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,  2000

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

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

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


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

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

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

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

                                  YES     X NO
                                     ------

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

            COMMON STOCK OUTSTANDING:  5,643,903 AS OF JULY 31, 2000


<PAGE>
                     COASTAL BANCORP, INC. AND SUBSIDIARIES

                                Table of Contents



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

<CAPTION>



<S>     <C>                                                                       <C>
Item 1  Financial Statements (unaudited)
        Consolidated Statements of Financial Condition at June 30, 2000
        and December 31, 1999                                                      1

        Consolidated Statements of Income for the Six-Month Periods Ended
        June 30, 2000 and 1999                                                     2

        Consolidated Statements of Income for the Three-Month Periods Ended
        June 30, 2000 and 1999                                                     3

        Consolidated Statements of Comprehensive Income for the Six-Month and
        Three-Month Periods Ended June 30, 2000 and 1999                           4

        Consolidated Statements of Cash Flows for the Six-Month Periods
        Ended June 30, 2000 and 1999                                               5

        Notes to Consolidated Financial Statements                                 7

        Management's Discussion and Analysis of Financial Condition and Results
Item 2  of Operations                                                             17

Item 3  Quantitative and Qualitative Disclosures About Market Risk                24

</TABLE>






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

<CAPTION>



<S>     <C>                                                  <C>
Item 1  Legal Proceedings                                    24
Item 2  Changes in Securities and Use of Proceeds            24
Item 3  Default upon Senior Securities                       24
Item 4  Submission of Matters to a Vote of Security Holders  24
Item 5  Other Information                                    24
Item 6  Exhibits and Reports on Form 8-K                     24
</TABLE>




SIGNATURES

<PAGE>

6

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,
ASSETS                                                                                 2000             1999
---------------------------------------------------------------------               ----------       ------------
                                                                       (Unaudited)
<S>                                                                    <C>          <C>         <C>   <C>
Cash and cash equivalents                                                           $   37,742       $   48,098
Federal funds sold                                                                       1,900               --
Loans receivable (note 4)                                                            1,881,644        1,735,081
Mortgage-backed securities held-to-maturity (fair value of
 $853,528 in 2000 and $899,934 in 1999) (note 3)                                       904,641          917,212
Mortgage-backed securities available-for-sale, at fair value (note 3)                   94,230           99,665
U.S. Treasury securities held-to-maturity                                                  994              299
Accrued interest receivable                                                             17,965           16,150
Property and equipment                                                                  28,742           30,708
Stock in the Federal Home Loan Bank of Dallas (FHLB)                                    67,367           56,753
Goodwill                                                                                26,122           27,636
Mortgage servicing rights (note 4)                                                          --            3,035
Prepaid expenses and other assets                                                       11,938           13,315
                                                                                    ----------       ----------
                                                                                    $3,073,285       $2,947,952
                                                                                    ==========       ==========
</TABLE>


<TABLE>
<CAPTION>

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


<S>                                                               <C>          <C>
Liabilities:
 Deposits (note 5)                                                $1,616,251   $1,624,289
 Advances from the FHLB (note 6)                                   1,224,948    1,096,931
 Senior notes payable, net (note 7)                                   46,900       46,900
 Advances from borrowers for taxes and insurance                      10,609        3,852
 Other liabilities and accrued expenses                               17,149       13,774
                                                                  -----------  -----------
     Total liabilities                                             2,915,857    2,785,746
                                                                  -----------  -----------

Minority interest - 9.0% noncumulative preferred stock of
 Coastal Banc ssb (note 10)                                           28,750       28,750

Commitments and contingencies (notes 4 and 8)

Stockholders' equity (notes 1, 3, 9, 11 and 13):
 Preferred stock, no par value; authorized shares 5,000,000;
   9.12% Cumulative, Series A, 1,100,000 shares issued and
   outstanding                                                        27,500       27,500
 Common stock, $.01 par value; authorized shares
   30,000,000; 7,643,453 and 7,616,227 shares issued
   in 2000 and 1999, respectively                                         76           76
 Additional paid-in capital                                           32,912       32,683
 Retained earnings                                                   103,389       95,508
 Accumulated other comprehensive loss -
   unrealized loss on securities available-for-sale                   (3,854)      (1,848)
 Treasury stock at cost (2,000,000 and 1,283,679 shares in 2000
   and 1999)                                                         (31,345)     (20,463)
                                                                  -----------  -----------
     Total stockholders' equity                                      128,678      133,456
                                                                  -----------  -----------
                                                                  $3,073,285   $2,947,952
                                                                  ===========  ===========
</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,
                                                                        -----------------------
                                                                           2000          1999
                                                                        -----------------------
                                                                               (Unaudited)
<S>                                                                 <C>                 <C>
Interest income:
 Loans receivable                                                   $        81,120     $63,828
 Mortgage-backed securities                                                  31,244      33,489
 FHLB stock, federal funds sold and other interest-earning assets             3,148       1,560
                                                                    ---------------     -------
                                                                            115,512      98,877
                                                                    ---------------     -------

Interest expense:
 Deposits                                                                    33,983      32,878
 Advances from the FHLB                                                      36,489      22,231
 Other borrowed money                                                             1       4,091
 Senior notes payable                                                         2,345       2,414
                                                                    ---------------     -------
                                                                             72,818      61,614
                                                                    ---------------     -------

   Net interest income                                                       42,694      37,263
Provision for loan losses                                                     3,990       3,006
                                                                    ---------------     -------
   Net interest income after provision for loan losses                       38,704      34,257
                                                                    ---------------     -------

Noninterest income:
 Loan fees and service charges on deposit accounts                            4,052       3,724
 Loan servicing income, net                                                     244         286
 Other                                                                          582         843
 Gain on sale of mortgage servicing rights                                    2,172          --
                                                                    ---------------     -------
                                                                              7,050       4,853
                                                                    ---------------     -------

Noninterest expense:
 Compensation, payroll taxes and other benefits                              14,713      14,405
 Office occupancy                                                             5,680       5,639
 Data processing                                                              1,700       1,762
 Amortization of goodwill                                                     1,514       1,514
 Insurance premiums                                                             298         615
 Real estate owned                                                              209         277
 Other                                                                        5,173       4,086
                                                                    ---------------     -------
                                                                             29,287      28,298
                                                                    ---------------     -------

     Income before provision for Federal income taxes and
       minority interest                                                     16,467      10,812

Provision for Federal income taxes                                            5,040       3,399
                                                                    ---------------     -------
     Income before minority interest                                         11,427       7,413
Minority interest - preferred stock dividends of Coastal Banc ssb
   (Series A) (note 10)                                                       1,294       1,294
                                                                    ---------------     -------
     Net income                                                     $        10,133     $ 6,119
                                                                    ===============     =======
     Net income available to common stockholders                    $         8,879     $ 5,789
                                                                    ===============     =======

Basic earnings per share (note 9)                                   $          1.45     $  0.87
                                                                    ===============     =======

Diluted earnings per share (note 9)                                 $             1.42  $  0.85
                                                                    ==================  =======
</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,
                                                                    -----------------------------
                                                                            2000           1999
                                                                    -----------------------------
                                                                                (Unaudited)

<S>                                                                 <C>               <C>
Interest income:
 Loans receivable                                                   $      42,614       $32,824
 Mortgage-backed securities                                                15,811        15,739
 FHLB stock, federal funds sold and other interest-earning assets           2,173           788
                                                                    -------------       -------
                                                                           60,598        49,351
                                                                    -------------       -------

Interest expense:
 Deposits                                                                  17,450        16,068
 Advances from the FHLB                                                    19,394        10,666
 Other borrowed money                                                          --         2,573
 Senior notes payable                                                       1,172         1,197
                                                                    -------------       -------
                                                                           38,016        30,504
                                                                    -------------       -------

   Net interest income                                                     22,582        18,847
Provision for loan losses                                                   1,590           675
                                                                    -------------       -------
   Net interest income after provision for loan losses                     20,992        18,172
                                                                    -------------       -------

Noninterest income:
 Loan fees and service charges on deposit accounts                          1,995         1,910
 Loan servicing income, net                                                    43           152
 Other                                                                        486           351
                                                                    -------------       -------
                                                                            2,524         2,413
                                                                    -------------       -------

Noninterest expense:
 Compensation, payroll taxes and other benefits                             7,244         7,290
 Office occupancy                                                           2,874         2,837
 Data processing                                                              841           863
 Amortization of goodwill                                                     761           761
 Insurance premiums                                                           149           312
 Real estate owned                                                             82           123
 Other                                                                      2,442         2,632
                                                                    -------------       -------
                                                                           14,393        14,818
                                                                    -------------       -------

       Income before provision for Federal income taxes and
         minority interest                                                  9,123         5,767

Provision for Federal income taxes                                          2,831         1,773
                                                                    -------------       -------
     Income before minority interest                                       6,292         3,994
Minority interest - preferred stock dividends of Coastal Banc ssb
   (Series A) (note 10)                                                      647           647
                                                                    ------------       -------
     Net income                                                     $      5,645       $ 3,347
                                                                    ============       =======
     Net income available to common stockholders                    $      5,018       $ 3,017
                                                                    ============       =======

Basic earnings per share (note 9)                                   $       0.84       $  0.47
                                                                    ============       =======

Diluted earnings per share (note 9)                                 $       0.83       $  0.46
                                                                    ============       =======
</TABLE>


See  accompanying  Notes  to  Consolidated  Financial  Statements

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

                                                                          Six Months Ended
                                                                              June 30,
                                                                       ------------------------
                                                                            2000          1999
                                                                     ----------------  ------
                                                                              (Unaudited)
<S>                                                                  <C>             <C>

Net income                                                           $      10,133        $6,119

Other comprehensive income (loss), net of tax:
 Unrealized holding gains (losses) on securities available-for-sale
 arising during period                                                      (2,006)          273
                                                                     --------------       ------

Total comprehensive income                                           $       8,127        $6,392
                                                                     ==============       ======
</TABLE>


<TABLE>
<CAPTION>

                                                                           Three Months Ended
                                                                                June 30,
                                                                     -----------------------------
                                                                             2000           1999
                                                                     -----------------------------
                                                                                 (Unaudited)
<S>                                                                  <C>                   <C>

Net income                                                           $       5,645         $3,347

Other comprehensive income (loss), net of tax:
 Unrealized holding gains (losses) on securities available-for-sale
 arising during period                                                        (108)           (43)
                                                                     --------------        -------

Total comprehensive income                                           $       5,537         $3,304
                                                                     ==============        =======
</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,
                                                                      ------------------------------
                                                                             2000            1999
                                                                      ------------------  ----------
                                                                                  (Unaudited)

<S>                                                                   <C>                  <C>
Cash flows from operating activities:
 Net income                                                           $     10,133        $   6,119
 Adjustments to reconcile net income
   to net cash provided by operating activities:
 Depreciation and amortization of property and equipment,
   mortgage servicing rights and prepaid expenses and other assets           4,554            4,928
 Net premium amortization                                                      357              747
 Provision for loan losses                                                   3,990            3,006
 Amortization of goodwill                                                    1,514            1,514
 Originations and purchases of mortgage loans held for sale                 (2,876)          (2,358)
 Sales of mortgage loans for held for sale                                   2,898            1,936
 Stock dividends from the FHLB                                              (3,011)          (1,337)
 Gain on sale of mortgage servicing rights                                  (2,172)              --
 Decrease (increase) in:
   Accrued interest receivable                                              (1,815)              11
   Other, net                                                                5,625             (496)
                                                                      -------------       ----------

   Net cash provided by operating activities                                19,197           14,070
                                                                      -------------       ----------

Cash flows from investing activities:
 Net increase in federal funds sold                                         (1,900)          (2,900)
 Purchases of mortgage-backed securities held-to-maturity                   (2,300)          (3,080)
 Purchase of mortgage-backed securities available-for-sale                      --          (26,489)
 Purchase of U.S. Treasury securities                                         (692)              --
 Principal repayments on mortgage-backed securities held-to-maturity        14,778          179,796
 Principal repayments on mortgage-backed securities
   available-for-sale                                                        2,333           19,406
 Purchases of loans receivable                                            (236,394)        (235,485)
 Net decrease in loans receivable                                           83,842           93,384
 Net purchases of property and equipment                                      (515)          (1,722)
 Purchases of FHLB stock                                                    (7,603)             (10)
 Proceeds from the sale of mortgage servicing rights                         5,001               --
                                                                     --------------       ----------

   Net cash provided (used) by investing activities                       (143,450)          22,900
                                                                     --------------       ----------

</TABLE>



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

                                                                                   Six Months Ended
                                                                                       June 30,
                                                                       --------------------------------
                                                                                  2000           1999
                                                                       --------------------------------
                                                                                   (Unaudited)

<S>                                                                    <C>                 <C>
Cash flows from financing activities:
 Net decrease in deposits                                              $          (7,972)  $   (80,285)
 Advances from the FHLB                                                        5,467,693     2,763,444
 Principal payments on advances from the FHLB                                 (5,339,676)   (2,743,155)
 Securities sold under agreements to repurchase and federal funds
   purchased                                                                       6,400       319,340
 Purchases of securities sold under agreements to repurchase and
   federal funds purchased                                                        (6,400)     (319,340)
 Net increase in advances from borrowers for taxes and insurance                   6,757         4,680
 Proceeds from issuance of preferred stock, net                                       --        26,024
 Exercise of stock options for purchase of common stock, net                         229            54
 Purchase of treasury stock                                                      (10,882)      (12,508)
 Repurchase of senior notes                                                           --        (2,100)
 Dividends paid                                                                   (2,252)       (1,399)
                                                                       ------------------  ------------
   Net cash provided (used) by financing activities                              113,897       (45,245)
                                                                       ------------------  ------------

   Net decrease in cash and cash equivalents                                     (10,356)       (8,275)
 Cash and cash equivalents at beginning of period                                 48,098        45,453
                                                                       ------------------  ------------
 Cash and cash equivalents at end of period                            $          37,742   $    37,178
                                                                       ==================  ============

 Supplemental schedule of cash flows-interest paid                     $          71,907   $    62,969
                                                                       ==================  ============

 Supplemental schedule of noncash investing and financing activities:
   Foreclosures of loans receivable                                    $           1,682   $     2,583
                                                                       ==================  ============
</TABLE>

See  accompanying  Notes  to  Consolidated  Financial  Statements

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

16

(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  June  30, 2000 are not necessarily indicative of the results
that  may  be  expected  for the entire fiscal year or any other interim period.

     On  August  27,  1998,  December  21, 1998, February 25, 1999 and April 27,
2000,  the Board of Directors authorized four separate repurchase plans each for
up  to  500,000  shares  of  the  outstanding  shares of common stock through an
open-market repurchase program and privately negotiated repurchases, if any.  As
of June 30, 2000, 2,000,000 shares had been repurchased in the open market at an
average  repurchase price of $15.67 per share for a total cost of $31.3 million.
On  July 27, 2000, the Board of Directors authorized a fifth repurchase plan for
up  to  an  additional 500,000 shares of the outstanding shares of common stock.

(2)     PRINCIPLES  OF  CONSOLIDATION

     The  accompanying  unaudited  Consolidated Financial Statements include the
accounts  of Coastal Bancorp, Inc. and its wholly-owned subsidiary, Coastal Banc
Holding  Company,  Inc.  and its wholly-owned subsidiaries, Coastal Banc ssb and
its subsidiaries, CoastalBanc Financial Corp. and Coastal Banc Insurance Agency,
Inc.  (collectively,  the  "Bank"), and Coastal Banc Capital Corp. (collectively
with  Coastal  Bancorp,  Inc.  and  the  Bank,  "Coastal").  All  significant
intercompany  balances  and  transactions have been eliminated in consolidation.

(3)     MORTGAGE-BACKED  SECURITIES

     Mortgage-backed  securities  at  June  30, 2000 were as follows (dollars in
thousands):
<TABLE>

<CAPTION>



                                                      Gross       Gross
                                    Amortized    Unrealized   Unrealized      Fair
                                       Cost          Gains       Losses       Value
                                    ---------    -----------  ----------     ------
<S>                               <C>           <C>         <C>     <C>         <C>
Held-to-maturity:
 REMICS - Agency                   $   653,445     $  858     $ (37,945)    $ 616,358
 REMICS - Non-agency                   174,248         --       (11,372)      162,876
 FNMA certificates                      53,016         15        (2,360)       50,671
 GNMA certificates                      16,939         --           (92)       16,847
 Non-agency securities                   6,993          3          (220)        6,776
                                   -----------     ------     ----------    ---------
                                   $   904,641     $  876     $ (51,989)    $ 853,528
                                   ===========     ======     ==========    =========

Available-for-sale:
 REMICS - Agency                   $    77,347     $   --     $  (5,694)    $  71,653
 REMICS - Non-agency                       210         13            --           223
 GNMA certificates                      22,602         --          (248)       22,354
                                   -----------     ------     ----------    ---------
                                   $   100,159     $   13     $  (5,942)    $  94,230
                                   ===========     ======     ==========    =========
</TABLE>


<PAGE>
     Mortgage-backed securities at December 31, 1999 were as follows (dollars in
thousands):
<TABLE>
<CAPTION>

                                                     Gross         Gross
                                   Amortized    Unrealized     Unrealized     Fair
                                      Cost          Gains         Losses       Value
                                   ---------    -----------    ----------    -------
<S>                              <C>        <C>                <C>           <C>
Held-to-maturity:
 REMICS - Agency                 $   657,305      $ 2,560     $ (13,224)    $ 646,641
 REMICS - Non-agency                 180,163           41        (4,094)      176,110
 FNMA certificates                    56,068            9        (2,306)       53,771
 GNMA certificates                    16,129           --           (89)       16,040
 Non-agency securities                 7,547           --          (175)        7,372
                                 -----------      -------     ----------    ---------
                                 $   917,212      $ 2,610     $ (19,888)    $ 899,934
                                 ===========      =======     ==========    =========

Available-for-sale:
 REMICS - Agency                 $    77,343      $    --     $  (2,400)    $  74,943
 REMICS - Non-agency                     372           --            (4)          368
 GNMA certificates                    24,792           --          (438)       24,354
                                 -----------      -------     ----------    ---------
                                 $   102,507      $    --     $  (2,842)    $  99,665
                                 ===========      =======     ==========    =========
</TABLE>



(4)     LOANS  RECEIVABLE

     Loans  receivable  at  June  30, 2000 and December 31, 1999 were as follows
(dollars  in  thousands):
<TABLE>

<CAPTION>



                                                    June 30, 2000               December 31, 1999
                                                   ---------------              -----------------
<S>                                                <C>              <C>                <C>
Real estate mortgage loans:
 First-lien mortgage, primarily residential        $      995,312                      $  836,005
 Commercial                                               314,922                         314,292
 Multifamily                                              202,432                         163,059
 Residential construction                                 151,828                         136,675
 Acquisition and development                               97,208                         103,357
 Commercial construction                                   77,051                          65,934
Commercial loans, secured by residential mortgage
 loans held for sale                                       13,933                          60,372
Commercial, financial and industrial                       95,885                         100,195
Loans secured by savings deposits                          13,707                          13,094
Consumer and other loans                                   59,002                          63,383
                                                   ---------------                     -----------
                                                        2,021,280                       1,856,366
Loans in process                                         (117,551)                       (108,561)
Allowance for loan losses                                 (13,782)                        (10,493)
Unearned interest and loan fees                            (3,654)                         (2,947)
(Discount) premium to record purchased loans, net          (4,649)                            716
                                                   ---------------                     -----------

                                                   $    1,881,644                      $1,735,081
                                                   ===============                     ===========

Weighted average yield                                       8.91%                           8.67%
                                                   ===============                     ===========
</TABLE>




<PAGE>
     At  June  30,  2000,  Coastal  had  outstanding commitments to originate or
purchase  $107.0  million  of  real  estate  mortgage  and  other  loans and had
commitments  under  lines  of credit to originate primary construction and other
loans  of  approximately  $86.7 million.  In addition, at June 30, 2000, Coastal
had  $6.4  million of outstanding letters of credit.  Management anticipates the
funding  of  these  commitments  through  normal  operations.

     At  June  30,  2000 and December 31, 1999, the carrying value of loans that
were  considered  to  be  impaired  totaled  approximately $4.2 million and $2.0
million,  respectively  and  the  related  allowance  for  loan  losses on those
impaired  loans  totaled $1.0 million and $778,000 at June 30, 2000 and December
31, 1999, respectively. The average recorded investment in impaired loans during
the  six months ended June 30, 2000 and 1999 was $3.0 million and $10.6 million,
respectively.

     An analysis of activity in the allowance for loan losses for the six months
ended  June  30,  2000  and  1999  is  as  follows  (in  thousands):

<TABLE>
<CAPTION>

                                                  Six Months Ended June 30,
                                                   ------------------------
                                                           2000      1999
                                                         --------  --------
<S>                           <C>                        <C>       <C>
Balance, beginning of period                             $10,493   $11,358
Provision for loan losses                                  3,990     3,006
Charge-offs                                               (1,012)   (1,107)
Recoveries                                                   311       127
                                                         --------  --------

Balance, end of period                                   $13,782   $13,384
                                                         ========  ========
</TABLE>



     On  August  11,  1998,  Coastal  approved  the  purchase of a $10.0 million
participation  in  a  warehouse  loan aggregating $25.0 million to MCA Financial
Corp.,  and  certain  of  its  affiliates, of Southfield, Michigan (collectively
"MCA").  The  lead lender ("Lead Lender") in this facility is a major commercial
bank  and  the  loan was secured by subprime residential loans.  In late January
1999,  due  to a lack of liquidity, MCA ceased operations and shortly thereafter
was  seized by the Michigan Bureau of Financial Institutions.  A conservator was
appointed  to  take  control  of MCA's books and records, marshal that company's
assets  and  continue its loan servicing operations.  A voluntary petition under
Chapter  11  of  the U.S. Bankruptcy Code was filed in the U.S. Bankruptcy Court
for  the  Eastern District of Michigan for MCA on or about February 10, 1999, by
the  conservator,  who  was  appointed  the "debtor-in-possession," to allow the
conservator time to develop a plan of reorganization while protecting the assets
of  MCA.

Effective  December  31,  1998,  Coastal  placed this loan on nonaccrual and had
allocated  $1.5  million  of  the  general allowance to this loan.  During 1999,
based  on  updated information received, management made the decision to provide
for  and charge-off the remaining balance of the loan.  Throughout 1999, Coastal
worked with the Lead Lender and the bankruptcy trustee to determine the value of
and  sell  the  underlying  collateral.  As  of  December  31, 1999, Coastal had
received  only $1.1 million in proceeds from the collateral on the MCA loan.  In
addition,  on  January 12, 2000, Coastal filed a lawsuit against the Lead Lender
in  the  participation seeking to recover losses incurred as a result of actions
or  omissions  of  the  Lead  Lender  related  to  the  loan to MCA.  Due to the
uncertainty  of the value of the remaining collateral, its marketability and the
timing  of recovery, if any, from the lawsuit, Coastal charged-off the remaining
$8.9  million  balance of this loan in 1999.  Coastal will continue to work with
the  Lead  Lender  and the bankruptcy trustee to recover any funds, if possible,
from  the  collateral  or  MCA.  During  the  three months ended March 31, 2000,
Coastal  received $180,000 in proceeds from the MCA loan which was recorded as a
recovery  in  the allowance for loan losses during the period.  No proceeds were
received  during  the  three  months  ended  June  30,  2000.

     Effective  March 31, 2000,  Coastal  sold  its  mortgage servicing rights
portfolio  and  recorded  a  nonrecurring  gain  of  $2.2 million  pursuant to a
purchase  and  sale  agreement, Coastal sold its rights to service approximately
$389.1  million  of  mortgage  loans  for  third  party investors.  Coastal will
continue  to  service  the  loans  in  its  own  loans  receivable  portfolio.

(5)     DEPOSITS

     Deposits,  their  stated  rates  and  the related weighted average interest
rates,  at  June  30,  2000  and  December  31,  1999, are summarized as follows
(dollars  in  thousands):

<TABLE>
<CAPTION>

                                 Stated Rate                         June 30, 2000   December 31, 1999
                                --------------                       -------------  -------------------
<S>                             <C>             <C>            <C>                  <C>
Noninterest-bearing checking             0.00%                 $           82,859   $   97,146
Interest-bearing checking       0.75  -  2.00                              58,556       65,229
Savings accounts                1.49  -  3.00                              46,698       46,011
Money market demand accounts    0.00  -  6.31                             341,262      331,082
                                                               -------------------  -----------

                                                                          529,375      539,468
                                                               -------------------  -----------

Certificate accounts            2.00  -  2.99                                 246          461
                                3.00  -  3.99                               1,872       23,288
                                4.00  -  4.99                             133,758      446,746
                                5.00  -  5.99                             563,213      543,980
                                6.00  -  6.99                             385,230       62,363
                                7.00  -  7.99                               2,229        7,580
                                8.00  -  8.99                                 106          103
                                9.00  -  9.99                                  99           99
                                over  10.00                                    --           12
                                                               -------------------  -----------
                                                                        1,086,753    1,084,632
                                                               -------------------  -----------

Premium on purchased deposits                                                 123          189
                                                               -------------------  -----------

                                                               $        1,616,251   $1,624,289
                                                               ===================  ===========

Weighted average interest rate                                               4.42%        3.96%
                                                               ===================  ===========
</TABLE>




     The  scheduled  maturities  of certificate accounts outstanding at June 30,
2000  were  as  follows  (dollars  in  thousands):
<TABLE>
<CAPTION>

                  June 30, 2000
                  --------------
<S>               <C>
 0 to 12 months   $      955,275
 13 to 24 months         103,074
 25 to 36 months          15,561
 37 to 48 months           7,361
 49 to 60 months           5,220
 Over 60 months              262
                  --------------
                  $    1,086,753
                  ==============
</TABLE>



(6)     ADVANCES  FROM  THE  FHLB

     The  weighted  average interest rates on advances from the FHLB at June 30,
2000  and  December  31, 1999 were 6.63% and 5.72%, respectively.  The scheduled
maturities and related weighted average interest rates on advances from the FHLB
at  June  30,  2000  are  summarized  as  follows  (dollars  in  thousands):

<TABLE>
<CAPTION>

                                            Weighted Average
Due during the year ending December 31,       Interest Rate            Amount
---------------------------------------    -----------------           ------
<S>                                      <C>                <C>     <C>
2000                                                 6.71%          $  870,024
2001                                                 6.23               38,934
2002                                                 6.47              279,451
2003                                                 6.98                5,781
2004                                                 5.80                5,364
2005                                                 6.44                  289
2006                                                 6.86                3,258
2007                                                 6.72                1,190
2008                                                 5.61                1,874
2009                                                 8.11                4,130
2010                                                 6.85                  862
2011                                                 6.61                1,330
2012                                                 5.68                  217
2013                                                 5.75                7,708
2014                                                 5.43                2,946
2018                                                 5.05                1,590
                                         -----------------          ----------

                                                     6.63%          $1,224,948
                                         =================          ==========
</TABLE>



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

(7)     SENIOR  NOTES  PAYABLE

     On  June  30,  1995, Coastal issued $50.0 million of 10.0% Senior Notes due
June 30, 2002.  The Senior Notes are redeemable at Coastal's option, in whole or
in  part,  on  or  after  June  30,  2000,  at par, plus accrued interest to the
redemption  date.  Interest  on  the  Senior Notes is payable quarterly.  During
1999,  Coastal, after receipt of unsolicited offers, repurchased $3.1 million of
the  Senior  Notes  outstanding  at  par.

(8)     FINANCIAL  INSTRUMENTS  WITH  OFF-BALANCE  SHEET  RISK

     Coastal  is a party to financial instruments with off-balance sheet risk in
the normal course of business to reduce its exposure to fluctuations in interest
rates.  These  financial  instruments  include interest rate swap agreements and
interest  rate  cap  agreements.


<PAGE>
     Coastal  utilizes  interest  rate  swap and interest rate cap agreements to
reduce  exposure  to  floating  interest  rates  by  altering  the interest rate
sensitivity  of  a  portion of its variable-rate assets and borrowings.  At June
30,  2000,  Coastal  had  interest  rate swap and cap agreements having notional
principal  amounts  totaling  $40.3  million  and  $158.6 million, respectively.

     The terms of the interest rate swap agreements outstanding at June 30, 2000
and  December  31,  1999  are  summarized  as  follows  (dollars  in thousands):
<TABLE>

<CAPTION>



                                                                        Fair Value at
                                                       Floating Rate       End of
                       Notional      LIBOR     Fixed         at            Period
Maturity                Amount       Index      Rate   End of Period    (gain (loss))
---------------------  ---------  -----------  ------  --------------  ---------------
<S>                    <C>        <C>          <C>     <C>             <C>
At June 30, 2000:
2000. . . . . . . . .  $   4,800  Three-month  6.170%          6.191%  $          (66)
2000. . . . . . . . .      2,205  Three-month  6.000           6.280               10
2003. . . . . . . . .     16,073  One-month    5.345           6.198              214
2004. . . . . . . . .      3,801  One-month    5.635           6.523              166
2005. . . . . . . . .     13,440  Three-month  6.500           6.101              272
                       ---------                                       ---------------
                       $  40,319                                       $          596
                       =========                                       ===============

At December 31, 1999:
2000. . . . . . . . .  $   4,800  Three-month  6.170%          6.140%  $          (70)
2000. . . . . . . . .      2,240  Three-month  6.000           6.184               10
2003. . . . . . . . .     19,290  One-month    5.345           6.476              248
2004. . . . . . . . .      3,842  One-month    5.635           6.463              160
2005. . . . . . . . .     13,440  Three-month  6.500           6.110              215
                       ---------                                       ---------------
                       $  43,612                                       $          563
                       =========                                       ===============
</TABLE>




     The  interest  rate  swap  agreements  provide  for  Coastal  to make fixed
interest  payments  and  receive  payments  based  on a floating LIBOR index, as
defined  in  each  agreement.  The  weighted  average  interest rate of payments
received on all of the interest rate swap agreements was approximately 6.24% and
the  weighted  average  interest  payment  rate on all of the interest rate swap
agreements  was  approximately  5.93%  for  the  six months ended June 30, 2000.
Payments  on  the  interest  rate  swap  agreements  are  based  on the notional
principal amount of the agreements; no funds were actually borrowed or are to be
repaid.  The  interest  rate swap agreements are used to alter the interest rate
sensitivity of a portion of Coastal's variable-rate borrowings. As such, Coastal
records  net interest expense or income related to these agreements on a monthly
basis  in  "interest  expense  on  other  borrowed  money"  in  the accompanying
consolidated statements of income. The net reduction in interest expense related
to  these  agreements was $66,000 for the six months ended June 30, 2000 and the
net  interest expense related to these agreements was approximately $310,000 for
the  six months ended June 30, 1999.  Coastal had pledged approximately $932,000
of  mortgage-backed  securities  to secure interest rate swap agreements at June
30,  2000.

     Coastal  has  interest  rate  cap  agreements  with  third  parties.  The
agreements  provide for the third parties to make payments to Coastal whenever a
defined  floating rate exceeds rates ranging from 7.0% to 9.5%, 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 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  $77,000  and  $90,000  at  June  30,  2000 and December 31, 1999,
respectively, with the estimated fair value of the agreements being $251,000 and
$750,000  at  June  30,  2000 and December 31, 1999, respectively.  The interest
rate cap agreements are used to alter the interest rate sensitivity of a portion
of  Coastal's  mortgage-backed  securities  and  loans  receivable. As such, the
amortization  of  the  purchase price and interest income from the interest rate
cap agreements are recorded in "interest income on mortgage-backed securities or
loans  receivable,"  as appropriate, in the accompanying consolidated statements
of  income. The net decrease in interest income related to the interest rate cap
agreements  was approximately $13,000 for the six months ended June 30, 2000 and
1999.  No  payments  were made to Coastal under the interest rate cap agreements
during  the  six  months  ended  June  30,  2000  or  1999.

     Interest rate cap agreements outstanding at June 30, 2000 expire as follows
(dollars  in  thousands):
<TABLE>

<CAPTION>



Year of      Strike Rate    Notional
Expiration      Range        Amount
----------  --------------  ---------
<S>         <C>             <C>
2000                 9.50%  $   3,000
2001        7.00  -  9.00      33,697
2002        8.75  -  9.00      18,625
2003        8.00  -  9.00     103,300
                            ---------
                            $ 158,622
                            =========
</TABLE>



     Market risk, or the risk of loss due to movement in market prices or rates,
is  quantified by Coastal through a risk monitoring process of marking to market
the portfolio to expected market level changes in an instantaneous shock of plus
and  minus  200  basis  points on a quarterly basis.  This process discloses the
effects  on  market  values  of the assets and liabilities, unrealized gains and
losses,  including  off-balance sheet items, as well as potential changes in net
interest  income.

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

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

<PAGE>
(9)     EARNINGS  PER  SHARE

     The  following  summarizes  information related to the computation of basic
and diluted earnings per share ("EPS") for the six-and three-month periods ended
June  30,  2000  and  1999  (dollars  in  thousands,  except  per  share  data):

<TABLE>
<CAPTION>



                                                                    Six Months Ended
                                                                        June 30,
                                                                ------------------------
<S>                                           <C>               <C>          <C>
                                                                      2000         1999
                                                                -----------  -----------

Net income                                                      $   10,133   $    6,119
Preferred stock dividends                                           (1,254)        (330)
                                                                -----------  -----------
Net income available to common stockholders                     $    8,879   $    5,789
                                                                ===========  ===========
Weighted average number of common shares
 outstanding used in basic EPS calculation                       6,139,175    6,650,424
Add assumed exercise of outstanding stock
 options as adjusted for dilutive securities                       108,624      153,238
                                                                -----------  -----------
Weighted average number of common shares
 outstanding used in diluted EPS calculation                     6,247,799    6,803,662
                                                                ===========  ===========
Basic EPS                                                       $     1.45   $     0.87
                                                                ===========  ===========
Diluted EPS                                                     $     1.42   $     0.85
                                                                ===========  ===========
</TABLE>




<TABLE>
<CAPTION>



                                                                 Three Months Ended
                                                                    June 30,
                                                                 -------------------------
<S>                                           <C>                 <C>          <C>
                                                                        2000         1999
                                                                  -----------  -----------

Net income                                                        $    5,645   $    3,347
Preferred stock dividends                                               (627)        (330)
                                                                  -----------  -----------
Net income available to common stockholders                       $    5,018   $    3,017
                                                                  ===========  ===========
Weighted average number of common shares
 outstanding used in basic EPS calculation                         5,989,330    6,384,779
Add assumed exercise of outstanding stock
 options as adjusted for dilutive securities                          89,880      150,981
                                                                  -----------  -----------
Weighted average number of common shares
 outstanding used in diluted EPS calculation                       6,079,210    6,535,760
                                                                  ===========  ===========
Basic EPS                                                         $     0.84   $     0.47
                                                                  ===========  ===========
Diluted EPS                                                       $     0.83   $     0.46
                                                                  ===========  ===========
</TABLE>



     The  weighted  average number of common shares outstanding has been reduced
by  the  treasury  stock held by Coastal.  As of June 30, 2000 and 1999, Coastal
had  2,000,000  and  1,272,679  common  shares  in  treasury,  respectively.


<PAGE>
(10)     COASTAL  BANC  SSB  PREFERRED  STOCK

     On October 21, 1993, the Bank issued 1,150,000 shares of 9.0% Noncumulative
Preferred  Stock,  no  par  value,  Series A, at a price of $25 per share to the
public.  Dividends  on  the  Preferred Stock are payable quarterly at the annual
rate  of  $2.25 per share, when, as and if declared by the Board of Directors of
the Bank.  At any time on or after December 15, 1998, the Preferred Stock may be
redeemed  in  whole  or  in part only at the Bank's option at $25 per share plus
unpaid  dividends  (whether  or  not  earned  or  declared) for the then current
dividend  period  to  the  date  fixed  for  redemption.

(11)     STATUTORY  CAPITAL  REQUIREMENTS

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

     At June 30, 2000, the Bank's regulatory capital in relation to its existing
regulatory  capital  requirements  for  capital adequacy purposes was as follows
(dollars  in  thousands):
<TABLE>
<CAPTION>


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

 Tier 1 (core)              $     177,481      5.78%    $122,755     4.00%    $153,444     5.00%
 Tier 1 risk-based                177,481      9.89       71,761     4.00      107,641     6.00
 Total risk-based                 191,263     10.66      143,522     8.00      179,402    10.00
</TABLE>



     As  of June 30, 2000, the most recent notification from the Federal Deposit
Insurance  Corporation  ("FDIC")  categorized the Bank as well capitalized under
the  regulatory  framework  for  prompt corrective action.  To be categorized as
well  capitalized,  the  Bank  must  maintain  minimum  Tier  1  (core),  Tier 1
risk-based  and  total risk-based ratios as set forth in the table above.  There
are  no  conditions  or  events since that notification that management believes
have  changed  the  institution's  category.

(12)     RECENT  ACCOUNTING  STANDARDS

     The  Financial  Accounting  Standards  Board  ("FASB")  Statement  No. 137,
"Accounting  for Derivative Instruments and Hedging Activities - Deferral of the
Effective  Date  of  FASB  Statement No. 133, an Amendment of FASB Statement No.
133"  ("Statement  137")  was  issued  in  June  1999.  Statement 137 defers the
effective date of FASB Statement 133, "Accounting for Derivative Instruments and
Hedging  Activities" ("Statement 133") for one year.  Statement 133, as amended,
is  effective  for  all fiscal quarters of all fiscal years beginning after June
15,  2000.  Statement  133  generally  requires  that changes in fair value of a
derivative  be recognized currently in earnings unless specific hedge accounting
criteria  are  met.  Upon implementation of Statement 133, hedging relationships
may  be  redesignated  and  securities  held-to-maturity  may  be transferred to
available-for-sale or trading.  In June 2000, FASB Statement No. 138 "Accounting
for  Certain  Derivative Instruments and Certain Hedging Activities" ("Statement
138")  was issued.  Statement 138 adds to the guidance related to accounting for
derivative  instruments  and  hedging  activities.  Statement 133, as amended by
Statement  138  is  intended  to  be  comprehensive  guidance  on accounting for
derivatives  and  hedging activities.  Coastal is evaluating the impact, if any,
Statement  133,  as  amended,  may  have  on  its  future consolidated financial
statements.


<PAGE>
(13)     COASTAL  BANCORP,  INC.  PREFERRED  STOCK

     On  May 11, 1999, Coastal Bancorp, Inc. ("Bancorp") issued 1,100,000 shares
of  9.12%  Series  A Cumulative Preferred Stock, no par value, at a price of $25
per  share  to the public ("Bancorp Preferred Stock").  Dividends on the Bancorp
Preferred  Stock  are  payable  quarterly at the annual rate of $2.28 per share.
The  preferred stock is callable on May 15, 2003 at Bancorp's option.  The $26.0
million  net  proceeds  has  been  used  for  repurchases  in the open market of
Bancorp's outstanding common stock and of Bancorp's outstanding 10% Senior Notes
with  the remaining being invested on a short-term basis.  Pursuant to Coastal's
tax  benefit  agreement  with  the  FDIC,  Coastal  receives  a  tax benefit for
dividends  paid  on  the  Bancorp  Preferred  Stock.


<PAGE>

25

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

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

     Total  assets  increased  4.3%  or $125.3 million from December 31, 1999 to
June  30,  2000.  The net increase resulted primarily from an increase of $146.6
million  in  loans  receivable,  in  addition to an increase of $10.6 million in
stock  in  the  FHLB.  These increases were only slightly offset by decreases of
$10.4  million,  $12.6  million  and  $5.4 million in cash and cash equivalents,
mortgage-backed  securities  held-to-maturity  and  mortgage-backed  securities
available-for-sale, respectively. The increase in loans receivable was primarily
due  to  a  bulk  residential mortgage loan purchase during the first quarter of
2000  of  $225.2 million (net of purchase discount) offset by principal payments
received  and  a  decrease  of  $46.4  million  in  commercial  loans secured by
residential  mortgage  loans held for sale, because of the decreased emphasis on
this  type  of  lending.  The decrease in mortgaged-backed securities was due to
principal  payments  received.

     Deposits  decreased $8.0 million or 0.5% from December 31, 1999 to June 30,
2000  and  advances  from  the  FHLB  increased  11.7%  or  $128.0  million.
Stockholders'  equity  decreased  3.6% or $4.8 million from December 31, 1999 to
June  30,  2000  as  a result of net income, offset by additional treasury stock
acquired  of  $10.9  million,  a  $2.0  million  increase  in  accumulated other
comprehensive  loss  and  dividends  declared.


Results  of  Operations  for  the  Six  Months  Ended  June  30,  2000  and 1999
--------------------------------------------------------------------------------

     General
     -------

     For  the  six  months  ended  June  30,  2000, net income was $10.1 million
compared  to  $6.1 million for the six months ended June 30, 1999.  The increase
in  net  income  for  the  six  months  ended June 30, 2000 was comprised of the
following:  a  $5.4  million  increase in net interest income and a $2.2 million
increase  in  noninterest  income,  which  was  partially  offset  by a $984,000
increase  in  the  provision for loan losses, a $989,000 increase in noninterest
expense  and  a $1.6 million increase in the provision for Federal income taxes.
The  increase  in  net  interest income was due primarily to the increase in net
interest  margin  from 2.67% for the six months ended June 30, 1999 to 2.90% for
the  same  period in 2000, which includes the FHLB special dividend as described
below.  The increase in noninterest income was primarily due to the $2.2 million
gain  recorded  on  the  sale  of Coastal's mortgage servicing rights during the
first  quarter  of 2000, as discussed below. The increase in noninterest expense
was  primarily  because  of the reversal of certain accrued liabilities totaling
$1.1  million  during  the  first  quarter  of  1999  and a $308,000 increase in
compensation,  payroll  taxes and other benefits, which was somewhat offset by a
decrease  of $317,000 in insurance premiums expense, primarily due to a decrease
in  deposit  insurance  rates,  in  addition  to  small changes in other expense
categories.

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

     Interest  income  for  the  six  months ended June 30, 2000 increased $16.6
million  or 16.8% from the six months ended June 30, 1999.  The increase was due
to  an  increase  in  average  interest-earning  assets of $155.2 million and an
increase  in the average yield from 7.09% for the six months ended June 30, 1999
to  7.84%  (which includes the FHLB special dividend as described below) for the
six  months  ended June 30, 2000.  Interest income on loans receivable increased
$17.3  million  due  to  a $293.1 million increase in the average balance and an
increase  in the average yield from 8.12% for the six months ended June 30, 1999
to  8.70%  for  the  same  period  in  2000.  Interest income on mortgage-backed
securities  decreased $2.2 million, or 6.7%, due to a $145.8 million decrease in
the  average  balance  offset by an increase in the average yield from 5.79% for
the  six  months  ended  June  30,  1999  to  6.18% for the same period in 2000.

     In  addition,  interest  income on FHLB stock, federal funds sold and other
interest-earning  assets increased $1.6 million during the six months ended June
30, 2000, as compared to the same period in 1999.  The majority of this increase
was  due  to  a  special  dividend  recorded in the second quarter of 2000.  The
dividend  was declared by the Federal Home Loan Bank of Dallas ("FHLB") equal to
1.625%  of  each  members'  FHLB  stock  held as of March 31, 2000 (the "special
dividend").  The  special  dividend amounted to $1.1 million for Coastal and was
paid  in  the  form  of  FHLB  stock  on  April  28,  2000.

     The  average  yield  on Coastal's interest-earning assets was 7.77% without
the  special  dividend  for  the  six  months  ended  June  30,  2000.  Total
interest-earning  assets  for  the  six months ended June 30, 2000 averaged $2.9
billion  compared  to  $2.8  billion  for  the  six  months ended June 30, 1999.

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

     Interest  expense on interest-bearing liabilities was $72.8 million for the
six months ended June 30, 2000, as compared to $61.6 million for the same period
in  1999, which represents an increase of $11.2 million, or 18.2%.  The increase
in  interest  expense  was  due  to  an  increase  in  the  average rate paid on
interest-bearing  liabilities  from 4.75% for the six months ended June 30, 1999
to 5.35% for the six months ended June 30, 2000 and a $127.3 million increase in
the  average balance of interest-bearing liabilities.  The 0.60% increase in the
average  rate  paid  on interest-bearing liabilities was primarily due to higher
wholesale  funding  costs.  The increase in average interest-bearing liabilities
consisted  primarily  of  a  $320.6  million increase in advances from the FHLB,
which  was  partially  offset  by decreases of $153.4 million in securities sold
under  agreements  to repurchase, $38.5 million in interest-bearing deposits and
$1.4  million  in  senior  notes  payable  due  to  repurchases.

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

     Net  interest  income  was  $42.7 million for the six months ended June 30,
2000  and  $37.3  million  for  the  same  period  in 1999.  Net interest margin
("Margin")  was  2.90%  (2.83%  without the special dividend) for the six months
ended  June  30,  2000 compared to 2.67% for the six months ended June 30, 1999.
Margin  represents  net  interest  income  as  a  percentage  of  average
interest-earning  assets.  Net  interest  spread  ("Spread"), defined to exclude
noninterest-bearing deposits, increased from 2.34% for the six months ended June
30,  1999 to 2.49% (2.42% without the special dividend) for the six months ended
June  30, 2000.  Management also calculates an alternative Spread which includes
noninterest-bearing  deposits  to  show  a spread that considers the cost of all
deposits  as  part  of  the  overall cost of funds.  Under this calculation, the
alternative  Spreads  for the six months ended June 30, 2000 and 1999 were 2.76%
(2.69% without the special dividend) and 2.59%, respectively.  Margin and Spread
are  affected  by  the changes in the amount and composition of interest-earning
assets  and  interest-bearing  liabilities.  The  overall increase in Margin and
Spread  was  primarily  due  to  the  0.75% (0.68% without the special dividend)
increase  in the average yield on interest-earning assets.  This increase in the
average yield on interest-earning assets was somewhat offset by a 0.60% increase
in  the  average  rate  on  interest-bearing  liabilities.  Average  net
interest-earning  assets  increased $27.9 million from the six months ended June
30,  1999  to  the  six  months  ended  June  30,  2000.

     Management's  goal  is  to  achieve  a  more  desirable  asset/liability
composition  which  is  less  vulnerable  to  market interest rate fluctuations,
primarily through the addition of loans tied to variable rates such as LIBOR and
local  and  regional  prime rates and through the efforts to replace LIBOR based
borrowings  with lower cost retail deposits.  In addition, management intends to
gradually increase the amount of generally higher yielding commercial, financial
and  industrial  loans and noninterest-bearing deposits as a percentage of total
assets  and  deposits,  respectively.

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

     The  provision  for  loan  losses was $4.0 million for the six months ended
June  30,  2000 compared to $3.0 million for the six months ended June 30, 1999.
The  increase  in  the  provision  for  loan  losses was primarily due Coastal's
continuing focus on more commercial type loans and Coastal's plan to continue to
build  the  allowance  for  loan  losses to a benchmark of approximately 100% of
nonperforming  loans.  Nonperforming  loans are those loans on nonaccrual status
as  well  as  those  loans  greater  than  ninety (90) days delinquent and still
accruing.  At  June  30,  2000,  Coastal  had nonperforming loans totaling $19.2
million,  of  which  $3.0 million were greater than 90 days delinquent and still
accruing  interest.  Of these nonperforming loans, $13.4 million, or 69.6%, were
first  lien  residential  (single  family)  mortgage  loans,  $2.2  million were
commercial  real  estate  loans,  $2.2  million  were  commercial, financial and
industrial  loans, with the balance in the residential construction, multifamily
mortgage  and  consumer  and  other  categories.  At  June  30, 2000, 82% of the
nonperforming  first lien residential mortgage loans were purchased and 18% were
originated,  compared  to  85% of the total first lien residential mortgage loan
portfolio  being  purchased and 15% originated.  At June 30, 2000, the allowance
for  loan  losses  as  a percentage of nonperforming loans was 71.7% compared to
61.3%  at  December  31,  1999.

     Although  no assurance can be given, management believes that the allowance
for  loan  losses  at  June  30,  2000  is  adequate  considering  the  changing
composition  of  the  loans  receivable  portfolio,  historical loss experience,
delinquency  trends and current economic conditions. Management will continue to
review its loan loss allowance policy as Coastal's loan portfolio 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, 2000, noninterest income increased $2.2
million  to $7.1 million, compared to $4.9 million for the six months ended June
30,  1999.  As  mentioned  previously,  the  increase  in noninterest income was
primarily  due  to  the  $2.2  million  gain  recorded  on the sale of Coastal's
mortgage  servicing  rights  during  the  first  quarter  of  2000.  Due  to the
declining  servicing portfolio (with an average loan life of approximately seven
years),  management  decided to take the opportunity to sell Coastal's rights to
service  $389.1  million  of  loans  for  third party investors, which comprised
Coastal's  entire  portfolio  of loans serviced for others, based on the current
market  conditions  for  loan servicing rights and the expected declining income
benefits  of  that  servicing  portfolio  on  an  ongoing basis.  As part of the
decision to sell Coastal's mortgage servicing rights, management also decided to
purchase  a $230.6 million ($225.2 million net of the purchase discount) package
of  single  family  mortgage  loans,  which  is expected to provide net interest
income  of  approximately  $750,000 per quarter (or $490,000 net of tax) for the
first  year.  This  estimated  positive  earnings  impact  is  expected  to
substantially  offset  the  expected  ongoing negative impact on earnings of the
March  2000  servicing  sale  (due  to  the  loss  of the related loan servicing
income).  Management  expects  the  sale  of  the  servicing  to have an ongoing
slightly  negative impact on earnings, net of tax, of approximately $150,000 per
quarter  for  the  first  year.

     In  addition  to  the  nonrecurring gain, comparing the first six months of
2000  to  the first six months of 1999, loan fees and service charges on deposit
accounts  increased  $328,000  and  other noninterest income decreased $261,000.

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

     For  the  six  months  ended  June  30, 2000, noninterest expense increased
$989,000  from  the  six  months ended June 30, 1999.  The increase was due to a
$1.1  million  increase  in  other noninterest expenses primarily because of the
reduction  of certain accrued liabilities totaling $1.1 million during the first
quarter  of  1999.  Other  changes included an increase in compensation, payroll
taxes  and  other  benefits  of $308,000 and a decrease of $317,000 in insurance
premiums.  The decrease in insurance premiums was primarily due to a decrease in
deposit  insurance  rates.

     Provision  for  Federal  Income  Taxes
     --------------------------------------

     The  provision  for  federal income taxes for the six months ended June 30,
2000 was $5.0 million compared to the provision for federal income taxes for the
six  months  ended  June  30, 1999 of $3.4 million.  The increase was due to the
increased income before provision for Federal income taxes and minority interest
in  2000,  with the effective tax rate for both periods being approximately 31%.


Results  of  Operations  for  the  Three  Months  Ended  June  30, 2000 and 1999
--------------------------------------------------------------------------------

     General
     -------

     For  the  three  months  ended  June  30, 2000, net income was $5.6 million
compared to $3.3 million for the three months ended June 30, 1999.  The increase
was  due  to a $3.7 million increase in net interest income, a $111,000 increase
in noninterest income and a $425,000 decrease in noninterest expense, which were
partially  offset  by a $915,000 increase in the provision for loan losses and a
$1.1  million  increase  in  the  provision  for  Federal  income  taxes.

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

     Interest  income  for  the three months ended June 30, 2000 increased $11.2
million  or  22.8%  from the three months ended June 30, 1999.  The increase was
due  to  an increase in average interest-earning assets of $199.6 million and an
increase  in  the  average  yield  of 1.03% to 8.10% (or an increase of 0.89% to
7.96%  without  the  special dividend) for the three months ended June 30, 2000.
Interest  income  on  loans  receivable  increased  $9.8 million due to a $290.7
million  increase  in  the  average balance and an increase in the average yield
from 8.09% for the three months ended June 30, 1999 to 8.91% for the same period
in 2000.  Interest income on mortgage-backed securities increased $72,000 due to
an  increase in the average yield from 5.68% for the three months ended June 30,
1999  to  6.27%  for  the  same  period  in  2000.

     In  addition,  interest  income on FHLB stock, federal funds sold and other
interest-earning  assets  increased  $1.4 million.  The majority of the increase
was  due  to  the  special  dividend received from the FHLB, as described above,
during  the  second  quarter  of  2000,  which  amounted  to  $1.1 million.  The
remainder  of  the  increase  was  due  primarily to the increase in the average
balance  of  other  interest-earning  assets  of  $10.3  million.  Total
interest-earning  assets  for the three months ended June 30, 2000 averaged $3.0
billion  as  compared  to $2.8 billion for the three months ended June 30, 1999.

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

     Interest  expense on interest-bearing liabilities was $38.0 million for the
three  months  ended  June  30,  2000, as compared to $30.5 million for the same
period  in 1999.  The increase in interest expense was due to an increase in the
average  rate  paid  on  interest-bearing  liabilities  from 4.71% for the three
months ended June 30, 1999 to 5.48% for the three months ended June 30, 2000 and
a  $180.9  million  increase  in  the  average  balance  of  interest-bearing
liabilities.  The  0.77%  increase  in the average rate paid on interest-bearing
liabilities was due primarily to higher market and wholesale funding costs.  The
increase in average interest-bearing liabilities consisted primarily of a $400.6
million  increase in advances from the FHLB, offset somewhat by a $193.8 million
decrease  in  federal  funds  purchased  and securities sold under agreements to
repurchase,  a  $24.8  million  decrease in interest-bearing deposits and a $1.0
million  decrease  in  senior notes payable due to repurchases.  The increase in
the  average  balance  of  advances  from  the  FHLB  was  primarily  due to the
additional  borrowing  during  the  first six months of 2000 to finance the loan
purchase  mentioned  earlier.

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

     Net  interest  income was $22.6 million for the three months ended June 30,
2000  and  $18.8  million  for  the  same  period  in 1999.  The increase in net
interest  income  was primarily due to the increase in Margin from 2.70% for the
three  months  ended  June 30, 1999 to 3.02% for the three months ended June 30,
2000.  A  portion of this increase in net interest income, and therefore Margin,
was  due  to  a  special  dividend  declared by the FHLB equal to 1.625% of each
members'  FHLB  stock held as of March 31, 2000, as discussed above. Without the
special  dividend,  Margin  was  2.88% for the three months ended June 30, 2000.
Spread  increased  from  2.36% for the three months ended June 30, 1999 to 2.62%
(2.48%  without  the special dividend) for the three months ended June 30, 2000.
Management  also  calculates  an  alternative  Spread  which  includes
noninterest-bearing  deposits.  Under  this calculation, the alternative Spreads
for  the three months ended June 30, 2000 and 1999 were 2.90% (2.76% without the
special  dividend)  and  2.62%, respectively.  Margin and Spread are affected by
the  changes  in  the  amount  and  composition  of  interest-earning assets and
interest-bearing  liabilities.  The  overall increases in Margin and Spread were
primarily  due to the 1.03% (0.89% without the special dividend) increase in the
average  yield  on interest-earning assets, primarily on loans receivable, which
was  partially  offset  by  a  0.77%  increase  in  the  average  rate  paid  on
interest-bearing  liabilities.  Average  net  interest-earning  assets increased
$18.7  million  from  the  three  months ended June 30, 1999 to the three months
ended  June  30,  2000.

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

     The  provision  for loan losses was $1.6 million for the three months ended
June  30,  2000  compared  to $675,000 for the three months ended June 30, 1999.
The  increased provision was primarily due to Coastal's continuing focus on more
commercial  type loans and Coastal's plan to continue to build the allowance for
loan  losses  to  a benchmark of approximately 100% of nonperforming loans.  The
allowance  for  loan  losses as a percentage of nonperforming loans was 71.7% at
June  30,  2000  and  61.3%  at  December 31, 1999. Management believes that the
present  allowance  for  loan  losses  is  adequate  considering  the  changing
composition  of  the  loans  receivable  portfolio,  historical loss experience,
delinquency  trends and current economic conditions. Management will continue to
review  its allowance for loan losses as Coastal's loan portfolio diversifies to
determine  if  changes  or  additions  are  necessary.

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

     For  the  three  months  ended  June 30, 2000, noninterest income increased
slightly  by  $111,000  to  $2.5 million, compared to $2.4 million for the three
months  ended  June  30, 1999.  The increase consisted of an $85,000 increase in
loan  fees  and  service  charges on deposit accounts and a $135,000 increase in
other  noninterest  income,  somewhat  offset  by  the $109,000 decrease in loan
servicing  income  due  to  the  sale of the mortgage servicing portfolio in the
first  quarter  of  2000.

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

     For  the  three  months  ended June 30, 2000, noninterest expense decreased
$425,000  from  the  three  months  ended  June  30, 1999.  The decrease was due
primarily  to  decreases of $163,000 and $190,000 in insurance premiums expense,
including  deposit  insurance  premiums  and  other  noninterest  expense,
respectively.

     Provision  for  Federal  Income  Taxes
     --------------------------------------

     The  provision for Federal income taxes for the three months ended June 30,
2000  was  $2.8 million compared to $1.8 million for the three months ended June
30,  1999.  The  increase  was  due to the increased income before provision for
federal  income taxes and minority interest in 2000, with the effective tax rate
for  both  periods  being  approximately  31%.

Liquidity  and  Capital  Resources
----------------------------------

Coastal's  primary  sources of funds consist of deposits bearing market rates of
interest,  advances  from  the  FHLB,  securities  sold  under  agreements  to
repurchase,  federal  funds purchased and principal payments on loans receivable
and  mortgage-backed securities.  Coastal uses its funding resources principally
to  meet  its  ongoing  commitments  to  fund  maturing  deposits  and  deposit
withdrawals,  repay  borrowings,  purchase  loans receivable and mortgage-backed
securities,  fund  existing  and  continuing  loan  commitments,  maintain  its
liquidity,  meet  operating  expenses  and  fund acquisitions of other banks and
thrifts,  either on a branch office or whole bank acquisition basis, in addition
to  purchasing treasury stock. At June 30, 2000, Coastal had binding commitments
to  originate  or  purchase  loans totaling approximately $107.0 million and had
$117.6  million  of  undisbursed  loans  in  process.  Scheduled  maturities  of
certificates  of  deposit  during  the 12 months following June 30, 2000 totaled
$955.3  million at June 30, 2000.  Management believes that Coastal has adequate
resources to fund all of its commitments.  In addition, Coastal has historically
experienced  a  retention  rate of maturing certificates of deposit of $5,000 or
greater  of  approximately  80%.

As of June 30, 2000, Coastal operated 50 retail banking offices in Texas cities,
including  Houston,  Austin,  Corpus  Christi,  the  Rio Grande Valley and small
cities  in  the  southeast  quadrant of Texas. Management's five year goal is to
have  over  $5  billion  in assets, over $3 billion in deposits, $2.5 billion in
loans  and  80  branches  in cities throughout central and south Texas, although
there  can  be no assurance that this goal can be accomplished through growth or
acquisitions.

The  Year  2000
---------------

Coastal  has  not  experienced  any  significant disruptions to its financial or
operating  activities  resulting  from  Year  2000  issues.  Management does not
expect  Year  2000  issues  to  have  a  material  adverse  effect  on Coastal's
operations  or  financial  results  in  2000.

Forward-Looking  Information
----------------------------

The  Management's  Discussion and Analysis of Financial Condition and Results of
Operations  set  forth  in  the Form 10-Q should be read in conjunction with the
information  contained  in  the  Consolidated Financial Statements and the Notes
thereto.  Such  discussion  contains  "forward-looking  statements"  within  the
meaning  of  the  Private  Securities Litigation Reform Act of 1995 (the "Reform
Act"),  and is subject to the safe harbor created by that Reform Act.  The words
"estimate," "project," "anticipate," "expect," "intend," "believe," "plans," and
similar expressions are intended to identify forward-looking statements. Because
such  forward-looking  statements  involve  risks  and  uncertainties, there are
important  factors  that  could  cause  actual results to differ materially from
those  expressed  or implied by such forward-looking statements. Factors, all of
which  are  difficult  to  predict  and  many of which are beyond the control of
Coastal,  that  could cause actual results to differ materially include, but are
not  limited  to:  risks  related  to  Coastal's acquisition strategy, including
risks  of  adversely  changing  results  of  operations  and  factors  affecting
Coastal's  ability  to  consummate  further  acquisitions;  risks  involved  in
Coastal's  ability  to  quickly  and  efficiently  integrate  the  operations of
acquired  entities  with  those  of  Coastal;  changes  in  general economic and
business  conditions;  changes  in market rates of interest; changes in the laws
and  regulations  applicable to Coastal; the risks associated with the Coastal's
non-traditional  lending  (loans  other  than single-family residential mortgage
loans  such  as multifamily, real estate acquisition and development, commercial
real  estate,  commercial  business  and  warehouse  and  loans); and changes in
business strategies and other factors as discussed in Coastal's Annual Report on
Form  10-K  for the year ended December 31, 1999, as filed with the SEC on March
28,  2000.


<PAGE>
ITEM  3.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK
             ----------------------------------------------------------------

     There  have  been  no  material  changes  in  Coastal's  interest rate risk
position since December 31, 1999. Coastal's principal market risk exposure is to
interest  rates.  See  note 8 of the Notes to Consolidated Financial Statements.


<PAGE>
     PART  II  -  OTHER  INFORMATION

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

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

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

     Not  applicable.

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

     Not  applicable.

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

     On  April  27,  2000,  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 LLP as
the Company's independent auditors for the fiscal year ending December 31, 2000.
With  respect  to  such  matters,  the  results  of  the  votes were as follows:

     1)     Election  of  directors:
<TABLE>
<CAPTION>



                 Number of Votes
                 ---------------
                    In favor      Withheld
                                  --------
<S>              <C>              <C>
Manuel J. Mehos        4,996,619   439,427
James C. Niver         4,996,619   439,427

</TABLE>



     2)     Ratification  of  KPMG LLP as the Company's independent auditors for
the  year  ending  December  31,  2000:
<TABLE>
<CAPTION>



<S>                          <C>
Number of votes in favor:    4,801,132
Number of votes against:        80,966
Number of votes abstaining:      2,020
</TABLE>



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

NOT  APPLICABLE.


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

     (a)     Exhibit  27  -  Financial  Data Schedule is filed as a part of this
report.
(b)     Form  8K  filed  on May 8, 2000 concerning the announcement that Coastal
completed  the  repurchase  of  an additional 500,000 shares of its common stock
under  the  February  25,  1999  stock  repurchase  plan.
     Form  8K  filed  on  June 20, 2000 concerning the announcement that Coastal
completed  the  repurchase  of  an additional 500,000 shares of its common stock
under  the  April  27,  2000  stock  repurchase  plan.


<PAGE>



                                   SIGNATURES


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




Dated:     8/14/00                      By     /s/  Catherine  N. Wylie
           -------                            --------------------------
                                             Catherine  N.  Wylie
                                             Chief  Financial  Officer









Dated:     8/14/00                      By     /s/  Gary R. Garrett
           -------                            --------------------------
                                             Gary R. Garrett
                                             Chief  Lending  Officer

<PAGE>



                                   Exhibit 27

                             Financial Data Schedule


[ARTICLE] 9
[LEGEND]
This schedule contains summary financial information extracted from the
consolidated statement of financial condition, the consolidated statement of
income and notes thereto found on pages 1 through 15 of the Company's Form
10-Q for the year-to-date June 30, 2000 and is qualified in its
entirety by reference to such financial statements
[/LEGEND]
<TABLE>
<CAPTION>
<S>                             <C>
[PERIOD-TYPE]                   6-MOS
[FISCAL-YEAR-END]                          DEC-31-2000
[PERIOD-START]                             JAN-01-2000
[PERIOD-END]                               JUN-30-2000
[CASH]                                          37,742
[INT-BEARING-DEPOSITS]                               0
[FED-FUNDS-SOLD]                                 1,900
[TRADING-ASSETS]                                     0
[INVESTMENTS-HELD-FOR-SALE]                     94,230
[INVESTMENTS-CARRYING]                         905,635
[INVESTMENTS-MARKET]                           854,522
[LOANS]                                      1,881,644
[ALLOWANCE]                                     13,782
[TOTAL-ASSETS]                               3,073,285
[DEPOSITS]                                   1,616,251
[SHORT-TERM]                                   903,690
[LIABILITIES-OTHER]                             56,508
[LONG-TERM]                                    368,158
[PREFERRED-MANDATORY]                                0
[PREFERRED]                                     27,500
[COMMON]                                            76
[OTHER-SE]                                     101,102
[TOTAL-LIABILITIES-AND-EQUITY]               3,073,285
[INTEREST-LOAN]                                 81,120
[INTEREST-INVEST]                               31,244
[INTEREST-OTHER]                                 3,148
[INTEREST-TOTAL]                               115,512
[INTEREST-DEPOSIT]                              33,983
[INTEREST-EXPENSE]                              72,818
[INTEREST-INCOME-NET]                           42,694
[LOAN-LOSSES]                                    3,990
[SECURITIES-GAINS]                                   0
[EXPENSE-OTHER]                                 30,581
[INCOME-PRETAX]                                 15,173
[INCOME-PRE-EXTRAORDINARY]                      10,133
[EXTRAORDINARY]                                      0
[CHANGES]                                            0
[NET-INCOME]                                    10,133
[EPS-BASIC]                                     1.45
[EPS-DILUTED]                                     1.42
[YIELD-ACTUAL]                                       0
[LOANS-NON]                                          0
[LOANS-PAST]                                         0
[LOANS-TROUBLED]                                     0
[LOANS-PROBLEM]                                      0
[ALLOWANCE-OPEN]                                10,493
[CHARGE-OFFS]                                    1,012
[RECOVERIES]                                       311
[ALLOWANCE-CLOSE]                               13,782
[ALLOWANCE-DOMESTIC]                            13,782
[ALLOWANCE-FOREIGN]                                  0
[ALLOWANCE-UNALLOCATED]                              0
</TABLE>