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

                                    FORM 10-Q


          [  X  ]     Quarterly  Report  Under  Section  13  or  15  (d)  of
               the  Securities  Exchange  Act  of  1934
               For  the  Quarterly  Period  Ended  March  31,  1999

          [    ]     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:   6,412,774 AS OF APRIL 30, 1999


<PAGE>
                     COASTAL BANCORP, INC. AND SUBSIDIARIES

                                Table of Contents



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

<CAPTION>



<S>                                                                       <C>
Item 1
Financial Statements
Consolidated Statements of Financial Condition at March 31, 1999
(unaudited) and December 31, 1998                                          1

Consolidated Statements of Income for the Three-Month Periods Ended
March 31, 1999 and 1998 (unaudited)                                        2

Consolidated Statements of Comprehensive Income for the Three-Month
Periods Ended March 31, 1999 and 1998 (unaudited)                          3

Consolidated Statements of Cash Flows for the Three-Month Periods
Ended March 31, 1999 and 1998 (unaudited)                                  4

Notes to Consolidated Financial Statements                                 6

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

Item 3
Quantitative and Qualitative Disclosures About Market Risk                21
</TABLE>






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

<CAPTION>



<S>     <C>                                                  <C>
Item 1  Legal Proceedings                                    22
Item 2  Changes in Securities                                22
Item 3  Default upon Senior Securities                       22
Item 4  Submission of Matters to a Vote of Security Holders  22
Item 5  Other Information                                    22
Item 6  Exhibits and Reports on Form 8-K                     22
</TABLE>




SIGNATURES



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

<TABLE>

<CAPTION>

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


                                                                        March 31,    December 31,
                                                                           1999          1998
                                                                       ------------  -------------
ASSETS                                                                 (Unaudited)
---------------------------------------------------------------------                      
<S>                                                                    <C>           <C>
Cash and cash equivalents                                              $     47,801  $      45,453
Federal funds sold                                                           18,000             --
Loans receivable (note 4)                                                 1,603,898      1,538,149
Mortgage-backed securities held-to-maturity (note 3)                      1,062,264      1,154,116
Mortgage-backed securities available-for-sale, at fair value (note 3)        85,878         96,609
U.S. Treasury security available-for-sale, at fair value                      2,009          2,016
Mortgage loans held for sale                                                  2,381             --
Accrued interest receivable                                                  15,186         15,518
Property and equipment                                                       32,618         33,116
Stock in the Federal Home Loan Bank of Dallas (FHLB)                         50,505         49,819
Goodwill                                                                     29,934         30,687
Mortgage servicing rights                                                     3,721          4,049
Prepaid expenses and other assets                                            10,720         12,629
                                                                       ------------  -------------
                                                                       $  2,964,915  $   2,982,161
                                                                       ============  =============
</TABLE>

<TABLE>
<CAPTION>

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

<S>                                                                       <C>          <C>
Liabilities:
 Deposits (note 5)                                                       $1,665,176   $1,705,004 
 Advances from the FHLB (note 6)                                            996,576      966,720 
 Securities sold under agreements to repurchase (note 6)                    100,000      100,000 
 Senior notes payable, net (note 7)                                          47,900       50,000 
 Advances from borrowers for taxes and insurance                              5,546        3,340 
 Other liabilities and accrued expenses                                      16,312       15,583 
                                                                         -----------  -----------
     Total liabilities                                                    2,831,510    2,840,647 
                                                                         -----------  -----------

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 and 11):
 Preferred stock, no par value; authorized shares 5,000,000;
   no shares issued                                                              --           -- 
 Common stock, $.01 par value; authorized shares
   30,000,000; 7,570,043 and 7,568,255 shares issued
   in 1999 and 1998, respectively                                                76           76 
 Additional paid-in capital                                                  33,714       33,696 
 Retained earnings                                                           90,360       88,144 
 Accumulated other comprehensive income (loss) -
   unrealized loss on securities available-for-sale                          (1,058)      (1,374)
 Treasury stock at cost (1,160,679 and 499,600 shares in 1999
   and 1998)                                                                (18,437)      (7,778)
                                                                         -----------  -----------
     Total stockholders' equity                                             104,655      112,764 
                                                                         -----------  -----------
                                                                         $2,964,915   $2,982,161 
                                                                         ===========  ===========
</TABLE>




See  accompanying  Notes  to  Consolidated  Financial  Statements

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

<CAPTION>



                                                                          Three Months Ended
                                                                               March 31,
                                                                          ------------------- 
                                                                           1999            1998
                                                                    -------------------  --------
(Unaudited)

<S>                                                                 <C>                  <C>
Interest income:
 Loans receivable                                                   $            31,004  $26,940 
 Mortgage-backed securities                                                      17,750   23,446 
 FHLB stock, federal funds sold and other interest-earning assets                   772      502 
                                                                    -------------------  --------
                                                                                 49,526   50,888 
                                                                    -------------------  --------

Interest expense:
 Deposits                                                                        16,810   15,507 
 Advances from the FHLB:
   Short-term                                                                     4,006    3,955 
   Long-term                                                                      7,559    3,947 
 Other borrowed money                                                             1,518   11,229 
 Senior notes payable                                                             1,217    1,250 
                                                                    -------------------  --------
                                                                                 31,110   35,888 
                                                                    -------------------  --------

   Net interest income                                                           18,416   15,000 
Provision for loan losses                                                         2,331    1,450 
                                                                    -------------------  --------
   Net interest income after provision for loan losses                           16,085   13,550 
                                                                    -------------------  --------

Noninterest income:
 Loan fees and service charges on deposit accounts                                1,814    1,324 
 Loan servicing income, net                                                         134      240 
 Writedown of purchased mortgage loan premium                                        --     (709)
 Other                                                                              492      192 
                                                                    -------------------  --------
                                                                                  2,440    1,047 
                                                                    -------------------  --------

Noninterest expense:
 Compensation, payroll taxes and other benefits                                   7,115    4,940 
 Office occupancy                                                                 2,802    1,989 
 Data processing                                                                    899      608 
 Amortization of goodwill                                                           753      469 
 Insurance premiums                                                                 303      265 
 Real estate owned                                                                  154      252 
 Other                                                                            1,454    1,812 
                                                                    -------------------  --------
                                                                                 13,480   10,335 
                                                                    -------------------  --------

       Income before provision (benefit) for Federal income taxes                 5,045    4,262 

Provision (benefit) for Federal income taxes (note 12)                            1,626   (2,326)
                                                                    -------------------  --------
     Net income before preferred stock dividends                                  3,419    6,588 
Preferred stock dividends of Coastal Banc ssb (Series A) (note 10)                  647      647 
                                                                    -------------------  --------
     Net income available to common stockholders                    $             2,772  $ 5,941 
                                                                    ===================  ========

Basic earnings per share (note 9)                                   $              0.40  $  0.79 
                                                                    ===================  ========

Diluted earnings per share (note 9)                                 $              0.40  $  0.76 
                                                                    ===================  ========
</TABLE>


See  accompanying  Notes  to  Consolidated  Financial  Statements

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

<CAPTION>



                                                                            Three Months Ended
                                                                                 March 31,
                                                                           -------------------     
                                                                             1999           1998
                                                                      -------------------  -------
(Unaudited)
<S>                                                                   <C>                  <C>


Net income available to common stockholders                           $             2,772  $5,941 

Other comprehensive income, net of tax:
 Unrealized holding gains (losses) on securities available-for-sale
 arising during period                                                                316     (29)
                                                                      -------------------  -------

Total comprehensive income                                            $             3,088  $5,912 
                                                                      ===================  =======

</TABLE>



See  accompanying  Notes  to  Consolidated  Financial  Statements

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

<CAPTION>



                                                                              Three Months Ended
                                                                                    March 31,
                                                                             -------------------- 
                                                                               1999             1998
                                                                       --------------------  ----------
(Unaudited)

<S>                                                                    <C>                   <C>
Cash flows from operating activities:
 Net income available to common stockholders                           $             2,772   $   5,941 
 Adjustments to reconcile net income to common stockholders
   to net cash provided by operating activities:
 Depreciation and amortization of property and equipment,
   mortgage servicing rights and prepaid expenses and other assets                   2,437       2,004 
 Net premium amortization                                                              140       1,867 
 Provision for loan losses                                                           2,331       1,450 
 Amortization of goodwill                                                              753         469 
 Originations and purchases of mortgage loans held for sale                         (2,381)     (7,154)
 Stock dividends from the FHLB                                                        (676)       (431)
 Decrease (increase) in:
   Accrued interest receivable                                                         332        (406)
   Other, net                                                                        2,159       1,714 
                                                                       --------------------  ----------

   Net cash provided by operating activities                                         7,867       5,454 
                                                                       --------------------  ----------

Cash flows from investing activities:
 Net increase in federal funds sold                                                (18,000)     (3,500)
 Purchases of mortgage-backed securities held-to-maturity                           (3,080)         -- 
 Principal repayments on mortgage-backed securities held-to-maturity                95,269      19,794 
 Principal repayments on mortgage-backed securities
   available-for-sale                                                               11,219         169 
 Purchases of loans receivable                                                    (143,690)   (121,593)
 Net decrease in loans receivable                                                   74,556      42,226 
 Net purchases of property and equipment                                              (772)     (1,661)
 Purchases of FHLB stock                                                               (10)     (1,930)
                                                                       --------------------  ----------

   Net cash provided (used) by investing activities                                 15,492     (66,495)
                                                                       --------------------  ----------


</TABLE>



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

<CAPTION>



                                                                                Three Months Ended
                                                                                     March 31,
                                                                               --------------------  
                                                                                1999              1998
                                                                        --------------------  ------------
(Unaudited)

<S>                                                                     <C>                   <C>
Cash flows from financing activities:
 Net decrease in deposits                                               $           (39,776)  $    (7,707)
 Advances from the FHLB                                                           1,602,772     1,013,550 
 Principal payments on advances from the FHLB                                    (1,572,916)     (997,220)
 Securities sold under agreements to repurchase and federal funds
   purchased                                                                         37,783     1,817,924 
 Purchases of securities sold under agreements to repurchase and
   federal funds purchased                                                          (37,783)   (1,780,482)
 Net increase in advances from borrowers for taxes and insurance                      2,206         3,141 
 Exercise of stock options for purchase of common stock, net                             18           369 
 Purchase of Treasury Stock                                                         (10,659)           -- 
 Repurchase of Senior Notes                                                          (2,100)           -- 
 Dividends paid                                                                        (556)         (604)
                                                                        --------------------  ------------
   Net cash provided (used) by financing activities                                 (21,011)       48,971 
                                                                        --------------------  ------------

   Net increase (decrease) in cash and cash equivalents                               2,348       (12,070)
 Cash and cash equivalents at beginning of period                                    45,453        37,096 
                                                                        --------------------  ------------
 Cash and cash equivalents at end of period                             $            47,801   $    25,026 
                                                                        ====================  ============

 Supplemental schedule of cash flows-interest paid                      $            31,463   $    33,920 
                                                                        ====================  ============

 Supplemental schedule of noncash investing and financing activities:
   Foreclosures of loans receivable                                     $               528   $     1,595 
                                                                        ====================  ============


</TABLE>




See  accompanying  Notes  to  Consolidated  Financial  Statements

<PAGE>

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



(1)     BASIS  OF  PRESENTATION

     The  accompanying unaudited Consolidated Financial Statements were prepared
in accordance with the instructions for Form 10-Q and, therefore, do not include
all  disclosures  necessary  for a complete presentation of financial condition,
results  of  operations,  and  cash  flows in conformity with generally accepted
accounting principles.  All adjustments which are, in the opinion of management,
of  a  normal  recurring nature and are necessary for a fair presentation of the
interim financial statements, have been included.  The results of operations for
the  periods  ended March 31, 1999 are not necessarily indicative of the results
that  may  be  expected  for the entire fiscal year or any other interim period.

     Coastal  Bancorp,  Inc.  and  subsidiaries adopted the Financial Accounting
Standards  Boards  Statement No. 130 ("Statement 130"), "Reporting Comprehensive
Income"  as  of  January  1, 1998.  Statement 130 requires the disclosure of all
components  of  comprehensive  income,  which  includes  net  income  and  other
comprehensive  income.  Other comprehensive income includes all nonowner related
changes  to  stockholders'  equity,  which  is  the  unrealized  gain  (loss) on
securities  available-for-sale.  These  amounts  have  been  disclosed  in  the
consolidated  statements  of  comprehensive  income.

     On April 23, 1998, the Board of Directors declared a 3:2 stock split on the
common  stock  of  Coastal  Bancorp,  Inc.  payable  on  June  15,  1998  to the
stockholders  of  record  at the close of business on May 15, 1998. Accordingly,
all  applicable common stock share data have been adjusted to include the effect
of  the  stock  split  for  all  periods  presented.

     On  August  27, 1998, December 21, 1998 and February 25, 1999, the Board of
Directors  authorized  three  separate repurchase plans for up to 500,000 shares
each of the outstanding shares of common stock through an open-market repurchase
program  and  privately  negotiated  repurchases, if any.  As of March 31, 1999,
1,160,679  shares  had  been  repurchased  in  the  open  market  at  an average
repurchase  price  of  $15.88  per  share  for  a  total  cost of $18.4 million.

(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  subsidiary,  CoastalBanc  Financial  Corp.  (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.

<PAGE>
(3)     MORTGAGE-BACKED  SECURITIES

     Mortgage-backed  securities  at  March 31, 1999 (unaudited) 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        $   769,561  $     4,381  $    (7,252)  $   766,690
   REMICS - Non-agency      199,569          403       (1,360)      198,612
 FNMA certificates           62,882          171         (847)       62,206
 GNMA certificates           19,523           17          (19)       19,521
 Non-agency securities       10,729           86          (23)       10,792
                        -----------  -----------  ------------  -----------
                        $ 1,062,264  $     5,058  $    (9,501)  $ 1,057,821
                        ===========  ===========  ============  ===========

Available-for-sale:
 REMICS - Agency        $    86,715  $         3  $    (1,630)  $    85,088
 REMICS - Non-agency            797           --           (7)          790
                        -----------  -----------  ------------  -----------
                        $    87,512  $         3  $    (1,637)  $    85,878
                        ===========  ===========  ============  ===========
</TABLE>




     Mortgage-backed securities at December 31, 1998 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           $   839,593  $     3,770  $   (10,349)  $   833,014
   REMICS - Non-agency         218,500          598       (2,186)      216,912
 FNMA certificates              63,199          147         (810)       62,536
 GNMA certificates              21,311           16          (23)       21,304
 Non-agency securities          11,512          113          (23)       11,602
 Interest-only securities            1           --           --             1
                           -----------  -----------  ------------  -----------
                           $ 1,154,116  $     4,644  $   (13,391)  $ 1,145,369
                           ===========  ===========  ============  ===========

Available-for-sale:
 REMICS - Agency           $    97,695  $        --  $    (2,115)  $    95,580
 REMICS - Non-agency             1,037           --           (8)        1,029
                           -----------  -----------  ------------  -----------
                           $    98,732  $        --  $    (2,123)  $    96,609
                           ===========  ===========  ============  ===========
</TABLE>




<PAGE>
(4)     LOANS  RECEIVABLE

     Loans  receivable  at  March 31, 1999 and December 31, 1998 were as follows
(dollars  in  thousands):
<TABLE>

<CAPTION>



                                                    March 31, 1999    December 31, 1998
                                                   ----------------  -------------------
                                                     (Unaudited)
<S>                                                <C>               <C>
Real estate mortgage loans:
 First-lien mortgage, primarily residential        $       763,904   $          690,510 
 Commercial                                                277,608              257,723 
 Multifamily                                               115,914              119,447 
 Residential construction                                  133,222              115,714 
 Acquisition and development                                71,541               75,932 
 Commercial construction                                    42,790               40,344 
Commercial loans, secured by residential mortgage
 loans held for sale                                       104,278              173,124 
Commercial loans, secured by mortgage servicing
 rights                                                      8,054                3,867 
Commercial, financial and industrial                       112,048               92,218 
Loans secured by savings deposits                           12,717               13,164 
Consumer and other loans                                    71,606               66,989 
                                                   ----------------  -------------------
                                                         1,713,682            1,649,032 
Loans in process                                           (97,239)             (99,790)
Allowance for loan losses                                  (13,157)             (11,358)
Unearned interest and  loan fees                            (2,907)              (3,493)
Premium to record purchased loans, net                       3,519                3,758 
                                                   ----------------  -------------------

                                                   $     1,603,898   $        1,538,149 
                                                   ================  ===================

Weighted average yield                                        8.27%                8.55%
                                                   ================  ===================
</TABLE>



     At  March  31,  1999,  Coastal  had outstanding commitments to originate or
purchase  $123.1  million  of  real  estate  mortgage  and  other  loans and had
commitments  under  lines  of credit to originate primary construction and other
loans  of approximately $189.3 million.  In addition, at March 31, 1999, Coastal
had  $7.2  million of outstanding letters of credit.  Management anticipates the
funding  of  these  commitments  through  normal  operations.

     At  March  31, 1999 and December 31, 1998, the carrying value of loans that
were  considered  to  be  impaired  totaled approximately $12.1 million and $1.7
million,  respectively  and  the  related  allowance  for  loan  losses on those
impaired  loans totaled $3.1 million and $880,000 at March 31, 1999 and December
31,  1998,  respectively.  The  average  recorded  investment  in impaired loans
during  the three months ended March 31, 1999 and 1998 was $9.4 million and $1.9
million,  respectively.


<PAGE>
     An  analysis  of  activity  in  the allowance for loan losses for the three
months  ended  March  31,  1999  and  1998  is  as  follows  (in  thousands):
<TABLE>

<CAPTION>



                                         Three Months Ended March 31,
                                        ------------------------------     
                                            1999                1998
                               ------------------------------  -------
                                                  (Unaudited)
<S>                            <C>                             <C>
Balance, beginning of period   $                      11,358   $7,412 
Provision for loan losses                              2,331    1,450 
Charge-offs                                             (553)    (350)
Recoveries                                                21      173 
                               ------------------------------  -------

Balance, end of period         $                      13,157   $8,685 
                               ==============================  =======
</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 the
"Mortgage Banker").  The lead lender ("Lead Lender") in this facility is a major
commercial  bank and the loan is secured by subprime residential loans.  In late
January  1999, due to a lack of liquidity, the Mortgage Banker ceased operations
and  shortly  thereafter  was  seized  by  the  Michigan  Bureau  of  Financial
Institutions.  A  conservator  was  appointed  to  take  control of the Mortgage
Banker'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  the  Mortgage  Banker  on  or about February 11, 1999, by the
conservator,  who  has  been  appointed the "debtor-in-possession", to allow the
conservator time to develop a plan of reorganization while protecting the assets
of  the  Mortgage  Banker.

     Coastal  has  hired  special  bankruptcy  counsel  to  represent it in this
situation  and  has  been involved in discussions with the Lead Lender regarding
the  status  of the loan.  Although Coastal has been informed by the Lead Lender
that  Coastal's  loan is collateralized by residential loans, Coastal, as of the
date  hereof,  has  been unable to verify the extent to which the collateral, if
any, is sufficient to prevent Coastal from incurring a loss or the amount of any
loss,  should  one occur.  Effective December 31, 1998, Coastal placed this loan
on  nonaccrual.  At  this  time,  Coastal  is  unable  to  determine the timing,
probability,  or  the  amount of any loss which might result from the default by
the  Mortgage  Banker.  Coastal is continuing to monitor this situation and will
make  additions to the overall allowance for loan losses as considered necessary
based  on  its  existing  policy.

     Coastal  services for others loans receivable which are not included in the
Consolidated  Financial  Statements. The total amounts of such loans were $483.5
million  and  $519.2  million  at  March  31,  1999  and  December  31,  1998,
respectively.




<PAGE>
(5)     DEPOSITS

     Deposits,  their  stated  rates  and  the related weighted average interest
rates,  at  March  31,  1999  and  December  31,  1998 are summarized as follows
(dollars  in  thousands):
<TABLE>

<CAPTION>



                                          Stated Rate     March 31, 1999   December 31, 1998
                                        ---------------  ----------------  ------------------
                                          (Unaudited)
<S>                                     <C>              <C>               <C>
Noninterest-bearing checking                      0.00%  $        83,166   $           95,398
Interest-bearing checking                1.00  -  2.00            51,262               63,067
Savings accounts                         1.98  -  2.75            49,810               48,571
Money market demand accounts             0.00  -  4.51           347,170              339,481
                                                         ----------------  ------------------

                                                                   531,408           546,517 
                                                         ------------------  ----------------

Certificate accounts                     2.00  -  2.99             2,694                6,538
                                         3.00  -  3.99            80,377               38,614
                                         4.00  -  4.99           411,456              272,325
                                         5.00  -  5.99           552,305              747,585
                                         6.00  -  6.99            77,325               83,277
                                         7.00  -  7.99             8,463                8,727
                                         8.00  -  8.99               478                  699
                                         9.00  -  9.99               305                  305
                                         over  10.00                  18                   18
                                                            ---------------  ----------------
                                                                  1,133,421         1,158,088
                                                            ---------------  ----------------
Premium (discount) to record purchased
 deposits, net                                                          347               399
                                                            ---------------  ----------------

                                                             $    1,665,176   $     1,705,004
                                                            ===============  ================

Weighted average rate                                                 4.03%             4.11%
                                                            ===============  ================
</TABLE>




     The  scheduled  maturities of certificate accounts outstanding at March 31,
1999  were  as  follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



                   March 31, 1999
                  ----------------
                    (Unaudited)
<S>               <C>
 0 to 12 months   $        976,636
 13 to 24 months           117,099
 25 to 36 months            18,365
 37 to 48 months            12,533
 49 to 60 months             8,527
 Over 60 months                261
                  ----------------
                  $      1,133,421
                  ================
</TABLE>



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

     The  weighted  average  and  stated interest rates on securities sold under
agreements  to  repurchase  at  March  31, 1999 and December 31, 1998 was 4.93%.

     The  weighted average interest rates on advances from the FHLB at March 31,
1999  and  December  31, 1998 were 5.02% and 5.24%, respectively.  The scheduled
maturities and related weighted average interest rates on advances from the FHLB
at  March 31, 1999 are summarized as follows (dollars in thousands) (unaudited):
<TABLE>

<CAPTION>



                                         Weighted Average
Due during the year ended December 31,     Interest Rate    Amount
---------------------------------------  -----------------  ------------
<S>                                      <C>                <C>
1999                                                 4.98%  $818,914
2000                                                 5.53     12,237
2001                                                 5.89     12,847
2002                                                 4.91     73,815
2003                                                 5.22        794
2004                                                 6.47      2,508
2005                                                 5.57        129
2006                                                 6.85      3,184
2007                                                 6.65      1,144
2008                                                 4.72     52,801
2009                                                 8.15      4,352
2010                                                 5.66        187
2011                                                 6.62      1,410
2012                                                 5.68        217
2013                                                 5.71      6,850
2014                                                 5.43      2,997
2018                                                 5.28      2,190
                                                            --------

                                                            $996,576
                                                            ========
</TABLE>



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

(7)     SENIOR  NOTES  PAYABLE

     On  June  30,  1995, Coastal issued $50.0 million of 10.0% Senior Notes due
June 30, 2002.  The Senior Notes are redeemable at Coastal's option, in whole or
in  part,  on  or  after  June  30,  2000,  at par, plus accrued interest to the
redemption date.  Interest on the Senior Notes is payable quarterly.  During the
first  quarter  of  1999,  Coastal,  after  receipt  of  an  unsolicited  offer,
repurchased  $2.1  million  of  the  Senior  Notes  outstanding  at  par.


<PAGE>
(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.

     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 March
31,  1999,  Coastal  had  interest  rate swap and cap agreements having notional
principal  amounts  totaling  $41.9  million  and  $195.0 million, respectively.

     The  terms  of  the  interest rate swap agreements outstanding at March 31,
1999  (unaudited)  and  December  31, 1998 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 March 31, 1999:
1999                 $       14,600   Three-month            6.926%          5.000%  $        (155)
2000                          4,800   Three-month            6.170           5.000             (63)
2000                          2,345   Three-month            6.000           5.000             (24)
2004                          3,900   One-month              5.635           4.939              15 
2005                         16,225   Three-month            6.500           5.020            (691)
                     ---------------                                                 --------------
                             41,870                                                 $         (918)
                     ===============                                                 ==============

                                      At December 31, 1998:
1999                 $       14,600   Three-month            6.926%          5.399%  $        (218)
2000                          4,800   Three-month            6.170           5.226            (164)
2000                          2,380   Three-month            6.000           5.281             (38)
2005                         16,225   Three-month            6.500           5.261            (707)
                     ---------------                                                 --------------
                             38,005                                                 $       (1,127)
                     ===============                                                 ==============
</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 5.23% and
the  weighted  average  interest  payment  rate on all of the interest rate swap
agreements  was  approximately  6.63% for the three months ended March 31, 1999.
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 interest expense related to these
agreements  was approximately $134,000 for the three months ended March 31, 1999
and  approximately  $86,000  for the three months ended March 31, 1998.  Coastal
had  pledged  approximately $6.6 million of mortgage-backed securities to secure
interest  rate  swap  agreements  at  March  31,  1999.

     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 11.0%, depending on the
agreement.  Payments  on  the  interest  rate  cap  agreements  are based on the
notional  principal amount of the agreements; no funds were actually borrowed or
are  to  be repaid.  The 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  $109,000  and  $115,000  at March 31, 1999 and December 31, 1998,
respectively, with the estimated fair value of the agreements being $480,000 and
$888,000  at  March  31, 1999 and December 31, 1998, respectively.  The interest
rate cap agreements are used to alter the interest rate sensitivity of a portion
of  Coastal's  mortgage-backed  securities,  loans  receivable and their related
funding  sources.  As  such, the amortization of the purchase price and interest
income from the interest rate cap agreements are recorded in "interest income on
mortgage-backed  securities  or  loans  receivable,"  as  appropriate,  in  the
accompanying  consolidated  statements  of income.  The net decrease in interest
income  related to the interest rate cap agreements was approximately $6,000 and
$24,000  for  the  three  months  ended  March  31, 1999 and 1998, respectively.

     Interest  rate  cap  agreements  outstanding  at March 31, 1999 (unaudited)
expire  as  follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



Year of        Strike Rate    Notional
Expiration        Range        Amount
-----------  ---------------  ---------
<S>          <C>              <C>
1999          7.25  - 11.00%  $  49,339
2000          8.50  -  9.50      11,620
2001          7.00  -  9.00      35,051
2003          8.00  -  8.50      99,000
                              ---------
                                195,010
                              =========
</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 three- month periods ended March
31,  1999  and  1998  (dollars in thousands, except per share data) (unaudited):

<TABLE>
<CAPTION>



                                                      Three Months Ended
                                                          March 31,
                                                     -------------------       
<S>                                           <C>                  <C>
                                                             1999        1998
                                              -------------------  ----------

Net income available to common stockholders   $             2,772  $    5,941
                                              ===================  ==========
Weighted average number of common shares
 outstanding used in basic EPS calculation              6,856,505   7,541,310
Add assumed exercise of outstanding stock
 options as adjusted for dilutive securities              155,166     257,877
                                              -------------------  ----------
Weighted average number of common shares
 outstanding used in diluted EPS calculation            7,011,671   7,799,187
                                              ===================  ==========
Basic EPS                                     $              0.40  $     0.79
                                              ===================  ==========
Diluted EPS                                   $              0.40  $     0.76
                                              ===================  ==========
</TABLE>



     The  weighted  average number of common shares outstanding has been reduced
in  1999  by  the treasury stock held by Coastal.  As of March 31, 1999, Coastal
had  1,160,679  common  shares  in  treasury.

(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 March 31, 1999, the Bank's regulatory capital (unaudited) in relation to
its  existing regulatory capital requirements for capital adequacy purposes were
as  follows  (dollars  in  thousands):
<TABLE>
<CAPTION>


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

 Tier 1 (core)        $            161,145   5.59%  $     115,238   4.00%     $144,047   5.00%
 Tier 1 risk-based                 161,145   9.39          68,666   4.00       102,999   6.00 
 Total risk-based                  174,302  10.15         137,331   8.00       171,664  10.00 
</TABLE>



     As of March 31, 1999, 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)     FEDERAL  INCOME  TAXES

     In  March  1998,  Coastal  announced  that  it had successfully resolved an
outstanding  tax  benefit  issue with the FDIC as Manager of the Federal Savings
and  Loan  Insurance  Corporation  Resolution Fund.  The resolution of the issue
resulted  in  Coastal  recording  a $3.7 million, or 47 cents per diluted share,
reversal  of  accrued income taxes during the three months ended March 31, 1998;
resulting in a one-time positive effect on net income. The resolution of the tax
benefit  issue  also contributes an ongoing quarterly tax benefit of $226,000 or
approximately 3 cents per diluted share, as of March 31, 1999.  This tax benefit
is  expected  to  continue  until  the  second  quarter  of  2001.

(13)     RECENT  ACCOUNTING  STANDARDS

     The  Financial  Accounting  Standards Board's Statement No. 133 ("Statement
133"),  "Accounting  for Derivative Instruments and for Hedging Activities," was
issued  in  June  1998.  Statement  133  requires  companies  to  recognize  all
derivatives  as  either  assets  or  liabilities  in  the statement of financial
condition  and  measure those instruments at fair value.  Statement 133 requires
that  changes  in fair value of a derivative be recognized currently in earnings
unless  specific  hedge accounting criteria are met.  Statement 133 is effective
for  fiscal  years  beginning  after  June  15, 1999.  Coastal is evaluating the
impact,  if  any,  Statement  133  may have on its future consolidated financial
statements.

(14)     Coastal  Bancorp,  Inc.  Preferred  Stock

     The  week  of  May  10,  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.  Dividends on the preferred stock are
payable quarterly at the annual rate of $2.28 per share.  The preferred stock is
callable  on  May  15, 203 at Bancorp's option.  The estimated $26.4 million net
proceeds  may  be  used  for  acquisitions,  although  there  are  presently  no
agreements  or  understandings with respect to any such acquisition; repurchases
in  the  open  market  of Bancorp's outstanding common stock; repurchases in the
open  market  of  the  outstanding  10%  Senior  Notes  Due  2002;  and  capital
contributions to the Bank to support growth and to provide working capital.  The
proceeds  may  be  invested  temporarily  in  short-term  investments.


<PAGE>

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

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

     Total  assets  decreased  0.6%  or  $17.2 million from December 31, 1998 to
March  31,  1999.  The  net  decrease resulted primarily from decreases of $91.9
million  and  $10.7  million  in mortgage-backed securities held-to-maturity and
mortgage-backed  securities  available-for-sale,  respectively,  offset  by  an
increase  in  loans receivable of $65.7 million and an increase in federal funds
sold  of  $18.0  million.  The decrease in mortgage-backed securities was due to
principal payments received.  The increase in loans receivable was primarily due
to  bulk  residential mortgage loan purchases of $135.6 million and $8.1 million
of  consumer  loan  purchases  from  correspondent  lenders, offset by principal
payments  received  and a decrease of $68.8 million in commercial loans, secured
by  residential  mortgage loans held for sale, because of the decreased activity
during  the  period  by  these  types  of  customers.

     Deposits  decreased  $39.8 million or 2.34% from December 31, 1998 to March
31,  1999  and  advances  from  the  FHLB  increased 3.09% or $29.9 million from
December  31,  1998  to  March 31, 1999.  Stockholders' equity decreased 7.2% or
$8.1  million from December 31, 1998 to March 31, 1999 as a result of additional
treasury stock acquired of $10.7 million and dividends declared, offset somewhat
by net income and a $316,000 decrease in accumulated other comprehensive income.


Results  of  Operations  for  the  Three  Months  Ended  March 31, 1999 and 1998
--------------------------------------------------------------------------------

     General
     -------

     For  the  three months ended March 31, 1999, net income available to common
stockholders  was  $2.8  million  compared  to $5.9 million for the three months
ended  March 31, 1998.  During the first quarter of 1999, net income was reduced
by  a  $1.7  million  additional  provision  for  loan losses (above the planned
quarterly  provision of $675,000).  The additional provision for loan losses was
due  in  part  to  a  $10.0  million  participation  in  a warehouse loan to MCA
Financial  Corp.,  and  certain  of  its  affiliates,  of  Southfield,  Michigan
(collectively  the  "Mortgage Banker"), that, during January 1999, was placed on
nonaccrual effective December 31, 1998, due to the fact that the Mortgage Banker
ceased  operations in late January 1999 and shortly thereafter was seized by the
Michigan  Bureau of Financial Institutions.  Coastal, as of the date hereof, has
been  unable to verify the extent to which the collateral, if any, is sufficient
to  prevent  Coastal from incurring a loss or the amount of any loss, should one
occur.  At this time, Coastal is unable to determine the timing, probability, or
the  amount  of  any  loss  which  might result from the default by the Mortgage
Banker.  Coastal is continuing to monitor this situation and will make additions
to  the  overall  allowance  for  loan losses as it deems necessary based on its
existing  policy.  The additional provision for loan losses is also attributable
to  other  changes  and  growth in Coastal's loan portfolio, including the loans
acquired  in  the  1998  acquisition of 12 branch offices from Pacific Southwest
Bank  (the  "Valley  Acquisition").

     Net  income  in the first quarter of 1998 was affected by a one-time income
benefit  of  $2.6 million (net) or 33 cents per diluted share.  This benefit was
the  result  of  the  resolution  of  an  outstanding tax benefit issue with the
Federal Deposit Insurance Corporation as manager of the Federal Savings and Loan
Insurance Corporation Resolution Fund. The $3.7 million one-time tax benefit was
offset  by  the  recording  of  an  additional provision for loan losses of $1.0
million  and  a  writedown  of purchased mortgage loan premium of $709,000.  The
resolution  of  the  one-time  tax benefit issue is also contributing an ongoing
quarterly  tax  benefit  of  $226,000 or approximately 3 cents per diluted share
which  is estimated to continue until the second quarter of 2001.  Excluding the
net  benefit  from  these  nonrecurring  items,  net  income available to common
stockholders  from ongoing core operations was $3.4 million or $0.43 per diluted
share  for  the  three  months  ended  March  31,  1998.

<PAGE>
     Net  interest  income  increased  $3.4  million  and  noninterest  income
(excluding  the  writedown of purchased mortgage loan premium in 1998) increased
$684,000  from  the  three months ended March 31, 1998 to the three months ended
March  31,  1999.  These  increases were offset by the increase in the provision
for  loan  losses  of  $881,000  and the increase in noninterest expense of $3.1
million.  The  provision  (benefit)  for  federal  income  taxes  (excluding the
one-time  effect  of  the $3.7 million reversal of accrued income taxes in 1998)
increased  $273,000  due  to  the  increased income before provision for federal
income  taxes.

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

     Interest  income  for  the three months ended March 31, 1999 decreased $1.4
million or 2.7% from the three months ended March 31, 1998.  The decrease is due
to  a  decrease  in  average interest-earning assets of $74.7 million, while the
average  yield  remained constant at 7.11%.  Interest income on loans receivable
increased  $4.1 million due to a $208.0 million increase in the average balance,
offset  slightly  by  a  decrease  in the average yield from 8.20% for the three
months  ended  March  31,  1998  to 8.15% for the same period in 1999.  Interest
income  on  mortgage-backed  securities  decreased  $5.7 million due to a $304.6
million decrease in the average balance and a decrease in the average yield from
6.21%  for the three months ended March 31, 1998 to 5.89% for the same period in
1999.

     In  addition,  interest  income on FHLB stock, federal funds sold and other
interest-earning  assets  increased $270,000.  Total interest-earning assets for
the  three months ended March 31, 1999 averaged $2.8 billion as compared to $2.9
billion  for  the  three  months  ended  March  31,  1998.

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

     Interest  expense on interest-bearing liabilities was $31.1 million for the
three  months  ended  March  31, 1999, as compared to $35.9 million for the same
period  in  1998.  The decrease in interest expense was due to a decrease in the
average  rate  paid  on  interest-bearing  liabilities  from 5.37% for the three
months  ended  March 31, 1998 to 4.81% for the three months ended March 31, 1999
and  a  $68.3  million  decrease  in  the  average  balance  of interest-bearing
liabilities.  The  56  basis  point  decrease  in  the  average  rate  paid  on
interest-bearing  liabilities was due to the lower cost deposits acquired in the
1998  Valley Acquisition, the new pricing strategies for certificates of deposit
that  reduced  Coastal's  cost  of  retail  deposits and lower wholesale funding
costs.  The decrease in average interest-bearing liabilities consisted primarily
of  a  $683.8 million decrease in securities sold under agreements to repurchase
offset  somewhat  by  a  $353.2 million increase in advances from the FHLB and a
$263.8  million  increase  in  interest-bearing  deposits.

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

     Net  interest income was $18.4 million for the three months ended March 31,
1999  and  $15.0  million  for  the  same  period  in 1998.  Net interest margin
("Margin") was 2.64% for the three months ended March 31, 1999 compared to 2.10%
for  the  three  months  ended  March  31, 1998.  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
1.74%  for  the  three months ended March 31, 1998 to 2.30% for the three months
ended  March  31,  1999.  Management also calculates an alternative Spread which
includes  noninterest-bearing deposits.  Under this calculation, the alternative
Spreads for the three months ended March 31, 1999 and 1998 were 2.55% and 1.92%,
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 decrease in the
average  rate  paid on interest-bearing liabilities of 56 basis points.  Average
net  interest-earning  assets decreased $6.4 million from the three months ended
March  31,  1998  to  the  three  months  ended  March  31,  1999.


     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  commercial  business  loans  to  approximately 15% of total
assets  and  noninterest-bearing deposits to approximately 10% of total deposits
within  three  to  five  years.

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

     The  provision  for loan losses was $2.3 million for the three months ended
March  31,  1999  compared  to $1.5 million for the three months ended March 31,
1998.  The increase in the provision for loan losses (over the planned quarterly
provision  of  $675,000)  was  in  part  due to the $10.0 million warehouse loan
participation  placed  on  nonaccrual  effective December 31, 1998, as discussed
previously,  as  well  as  other changes and growth in Coastal's loan portfolio,
including  the  loans acquired in the 1998 Valley Acquisition.  During the three
months  ended  March  31,  1998, an additional provision for loan losses of $1.0
million  (over  the planned quarterly provision of $450,000) was recorded due to
the  changes  in the composition of the loan portfolio and Coastal's emphasis on
business  lending  during  that  period.  The  allowance  for  loan  losses as a
percentage  of  total  loans  was 0.82% at March 31, 1999 and 0.65% at March 31,
1998.  Although  no assurance can be given, 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 loan
loss  allowance  policy  as  Coastal's  loan  portfolio grows and diversifies to
determine  if  changes to the policy and resulting allowance for loan losses are
necessary.

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

     For  the  three  months ended March 31, 1999, noninterest income (excluding
the  writedown of purchased mortgage loan premium in 1998) increased $684,000 to
$2.4  million,  compared  to  $1.8  million for the three months ended March 31,
1998.  The  increase  in  noninterest income was primarily due to an increase of
$490,000  in  loan  fees  and service charges on deposit accounts and a $300,000
increase  in  other  noninterest  income.  The increase in loan fees and service
charges  on deposit accounts consisted of a $650,000 increase in service charges
on  deposit  accounts  due to the increase in transaction type deposit accounts,
including  those  acquired  in  the  Valley  Acquisition,  offset  somewhat by a
$160,000  decrease  in  loan  fees.  These  increases  were somewhat offset by a
$106,000  decrease  in loan servicing income due to the declining loan servicing
portfolio.

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

     For  the  three  months ended March 31, 1999, noninterest expense increased
$3.1  million from the three months ended March 31, 1998.  Compensation, payroll
taxes  and  other  benefits  as  well as office occupancy expense increased $2.2
million  and  $813,000, respectively, from the three months ended March 31, 1998
to  the  three  months  ended  March  31,  1999,  primarily  due to the staffing
increases  related  to the expansion of the loan product base and the continuing
development of commercial business lending programs, in addition to the staffing
and  occupancy  expenses  related  to  the Valley Acquisition.  In addition, the
amortization  of  goodwill  increased  $284,000  and  data  processing  expense
increased  $291,000  primarily  due  to  the  Valley Acquisition.  Other changes
included  a  $38,000  increase in insurance premiums, a $98,000 decrease in real
estate  owned  expense  and  a  $358,000  decrease  in other operating expenses.

     Provision  (benefit)  for  Federal  Income  Taxes
     -------------------------------------------------

     The provision for federal income taxes for the three months ended March 31,
1999  was  $1.6  million  compared  to  the  provision  for federal income taxes
(excluding  the  one-time  effect of the $3.7 million reversal of accrued income
taxes)  for  the  three months ended March 31, 1998 of $1.4 million.  The slight
increase  was due to the increased income before provision (benefit) for federal
income  taxes  in  1999.


<PAGE>
     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. At March 31,
1999,  Coastal  had  binding commitments to originate or purchase loans totaling
approximately  $123.1  million  and  had  $97.2  million of undisbursed loans in
process.  Scheduled  maturities  of certificates of deposit during the 12 months
following  March  31, 1999 totaled $976.6 million at March 31, 1999.  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  March 31, 1999, 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
     ---------------

     Many  existing  computer  programs, including many utilized by Coastal, use
only  two  digits  to  identify  a  year in the date field.  These programs were
designed  and developed without considering the impact of the upcoming change in
the  century.  Because of the Year 2000 implications, Coastal formally initiated
a  project  during  the first quarter of 1997 to ensure that its operational and
financial systems will not be adversely affected by Year 2000 software problems.
The  Year  2000  project  team,  which  includes  all  levels  of management, is
identifying  the  computer  applications  which  could  fail or create erroneous
results  because  of  the  Year 2000, and is developing alternate ("contingent")
operating systems for these applications.  Coastal has included in its Year 2000
project  the  following  phases:

-     inventory  and  assessment;
-     renovation,  which  includes  the  repair  or  replacement;
-     validation,  which  includes the testing of computer systems and Coastal's
      connections  with  other  computer  systems  and  service  bureaus;
-     due  diligence  of  third-party  servicers;
-     development  of  contingency  plans.

     Regular  Year  2000 progress reports have been and will continue to be made
to  Coastal's  Board  of  Directors.

     An inventory of all core systems and products that could be affected by the
Year 2000 date change has been developed by Coastal.  The software for Coastal's
systems  is  primarily provided through third party service bureaus and software
vendors.  Coastal  is  requiring  its  third  party  service  bureaus,  software
providers  and  vendors  to demonstrate and represent that the products provided
are  or will be Year 2000 compliant by June 30, 1999.  Coastal is performing due
diligence on its customers and other business partners by the implementation and
continuous  monitoring  of  processes for evaluating its customers' and business
partners'  readiness  for  the  Year  2000.  Coastal  has an internal compliance
testing program in place for testing with the external service bureaus and other
software  providers,  as well as testing other internally used systems.  Coastal
anticipates  that  mission  critical systems will be Year 2000 compliant by June
30,  1999.

<PAGE>
     While  Coastal  does  not  believe  that the process of making its computer
systems  Year  2000  ready  will  result  in  an  adverse material impact on its
operations  or  liquidity, a substantial amount of management and staff time has
been and will continue to be devoted to the Year 2000 project.  The direct costs
associated with the Year 2000 issues are estimated not to exceed $300,000 in the
aggregate.  A portion of such costs representing hardware and software purchases
will  be  capitalized and amortized over an estimated three to five year period.

     Planning  and testing will not ensure that any organization will be able to
conduct  business  around and after the Year 2000.  Testing does not ensure that
our customers and other business partners will be able to conduct business.  The
failure of Coastal, its customers and its other business partners to address the
Year  2000  software  problems could have a material adverse effect on Coastal's
financial  condition,  results  of  operations  or  liquidity.

     Coastal  has  implemented  procedures and continues to refine its processes
for  evaluating  its  business  readiness  in addition to developing contingency
plans  to  ensure that alternate operating systems are available in the event of
unforeseen  problems.  The  effect of many business disruptions at the same time
may  impact  Coastal.  Coastal  will continue to review its contingency plans to
reasonably  address  these incidents.  While Coastal will have contingency plans
in  place  to  address  a  temporary  disruption  in  services,  there can be no
assurance  that any disruption or failure will be only temporary, that Coastal's
contingency  plans  will  function  as  anticipated,  or  that  the  results  of
operations,  financial  condition, or liquidity of Coastal will not be adversely
affected  in  the  event  of  a  prolonged  disruption  or  failure.



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

     "Safe  Harbor" Statement under the Private Securities Litigation Reform Act
of  1995:  The  statements contained in this Quarterly Report on Form 10-Q which
are  not  historical  facts  contain forward looking information with respect to
plans,  projections  or  future  performance of Coastal, the occurrence of which
involve  certain  risks and uncertainties detailed in Coastal's filings with the
Securities  and  Exchange  Commission  ("SEC").

     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 Bank'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,  warehouse  and  mortgage  servicing rights
loans);  and  changes  in  business strategies and other factors as discussed in
Coastal's  Annual  Report  on Form 10-K for the year ended December 31, 1998, as
filed  with  the  SEC  on  March  23,  1999.


<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, 1998. 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.

Item  2.     Changes  in  Securities
             -----------------------

     a)     Not  applicable.
     b)     Not  applicable.

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

     Not  applicable.

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

     Not  applicable.

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

     Not  applicable.

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

(a)     The  following  exhibits  are  filed  as  part  of  this  report:
        Exhibit  27  -  Financial  Data  Schedule
        Exhibit  99  -  Forward-Looking  Information
(b)     Form  8K  filed  on  February 1, 1999 concerning the announcement that a
member  of  the  Board  of  Directors  had resigned effective November 24, 1998.
(c)     Form  8K  filed  on  February 8, 1999 concerning the election of Paul W.
Hobby  to  the  Board  of  Directors  effective  February  1,  1999.
(d)     Form 8K filed on March 15, 1999 concerning the announcement that Coastal
completed  the  repurchase  of  an additional 500,000 shares of its common stock
under  the  December  21,  1998  stock  repurchase  plan.  In  addition  to  the
announcement  that  on  February 25, 1999, the Board of Directors authorized the
extension  of  the  repurchase  plan  for  up  to  an additional 500,000 shares.
(e)     Form  8K  filed  on March 31, 1999 concerning the status of a nonaccrual
loan  and  the  related  allowance  for  loan  losses.




                                   SIGNATURES


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




Dated:     5/14/99                           By     /s/  Manuel J. Mehos
           -------                                  --------------------
                                             Manuel  J.  Mehos
                                             Chairman  of  the  Board
                                             Chief  Executive  Officer









Dated:     5/14/99                          By     /s/  Catherine  N. Wylie
           -------                                  -----------------------
                                            Catherine  N.  Wylie
                                            Chief  Financial  Officer



                                   Exhibit 27


                             Financial Data Schedule





                                   Exhibit 99


                           Forward-Looking Information





                                   EXHIBIT 99

     Forward-Looking  Information

     "Safe  Harbor" Statement under the Private Securities Litigation Reform Act
of  1995:  The  statements contained in this Quarterly Report on Form 10-Q which
are  not  historical  facts  contain forward looking information with respect to
plans,  projections  or  future  performance of Coastal, the occurrence of which
involve  certain  risks and uncertainties detailed in Coastal's filings with the
Securities  and  Exchange  Commission  ("SEC").

     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 Bank'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,  warehouse  and  mortgage  servicing rights
loans);  and  changes  in  business strategies and other factors as discussed in
Coastal's  Annual  Report  on Form 10-K for the year ended December 31, 1998, as
filed  with  the  SEC  on  March  23,  1999.




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