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

                                    FORM 10-Q


          [  X  ]     Quarterly  Report  Under  Section  13  or  15  (d)  of
               the  Securities  Exchange  Act  of  1934
               For  the  Quarterly  Period  Ended  September  30,  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:  5,676,783 AS OF OCTOBER 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 September 30, 2000
        and December 31, 1999                                                      1

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

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

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

        Consolidated Statements of Cash Flows for the Nine-Month Periods
        Ended September 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                23

</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>



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

<TABLE>

<CAPTION>

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


                                                                              September 30,       December 31,
ASSETS                                                                            2000               1999
---------------------------------------------------------------------       ---------------     ----------------
                                                                               (Unaudited)
<S>                                                                    <C>          <C>         <C>           <C>
Cash and cash equivalents                                                   $       32,963       $       48,098
Federal funds sold                                                                  10,000                   --
Loans receivable (note 4)                                                        1,881,763            1,735,081
Mortgage-backed securities held-to-maturity (fair value of
 $844,174 in 2000 and $899,934 in 1999) (note 3)                                   891,967              917,212
Mortgage-backed securities available-for-sale, at fair value (note 3)               93,729               99,665
U.S. Treasury securities held-to-maturity                                              995                  299
Accrued interest receivable                                                         18,294               16,150
Property and equipment                                                              28,628               30,708
Stock in the Federal Home Loan Bank of Dallas (FHLB)                                29,470               56,753
Goodwill                                                                            25,360               27,636
Mortgage servicing rights (note 4)                                                      --                3,035
Prepaid expenses and other assets                                                   11,453               13,315
                                                                            --------------       --------------
                                                                            $    3,024,622       $    2,947,952
                                                                            ==============       ==============
</TABLE>

<TABLE>
<CAPTION>

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

<S>                                                                         <C>                  <C>
Liabilities:
 Deposits (note 5)                                                          $    1,649,027       $    1,624,289
 Advances from the FHLB (note 6)                                                   558,220            1,096,931
 Securities sold under agreements to repurchase and federal
   funds purchased                                                                 579,371                   --
 Senior notes payable, net (note 7)                                                 46,900               46,900
 Advances from borrowers for taxes and insurance                                    13,167                3,852
 Other liabilities and accrued expenses                                             16,395               13,774
                                                                            --------------        --------------
     Total liabilities                                                           2,863,080            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; 7,648,503 and 7,616,227 shares issued
   in 2000 and 1999                                                                     76                   76
 Additional paid-in capital                                                         32,956               32,683
 Retained earnings                                                                 106,928               95,508
 Accumulated other comprehensive loss -
   unrealized loss on securities available-for-sale                                 (3,323)              (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                                                    132,792              133,456
                                                                            --------------       --------------
                                                                            $    3,024,622       $    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>

                                                                           Nine Months Ended
                                                                             September 30,
                                                                    -----------------------------
                                                                           2000            1999
                                                                       ------------    ----------
                                                                               (Unaudited)
<S>                                                                 <C>                  <C>
Interest income:
 Loans receivable                                                       $  124,319      $  98,766
 Mortgage-backed securities                                                 47,642         48,633
 FHLB stock, federal funds sold and other interest-earning assets            4,306          2,348
                                                                       ------------    ----------
                                                                           176,267        149,747
                                                                       ------------    ----------

Interest expense:
 Deposits                                                                   53,005         48,637
 Advances from the FHLB                                                     49,383         35,204
 Other borrowed money                                                        7,045          5,482
 Senior notes payable                                                        3,517          3,600
                                                                       ------------    ----------
                                                                           112,950         92,923
                                                                       ------------    ----------

   Net interest income                                                      63,317         56,824
Provision for loan losses                                                    4,890          4,366
                                                                       ------------    ----------
   Net interest income after provision for loan losses                      58,427         52,458
                                                                       ------------    ----------

Noninterest income:
 Loan fees and service charges on deposit accounts                           6,022          5,755
 Loan servicing income, net                                                    244            470
 Other                                                                         977          1,198
 Gain on sale of mortgage servicing rights                                   2,172             --
                                                                       ------------    ----------
                                                                             9,415          7,423
                                                                       ------------    ----------

Noninterest expense:
 Compensation, payroll taxes and other benefits                             21,973         21,682
 Office occupancy                                                            8,502          8,495
 Data processing                                                             2,512          2,550
 Amortization of goodwill                                                    2,276          2,282
 Insurance premiums                                                            447            907
 Real estate owned                                                             347            333
 Other                                                                       7,603          6,585
                                                                       ------------    ----------
                                                                            43,660         42,834
                                                                       ------------    ----------

     Income before provision for Federal income taxes and
       minority interest                                                    24,182         17,047

Provision for Federal income taxes                                           7,378          5,242
                                                                       ------------    ----------
     Income before minority interest                                        16,804         11,805
Minority interest - preferred stock dividends of Coastal Banc ssb
   (Series A) (note 10)                                                      1,941          1,941
                                                                       ------------    ----------
     Net income                                                          $  14,863       $  9,864
                                                                       ============    ==========
     Net income available to common stockholders                         $  12,982       $  8,907
                                                                       ============    ==========

Basic earnings per common share (note 9)                                 $    2.17       $   1.36
                                                                       ============    ==========

Diluted earnings per common share (note 9)                               $    2.12       $   1.33
                                                                       ============    ==========
</TABLE>

See  accompanying  Notes  to  Consolidated  Financial  Statements


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

<TABLE>
<CAPTION>

                                                                           Three Months Ended
                                                                           September 30,
                                                                       ---------------------------
                                                                            2000           1999
                                                                        ----------      ----------
                                                                                (Unaudited)

<S>                                                                     <C>              <C>
Interest income:
 Loans receivable                                                         $43,199        $34,938
 Mortgage-backed securities                                                16,398         15,144
 FHLB stock, federal funds sold and other interest-earning assets           1,158            788
                                                                          -------        -------
                                                                           60,755         50,870
                                                                          -------        -------

Interest expense:
 Deposits                                                                  19,022         15,759
 Advances from the FHLB                                                    12,894         12,973
 Other borrowed money                                                       7,044          1,391
 Senior notes payable                                                       1,172          1,186
                                                                          -------        -------
                                                                           40,132         31,309
                                                                          -------        -------

   Net interest income                                                     20,623         19,561
Provision for loan losses                                                     900          1,360
                                                                          -------        -------
   Net interest income after provision for loan losses                     19,723         18,201
                                                                          -------        -------

Noninterest income:
 Loan fees and service charges on deposit accounts                          1,970          2,031
 Loan servicing income, net                                                    --            184
 Other                                                                        395            355
                                                                          -------        -------
                                                                            2,365          2,570
                                                                          -------        -------

Noninterest expense:
 Compensation, payroll taxes and other benefits                             7,260          7,277
 Office occupancy                                                           2,822          2,856
 Data processing                                                              812            788
 Amortization of goodwill                                                     762            768
 Insurance premiums                                                           149            292
 Real estate owned                                                            138             56
 Other                                                                      2,430          2,499
                                                                          -------        -------
                                                                           14,373         14,536
                                                                          -------        -------

       Income before provision for Federal income taxes and
         minority interest                                                  7,715          6,235

Provision for Federal income taxes                                          2,338          1,843
                                                                          -------        -------
     Income before minority interest                                        5,377          4,392
Minority interest - preferred stock dividends of Coastal Banc ssb
   (Series A) (note 10)                                                       647            647
                                                                          -------        -------
     Net income                                                          $  4,730        $ 3,745
                                                                         =======         =======
     Net income available to common stockholders                         $  4,103        $ 3,118
                                                                         ========        =======

Basic earnings per common share (note 9)                                 $  0.73        $  0.50
                                                                         ========       ========

Diluted earnings per common share (note 9)                               $ 0.71          $  0.48
                                                                         ========        =======
</TABLE>


See  accompanying  Notes  to  Consolidated  Financial  Statements

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

<TABLE>
<CAPTION>

                                                                          Nine Months Ended
                                                                            September 30,
                                                                     -------------------
                                                                          2000          1999
                                                                     ------------  -----------
                                                                            (Unaudited)
<S>                                                                  <C>                  <C>


Net income                                                           $    14,863   $     9,864

Other comprehensive income (loss), net of tax:
 Unrealized holding gains (losses) on securities available-for-sale
 arising during period                                                    (1,475)          367
                                                                     ------------  -----------

Total comprehensive income                                           $    13,388   $    10,231
                                                                     ============  ===========
</TABLE>





<TABLE>
<CAPTION>

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

Net income                                                           $    4,730        $    3,745

Other comprehensive income (loss), net of tax:
 Unrealized holding gains (losses) on securities available-for-sale
 arising during period                                                      531                94
                                                                     ----------        ----------

Total comprehensive income                                           $    5,261        $    3,839
                                                                     ==========        ==========
</TABLE>




See  accompanying  Notes  to  Consolidated  Financial  Statements

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

<TABLE>
<CAPTION>

                                                                              Nine Months Ended
                                                                               September 30,
                                                                        -------------------------------
                                                                               2000             1999
                                                                        -------------------  ----------
                                                                                     (Unaudited)

<S>                                                                     <C>                  <C>
Cash flows from operating activities:
 Net income                                                                 $       14,863   $   9,864
 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                   7,055       7,383
 Net premium amortization                                                              463       1,239
 Provision for loan losses                                                           4,890       4,366
 Amortization of goodwill                                                            2,276       2,282
 Originations and purchases of mortgage loans held for sale                         (2,876)     (6,237)
 Sales of mortgage loans for held for sale                                           2,898       2,025
 Stock dividends from the FHLB                                                      (4,114)     (2,040)
 Gain on sale of mortgage servicing rights                                          (2,172)         --
 Decrease (increase) in:
   Accrued interest receivable                                                      (2,144)       (434)
   Other, net                                                                        4,909       1,479
                                                                             --------------  ----------

   Net cash provided by operating activities                                        26,048      19,927
                                                                             --------------  ----------

Cash flows from investing activities:
 Net increase in federal funds sold                                                (10,000)     (4,800)
 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)       (299)
 Principal repayments on mortgage-backed securities held-to-maturity                27,416     226,497
 Principal repayments on mortgage-backed securities
   available-for-sale                                                                3,647      22,059
 Proceeds from maturity of U.S. Treasury securities available-for-sale                  --       2,000
 Purchases of loans receivable                                                    (236,970)   (374,290)
 Net decrease in loans receivable                                                   82,186     153,737
 Net purchases of property and equipment                                            (1,629)     (2,379)
 Purchases of FHLB stock                                                            (7,603)     (2,608)
 Proceeds from sales of FHLB stock                                                  39,000       1,692
 Proceeds from the sale of mortgage servicing rights                                 5,001          --
                                                                             --------------  ----------

   Net cash used by investing activities                                          (101,944)     (7,960)
                                                                             --------------  ----------
</TABLE>



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

<TABLE>
<CAPTION>

                                                                              Nine Months Ended
                                                                               September 30,
                                                                       ---------------------------------
                                                                              2000              1999
                                                                       -------------------  ------------
                                                                                     (Unaudited)

<S>                                                                    <C>                  <C>
Cash flows from financing activities:
 Net increase (decrease) in deposits                                        $      24,838   $  (103,846)
 Advances from the FHLB                                                         8,133,597     6,448,344
 Principal payments on advances from the FHLB                                  (8,672,308)   (6,385,211)
 Securities sold under agreements to repurchase and federal funds
   purchased                                                                    1,403,567       319,340
 Purchases of securities sold under agreements to repurchase and
   federal funds purchased                                                       (824,196)     (319,340)
 Net increase in advances from borrowers for taxes and insurance                    9,315         6,929
 Proceeds from issuance of preferred stock, net                                        --        25,942
 Exercise of stock options for purchase of common stock, net                          273           112
 Purchase of treasury stock                                                       (10,882)      (12,685)
 Repurchase of senior notes                                                            --        (3,100)
 Dividends paid                                                                    (3,443)       (2,530)
                                                                           ---------------  ------------
   Net cash provided (used) by financing activities                                60,761       (26,045)
                                                                           ---------------  ------------

   Net decrease in cash and cash equivalents                                      (15,135)      (14,078)
 Cash and cash equivalents at beginning of period                                  48,098        45,453
                                                                           ---------------  ------------
 Cash and cash equivalents at end of period                                $       32,963   $    31,375
                                                                           ===============  ============

 Supplemental schedule of cash flows-interest paid                         $      113,594   $    92,736
                                                                           ===============  ============

 Supplemental schedule of noncash investing and financing activities:
   Foreclosures of loans receivable                                        $        2,794   $     3,494
                                                                           ===============  ============
</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  September  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, April 27, 2000
and  July  27,  2000, the Board of Directors authorized five 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 September 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.

(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 September 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>
Held-to-maturity:
 REMICS - Agency                   $   646,130     $  726      $ (35,934)   $ 610,922
 REMICS - Non-agency                   171,318         --        (10,605)     160,713
 FNMA certificates                      51,847         --         (1,868)      49,979
 GNMA certificates                      16,030         64             (4)      16,090
 Non-agency securities                   6,642         --           (172)       6,470
                                   -----------     ------      ----------   ---------
                                   $   891,967     $  790      $ (48,583)   $ 844,174
                                   ===========     ======      ==========   =========

Available-for-sale:
 REMICS - Agency                   $    77,506     $   --      $  (5,010)   $  72,496
 GNMA certificates                      21,335         --           (102)      21,233
                                   -----------     ------      ----------   ---------
                                   $    98,841     $   --      $  (5,112)   $  93,729
                                   ===========     ======      ==========   =========
</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  September  30,  2000  and  December 31, 1999 were as
follows  (dollars  in  thousands):

<TABLE>
<CAPTION>

                                                    September 30, 2000       December 31, 1999
                                                   --------------------      -----------------
<S>                                                <C>                       <C>
Real estate mortgage loans:
 First-lien mortgage, primarily residential        $           949,169       $         836,005
 Commercial                                                    333,270                 314,292
 Multifamily                                                   213,791                 163,059
 Residential construction                                      108,826                 136,675
 Acquisition and development                                   125,554                 103,357
 Commercial construction                                        98,815                  65,934
Commercial loans, secured by residential mortgage
 loans held for sale                                             2,934                  60,372
Commercial, financial and industrial                            99,342                 100,195
Loans secured by savings deposits                               13,939                  13,094
Consumer and other loans                                        57,801                  63,383
                                                   --------------------             -----------
                                                             2,003,441               1,856,366
Loans in process                                               (99,090)               (108,561)
Allowance for loan losses                                      (14,210)                (10,493)
Unearned interest and loan fees                                 (3,850)                 (2,947)
(Discount) premium to record purchased loans, net               (4,528)                    716
                                                   --------------------       -----------------

                                                   $         1,881,763        $      1,735,081
                                                   ====================       =================

Weighted average yield                                            9.19%              8.67%
                                                   ====================       =================
</TABLE>




<PAGE>
     At  September 30, 2000, Coastal had outstanding commitments to originate or
purchase  $141.8  million  of  real  estate  mortgage  and  other  loans and had
commitments under existing lines of credit to originate primary construction and
other  loans  of  approximately  $112.9  million.  In addition, at September 30,
2000,  Coastal  had  $7.7  million of outstanding letters of credit.  Management
anticipates  the  funding  of  these  commitments  through  normal  operations.

     At  September  30,  2000 and December 31, 1999, the carrying value of loans
that  were considered to be impaired totaled approximately $4.0 million and $2.0
million,  respectively  and  the  related  allowance  for  loan  losses on those
impaired  loans totaled $742,000 and $778,000 at September 30, 2000 and December
31, 1999, respectively. The average recorded investment in impaired loans during
the  nine  months  ended  September 30, 2000 and 1999 was $3.3 million and $11.1
million,  respectively.

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

<TABLE>
<CAPTION>

                                              Nine Months Ended September 30,
                                              -------------------------------
                                                   2000            1999
                                                 --------        --------
<S>                           <C>                <C>             <C>
Balance, beginning of period                     $10,493         $11,358
Provision for loan losses                          4,890           4,366
Charge-offs                                       (1,545)         (1,572)
Recoveries                                           372             212
                                                 --------        --------

Balance, end of period                           $14,210         $14,364
                                                 ========        ========
</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 other proceeds
were  received  during  the  nine  months  ended  September  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  September  30, 2000 and December 31, 1999, are summarized as follows
(dollars  in  thousands):

<TABLE>
<CAPTION>

                                    Stated Rate        September 30, 2000       December 31, 1999
                                   --------------      ------------------      -------------------
<S>                                <C>                 <C>                     <C>
Noninterest-bearing checking                0.00%     $       69,767           $      97,146
Interest-bearing checking          0.75  -  2.00              52,841                  65,229
Savings accounts                   1.49  -  3.00              45,047                  46,011
Money market demand accounts       0.00  -  6.31             372,013                 331,082
                                                      -------------------      --------------------

                                                             539,668                  539,468
                                                      -------------------      --------------------

Certificate accounts               2.00  -  2.99                 146                      461
                                   3.00  -  3.99                 797                   23,288
                                   4.00  -  4.99              58,979                  446,746
                                   5.00  -  5.99             381,495                  543,980
                                   6.00  -  6.99             663,083                   62,363
                                   7.00  -  7.99               4,563                    7,580
                                   8.00  -  8.99                 108                      103
                                   9.00  -  9.99                  99                       99
                                   over  10.00                    --                       12
                                                      -------------------      --------------------
                                                           1,109,270                1,084,632
                                                      -------------------      --------------------

Premium on purchased deposits                                     89                      189
                                                      -------------------      --------------------

                                                      $    1,649,027               $1,624,289
                                                      ===================      ====================

Weighted average interest rate                              4.72%                       3.96%
                                                      ===================      ====================
</TABLE>


     The  scheduled  maturities of certificate accounts outstanding at September
30,  2000  were  as  follows  (dollars  in  thousands):

<TABLE>
<CAPTION>

                           September 30, 2000
                           -------------------
<S>                        <C>
 0 through 12 months       $         1,017,655
 13 through 24 months                   66,691
 25 through 36 months                   15,758
 37 through 48 months                    4,359
 49 through 60 months                    4,595
 Over 60 months                            212
                           -------------------
                           $         1,109,270
                           ===================
</TABLE>



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

     (A)     The  weighted  average  interest rates on advances from the FHLB at
September  30,  2000  and  December 31, 1999 were 6.59% and 5.72%, respectively.
The scheduled maturities and related weighted average interest rates on advances
from  the  FHLB  at  September  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                                             6.70%          $203,650
2001                                             6.23             38,879
2002                                             6.60            279,406
2003                                             6.98              5,769
2004                                             5.80              5,305
2005                                             6.44                289
2006                                             6.86              3,241
2007                                             6.73              1,173
2008                                             5.61              1,859
2009                                             8.11              4,061
2010                                             6.85                862
2011                                             6.61              1,313
2012                                             5.68                217
2013                                             5.75              7,684
2014                                             5.43              2,935
2018                                             5.05              1,577
                                            --------------      ------------

                                                 6.59%          $558,220
                                            ==============      ============
</TABLE>



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

     (B)     The  weighted  average  interest  rate  on  securities  sold  under
agreements  to  repurchase  at  September  30,  2000  was  6.56% with the stated
interest  rates  ranging  from  6.54%  to  6.58%.

(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.

     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
September  30,  2000,  Coastal  had interest rate swap and cap agreements having
notional  principal  amounts  totaling  $33.8  million  and  $158.4  million,
respectively.

     The terms of the interest rate swap agreements outstanding at September 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 September 30, 2000:
2000                    $   2,135  Three-month  6.000%          6.660%     $    4
2003                       14,470  One-month    5.345           6.628         122
2004                        3,780  One-month    5.635           6.621         103
2005                       13,440  Three-month  6.500           6.680        (127)
                        ---------                                          -------
                        $  33,825                                          $  102
                        =========                                          =======

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 6.42% and
the  weighted  average  interest  payment  rate on all of the interest rate swap
agreements was approximately 5.92% for the nine months ended September 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 $152,000 for the nine months ended September 30, 2000
and  the  net  interest  expense  related  to these agreements was approximately
$441,000  for  the  nine  months  ended September 30, 1999.  Coastal had pledged
approximately  $902,000  of  mortgage-backed  securities to secure interest rate
swap  agreements  at  September  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  $71,000  and $90,000 at September 30, 2000 and December 31, 1999,
respectively, with the estimated fair value of the agreements being $111,000 and
$750,000  at  September  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 $19,000 for the nine
months  ended  September  30,  2000  and 1999.  No payments were made to Coastal
under  the  interest  rate cap agreements during the nine months ended September
30,  2000  or  1999.

     Interest  rate  cap  agreements outstanding at September 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        33,426
2002           8.75  -  9.00        18,625
2003           8.00  -  9.00       103,300
                                 ---------
                                 $ 158,351
                                 =========
</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  common  share  ("EPS") for the nine-and three-month
periods  ended  September  30,  2000  and 1999 (dollars in thousands, except per
share  data):

<TABLE>
<CAPTION>
                                                                    Nine Months Ended
                                                                       September 30,
                                                                -------------------------
<S>                                           <C>                <C>          <C>
                                                                       2000         1999
                                                                 -----------  -----------

Net income                                                       $   14,863   $    9,864
Preferred stock dividends                                            (1,881)        (957)
                                                                 -----------  -----------
Net income available to common stockholders                      $   12,982   $    8,907
                                                                 ===========  ===========
Weighted average number of common shares
 outstanding used in basic EPS calculation                        5,990,397    6,543,873
Add assumed exercise of outstanding stock
 options as adjusted for dilutive securities                        119,624      158,128
                                                                 -----------  -----------
Weighted average number of common shares
 outstanding used in diluted EPS calculation                      6,110,021    6,702,001
                                                                 ===========  ===========
Basic EPS                                                        $     2.17   $     1.36
                                                                 ===========  ===========
Diluted EPS                                                      $     2.12   $     1.33
                                                                 ===========  ===========
</TABLE>




<TABLE>
<CAPTION>
                                                                  Three Months Ended
                                                                   September 30,
                                                                 -------------------------
<S>                                           <C>                 <C>          <C>
                                                                        2000         1999
                                                                  -----------  -----------

Net income                                                        $    4,730   $    3,745
Preferred stock dividends                                               (627)        (627)
                                                                  -----------  -----------
Net income available to common stockholders                       $    4,103   $    3,118
                                                                  ===========  ===========
Weighted average number of common shares
 outstanding used in basic EPS calculation                         5,645,330    6,299,145
Add assumed exercise of outstanding stock
 options as adjusted for dilutive securities                         146,142      169,267
                                                                  -----------  -----------
Weighted average number of common shares
 outstanding used in diluted EPS calculation                       5,791,472    6,468,412
                                                                  ===========  ===========
Basic EPS                                                         $     0.73   $     0.50
                                                                  ===========  ===========
Diluted EPS                                                       $     0.71   $     0.48
                                                                  ===========  ===========
</TABLE>



     The  weighted  average number of common shares outstanding has been reduced
by  the  treasury  stock  held  by  Coastal.  As of September 30, 2000 and 1999,
Coastal  had  2,000,000  and  1,283,679 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  September  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>
Capital Requirement            Amount     Ratio      Amount    Ratio         Amount    Ratio
--------------------        ---------   -------    ---------  -------       --------  -------

 Tier 1 (core)               $181,749     5.98%     $121,516   4.00%        $151,896   5.00%
 Tier 1 risk-based            181,749     9.93        73,217   4.00          109,825   6.00
 Total risk-based             195,959    10.71       146,433   8.00          183,041  10.00
</TABLE>



     As  of  September  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 amended the accounting and reporting standards
of  Statement  133  for  certain  derivative instruments, hedging activities and
decisions  made  by  the  Derivatives  Implementation Group.  Coastal will adopt
Statement  133  on  January  1, 2001 and is evaluating the impact that Statement
133,  as  amended,  may  have  on  its future consolidated financial statements.
Coastal  anticipates  that  the  adoption  of  this statement could increase the
volatility  of  reported  earnings  and  stockholders'  equity.

<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>


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

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

     Total  assets  increased  2.6%  or  $76.7 million from December 31, 1999 to
September  30,  2000.  The  net  increase resulted primarily from an increase of
$146.7  million in loans receivable, in addition to an increase of $10.0 million
in  federal  funds  sold.  These  increases were somewhat offset by decreases of
$15.1  million,  $25.2  million, $5.9 million and $27.3 million in cash and cash
equivalents,  mortgage-backed  securities  held-to-maturity,  mortgage-backed
securities  available-for-sale and stock in the FHLB, 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)  which  was  partially  offset  by  principal  payments received and a
decrease  of  $57.4  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  mortgage-backed  securities  was  due  to  principal payments
received  and the decrease in stock in the FHLB was due to the decreased amounts
required  to  be  maintained  based  on  the  decreased  level  of FHLB advances
outstanding.

     Deposits  increased  $24.7  million  or  1.5%  from  December  31,  1999 to
September  30,  2000  and  securities  sold  under  agreements to repurchase and
federal  funds  purchased increased 100.0% or $579.4 million.  Advances from the
FHLB  decreased  $538.7 million or 49.1% during the period due to a reallocation
of  borrowings  to  securities  sold  under  agreements  to repurchase with more
favorable  market  rates.  Stockholders'  equity decreased 0.5% or $664,000 from
December  31,  1999  to  September 30, 2000 as a result of net income, offset by
additional  treasury stock acquired of $10.9 million, a $1.5 million increase in
accumulated  other  comprehensive  loss  and  dividends  declared.


Results  of  Operations  for  the  Nine Months Ended September 30, 2000 and 1999
--------------------------------------------------------------------------------

     General
     -------

     For  the nine months ended September 30, 2000, net income was $14.9 million
compared  to  $9.9  million  for  the nine months ended September 30, 1999.  The
increase  in  net  income  for  the  nine  months  ended  September 30, 2000 was
comprised  of the following:  a $6.5 million increase in net interest income and
a  $2.0  million increase in noninterest income, which was partially offset by a
$524,000  increase  in  the  provision  for  loan losses, a $826,000 increase in
noninterest  expense  (although it would have been a $315,000 decrease excluding
the  $1.1  million  reversal of certain accrued liabilities in 1999), and a $2.1
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 to
2.86%  for  the  nine  months  ended  September 30, 2000 from 2.71% for the same
period  in  1999.  The  net  interest margin for the period in 2000 includes the
effect  of  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 $291,000 increase in compensation, payroll taxes and
other benefits, which was somewhat offset by a decrease of $460,000 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  nine  months ended September 30, 2000 increased
$26.5  million  or  17.7%  from  the  nine months ended September 30, 1999.  The
increase  was  due  to  an increase in average interest-earning assets of $152.7
million  and  an increase in the average yield to 7.97% (including the effect of
the  FHLB  special  dividend  as  described  below)  for  the  nine months ended
September  30,  2000  from  7.14%  for the nine months ended September 30, 1999.
Interest  income  on  loans  receivable  increased $25.6 million due to a $260.0
million  increase in the average balance and an increase in the average yield to
8.84%  for  the  nine  months  ended  September 30, 2000 from 8.16% for the same
period  in  1999.  Interest  income  on  mortgage-backed  securities  decreased
$991,000, or 2.0%, due to a $116.9 million decrease in the average balance which
was  partially  offset by an increase in the average yield to 6.31% for the nine
months  ended  September  30,  2000  from  5.77%  for  the  same period in 1999.

     In  addition,  interest  income on FHLB stock, federal funds sold and other
interest-earning  assets  increased  $2.0  million  during the nine months ended
September  30,  2000,  as compared to the same period in 1999.  The increase was
due  to  the  $9.6  million  increase  in  the  average balance and to a special
dividend  recorded  in  the  second  quarter  of 2000.  The special dividend was
declared  by  the  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 7.92% for the
nine  months  ended  September  30,  2000,  excluding  the effect of the special
dividend.  Total interest-earning assets for the nine months ended September 30,
2000  averaged  $3.0  billion compared to $2.8 billion for the nine months ended
September  30,  1999.

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

     Interest expense on interest-bearing liabilities was $113.0 million for the
nine  months ended September 30, 2000, as compared to $92.9 million for the same
period  in  1999,  which represents an increase of $20.0 million, or 21.6%.  The
increase  in interest expense was due to an increase in the average rate paid on
interest-bearing  liabilities  to  5.53% for the nine months ended September 30,
2000  from  4.78%  for  the  nine  months  ended September 30, 1999 and a $133.1
million  increase  in  the average balance of interest-bearing liabilities.  The
0.75%  increase  in  the  average  rate paid on interest-bearing liabilities was
primarily  due  to higher wholesale funding costs and a higher cost of deposits.
The  increase  in  average interest-bearing liabilities consisted primarily of a
$148.3  million  increase in advances from the FHLB, and a $5.5 million increase
in securities sold under agreements to repurchase which were partially offset by
decreases  of  $19.7  million  in  interest-bearing deposits and $1.0 million in
senior  notes  payable  due to repurchases.  The overall increase in the average
balance  of  interest-bearing  liabilities  was  primarily due to the additional
borrowing  in  the  first  quarter  of  2000  to finance the $225.2 million loan
purchase  mentioned  earlier.

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

     Net  interest  income was $63.3 million for the nine months ended September
30,  2000  and  $56.8  million for the same period in 1999.  Net interest margin
("Margin")  was  2.86%  (2.81% excluding the effect of the special dividend) for
the  nine  months ended September 30, 2000 compared to 2.71% for the nine months
ended September 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 to 2.44% (2.39% excluding the
effect  of  the  special  dividend) for the nine months ended September 30, 2000
from  2.36%  for  the  nine  months  ended  September 30, 1999.  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 nine
months  ended September 30, 2000 and 1999 were 2.72% (2.67% excluding the effect
of  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 increase in Margin and Spread was
primarily  due to the 0.83% (0.78% excluding the effect of the special dividend)
increase  in the average yield on interest-earning assets during the nine months
ended  September  30,  2000  compared  to  the  first nine months of 1999.  This
increase  in the average yield on interest-earning assets was somewhat offset by
a  0.75%  increase in the average rate on interest-bearing liabilities.  Average
net  interest-earning  assets  increased $19.6 million for the nine months ended
September  30,  2000  from  the  nine  months  ended  September  30,  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 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 $4.9 million for the nine months ended
September  30, 2000 compared to $4.4 million for the nine months ended September
30,  1999.  The  increase  in  the  provision  for loan losses was primarily due
Coastal's  continuing  focus  on  more  commercial  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 September 30, 2000, Coastal had nonperforming loans totaling $19.5
million,  of  which  $2.5 million were greater than 90 days delinquent and still
accruing  interest.  Of these nonperforming loans, $14.1 million, or 72.2%, were
first  lien  residential  (single  family)  mortgage  loans,  $2.3  million were
commercial,  financial  and  industrial loans, $2.1 million were commercial real
estate  loans,  with  the  balance  in the residential construction, multifamily
mortgage  and  consumer and other categories.  At September 30, 2000, 82% of the
nonperforming  first lien residential mortgage loans were purchased and 18% were
originated.  At  September  30,  2000,  the  allowance  for  loan  losses  as  a
percentage  of  nonperforming  loans was 72.9% compared to 61.3% at December 31,
1999.

     Although  no assurance can be given, management believes that the allowance
for  loan  losses  at  September  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 nine months ended September 30, 2000, noninterest income increased
$2.0 million to $9.4 million, compared to $7.4 million for the nine months ended
September 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 at the time of purchase was expected to
provide  net  interest income of approximately $750,000 per quarter (or $490,000
net  of tax) for the first year.  This positive earnings impact is substantially
offsetting  the  ongoing negative impact on noninterest income of the March 2000
servicing  sale  (due  to  the  loss of the related loan servicing income, which
amounted  to  a  decrease  of  $226,000  comparing  the  2000 and 1999 periods).

     In  addition  to the effect of the servicing sale, comparing the first nine
months  of  2000 to the first nine months of 1999, loan fees and service charges
on  deposit  accounts  increased $267,000 and other noninterest income decreased
$221,000.

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

     For the nine months ended September 30, 2000, noninterest expense increased
$826,000  from  the nine months ended September 30, 1999, although it would have
been a $315,000 overall decrease excluding the $1.1 million reduction of certain
accrued liabilities during the first quarter of 1999.  Other changes included an
increase  in  compensation,  payroll  taxes and other benefits of $291,000 and a
decrease  of $460,000 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 nine months ended September
30, 2000 was $7.4 million compared to the provision for Federal income taxes for
the  nine months ended September 30, 1999 of $5.2 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 September 30, 2000 and 1999
--------------------------------------------------------------------------------

     General
     -------

     For  the three months ended September 30, 2000, net income was $4.7 million
compared  to  $3.7  million  for the three months ended September 30, 1999.  The
increase  was  due to a $1.1 million increase in net interest income, a decrease
of  $460,000  in  the  provision  for  loan  losses  and  a $163,000 decrease in
noninterest  expense,  which  were  partially  offset  by a $205,000 decrease in
noninterest  income  and a $495,000 increase in the provision for Federal income
taxes.

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

     Interest  income  for  the  three months ended September 30, 2000 increased
$9.9  million  or  19.4%  from  the  three months ended September 30, 1999.  The
increase  was  due  to  an increase in average interest-earning assets of $147.8
million  and  an  increase  in the average yield of 0.98% to 8.21% for the three
months  ended  September 30, 2000. Interest income on loans receivable increased
$8.3  million  due  to  a  $195.1 million increase in the average balance and an
increase  in the average yield to 9.13% for the three months ended September 30,
2000 from 8.23% for the same period in 1999.  Interest income on mortgage-backed
securities  increased  $1.3  million  due to an increase in the average yield to
6.57%  for  the  three  months  ended September 30, 2000 from 5.72% for the same
period in 1999, offset by a decrease in the average balance of $60.1 million due
to  principal  payments  received.

     In  addition,  interest  income on FHLB stock, federal funds sold and other
interest-earning  assets  increased $370,000.  The increase was due primarily to
the  increase  in  the average balance of other interest-earning assets of $12.8
million.  Total interest-earning assets for the three months ended September 30,
2000  averaged  $3.0  billion  as  compared to $2.8 billion for the three months
ended  September  30,  1999.

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

     Interest  expense on interest-bearing liabilities was $40.1 million for the
three months ended September 30, 2000, as compared to $31.3 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 to 5.80% for the three months
ended  September  30,  2000  from 4.78% for the three months ended September 30,
1999  and  a  $144.4 million increase in the average balance of interest-bearing
liabilities.  The  1.02%  increase  in the average rate paid on interest-bearing
liabilities  was  due  primarily  to  higher market and wholesale funding costs,
including  higher  deposit  costs.  The  increase  in  average  interest-bearing
liabilities  consisted  primarily  of  a $319.18 million increase in the average
balance  of  securities  sold under agreements to repurchase and a $17.5 million
increase  in  the  average  balance  of  interest-bearing  deposits,  offset  by
decreases  of  $192.3  million  and $522,000 in the average balances of advances
from  the  FHLB  and  senior  notes  payable, respectively.  The increase in the
average  balance  of  interest-bearing  liabilities  was  primarily  due  to the
additional  borrowing  during the first three months of 2000 to finance the loan
purchase  mentioned  earlier.


<PAGE>

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

     Net  interest income was $20.6 million for the three months ended September
30,  2000  and  $19.6  million for the same period in 1999.  The increase in net
interest  income  was  primarily  due to the increase in Margin to 2.79% for the
three  months  ended  September  30,  2000 from 2.78% for the three months ended
September  30,  1999.  Spread  decreased  to  2.41%  for  the three months ended
September  30,  2000  from  2.45% for the three months ended September 30, 1999.
Management  also  calculates  an  alternative  Spread  which  includes
noninterest-bearing  deposits.  Under  this calculation, the alternative Spreads
for  the  three  months  ended September 30, 2000 and 1999 were 2.70% and 2.72%,
respectively.  Margin  and  Spread are affected by the changes in the amount and
composition  of  interest-earning  assets and interest-bearing liabilities.  The
overall  decreases in Margin and Spread were primarily due to the 0.98% increase
in  the average yield on interest-earning assets, primarily on loans receivable,
and the 1.02% increase in the average rate paid on interest-bearing liabilities.
Average  net interest-earning assets increased $3.4 million for the three months
ended  September  30,  2000  from  the  three  months  ended September 30, 1999.



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

     The  provision  for  loan  losses  was  $900,000 for the three months ended
September 30, 2000 compared to $1.4 million for the three months ended September
30,  1999.  The allowance for loan losses as a percentage of nonperforming loans
was  72.9% at September 30, 2000 and 61.3% at December 31, 1999.  The increasing
ratio  of  the  allowance  for  loan  losses  to  nonperforming  loans is due to
Coastal's  continuing  focus  on  more  commercial  loans  and Coastal's plan to
continue  to build the allowance for loan losses to a benchmark of approximately
100% of nonperforming loans.  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 September 30, 2000, noninterest income decreased
slightly  by  $205,000  to  $2.4 million, compared to $2.6 million for the three
months ended September 30, 1999.  The decrease was primarily due to the $184,000
decrease  in  loan  servicing  income  due to the sale of the mortgage servicing
portfolio  in  the first quarter of 2000 and a $61,000 decrease in loan fees and
service  charges  on  deposit  accounts.

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

     For  the  three  months  ended  September  30,  2000,  noninterest  expense
decreased $163,000 from the three months ended September 30, 1999.  The decrease
was due primarily to a decrease of $143,000 in insurance premiums expense due to
a  decrease  in  deposit  insurance  premiums.

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

     The provision for Federal income taxes for the three months ended September
30,  2000  was  $2.3 million compared to $1.8 million for the three months ended
September  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  30%.

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  September  30,  2000,  Coastal had binding
commitments to originate or purchase loans totaling approximately $141.8 million
and  had  $99.1 million of undisbursed loans in process. Scheduled maturities of
certificates  of  deposit  during  the  12  months  following September 30, 2000
totaled  $1.0  billion  at September 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  September  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
             -----------------------------------------------------------

             Not  applicable.

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 August 14, 2000 concerning the announcement that the
Board  of  Directors  voted  to increase the second quarter of 2000 common stock
dividend  to  $0.10  per  share.
     Form 8K filed on August 14, 2000 concerning the announcement that the Board
of  Directors  had  authorized  the  repurchase  of  up to 500,000 shares of the
outstanding  shares  of  common  stock.


<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:     11/14/00                    By    /s/ Manuel J. Mehos
                                             ----------------------------
                                             Manuel  J.  Mehos
                                             Chief  Executive  Officer









Dated:     11/14/00                    By    /s/ Catherine N. Wylie
                                             ----------------------------
                                             Catherine  N.  Wylie
                                             Chief  Financial  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 16 of the Company's Form
10-Q for the year-to-date September 30, 2000 and is qualified in its
entirety by reference to such financial statements
[/LEGEND]
<TABLE>
<S>                             <C>
[PERIOD-TYPE]                   9-MOS
[FISCAL-YEAR-END]                          DEC-31-2000
[PERIOD-START]                             JAN-01-2000
[PERIOD-END]                               SEP-30-2000
[CASH]                                          32,963
[INT-BEARING-DEPOSITS]                               0
[FED-FUNDS-SOLD]                                10,000
[TRADING-ASSETS]                                     0
[INVESTMENTS-HELD-FOR-SALE]                     93,729
[INVESTMENTS-CARRYING]                         892,962
[INVESTMENTS-MARKET]                           845,169
[LOANS]                                      1,881,763
[ALLOWANCE]                                     14,210
[TOTAL-ASSETS]                               3,024,622
[DEPOSITS]                                   1,649,027
[SHORT-TERM]                                   821,400
[LIABILITIES-OTHER]                             58,312
[LONG-TERM]                                    363,091
[PREFERRED-MANDATORY]                                0
[PREFERRED]                                     27,500
[COMMON]                                            76
[OTHER-SE]                                     105,216
[TOTAL-LIABILITIES-AND-EQUITY]               3,024,622
[INTEREST-LOAN]                                124,319
[INTEREST-INVEST]                               47,642
[INTEREST-OTHER]                                 4,306
[INTEREST-TOTAL]                               176,267
[INTEREST-DEPOSIT]                              53,005
[INTEREST-EXPENSE]                             112,950
[INTEREST-INCOME-NET]                           63,317
[LOAN-LOSSES]                                    4,890
[SECURITIES-GAINS]                                   0
[EXPENSE-OTHER]                                 45,601
[INCOME-PRETAX]                                 22,241
[INCOME-PRE-EXTRAORDINARY]                      14,863
[EXTRAORDINARY]                                      0
[CHANGES]                                            0
[NET-INCOME]                                    14,863
[EPS-BASIC]                                     2.17
[EPS-DILUTED]                                     2.12
[YIELD-ACTUAL]                                       0
[LOANS-NON]                                          0
[LOANS-PAST]                                         0
[LOANS-TROUBLED]                                     0
[LOANS-PROBLEM]                                      0
[ALLOWANCE-OPEN]                                10,493
[CHARGE-OFFS]                                    1,545
[RECOVERIES]                                       372
[ALLOWANCE-CLOSE]                               14,210
[ALLOWANCE-DOMESTIC]                            14,210
[ALLOWANCE-FOREIGN]                                  0
[ALLOWANCE-UNALLOCATED]                              0
</TABLE>