SECURITIES AND EXCHANGE COMMISSION


                            WASHINGTON, D.C.   20549


                                    FORM 8-K



                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


       Date of Report (Date of earliest event reported)    MARCH 31, 1999
                                                         ----------------


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


          TEXAS                         0-24526               76-0428727
(State or other jurisdiction     (Commission File Number)          (IRS Employer
     of  incorporation)                                   Identification  No.)






                                                 
5718 WESTHEIMER, SUITE 600, HOUSTON, TEXAS . . . .            77057
- --------------------------------------------------  ---------------
(Address of Principal executive offices) . . . . .       (Zip Code)


Registrant's telephone number including area code.   (713) 435-5000
                                                    ---------------




(Former name or former address, if changed since last report) --  Not applicable
     -----



ITEM  5.          OTHER  EVENTS.
- --------          --------------

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

Coastal  has  hired special bankruptcy counsel to represent it in this situation
and  has  been involved in discussions with the Lead Lender regarding the status
of  the  loan.  Although  Coastal  has  been  informed  by  the Lead Lender that
Coastal's  loan is collateralized by residential loans, the Bank, as of the date
hereof, has been unable to verify the extent to which the collateral, if any, is
sufficient  to prevent Coastal from incurring a loss.  Coastal has put this loan
on  nonaccrual  and  has allocated $1.5 million of the loan loss reserve to this
loan.  At  this time, Coastal is unable to determine the timing, probability, or
the  amount  of  any  loss  which  might result from the default by the Mortgage
Banker.

However,  on  March 31, 1999 Coastal stated that it had taken loan loss reserves
for the three months ended March 31, 1999, on this transaction.  Coastal accrued
loan  loss  reserves  for such  period  in the amount of approximately $800,000,
which represents approximately 8 cents per fully diluted common share.







     SIGNATURES

Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  hereunto  duly  authorized.

COASTAL  BANCORP,  INC.


     /s/  Catherine  N.  Wylie                         Date:  March  31,  1999
     -------------------------
by:  Catherine  N.  Wylie
     Executive  Vice  President/
     Chief  Financial  Officer

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