Correction: Fitch Affs Coastal Bancorp's Rtgs; Assigns Rtgs To Subs.

Business Editors

NEW YORK--(BUSINESS WIRE)--May 30, 2002

(This is an amended version of a press release issued May 29, 2002, containing revised rating information in the list below.)

Fitch Ratings has affirmed the ratings of Coastal Bancorp, Inc. (CBSA), and has assigned ratings for its subsidiaries. The Rating Outlook has been affirmed at Stable. A list of ratings is provided at the end of this release.

CBSA is a $2.5 billion Houston-based thrift holding company operating through 50 retail banking offices in the southeast quadrant of Texas. CBSA's ratings are based on the company's current financial condition, growth prospects and strategic transition stage of its business model. The company's risk profile and return measures are representative of its thrift origin. Earnings reflect gradual improvement with incremental steps toward commercial lending. Aided by a declining rate environment, commercial portfolio loan growth and investment portfolio reductions, CBSA has reached an intermediary goal of improving net interest margin performance to the 2.5%-3.0% range. This also enabled CBSA to reach return on average assets in the 0.60%-0.70% range for 2001 and first quarter 2002. Earning assets include a high percentage of residential loans and mortgage-backed securities, though CBSA has made progress in growing its commercial book. Recent asset quality measures reflect an increase in problem loans (mainly in residential mortgages), but net charge-offs (at 0.10% for first quarter 2002) are still reasonable. Capital has trended favorably over the past two years in the absence of acquisitions and repurchase activity, and while consolidated ratios are low in relation to peers, this is offset by CBSA's lower risk loan portfolio. Repurchase activity during 2002 will reverse some of the positive trend in consolidated common equity accretion. While Fitch is comfortable with current levels, intentions to increase commercial lending and re-enter the acquisition market will make capitalization levels more critical.

Ratings Affirmed:

Coastal Bancorp, Inc.

-- Long-Term Deposits 'BB+';

-- Long-Term Senior 'BB';

-- Short-Term Deposits 'B';

-- Short-Term Senior 'B';

-- Individual 'C';

-- Support '5'

-- Rating Outlook 'Stable'.

Ratings Assigned:

Coastal Bancorp, Inc.

-- Long-Term Deposits 'BB+';

-- Long-Term Senior 'BB';

-- Short-Term Deposits 'B';

-- Short-Term Senior 'B';

-- Individual 'C';

-- Support '5'

-- Rating Outlook 'Stable'.

Coastal Bank ssb

-- Long-Term Deposits 'BB+';

-- Long-Term Senior 'BB';

-- Short-Term Deposits 'B';

-- Short-Term Senior 'B';

-- Individual 'C';

-- Support '5'

-- Rating Outlook 'Stable'.

Coastal Capital Trust I

-- Trust Preferred 'BB-'.