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

                        Form 10-QSB

X  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934
               
           For the quarterly period ended March 31, 1998

    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

               For the transition period from       to      

                 Commission file number  33-40799

                 TIMBERLINE BANCSHARES, INC.                           
(Exact name of small business issuer as specified in its charter)

          California                                 68-0269988        
(State or other jurisdiction of                (IRS Employer Identification No.)
of incorporation or organization)

         123 N. Main Street   P. O. Box 1087, Yreka, Ca 96097          
         (Address of principal executive offices)

                    ( 916 )  842-6191                                    
               (Issuer's telephone number) 

                                                                       
(Former name, former address and former fiscal year, if changed since last
 report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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   .

     APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
        PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and report required to be filed
by Section 12, 13 or 15(d) of the Exchange Act after the distribution of 
securities under a plan confirmed by a court.  Yes     No   

           APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:    1,006,726   









              PART 1 - FINANCIAL INFORMATION


Item 1.  Financial Statements

                TIMBERLINE BANCSHARES, INC.
               CONSOLIDATED INCOME STATEMENT
                     Periods Indicated


                                               Year            Prior Year 
                                             to Date           to Date
                                             03/31/98         03/31/97
 1.  Interest and Fees on Loans              $ 1,213           $ 1,064
 2.  Interest on Securities:
       Held for Sale                             171               101
       Held to Maturity                          119               134
 3.  Trading Account interest                    -0-               -0- 
 4.  Other interest                              164               183
 5.  Total Interest Income                     1,667             1,482
 6.  Interest on Deposits                        580               493
 7.  Interest on short term borrowing            -0-               -0-
 8.  Interest on long term debt                  -0-               -0-
 9.  Total Interest Expense                      580               493
10.  Net Interest Income                       1,087               989
11.  Provision for Loan Losses                    20               -0-
12.  Net Interest Income after
      Provision for loan losses                1,067               989
13.  Other Income                                108               114
14.  Other Expenses                              925               843
15.  Income before Tax                           250               260
16.  Income Tax Expense                           60                82
17.  Income before extraordinary
       item                                      190               178
18.  Extraordinary item net of tax               -0-               -0-
19.  Cumulative effect of accounting
       changes                                   -0-               -0-
20.  Net Income                              $   190            $  178

21.  Earnings per share                      $   .19            $  .18



Note 1:  The financial statements included in this report are unaudited but,
in the opinion of management of the Corporation, reflect all adjustments 
(consisting only of normal recurring adjustments) necessary for a fair
presentation of financial position, results of operations, and changes in
financial position for the periods presented.




                            -1-


                TIMBERLINE BANCSHARES, INC.
                CONSOLIDATED BALANCE SHEET
                          03/31/98


     ASSETS                                      03/31/98        03/31/97
 1.  Cash and Due from Banks                      $ 4,241         $ 4,135   
 2.  Interest Bearing Deposits other banks            -0-             -0- 
 3.  Federal Funds sold and securities
       purchased under resale agreement            16,400          14,600 
 4.  Trading Account Assets                           -0-             -0- 
 5.  Other short-term investments                   1,317           1,263 
 6.  Investment securities:
          Available for Sale                        9,609           8,397 
          to be Held to Maturity                    7,113           8,009 
 7.  Loans, Total                                  46,727          39,961 
          Allowance for loan losses                  (410)           (489)
          Unearned Income                             (71)            (57)
 8.  Premises and Equipment                         2,504           2,075 
 9.  Due from customers on acceptances                -0-             -0- 
10.  Other assets                                     999           1,370 
11.  Total Assets                                 $88,427         $79,264 


     LIABILITIES

12.  Deposits, non-interest bearing               $14,388         $12,742 
               Interest bearing                    65,835          59,108 
13.  Short-term borrowing                             -0-             -0- 
14.  Bank Acceptances outstanding                     -0-             -0- 
15.  Other liabilities                                552             465 
16.  Long-term debt                                   -0-             -0- 
17.  Commitments and contingent liabilities           -0-             -0- 
18.  Minority Interests                               -0-             -0- 
     SHAREHOLDERS EQUITY
19 & 20.  Preferred stock                             -0-             -0- 
21.  Common Stock                                   2,992           2,824 
22.  Other Shareholders equity                      4,660           4,125 
23.  Total Liabilities and Shareholders Equity    $88,427         $79,264 






Note: Held for Sale amount includes unrealized gain of $2.



                            -2-

                TIMBERLINE BANCSHARES, INC
                  STATEMENT OF CASH FLOWS
                   For Periods Indicated

                                                   Year            Prior Year
                                                 to Date            to date  
                                                 03/31/98           03/31/97 

Cash Flow from Operating Activities
     Net Income                                     $ 190              $ 178 
     Non-cash items included in income
       Depreciation                                   105                 45 
       Net change in Bad Debt Provision                 9                 (3)
     (Increase)Decrease in:
       Other Assets                                   582                141 
     Increase(Decrease) in:
       Accrued Expenses                                11                 35 
     
       Net cash provided by operations                897                396 

Cash Flow from Investing Activities
     Increase(Decrease) in:
          Deposits                                  2,665              1,582 
     (Increase)Decrease in:
          Short term investments                      (14)
          Securities - Held For Sale                3,507             (1,991)
                    - Held to Maturity                 92              1,565 
          Federal Funds Sold                       (9,400)            (1,900)
          Loans                                     1,847               (706)
     (Purchase)Sale of Fixed assets                   577                (23)
Net cash (used for) provided by
     investing activities                          (1,880)            (1,473)

Cash Flow from Financing Activities
     Dividends Paid                                   -0-                -0- 
     Additional Paid in Capital                       -0-                 10 
Net cash (applied to)provided by
     financing activities                             -0-                 10 

Net cash increase(decrease) in cash
     and due from banks                              (983)            (1,067)

Cash and Due from Banks at
     beginning of year                              5,224              5,202 

Cash and Due from Banks at
     end of period                                $ 4,241            $ 4,135 



                            -3-

Item 2.  Management's Discussion and Analysis or Plan of Operation.

(a) Plan of Operation

It is the intention of management that its wholly-owned subsidiary, Timberline 
Community Bank, shall continue to function much as it has in the past.  When 
formed in June 1980, it was the intent of the Bank to serve the needs of the 
communities of the County.  This intention has not changed.  

Efforts of management will now be concentrated on serving the customer base with
the personal service that only a community oriented bank can offer.  It will 
maintain and/or enhance the products most suited to the needs of the community 
while continuing the profitability of the past 15 years.


(b) Management's Discussion and Analysis of Financial condition and Results of 
Operations

As is indicated by the financial statements, the Bank is enjoying a steady 
growth in size and maintaining a respectable level of income, as it has enjoyed 
in the past.

The changes in income and expense from 1997 to 1998 are minimal in most 
categories and can be attributed to the changes in the mix of loans, investments
and deposit growth on the balance sheet.  Operating expenses have increased with
addition of personnel commensurate with growth, the cost of regulatory 
compliance with the Year 2000, and normal increases due to growth.

The Bank hired an electronic bank officer to streamline it's LAN and Server 
networks and to insure that those networks are Y2K compliant.  The officer has
been working with the Bank's outside service bureau, vendors, and customers to 
ensure compliance.

The Bank has initiated a Visa Debit card program in the first quarter of 1998 
for the convenience of it's customers.  We will continue to maintain the current
ATM program.

As loan demand remains flat in the bank's local service area, the Bank has 
increased activity in it's Oregon Loan Production Office and has begun a loan 
participation program with several Oregon Bank's to facilitate their lending and
to increase the Bank's profits.  The Bank already enjoys similar relationships 
with banks in the central and northern California areas.
 
At the March meeting, the Board of Directors of the Holding Company, declared 
the shareholders of record of March 23, 1998 eligible to vote at the annual 
meeting to be held May 9, 1998.  Proxy statements and annual reports as 
submitted to the SEC with the 10KSB for 1997 were mailed to the shareholders on
April 10, 1998.




                            -4-

                PART 11 - OTHER INFORMATION

Item 1. Legal Proceedings

There are no legal proceedings pending other than those in the normal course 
of doing business that may have a material impact on the bank.

Item 2.  Changes in Securities

None

Item 3.  Defaults Upon Senior Securities

None

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

None

Item 5.  Other Information

None

Item 6.  Exhibits and Reports on Form 8-K

None

                        SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly 
authorized.




                                      TIMBERLINE BANCSHARES, INC.


Date  4/28/98                         ss/Robert J. Youngs                    
                                      ROBERT J. YOUNGS, PRES. & CEO


Date   4/28/98                        ss/Helen L. Gaulden                  
                                      HELEN. L. GAULDEN, SR. VICE PRES
                                      TREASURER