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 September 30, 2000

    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)

                          ( 530 )842-4200
                     (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:
1,006,860







PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements
                      "TIMBERLINE BANCSHARES, INC."
                      CONSOLIDATED INCOME STATEMENT
                          Periods Indicated

                                       Quarter     YTD      Quarter      YTD
                                     09/30/00   09/30/00   09/30/99   09/30/99
INTEREST AND FEES ON LOANS             1,441      4,211      1,318      3,765
INTEREST AND DIVIDENDS ON
INVESTMENT SECURITIES
     HELD FOR SALE                       243        728        244        650
     HELD TO MATURITY                     33        113         52        174
TRADING ACCOUNT INTEREST                   -          -          -          -
OTHER INTEREST                            81        197         51        295
TOTAL INTEREST INCOME                  1,798      5,249      1,665      4,884
INTEREST ON DEPOSITS                     625      1,805        544      1,670
INTEREST ON SHORT TERM BORROWING                      7          3          3
INTEREST ON LONG TERM DEBT                 -          -          -          -
TOTAL INTEREST EXPENSE                   625      1,812        547      1,673
NET INTEREST INCOME                    1,173      3,437      1,118      3,211
PROVISION FOR LOAN LOSSES                 21         56          9         27
NET INTEREST INCOME AFTER ALLOWANCE
FOR LOAN LOSSES                        1,152      3,381      1,109      3,184
OTHER INCOME                             100        303        103        311
OTHER EXPENSES                           815      2,630        905      2,731
INCOME BEFORE TAX                        437      1,054        307        764
INCOME TAX EXPENSE                       124        321         71        185
INCOME BEFORE EXTRAORDINARY ITEMS        313        733        236        579
EXTRAORDINARY ITEM NET OF TAX              -          -          -          -
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES                                    -          -          -          -
NET INCOME                               313        733        236        579
EARNINGS PER SHARE                       0.31       0.73       0.23       0.58


Note 1:  The financial statements in this report are un-audited 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.














TIMBERLINE BANCSHARES, INC.
                             CONSOLIDATED BALANCE SHEET
                                       09/30/00


         ASSETS
CASH & DUE FROM BANKS                         $8,975
INTEREST BEARING DEPOSITS IN OTHER               100
FED FUNDS & RESALE SECURITY AGREE              2,300
TRADING ACCOUNT ASSETS                             0
OTHER SHORT TERM                                   0
INVESTMENT SECURITIES
   HELD FOR SALE                              17,451
   MATURITY                                    2,287
LOANS TOTAL                                   59,884
   ALLOWANCE FOR LOAN LOSSES                    (423)
   UNEARNED INCOME                              (120)
PREMISES & EQUIPMENT                           1,797
DUE FROM CUSTOMERS, ACCEPTANCES                    0
OTHER ASSETS                                   4,333
     TOTAL                                   $96,584

            LIABILITIES
DEPOSITS, NON-INTREST BEARING                $22,352
          INTEREST BEARING                    65,168
SHORT TERM BORROWING                               0
BANK ACCEPTANCES                                   0
OTHER LIABILITIES                                690
LONG TERM DEBT                                     0
COMMITMENTS & CONTINGENT LIABILITY                 0
MINORITY INTERESTS                                 0

           SHAREHOLDER EQUITY
PERFERED STOCK                                     0
COMMON STOCK                                   2,993
OTHER S/H EQUITY                               5,381
    TOTAL                                    $96,584


Note: Held for Sell amount includes unrealized loss of $484




















TIMBERLINE BANCSHARES, INC.
                      CONSOLIDATED CASH FLOWS


CASH FLOW FROM OPERATING ACT             YTD 09/30/00       YTD 09/30/99
   NET INCOME                                  733               579
   NON-CASH
     DEPRECIATION                              162               160
     NET CHANGE BAD DEBTS PROV                  51                45
     CUMU EFFECT ACCTG CH
   (INCREASE) DECREASE IN
     OTHER ASSETS                             (299)              (51)
   INCREASE (DECREASE) IN
     ACCRUED EXPENSES                          (76)               78

CASH PROVIDED BY OPS                           571               811


CASH FROM INVESTING
    INCREASE (DECREASE) IN
     DEPOSITS                                 4,369              717
    (INCREASE) DECREASE IN
     SHORT  TERM INVESTMENTS                     0              (938)
     SECURITIES: FOR SALE                     (126)           (4,385)
                          HOLD                 885             1,587
     FED FUNDS                              (1,500)            9,800
     LOANS                                  (1,838)           (6,352)
     (PURCHASE) SALE OF F.A.                   (85)             (107)


CASH (USED) PROVIDED                         1,705               322


CASH FROM FINANCING
    DIVIDENDS PAID                            (252)             (252)
    SHORT TERM BORROWING                         0             1,300
    ADDITIONAL PD IN CAP                         0                 0


CASH(APPLIED) PROVIDED                        (252)            1,048

NET CHANGE                                   2,024             2,181

OPEN                                         6,951             4,785

CLOSE                                        8,975             6,966








            3-

Item 2.  Management's Discussion

(a) Plan of Operation

Timberline Bancshares management is an overlay of its wholly
owned subsidiary, Timberline Community Bank, and therefore shares
the same concepts regarding growth of the institution, protection
and preservation of assets, shareholder enhancement, and
fulfilling the joint mission statement to assist the communities
which we serve.

Timberline's plans are to increase it's market share in the areas
it serves, continue to upgrade services to it's customers,
continue to offer loans to the customers in it's service area, to
enhance earnings, to control costs, and to enhance the
shareholders' value.  To greatly enhance our ability to do this we
have signed a definitive agreement to merge with another bank.


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


Net interest income in the first nine0 months of 2000 exceeds that of
the same period of 1999 as a result of the recent rises in prime
rate and an increase in loans outstanding coupled with a slower rise in
interest paid to depositors.

Siskiyou county has been in an economic downturn for years as it's main
economy was based on timber products and services. In view of
those economic conditions , the Bank has accelerated its program
of buying participations from other financial institutions outside
its normal lending area.  Through this program, the bank has
increased the loan to deposit ratio somewhat and expects an
increase in income from lending for the remainder of the year.

As a relatively small bank in a sparsely populated county, the
bank does not offer mutual funds or insurance as an avenue of
enhancing income.  Nor has the bank greatly increased service fees
to its customers, but has relied on the traditional banking
revenue sources; i.e. income from lending.  With a loan
delinquency of less than one per cent, the Bank has reduced the
amount set aside in loan loss reserves while still maintaining an
adequate reserve.  Other expenses have gone down slightly as the
Bank is no longer investing funds in last year's Y2K readiness.

In addition, the Bank will be paying a $.25 per share cash dividend to
shareholders of record in the fourth quarter of the year.






                  -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

Definitive Agreement signed in October of 2000 to merge with bank holding
company head-quartered in Medford Oregon.

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.




//ss John A. Linton                               Date   10/25/2000
     John A. Linton,  President




//ss Michael W. Jones                             Date   10/25/2000
     Michael W. Jones, Assistant Vice-President