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, 1997

    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:    1,003,112   






                        PART 1 - FINANCIAL INFORMATION


Item 1.  Financial Statements

                         TIMBERLINE BANCSHARES, INC.
                        CONSOLIDATED INCOME STATEMENT
                              Periods Indicated

(Amounts stated in thousands)
                   
                                        Quarter    Year       Prior     Prior Yr
                                         Ended    to Date   Quarter End  to Date
                                       09/30/97   09/30/97   09/30/96   09/30/96

 1.  Interest and Fees on Loans         $1,180     $3,355     $1,087     $3,246
 2.  Interest On Securities
     Held to Maturity                      216        499        210        519
        Available for Sale                 113        367        111        303
 3.  Trading Account interest              -0-        -0-        -0-        -0-
 4.  Other interest                        146        458        173        526
 5.  Total Interest Income               1,655      4,679      1,581      4,594
 6.  Interest on Deposits                  539      1,542        501      1,537
 7.  Interest on short term borrowing      -0-        -0-        -0-        -0-
 8.  Interest on long term debt            -0-        -0-        -0-        -0-
 9.  Total Interest Expense                539      1,542        501      1,537
10.  Net Interest Income                 1,116      3,137      1,080      3,057
11.  Provision for Loan Losses             -0-        -0-         15         15
12.  Net Interest Income after
      Provision for loan losses          1,116      3,137      1,065      3,042
13.  Other Income                          108        331         60        294
14.  Other Expenses                        826      2,517        759      2,308
15.  Income before Tax                     398        951        366      1,028
16.  Income Tax Expense                    123        245         61        328
17.  Income before extraordinary
       item                                275        706        305        700
18.  Cumulative effect of accounting
       changes                             -0-        -0-        -0-        -0-
19.  Net Income                          $ 275      $ 706      $ 305      $ 700

20.  Earnings per share                  $ .27      $ .70      $ .30      $ .70








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.


                        TIMBERLINE BANCSHARES, INC.
                         CONSOLIDATED BALANCE SHEET
                                  09/30/97
(Amounts stated in thousands)


     ASSETS

 1.  Cash and Due from Banks                            $ 5,736 
 2.  Interest Bearing Deposits other banks                  -0- 
 3.  Federal Funds sold and securities
       purchased under resale agreement                  10,200 
 4.  Trading Account Assets                                 -0- 
 5.  Other short-term investments                         1,289 
 6.  Investment securities
     Held for Sale                                       14,848 
     Held to Maturity                                     7,215 
 7.  Loans, Total                                        42,812 
          Allowance for loan losses                        (470)
          Unearned Income                                   (70)
 8.  Premises and Equipment                               2,141 
 9.  Due from customers on acceptances                      -0- 
10.  Other assets                                         1.319 
11.  Total Assets                                       $85,020 


     LIABILITIES

12.  Deposits, non-interest bearing                     $16,220           
          Interest bearing                               60,889 
13.  Short-term borrowing                                   -0- 
14.  Bank Acceptances outstanding                           -0- 
15.  Other liabilities                                      495 
16.  Long-term debt                                         -0- 
17.  Commitments and contingent liabilities                 -0- 
18.  Minority Interests                                     -0- 
     SHAREHOLDERS EQUITY
19 & 20.  Preferred stock                                   -0- 
21.  Common Stock                                         2,980 
22.  Other Shareholders equity                            4,436 
23.  Total Liabilities and Shareholders Equity          $85,020 







Note:  Held for Sale amount stated net of unrealized loss of $2.





                            TIMBERLINE BANCSHARES, INC
                       CONSOLIDATED STATEMENT OF CASH FLOWS
                              For Periods Indicated

(Amounts stated in thousands)
                                                  Year                  Year    
                                                 to Date              to date  
                                                 09/30/97             09/30/96

Cash Flow from Operating Activities
     Net Income                                     $706               $ 700 
     Non-cash items included in income
     Depreciation                                    194                 143 
     Net change in Bad Debt Provision                (21)                 15 
     Cumulative effect of accounting 
          change
     (Increase)Decrease in:
          Other Assets                               205                 (26)
     Increase(Decrease) in:
          Other Liabilities                           65                   1 
                                                                                
            Net cash provided by operations        1,149                 833 

Cash Flow from Investing Activities
     Increase(Decrease) in:
          Deposits                                 6,841               2,531 
     (Increase)Decrease in:
          Short Term Investments                     (40)                (43)
          Securities: Held for Sale               (8,408)                271 
                   Held to Maturity                2,359                 219 
          Federal Funds Sold                       2,500              (2,700)
          Loans                                   (3,544)               (315)
     (Purchase)Sale of Fixed assets                 (238)                (89)   
                                                                        
Net cash (used for) provided by
     investing activities                           (530)               (126)

Cash Flow from Financing Activities
     Dividends (Paid)                               (251)               (249)
Additional Paid in Capital                           166                 135   
                                                                          
Net cash (applied to)provided by
     financing activities                            (85)               (114)
Net cash increase(decrease) in cash
     and due from banks                              534                 593 

Cash and Due from Banks at
     beginning of year                             5,202               4,163 

Cash and Due from Banks at
     end of period                                $5,736              $4,756



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.  

The Bank has enjoyed sustained growth since it was opened and has established a 
solid deposit base and profitability that has enabled it to maintain the cash 
requirements for operation.  Management can foresee nothing that would indicate
that this condition will change in the future.

The Bank will continue to operate as a full service banking organization, 
continually enhancing the service to its depositors, stay abreast of the 
changing environment of banking, always monitoring operational costs, 
maintaining a respectable return to the shareholders, providing the best 
service possible to its customer base, and increasing income to full potential.

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

As is indicated by the financial statements, the Bank is maintaining the steady 
profitability that it has enjoyed in the past.  The changes in income and 
expense from 1996 to 1997 are minimal in most categories and can be attributed 
to the changes in interest rates, both earned and paid, the normal changes that
occur with growth, including increases in operating expenses.   The Bank has 
installed a voice response system for the convenience of our customers.  The 
Bank also shared startup costs with the lead bank of a Credit Card program for 
California State Employees Association in which the Bank is a participant.

The Bank has experienced a flattening of growth in loan demand in the past 
couple of years.  Management feels that this reflects the same lack of growth 
in the local economy.  The Bank, while a strong community lender, has not 
aggressively sought to increase market share of deposits in order to maintain 
the profitable yield spread of 5%.  This is possible through careful management
of interest rates and the investment portfolio.  Loan delinquencies are minimal
and with a loan loss reserve well above regulatory requirements, the Bank has 
not increased the reserve in 1997.             


The Bank paid a $.25 per share dividend in the first quarter of 1997 and the 
Board of Directors has declared an additional $.25 per share dividend to be paid
in October.  

     





















                        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 10/27/97                            /s/ Robert J. Youngs    
                                         Robert J. Youngs, President & CEO   



Date  10/27/97                           /s/ Helen L. Gaulden                
                                    Helen L. Gaulden, Vice Presidnt & Treasurer