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 JUNE 30, 1999

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 )842-6191
                      (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:    1,006,810





PART 1 - FINANCIAL INFORMATION


Item 1. Financial Statements


                           TIMBERLINE BANCSHARES, INC.
                          CONSOLIDATED INCOME STATEMENT

                               Periods Indicated


                                         QUARTER     YTD     QUARTER     YTD
                                         6/30/99   6/30/99   6/30/98   6/30/98

INTEREST AND FEES ON LOANS                1,206     2,447     1,240     2,453

INTEREST AND DIVIDENDS ON INVESTMENT
 SECURITIES
     HELD FOR SALE                          226       406       197       368
     HELD TO MATURITY                        56       122       100       219
TRADING ACCOUNT INTEREST                      -         -         -         -
OTHER INTEREST                              106       244       159       323
TOTAL INTEREST INCOME                     1,594     3,219     1,696     3,363
INTEREST ON DEPOSITS                        556     1,126       609     1,189
INTEREST ON SHORT TERM BORROWING              -         -         -         -
INTEREST ON LONG TERM DEBT                    -         -         -         -
TOTAL INTEREST EXPENSE                      556     1,126       609     1,189
NET INTEREST INCOME                       1,038     2,093     1,087     2,174
PROVISION FOR LOAN LOSSES                   (12)       18        18        38
NET INTEREST INCOME AFTER ALLOWANCE
FOR LOAN LOSSES                           1,050     2,075     1,069     2,136
OTHER INCOME                                103       208       106       214
OTHER EXPENSES                              903     1,826       872     1,797
INCOME BEFORE TAX                           250       457       303       553
INCOME TAX EXPENSE                           51       114        68       128
INCOME BEFORE EXTRAORDINARY ITEMS           199       343       235       425
EXTRAORDINARY ITEM NET OF TAX
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES
NET INCOME                                  199       343       235       425
EARNINGS PER SHARE                         0.20      0.34      0.23      0.42


Note 1:  The financial statements in this report are unaudited but, in the
opinion of management of the Corporationreflect 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.


                                        -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.

For further enhancement of shareholders value, management is pursuing the
possibility of opening, de novo, a bank in Southern Oregon in the early part
of 2000.  The Bank currently serves customers in Southern Oregon in the
lending capacity through the Loan Production Office.  This would make
Timberline Bancshares, inc., a multi-bank multi-state entity.


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


Net interest income has declined in the first half of 1999 as the Bank, and
community banks across the nation, has been caught in the interest crunch
created by the low prime rate.   To maintain market share, the bank must pay
it?s depositors at a comparable rate of other community banks.  Conversely,
the rates charged on loans must also be competitive with other financial
institutions.  Consequently, the net interest spread suffers and income is
reduced.

While economic indicators report the nation?s unemployment rate at 4.7%
Siskiyou County has a current unemployment rate of 11.6%.  The 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 in the
second half of the year.  In addition, the bank?s loan delinquency has
remained well below .06 percent so the bank reclaimed a portion of the
excessive loan loss reserve in the second quarter.

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.

The bank has also been addressing the Y2K situation diligently, being on
schedule with the guidelines established by the regulatory authorities
including necessary upgrading of equipment and application testing.
The bank is also offering seminars on the Y2K to all  business located in
Siskiyou County.  The cost of these programs and the increased personnel to
handle same are reflected in the nominal increase in other operating expenses.

 In addition, the Bank has continued its dividend program paying a $.25 per
share cash dividend to shareholders of record in the second quarter of the year




                        TIMBERLINE BANCSHARES, INC.
                        CONSOLIDATED BALANCE SHEET
                                6/30/99

     ASSETS
CASH & DUE FROM BANKS                        $   7,243
INTEREST BEARING DEPOSITS IN OTHER                 100
FED FUNDS & RESALE SECURITY AGREE                1,600
TRADING ACCOUNT ASSETS                               -
OTHER SHORT TERM                                 2,030
INVESTMENT SECURITIES
   HELD FOR SALE                                17,509
   MATURITY                                      4,285
LOANS TOTAL                                     53,693
   ALLOWANCE FOR LOAN LOSSES                      (397)
   UNEARNED INCOME                                (122)
PREMISES & EQUIPMENT                             1,940
DUE FROM CUSTOMERS, ACCEPTANCES                      -
OTHER ASSETS                                     2,803
     TOTAL                                    $ 90,684


     LIABILITIES
DEPOSITS, NON-INTREST BEARING                 $ 16,667
          INTEREST BEARING                      65,629
SHORT TERM BORROWING                                 -
BANK ACCEPTANCES                                     -
OTHER LIABILITIES                                  680
LONG TERM DEBT                                       -
COMMITMENTS & CONTINGENT LIAB                        -
MINORITY INTERESTS                                   -


     SHAREHOLDER EQUITY
PERFERED STOCK                                       -
COMMON STOCK                                     2,993
OTHER S/H EQUITY                                 4,715
    TOTAL                                     $ 90,684



Note: Held for Sell amount includes unrealized gain of $(427)




                            TIMBERLINE BANCSHARES, INC.
                              CONSOLIDATED CASH FLOWS





CASH FLOW FROM OPERATING ACT         YTD 6/30/99        YTD 6/30/98
   NET INCOME                             343                425
   NON-CASH                                 -                  -
     DEPRECIATION                         107                153
     NET CHANGE BAD DEBTS PROV             18                -14
     CUMU EFFECT ACCTG CH                   -                  -
   (INCREASE) DECREASE IN
     OTHER ASSETS                       -1072                370
   INCREASE (DECREASE) IN
     ACCRUED EXPENSES                      27                 36

CASH PROVIDED BY OPS                     -577                970


CASH FROM INVESTING
    INCREASE (DECREASE) IN
     DEPOSITS                             297               2187
    (INCREASE) DECREASE IN
     SHORT  TERM INVESTMENTS             -669                -27
     SECURITIES: FOR SALE               -4468               -992
                 HOLD                    1253                723
     FED FUNDS                           8200              -2100
     LOANS                              -1289               -551
     (PURCHASE) SALE OF F.A.              -38               -577

CASH (USED) PROVIDED                     3286              -1337

CASH FROM FINANCING                         -                  -
    DIVIDENDS PAID                       -252               -252
    ADDITIONAL PD IN CAP                    -                  -

CASH(APPLIED) PROVIDED                   -252               -252

NET CHANGE                               2457               -619

OPEN                                     4886               5224

CLOSE                                    7343               4605



                                        -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   7/27/99                       ss/Robert J. Youngs
                                        Robert J. Youngs,  President & CEO


Date  7/27/99                        ss/Helen L. Gualden
                                        Helen L. Gaulden, Sr. V. P. & Treasurer