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, 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:    957412   









                    PART 1 - FINANCIAL INFORMATION


Item 1.  Financial Statements

                      TIMBERLINE BANCSHARES, INC.
                           INCOME STATEMENT
                           Periods Indicated


                                               Year            Prior Year 
                                             to Date              to Date
                                             03/31/97            03/31/96
 1.  Interest and Fees on Loans              $ 1,064             $ 1,097
 2.  Interest on Securities:
       Held to Maturity                          101                 107
       Available for Sale                        134                 151
 3.  Trading Account interest                    -0-                 -0-
 4.  Other interest                              183                 175
 5.  Total Interest Income                     1,482               1,530
 6.  Interest on Deposits                        493                 540
 7.  Interest on short term borrowing            -0-                 -0-
 8.  Interest on long term debt                  -0-                 -0-
 9.  Total Interest Expense                      493                 540
10.  Net Interest Income                         989                 990
11.  Provision for Loan Losses                   -0-                 -0-
12.  Net Interest Income after
      Provision for loan losses                  989                 990
13.  Other Income                                114                 115
14.  Other Expenses                              843                 777
15.  Income before Tax                           260                 328
16.  Income Tax Expense                           82                 113
17.  Income before extraordinary
       item                                      178                 215
18.  Extraordinary item net of tax               -0-                 -0-
19.  Cumulative effect of accounting
       changes                                   -0-                 -0-
20.  Net Income                               $  178              $  215

21.  Earnings per share                       $  .22               $ .46




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.
                             BALANCE SHEET
                                03/31/97


     ASSETS                                      03/31/97           03/31/96
 1.  Cash and Due from Banks                     $ 4,135            $ 5,331 
 2.  Interest Bearing Deposits other banks           -0-                -0- 
 3.  Federal Funds sold and securities
       purchased under resale agreement           14,600             13,800 
 4.  Trading Account Assets                          -0-                -0- 
 5.  Other short-term investments                  1,263              1,208 
 6.  Investment securities:
          Available for Sale                       8,397              7,469 
          to be Held to Maturity                   8,009             10,189 
 7.  Loans, Total                                 39,961             37,743 
          Allowance for loan losses                 (489)              (476)
          Unearned Income                            (57)               (91)
 8.  Premises and Equipment                        2,075              2,200 
 9.  Due from customers on acceptances               -0-                -0- 
10.  Other assets                                  1,370              1,236 
11.  Total Assets                                $79,264            $78,609 


     LIABILITIES

12.  Deposits, non-interest bearing              $12,742            $12,567 
               Interest bearing                   59,108             59,200 
13.  Short-term borrowing                            -0-                -0- 
14.  Bank Acceptances outstanding                    -0-                -0- 
15.  Other liabilities                               465                581 
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                                  2,294              2,294 
       Additional Paid in Capital                    530                485 
22.  Other Shareholders equity                     4,125              3,482 
23.  Total Liabilities and Shareholders Equity   $79,264            $78,609 



                                  -2-




                      TIMBERLINE BANCSHARES, INC
                        STATEMENT OF CASH FLOWS
                         For Periods Indicated

                                                  Year             Prior Year
                                                 to Date             to date  
                                                03/31/97            03/31/96 

Cash Flow from Operating Activities
     Net Income                                   $ 178              $  215 
     Non-cash items included in income
       Depreciation                                  45                  47 
       Net change in Bad Debt Provision              (3)                  1 
     (Increase)Decrease in:
       Other Assets                                 141                  61 
     Increase(Decrease) in:
       Accrued Expenses                              35                 118 
     Prior period adjustment                        -0-                 -0- 

       Net cash provided by operations              396                 442 

Cash Flow from Investing Activities
     Increase(Decrease) in:
          Deposits                                1,582              1,936 
     (Increase)Decrease in:                                      
          Securities - Held For Sale             (1,991)              (173)
                     - Held to Maturity           1,565                821 
          Federal Funds Sold                     (1,900)            (3,600)
          Loans                                    (706)             1,930 
     (Purchase)Sale of Fixed assets                 (23)               (47)
Net cash (used for) provided by
     investing activities                        (1,473)               867 

Cash Flow from Financing Activities
     Dividends Paid                                 -0-                -0- 
     Additional Paid in Capital                      10               (241)
                                                                       100 
Net cash (applied to)provided by
     financing activities                            10               (141)

Net cash increase(decrease) in cash
     and due from banks                          (1,067)             1,168 

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

Cash and Due from Banks at
     end of period                              $ 4,135            $ 5,331 


                                      -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 maintaining the
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 1996 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, and increases in operating 
expenses due rising prices, continued compliance with regulatory requirements 
and FASB rulings.

     The Bank has experienced in the past year a steadily declining loan demand 
in the county, and is therefore experiencing an increased investment portfolio 
and liquidity.  This has changed the point spread that the Bank has averaged for
the past several years from an average of 5.40% to 5.04%.  An aggressive loan 
program, participation in an affinity card program with another institution  
plus adjustments to interest rates paid should effectively counter these 
conditions in 1997.          

     At the March meeting, the Board of Directors of the Holding Company,
declared the shareholders of record of March 14, 1997 eligible to vote at the 
annual meeting to be held May 8, 1997.  Proxy statements and annual reports as 
submitted to the SEC with the 10KSB for 1996 were mailed to the shareholders on 
April 12, 1997.

                                  -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  4/28/97                                  \s\ Robert J. Youngs       
                                               Robert J. Youngs, President
                                                                 & CEO    


Date   4/28/97                                 \s\ Helen L. Gaulden       
                                               Helen L. Gaulden, Sr. Vice 
                                               President and Treasurer