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, 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 )842-4200
                    (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:    1,006,810







                                       -2-



3rd Qrtr 99
TIMBERLINE BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
9/30/99

             ASSETS
CASH & DUE FROM BANKS                     $6,966
INTEREST BEARING DEPOSITS IN OTHER           100
FED FUNDS & RESALE SECURITY AGREE
TRADING ACCOUNT ASSETS
OTHER SHORT TERM                           2,299
INVESTMENT SECURITIES
   HELD FOR SALE                          17,303
   MATURITY                                3,951
LOANS TOTAL                               58,748
   ALLOWANCE FOR LOAN LOSSES                -423
   UNEARNED INCOME                          -114
PREMISES & EQUIPMENT                       1,908
DUE FROM CUSTOMERS, ACCEPTANCES
OTHER ASSETS                               1,830
     TOTAL                               $92,568

                 LIABILITIES
DEPOSITS, NON-INTREST BEARING            $17,533
          INTEREST BEARING                65,183
SHORT TERM BORROWING                       1,300
BANK ACCEPTANCES
OTHER LIABILITIES                            731
LONG TERM DEBT

COMMITMENTS & CONTINGENT LIAB
MINORITY INTERESTS

              SHAREHOLDER EQUITY
PERFERED STOCK
COMMON STOCK                               2,993
OTHER S/H EQUITY                           4,828
    TOTAL                                $92,568

Note: Held for Sell amount includes unrealized loss of $383.













                                          -3-

                        PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
                          TIMBERLINE BANCSHARES, INC.
                         CONSOLIDATED INCOME STATEMENT
                               Periods Indicated

                                Q 9/30/99  YTD 9/30/99  Q 9/30/98  YTD 9/30/98

INTEREST AND FEES ON LOANS          1,318        3,765      1,240        3,693
INTEREST AND DIVIDENDS ON
INVESTMENT SECURITIES
     HELD FOR SALE                    244          650        201          569
     HELD TO MATURITY                  52          174        102          321
TRADING ACCOUNT INTEREST                -            -          -            -
OTHER INTEREST                         51          295        184          507
TOTAL INTEREST INCOME               1,665        4,884      1,727        5,090
INTEREST ON DEPOSITS                  544        1,670        617        1,806
INTEREST ON SHORT TERM BORROWING        3            3          -            -
INTEREST ON LONG TERM DEBT              -            -          -            -
TOTAL INTEREST EXPENSE                547        1,673        617        1,806
NET INTEREST INCOME                 1,118        3,211      1,110        3,284
PROVISION FOR LOAN LOSSES               9           27         22           60
NET INTEREST INCOME AFTER ALLOWANCE
FOR LOAN LOSSES                     1,109        3,184      1,088        3,224
OTHER INCOME                          103          311        106          320
OTHER EXPENSES                        905        2,731        842        2,639
INCOME BEFORE TAX                     307          764        352          905
INCOME TAX EXPENSE                     71          185         98          226
INCOME BEFORE EXTRAORDINARY ITEMS     236          579        254          679
EXTRAORDINARY ITEM NET OF TAX
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES
NET INCOME                            236          579        254          679
EARNINGS PER SHARE                   0.23         0.58       0.25         0.67


Note 1:  The financial statements 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.














                                    -4-



                        TIMBERLINE BANCSHARES, INC.
                          CONSOLIDATED CASH FLOWS

CASH FLOW FROM OPERATING ACT               YTD 9/30/99   YTD 9/30/98
   NET INCOME                                    579           679
   NON-CASH
     DEPRECIATION                                160           160
     NET CHANGE BAD DEBTS PROV                    45           -29
     CUMU EFFECT ACCTG CH
   (INCREASE) DECREASE IN
     OTHER ASSETS                                -51           489
   INCREASE (DECREASE) IN
     ACCRUED EXPENSES                             78           120

CASH PROVIDED BY OPS                             811         1,419


CASH FROM INVESTING
    INCREASE (DECREASE) IN
     DEPOSITS                                    717         3,616
    (INCREASE) DECREASE IN
     SHORT  TERM INVESTMENTS                    -938           -43
     SECURITIES: FOR SALE                     -4,385         1,246
                          HOLD                 1,587           602
     FED FUNDS                                 9,800        -9,100
     LOANS                                    -6,352         2,793
     (PURCHASE) SALE OF F.A.                    -107          -619


CASH (USED) PROVIDED                             322        -1,505


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


CASH(APPLIED) PROVIDED                         1,048          -252

NET CHANGE                                     2,181          -338

OPEN                                           4,785         5,224

CLOSE                                          6,966         4,886








                                        -5-

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 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.  Conversly, 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 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.

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
and has declared a second $.25 per share cash dividend to be paid in the third
quarter of the year.

                                         -6-

                             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   10/25/99                    SS/ROBERT J. YOUNGS
                                      Robert J. Youngs,  President &
                                                         CEO




Date 10/25/99                      SS/HELEN L. GAULDEN
                                      Helen L. Gaulden, Sr. V. P. &
                                                        Treasurer