<PAGE>
                    SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549

                            ===================

                                 FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
     For The Quarterly Period Ended June 30, 1997


[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
     For The Transition Period From _____________ to ______________.

                        Commission File No.:  0-16444

                      SHORELINE FINANCIAL CORPORATION
          (Exact Name of Registrant as Specified in its Charter)

                   MICHIGAN                             38-2758932
         (State or Other Jurisdiction                (I.R.S. Employer
       of Incorporation or Organization)            Identification No.)

              823 RIVERVIEW DRIVE
            BENTON HARBOR, MICHIGAN                       49022
   (Address of Principal Executive Offices)             (Zip Code)

                              (616) 927-2251
           (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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 _____

As of July 31, 1997, there were 5,901,032 issued and outstanding shares of
the Registrant's Common Stock.









<PAGE>
                      SHORELINE FINANCIAL CORPORATION
                                 FORM 10-Q

                                   INDEX

                                                                       PAGE
                                                                      NUMBER
                                                                      ------

PART I.  FINANCIAL INFORMATION

     Item 1. Financial Statements (Unaudited)

             Condensed Consolidated Balance Sheets,
             June 30, 1997 and December 31, 1996                        3-4

             Condensed Consolidated Statements of Income,
             Three Months and Six Months Ended June 30,
             1997 and 1996                                                5

             Condensed Consolidated Statements of Cash Flows,
             Six Months Ended June 30, 1997 and 1996                    6-7

             Notes to Condensed Consolidated Financial
             Statements                                                8-11

     Item 2. Management's Discussion and Analysis of
             Financial Condition and Results of Operations            12-17


PART II.  OTHER INFORMATION                                           18-19

     Item 4. Submission of Matters to a Vote of Security Holders         18

     Item 6. Exhibits and Reports on Form 8-K                         18-19


SIGNATURES                                                               20












                                      -2-
<PAGE>
                      PART I.  FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS.
<TABLE>
                      SHORELINE FINANCIAL CORPORATION
                        CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                                  JUNE 30,         DECEMBER 31,
                                                                    1997               1996
                                                                ------------       ------------
                                                                (unaudited)
<S>                                                            <C>                <C>
ASSETS
 Cash and due from banks                                        $ 38,101,653       $ 38,266,519
 Interest-earning deposits                                         3,473,970         18,142,151
 Federal funds sold                                                1,650,000          5,150,000
                                                                ------------       ------------
     Total cash and cash equivalents                              43,225,623         61,558,670
 Securities held to maturity
     (fair values of $46,022,753 and
     $48,588,454 on June 30, 1997 and
     December 31, 1996, respectively)                             45,066,689         47,582,337
 Securities available for sale (carried at fair value)           120,421,200         90,254,236

 Total loans                                                     620,536,961        500,591,353
 Less allowance for loan loss                                      7,648,824          6,894,945
                                                                ------------       ------------
     Net loans                                                   612,888,137        493,696,408

 Premises and equipment, net                                      13,692,369         10,975,483
 Other assets                                                     23,601,322         12,027,685
                                                                ------------       ------------
     Total Assets                                               $858,895,340       $716,094,819
                                                                ============       ============

LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities
 Deposits:
     Non interest-bearing                                       $ 74,046,139       $ 74,142,067
     Interest-bearing                                            654,967,321        542,335,458
                                                                ------------       ------------
       Total deposits                                            729,013,460        616,477,525

 Securities sold under agreements to repurchase                    7,274,156          7,166,563
 Other liabilities                                                 5,975,921          5,032,529
 FHLB advances                                                    44,185,646         18,000,000
                                                                ------------       ------------
     Total Liabilities                                           786,449,183        646,676,617
                                                                ------------       ------------
</TABLE>
                                      -3-
<PAGE>
<TABLE>
                      SHORELINE FINANCIAL CORPORATION
                  CONSOLIDATED BALANCE SHEETS - CONTINUED
<CAPTION>
                                                                  JUNE 30,         DECEMBER 31,
                                                                    1997               1996
                                                                ------------       ------------
                                                                (unaudited)
<S>                                                            <C>                <C>
Shareholders' Equity
 Common Stock:
     10,000,000 shares authorized;
     5,894,625 and 5,555,672 shares issued
     at June 30, 1997 and December 31, 1996,
     respectively
 Additional Paid-in Capital                                       64,365,908         56,388,553
 Stock Incentive Plan (unearned shares)                             (555,725)
 Unrealized gain on securities
     available for sale, net                                       1,014,268          1,378,327
 Retained earnings                                                 7,621,706         11,651,322
                                                                ------------       ------------
     Total Shareholders' Equity                                   72,446,157         69,418,202
                                                                ------------       ------------
     Total Liabilities & Shareholders' Equity                   $858,895,340       $716,094,819
                                                                ============       ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.





















                                      -4-
<PAGE>
<TABLE>
                      SHORELINE FINANCIAL CORPORATION
                     CONSOLIDATED STATEMENTS OF INCOME
                                (UNAUDITED)
<CAPTION>
                                             THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                  JUNE 30,                          JUNE 30,
                                       ----------------------------      ----------------------------
                                           1997             1996             1997             1996
                                       -----------      -----------      -----------      -----------
<S>                                   <C>              <C>              <C>              <C>
INTEREST INCOME
 Loans, including fees                 $11,711,992      $10,909,908      $22,674,067      $21,556,648
 Securities                              2,569,756        2,408,231        5,064,534        4,827,292
 Deposits with banks                       382,560          104,172          677,483          150,686
 Federal funds sold                        123,910          107,415          250,596          194,080
                                       -----------      -----------      -----------      -----------
     Total interest income              14,788,218       13,529,726       28,666,680       26,728,706
                                       -----------      -----------      -----------      -----------

INTEREST EXPENSE
 Deposits                                6,641,187        5,961,549       12,881,773       12,002,047
 Other                                     455,355          228,506          776,536          359,743
                                       -----------      -----------      -----------      -----------
     Total interest expense              7,096,542        6,190,055       13,658,309       12,361,790
                                       -----------      -----------      -----------      -----------

NET INTEREST INCOME                      7,691,676        7,339,671       15,008,371       14,366,916
 Provision for loan losses                 120,000          150,000          240,000          300,000
                                       -----------      -----------      -----------      -----------

NET INTEREST INCOME AFTER
 PROVISION FOR LOAN LOSSES               7,571,676        7,189,671       14,768,371       14,066,916
                                       -----------      -----------      -----------      -----------

OTHER INCOME
 Service charges on deposit
   accounts                                549,975          449,003        1,017,686          866,735
 Trust fees                                415,816          407,201          818,864          779,889
 Securities gains                           77,602          113,705          112,903          184,344
 Other                                     386,566          117,513          669,397          267,382
                                       -----------      -----------      -----------      -----------
     Total other income                  1,429,959        1,087,422        2,618,850        2,098,350
                                       -----------      -----------      -----------      -----------






                                       -5-
<PAGE>
OTHER EXPENSES
 Personnel                               2,761,345        2,641,053        5,454,689        5,282,615
 Occupancy                                 333,228          327,767          693,501          677,439
 Equipment                                 534,216          489,880        1,033,017          963,896
 Other                                   1,616,470        1,464,338        2,913,291        2,638,703
                                       -----------      -----------      -----------      -----------
     Total other expense                 5,245,259        4,923,038       10,094,498        9,562,653
                                       -----------      -----------      -----------      -----------

INCOME BEFORE INCOME TAXES               3,756,376        3,354,055        7,292,723        6,602,613
 Federal income tax expense              1,107,000          960,800        2,101,000        1,851,800
                                       -----------      -----------      -----------      -----------

NET INCOME                             $ 2,649,376      $ 2,393,255      $ 5,191,723      $ 4,750,813
                                       ===========      ===========      ===========      ===========
EARNINGS PER SHARE                     $       .45      $       .41      $       .88      $       .82
                                       ===========      ===========      ===========      ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.





























                                      -6-
<PAGE>
<TABLE>
                      SHORELINE FINANCIAL CORPORATION
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (UNAUDITED)
<CAPTION>
                                                                           SIX MONTHS ENDED
                                                                               JUNE 30,
                                                                   ---------------------------------
                                                                       1997                 1996
                                                                   ------------         ------------
<S>                                                               <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                         $  5,191,723         $  4,750,813
Adjustments to reconcile net income to net cash
from operating activities:
 Depreciation and amortization                                          785,572              744,647
 Provision for loan losses                                              240,000              300,000
 Net amortization and accretion on securities                           144,556              332,116
 Amortization of goodwill and related core
     deposit intangible                                                 128,139              141,165
 Stock incentive expense                                                 50,525
 Gains on sales and calls of securities                                (112,903)            (184,344)
 Increase in other assets                                              (593,980)            (388,042)
 Increase in other liabilities                                         (372,273)          (1,273,614)
                                                                   ------------         ------------
NET CASH FROM OPERATING ACTIVITIES                                    5,461,359            4,422,741
                                                                   ------------         ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Net cash paid for acquisition of SJS (See Note 2)                  (20,436,447)
 Net increase in loans                                               (7,139,217)         (30,755,890)
 Securities available for sale:
     Purchases                                                      (22,592,526)         (11,183,902)
     Proceeds from sales                                             13,320,287            6,870,805
     Proceeds from maturities, calls and principal
       reductions                                                     7,349,079           11,478,113
 Securities held to maturity:
     Purchases                                                       (3,000,000)          (8,681,583)
     Proceeds from maturities, calls and principal
       reductions                                                     5,482,882            6,161,325
 Premises and equipment expenditures                                 (1,329,203)          (1,159,056)
                                                                   ------------         ------------
NET CASH USED IN INVESTING ACTIVITIES                               (28,345,145)         (27,270,188)
                                                                   ------------         ------------
</TABLE>






                                      -7-
<PAGE>
<TABLE>
                      SHORELINE FINANCIAL CORPORATION
             CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
                                (UNAUDITED)
<CAPTION>
                                                                           SIX MONTHS ENDED
                                                                               JUNE 30,
                                                                   ---------------------------------
                                                                       1997                 1996
                                                                   ------------         ------------
<S>                                                               <C>                  <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
 Net increase in deposits                                             1,793,380           13,156,513
 Net (increase) decrease in short-term borrowing                        107,593              (90,416)
 Proceeds from FHLB advances                                          9,000,000           11,000,000
 Repayment of FHLB advances                                          (4,500,000)
 Dividends paid                                                      (2,418,073)          (2,153,897)
 Proceeds from shares issued                                            567,839              461,291
 Payments to retire common stock                                                            (354,725)
                                                                   ------------         ------------
NET CASH FROM FINANCING ACTIVITIES                                    4,550,739           22,018,766
                                                                   ------------         ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                             (18,333,047)            (828,681)
 Cash and Cash Equivalents at Beginning of Year                      61,558,670           42,760,198
                                                                   ------------         ------------
 Cash and Cash Equivalents at June 30                              $ 43,225,623         $ 41,931,517
                                                                   ============         ============
CASH PAID DURING THE YEAR FOR:
 Interest                                                          $ 13,297,673         $ 12,441,797
 Income Taxes                                                      $  1,577,000         $  2,459,000
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
 Shares issued under stock incentive plan in the amount of $606,250.


The accompanying notes are an integral part of these consolidated financial
statements












                                      -8-
<PAGE>
                      SHORELINE FINANCIAL CORPORATION

           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

          The accompanying unaudited condensed consolidated financial
statements were prepared in accordance with Rule 10-01 of Regulation S-X
and the instructions for Form 10-Q and, therefore, do not include all
disclosures required by generally accepted accounting principles for
complete presentation of financial statements.  In the opinion of
management, the condensed consolidated financial statements contain all
adjustments (consisting only of normal recurring accruals) necessary to
present fairly the financial condition of Shoreline Financial Corporation
as of June 30, 1997 and December 31, 1996, and the results of its
operations for the three and six months ended June 30, 1997 and 1996, and
its cash flows for the six months then ended.  The results of operations
for the six months ended June 30, 1997 are not necessarily indicative of
the results to be expected for the year ending December 31, 1997.

          The Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standard (SFAS) No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities."
This pronouncement revises the accounting for transfers of financial
assets, such as loans and securities, and for distinguishing between sales
and secured borrowings.  SFAS No. 125, as amended by SFAS No. 127, is
effective for some transactions in 1997 and others in 1998.  The effect of
adopting this standard was not material to the consolidated financial
statements of Shoreline Financial Corporation.

          In June 1997, the FASB issued SFAS No. 128, "Earnings Per
Share," which revises the accounting requirements for calculating earnings
per share.  Effective beginning with year-end 1997, basic earnings per
share will be calculated solely on average common shares outstanding.
Diluted earnings per share will reflect the potential dilution of stock
options and other common stock equivalents.  All prior calculations will be
restated to be comparable to the new methods.  Since the Corporation has not
had significant dilution from stock options, the new calculation methods
will not significantly affect future basic earnings per share or diluted
earnings per share.

PRINCIPLES OF CONSOLIDATION

          The accompanying consolidated financial statements include the
accounts of Shoreline Financial Corporation and its wholly owned
subsidiary, Shoreline Bank, together referred to as "Shoreline." All material


                                      -9-
<PAGE>
intercompany accounts and transactions have been eliminated in
consolidation.

INVESTMENTS IN DEBT AND EQUITY SECURITIES

          Securities are classified into held to maturity, available for
sale and trading categories.  Held to maturity securities are those which
Shoreline has the positive intent and ability to hold to maturity and are
reported at amortized cost.  Available for sale securities are those which
Shoreline may decide to sell if needed for liquidity, asset-liability
management or other reasons.  Available for sale securities are reported at
fair value, with unrealized gains or losses included as a separate
component of equity, net of tax.  Trading securities are bought principally
for sale in the near term and are reported at fair value with unrealized
gains or losses included in earnings.  Shoreline did not hold any
securities considered for this category at any time during the second
quarter of 1997.

          Realized gains or losses are determined based on the amortized
cost of the specific security sold.

          During the six month period ended June 30, 1997, the proceeds
from sales of available for sale securities were $13,320,287, with gross
realized gains of $112,457 and gross realized losses of $10,040 from those
sales.  Gross gains of $10,486 were realized on calls of securities during
the same period.  For this period, the change in net unrealized holding
gains on available for sale securities was a decrease of approximately
$552,000.  There were no sales or transfers of securities classified as
held to maturity.

INTANGIBLE ASSETS

          Goodwill represents the excess of the purchase price over the net
value of tangible assets acquired and related core deposit intangibles
identified in acquisitions.  Goodwill is expensed on the straight-line
method over no more than 25 years. The related core deposit intangibles are
amortized on an accelerated basis over the estimated life of the deposits
acquired.  Goodwill and core deposit intangibles totaled approximately
$12,385,000 and $2,377,000 at June 30, 1997 and December 31, 1996,
respectively.  The increase is attributable to the acquisition of SJS
Bancorp, Inc. as discussed below.  These amounts are included in Other
Assets in the accompanying balance sheets.

INCOME TAXES

          Income tax expense for the periods ended June 30, 1997 and 1996
is based upon the asset and liability method.  Shoreline records income tax
expense based on the amount of taxes due on its tax return plus deferred


                                      -10-
<PAGE>
taxes computed based on the expected future tax consequences of temporary
differences between the carrying amounts and tax bases of assets and
liabilities, using enacted rates.

EARNINGS PER SHARE

          Earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding and common equivalent
shares with a dilutive effect.  Common equivalent shares are shares which
may be issuable to employees upon exercise of outstanding stock options.
The average number of shares was 5,886,002 in the second quarter of 1997
and 5,791,059 in the second quarter of 1996.  The average number of shares
was 5,872,630 in the six months ended June 30, 1997 and 5,790,038 in the
six months ended June 30, 1996.

NOTE  2 - ACQUISITION

          On June 13, 1997, Shoreline completed the acquisition of all the
outstanding stock of SJS Bancorp, Inc. ("SJS"), headquartered in St. Joseph,
Michigan for approximately $24.8 million in cash.

          The acquisition is accounted for as a purchase.  Intangibles are
amortized on various methods over their estimated lives.  The fair values of
assets and liabilities assumed were as follows (in thousands):

<TABLE>
<CAPTION>
<S>      <C>                                                       <C>
          Cash acquired, net of cash paid for acquisition           $ (20,436)
          Securities                                                   28,794
          Loans, net                                                  112,293
          Premises and equipment, net                                   2,173
          Acquisition intangibles                                      10,619
          Other assets                                                    301

          Deposits                                                   (110,743)
          FHLB advances                                               (21,686)
          Other liabilities                                            (1,315)
</TABLE>











                                      -11-
<PAGE>
NOTE 3 - INCOME TAXES

          Components of the provision for federal income taxes are as
follows:
<TABLE>
<CAPTION>
                                             JUNE 30, 1997
                                             -------------
<S>      <C>                                 <C>
          Taxes currently payable             $1,894,000
          Deferred tax expense                   207,000
                                              ----------
            Income tax expense                $2,101,000
                                              ==========
</TABLE>

          The deferred income taxes are due primarily to the temporary
difference related to depreciation, bad debt deductions, mark-to-market of
securities held for sale and deferred loan fees.

               The difference between the provision for income taxes shown on
the statement of income and amounts computed by applying the statutory
federal income tax rate to income before income taxes is as follows:
<TABLE>
<CAPTION>
                                                                    JUNE 30, 1997
                                                                    -------------
<S>      <C>                                                         <C>
          Income tax calculated at statutory federal rate of 34%      $2,480,000
          Increase (decrease) due to tax effect of
            Tax-exempt income                                           (445,000)
            Nondeductible expense and other                               66,000
                                                                      ----------
            Income tax expense                                        $2,101,000
                                                                      ==========
</TABLE>

          The components of the net deferred tax asset recorded in the
balance sheet as of June 30, 1997 are as follows:
<TABLE>
<CAPTION>
<S>      <C>                                          <C>
          Total deferred tax liabilities               $ (950,500)
          Total deferred tax assets                     3,288,000
          Total valuation allowance                             0
                                                       ----------
            Net deferred tax asset                     $2,337,500
                                                       ==========
</TABLE>

                                      -12-
<PAGE>
Item 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

       The following discussion compares the financial condition of
Shoreline Financial Corporation ("Shoreline") at June 30, 1997 to December
31, 1996 and the results of operations for the three and six months ended
June 30, 1997 with the same periods in 1996. The acquisition of SJS
Bancorp, Inc. ("SJS") in the quarter ended June 30, 1997 is reflected in
the balance sheet of Shoreline with the addition of approximately $134
million in market valued assets and liabilities (see Note 2). As such,
average balance comparisons normally used in the balance sheet discussion
provide limited usefulness due to the SJS transaction. Therefore, the
discussion relating to the financial condition of Shoreline will compare
actual balances of selected items.

FINANCIAL CONDITION

       Total assets of Shoreline were $858.9 million as of June
30, 1997, a 19.9% increase compared to the level of $716.1 million at
December 31, 1996. The acquisition of SJS accounted for $133.7 million of
growth. Various components of the balance sheet impacted by the merger are
analyzed below.

       Total deposits on June 30, 1997 were $729.0 million, an increase
of $112.5 million from December 31, 1996. Deposits added to the balance
sheet as a result of the SJS acquisition were $110.7 million.
Approximately 75% of these deposits were interest-bearing time deposits.
Only $1.3 million of the SJS deposits were non-interest bearing. Without
considering the SJS deposits, total deposits have increased a modest $1.8
million from December 31, 1996. Reduction in Shoreline's Super Public Fund
account, an interest-bearing demand deposit account geared toward
municipalities, during the second quarter of 1997 offset the majority of
the growth in deposits obtained during the first quarter. The decline in
these accounts is somewhat tied to seasonal funding patterns of the
municipalities.

       Borrowings from the Federal Home Loan Bank of Indianapolis ("FHLB")
increased to $44.2 million as of June 30, 1997 from $18.0 million as of
December 31, 1996. The majority of this increase resulted from the addition
of $21.7 million in outstanding borrowings of SJS. Shoreline also increased
its borrowings in the first quarter of 1997 by $5.0 million. This source of
wholesale funding provides an alternative to conventional retail funding at
comparable cost.

       Total loans increased $119.9 million to $620.5 million as of June
30, 1997 from $500.6 million as of December 31, 1996. Of this increase,
$112.3 million was attributable to the acquisition of SJS. Removing this
effect, Shoreline's loan portfolios increased $7.1 million over the six


                                      -13-
<PAGE>
month period. The majority of this increase occurred in the consumer loan
portfolio where volume rose $5.8 million, primarily the result of a promotion
program held during the second quarter. Commercial loans increased $2.3
million while the volume of mortgage loans held in the portfolio declined by
$1.0 million.  Approximately $86 million of the $112.3 million of loans
acquired from SJS were added to Shoreline's mortgage loan portfolio.

       Total investment securities were $165.5 million as of June 30, 1997,
an increase of $27.7 million from December 31, 1996. The SJS transaction
added $28.8 million to Shoreline's securities portfolio, of which $27.6
million were U.S. Government Agency securities designated as available for
sale. Shoreline's short-term investments were impacted by the payment of
$24.8 million for the purchase of all of the outstanding common stock of SJS.
Total cash and cash equivalents at June 30, 1997 is more representative of
the level at which Shoreline will normally operate.

       Other assets increased $11.6 million to $23.6 million as of June
30, 1997 from $12.0 million as of December 31, 1997. The purchase
accounting method was used in the acquisition of SJS, resulting in the
addition of related intangibles totaling $10.6 million.

       Total non-performing assets at June 30, 1997 were $2.0 million,
which represents .32% of Shoreline's total loan portfolio at that date.
This level of non-performing assets is down from the ratio of .38% at
December 1996. Non-performing assets include loans that are classified for
regulatory purposes as contractually past due 90 days or more, on non-
accrual status or "troubled debt restructurings" and other real estate
owned.

       During the second quarter of 1997, Shoreline enjoyed net recoveries
on charged-off loans of $113,155. This reduced net charge-offs on a
year-to-date basis to only $26,715, which represents .01% of average total
loans for the same period.  The provision for loan losses for the second
quarter of 1997 was $120,000, consistent with that of the first quarter of
the year. At June 30, 1997, Shoreline's allowance for loan losses totaled
$7,648,824, which provides a coverage ratio of 3.9 times the level of
non-performing assets identified at that date.  The SJS transaction added
approximately $540,000 to Shoreline's allowance. Despite this increase,
Shoreline's allowance as a percentage of total loans declined to 1.23% at
June 30, 1997 from 1.38% at March 31, 1997.  Management believes the level of
the loan loss reserve is adequate to cover the risk associated with its loan
portfolio.

LIQUIDITY AND RATE SENSITIVITY

       During the second quarter of 1997, Shoreline's loan to deposit
ratio was 81.4%, up slightly from the previous quarter's ratio of 80.6%.



                                      -14-
<PAGE>
During the second quarter of 1997, average interest-earning deposits and
federal funds sold represented 4.8% of Shoreline's total assets.  On June
30, 1997, however, interest-earning deposits and federal funds sold totaled
$5.1 million, representing less than 1% of total assets. This decline
reflects the impact of the cash purchase of SJS. Approximately $120 million
or 73% of Shoreline's total securities portfolio was classified as
available for sale on June 30, 1997 and $624,000 of loans were classified
as held for sale. On June 30, 1997, Shoreline had commitments to make or
purchase loans, including the unused portions of lines of credit, totaling
approximately $125 million.

       On June 30, 1997, the cumulative funding gaps of interest-earning
assets and interest-bearing liabilities for selected maturity periods are
illustrated as follows:

<TABLE>
<CAPTION>
                                         REPRICEABLE OR MATURING WITHIN:
                                      --------------------------------------
                                        0 TO 3        0 TO 12        0 TO 5
(000S)                                  MONTHS        MONTHS         YEARS
                                        ------        ------         -----
<S>                                  <C>            <C>            <C>
Interest-earning assets
 Loans                                $ 155,038      $ 254,586      $539,085
 Securities                              22,021         33,619        91,845
 Federal funds sold                       1,650          1,650         1,650
 Interest-earning deposits                3,474          3,474         3,474
                                      ---------      ---------      --------

     Total                            $ 182,183      $ 293,329      $636,054
                                      =========      =========      ========

Interest-bearing liabilities
 Time deposits                        $ 108,832      $ 242,825      $377,504
 Demand and savings deposits            272,783        272,783       272,783
 Other borrowings                        17,224         29,974        51,274
                                      ---------      ---------      --------

     Total                            $ 398,839      $ 545,582      $701,561
                                      =========      =========      ========

Asset/(Liability) Gap                 $(216,656)     $(252,253)     $(65,507)
                                      =========      =========      ========
</TABLE>

          As shown, Shoreline had a cumulative liability gap position of
$252.3 million within the one-year time frame. At March 31, 1997, Shoreline


                                      -15-
<PAGE>
reported a liability gap position within this same time frame of $182.2
million. The increase reflects the addition of SJS rate sensitive assets
and liabilities. This position suggests that if market interest rates
decline in the next 12 months, Shoreline has the potential to earn more net
interest income. A limitation of the traditional static gap analysis,
however, is that it does not consider the timing or magnitude of
noncontractual repricing.  Because of these and other limitations of the
static gap analysis, Shoreline's Asset/Liability Committee utilizes
simulation modeling as its primary tool to project how changes in interest
rates will impact net interest income. These models indicate, and
management believes, that Shoreline is positioned such that changes in
rates within anticipated ranges and under anticipated circumstances would
not severely alter operating results.

CAPITAL RESOURCES

          Total shareholders' equity was $72.4 million on June 30,
1997. Included in this total are net unrealized gains on securities
available for sale totaling $1 million, a decrease of approximately
$364,000 from December 31, 1996. During the second quarter of 1997,
Shoreline's Board of Directors approved and paid a cash dividend of $.21
per share. Shoreline's capital ratios declined from March 31, 1997
reflecting the impact of its purchase of SJS. However, Shoreline's capital
position still remains strong and is well above minimum regulatory
standards.  Shoreline remains classified as a "well-capitalized" institution
under these standards.

<TABLE>
<CAPTION>
                               JUNE 30, 1997      DECEMBER 31, 1996
                               -------------      -----------------
<S>                              <C>                  <C>
Equity to assets                   8.43%                9.69%
Tier I leverage                    6.97%                9.30%
Risk-based:
     Tier I Capital               11.35%               15.10%
     Total Capital                12.59%               16.33%
</TABLE>

RESULTS OF OPERATIONS

          Net income for the quarter ended June 30, 1997 was $2,649,376, an
increase of 10.7%, or $256,121, over the same period in 1996. Revenue
growth, both in net interest income and non-interest income, was the primary
reason behind the improved profitability.  The following table illustrates
the effect that changes in rates and volumes of interest-earning assets and
interest-bearing liabilities had on net interest income:



                                      -16-
<PAGE>
<TABLE>
                        THREE MONTHS ENDED JUNE 30
<CAPTION>
                                                 1997           1996
                                                 ----           ----
<S>                                           <C>            <C>
(000S)
Interest income (taxable equivalent)           $ 15,030       $ 13,831
Interest expense                                  7,096          6,190
                                               --------       --------
 Net interest income                           $  7,934       $  7,640
                                               ========       ========

Average volume:
 Interest-earning assets                       $709,718       $647,917
 Interest-bearing liabilities                   610,864        553,903
                                               --------       --------
     Net differential                          $ 98,854       $ 94,014
                                               ========       ========

Average yields/rates:
 Yield on earning assets                          8.49%          8.56%
 Rate paid on liabilities                         4.66%          4.48%
                                               --------       --------

     Interest spread                              3.83%          4.08%
                                               ========       ========

     Net interest margin                          4.48%          4.73%
                                               ========       ========
</TABLE>

          The change in net interest income (in thousands) is attributable
to the following:

<TABLE>
<CAPTION>
                                    VOLUME       RATE     INC/(DEC)
                                    ------       ----     ---------
<S>                                <C>         <C>        <C>
Interest-earning assets             $1,313      $(114)     $1,199
Interest-bearing liabilities           650        255         905
                                    ------      -----      ------
 Net Interest                       $  663      $(369)     $  294
                                    ======      =====      ======
</TABLE>




                                      -17-
<PAGE>
          Net income for the six months ended June 30, 1997, was
$5,191,723, an increase of 9.3% over the same period in 1996.  Increased
revenue from net interest income and other income provided this increase. 
The following table illustrates the effect that changes in rates and
volumes of interest-earning assets and interest-bearing liabilities had on
net interest income for the six months ended June 30, 1997 and 1996.

<TABLE>
                         SIX MONTHS ENDED JUNE 30
<CAPTION>
                                                   1997           1996
                                                   ----           ----
<S>                                             <C>            <C>
(000S)
Interest income (taxable equivalent)             $ 29,072       $ 27,243
Interest expense                                   13,658         12,362
                                                 --------       --------
 Net interest income                             $ 15,414       $ 14,881
                                                 ========       ========

Average volume:
 Interest-earning assets                         $629,283       $640,455
 Interest-bearing liabilities                     594,465        547,693
                                                 --------       --------
     Net differential                            $ 97,818       $ 92,762
                                                 ========       ========

Average yields/rates:
 Yield on earning assets                            8.47%          8.55%
 Rate paid on liabilities                           4.63%          4.55%
                                                 --------       --------

     Interest spread                                3.84%          4.00%
                                                 ========       ========

     Net interest margin                            4.49%          4.69%
                                                 ========       ========
</TABLE>

          The change in net interest income (in thousands) is attributable
to the following:









                                      -18-
<PAGE>
<TABLE>
<CAPTION>
                                         VOLUME       RATE     INC/(DEC)
                                         ------       ----     ---------
<S>                                     <C>         <C>        <C>
Interest-earning assets                  $2,095      $(266)     $1,829
Interest-bearing liabilities              1,075        221       1,296
                                         ------      -----      ------
      Net interest                       $1,020      $(487)     $  533
                                         ======      =====      ======
</TABLE>

       Shoreline expensed $120,000 for the provision for loan losses in
the second quarter of 1997, unchanged from the previous quarter. The
provision for loan losses is based upon loan loss experience and such other
factors which, in management's judgment, deserve current recognition in
maintaining an adequate allowance for loan losses.

       Total other income for the quarter ended June 30, 1997 was $1,429,959,
an increase of $342,537, or 31.5% over the second quarter in 1996.  Increased
other income accounted for approximately $269,000 of this increase. Increased
gains from the sale of mortgage loans as well as increased ATM fee income
provided the majority of the increase in other income. Increased deposit
service charge income contributed $101,000 to the increase in total other
income. For the six months ended June 30, total other income was $2,618,850
in 1997 compared to $2,098,350 in 1996. This is an increase of 24.8% or
$520,500. Again, increased other income provided the majority of growth in
this area. Other income for the six months ended June 30, 1997 totaled
$669,397, an increase of $402,000 over same period in 1996. Gains on the sale
of mortgage loans accounted for $295,000 of this increase with ATM fee income
and investment and insurance sale income also contributing to the $402,000
increase. Deposit service charge income increased $151,000 or 17.4% in first
six months of 1997 compared to the same period in 1996. Trust fee income
provided an additional $39,000 in 1997. As a percentage of average assets,
other income for the first six months of 1997 totaled .68% compared to .56%
in 1996.

       Total other expense was $5,245,259 during the second quarter of 1997,
an increase of $322,221 or 6.5% over the same period in 1996. Increased use
of professional services related to outsource arrangements and consulting
projects along with increased advertising, personnel and other expenses
related to the SJS acquisition contributed to the increase. For the six
months ended June 30, 1997, total other expense was $10,094,498, which is an
increase of 5.6% or $532,000 over the six months ended June 30, 1996. Again,
advertising, personnel expense and professional fees accounted for the
majority of this increase. As a percentage of average assets, total other
expense was 2.75% through June 1997. This compares to the prior year's ratio



                                      -19-
<PAGE>
over the same time period of 2.82%. Shoreline's efficiency ratio also
declined from 56.6% in the first half of 1996 to 55.8% in the first half of
1997.

       In summary, Shoreline's net income of $2,649,376 in the second
quarter of 1997 produced a return on average shareholders' equity of 14.93%
and a return on average assets of 1.40%. On a year-to-date basis,
Shoreline's return on average shareholders' equity stands at 14.77% and its
return on average assets was 1.42%, which favorably compare to 1996 ratios
of 14.53% and 1.39%, respectively. Earnings per share through June 30, 1997
was $.88 and dividends per share was $.41. These compare to earnings per
share and dividends per share through June 30, 1996 of $.82 and $.37,
respectively.





































                                      -20-
<PAGE>
                        PART II - OTHER INFORMATION


Item 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       The annual meeting of shareholders of Shoreline Financial
Corporation was held on May 1, 1997.  The purpose of the meeting was to
elect directors and to transact any other business that properly came
before the meeting.

       (a)  The name of each director elected (along with the number of
votes cast for or authority withheld) and the name of each other director
whose term of office as a director continued after the meeting follows:

<TABLE>
<CAPTION>
                                                          VOTES CAST
                                                          AUTHORITY         BROKER
                                             FOR           WITHHELD       NON-VOTES
                                             ---          ---------       ---------
<S>                                      <C>              <C>                 <C>
ELECTED DIRECTORS
Louis A. Desenberg                        4,717,325         12,424             0
Merlin J. Hanson                          4,720,525          9,224             0
Jeffrey H. Tobian                         4,585,158        144,591             0
</TABLE>

DIRECTORS WHO CONTINUE TO SERVE
Thomas T. Huff                       James E. LeBlanc
L. Richard Marzke                    James F. Murphy
Dan L. Smith                         Robert L. Starks
Ronald L. Zile

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  EXHIBITS.  The following documents are filed as exhibits to
this report on Form 10-Q:













                                      -21-
<PAGE>
     EXHIBIT
     NUMBER                        DOCUMENT
     ------                        --------

      2.1        Agreement and Plan of Merger, dated as of November 6,
                 1996 between Registrant, SJS Acquisition Corporation, and
                 SJS Bancorp, Inc.  Previously filed as Exhibit 2.1 to the
                 Registrant's Form 8-K filed on June 27, 1997.  Here
                 incorporated by reference.

      3.1        Restated Articles of Incorporation.  Previously filed as
                 Exhibit 1(a) to the registrant's Quarterly Report on Form
                 10-Q for the period ended September 30, 1994.  Here
                 incorporated by reference.

      3.2        Bylaws.  Previously filed as Exhibit 3(b) to the
                 registrant's Form S-1 Registration Statement filed March
                 23, 1990.  Here incorporated by reference.

      27         Financial Data Schedule.

          (b)  REPORTS ON FORM 8-K.  Shoreline filed a Form 8-K on June 27,
1997 reporting the acquisition of SJS Bancorp, Inc.  As of the date of the
filing, it was impracticable for the registrant to provide financial
statement information as well as pro forma financial information required
in Form 8-K.  In accordance with Item 7(a)(4) of Form 8-K, these financial
statements will be filed by amendment to this Form 8-K as soon as
practicable, but no later than 60 days after the date of the report.






















                                      -22-
<PAGE>
                                SIGNATURES


          Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.


                              SHORELINE FINANCIAL CORPORATION
                              (Registrant)


Date August 13, 1997          /S/ DAN L. SMITH
                              Dan L. Smith
                              Chairman, President and Chief Executive
                              Officer


Date August 13, 1997          /S/ WAYNE R. KOEBEL
                              Wayne R. Koebel
                              Executive Vice President, Chief Financial
                              Officer, Secretary and Treasurer (Principal
                              Financial and Accounting Officer)



























                                      -23-
<PAGE>
                               EXHIBIT INDEX


EXHIBIT
NUMBER                               DOCUMENT
------                               --------

 2.1         Agreement and Plan of Merger, dated as of November 6,
             1996 between Registrant, SJS Acquisition Corporation, and
             SJS Bancorp, Inc.  Previously filed as Exhibit 2.1 to the
             Registrant's Form 8-K filed on June 27, 1997.  Here
             incorporated by reference.

 3.1         Restated Articles of Incorporation.  Previously filed as
             Exhibit 1(a) to the registrant's Quarterly Report on Form
             10-Q for the period ended September 30, 1994.  Here
             incorporated by reference.

 3.2         Bylaws.  Previously filed as Exhibit 3(b) to the registrant's
             Form S-1 Registration Statement filed March 23, 1990.  Here
             incorporated by reference.

 27          Financial Data Schedule.