UNITED STATES 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 March 31, 1997

                              OR

_____     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
          OF THE SECURITIES EXCHANGE ACT OF 1934.

          For the transition period from _______ to _______

                         Commission file number 2-89283


                           IOWA FIRST BANCSHARES CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


       STATE  OF  IOWA                                           42-1211285  
-------------------------------                              -------------------
(State  or  other  jurisdiction                              (IRS  Employer  of
incorporation or organization)                               Identification No.)

                             300 East Second Street
                             Muscatine, Iowa 52761
                    ----------------------------------------
                    (Address of principal executive offices)

                                  319-263-4221
                        -------------------------------
                        (Registrant's telephone number)


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_____

At March 31, 1997 there were 1,755,707 shares of the  registrant's  common stock
outstanding.
<PAGE>






                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES

                               INDEX TO FORM 10-Q




                                                                     PAGE NO.

PART 1  Financial Information

        Item 1.   Financial Statements

                  Consolidated  Condensed  Balance  Sheets,  March 31,  1997 and
                  December 31, 1996

                  Consolidated Condensed Statements of Operations,  Three Months
                  Ended March 31, 1997 and 1996

                  Consolidated  Condensed Statements of Cash Flows, Three Months
                  Ended March 31, 1997 and 1996

                  Notes to Consolidated Condensed Financial Statements


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

PART II Other Information

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


        Item 6.   Exhibits and Reports on Form 8-K  


Signatures                                                               
<PAGE>





                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                 (In Thousands)
                                   (Unaudited)

                                                         March 31,  December 31,
                                                           1997         1996
                                                         -----------------------
                 ASSETS

Cash and due from banks .............................    $  12,344     $  14,914

Investment securities available for sale (cost ......       68,259        67,622
  1997, $68,414; December 31, 1996, $67,492)

Federal funds sold and securities
   purchased under resale agreements ................       12,130         7,263

Loans, net of allowance for possible loan
   losses March 31, 1997, $2,821;
   December 31, 1996, $2,803 ........................      186,756       183,438

Bank premises and equipment, net ....................        4,736         4,526

Other assets ........................................        2,821         2,698
                                                         -----------------------
   TOTAL ASSETS .....................................    $ 287,046     $ 280,461
                                                         =======================

LIABILITIES AND STOCKHOLDERS' EQUITY
            LIABILITIES

Noninterest bearing deposits ........................    $  34,550        43,445
Interest bearing deposits ...........................      206,352       194,907
                                                         -----------------------
   TOTAL DEPOSITS ...................................    $ 240,902       238,352
Securities sold under agreements to
   repurchase .......................................        3,504         5,453
Federal Home Loan Bank advances .....................       12,557         7,473
Treasury tax and loan open note .....................        2,413         1,944
Other liabilities ...................................        1,929         2,041
                                                         -----------------------
   TOTAL LIABILITIES ................................    $ 261,305     $ 255,263
                                                         -----------------------

STOCKHOLDERS' EQUITY

Common Stock ........................................    $     200     $     200
Surplus .............................................        3,925         3,872
Retained earnings ...................................       22,161        21,621
                                                         -----------------------
                                                         $  26,286        25,693
Unrealized gains (losses) on securities availab .....          (97)           81
Less net cost of common shares acquired for the .....          448           576
                                                         -----------------------
   TOTAL STOCKHOLDERS' EQUITY .......................    $  25,741     $  25,198
                                                         -----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..........    $ 287,046       280,461
                                                         =======================

See notes to Consolidated Condensed Financial Statements.
<PAGE>



                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                        (In Thousands, Except Per Share Data)
                                   (Unaudited)

                                                              Three Months Ended
                                                                    March 31,
                                                              ------------------
                                                                1997       1996
                                                              ------------------
INTEREST INCOME:
   Interest and fees on loans ............................      3,913      3,690
   Interest on investment securities .....................        973        919
   Interest on federal funds sold and securities
     purchased under resale agreements ...................         96        293
                                                              ------------------
   Total interest income .................................      4,982      4,902

INTEREST EXPENSE:
   Interest on deposits ..................................      2,137      2,274
   Interest on repurchase agreements and other
     borrowings ..........................................        246        155
                                                              ------------------
   Total interest expense ................................      2,383      2,429
                                                              ------------------
   Net interest income ...................................      2,599      2,473

Provision for loan losses ................................          3         15
                                                              ------------------
   Net interest income after provision for
      loan losses ........................................      2,596      2,458

Investment securities gains (losses) .....................         11          0
Other income .............................................        394        387
Other expense ............................................      1,721      1,671
                                                              ------------------
   Income before income taxes ............................      1,280      1,174
Applicable income taxes ..................................        406        382
                                                              ------------------
Net income ...............................................        874        792
                                                              ==================
Per share data:
  Net earnings per common share ..........................       0.49       0.45
                                                              ==================
Dividends declared per common share ......................       0.19       0.15
                                                              ==================

See notes to Consolidated Condensed Financial Statements.
<PAGE>



                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
               For The Three Months Ended March 31, 1997 and 1996
                                 (In Thousands)


                                                              1997       1996
                                                            --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ..............................................   $    874   $    792

Adjustments to reconcile net income to net 
  cash  provided  by  operating activities:
   Proceeds from  FHLMC .................................        - -      2,151
   Loans underwritten for FHLMC .........................        - -     (2,150)
   Gains on loans sold to FHLMC .........................        - -         (1)
   Provision for loan losses ............................          3         15
   Investment securities (gains) losses, net ............        (11)       - -
   Depreciation .........................................         92         98
   Amortization of premiums and accretion of discounts
     on loans and investment securities, net ............         49         43
  (Increase) decrease in other assets ...................       (123)        24
  (Decrease) in other liabilities .......................       (217)      (298)
                                                            --------------------
Net cash provided by operating activities ...............   $    667   $    674
                                                            --------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Net (increase) decrease in federal funds sold ........   $ (4,867) $   1,335
   Proceeds from maturities of investment securities ....      4,182      5,886
   Proceeds from sales of investment securities .........      1,669        - -
   Purchases of investment securities ...................     (6,548)   (10,294)
   Net (increase) in loans ..............................     (3,321)       (71)
   Purchases of bank premises and equipment .............       (302)       (37)
                                                            --------------------
   Net cash (used in) investing activities ..............   $ (9,187) $  (3,181)
                                                            --------------------


CASH FLOWS FROM FINANCING ACTIVITIES
   Net (decrease) in noninterest bearing deposits .......   $ (8,895) $    (825)
   Net increase in interest bearing deposits ............     11,445      5,382
   Net increase (decrease) in securities sold under
     agreements to repurchase ...........................     (1,949)    (1,222)
   Net increase in other borrowings .....................      5,553        855
   Cash dividends paid ..................................       (331)      (246)
   Reissuance of treasury stock .........................        263         10
   Purchases of common stock for the treasury ...........       (136)       - -
                                                            --------------------
   Net cash provided by financing activities ............   $  5,950   $  3,954
                                                            --------------------
   Net increase in cash and due from banks ..............     (2,570)     1,447

Cash and due from banks:
   Beginning ............................................   $ 14,914   $ 10,963
                                                            --------------------
   Ending ...............................................   $ 12,344   $ 12,410
                                                            ====================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

   Cash payments for: 
        Interest ........................................   $  2,355   $  2,417

        Income ..........................................   $    - -   $    - -


See Notes to Consolidated Condensed Financial Statements.
<PAGE>



                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS



Note 1.  Nature of Business and Significant Accounting Policies

Nature of business:

Iowa First  Bancshares  Corp. is a bank holding company  providing bank and bank
related services through its subsidiaries.

Significant accounting policies:

Principles of consolidation:

The accompanying  consolidated  financial statements include the accounts of the
Company and its  wholly-owned  subsidiaries,  First  National  Bank of Muscatine
(Muscatine)  and First  National  Bank in  Fairfield  (Fairfield),  collectively
referred  to  herein  as  (Banks).  All  material   intercompany   accounts  and
transactions  have been  eliminated  in  consolidation.  The  unaudited  interim
financial statements presented reflect all adjustments which are, in the opinion
of  management,  necessary  to a fair  statement  of the results for the interim
periods. All such adjustments are of a normal recurring nature.

Presentation of cash flows:

For  purposes of  reporting  cash flows,  cash and due from banks  include  cash
on-hand and amounts due from banks, including cash items in process of clearing.
Cash flows from demand deposits, NOW accounts,  savings accounts,  federal funds
sold,  securities  sold under  agreements to repurchase,  Federal Home Loan Bank
advances, TT&L open note, certificates of deposits, and loans are reported net.

Investment securities available for sale:

Securities available for sale are accounted for at fair value and the unrealized
holding gains or losses are presented as a separate  component of  stockholders'
equity, net of their deferred income tax effect.

Realized gains or losses, determined using the  specific-identification  method,
are included in earnings.

Declines in the fair value of  individual  available-for-sale  securities  below
their cost that are other than  temporary  would  result in  write-downs  of the
individual  securities  to their fair value.  The related  write-downs  would be
included in earnings as realized losses.

Premiums and  discounts  are  recognized  in interest  income using the interest
method over the period to maturity.  There were no investments  held to maturity
or for trading purposes as of March 31, 1997.

Loans:

Loans are stated at the amount of unpaid principal, reduced by unearned discount
and an allowance for loan losses. The Banks record impaired loans at the present
value of expected future cash flows discounted at the loan's effective  interest
rate,  or as an  expedient,  at the loan's  observable  market price or the fair
value of the collateral if the loan is collateral dependent.  A loan is impaired
when it is  probable  the  creditor  will be unable to collect  all  contractual
principal  and interest  payments due in  accordance  with the terms of the loan
agreement.

The allowance for loan losses is maintained at the level considered  adequate by
management   of  the  Banks  to  provide  for  losses  that  can  be  reasonably
anticipated.  The  allowance  is increased  by  provisions  charged to operating
expense and  reduced by net  charge-offs.  In  determining  the  adequacy of the
allowance  balance,  the  Banks  make  continuous  credit  reviews  of the  loan
portfolio and related  off-balance sheet commitments,  consider current economic
conditions,  historical loan loss  experience,  review of specific problem loans
and other factors.

Unearned  interest on  discounted  loans is amortized to income over the life of
the loans using the interest  method.  For all other loans,  interest is accrued
daily on the outstanding balances. Accrual of interest is discontinued on a loan
when  management  believes,  after  considering  collection  efforts  and  other
factors,  that the  borrower's  financial  condition is such that  collection of
interest is doubtful.  Generally  this occurs when the collection of interest or
principal has become 90 days past due.
<PAGE>



Direct loan and lease  origination  fees and costs are generally  being deferred
and the net amount  amortized as an adjustment of the related loan's yield.  The
Banks  generally  amortize these amounts over the contractual  life.  Commitment
fees based  upon a  percentage  of  customers'  unused  lines of credit and fees
related to standby letters of credit are not significant.

Bank premises and equipment:

Bank premises and equipment  are stated at cost less  accumulated  depreciation.
Depreciation  is  computed  primarily  by  the  straight-line  method  based  on
estimated useful lives.

Other assets:

Other  real  estate  (ORE),  which  is  included  in  other  assets,  represents
properties  acquired  through  foreclosure,  in-substance  foreclosure  or other
proceedings.  ORE is  recorded  at the  lower of the  amount of the loan or fair
market value of the properties.  Any write-down to fair market value at the time
of  transfer to ORE is charged to the  allowance  for loan  losses.  Property is
evaluated  regularly  to ensure that the  recorded  amount is  supported  by the
current fair market value.

Income taxes:

The Company  files its tax return on a  consolidated  basis with its  subsidiary
banks.  The entities  follow the direct  reimbursement  method of accounting for
income  taxes  under  which  income  taxes  or  credits  which  result  from the
subsidiary  banks'  inclusion  in the  consolidated  tax  return  are paid to or
received from the parent company.

Deferred taxes are provided on a liability  method  whereby  deferred tax assets
are recognized for deductible  temporary  differences and operating loss and tax
credit  carryforwards  and  deferred  liabilities  are  recognized  for  taxable
temporary  differences.  Temporary  differences are the differences  between the
reported  amounts of assets and  liabilities  and their tax bases.  Deferred tax
assets are reduced by a valuation  allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred  assets will
not be  realized.  Deferred  tax assets and  liabilities  are  adjusted  for the
effects of changes in tax laws and rates on the date of enactment.

Deferred income taxes have not been provided on the equity in undistributed  net
income of the  subsidiaries  as the  entities  file a  consolidated  income  tax
return.

Trust assets:

Trust assets (other than cash deposits) held by the Banks in fiduciary or agency
capacities for its customers are not included in the  accompanying  consolidated
balance sheets since such items are not assets of the Banks.

Fair value of financial instruments:

FAS No. 107,  Disclosures  about Fair  Market  Value of  Financial  Instruments,
requires  disclosure  of fair value  information  about  financial  instruments,
whether or not recognized in the balance  sheet,  for which it is practicable to
estimate that value.  Interim condensed financial statements are not required to
include the disclosures outlined by FAS 107 and,  accordingly,  are not included
herein.


Note 2.  Capital Stock and Earnings Per Share

Common shares and preferred stock  authorized total 6,000,000 shares and 500,000
shares, respectively. Earnings per share is arrived at by dividing net income by
the  weighted  average  number  of  shares of  common  stock  and  common  stock
equivalents  outstanding for the respective  period. The weighted average number
of shares of common stock and common stock equivalents outstanding for the first
three months of 1997 was 1,788,267.  Fully  dilutive  earnings per share are not
shown as the  dilutive  effect of common stock  equivalents  was less than three
percent.
<PAGE>




                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS





Discussion and Analysis of Financial Condition


The Company's  total assets at March 31, 1997,  were  $287,046,000.  Muscatine's
total assets were $196,518,000  which reflects a $2,980,000 (1.5%) increase from
December 31, 1996,  total assets.  Fairfield's  total assets were $87,356,000 at
March 31,  1997,  which is an increase  of  $3,260,000  (3.9%) when  compared to
December 31, 1996,  total assets.  Total  consolidated  assets increased by 2.3%
during the first three months of 1997.

Net loans  totaled  $186,756,000  at March  31,  1997.  Net  loans at  Muscatine
increased  by  $3,944,000  (3.1%)  during  the  first  three  months.  Net loans
decreased at Fairfield by $626,000 (1.1%) during the first three months.
Consolidated net loans increased by $3,318,000 year-to-date.

Total  available for sale securities  increased  $637,000 during the first three
months of 1997  while  federal  funds sold  increased  $4.9  million.  The Banks
continue to emphasize  purchase of securities  with maturities of five years and
less as such purchases offer  reasonable  yields with very little credit risk as
well as limited  interest  rate risk.  Additionally,  selected  securities  with
longer  maturities  have been  purchased in order to enhance  overall  portfolio
yield without significantly increasing risk. At March 31, 1997, less than 15% of
investment  securities mature in more than five years and less than 5% mature in
more than ten years.  Securities totaling $1.7 million have been sold during the
year, generating net gains of $11,000.

Total  deposits at March 31,  1997,  were  $240,902,000.  Deposits at  Muscatine
increased $157,000 from the prior year end. Fairfield's total deposits increased
$2,455,000  during the same period.  This represents a combined deposit increase
of $2.6  million  (1.1%) for the Company  during the first three months of 1997.
Additionally,  securities  sold under  agreements to repurchase  decreased  $1.9
million and intermediate  term advances borrowed from the Federal Home Loan Bank
increased $5.1 million to total $12.6 million at quarter end.

Results of Operations

Consolidated  net income from  continuing  operations was $874,000,  or $.49 per
share, for the first quarter of 1997, an $82,000 or 10.4% increase from the same
period  last year.  This  improvement  resulted  primarily  from  increased  net
interest  margin,  $126,000 higher than the first quarter of the prior year, and
controlling  operating expenses to within $50,000 of the comparable quarter last
year.

The Company has been able to expand the net interest margin,  as compared to the
prior year by actively managing asset quality, growth of the loan portfolio, and
rates paid on assets and liabilities. Management has expressed concern, however,
as to the ability to continue increasing the net interest margin each quarter as
short-term  interest rates climb.  Indeed, the net interest margin for the first
quarter of 1997 was $62,000 less than the fourth quarter of 1996.

Provisions  for loan  losses were  $3,000 for the three  months  ended March 31,
1997,  this was $12,000 less than the first quarter of 1996. Net loan recoveries
totaled  $14,000  compared to net recoveries of $60,000 for the first quarter of
1996.

Nonaccrual loans grew during the past twelve months totaling $1,443,000 at March
31, 1997,  $537,000 more than the end of the first quarter in 1996. There was no
other real estate owned,  and loans past due 90 days or more and still  accruing
totaled $263,000.  The reserve for loan losses of $2,821,000  represents 1.5% of
net loans and 165% of total nonaccrual loans, other real estate owned, and loans
past due 90 days or more and still accruing.

The  efficiency  ratio,  defined  as  noninterest  expense  as a percent  of net
interest income plus noninterest income, was 57.3% for the first three months of
1997 compared to 56.2% for all of 1996.
<PAGE>



Interest Rate Sensitivity

The Company  manages its balance  sheet to minimize the impact of interest  rate
movements on its earnings.  The term "rate sensitive" refers to those assets and
liabilities  which are  "sensitive" to  fluctuations  in rates and yields.  When
interest  rates move,  earnings may be affected in many ways.  Interest rates on
assets and liabilities  may change at different  times or by different  amounts.
Maintaining a proper  balance  between rate  sensitive  earning  assets and rate
sensitive   liabilities  is  the  principal  function  of  asset  and  liability
management of a banking organization.

The  following  table shows the interest  rate  sensitivity  position at several
repricing intervals (dollar amounts in thousands):


                     Repricing Maturities at March 31, 1997
<TABLE>


                                           Less Than       1-5       More Than   Noninterest
                                            One Year      Years       5 Years      Bearing        Total
                                           -------------------------------------------------------------
<S>                                        <C>          <C>          <C>         <C>           <C>   
Assets:
  Loans ................................   $  92,244    $  74,455    $  21,435   $   1,443     $ 189,577
  Investment securities ................      21,140       37,601        9,508          10        68,259
  Other earning assets .................      12,130           --           --          --        12,130
  Nonearning assets ....................          --           --           --      17,080        17,080
                                           -------------------------------------------------------------
      Total assets .....................   $ 125,514    $ 112,056    $  30,943   $  18,533     $ 287,046
                                           =============================================================

Liabilities and Equity:
  Deposits .............................   $ 141,770    $  64,583    $      --   $  34,550     $ 240,902
    Other purchased funds ..............       5,917        2,850        9,707          --        18,474
  Other liabilities ....................          --           --           --       1,929         1,929
  Equity ...............................          --           --           --      25,741        25,741
                                           -------------------------------------------------------------
     Total liabilities and equity .....    $ 147,687    $  67,433    $   9,707   $  62,220     $  28,046
                                           =============================================================


Repricing gap ..........................   $ (22,173)   $  44,624    $  21,236   $ (43,687)    $      --
Cumulative repricing gap ...............   $ (22,173)   $  22,451    $  43,687   $      --     $      --
</TABLE>


The data in this table  incorporates the contractual  characteristics as well as
an estimate of the actual repricing  characteristics of the Company's assets and
liabilities.  Based  on the  estimate,  fifty  percent  of the  savings  and NOW
accounts are  reflected in the less than one year  category,  with the remaining
50% in the 1-5 year time frame.  Money market  accounts are estimated as 100% in
the less than one year category.

A positive  repricing gap for a given period exists when total  interest-earning
assets exceed total interest-bearing  liabilities and a negative gap exists when
total  interest-bearing  liabilities are in excess of  interest-earning  assets.
Generally a positive  repricing gap will result in increased net interest income
in a rising rate environment and decreased net interest income in a falling rate
environment.  A negative  repricing gap tends to produce  increased net interest
income in a falling rate  environment  and  decreased  net interest  income in a
rising rate environment.  At March 31, 1997, rate sensitive liabilities exceeded
rate  sensitive  assets within a one year  maturity  range by $22.2 million and,
thus,  the Company is  positioned  to benefit  from a decline in interest  rates
within the next year.

The Company's  repricing gap position is useful for measuring  general  relative
risk  levels.  However,  even with  perfectly  matched  repricing  of assets and
liabilities,  interest rate risk cannot be avoided entirely.  Interest rate risk
remains in the form of prepayment risk of assets and liabilities, timing lags in
adjusting  certain assets and  liabilities  that have varying  sensitivities  to
market interest rates, and basis risk. Basis risk refers to the possibility that
the repricing  behavior of variable-rate  assets could differ from the repricing
characteristics  of  liabilities  which  reprice in the same time  period.  Even
though  these  assets are  match-funded,  the spread  between  asset  yields and
funding costs could change.
<PAGE>



Because the  repricing  gap position  does not capture  these risks,  Management
utilizes simulation modeling to measure and manage the rate sensitivity exposure
of earnings.  The Company's simulation model provides a projection of the effect
on net interest  income of various  interest  rate  scenarios  and balance sheet
strategies.

Liquidity

For  banks,  liquidity  represents  ability  to meet both loan  commitments  and
deposit withdrawals.  Factors which influence the need for liquidity are varied,
but include general economic  conditions,  asset/liability mix, bank reputation,
future  FDIC  funding  needs,  changes  in  regulatory  environment,  and credit
standing.  Assets which provide liquidity consist principally of loans, cash and
due from  banks,  investment  securities,  and  short-term  investments  such as
federal funds.  Maturities of securities  held for investment  purposes and loan
payments   provide  a  constant   flow  of  funds   available  for  cash  needs.
Additionally,  liquidity can be gained by the sale of loans or securities  prior
to maturity if such assets had previously been designated as available for sale.
Interest  rates,  relative to the rate paid by the security or loan sold,  along
with the maturity of the  security or loan,  are the major  determinates  of the
price which can be realized upon sale.

The subsidiary banks do not have brokered deposits.

The  stability  of the  Company's  funding,  and  thus  its  ability  to  manage
liquidity,  is greatly enhanced by its consumer deposit base.  Consumer deposits
tend to be small in size,  diversified  across a large base of individuals,  and
are government  insured to the extent  permitted by law. Total deposits at March
31, 1997, were $240,902 or 84% of total liabilities and equity.

Securities  available for sale with a cost totaling  $68,414,000  at quarter-end
included net  unrealized  losses of $155,000.  These  securities  may be sold in
whole or in part to increase liquid assets, reposition the investment portfolio,
or for other purposes as defined by Management.

Capital

Stockholders'  equity increased $543,000 during the three months ended March 31,
1997.

Federal regulatory agencies have adopted various capital standards for financial
institutions,  including risk-based capital standards. The primary objectives of
the risk-based  capital  framework are to provide a more  consistent  system for
comparing capital  positions of financial  institutions and to take into account
the  different   inherent  risks  among  financial   institutions'   assets  and
off-balance-sheet items.

Risk-based  capital  standards have been  supplemented  with  requirements for a
minimum Tier 1 capital to assets ratio (leverage ratio). In addition, regulatory
agencies consider the published capital levels as minimum levels and may require
a Financial Institution to maintain capital at higher levels.

A  comparison  of the  Company's  capital as of March 31,  1997 with the minimum
requirements is presented below.
                                                             Minimum
                                             Actual       Requirements
                                             -------------------------
Tier 1 risk-based capital                    13.17%           4.00%
Total risk-based capital                     14.42%           8.00%
Tier 1 leverage ratio                         9.10%           3.00%

Impact of Inflation and Changing Prices

The financial statements and related data presented herein have been prepared in
accordance  with generally  accepted  accounting  principles,  which require the
measurement of financial  position and operating  results in terms of historical
dollars without  considering  changes in the relative  purchasing power of money
over time due to inflation.  Unlike most industrial companies,  virtually all of
the assets and liabilities of a financial institution are monetary in nature.

As a result,  interest  rates  have a more  significant  impact  on a  financial
institution's  performance  than the  effects  of general  levels of  inflation.
Interest  rates do not  necessarily  move in the same  direction  or in the same
magnitude  as the price of goods and  services.  In the  current  interest  rate
environment,  liquidity and the maturity  structure of the Company's  assets and
liabilities are critical to the maintenance of acceptable performance levels.
<PAGE>



Trends, Events or Uncertainties

Officers  and  Directors of the Company and its  subsidiaries  have had, and may
have in the future,  banking  transactions in the ordinary course of business of
the Company's subsidiaries.  All such transactions are on substantially the same
terms, including interest rates on loans and collateral,  as those prevailing at
the time for comparable  transactions  with others,  involve no more than normal
risk of collectibility, and present no other unfavorable features.

At its meeting on June 15, 1989, the Company's  Board of Directors  authorized a
stock  repurchase  program,  to  repurchase  up to 10 percent  of the  Company's
shares. Through March 31, 1997, approximately 44,000 shares of common stock have
been purchased under the program,  net of sales to the Company's  Employee Stock
Ownership  Plan and shares issued  pursuant to the Company's  Stock Option Plan.
The Company expects to continue repurchase of its common stock from time to time
under the repurchase program.

In the normal  course of  business,  the Banks are  involved  in  various  legal
proceedings.  In the current opinion of management, any liability resulting from
such  proceedings  would not have a material  effect on the Company's  financial
statements.

<PAGE>



                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
                                OTHER INFORMATION




ITEM 4.   Submission of Matters to a Vote of Security Holders.

At the Annual  Meeting of the Company held at its offices on April 17, 1997, the
shareholders  elected the  following  individuals  to the Board of Directors for
three year terms:

                                          Votes in Favor          Votes Against
                                          --------------------------------------

Kim K. Bartling                             1,477,239                      0
Larry L. Emmert                             1,476,069                  3,870
George A. Shepley                           1,477,239                  2,700
Carl J. Spaeth                              1,475,619                  1,620

Also  at the  Annual  Meeting  of the  Company  held  on  April  17,  1997,  the
shareholders approved increasing the number of authorized common shares from two
million to six million by a vote of 1,379,126 in favor and 86,416 against.





ITEM 6.  Exhibits and reports on Form 8-K.


         Reports on Form 8-K.      No Form 8-K has been  filed for
                                   the quarter ended March 31, 1997.
<PAGE>




                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
                                   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.




                             IOWA FIRST BANCSHARES CORP.

                                 (Registrant)


May 14, 1997                 /s/ George A. Shepley
----------------             -------------------------------------
Date                         George A. Shepley, Chairman of
                             the Board and Chief Executive Officer





May 14, 1997                 /s/ Kim K. Bartling
----------------             -------------------------------------
Date                         Kim K. Bartling, Executive Vice
                             President, Chief Operating
                             Officer & Treasurer