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, 1999
 
                              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.

     X
YES ----   NO ----

 
 
At March 31, 1999 there were 1,532,424 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, 1999 and December 31, 1998               

                    Consolidated Condensed Statements of
                    Operations, Three Months Ended
                    March 31, 1999 and 1998                            

                    Consolidated Condensed Statements of
                    Cash Flows, Three Months Ended
                    March 31, 1999 and 1998                            

                    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)
<TABLE>
                                                                     March 31,              December 31,
                                                                       1999                     1998
                                                                   -------------           -------------
<S>                                                                 <C>                      <C>   
ASSETS

Cash and due from banks ............................                 $ 11,663                $ 14,408

Investment securities available for sale                                                 
  (Cost March 31 1999, $63,594;
   December 31, 1998, $57,581)......................                   64,357                  58,711 

Federal funds sold and securities
   purchased under resale agreements ...............                   14,825                  12,555

Loans, net of allowance for possible loan
   losses March 31, 1999, $2,757;
   December 31, 1998, $2,787 .......................                  257,854                 250,318

Bank premises and equipment, net ...................                    5,732                   5,858

Other assets .......................................                    4,070                   3,561
                                                                     ---------               ---------

   TOTAL ASSETS ....................................                 $358,501                $345,411
                                                                     =========               =========

LIABILITIES AND STOCKHOLDERS' EQUITY
            LIABILITIES

Noninterest bearing deposits .......................                 $ 46,143                $ 44,430
Interest bearing deposits ..........................                  226,861                 217,416
                                                                     ---------               ---------
   TOTAL DEPOSITS ..................................                 $273,004                $261,846
Notes Payable ......................................                    7,250                   7,250
Securities sold under agreements to
   repurchase ......................................                    5,851                   5,645
Federal Home Loan Bank advances ....................                   48,901                  47,973
Treasury tax and loan open note ....................                      602                     163
Other liabilities ..................................                    2,328                   2,225
                                                                     ---------               ---------

   TOTAL LIABILITIES ...............................                 $337,936                $325,102
                                                                     ---------               ---------

STOCKHOLDERS' EQUITY

Common Stock .......................................                 $    200                $    200
Surplus ............................................                    4,408                   4,408
Retained earnings ..................................                   25,947                  25,460
                                                                     ---------               --------- 
                                                                     $ 30,555                $ 30,068
Accumulated other comprehensive income .............                      477                     708
Less net cost of common shares acquired for the                       
  treasury..........................................                  (10,467)                (10,467)
                                                                     ---------               ---------

   TOTAL STOCKHOLDERS' EQUITY ......................                 $ 20,565                $ 20,309
                                                                     ---------               ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .........                 $358,501                $345,411
                                                                     =========               =========
</TABLE>
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)
<TABLE>
                                                            Three Months Ended
                                                                 March 31,
                                                             1999         1998
                                                           ---------   ---------
<S>                                                          <C>          <C>    
INTEREST INCOME:
Interest and fees on loans ...............................   $5,061       $4,425
   Interest on investment securities .....................      834          920
   Interest on federal funds sold and securities
     purchased under resale agreements ...................      127          226
                                                           ---------   ---------

   Total interest income .................................   $6,022       $5,571
                                                           ---------   ---------

INTEREST EXPENSE:
   Interest on deposits ..................................   $2,300       $2,340
   Interest on notes payable .............................      133         --
   Interest on other borrowed funds ......................      835          559
                                                           ---------   ---------

   Total interest expense ................................   $3,268       $2,899
                                                           ---------   ---------

   Net interest income ...................................   $2,754       $2,672

Provision for loan losses ................................       54           18
                                                           ---------   ---------

   Net interest income after provision for
      loan losses ........................................    $2,700      $2,654

Investment securities gains (losses) .....................      --             4
Other income .............................................       455         412
Other expense ............................................     1,972       1,833
                                                            ---------  ---------

   Income before income taxes ............................    $1,183      $1,237
Applicable income taxes ..................................       374         397
                                                            ---------  ---------
Net income ...............................................    $  809      $  840
                                                            =========  =========

Net income per common share:
   Basic .................................................    $ 0.53      $ 0.46
                                                            =========  =========

   Diluted ...............................................    $ 0.53      $ 0.46
                                                            =========  =========


Dividends declared per common share ......................    $ 0.21     $  0.21
                                                            =========  =========

Comprehensive income .....................................    $  578     $   848
                                                            =========  =========
</TABLE>
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, 1999 and 1998
                                 (In Thousands)
<TABLE>
                                                                            1999         1998
                                                                         ----------   ---------
<S>                                                                       <C>         <C>  
CASH FLOWS FROM OPERATING ACTIVITIES
  
Net income .............................................                  $   809     $    840

Adjustments to reconcile net income to net cash
provided by operating activities:

   Proceeds from  FHLMC ................................                      994           88
   Loans underwritten for FHLMC ........................                     (987)         (87)
   Gains on loans sold to FHLMC ........................                       (7)          (1)
   Provision for loan losses ...........................                       54           18
   Investment securities (gains) losses, net ...........                       --           (4)
   Depreciation ........................................                      159          154
   Amortization of premiums and accretion of discounts
     on loans and investment securities, net ...........                       39           30
  (Increase) in other assets ...........................                     (509)        (240)
   Increase (decrease) in other liabilities ............                     (130)         146
                                                                         ----------   ---------

Net cash provided by operating activities ..............                  $   422     $    944
                                                                         ----------   ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) in federal funds sold ...................                  $(2,270)    $(12,185)
Proceeds from sales, maturities, calls and paydowns of 
available for sale securities ..........................                    5,595        5,706
Purchases of available for sale securities .............                  (11,280)      (2,129)
Net (increase) in loans ................................                   (7,590)     (11,311)
Purchases of bank premises and equipment ...............                      (33)         (61)
                                                                         ----------   ---------

Net cash (used in) investing activities ................                 $(15,578)    $(19,980)
                                                                         ----------   ---------


CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in noninterest bearing deposits                  $  1,713     $ (1,903)
Net increase in interest bearing deposits ..............                    9,445       13,431
Net increase in securities sold under
  agreements to repurchase .............................                      206        1,120
Net increase in other borrowings .......................                    1,367        7,045
Cash dividends paid ....................................                     (320)        (374)
Reissuance of treasury stock ...........................                       --            3
Purchases of common stock for the treasury .............                       --         (160)
                                                                         ----------   ---------

Net cash provided by financing activities ..............                 $ 12,411    $  19,162
                                                                         ----------  ----------

Net increase in cash and due from banks ................                   (2,745)         126

Cash and due from banks:
Beginning ..............................................                 $ 14,408    $  12,726
                                                                         ----------  ----------

Ending .................................................                 $ 11,663    $  12,852
                                                                         ==========  ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash payments for: 
  Interest..............................................                 $  3,198    $   2,873

  Income taxes..........................................                 $     24    $     --

</TABLE>
See notes to Consolidated Condensed Financial Statements.
<PAGE>
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                
Note 1.  Nature of Business and Significant Accounting Policies

Nature of business: 

Iowa  First   Bancshares  Corp.  (the "Company")  is  a  bank  holding  company
headquartered in Muscatine,  Iowa. The Company owns the outstanding stock of two
national banks, First National Bank of Muscatine  (Muscatine) and First National
Bank in Fairfield  (Fairfield).  First National Bank of Muscatine has a total of
five  locations in  Muscatine,  Iowa.  First  National Bank in Fairfield has two
locations in  Fairfield,  Iowa.  Each bank is engaged in the general  commercial
banking   business  and  provides  full  service   banking  to  individuals  and
businesses,  including checking, savings and other deposit accounts,  commercial
loans, consumer loans, real estate loans, safe deposit facilities,  transmitting
of funds,  trust  services,  and such other  banking  services  as are usual and
customary for commercial banks.
 

Significant accounting policies:

     Accounting Estimates:
 
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amount  of  assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported  amounts of revenues and expenses  during the reporting  period.  A
significant  estimate  which is  particularly  susceptible  to change in a short
period of time relates to the  determination  of the  allowance for loan losses.
Actual results could differ from those estimates.

     Principles  of  consolidation:

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly-owned subsidiaries,  First National Bank of Muscatine and
First National Bank in Fairfield (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  includes  cash
on-hand,  amounts due from banks,  and 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 at quarter-end.

     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 Banks recognize interest income on impaired loans on a cash
basis.
 
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.
<PAGE>
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.

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.  Subsequent  write-downs to fair value are charged to
earnings.

     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.
 
     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.  Basic  earnings  per share is arrived at by dividing net
income by the weighted average number of shares of common stock  outstanding for
the respective period.  Diluted earnings per share is arrived at by dividing net
income  by the  weighted  average  number  of  common  stock  and  common  stock
equivalents  outstanding for the respective period. The average number of shares
of common  stock  outstanding  for the first three  months of 1999 and 1998 were
1,532,424 and 1,827,129, respectively. There were no common stock equivalents in
1999 or 1998.
<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, 1999,  were  $358,501,000.  Muscatine's
total assets were $260,825,000 which reflects a $13,758,000 (5.6%) increase from
December 31, 1998,  total assets.  Fairfield's  total assets were $96,409,000 at
March 31, 1999, which is a decrease of $858,000 (0.9%) when compared to December
31, 1998, total assets.  Total consolidated  assets increased by 3.8% during the
first three months of 1999.

Net loans  totaled  $257,854,000  at March  31,  1999.  Net  loans at  Muscatine
increased  by  $7,336,000  (4.0%)  during  the  first  three  months.  Net loans
increased  at  Fairfield  by  $200,000  (0.3%)  during the first  three  months.
Consolidated net loans increased by $7,536,000 (3.0%) year-to-date.

Total available for sale securities  increased $5,646,000 during the first three
months of 1999  while  federal  funds sold  increased  $2.3  million.  The Banks
emphasize  purchase of securities with maturities of five years and less as such
purchases  offer  reasonable  yields with 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, 1999,  less than 35% of investment
securities  mature in more than five years and less than 10% mature in more than
ten years. No securities have been sold during the year.

Total  deposits at March 31,  1999,  were  $273,004,000.  Deposits at  Muscatine
increased $12,359,000 (6.8%) from the prior year end. Fairfield's total deposits
decreased  $872,000  (1.1%) during the same period.  This  represents a combined
deposit  increase  of over $11 million  (4.3%) for the Company  during the first
three  months  of  1999.  Additionally,  securities  sold  under  agreements  to
repurchase  increased  $206,000 and advances borrowed from the Federal Home Loan
Bank increased $928,000 to total $48.9 million at quarter end.

Results of Operations:

Consolidated  net income was $809,000,  or $.53 per share, for the first quarter
of 1999.  This was  $31,000 or 3.7% less than the same  period  last  year,  but
approximately  7% greater than  budgeted.  The primary reason for the decline in
net income was interest expense on debt used to purchase  treasury shares.  This
interest expense totaled $133,000 before tax for the first three months of 1999.
Due in large part to the  purchase of the  treasury  shares,  earnings per share
increased  15%  compared  to the first  quarter of 1998 and return on equity was
nearly 16%, appreciably greater than the 11.8% a year earlier.

The  Company  has been able to expand net  interest  income,  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  for
several quarters, however, as to the ability to continue increasing net interest
income  each  successive  quarter.  The  increased  usage of  wholesale  funding
sources,  while  mitigating  intermediate  and  long-term  interest  rate  risk,
increases  interest  expense.  The  interest  expense  associated  with the debt
incurred to purchase  treasury  shares  also adds  pressure to the net  interest
income.  Finally, the intense competition for all types of loans does not afford
the Company much pricing power when dealing with borrowers.

Provisions  for loan losses were  $54,000 for the three  months  ended March 31,
1999, this was $36,000 more than the first quarter of 1998. Net loan charge-offs
totaled  $83,000  compared to net charge-offs of $7,000 for the first quarter of
1998.

Nonaccrual loans totaled $493,000 at March 31, 1999,  $804,000 less than the end
of the first  quarter in 1998.  Other real estate owned  totaled  $636,000,  and
loans past due 90 days or more and still accruing totaled $353,000.  The reserve
for loan  losses of  $2,757,000  represents  1.1% of net loans and 186% 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 61.5% for the first three months of
1999 compared to 59.4% for all of 1998.

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.
<PAGE>
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, 1999, rate sensitive liabilities exceeded
rate sensitive assets within a one year maturity range by  approximately  15% of
total assets and, thus, the Company is theoretically  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.

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, 1999, were $273,004,000 or 76% of total liabilities and equity.

Securities available for sale with a cost totaling  $63,594,000  at quarter-end
included net unrealized gains of $763,000. 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 $256,000 during the three months ended March 31,
1999.

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.
<PAGE>
A comparison of the Company's capital as of March 31, 1999 with the requirements
to be considered adequately capitalized is presented below.
<TABLE>

                                                                 For Capital
                                               Actual         Adequacy Purposes
--------------------------------------------------------------------------------
<S>                                             <C>                 <C>    

Tier 1 risk-based capital                       7.87%               4.00%
Total risk-based capital                        8.98%               8.00%
Tier 1 leverage ratio                           5.62%               4.00%
</TABLE>

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.

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.

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

At the Annual Meeting of the Company held at its offices on April 15, 1999, the
shareholders elected the following individuals to the Board of Directors for the
indicated terms:
<TABLE>
                           Votes in Favor     Votes Against     Term
                           --------------     -------------     ----
<S>                          <C>                 <C>           <C>    
Craig R. Foss                1,185,489             540         3 Years
Donald R. Heckman            1,174,644           7,065         3 Years  
D. Scott Ingstad             1,202,212             --          3 Years
Beverly J. White             1,182,562           4,080         3 Years
John "Jay" S. McKee          1,202,212             --          2 Years
David R. Housley             1,181,409           4,620         1 Year
</TABLE>

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, 1999.

<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 10, 1999                 /s/ George A. Shepley
-----------------------      ---------------------------------------------------
Date                         George A. Shepley, Chairman of
                             the Board and Chief Executive Officer





May 10, 1999                 /s/ Kim K. Bartling
-----------------------      ---------------------------------------------------
Date                         Kim K. Bartling, Executive Vice
                             President, Chief Operating
                             Officer & Treasurer