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 September 30, 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 September 30, 1997 there were  1,779,242  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, September 30, 
             1997 and December 31, 1996  

             Consolidated Condensed Statements of Operations, Three 
             and Nine Months Ended September 30, 1997 and 1996       

             Consolidated Condensed Statements of Cash Flows, 
             Nine months Ended September 30, 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 6.   Exhibits and Reports on Form 8-K          


Signatures                                     

<PAGE>




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

<TABLE>

                                                                September 30,   December 31,
                                                                    1997           1996
                                                                -------------   ------------
<S>                                                             <C>             <C>  

               ASSETS

Cash and due from banks .......................................   $ 12,303        $ 14,914

Investment securities available for sale (cost September 30, ..     69,222          67,622
  1997, $68,752; December 31, 1996, $67,492)

Federal funds sold and securities
   purchased under resale agreements ..........................      3,540           7,263

Loans, net of allowance for possible loan
   losses September 30, 1997, $2,647;
   December 31, 1996, $2,803 ..................................    202,602         183,438

Bank premises and equipment, net ..............................      5,671           4,526

Other assets ..................................................      3,541           2,698
                                                                  --------        --------

   TOTAL ASSETS ...............................................   $296,879        $280,461
                                                                  ========        ========

LIABILITIES AND STOCKHOLDERS' EQUITY
            LIABILITIES

Noninterest bearing deposits ..................................   $ 37,728        $ 43,445
Interest bearing deposits .....................................    202,067         194,907
                                                                  --------        --------
   TOTAL DEPOSITS .............................................   $239,795        $238,352
Federal funds purchased and securities
   sold under agreements to repurchase ........................      5,567           5,453
Federal Home Loan Bank advances ...............................     20,363           7,473
Treasury tax and loan open note ...............................      1,777           1,944
Other liabilities .............................................      2,121           2,041
                                                                  --------        --------

   TOTAL LIABILITIES ..........................................   $269,623        $255,263
                                                                  --------        --------

STOCKHOLDERS' EQUITY

Common Stock ..................................................   $    200       $    200
Surplus .......................................................      3,911          3,872
Retained earnings .............................................     23,062         21,621
                                                                  --------       --------
                                                                  $ 27,173       $ 25,693
Unrealized gains (losses) on securities available for sale, net        295             81
Less net cost of common shares acquired for the treasury ......        212            576
                                                                  --------       --------
   TOTAL STOCKHOLDERS' EQUITY .................................   $ 27,256       $ 25,198
                                                                  --------       --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ....................   $296,879       $280,461
                                                                  ========       ========
</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     Nine Months Ended
                                                      September 30,          September 30,
                                                   -------------------   --------------------
                                                     1997       1996       1997        1996
                                                   --------   --------   --------    --------
<S>                                                <C>        <C>        <C>         <C>  
INTEREST INCOME:
   Interest and fees on loans ..................   $  4,261   $  3,803   $ 12,250    $ 11,372
   Interest on investment securities ...........      1,023      1,015      3,013       2,904
   Interest on federal funds sold and securities
     purchased under resale agreements .........         64        134        314         711
                                                   --------   --------    --------   --------
   Total interest income .......................   $  5,348   $  4,952   $ 15,577    $ 14,987
                                                   --------   --------    --------   --------

INTEREST EXPENSE:
   Interest on deposits ........................   $  2,291   $  2,194   $  6,701    $  6,772
   Interest on repurchase agreements and
     other borrowings ..........................        392        147        957         442
                                                   --------   --------    --------   --------
   Total interest expense ......................   $  2,683   $  2,341   $  7,658    $  7,214
                                                   --------   --------    --------   --------

   Net interest income .........................   $  2,665   $  2,611   $  7,919    $  7,773
Provision for possible loan losses .............          0         60          4         100
                                                   --------   --------    --------   --------
   Net interest income after provision for
     possible loan losses ......................   $  2,665   $  2,551   $  7,915    $  7,673

Investment securities gains (losses) ...........          3          4         (1)          4
Other income ...................................        428        449      1,259       1,319
Other expense ..................................      2,020      1,685      5,581       5,018
                                                   --------   --------    --------   --------
   Income before income taxes ..................   $  1,076   $  1,319   $  3,592    $  3,978
Applicable income taxes ........................        341        436      1,146       1,328
                                                   --------   --------    --------   --------
Net income .....................................   $    735   $    883   $  2,446    $  2,650
                                                   ========   ========    ========   ========

Per share data:
  Net earnings per common share ................   $   0.41   $   0.50   $   1.36    $   1.50
                                                   ========   ========    ========   ========

Dividends declared per common share ............   $   0.19   $   0.18   $   0.57    $   0.49
                                                   ========   ========    ========   ========
</TABLE>
See Notes to Consolidated Condensed Financial Statements.

<PAGE>



                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
              For The Nine Months Ended September 30, 1997 and 1996
                                 (In Thousands)

<TABLE>

                                                                  1997        1996
                                                                --------    --------
<S>                                                             <C>         <C>   
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ..................................................   $  2,446    $  2,650
Adjustments to  reconcile  net  income  to  net  
   cash  provided  by  operating activities:
   Proceeds from  FHLMC .....................................        498       4,678
   Loans underwritten for FHLMC .............................       (494)     (4,673)
   Gains on loans sold to FHLMC .............................         (4)         (5)
   Provision for loan losses ................................          4         100
   Investment securities (gains) losses, net ................          1          (4)
   Depreciation .............................................        347         282
   Amortization of premiums and accretion of discounts
     on loans and investment securities, net ................        120         158
  (Increase) in other assets ................................       (843)       (600)
  (Decrease) increase in other liabilities ..................        324        (525)
                                                                --------    --------
Net cash provided by operating activities ...................   $  2,399    $  2,061
                                                                --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES
   Net decrease in federal funds sold .......................   $  3,723    $ 16,200
   Proceeds from maturities of investment securities ........     10,495      12,635
   Proceeds from sales of investment securities .............      6,426       1,505
   Purchases of investment securities .......................    (18,640)    (22,337)
   Net (increase) in loans ..................................    (19,168)     (6,653)
   Purchases of bank premises and equipment .................     (1,492)       (220)
                                                                --------    --------
   Net cash (used in) investing activities ..................   $(18,656)   $  1,130
                                                                --------    --------


CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in noninterest bearing deposits ..   $ (5,717)   $  2,371
   Net increase (decrease) in interest bearing deposits .....      7,160      (2,032)
   Net increase (decrease) in securities sold under
     agreements to repurchase ...............................        114      (1,023)
   Net increase in other borrowings .........................     12,723       1,683
   Cash dividends paid ......................................       (998)       (778)
   Reissuance of treasury stock .............................        525         256
   Purchases of common stock for the treasury ...............       (161)       (396)
                                                                --------    --------
   Net cash provided by financing activities ................   $ 13,646    $     81
                                                                --------    --------

   Net increase in cash and due from banks ..................     (2,611)      3,272

Cash and due from banks:
   Beginning ................................................   $ 14,914    $ 10,963
                                                                --------    --------
   Ending ...................................................   $ 12,303    $ 14,235
                                                                ========    ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

   Cash payments for: 
        Interest ............................................    $  7,595    $  7,303
        Income taxes ........................................    $    811    $  1,310

</TABLE>

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:

   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 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 September 30, 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.
<PAGE>



   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.

   Direct loan  origination  fees and costs are generally being deferred and the
   net amount amortized as an adjustment of the related loan's or lease'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.
<PAGE>


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 third
quarter and year-to-date through September 30, 1997 was 1,796,000 and 1,796,330,
respectively.  Fully  diluted  earnings  per share are not shown as the dilutive
effect of common stock equivalents was less than three percent.

Note 3.  Pending Accounting Changes

In February  1997,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement #128,  "Earnings Per Share." This Statement simplifies the computation
of earnings per share and makes the  computation  more  consistent with those of
International  Accounting  Standards.  The  Statement is  effective  for periods
ending after December15,  1997. The Company does not expect the adoption of this
new standard to significantly  impact previously  reported earnings per share or
earnings per share trends.

In June 1997, the FASB issued Statement #130, "Reporting  Comprehensive Income,"
and Statement  #131,  "Disclosures  About  Segments of an Enterprise and Related
Information."  Statement #130 establishes standards for reporting  comprehensive
income in financial  statements.  Statement #131 expands  certain  reporting and
disclosure requirements for segments from current standards.  The Statements are
effective  for fiscal years  beginning  after  December 15, 1997 and the Company
does not  expect  the  adoption  of these new  standards  to result in  material
changes to previously reported amounts or disclosures.
<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 September 30, 1997, were $296,879,000. Muscatine's
total assets were  $208,955,000  which reflects an $15,417,000  (8.0%)  increase
from December 31, 1996, total assets.  Fairfield's total assets were $85,139,000
at September 30, 1997,  which is an increase of $1,043,000  (1.2%) when compared
to  December  31,  1996,  total  assets.  Total  consolidated  assets  increased
$16,418,000 (5.9%) during the first nine months of 1997.

Net loans totaled  $202,602,000  at September  30, 1997.  Net loans at Muscatine
increased  by  $19,425,000  (15.4%)  during  the first  nine  months.  Net loans
decreased  at  Fairfield  by  $261,000  (0.5%)  during  the first  nine  months.
Consolidated  net loans  increased  by  $19,164,000  (10.4%)  year-to-date  with
approximately $11 million of the increase occurring during the third quarter.

Total available for sale securities increased $1.6 million during the first nine
months of 1997 and federal funds sold decreased $3.7 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 September 30, 1997, less than 20% of
investment  securities mature in more than five years and less than 5% mature in
more than ten years.  Securities totaling $6.4 million have been sold during the
year, generating net losses of $1,000.

Total deposits at September 30, 1997, were  $239,795,000.  Deposits at Muscatine
increased 1.5% from the prior year end.  Fairfield's  total  deposits  decreased
approximately  1.4% during the same period.  This represents a combined  deposit
increase of $1.4 million  (.6%) for the Company  during the first nine months of
1997. Additionally,  securities sold under agreements to repurchase totaled $5.6
million. Intermediate and long term advances borrowed from the Federal Home Loan
Bank  totaled  $20.4  million at  quarter  end, a $12.9  million  increase  from
year-end 1996.

Results of Operations

Consolidated  net income was $735,000,  or $.41 per share, for the third quarter
of 1997,  compared to $883,000 and $.50 per share for the same period last year.
Contributing  to the net  income  reduction  were  expenses,  after  income  tax
effects,  of  approximately  $100,000 related to a problem loan which management
believes will be partially or wholly recovered in a future year.

Net income for the nine months ended September 30, 1997 was $2,446,000  compared
to  $2,650,000  in 1996,  a 7.7%  decrease.  The net  income  for 1996  included
$150,000 of nonrecurring income primarily from recovery of interest on two loans
which had been on nonaccrual of interest status for quite some time. These loans
were paid off and our  position  in certain  leases  were sold during the second
quarter of 1996  resulting in the  aforementioned  $150,000  additional  income.
Excluding  this $150,000 of income and including the $100,000  discussed  above,
1997 earnings to date were $46,000 or two percent higher than 1996.

The  Company  has been able to expand the  dollars of net  interest  margin,  as
compared to the prior  year-to-date  figures 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 the net interest margin each successive quarter.
The increased usage of wholesale funding sources, while mitigating  intermediate
and  long-term  interest rate risk,  increases  interest  expense.  As a result,
margins are put under pressure with the goal of increasing  volume  sufficiently
to more than offset the margin reduction, thus, improving earnings over time.
<PAGE>



Provisions  for loan losses were $4,000 for the nine months ended  September 30,
1997,  which is $96,000 less than the same period in 1996. Net loan  charge-offs
totaled  $161,000  compared to net  recoveries  of  $328,000  for the first nine
months of 1996.

Nonaccrual  loans rose  during the past twelve  months  totaling  $1,241,000  at
September 30, 1997;  $339,000 more than at September 30, 1996. Other real estate
owned  totaled  only  $24,000,  and  loans  past due 90 days or more  and  still
accruing totaled $427,000.  The reserve for loan losses of $2,647,000 represents
1.3% of net loans and 156% 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 60.8% for the first nine months of
1997 compared to 56.2% for all of 1996. This increase is due in large measure to
the following  expenditures thus far in 1997: opening a new full-service  branch
in  Fairfield,  Iowa;  opening  a  full-service  branch  inside  a new  Wal-Mart
Superstore in Muscatine, Iowa; upgrading computer hardware,  software,  networks
and training;  and opening a new branch facility with  drive-through  service in
downtown Muscatine,  Iowa. These costs were incurred to maintain and enhance the
competitiveness of the organizations  service and product delivery system now as
well as in the future. However, such decisions increase overhead expenses in the
near term which results in a less favorable efficiency ratio.

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):
<TABLE>

                                                         Repricing Maturities at September 30, 1997
                                                 -----------------------------------------------------------
                                                 Less Than       1-5      More Than  Noninterest
                                                  One Year      Years      5 Years     Bearing       Total
                                                 ---------    ---------   ---------  -----------   ---------
<S>                                              <C>          <C>         <C>        <C>           <C> 
Assets:
  Loans ......................................   $  83,555    $  82,620   $  37,833   $   1,241    $ 205,249
  Investment securities ......................      19,067       33,156      16,989          10       69,222
  Other earning assets .......................       3,540           --          --          --        3,540
  Nonearning assets ..........................          --           --          --      18,868       18,868
                                                 ---------    ---------   ---------   ---------    --------- 
     Total assets ............................   $ 106,162    $ 115,776   $  54,822   $  20,119    $ 296,879
                                                 =========    =========   =========   =========    =========
Liabilities and Equity:
   Deposits ..................................   $ 151,632    $  50,436   $      --   $  37,728    $ 239,795   
   Other purchased funds .....................       7,344        8,863      11,500          --       27,707
   Other liabilities .........................          --           --          --       2,121            2     
Equity .......................................          --           --          --      27,256       27,256
                                                 ---------    ---------   ---------   ---------    ---------
      Total liabilities and equity ...........   $ 158,976    $  59,299   $  11,500   $  67,105    $ 296,879
                                                 =========    =========   =========   =========    =========

Repricing gap ................................   $ (52,814)   $  56,478   $  43,322   $ (46,986)   $      --
                                                 =========    =========   =========   =========    =========
                                                 
Cumulative repricing gap .....................   $ (52,814)   $   3,664   $  46,986   $      --    $      --
                                                 =========    =========   =========   =========    =========
</TABLE>
<PAGE>



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 September  30, 1997,  rate  sensitive  liabilities
exceeded rate sensitive assets within a one year maturity range by $52.8 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.

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
September 30, 1997, were $239,795,000 or 81% of total liabilities and equity.
<PAGE>



Securities  available for sale with a cost totaling  $68,752,000  at quarter-end
included net unrealized gains of $470,000. 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 $2,058,000 during the nine months ended September
30, 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 September 30, 1997 with the minimum
requirements is presented below.

                                                             Minimum
                                             Actual        Requirements
                                             ------        ------------

Tier 1 risk-based capital                    12.75%           4.00%
Total risk-based capital                     14.00%           8.00%
Tier 1 leverage ratio                         9.09%           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.

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 September 30, 1997,  approximately 21,000 shares of common stock
had 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.  It is  anticipated,  however,  that all
treasury  stock  purchased  to date will have been used for the above  described
purposes by year end 1997.

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 6.  Exhibits and reports on Form 8-K.


         Reports on Form 8-K.      No Form 8-K has been  filed for
                                   the quarter ended September 30, 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)


November 10, 1997            /s/ George A. Shepley
-----------------            -------------------------------
Date                         George A. Shepley, Chairman of
                             the Board and Chief Executive Officer






November 10, 1997            /s/ Kim K. Bartling
-----------------            -------------------------------
Date                         Kim K. Bartling, Executive Vice
                             President, Chief Operating
                             Officer & Treasurer