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, 2001

                              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, 2001 there were  1,460,510  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, 2001 and December 31, 2000

                   Consolidated Condensed Statements of

                   Income, Three and Nine months Ended
                   September 30, 2001 and 2000

                   Consolidated Condensed Statements of
                   Cash Flows, Nine months Ended
                   September 30, 2001 and 2000

                   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)
<TABLE>
                                                           (Unaudited)
                                                           September 30,  December 31,
                                                              2001           2000
                                                           ---------------------------
<S>                                                        <C>           <C>
               ASSETS
Cash and due from banks ................................    $  11,255    $  15,994

Interest-bearing deposits at financial institutions ....        1,586          188

Investment securities available for sale ...............       49,289       63,059

Federal funds sold .....................................       29,060       14,650

Loans, net of allowance for loan
   losses September 30, 2001, $3,195; December 31,
   2000, $3,268 ........................................      276,607      270,539

Bank premises and equipment, net .......................        5,010        4,936

Life insurance contracts ...............................        3,316        3,184

Restricted investment securities .......................        3,825        3,831

Other assets ...........................................        4,009        4,033
                                                            ----------------------
   TOTAL ASSETS ........................................    $ 383,957    $ 380,414
                                                            ======================

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits ...........................    $  39,966    $  48,649
Interest bearing deposits ..............................      232,604      222,831
                                                            ----------------------
   TOTAL DEPOSITS ......................................      272,570      271,480
Notes payable ..........................................        5,465        6,276
Securities sold under agreements to
   repurchase ..........................................        4,161        3,950
Federal Home Loan Bank advances ........................       67,850       71,531
Treasury tax and loan open note ........................        2,238        1,187
Company obligated mandatorily redeemable preferred
  securities of subsidiary trust .......................        4,000           --
Other liabilities ......................................        2,471        2,240
                                                            ----------------------
   TOTAL LIABILITIES ...................................      358,755      356,664
                                                            ----------------------
Redeemable common stock held by employee stock
ownership plan with 401(k) provisions (KSOP) ...........        2,118        2,118
                                                            ----------------------

STOCKHOLDERS' EQUITY
Common stock ...........................................          200          200
Additional paid-in capital .............................        4,309        4,309
Retained earnings ......................................       31,455       29,852
Accumulated other comprehensive income .................        1,181          290
Less net cost of common shares acquired for the treasury      (11,943)     (10,901)
Less maximum cash obligation related to KSOP shares ....       (2,118)      (2,118)
                                                            ----------------------
   TOTAL STOCKHOLDERS' EQUITY ..........................       23,084       21,632
                                                            ----------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .............    $ 383,957    $ 380,414
                                                            ======================
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>

                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                      (In Thousands, Except Per Share Data)
                                   (Unaudited)
<TABLE>
                                                          Three Months Ended   Nine Months Ended
                                                             September 30,      September 30,
                                                          ------------------   -----------------
                                                             2001      2000     2001      2000
                                                           -----------------   -----------------
<S>                                                       <C>        <C>       <C>       <C>
INTEREST INCOME:
   Interest and fees on loans ..........................   $ 5,485   $ 5,840   $16,835   $17,079
   Interest on investment securities available for sale        702       944     2,344     2,779
   Interest on federal funds sold ......................       149        22       509       193
   Dividends on restricted investment securities .......        34        67       132       184
   Other ...............................................        25        --        --        41
                                                           -------------------------------------
   Total interest income ...............................   $ 6,395   $ 6,873   $19,861   $20,235
                                                           -------------------------------------

INTEREST EXPENSE:
   Interest on deposits ................................   $ 2,380   $ 2,674   $ 7,887   $ 7,715
   Interest on notes payable ...........................       103       117       330       365
   Interest on other borrowed funds ....................     1,088     1,276     3,291     3,475
   Interest on company obligated mandatorily
     redeemable preferred securities of subsidiary trust       103        --       208        --
                                                           -------------------------------------
   Total interest expense ..............................   $ 3,674   $ 4,067   $11,716   $11,555
                                                           -------------------------------------

   Net interest income .................................   $ 2,721   $ 2,806   $ 8,145   $ 8,680

Provision for loan losses ..............................       130       125       308       284
                                                           -------------------------------------
   Net interest income after provision for
     loan losses .......................................   $ 2,591   $ 2,681   $ 7,837   $ 8,396

Investment securities gains ............................       186        --       285         8
Other income ...........................................       598       543     1,810     1,623
Other expense ..........................................     2,086     2,082     6,208     6,100
                                                           -------------------------------------
   Income before income taxes ..........................   $ 1,289   $ 1,142   $ 3,724   $ 3,927
Applicable income taxes ................................       389       340     1,145     1,225
                                                           -------------------------------------
Net income .............................................   $   900   $   802   $ 2,579   $ 2,702
                                                           =====================================

Net income per common share, basic and diluted .........   $  0.61   $  0.53   $  1.74   $  1.77
                                                           =====================================

Dividends declared per common share ....................   $  0.22   $  0.21   $  0.66   $  0.63
                                                           =====================================

Comprehensive income ...................................   $ 1,135   $ 1,242   $ 3,470   $ 3,130
                                                           =====================================
</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, 2001 and 2000
                                 (In Thousands)
<TABLE>
                                                                         2001        2000
                                                                       --------------------
<S>                                                                    <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .........................................................   $  2,579    $  2,702
Adjustments to reconcile net income to net cash provided by
  operating activities:
   Proceeds from real estate loans sold ............................      4,850       1,192
   Real estate loans underwritten and sold .........................     (4,813)     (1,185)
   Gains on real estate loans sold .................................        (37)         (7)
   Provision for possible loan losses ..............................        308         284
   Investment securities (gains), net ..............................       (285)         (8)
   Depreciation ....................................................        475         479
   Amortization of premiums and accretion of discounts
     on investment securities available for sale, net ..............        (19)          5
   Net (increase) in other assets ..................................       (336)       (550)
   Net increase in other liabilities ...............................        242         201
                                                                       --------------------
Net cash provided by operating activities ..........................   $  2,964    $  3,113
                                                                       --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Net (increase) in interest bearing deposits at
     financial institutions ........................................   $ (1,398)   $   (504)
   Net (increase) decrease in federal funds sold ...................    (14,410)      9,950
   Proceeds from sales, maturities, calls and paydowns of available
   for sale securities .............................................     20,556       8,654
   Purchases of available for sale securities ......................     (5,063)    (11,805)
   Net (increase) in loans .........................................     (6,376)     (4,817)
   Purchases of bank premises and equipment ........................       (549)       (103)
   Increase in cash value of life insurance contracts ..............       (132)     (3,139)
   Net (purchases) sales of restricted investment securities .......          6        (358)
                                                                       --------------------
   Net cash (used in) investing activities .........................   $ (7,366)   $ (2,122)
                                                                       --------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net (decrease) in noninterest bearing deposits ..................   $ (8,683)   $ (6,632)
   Net increase in interest bearing deposits .......................      9,773       3,237
   Net increase (decrease) in securities sold under
     agreements to repurchase ......................................        211        (453)
   Repayment of notes payable ......................................       (686)       (676)
   Net increase (decrease) in line of credit .......................       (125)         25
   Net increase (decrease) in treasury tax and loan open note ......      1,051        (281)
   Advances from Federal Home Loan Bank ............................     13,400      15,350
   Payments of advances from Federal Home Loan Bank ................    (17,081)    (12,097)
   Net proceeds from issuance of company obligated mandatorily
     redeemable preferred securities of subsidiary trust ...........      3,832          --
   Cash dividends paid .............................................       (987)       (965)
   Purchases of common stock for the treasury ......................     (1,042)       (456)
                                                                       --------------------
   Net cash (used in) financing activities .........................   $   (337)   $ (2,948)
                                                                       --------------------

   Net (decrease) in cash and due from banks .......................     (4,739)     (1,957)

Cash and due from banks:
   Beginning .......................................................   $ 15,994    $ 15,149
                                                                       --------------------
   Ending ..........................................................   $ 11,255    $ 13,192
                                                                       ====================

Supplemental Disclosures of Cash Flow Information
   Cash payments for:
     Interest ......................................................   $ 11,832    $ 11,064
     Income taxes ..................................................      1,193       1,390
Supplemental Schedule of Noncash Investing and Financing Activities:
  Change in accumulated other comprehensive income, unrealized
  gains on securities available for sale, net ......................        891         428
</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.  (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. The Company also owns the outstanding  stock of
Iowa First Capital Trust I, which was  capitalized in March 2001 for the purpose
of issuing Company Obligated Mandatorily Redeemable Preferred Securities.

Reclassifications:

Certain amounts in the prior year financial  statements have been  reclassified,
with no effect on net income or  stockholders'  equity,  to conform with current
year presentations.

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  nine  months of 2001 and 2000 were
1,485,882 and 1,529,158, respectively. There were no common stock equivalents in
2001 or 2000.
<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, 2001, were $383,957,000. Muscatine's
total assets were $284,341,000  which reflects a $3,387,000 (1.2%) increase from
December 31, 2000,  total assets.  Fairfield's  total assets were $97,337,000 at
September 30, 2001,  which is a decrease of  $1,596,000  (1.6%) when compared to
December 31, 2000,  total assets.  Total  consolidated  assets increased by 0.9%
during the first nine months of 2001.  Compared to September 30, 2000,  however,
total consolidated assets have increased $12,545,000 (3.4%).

Net loans totaled  $276,607,000  at September  30, 2001.  Net loans at Muscatine
increased by $6,524,000 (3.3%) during the first nine months. Net loans decreased
at Fairfield by $456,000 (0.6%) during the first nine months.  Consolidated  net
loans increased by $6,068,000 (2.2%) year-to-date.

Total available for sale securities decreased  $13,770,000 during the first nine
months  of 2001  while  federal  funds  sold  increased  $14,410,000.  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 are
owned  in  order  to  enhance  overall  portfolio  yield  without  significantly
increasing risk. In the current historically low interest rate environment,  the
banks have purchased few securities, and those that have been purchased have had
relatively short maturities.  Securities sold during the year of $9,159,000 have
resulted in gains recognized totaling $285,000.

Total  deposits at  September  30, 2001,  were  $272,570,000.  Deposits,  net of
intercompany  deposits,  at Muscatine increased $5,162,000 (2.7%) from the prior
year end. Fairfield's total deposits decreased $4,072,000 (5.0%) during the same
period.  This  represents  a combined  deposit  increase of nearly $1.1  million
(0.4%)  for the  Company  during the first  nine  months of 2001.  Additionally,
securities  sold under  agreements  to  repurchase  increased  $211,000  to $4.2
million  and  advances  borrowed  from the  Federal  Home  Loan  Bank  decreased
$3,681,000 to total $67.9 million at quarter end.

On March 28,  2001,  the Company  issued  4,000 shares  totaling  $4,000,000  of
Company  Obligated  Mandatorily  Redeemable  Preferred  Securities of Iowa First
Capital  Trust I. The  securities  provide  for  cumulative  cash  distributions
calculated at a 10.18% annual rate. The Company may, at one or more times, defer
interest payments on the capital securities for up to 10 consecutive semi-annual
periods,  but not beyond June 8, 2036.  At the end of the deferral  period,  all
accumulated and unpaid  distributions  will be paid. The capital securities will
be redeemed on June 8, 2031; however,  the Company has the option to shorten the
maturity  date to a date not earlier  than June 8, 2011.  The  redemption  price
begins at 105.09% to par and is reduced 51 basis  points each year until June 8,
2021 when the capital  securities can be redeemed at par. Holders of the capital
securities have no voting rights, are unsecured,  and rank junior in priority of
payment to all of the Company's indebtedness and senior to the Company's capital
stock. For regulatory  purposes,  the entire amount of the capital securities is
allowed  in the  calculation  of Tier 1  capital.  The  capital  securities  are
included  in the  balance  sheet as a  liability  with  the  cash  distributions
included in interest expense.

Results of Operation

Consolidated  net income was $900,000,  or $.61 per share, for the third quarter
of 2001.  This was  $98,000 or 12.2% more than the same  period  last year.  Net
interest  income declined from the third quarter of 2000 to the third quarter of
2001 by $85,000  (3.0%),  provision  for loan losses  increased  $5,000  (4.0%),
securities  gains  increased  by  $186,000,  other  income  increased by $55,000
(10.1%), and operating expenses increased only $4,000 (0.2%). For the first nine
months of 2001, net income was  $2,579,000  which  represented  $123,000 or 4.6%
less than the same  period  last  year.  Net income per share for the first nine
months  of 2001 was  $1.74  which  represented  $.03 or 1.7% less than the prior
year.
<PAGE>

Management  had  expressed  concern  for  several  quarters as to the ability to
continue  increasing net interest income each successive  quarter.  Net interest
income did indeed  decline  during the first three  quarters of 2001 compared to
2000.  The prime lending rate dropped a precipitous  350 basis points during the
first nine months of 2001. This rapid,  substantial decline in the prime lending
rate  caused   downward   pressure  on  the  Company's   net  interest   margin.
Additionally,   the  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
and  the  interest  expense  related  to the  aforementioned  Company  Obligated
Mandatorily  Redeemable  Preferred  Securities  also  add  pressure  to the  net
interest  income.  Finally,  the intense  competition for all types of loans and
deposits  limits the Company's  ability to control  pricing and other terms when
dealing with customers.

Provisions  for loan losses were  $130,000 and $308,000,  respectively,  for the
three and nine months ended  September  30, 2001.  This was $5,000 more than the
third  quarter of 2000 and $24,000 more than the first nine months of 2000.  Net
loan charge-offs  through  September 30, 2001 totaled  $381,000  compared to net
charge-offs of $123,000 for the first three quarters of 2000.

Nonaccrual loans totaled $806,000 at September 30, 2001,  $295,000 more than the
end of the third quarter in 2000.  Other real estate owned totaled  $221,000,  a
reduction  of $197,000  from a year ago,  and loans past due 90 days or more and
still accruing  totaled  $861,000 which was $392,000 more than at the end of the
third quarter of 2000. The reserve for loan losses of $3,195,000 represents 1.2%
of net loans and 169% 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 60.6% for the first nine months of
2001  compared to 59.5% for all of 2000.  The primary  reason for this change is
the reduced net interest income.

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.

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, 2001,  rate  sensitive  liabilities
exceeded rate  sensitive  assets within a one year maturity range and, thus, the
Company is theoretically  positioned to benefit from a decline in interest rates
within the next year.  However,  over  shorter  periods of three to six  months,
rising rates tend to be more beneficial for the Company.

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.
<PAGE>

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  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, 2001, were $272,570,000 or 71% of total liabilities and equity.

Securities  available for sale with a cost totaling  $47,407,000  at quarter-end
included net  unrealized  gains of $1,882,000.  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  $1,452,000  (6.7%) during the nine months ended
September 30, 2001.

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  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,  2001  with the
requirements to be considered adequately capitalized is presented below.

                                                                 For Capital
                                                      Actual   Adequacy Purposes
--------------------------------------------------------------------------------
Tier 1 risk-based capital                             10.25%        4.00%
Total risk-based capital                              11.43%        8.00%
Tier 1 leverage ratio                                  7.37%        4.00%

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.

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.

The Company has in the past purchased shares of its outstanding common stock for
the treasury as they become  available.  During the third  quarter of 2001,  the
Company  announced an expanded  stock  repurchase  plan  authorizing  up to $2.2
million for the repurchase of common shares.  This is approximately $1.0 million
more  than  has  been  invested  pursuant  to the  previously  authorized  stock
repurchase plan.

In July 2001, the Financial  Accounting  Standards  Board issued  Statement 141,
"Business  Combinations"  and  Statement  142,  "Goodwill  and Other  Intangible
Assets". Statement 141 eliminates the pooling method for accounting for business
combinations;  requires  that  intangible  assets that meet certain  criteria be
reported separately from goodwill; and requires negative goodwill arising from a
business  combination  to be recorded as an  extraordinary  gain.  Statement 142
eliminates  the  amortization  of  goodwill  and  other   intangibles  that  are
determined  to have an  indefinite  life;  and  requires,  at a minimum,  annual
impairment tests for goodwill and other intangible assets that are determined to
have an indefinite  life. For the Company,  the provisions of the Statements are
generally effective January 1, 2002. The Company's financial  statements will be
impacted in that yearly goodwill  amortization expense of approximately  $56,000
will no longer be recorded.
<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, 2001.
<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 14, 2001            /s/ George A. Shepley
-----------------            -------------------------------
Date                         George A. Shepley, Chairman of
                             the Board

November 14, 2001            /s/ Kim K. Bartling
-----------------            -------------------------------
Date                         Kim K. Bartling, Executive Vice
                             President, Chief Operating
                             Officer & Treasurer