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, 1996

                                       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, 1996 there were  1,723,098  shares of the  registrant's  common
stock outstanding.
<PAGE>



                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES

                               INDEX TO FORM 10-Q







                                                                     

PART 1   Financial Information

         Item 1.   Financial Statements

                   Consolidated Condensed Balance Sheets, September 30, 1996 and
                   December 31, 1995

                   Consolidated  Condensed  Statements of Operations,  Three and
                   Nine months Ended September 30, 1996 and 1995

                   Consolidated  Condensed Statements of Cash Flows, Nine months
                   Ended September 30, 1996 and 1995

                   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,
                                                                     1996         1995
                                                                 ------------- ------------
<S>                                                              <C>           <C> 
               ASSETS

Cash and due from banks .......................................   $  14,235    $  10,963

Investment securities available for sale (cost  September 30, .      68,763       60,728
  1996, $69,046; December 31, 1995, $60,364)

Federal funds sold and securities
   purchased under resale agreements ..........................       8,500       24,700

Loans, net of allowance for possible loan
   losses September 30, 1996, $2,737; December 31, 1995, 
   $2,309 .....................................................     175,895      169,342

Bank premises and equipment, net ..............................       4,280        4,342

Other assets ..................................................       3,355        2,755
                                                                  ---------    ---------

   TOTAL ASSETS ...............................................   $ 275,028    $ 272,830
                                                                  =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
            LIABILITIES

Noninterest bearing deposits ..................................   $  37,447    $  35,076
Interest bearing deposits .....................................     198,845      200,877
                                                                  ---------    ---------
   TOTAL DEPOSITS .............................................   $ 236,292    $ 235,953
Securities sold under agreements to
   repurchase .................................................       5,791        6,814
Federal Home Loan Bank advances ...............................       4,132        3,398
Treasury tax and loan open note ...............................       2,474        1,525
Other liabilities .............................................       2,041        2,107
                                                                  ---------    ---------

   TOTAL LIABILITIES ..........................................   $ 250,730    $ 249,797
                                                                  ---------    ---------

STOCKHOLDERS' EQUITY

Common Stock ..................................................   $     200    $     200
Surplus .......................................................       3,861        3,800
Retained earnings .............................................      21,137       19,326
                                                                  ---------    ---------
                                                                  $  25,198    $  23,326
Unrealized gains (losses) on securities available for sale, net        (178)         229
Less net cost of common shares acquired for the treasury ......         722          522
                                                                  ---------    ---------
   TOTAL STOCKHOLDERS' EQUITY .................................   $  24,298    $  23,033
                                                                  ---------    ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ....................   $ 275,028    $ 272,830
                                                                  =========    =========

</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,
                                                   -------------------    -------------------
                                                      1996      1995        1996       1995
                                                   --------   --------    --------   --------
<S>                                                <C>        <C>         <C>        <C>
INTEREST INCOME:
   Interest and fees on loans ..................   $  3,803   $  3,744    $ 11,372   $ 10,828
   Interest on investment securities ...........      1,015        927       2,904      2,828
   Interest on federal funds sold and securities
     purchased under resale agreements .........        134        109         711        300
                                                   --------   --------    --------   ---------
   Total interest income .......................   $  4,952   $  4,780    $ 14,987   $ 13,956
                                                   --------   --------    --------   ---------

INTEREST EXPENSE:
   Interest on deposits ........................   $  2,194   $  2,224    $  6,772   $  6,409
   Interest on repurchase agreements and
     other borrowings ..........................        147         83         442        195
                                                   --------   --------    --------   ---------
   Total interest expense ......................   $  2,341   $  2,307    $  7,214   $  6,604
                                                   --------   --------    --------   ---------

   Net interest income .........................   $  2,611   $  2,473    $  7,773   $  7,352

Provision for possible loan losses .............         60          0         100         30
                                                   --------   --------    --------   ---------

   Net interest income after provision for
     possible loan losses ......................   $  2,551   $  2,473    $  7,673   $  7,322

Investment securities gains (losses) ...........          4         (9)          4         (3)
Other income ...................................        449        405       1,319      1,135
Other expense ..................................      1,685      1,617       5,018      5,108
                                                   --------   --------    --------   ---------
   Income before income taxes ..................   $  1,319   $  1,252    $  3,978   $  3,346
Applicable income taxes ........................        436        400       1,328      1,046
                                                   --------   --------    --------   ---------
Net income .....................................   $    883   $    852    $  2,650   $  2,300
                                                   ========   ========    ========   =========

Per share data:
  Net earnings per common share ................  $    0.50   $   0.47    $   1.50   $    1.29
                                                  =========   ========    ========   =========

Dividends declared per common share ............     0.1800     0.1367      0.4900      0.3900
                                                  =========   ========    ========   =========
</TABLE>
All per share  information  has been adjusted to reflect a  three-for-one  stock
split effected as July 26, 1996.

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, 1996 and 1995
                                 (In Thousands)
<TABLE>

                                                                      1996        1995
                                                                    --------    --------
<S>                                                                 <C>         <C> 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ......................................................   $  2,650    $  2,300
Adjustments to  reconcile  net  income  to  net  cash  
provided  by  operating activities:
   Proceeds from  FHLMC .........................................      4,678       1,405
   Loans underwritten for FHLMC .................................     (4,673)     (1,400)
   Gains on loans sold to FHLMC .................................         (5)         (5)
   Provision for loan losses ....................................        100          30
   Investment securities (gains) losses, net ....................         (4)          3
   Depreciation .................................................        282         324
   Deferred income taxes ........................................       (396)         --
   Amortization of premiums and accretion of discounts
     on loans and investment securities, net ....................        158         138
   (Increase) in other assets ...................................       (600)       (429)
   Increase (decrease) in other liabilities .....................       (129)         50
                                                                    --------    --------
Net cash provided by operating activities .......................   $  2,061    $  2,416
                                                                    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES
   Net (increase) decrease in federal funds sold ................   $ 16,200    $ (3,738)
   Proceeds from maturities of investment securities ............     12,635      11,430
   Proceeds from sales of investment securities .................      1,505       3,968
   Purchases of investment securities ...........................    (22,337)     (9,773)
   Net (increase) in loans ......................................     (6,653)     (8,029)
   Purchases of bank premises and equipment .....................       (220)       (209)
                                                                    --------    --------
   Net cash (used in) investing activities ......................   $  1,130    $ (6,351)
                                                                    --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in noninterest bearing deposits ......   $  2,371    $ (2,923)
   Net increase (decrease) in interest bearing deposits .........     (2,032)      4,605
   Net increase (decrease) in securities sold under
     agreements to repurchase ...................................     (1,023)      1,469
   Net increase in other borrowings .............................      1,683       2,600
   Cash dividends paid ..........................................       (778)       (837)
   Reissuance of treasury stock .................................        256          27
   Purchases of common stock for the treasury ...................       (396)       (261)
                                                                    --------    --------
   Net cash provided by financing activities ....................   $     81    $  4,680
                                                                    --------    --------

   Net increase in cash and due from banks ......................      3,272         745

Cash and due from banks:
   Beginning ....................................................     10,963      11,720
                                                                    --------    --------
   Ending .......................................................   $ 14,235    $ 12,465
                                                                    ========    ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

   Cash payments for: 
     Interest ..................................................    $  7,303    $  7,614
     Income taxes ..............................................    $  1,310    $    757

</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.  Cash flows from
            demand deposits,  NOW accounts,  savings accounts, and federal funds
            sold are reported net, since their original maturities are less than
            three months.  Cash flows are also reported net for securities  sold
            under  agreements to  repurchase,  Federal Home Loan Bank  advances,
            TT&L open note, certificates of deposits, and loans.

            Investment securities:

            Investment  securities  held to maturity  are those debt  securities
            that the Banks have the  ability  and intent to hold until  maturity
            regardless  of  changes  in market  conditions,  liquidity  needs or
            changes in general economic conditions.  Such securities are carried
            at cost  adjusted  for  amortization  of premiums  and  accretion of
            discounts.  If the  ability  or  intent to hold to  maturity  is not
            present  for  certain  specified  securities,  such  securities  are
            considered  available  for sale as the Banks intend to hold them for
            an indefinite  period of time but not  necessarily to maturity.  Any
            decision to sell a security  classified  as available for sale would
            be based on various  factors,  including  significant  movements  in
            interest rates, changes in the maturity mix of the Banks' assets and
            liabilities, liquidity needs, regulatory capital considerations, and
            other similar factors.  Securities available for sale are carried at
            fair value.  Unrealized gains or losses are reported as increases or
            decreases in stockholders'  equity,  net of the related deferred tax
            effect. There are no securities held for trading purposes.  Realized
            gains or  losses,  determined  on the basis of the cost of  specific
            securities sold, are included in earnings.

            Pursuant  to a FASB  Special  Report "A Guide to  Implementation  of
            Statement  115 on  Accounting  for Certain  Investments  in Debt and
            Equity  Securities"  the  Company  transferred  at  fair  value  all
            investment  securities  from held to maturity to available  for sale
            prior to December 31, 1995.

            Loans and direct lease financing:

            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 and lease 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.
<PAGE>


            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 2,000,000 shares and
         500,000 shares, respectively. Primary earnings per share are 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,  1996  was  1,761,343  and
         1,770,223, respectively. Fully diluted earnings per share are not shown
         as the dilutive effect of common stock  equivalents was less than three
         percent.


<PAGE>



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



Discussion and Analysis of Financial Condition

The Company's total assets at September 30, 1996, were $275,028,000. Muscatine's
total assets were  $187,963,000  which reflects a $338,000  (0.2%) decrease from
December 31, 1995,  total assets.  Fairfield's  total assets were $84,683,000 at
September 30, 1996,  which is an increase of $2,218,000  (2.9%) when compared to
December  31,  1995,   total  assets.   Total   consolidated   assets  increased
$2,198,000(.8%)during the first nine months of 1996.

Net loans totaled  $175,895,000  at September  30, 1996.  Net loans at Muscatine
increased by $5,523,000 (4.8%) during the first nine months. Net loans increased
at Fairfield by $1,030,000 (1.9%) during the first nine months. Consolidated net
loans increased by $6,553,000 (3.9%) year-to-date.

Total available for sale securities increased $8.0 million during the first nine
months of 1996  while  federal  funds  sold  decreased  $16  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, 1996, less than
10% of  investment  securities  mature in more than five  years and less than 2%
mature in more than ten years.  Securities  totaling  approximately $1.5 million
have been sold during the year, generating gains of $4,000.

Total deposits at September 30, 1996, were  $236,292,000.  Deposits at Muscatine
decreased  .2% from the prior year end.  Fairfield's  total  deposits  increased
approximately  1.0% during the same period.  This represents a combined  deposit
increase  of  $339,000  for the  Company  during the first nine  months of 1996.
Additionally,  securities  sold under  agreements to repurchase  decreased  $1.0
million to total $5.8 million.  Intermediate to long term advances borrowed from
the Federal Home Loan Bank totaled $4.1 million at quarter end.

Results of Operations

Consolidated  net income was $883,000,  or $.50 per share, for the third quarter
of 1996, a $31,000 or 3.6% increase from the same period last year.  However,  a
major factor in the third quarter's  performance in 1995 was a $130,000 ($85,000
after-tax)  nonrecurring  refund from the Federal Deposit Insurance  Corporation
(FDIC).  Without this refund,  net income for the third quarter of 1996 exceeded
the same quarter of 1995 by $116,000.

Net income for the nine months ended September 30, 1996 was $2,650,000  compared
to $2,300,000 in 1995 for a 15.2% increase.  This improvement  included $188,000
of  nonrecurring  income  primarily from recovery of interest on loans which had
been on nonaccrual of interest status for quite some time. These loans were paid
off and the  Company's  position  in  certain  leases  were  sold  during  1996,
resulting in the aforementioned $188,000 additional income.  Factoring out these
unusual  increases to net income this year and the FDIC  refunds last year,  the
year-to-date 1996 net income exceeded 1995 by 11%.

The Company has been able to expand the net interest margin,  as compared to the
prior year by actively managing asset quality, growth of the loan portfolio, and
rates paid on assets and liabilities. Management has expressed concern, however,
as to the ability to continue increasing the net interest margin each quarter if
short-term interest rates climb.

Provisions for loan losses were $100,000 for the nine months ended September 30,
1996,  which is $70,000  greater than the same period in 1995. The third quarter
provision  of  $60,000  compared  to $0 in  1995.  Net loan  recoveries  totaled
$328,000  compared  to net  recoveries  of $20,000  for the first nine months of
1995.

Nonaccrual loans were reduced during the past twelve months totaling $902,000 at
September 30, 1996,  $293,000 less than at September 30, 1995. Other real estate
owned  totaled  $49,000,  and loans past due 90 days or more and still  accruing
totaled $205,000.  The reserve for loan losses of $2,737,000  represents 1.6% of
net loans and 237% 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 55.2% for the first nine months of
1996 compared to 60% for all of 1995.
<PAGE>


Interest Rate Sensitivity

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

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


                   Repricing Maturities at September 30, 1996
<TABLE>


                                                Less Than      3-12         1-5      More Than      Noninterest
                                                3 Months      Months       Years      5 Years        Bearing           Total
                                                ---------    --------     --------   ---------      ---------        ---------
<S>                                             <C>          <C>          <C>        <C>            <C>              <C>
Assets:
  Loans .....................................    $ 60,477    $ 29,100     $ 73,809    $ 14,344      $     902        $ 178,632
  Investment securities .....................       8,541      10,699       42,142       7,371             10           68,763
  Other earning assets ......................       8,500          --           --          --             --            8,500
  Nonearning assets .........................          --          --           --          --          9,133           19,133
                                                 --------    --------     --------    --------      ---------        ---------
     Total assets ...........................    $ 77,518    $ 39,799     $115,951    $ 21,715      $  20,045        $ 275,028
                                                 ========    ========     ========    ========      =========        =========

Liabilities and Equity:
  Deposits ..................................    $ 46,223    $ 93,246     $ 59,377    $     --      $  37,446        $ 236,292
  Other purchased funds .....................       5,766       2,500        2,700       1,432             --           12,398
  Other liabilities .........................          --          --           --          --          2,040            2,040
  Equity ....................................          --          --           --          --         24,298           24,298
                                                 --------    --------     --------    --------      ---------        ---------
      Total liabilities and equity ..........    $ 51,989    $ 95,746     $ 62,077    $  1,432      $ 63,784         $ 275,028
                                                 ========    ========     ========    ========      =========        =========

Repricing gap ...............................    $ 25,529    $(55,947)    $ 53,874    $ 20,283      $(43,739)        $      --

Cumulative repricing gap ....................    $ 25,529    $(30,418)    $ 23,456    $ 43,739      $     --         $      --

</TABLE>
The data in this table  incorporates the contractual  characteristics as well as
an estimate of the actual repricing  characteristics of the Company's assets and
liabilities.  Based on the  estimate,  twenty  percent  of the  savings  and NOW
accounts are reflected in the less than three months category,  30% in the three
month to one year  category,  with the remaining 50% in the 1-5 year time frame.
Money  market  accounts  are  estimated  as 25% in the less  than  three  months
category and 75% in the three months to one year time frame.

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, 1996,  rate  sensitive  liabilities
exceeded rate sensitive assets within a one year maturity range by $30.4 million
and, thus, the Company is positioned to benefit from a decline in interest rates
within the next year.

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


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

Liquidity

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

The subsidiary banks do not have brokered deposits.

Securities  available for sale with a cost totaling  $69,046,000  at quarter-end
included net  unrealized  losses of $283,000.  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  $1,265,000  (5.5%) during the nine months ended
September 30, 1996.

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, 1996 with the minimum
requirements is presented below.
                                                                       Minimum
                                                           Actual   Requirements
                                                           ------   ------------
Tier 1 risk-based capital .....................            13.02%       4.00%
Total risk-based capital ......................            14.27%       8.00%
Tier 1 leverage ratio .........................             8.74%       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.
<PAGE>


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, 1996,  more than 4% of the 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.

During  June the Board of  Directors  authorized  a  three-for-one  stock  split
effected as a stock dividend payable to common stockholders on record as of July
2, 1996, with such shares issued on July 26, 1996.

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 incurred legal and engineering fees, and performed various tests
on a bank-owned vacant lot to determine if the lot contains environmental damage
or a potential for environmental  damage liability.  As a result of the testing,
the Company has  submitted a Site  Clean-Up  Report with the Iowa  Department of
Natural Resources  (IADNR).  The Company intends to work with the IADNR, as well
as its own  engineers and  attorneys,  to determine the nature and scope of this
environmental concern, to ascertain the need for a monitoring and/or remediation
program and to consider the costs and allocations of responsibility with respect
to any  expenses  incurred  under  such a program.  In the event  that  on-going
monitoring or remediation is required,  reimbursement  by predecessor  owners or
insurers is likely.  No conclusions have been reached at this time about a final
plan of  monitoring  and/or  remediation,  if any,  however  costs  that  may be
associated  with such a plan will also most  likely be  covered  by  predecessor
owners or insurers. Besides those previously discussed,  management is not aware
of any trends,  events,  or uncertainties  that will have or that are reasonably
likely to have material effect on the Company's liquidity,  capital resources or
operations.

<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, 1996.

<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)


11/13/96                     /s/ George A. Shepley
----------------             -------------------------------
Date                         George A. Shepley, Chairman of
                             the Board, President & Chief
                             Executive Officer





11/13/96                     /s/ Kim K. Bartling
----------------             -------------------------------
Date                         Kim K. Bartling, Senior Vice
                             President, Chief Financial
                             Officer & Treasurer