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, 1999

                                       OR

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

                For the transition period from _______ to _______

                         Commission file number 2-89283


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


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

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

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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.  YES [ X ]     NO [  ]

At September 30, 1999 there were  1,529,294  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, 1999 and December 31, 1998

                     Consolidated Condensed Statements of
                     Operations, Three and Nine Months Ended
                     September 30, 1999 and 1998

                     Consolidated Condensed Statements of
                     Cash Flows, Nine Months Ended
                     September 30, 1999 and 1998

                     Notes to Consolidated Condensed Financial Statements


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

PART II  Other Information


         Item 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,
                                                                   1999        1998
                                                              --------------------------
<S>                                                            <C>          <C>

               ASSETS

Cash and due from banks ....................................   $  11,328    $  14,408

Investment securities available for sale (cost September 30,
  1999,  $66,180; December 31, 1998, $57,581) ..............      65,707       58,711

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

Loans, net of allowance for possible loan losses
   September 30, 1999,$3,032; December 31, 1998, $2,787.....     271,142      250,318

Bank premises and equipment, net ...........................       5,557        5,858

Other assets ...............................................       4,630        3,561
                                                               ----------------------

   TOTAL ASSETS ............................................   $ 358,364    $ 345,411
                                                               ======================

LIABILITIES AND STOCKHOLDERS' EQUITY
            LIABILITIES

Noninterest bearing deposits ...............................   $  38,549    $  44,430
Interest bearing deposits ..................................     216,101      217,416
                                                               ----------------------
   TOTAL DEPOSITS ..........................................   $ 254,650    $ 261,846
Notes payable ..............................................       6,911        7,250
Securities sold under agreements to repurchase .............       4,981        5,645
Federal Home Loan Bank advances ............................      63,991       47,973
Treasury tax and loan open note ............................       2,551          163
Other liabilities ..........................................       1,962        2,225
Federal Funds Purchased ....................................       2,500            0
                                                               ----------------------
   TOTAL LIABILITIES .......................................   $ 337,546    $ 325,102

STOCKHOLDERS' EQUITY

Common stock ...............................................   $     200    $     200
Surplus ....................................................       4,408        4,408
Retained earnings ..........................................      27,058       25,460
                                                               ----------------------
                                                               $  31,666    $  30,068
Accumulated other comprehensive income (loss) ..............        (296)         708
Less net cost of common shares acquired for the treasury ...     (10,552)     (10,467)
                                                               ----------------------
   TOTAL STOCKHOLDERS' EQUITY ..............................   $  20,818    $  20,309
                                                               ----------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................   $ 358,364    $ 345,411
                                                               ======================
</TABLE>
See notes to Consolidated Condensed Financial Statements.
<PAGE>


                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                      (In Thousands, Except Per Share Data)
                                   (Unaudited)
<TABLE>


                                                  Three Months Ended   Nine Months Ended
                                                    September 30,        September 30,
                                                  ------------------   -----------------
                                                    1999      1998       1999     1998
                                                  ------------------   -----------------
<S>                                               <C>        <C>       <C>       <C>
INTEREST INCOME:
   Interest and fees on loans ..................   $ 5,437   $ 4,975   $15,667   $14,131
   Interest on investment securities ...........       941       848     2,696     2,685
   Interest on federal funds sold and securities
     purchased under resale agreements .........         6       172       245       683
                                                   -------------------------------------
   Total interest income .......................   $ 6,384   $ 5,995   $18,608   $17,499
                                                   -------------------------------------

INTEREST EXPENSE:
   Interest on deposits ........................   $ 2,326   $ 2,422   $ 7,020   $ 7,269
   Interest on other borrowed funds ............     1,030       776     2,742     2,014
   Interest on notes payable ...................       131       136       395       232
                                                   -------------------------------------
   Total interest expense ......................   $ 3,487   $ 3,334   $10,157   $ 9,515
                                                   -------------------------------------

   Net interest income .........................   $ 2,897   $ 2,661   $ 8,451   $ 7,984

Provision for possible loan losses .............        90        36       256        80
                                                   -------------------------------------

   Net interest income after provision for
     possible loan losses ......................   $ 2,807   $ 2,625   $ 8,195   $ 7,904

Investment securities gains (losses) ...........         4        15         4        19
Other income ...................................       529       472     1,474     1,349
Other expense ..................................     2,053     1,930     5,938     5,645
                                                   -------------------------------------
   Income before income taxes ..................   $ 1,287   $ 1,182   $ 3,735   $ 3,627
Applicable income taxes ........................       408       377     1,172     1,142
                                                   -------------------------------------

Net income .....................................   $   879   $   805   $ 2,563   $ 2,485
                                                   =====================================

Net income per common share :
  Basic ........................................   $  0.57   $  0.53   $  1.67   $  1.50
                                                   =====================================

  Diluted ......................................   $  0.57   $  0.53   $  1.67   $  1.50
                                                   =====================================


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

Comprehensive income ...........................   $   644   $ 1,127   $ 1,559   $ 2,781
                                                   =====================================
</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, 1999 and 1998
                                 (In Thousands)

<TABLE>

                                                                         1999        1998
                                                                       --------------------
<S>                                                                    <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .........................................................   $  2,563    $  2,485
Adjustments to reconcile net income to net cash provided by
  operating activities:
   Proceeds from  FHLMC ............................................      1,936         205
   Loans underwritten for FHLMC ....................................     (1,922)       (201)
   Gains on loans sold to FHLMC ....................................        (14)         (4)
   Provision for loan losses .......................................        256          80
   Investment securities (gains) losses, net .......................         (4)        (19)
   Depreciation ....................................................        478         472
   Amortization of premiums and accretion of discounts
     on loans and investment securities, net .......................         86          99
  (Increase) in other assets .......................................     (1,069)       (966)
   Increase (decrease) in other liabilities ........................       (263)        588
                                                                       --------------------
Net cash provided by operating activities ..........................   $  2,047    $  2,739
                                                                       --------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Net decrease in federal funds sold ..............................   $ 12,555    $  3,795
   Proceeds from sales, maturities, calls, and paydowns of available
      for sale securities ..........................................     17,472      20,131
   Purchases of available for sale securities ......................    (25,555)    (12,224)
   Net (increase) in loans .........................................    (21,080)    (38,961)
   Purchases of bank premises and equipment ........................       (177)       (366)
                                                                       --------------------
   Net cash (used in) investing activities .........................   $(16,785)   $(27,625)
                                                                       --------------------


CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in noninterest bearing deposits .........   $ (5,881)   $     82
   Net increase (decrease) in interest bearing deposits ............     (1,315)      9,075
   Net increase (decrease) in securities sold under agreements
      to repurchase ................................................       (664)      2,043
   Net increase in other borrowings ................................     20,906      18,258
   Net increase (decrease) in notes payable ........................       (339)      7,250
   Cash dividends paid .............................................       (964)     (1,078)
   Reissuance of treasury stock ....................................         --           5
   Purchases of common stock for the treasury ......................        (85)    (10,753)
                                                                       --------------------

   Net cash provided by financing activities .......................   $ 11,658    $ 24,882
                                                                       --------------------

   Net increase (decrease) in cash and due from banks ..............     (3,080)         (4)

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

   Ending ..........................................................   $ 11,328    $ 12,722
                                                                       ====================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
   Cash payments for:
     Interest ......................................................   $ 10,064    $  9,438

     Income taxes ..................................................   $    984    $    903
</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.


Significant accounting policies:

Accounting Estimates:

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

Principles of consolidation:

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

Presentation of cash flows:

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

Investment securities available for sale:

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

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

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

Premiums and  discounts  are  recognized  in interest  income using the interest
method over the period to maturity.  There were no investments  held to maturity
or for trading purposes at quarter-end.
<PAGE>


Loans:

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

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

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

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

Bank premises and equipment:

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

Other assets:

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

Income taxes:

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

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


Trust assets:

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

Fair value of financial instruments:

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


Note 2.  Capital Stock and Earnings Per Share

Common shares and preferred stock  authorized total 6,000,000 shares and 500,000
shares,  respectively.  Basic  earnings  per share is arrived at by dividing net
income by the weighted average number of shares of common stock  outstanding for
the respective period.  Diluted earnings per share is arrived at by dividing net
income  by the  weighted  average  number  of  common  stock  and  common  stock
equivalents  outstanding for the respective period. The average number of shares
of  common  stock  outstanding  for the  third  quarter  of 1999 and  1998  were
1,531,341 and  1,524,351,  respectively.  The average number of shares of common
stock  outstanding for the first nine months of 1999 and 1998 were 1,532,063 and
1,661,400, respectively. There were no common stock equivalents in 1999 or 1998.

<PAGE>



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



Discussion and Analysis of Financial Condition

The Company's total assets at September 30, 1999, were $358,364,000. Muscatine's
total assets were $263,559,000 which reflects a $16,492,000 (6.7%) increase from
December 31, 1998,  total assets.  Fairfield's  total assets were $93,683,000 at
September 30, 1999,  which is a decrease of  $3,584,000  (3.7%) when compared to
December 31, 1998,  total assets.  Total  consolidated  assets increased by 3.8%
during the first nine months of 1999.

Consolidated  net loans totaled  271,142,000 at September 30, 1999. Net loans at
Muscatine  increased by  $16,884,000  (9.2%)  during the first nine months.  Net
loans increased at Fairfield by $3,940,000  (5.8%) during the first nine months.
Consolidated net loans increased by $20,824,000 (8.3%) year-to-date.

Total available for sale  securities  increased $7 million during the first nine
months of 1999 while  federal  funds sold  decreased  $12.6  million.  The Banks
emphasize  purchase of securities with maturities of five years and less as such
purchases  offer  reasonable  yields with little  credit risk as well as limited
interest rate risk.  Additionally,  selected  securities with longer  maturities
have  been  purchased  in order  to  enhance  overall  portfolio  yield  without
significantly  increasing  risk.  At  September  30,  1999,  less  than  40%  of
investment securities mature in more than five years and less than 15% mature in
more  than  ten  years.  To  date,   available  for  sale  securities   totaling
approximately $.5 million have been sold resulting in gains of $4,000.

Total deposits at September 30, 1999, were  $254,650,000.  Deposits at Muscatine
decreased  $135,000 (0.1%) from the prior year end.  Fairfield's  total deposits
decreased  $7,087,000 (8.8%) during the same period.  This represents a combined
deposit decrease of approximately $7.2 million (2.8%) for the Company during the
first nine months of 1999.  Additionally,  securities  sold under  agreements to
repurchase  decreased  $664,000 and advances borrowed from the Federal Home Loan
Bank increased $16,018,000 to total $64.0 million at quarter end.

Results of Operations

Consolidated  net income was $879,000,  or $.57 per share, for the third quarter
of 1999.  This was $74,000 or 9.2% more than the same period last year.  For the
first nine months,  net income totaled $2,563,000 or $1.67 per share compared to
$2,485,000  or $1.50 per  share  last  year.  Interest  expense  on debt used to
purchase  treasury shares is the primary reason  year-to-date net income is only
3.1% greater than the previous year while  earnings per share over the same time
period increased a healthy 11.3%.  This interest expense totaled $395,000 before
tax for the first nine months of 1999 compared to only $232,000 in 1998.  Due in
large part to the  purchase  of the  treasury  shares,  return on equity for the
first nine months of 1999 was 16.5%,  appreciably greater than the 13.8% for the
same period last year.

The  Company  has been able to expand net  interest  income,  as compared to the
prior year by actively managing asset quality, growth of the loan portfolio, and
rates paid on assets and  liabilities.  Management  has  expressed  concern  for
several quarters, however, as to the ability to continue increasing net interest
income  each  successive  quarter.  The  increased  usage of  wholesale  funding
sources,  while  mitigating  intermediate  and  long-term  interest  rate  risk,
increases  interest  expense.  The  interest  expense  associated  with the debt
incurred to purchase  treasury  shares  also adds  pressure to the net  interest
income.  Finally, the intense competition for all types of loans does not afford
the Company much pricing power when dealing with borrowers.
<PAGE>


Provisions  for loan losses were  $90,000  and  $256,000  for the three and nine
months ended  September  30, 1999.  This was $54,000 and $176,000  more than the
same periods in 1998. Net loan charge-offs totaled only $10,000 during the first
nine months of 1999. However,  due to low farm commodity prices in 1998 and thus
far in 1999,  and the  resultant  pressure  on cash flow and equity of some farm
borrowers,  our bank in Fairfield  increased  its  provisions  for possible loan
losses.  While no  significant  loan  charge-offs  have  yet  been  specifically
identified,  prudent management dictated strengthening our reserves for possible
loan losses as the financial  picture of selected farm borrowers  weakened.  The
market  prices of farm  commodities,  coupled with the level of success our farm
customers  have in the  production  and  marketing of their current year output,
will help determine the actual  required loan loss reserves.  Recently,  a major
employer in Muscatine announced layoffs and a local plant closing.  The eventual
impact  on loan  quality  and  provisions  for  possible  loan  losses,  if any,
resulting from this  announcement are not yet known. Most other employers in our
market area continue to experience difficulty in hiring and retaining sufficient
numbers of  employees.  This  strong job market may  mitigate  the impact of the
aforementioned layoffs.

Nonaccrual loans totaled  $545,000 at September 30, 1999,  $54,000 less than the
end of the third quarter in 1998. Other real estate owned totaled $723,000,  and
loans past due 90 days or more and still accruing totaled  $99,000.  The reserve
for loan  losses of  $3,032,000  represents  1.1% of net loans and 222% 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 59.8% for the first nine months of
1999 compared to 59.4% for all of 1998.

Interest Rate Sensitivity

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

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, 1999,  rate  sensitive  liabilities
exceeded rate sensitive assets within a one year maturity range by approximately
25% of total  assets and,  thus,  the  Company is  theoretically  positioned  to
benefit from a decline in interest rates within the next year.

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

Because the  repricing  gap position  does not capture  these risks,  Management
utilizes simulation modeling to measure and manage the rate sensitivity exposure
of earnings.  The Company's simulation model provides a projection of the effect
on net interest  income of various  interest  rate  scenarios  and balance sheet
strategies.
<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 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, 1999, were $254,650,000 or 71% of total liabilities and equity.

Securities  available for sale with a cost totaling  $66,180,000  at quarter-end
included net  unrealized  losses of $473,000.  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

Retained  earnings  increased  $558,000 during the three months,  and $1,598,000
during the nine months, ended September 30, 1999.

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

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

A  comparison  of the  Company's  capital  as of  September  30,  1999  with the
requirements to be considered adequately capitalized is presented below.

                                                                  For Capital
                                                    Actual     Adequacy Purposes
                                                    ----------------------------

Tier 1 risk-based capital ......................     7.97%           4.00%
Total risk-based capital .......................     9.14%           8.00%
Tier 1 leverage ratio ..........................     5.77%           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>


Year 2000

The Year 2000 Issue is the result of computer programs using two-digits  instead
of four-digits to represent the year. These computer systems,  if not renovated,
will be unable to interpret dates past 1999 which could cause computer  problems
leading to a  disruption  in  operations.  The Company  developed  a  five-phase
program  for  year  2000  compliance,  as  outlined  by  the  Federal  Financial
Institutions  Examination Council (FFIEC)in a supervisory  letter.  These phases
are Awareness, Assessment, Renovation, Validation, and Implementation.

The Awareness phase is intended to define the problem and obtain executive level
support for the resources  necessary to perform  compliance work. This phase was
completed with the formation of a Year 2000  Committee and the  appointment of a
Year 2000 Project  Manager.  The goal of the  Assessment  phase is to assess the
size and complexity of the problem,  including  identifying all systems that may
be affected by the year 2000. The Year 2000 Committee identified any system that
might be affected with emphasis on high risk and mission critical systems.  This
assessment included hardware,  software, vendor services and computer-controlled
devices  such as alarms,  elevators,  and heating and cooling  systems.  Through
correspondence  with  vendors,  the Company  determined  the year 2000 status of
these systems and made determinations  regarding replacement,  upgrades, etc. In
the Renovation  phase, the goals were to undertake code  enhancements,  hardware
and  software  upgrades,  system  replacements  and vendor  correspondence.  The
Company does not perform any of its own programming and is reliant on vendors to
provide updates. All needed upgrades or replacements of mission critical systems
have been completed as of September 30, 1999. The Validation  phase  encompasses
the testing and verification of changes to systems and coordination with outside
parties.   The  Company  has  finished  testing  mission  critical  systems  and
applications.  By the  Implementation  phase, all systems should be certified as
year 2000  compliant and should be in use. The Company has completed  this phase
as of September  30, 1999.  Because  there  remains so many  unknowns  about the
potential  issues  with the year 2000,  the  Company  has updated and tested its
disaster recovery plan which now includes  specific  provisions for dealing with
potential year 2000 related disaster recovery situations.

The  Company  believes it will incur a total of  approximately  $350,000 in year
2000  related  costs,  although  this number could  change  significantly.  This
estimate  includes hardware and software upgrades in addition to human resources
costs and consulting fees.

The federal banking regulators have issued several statements providing guidance
to  financial   institutions  on  the  steps  the  regulators  expect  financial
institutions  to take  to  become  year  2000  compliant.  The  federal  banking
regulators   are  also   examining  the  financial   institutions   under  their
jurisdiction  to  assess  each  institution's  compliance  with the  outstanding
guidance.  Failure to  satisfactorily  address  the Year 2000 Issue may expose a
financial  institution to various forms of  enforcement  action that its primary
federal   regulator  deems  appropriate  to  address  the  deficiencies  in  the
institution's year 2000 remediation program.  Management currently has no reason
to believe the Company will be subjected to any such regulatory actions.

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.

<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, 1999.
<PAGE>



                  IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
                                   SIGNATURES




Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                             IOWA FIRST BANCSHARES CORP.

                                 (Registrant)


10/10/99                     /s/ George A. Shepley
----------------             ---------------------------------------------------
Date                         George A. Shepley, Chairman of
                             the Board and Chief Executive Officer





10/10/99                     /s/ Kim K. Bartling
----------------             ---------------------------------------------------
Date                         Kim K. Bartling, Executive Vice
                             President, Chief Operating
                             Officer & Treasurer