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, 2000
                                         ------------------

                                       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, 2000 there were  1,516,888  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, 2000 and December 31, 1999

                           Consolidated Condensed Statements of

                           Operations, Three and Nine Months Ended

                           September 30, 2000 and 1999

                           Consolidated Condensed Statements of

                           Cash Flows, Nine Months Ended

                           September 30, 2000 and 1999

                           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,
                                                              2000        1999
                                                         --------------------------
<S>                                                       <C>         <C>
ASSETS
Cash and due from banks ................................  $  13,851   $  15,304

Investment securities available for sale ...............     67,144      62,950

Federal funds sold and securities
  purchased under resale agreements ....................      5,850      15,800

Loans, net of allowance for possible loan
  losses September 30, 2000, $3,252;
  December 31, 1999, $3,091 ............................    271,525     266,992

Bank premises and equipment, net .......................      5,080       5,456

Other assets ...........................................      7,962       4,527
                                                          ---------   ---------

       TOTAL ASSETS ....................................  $ 371,412   $ 371,029
                                                          =========   =========

LIABILITIES AND STOCKHOLDERS' EQUITY
  LIABILITIES

Noninterest bearing deposits ...........................  $  40,543   $  47,175
Interest bearing deposits ..............................    225,634     222,397
                                                          ---------   ---------
        TOTAL DEPOSITS .................................  $ 266,177   $ 269,572
Notes payable ..........................................      6,218       6,869
Securities sold under agreements to
  repurchase ...........................................      4,173       4,626
Federal Home Loan Bank advances ........................     67,874      64,621
Treasury tax and loan open note ........................      1,930       2,211
Other liabilities ......................................      2,134       1,937
                                                          ---------   ---------
       TOTAL LIABILITIES ...............................  $ 348,506   $ 349,836

 STOCKHOLDERS' EQUITY

Common stock ...........................................  $     200   $     200
Surplus ................................................      4,349       4,349
Retained earnings ......................................     29,326      27,585
                                                          ---------   ---------
                                                          $  33,875   $  32,134
Accumulated other comprehensive (loss) .................       (221)       (649)
Less net cost of common shares acquired for the treasury    (10,748)    (10,292)
                                                          ---------   ---------
         TOTAL STOCKHOLDERS' EQUITY ....................  $  22,906   $  21,193
                                                          ---------   ---------

         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $ 371,412   $ 371,029
                                                          =========   =========
</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,
                                                   ------------------   ----------------

                                                      2000     1999      2000     1999
                                                   -----------------    ----------------
<S>                                                <C>      <C>       <C>       <C>

INTEREST INCOME:
   Interest and fees on loans ..................   $ 5,840   $ 5,437   $17,079   $15,667
   Interest on investment securities ...........     1,011       941     2,963     2,696
   Interest on federal funds sold and securities
     purchased under resale agreements .........        22         6       193       245
                                                   -------   -------   -------   -------

   Total interest income .......................   $ 6,873   $ 6,384   $20,235   $18,608
                                                   -------   -------   -------   -------

INTEREST EXPENSE:
   Interest on deposits ........................   $ 2,674   $ 2,326   $ 7,715   $ 7,020
   Interest on other borrowed funds ............     1,276     1,030     3,475     2,742
   Interest on notes payable ...................       117       131       365       395
                                                   -------   -------   -------   -------

   Total interest expense ......................   $ 4,067   $ 3,487   $11,555   $10,157
                                                   -------   -------   -------   -------

   Net interest income .........................   $ 2,806   $ 2,897   $ 8,680   $ 8,451

Provision for possible loan losses .............       125        90       284       256
                                                   -------   -------   -------   -------

   Net interest income after provision for
     possible loan losses ......................   $ 2,681   $ 2,807   $ 8,396   $ 8,195

Investment securities gains ....................        --         4         8         4
Other income ...................................       543       529     1,623     1,474
Other expense ..................................     2,082     2,053     6,100     5,938
                                                   -------   -------   -------   -------

   Income before income taxes ..................   $ 1,142   $ 1,287   $ 3,927   $ 3,735
Applicable income taxes ........................       340       408     1,225     1,172
                                                   -------   -------   -------   -------

Net income .....................................   $   802   $   879   $ 2,702   $ 2,563
                                                   =======   =======   =======   =======

Net income per common share :

  Basic ........................................   $  0.53   $  0.57   $  1.77   $  1.67
                                                   =======   =======   =======   =======

  Diluted ......................................   $  0.53   $  0.57   $  1.77   $  1.67
                                                   =======   =======   =======   =======


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

Comprehensive income ...........................   $ 1,242   $   644   $ 3,130   $ 1,559
                                                   =======   =======   =======   =======
</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, 2000 and 1999
                                 (In Thousands)
<TABLE>
                                                                         2000        1999
                                                                      ---------------------
<S>                                                                   <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ........................................................   $  2,702    $  2,563
Adjustments to reconcile  net  income  to  net
cash  provided  by  operating activities:
   Proceeds from sale of loans ....................................      1,192       1,936
   Loans underwritten for sale ....................................     (1,185)     (1,922)
   Gains on loans sold ............................................         (7)        (14)
   Provision for possible loan losses .............................        284         256
   Investment securities (gains), net .............................         (8)         (4)
   Depreciation ...................................................        479         478
   Amortization of premiums and accretion of discounts
     on investment securities, net ................................          5          86
  (Increase) in other assets ......................................       (550)     (1,069)
  (Decrease) increase in other liabilities ........................        201        (263)
                                                                      ---------   --------
Net cash provided by operating activities .........................   $  3,113    $  2,047
                                                                      ---------   --------

CASH FLOWS FROM INVESTING ACTIVITIES
   Net decrease in federal funds sold .............................   $  9,950    $ 12,555
   Proceeds from sales, maturities, calls and paydowns of available
     for sale securities ..........................................      8,654      17,472
   Purchases of available for sale securities .....................    (12,163)    (25,555)
   Net (increase) in loans ........................................     (4,817)    (21,080)
   Purchases of bank premises and equipment .......................       (103)       (177)
   Increase in cash surrender value of life insurance .............     (3,139)         --
                                                                      --------    --------
   Net cash provided by (used in) investing activities ............   $ (1,618)   $(16,785)
                                                                      --------    --------


CASH FLOWS FROM FINANCING ACTIVITIES
   Net (decrease) in noninterest bearing deposits .................   $ (6,632)   $ (5,881)
   Net increase (decrease) in interest bearing deposits ...........      3,237      (1,315)
   Net (decrease) in securities sold under
     agreements to repurchase .....................................       (453)       (664)
   Payments of advances from Federal Home Loan Bank ...............    (12,097)       (271)
   Advances from Federal Home Loan Bank ...........................     15,350      16,289
   Net increase (decrease) in treasury tax and loan open note .....       (281)      2,388
   Proceeds from notes payable ....................................         25          --
   Repayments of notes payable ....................................       (676)       (339)
   Net increase in federal funds purchased ........................         --       2,500
   Cash dividends paid ............................................       (965)       (964)
   Purchases of common stock for the treasury .....................       (456)        (85)
                                                                      --------    --------

   Net cash provided by (used in) financing activities ............   $ (2,948)   $ 11,658
                                                                      --------    --------

   Net (decrease) in cash and due from banks ......................     (1,453)     (3,080)

Cash and due from banks:
   Beginning ......................................................   $ 15,304    $ 14,408
                                                                      --------    --------

   Ending .........................................................   $ 13,851    $ 11,328
                                                                      ========    ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

   Cash payments for:   Interest ..................................   $ 11,064    $ 10,064

                        Income taxes ..............................   $  1,390    $  1,182

</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 federal funds sold and other overnight investments,  loans, deposits,
securities sold under  agreements to repurchase,  and treasury tax and loan open
note 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 and  preferred  stock  authorized  total  6,000,000  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 2000 and  1999  were
1,520,679 and  1,531,341,  respectively.  The average number of shares of common
stock  outstanding for the first nine months of 2000 and 1999 were 1,529,158 and
1,532,063, respectively. There were no common stock equivalents in 2000 or 1999.

<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, 2000, were $371,412,000. Muscatine's
total assets were $273,958,000  which reflects a $1,558,000 (0.6%) increase from
December 31, 1999,  total assets.  Fairfield's  total assets were $96,915,000 at
September  30,  2000,  which is a decrease of $733,000  (0.8%) when  compared to
December 31, 1999,  total assets.  Total  consolidated  assets increased by 0.1%
during the first nine months of 2000.

Net loans  totaled  271,525,000  at September  30, 2000.  Net loans at Muscatine
increased by $5,893,000 (3.0%) during the first nine months. Net loans decreased
at Fairfield by $1,360,000 (1.9%) during the first nine months. Consolidated net
loans increased by $4,533,000 (1.7%) year-to-date.

Total available for sale securities  increased  $4,194,000 during the first nine
months  of 2000  while  federal  funds  sold  decreased  $9,950,000.  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
have  been  purchased  in order  to  enhance  overall  portfolio  yield  without
significantly  increasing  risk.  At  September  30,  2000,  less  than  45%  of
investment securities mature in more than five years and less than 15% mature in
more than ten years.  One security  has been sold during the year with  proceeds
totaling $18,000. A gain of $8,000 was recognized on this sale.

Total deposits at September 30, 2000, were  $266,177,000.  Deposits at Muscatine
decreased  $1,819,000 (1.0%) from the prior year end. Fairfield's total deposits
decreased  $1,586,000 (2.0%) during the same period.  This represents a combined
deposit  decrease of 1.3% for the Company  during the first nine months of 2000.
Additionally,  securities sold under agreements to repurchase decreased $453,000
and advances  borrowed from the Federal Home Loan Bank  increased  $3,253,000 to
total $67.9 million at quarter end.

During the three  months ended  September  30,  2000,  the Company  entered into
deferred compensation  agreements with various directors and executive officers.
As of September 30, 2000 the Company has accrued approximately  $200,000 for the
agreements.  Related to the agreements,  the Company has purchased  various life
insurance  contracts.  The cash  value  of these  life  insurance  contracts  is
$3,139,000  as of  September  30, 2000 and is included  with other assets in the
consolidated balance sheet.


Results of Operations

Consolidated net income was 802,000, or $.53 per share, for the third quarter of
2000.  This was  $77,000 or 8.8% less than the same  period  last year.  For the
first nine months,  net income totaled $2,702,000 or $1.77 per share compared to
$2,563,000 or $1.67 per share last year. Net interest  income  declined from the
third  quarter of 1999 to the third  quarter of 2000 by  $91,000  (3.1%),  other
income increased over the same period by $14,000 (2.6%),  and operating expenses
increased  $29,000 or only 1.4%.  For the nine month period ended  September 30,
2000  compared  to the same nine  month  period  in 1999,  net  interest  margin
increased  $229,000  (2.7%),   other  income  increased  $149,000  (10.1%),  and
operating expenses rose $162,000 (2.7%).
<PAGE>

The  Company  has been able to  expand  net  interest  income  year-to-date,  as
compared to the prior year by actively  managing  asset  quality,  growth of the
loan portfolio,  and yields 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.  This concern became reality during
the third  quarter of 2000 as the  Company's  cost of funds grew faster than the
rates earned on assets. 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 and  deposits  does not  afford the
Company a great deal of pricing power when dealing with customers.

Provisions  for loan losses were  $125,000  and  $284,000 for the three and nine
months  ended  September  30,  2000.  This was $28,000  more than the nine month
period ended September 30, 1999. Net loan  charge-offs  totaled  $123,000 during
the first nine months of 2000.  This  represents  only 0.05% of quarter-end  net
loans.

Nonaccrual loans totaled $511,000 at September 30, 2000. Other real estate owned
totaled $418,000,  and loans past due 90 days or more and still accruing totaled
$469,000. The reserve for loan losses of $3,252,000 represents 1.2% of net loans
and 233% 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 59.2% for the first nine months of
2000  compared to 59.7% for all of 1999. A lower  efficiency  ratio  signifies a
more efficiently operated organization.

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, 2000,  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.

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.

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, 2000, were $266,177,000 or 72% of total liabilities and equity.

Securities  available for sale with a cost totaling  $67,497,000  at quarter-end
included net  unrealized  losses of $353,000.  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  $484,000 during the three months,  and $1,741,000
during the nine months, ended September 30, 2000.

The  Company  has  repurchased  during the first nine  months of the year 19,813
shares of its common stock for a total cost of $456,000.

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,  2000  with the
requirements to be considered adequately capitalized is presented below.

                                                                  For Capital
                                                      Actual   Adequacy Purposes
--------------------------------------------------------------------------------
Tier 1 risk-based capital ......................      8.70%           4.00%
Total risk-based capital .......................      9.95%           8.00%
Tier 1 leverage ratio ..........................      6.16%           4.00%
<PAGE>

Impact of Inflation and Changing Prices

The financial statements and related data presented herein have been prepared in
accordance  with generally  accepted  accounting  principles,  which require the
measurement of financial  position and operating  results in terms of historical
dollars without  considering  changes in the relative  purchasing power of money
over time due to inflation.  Unlike most industrial companies,  virtually all of
the assets and liabilities of a financial institution are monetary in nature.

As a result,  interest  rates  have a more  significant  impact  on a  financial
institution's  performance  than the  effects  of general  levels of  inflation.
Interest  rates do not  necessarily  move in the same  direction  or in the same
magnitude  as the price of goods and  services.  In the  current  interest  rate
environment,  liquidity and the maturity  structure of the Company's  assets and
liabilities are critical to the maintenance of acceptable performance levels.

Trends, Events or Uncertainties

Officers  and  Directors of the Company and its  subsidiaries  have had, and may
have in the future,  banking  transactions in the ordinary course of business of
the Company's subsidiaries.  All such transactions are on substantially the same
terms, including interest rates on loans and collateral,  as those prevailing at
the time for comparable  transactions  with others,  involve no more than normal
risk of collectibility, and present no other unfavorable features.

In the normal  course of  business,  the Banks are  involved  in  various  legal
proceedings.  In the current opinion of management, any liability resulting from
such  proceedings  would not have a material  effect on the Company's  financial
statements.
<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, 2000.

<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)
11/14/00                     /s/ George A. Shepley
----------------             -------------------------------
Date                         George A. Shepley, Chairman of
                             the Board and Chief Executive Officer

11/14/00                     /s/ Kim K. Bartling
----------------             -------------------------------
Date                         Kim K. Bartling, Executive Vice
                             President, Chief Operating
                             Officer & Treasurer