UNITED STATES


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)
(X) Annual  Report  Pursuant  to  Section  13 or 15(d) of the  Securities
    Exchange Act of 1934. For the fiscal year ended December 31, 1997 or

( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities 
    Exchange Act of 1934.
    For the transition period from__________ to __________.

    Commission file number   2-89283

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

             An Iowa Corporation                             42-1211285
- ---------------------------------------------     ------------------------------
(State or other jurisdiction of organization)     (I.R.S. Employer incorporation
                                                       or Identification No.)

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

Registrant's telephone number, including area code   (319) 263-4221
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:  None

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. [ X ]  Yes  [  ]  No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)

The  aggregate  market  value of the voting stock held by  nonaffiliates  of the
registrant as of February 28, 1998,  was  $40,983,275.  As of February 28, 1998,
1,827,029 shares of the Registrant's common stock were outstanding.

Documents incorporated by reference:

Portions of the registrant's  1997 Annual Report are incorporated in Parts I and
II of this Form 10-K.  Portions of the registrant's  Proxy Statement dated March
20, 1998 are incorporated in Part III of this Form 10-K.

The Exhibit Index is located on page 11.



                           ANNUAL REPORT ON FORM 10-K


                                TABLE OF CONTENTS

                                     PART I
                                                                           Page
                                                                            No.

Item  1.  Business        
Item  2.  Properties                  
Item  3.  Legal Proceedings           
Item  4.  Submission of Matters to a Vote of Security Holders  
Table I.  Executive Officers of the Registrant  

                                     PART II

Item  5.  Market for the Registrant's Common Equity and Related 
            Stockholder Matters  
Item  6.  Selected Financial Data                              
Item  7.  Management's Discussion and Analysis of Financial Condition 
            and Results of Operations
Item  8.  Financial Statements and Supplementary Data
Item  9.  Changes in and Disagreements with Accountants on Accounting 
            and Financial Disclosure


                                    PART III

Item 10.  Directors and Executive Officers of the Registrant  
Item 11.  Executive Compensation   
Item 12.  Security Ownership of Certain Beneficial Owners and Management  
Item 13.  Certain Relationships and Related Transactions   


                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K 
          Signatures 
          Index of Exhibits  




                           ANNUAL REPORT ON FORM 10-K

                                     PART I


ITEM 1.   BUSINESS.

Iowa  First  Bancshares  Corp.  (the  "Company"),  is  a  bank  holding  company
headquartered in Muscatine,  Iowa. The Company owns all the outstanding stock of
two national banks in Iowa,  First National Bank of Muscatine and First National
Bank in Fairfield.

On a full-time  equivalent  basis,  year-end  employment for the Company and its
subsidiary banks totaled 118 employees.

First  National  Bank of Muscatine  has a total of five  locations in Muscatine,
Iowa. The 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 and
savings  accounts,  commercial  loans,  consumer loans,  real estate loans, safe
deposit  facilities,  transmitting  of funds,  trust  services,  and such  other
banking services as are usual and customary for commercial banks.

The commercial banking business is highly competitive.  Subsidiary banks compete
with other  commercial  banks and with other financial  institutions,  including
savings and loan associations, savings banks, mortgage banking companies, credit
unions and mutual funds.  In recent years,  competition  also has increased from
institutions  not subject to the same regulatory  restrictions as banks and bank
holding companies.

The operations of the Company and its subsidiary banks are affected by state and
federal legislative  changes and by policies of various regulatory  authorities.
The Company is a registered  bank holding company under the Bank Holding Company
Act of 1956 (the "Act") and is subject to the supervision of, and regulation by,
the Board of Governors of the Federal  Reserve System (the  "Board").  Under the
Act, a bank  holding  company  may engage in banking,  managing  or  controlling
banks,  furnishing or performing services for banks it controls,  and conducting
activities that the Board has determined to be closely related to banking.

National  banks are  subject to the  supervision  of, and are  examined  by, the
Office of the Comptroller of the Currency.  Both subsidiary banks of the Company
are members of the  Federal  Deposit  Insurance  Corporation,  and as such,  are
subject to examination thereby. In practice, the primary federal regulator makes
regular examinations of each subsidiary bank subject to its regulatory review or
participates in joint examinations with other federal regulators.  Areas subject
to regulation by these  authorities  include capital  levels,  the allowance for
possible  loan losses,  investments,  loans,  mergers,  issuance of  securities,
payment of  dividends,  establishment  of  branches,  and many other  aspects of
operations.

Statistical  information  called for by this Item is contained in the  Company's
1997 Annual Report to Shareholders  which is incorporated by reference (pages 38
- - 50 of this Form 10-K).

ITEM 2. PROPERTIES.

Since the Company commenced  business,  its principal  executive office has been
located at 300 East  Second  Street,  Muscatine,  Iowa,  which is the  principal
office of First National Bank of Muscatine, a national banking association and a
wholly owned subsidiary of the Company.

First National Bank of Muscatine  conducts its operations  from five  facilities
located in Muscatine.  The main bank is located at 300 East Second Street and is
a modern brick and steel  building  completed in 1979  containing  36,000 square
feet of floor space on three  floors.  The bank owns both the  building  and the
underlying real estate. All  administrative  functions of the bank are conducted
at its main offices.  Portions of the building are leased to commercial tenants.
During 1997, a branch was opened inside the new Wal-Mart  Supercenter located on
highway 61 at Muscatine. This branch and the Wal-Mart Supercenter were the first
of their kind in Iowa.  The bank  operates  this branch  under a five year lease
agreement  with  Wal-Mart,  with two five year  renewal  options.  Additionally,
another new branch facility,  which includes  drive-through banking services and
is located across the alley from the main Muscatine  banking  headquarters,  was
completed in the fall of 1997. This branch replaced a previous  downtown branch.
The bank owns this facility and the underlying real estate.



Two locations,  in addition to the new Wal-Mart branch, provide banking services
outside  the  Muscatine  downtown  area.  The  office at the  Muscatine  Mall is
approximately  two miles northeast of the main bank. The facility contains 2,304
square feet of floor  space in a  one-story  concrete  and steel  building.  The
facility offers a walk-in lobby and night  depository.  The three-lane  drive-up
facility of this branch is located  approximately 500 feet west of the branch at
the parking lot of the mall. The building,  drive-up  facilities and real estate
are leased from Aetna Life Insurance Company. The terms of the lease provide for
monthly  payments of $2,304  during the current  5-year term of the lease.  This
lease expires on May 31, 1999.

The  bank's  southside  office  at 608  Grandview  Avenue is  located  two miles
southwest of the main bank. The office contains 3,600 square feet of floor space
and is located in a one-story steel frame concrete block building.  The facility
offers a walk-in lobby and three  drive-up  lanes.  The building and  underlying
real  estate  are owned by the bank.  Portions  of the  building  are  leased to
commercial tenants.

First National Bank in Fairfield conducts its operations from a modern brick and
steel building  completed in 1968 containing 8,200 square feet of floor space on
two floors.  The bank owns both the  building  and the  underlying  real estate.
Portions of the building are leased to commercial tenants. A three-lane drive-up
facility  is  located  at the main  bank.  In the  spring of 1997,  a new branch
facility was opened at Fairfield, Iowa. The building, which is located in a high
traffic  area in front of the  local  Wal-Mart  store on  highway  34,  contains
several  private  offices for lending staff and management as well as teller and
deposit services, including several drive-through lanes.

The Company's  facilities are well maintained and are suitable for the Company's
business operations.

ITEM 3. LEGAL PROCEEDINGS.

The Company has no pending legal proceedings which are material.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.



                                 PART I, TABLE I
                      EXECUTIVE OFFICERS OF THE REGISTRANT


                               Family                                         Position        Business Experience
Name                 Age     Relationship     Position                       Held Since       During Past Five Years
- -----------------    ---     ------------     --------------------------     ----------       --------------------------------------
                                                                                  
George A. Shepley     75        None          Chairman of the Board             1983          President of the Company,
                                              Chief Executive Officer           1983          January 1989 to 1996;
                                              Director                          1983          Chairman of the Board,
                                                                                              Chief Executive Officer
                                                                                              of the Company, 1983 to present; 
                                                                                              Chairman of the Board, 1987 to 
                                                                                              present; President, 1963 to
                                                                                              January 1989, First National Bank of
                                                                                              Muscatine; Chairman of the Board, 
                                                                                              1986 to present, First National
                                                                                              Bank in Fairfield.

Kim K. Bartling       40        None         Executive Vice President           1996          Executive Vice President,
                                             Chief Operating Officer            1996          Chief Operating Officer
                                             Treasurer                          1988          and Treasurer of the
                                             Director                           1994          Company, December 1996 to present;
                                                                                              Senior Vice President, Chief
                                                                                              Financial Officer and Treasurer
                                                                                              of the Company, April 1988 to
                                                                                              December 1996; Director
                                                                                              First National Bank of
                                                                                              Muscatine, 1989 to present;
                                                                                              Executive Vice President and
                                                                                              Chief Financial Officer, First
                                                                                              National Bank of Muscatine, 1996 to
                                                                                              present; Senior Vice President/Chief
                                                                                              Financial Officer, First National
                                                                                              Bank of Muscatine, 1987 to
                                                                                              1996;  Director First National
                                                                                              Bank in Fairfield, 1990 to present.

Patricia R.           50        None         Secretary                          1986          Corporate Secretary of
Thirtyacre                                                                                    the Company, October 1986 to present.




                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED 
        STOCKHOLDER MATTERS

The brokerage  firms of Piper Jaffray Inc.,  and Howe Barnes  Investments,  Inc.
make a market for the Company's common stock.

High and low common stock prices and dividends for the last two years were:

1997 by                                                                 Dividend
Quarters                                  High            Low          Per Share
- ---------------------------------      ---------       ---------       ---------

First ...........................      $   25.50       $   20.50       $   0.19
Second ..........................          27.50           25.50           0.19
Third ...........................          27.50           27.50           0.19
Fourth ..........................          30.00           27.00           0.19


Total Dividend Paid .............                                     $    0.76

1996 by
Quarters
- ---------------------------------

First ...........................      $   16.67       $   16.50       $   0.14
Second ..........................          16.92           16.67           0.15
Third ...........................          16.25           16.25           0.16
Fourth ..........................          20.00           16.25           0.18


Total Dividend Paid .............                                         $0.63

The above  quotations were furnished by the brokerage firms that serve as market
makers for the Company's stock, or as of each year-end, an independent appraisal
of the stock if higher.  The quotations  represent prices between dealers and do
not include retail markup, markdown, or commissions.

Future dividends are dependent on future earnings,  regulatory restrictions (see
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  on  pages 38 - 50 of this  Form  10-K;  and Note 7 to the  Company's
Consolidated  Financial  Statements  in the  Company's  1997  Annual  Report  to
Shareholders  which is  incorporated  by  reference,  pages 29 - 30 of this Form
10-K), capital requirements, and the Company's financial condition.

As of February 28, 1998, the Company had  approximately  425 shareholders of its
outstanding  class of common stock.  The Iowa First  Bancshares  Corp.  Employee
Stock Ownership Plan with 401(k) Provisions is considered one shareholder as all
shares owned by this plan are voted by the trustees of said plan unless the vote
in  question  encompasses  approval  or  disapproval  of any  corporate  merger,
consolidation, dissolution, or similar transaction.

ITEM 6. SELECTED FINANCIAL DATA.

The  information  called for by this Item is  contained  in the  Company's  1997
Annual Report to  Shareholders  which is  incorporated  by reference (page 37 of
this Form 10-K).

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

The  information  called for by this Item is  contained  in the  Company's  1997
Annual Report to Shareholders  which is incorporated by reference (pages 38 - 50
of this Form 10-K).

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The  information  called for by this Item is  contained  in the  Company's  1997
Annual Report to Shareholders  which is incorporated by reference (pages 18 - 37
of this Form 10-K).

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE.

None.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information called for by this Item is contained in the Company's 1997 Proxy
Statement which is incorporated by reference (page 54 of this Form 10-K).


Director Compensation

The annual retainer that each outside  Director of the Company  received in 1997
was $5,300.  The Company paid $100 for attendance at each committee  meeting and
special Board of Directors  meeting.  During 1997,  each Director of the Company
served  as  Director  and  member  of  committees  for  subsidiary   boards  and
committees,  with the  exception of Mr.  Carver who served only as a Director of
the Company.  The annual retainer fee paid to each outside  subsidiary  Director
was $4,000, plus $50 to $150 for attendance at each committee meeting. Executive
officers who also serve on the Board of  Directors do not receive such  retainer
or committee fees.

ITEM 11. EXECUTIVE COMPENSATION

The information called for by this Item is contained in the Company's 1997 Proxy
Statement which is incorporated by reference (pages 55 - 57 of this Form 10-K).

ITEM 12. SECURITY OWNERHSIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information called for by this Item is contained in the Company's 1997 Proxy
Statement  which is  incorporated  by  reference  (pages  53 and 54 of this Form
10-K).

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

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 the
normal risk of collectibility, and present no other unfavorable features.




                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

         (a) Documents Filed with This Report:

             (1)  Financial  Statements.  The following  consolidated  financial
                  statements   of  the   Company   and  its   subsidiaries   are
                  incorporated  by  reference  from the 1997  Annual  Report  to
                  Shareholders of the Company:

                                                                           Page

                  Consolidated  balance  sheets -- dated  December  31,
                    1997 and 1996.

                  Consolidated  statements of income -- years ended 
                    December 31, 1997, 1996, and 1995.

                  Consolidated statements of stockholders' equity -- 
                    years ended December 31, 1997, 1996, and 1995.

                  Consolidated  statements of cash flows - years ended  
                    December 31, 1997, 1996, and 1995.

                  Notes to consolidated financial statements.

                  Opinion of independent accountants.

             (2)  Financial  Statement  Schedules.  All  schedules  are  omitted
                  because they are not applicable,  are not required, or because
                  the  required   information   is  included  in  the  financial
                  statements or the notes thereto.

         (b) Reports on Form 8-K.

             No reports on Form 8-K have been filed  during the last  quarter of
             the period covered by this report.

         (c) Exhibits.  The following exhibits are attached pursuant to Item 601
             of Regulation S-K:

             (13)   Registrant's 1997 Annual Report to Shareholders   
             (20)   Registrant's Proxy Statement dated March 20, 1998   
             (27.1) Financial Data Schedule
             (27.2) Restated Financial Data Schedule
             (27.3) Restated Financial Data Schedule

See Exhibit Index on page 11 hereof for a complete list of management  contracts
and  arrangements  required  by  this  item  and all  other  Exhibits  filed  or
incorporated by reference as a part of this report.


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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.

Date:  March 13, 1998                                     /s/ George A. Shepley
       --------------                                     ----------------------
                                                          George A. Shepley
                                                          Chairman of the  Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

     Signature                      Title                              Date
- ----------------------      ------------------------------         -------------

/s/ George A. Shepley       Chairman of the Board,                 March 13,1998
George A. Shepley           Chief Executive Officer, 
                            and Director (Principal 
                            Executive Officer)

/s/ Kim K. Bartling         Executive Vice President,             March 13, 1998
- ----------------------      Chief Operating Officer       
Kim K. Bartling             Treasurer and Director
                            (Principal Financial and 
                            Accounting Officer)


/s/ Roy J. Carver, Jr.      Director                              March 13, 1998
- ----------------------  
Roy J. Carver, Jr.

/s/ Larry L. Emmert         Director                              March 13, 1998
- ----------------------
Larry L. Emmert

/s/ Craig R. Foss           Director                              March 13, 1998
- ----------------------            
Craig R. Foss

/s/ Donald R. Heckman       Director                              March 13, 1998
- ----------------------              
Donald R. Heckman

/s/ Dean H. Holst           Director                              March 13, 1998
- ----------------------          
Dean H. Holst

/s/ D. Scott Ingstad        Director                              March 13, 1998
- ----------------------          
D. Scott Ingstad

/s/ Victor G. McAvoy        Director                              March 13, 1998
- ----------------------               
Victor G. McAvoy

/s/ Carl J. Spaeth          Director                              March 13, 1998
- ----------------------                                       
Carl J. Spaeth

/s/ Beverly J. White        Director                              March 13, 1998
- ----------------------                                        
Beverly J. White



                       ITEM 14 (a) (3) - INDEX OF EXHIBITS




         Exhibit                                                     Page
- -----------------------------------------------     --------------------------------------------
                                                    
(3)   Articles of Incorporation, as amended         Incorporated by reference to Exhibit
                                                    (3) to the registrant's Annual Report
                                                    on Form 10-K for the fiscal year ended
                                                    December 31, 1996.


(10a) Employment Agreement                          Incorporated by reference to Exhibit
                                                    (10a) to the registrant's
                                                    Annual Report on Form 10-K
                                                    for the fiscal year ended
                                                    December 31, 1995.

(10b) Change in Control Employment Agreement        Incorporated by reference to Exhibit
                                                    (10b) to the registrant's Annual
                                                    Report on Form 10-K for the fiscal
                                                    year ended December 31, 1995.

(10c) Incentive Stock Option and                    Incorporated by reference to
      Nonstatutory Stock Option Plan                Exhibit 99 to the registrant's
                                                    Annual Report on Form 10-K
                                                    for the fiscal year ended
                                                    December 31, 1993.


(13)  Registrant's 1997 Annual Report to 
      Shareholders                                  

(20)  Registrant's Proxy Statement Dated 
      March 20, 1998                                

(21)  Subsidiaries of Registrant                    Incorporated by reference to Exhibit 21
                                                    to the registrant's Annual Report on Form 10-K 
                                                    for the fiscal year ended December 31, 1995.

(27.1) Financial Data Schedule

(27.2) Restated Financial Data Schedule

(27.3) Restated Financial Data Schedule