<PAGE>
 
<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

                                   For the quarterly period ended March 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 1-9138

                       FIRST CENTRAL FINANCIAL CORPORATION

             (Exact name of registrant as specified in its charter)
<TABLE>
<S>                                                  <C>
                  NEW YORK                                        11-2648222

  (State or other jurisdiction of incorporation     (I.R.S. Employer Identification Number)
                  or organization)
</TABLE>

                   266 MERRICK ROAD, LYNBROOK, NEW YORK 11563

                    (Address of principal executive offices)
                                   (Zip Code)

                                 (516) 593-7070

              (Registrant's telephone number, including area code)

         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
                                             ---    ---

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.


<TABLE>
<CAPTION>

                                                                   Shares Outstanding at May 13, 1997
                  Title of Class                                   (excluding 602,404 treasury shares)
----------------------------------------------------      -----------------------------------------------------
<S>                                                       <C>
      Common Stock, Par Value $.10 Per Share                                    5,986,608
</TABLE>


<PAGE>
 
<PAGE>


                                TABLE OF CONTENTS

                         PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                          PAGE NO.
                                                                                          --------


<S>         <C>                                                                         <C>
ITEM I          FINANCIAL STATEMENTS................................................          1

                 Consolidated Balance Sheets........................................          1

                 Consolidated Statements of Operations..............................          3

                 Consolidated Statements of Changes in Shareholders' Equity.........          4

                 Consolidated Statements of Cash Flows..............................          5

                 Notes to Financial Statements......................................          6

ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS................................          8


                                           PART II - OTHER INFORMATION

ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K....................................         14

                SIGNATURES..........................................................         16
</TABLE>


<PAGE>
 
<PAGE>



                                     PART I

                              FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                               MARCH 31,             DECEMBER 31,
                                                                                 1997                    1996
                                                                         ---------------------   ---------------------
                                                                              (UNAUDITED)                  *

<S>                                                                      <C>                     <C>
ASSETS

 Investments
  Securities available-for-sale, at market value:
      Fixed maturities (amortized cost 1997 - $81,477,474;
      1996 - $79,563,688)                                                        $79,657,591              $79,279,962
      Equity securities, (cost: 1997 - $14,286,317;
      1996 - $17,230,459)                                                         15,470,357               18,814,702
    Short-term investments, at cost, which approximates
    market                                                                        12,564,579               10,216,742
                                                                         ---------------------   ---------------------
      Total Investments                                                          107,692,527              108,311,406

  Cash                                                                             2,278,623                4,112,441
  Accrued investment income                                                        1,389,744                1,379,187
  Agents' balances, less allowance for doubtful accounts
   (1997 - $3,554,074; 1996 - $3,554,074)                                          8,288,675               11,607,913
  Reinsurance receivables on unpaid losses                                        19,317,421               18,767,712
  Reinsurance receivables on paid losses                                           1,077,755                  466,480
  Prepaid reinsurance premiums                                                     3,804,285                5,358,744
  Federal income taxes recoverable                                                 4,848,473                4,092,473
  Other receivables                                                                  466,288                  184,429
  Deferred policy acquisition costs                                                4,312,002                4,541,520
  Deferred debenture costs                                                           264,738                  280,807
  Deferred income taxes                                                            2,950,000                2,950,000
  Property and equipment less accumulated depreciation
   (1997 - $1,377,571; 1996 - $1,323,113)                                          4,367,428                4,400,192
  Other Assets                                                                       417,977                  645,027
                                                                         ---------------------   ---------------------

                                                                                $161,475,936            $ 167,098,331
                                                                         =====================   =====================
</TABLE>


* The  balance  sheet  at  December  31,  1996  has been  derived  from  audited
consolidated financial statements at that date.

The accompanying notes are an integral part of these statements.

                                        1


<PAGE>
 
<PAGE>



FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    MARCH 30,                   DECEMBER 31,
                                                                      1997                         1996
                                                              --------------------          --------------------
                                                                   (UNAUDITED)                        *

<S>                                                                  <C>                  <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Policy Liabilities
 Unpaid losses                                                       $100,132,317                   $97,436,974
 Unpaid loss adjustment expenses                                       10,475,253                     9,357,095
 Unearned premiums                                                     26,218,475                    31,339,850
                                                              --------------------          --------------------

   Total Policy Liabilities                                           136,826,045                   138,133,919

Funds held for reinsurance treaty                                       2,196,646                     2,610,641
Reinsurance payable                                                     1,369,804                       785,104
Convertible subordinated debentures                                     4,900,000                     4,900,000
Other liabilities                                                         640,529                     1,172,527
                                                              --------------------          --------------------

  Total Liabilities                                                   145,932,808                   147,602,191
                                                              --------------------          --------------------

Commitments and Contingencies

Shareholders' Equity
 Common Stock, par value $.10 per share;
  authorized - 20,000,000 shares; issued (1997 -
  6,589,012 shares; 1996 - 6,589,012 shares)                              658,902                       658,902
 Additional paid-in capital                                            13,209,395                    13,209,395
 Net unrealized (depreciation) appreciation on
  securities available-for-sale, net of deferred taxes
  of (1997 - $216,000; 1996 - $532,000)                                  (419,845)                      768,517

 Retained earnings                                                      6,225,602                     8,990,468

                                                              --------------------          --------------------

                                                                       19,674,054                    23,627,282

Less treasury stock, at cost (1997 - 602,404
 shares; 1996 - 602,404 shares)                                        (4,131,142)                   (4,131,142)
                                                              --------------------          --------------------

Total Shareholder's Equity                                             15,542,912                    19,496,140
                                                              --------------------          --------------------

                                                                    $ 161,475,936                 $ 167,098,331
                                                              ====================          ====================
</TABLE>

* The  balance  sheet  at  December  31,  1996  has been  derived  from  audited
consolidated financial statements at that date.

The accompanying notes are an integral part of these statements.


                                        2


<PAGE>
 
<PAGE>



FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>


                                                      THREE MONTHS ENDED MARCH 31,

                                                       1997                                 1996
                                                -------------------                 --------------------
                                                    (UNAUDITED)                          (UNAUDITED)
<S>                                                     <C>                       <C>
Revenues
Premiums Written - Direct                               $8,953,076                          $15,039,411
Reinsurance ceded                                       (1,720,550)                          (3,683,703)
                                                -------------------                 --------------------

     Net Premiums Written                                7,232,526                           11,355,708
Decrease in unearned premiums                            3,566,916                            1,580,432
                                                -------------------                 --------------------

     Net Premiums Earned                                10,799,442                           12,936,140

Net investment income                                    1,387,780                            1,195,497
Realized gain on investments                               157,654                              722,125
Claims adjusting revenues                                  244,484                              192,276
Rental and Miscellaneous income                             55,922                               52,210
                                                -------------------                 --------------------

          Total Revenues                                12,645,282                           15,098,248
                                                -------------------                 --------------------


Expenses

Losses                                                   8,056,158                            6,321,175
Loss adjustment expense                                  4,061,874                            3,043,801
Policy acquisition costs                                 1,971,562                            2,918,235
Interest expense                                           110,250                              142,481
Provision for doubtful accounts                             75,032                              127,731
Other operating expenses                                 1,132,271                            1,346,690
                                                -------------------                 --------------------

          Total Expenses                                15,407,147                           13,900,113
                                                -------------------                 --------------------


Income (Loss) Before Income Taxes                       (2,761,865)                             367,400

Federal and State Income Taxes                               3,000                            1,198,135
                                                -------------------                 --------------------


          Net Income (Loss)                            $(2,764,865)                            $830,735
                                                ===================                 ====================


Per Share Data:

  Net Income:
   Primary                                            ($0.46)                               $0.14
                                                      =======                               =====

   Fully Diluted                                      ($0.46)                               $0.13
                                                      =======                               =====

  Cash Dividends Paid                                  $0.03                                $0.03
                                                       =====                                =====
</TABLE>

The accompanying notes are an integral part of these statements.

                                        3


<PAGE>
 
<PAGE>



              FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                        THREE MONTHS ENDED MARCH 31, 1997
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                      NET UNREALIZED
                                                                      (DEPRECIATION)
                                                         ADDITIONAL   APPRECIATION ON
                                     COMMON STOCK        PAID-IN         SECURITIES     RETAINED     TREASURY STOCK
                                   SHARES     AMOUNT     CAPITAL         AVAILABLE-     EARNINGS   SHARE       AMOUNT       TOTAL
                                                                         FOR-SALE
------------------------------------------------------------------------------------------------------------------------------------

<S>                             <C>         <C>        <C>             <C>            <C>         <C>      <C>         <C>
Balances at December 31, 1996*    6,589,012  $658,902   $13,209,395   $  768,517      $8,990,468  602,404  $(4,131,142) $19,496,140

Add (deduct):

 Net (Loss)                                                                           (2,764,865)                        (2,764,865)

Change in unrealized appreciation                                     (1,188,362)                                        (1,188,362)
(depreciation) on securities
 available-for-sale

------------------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 1997        6,589,012  $658,902   $13,209,395   $ (419,845)       $6,225,602 602,404 $(4,131,142)  $15,542,912
====================================================================================================================================
</TABLE>






* The  balance  sheet  at  December  31,  1996  has been  derived  from  audited
  consolidated financial statements at that date.

The accompanying notes are an integral part of these statements.


                                        4


<PAGE>
 
<PAGE>



FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                    THREE MONTHS ENDED MARCH 31,
                                                                              1997                         1996
                                                                       -------------------          -------------------
                                                                           (UNAUDITED)                  (UNAUDITED)
<S>                                                                          <C>                     <C>
OPERATING ACTIVITIES

Net Income (Loss)                                                            $(2,764,865)            $         830,735
Adjustments to reconcile net income (loss) to net cash provided
 by (used in) operating activities:
  Amortization of deferred policy acquisition costs                            4,541,520                     6,351,976
  Provision for depreciation and amortization                                     80,272                        69,771
  Provision for losses on uncollectible agents' balances                          75,033                       127,732
  Net realized investment gains                                                 (157,654)                     (722,125)
  Provision for deferred federal income taxes                                    748,000                      (158,003)
  Changes in operating assets and liabilities
    Increase in accrued investment income                                        (10,557)                     (190,330)
    Change in agents' balances and unearned premiums                            (736,405)                   (1,768,674)
    Change in unpaid losses, unpaid loss adjustment
     expenses, and reinsurance recoverables                                    2,652,517                     2,845,374
    Deferred policy acquisition costs                                         (4,312,002)                   (6,121,461)
    Other items, net                                                            (531,034)                      843,105
                                                                       -------------------          --------------------
  NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                           (415,175)                    2,108,100
                                                                       -------------------          --------------------


INVESTING ACTIVITIES

Purchases of fixed maturities                                                 (6,605,607)                  (31,736,959)
Sales and maturities of fixed maturities                                       4,562,813                    30,220,200
Purchases of equity securities                                                  (615,360)                   (3,816,416)
Sales of equity securities                                                     3,796,750                     8,685,397
Net (purchases) sales of short-term investments                               (2,347,837)                   (4,693,026)
Purchases of property and equipment                                              (27,767)                       10,581
                                                                       -------------------          --------------------
  NET CASH USED IN INVESTING ACTIVITIES                                       (1,237,008)                   (1,330,223)
                                                                       -------------------          --------------------
FINANCING ACTIVITIES

Cash dividend paid                                                              (181,635)                     (181,320)

                                                                       -------------------          --------------------

 NET CASH USED IN FINANCING ACTIVITIES                                          (181,635)                     (181,320)
                                                                       -------------------          --------------------


INCREASE (DECREASE) IN CASH                                                   (1,833,818)                       596,557

CASH AT BEGINNING OF YEAR                                                      4,112,441                      1,499,829
                                                                       -------------------          --------------------

CASH AT END OF FIRST QUARTER                                                  $2,278,623             $        2,096,386
                                                                       ===================          ====================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
    Cash payments for:

     Interest                                                           $        220,500             $         284,907
                                                                       ===================          ====================


     Income Taxes                                                       $         22,000             $          32,000

                                                                       ===================          ====================
</TABLE>


                                        5


<PAGE>
 
<PAGE>



FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1997

1. BASIS OF PRESENTATION

         The financial  information included herein is unaudited;  however, such
information  reflects all  adjustments  (consisting  solely of normal  recurring
adjustments)  which are,  in the  opinion of  management,  necessary  for a fair
presentation of results for the interim  periods.  The financial  statements for
the periods reported should be read in conjunction with the financial statements
and related notes  contained in First  Central's  Annual Report on Form 10-K for
the year ended December 31, 1996.

2. GOING CONCERN UNCERTAINTY AND LIQUIDITY

         First Central's  consolidated financial statements for the three months
ended March 31, 1997 and the year ended  December 31, 1996 have been prepared on
a going  concern  basis which  contemplates  the  realization  of assets and the
settlement of liabilities and commitments in the normal course of business. As a
result of losses  incurred,  First Central's  Shareholders'  Equity at March 31,
1997 and December 31, 1996  declined to  approximately  $15.5  million and $19.5
million,  respectively and First Central Insurance's  Statutory Surplus declined
to approximately  $10.8 million and $12.3 million at March 31, 1997 and December
31,  1996,  respectively.  Based upon the  required  relationships  between  Net
Premiums Written and Statutory Surplus, First Central Insurance expects that the
reduction in Statutory  Surplus will result in a  significantly  reduced premium
volume for the foreseeable future.

         First Central  Insurance has a statutory  deficiency in Earned  Surplus
resulting from its losses from operations.  Therefore, it will be precluded from
paying  dividends  to First  Central  by  reason  of such  deficiency.  The only
material  source of income to First  Central are  dividends  from First  Central
Insurance and Mercury. Management anticipates that Mercury will be able to pay a
dividend to First Central  sufficient  for it to pay the August 1, 1997 interest
of $220,500 due on its 9% Convertible Subordinated Debentures due 2000. However,
unless management is able to raise funds from other sources,  First Central will
not be able to pay the August 1, 1997 sinking fund  obligation  of $1,837,500 on
the Debentures.  First Central is not currently in default under such Debentures
but failure to pay either the aforementioned interest or sinking fund obligation
will  constitute  a default  under  the  Debentures  entitling  the  holders  to
accelerate the outstanding amount, currently $4,900,000.

         Based on a preliminary release of First Central  Insurance's  operating
results for the year ended December 31, 1996, A.M. Best & Company ("A.M. Best"),
one of the predominant  services engaged in the industry-wide rating of insurers
and reinsurers, amended First Central Insurance's rating to D (Very Vulnerable).
The change in rating is adversely impacting policy renewals.  Although,  at this
time a reduction  in the volume of premiums  written is necessary to comply with
regulatory  requirements,  continuation of a D rating will severely affect First
Central Insurance's future ability to compete with other insurers.

         The New York  State  Insurance  Department  has  requested  that  First
Central Insurance submit and implement a plan designed to improve operations and
raise additional capital. Such a plan will involve the revision of operations to
attain  future  profitability  by  raising  underwriting  standards,  curtailing
operating  expenses,   revising  agreements  to  achieve  a  reduction  in  loss
adjustment expenses, restructuring


                                        6


<PAGE>
 
<PAGE>



the  claims  department  to achieve  more  favorable  settlements  of claims and
restructuring  management  positions.  First Central  Insurance  engaged outside
consultants to review the activities of the various  operating  departments  and
make recommendations, where necessary, for changes within those departments. The
plan also requires First Central Insurance to raise additional capital and First
Central has engaged an investment  banker to assist in this effort.  Without the
additional  capital,  First Central  Insurance's  surplus may be insufficient to
enable it to remain in  operation.  Pending  implementation  of the plan and the
raising of additional capital, First Central Insurance has ceased the writing of
new insurance business.

         The events and  uncertainties  discussed above raise  substantial doubt
about First  Central's  ability to continue as a going concern.  There can be no
assurance  that  First  Central  will be  successful  in its  attempt  to revise
operations to attain future  profitability,  raise additional capital and resume
normal operations.  The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.

3. PER SHARE DATA

         Income  (loss) per  common  share is based  upon the  weighted  average
number of shares  outstanding  for the periods  reported.  Fully diluted  income
(loss) per share  assumes  the  conversion  of First  Central's  9%  Convertible
Subordinated Debentures due 2000, except when the effects of such conversion are
antidilutive.

         For the three-month periods ended March 31,
<TABLE>
<CAPTION>
                                   Basic         Primary       Fully Diluted
                                   -----         -------       -------------
           <S>                  <C>            <C>              <C>      
             1997...........     5,986,657      5,986,657        5,986,657

             1996...........     5,987,685      5,995,491        6,641,018
</TABLE>


4. PROPERTY AND EQUIPMENT

         Property and equipment as of March 31, 1997 consists of the following:

<TABLE>

      <S>                                      <C>
           Land                                  $      1,000,000
           Building                                     3,039,313
           Equipment                                    1,705,686
                                                ------------------
           Sub-total                                    5,744,999

           Less accumulated depreciation                1,377,571
                                                ------------------
           Total                                 $      4,367,427
                                                ==================
</TABLE>


                                        7


<PAGE>
 
<PAGE>



ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

GENERAL

         First Central Financial  Corporation  ("First Central"),  a corporation
incorporated  under  the laws of the State of New York on May 18,  1983,  is the
parent company of First Central  Insurance  Company ("First Central  Insurance")
and Mercury  Adjustment  Bureau,  Inc.  ("Mercury").  Until March 10, 1997 First
Central  Insurance  wrote  multiple  lines of property  and  casualty  insurance
including Commercial Multiple Peril, Workers'  Compensation,  General Liability,
Automobile  Liability and Physical  Damage,  Products  Liability,  Fire,  Allied
Lines,  Boiler and Machinery,  Glass,  Burglary and Theft, and Inland Marine. On
March 10, 1997, First Central Insurance ceased to write any new business.  First
Central  continues to process  renewals  and service its  existing  business and
expects to cease renewals on private passenger automobile policies. Mercury is a
licensed insurance adjuster and represents the interests of a number of property
and casualty insurers and  self-insurers  who conduct insurance  business in the
State of New York.  Unless  otherwise  indicated,  references  to First  Central
include its subsidiaries.

RECENT DEVELOPMENTS

         During  the  first  three  months  of  1997,  First  Central  Insurance
continued  to  experience  a  reduction  of premiums  written and  significantly
increased losses and loss adjustment  expense.  First Central reported a loss of
$2,764,865  or $0.46 per share for the three month  period ended March 31, 1997.
Such loss was  primarily  the result of a  decrease  in net  premiums  earned of
$2,136,698 and an aggregate  increase in losses and loss  adjustment  expense of
$2,753,056  when compared with the first quarter of 1996.  See "-- Loss and Loss
Adjustment Expense."

         First  Central  Insurance's  losses  from  operations  resulted  in its
statutory  surplus  declining  from $12.3  million at December 31, 1996 to $10.8
million at March 31, 1997 with earned  surplus  declining from a deficit of $4.3
million  to a deficit of $5.3  million  during the same  period.  First  Central
Insurance is precluded  from paying  dividends to First  Central  while it has a
deficiency in earned surplus.  Since the only material source of income to First
Central is  dividends  from First  Central  Insurance,  First  Central  will not
declare any further dividends on its common stock for the foreseeable future. In
addition,  unless First Central obtains  another source of funds,  First Central
will be unable to pay its $1.8  million  sinking  fund  obligation  under  First
Central's  Convertible  Subordinated  Debentures due 2000 (the  "Debentures") on
August 1, 1997.  Failure to pay the August 1, 1997 sinking fund  obligation will
constitute a default  under the  Debentures  entitling the holders to accelerate
the entire $4.9 million outstanding principal balance.  Primarily as a result of
First Central  Insurance's  financial  condition,  in February 1997, A.M. Best &
Co., Inc. ("A.M.  Best") changed the B++ (Very Good) rating it assigned to First
Central Insurance in June 1996 to D (Very Vulnerable).

         The New York  State  Insurance  Department  has  requested  that  First
Central Insurance submit and implement a plan designed to improve operations and
raise  additional  capital.  Such a plan will involve,  among other things,  the
revision of operations to attain future  profitability  by raising  underwriting
standards,  curtailing  operating  expenses,  revising  agreements  to achieve a
reduction in loss adjustment  expenses,  restructuring  the claims department to
achieve  more  favorable  settlements  of claims  and  restructuring  management
positions. First Central Insurance has engaged outside consultants to review the
activities of the various operating departments and make recommendations,  where
necessary,  for changes within those  departments.  The plan also requires First
Central  Insurance to raise additional  capital and First Central has engaged an
investment  banker to assist in this  effort.  Without the  additional  capital,
First Central  Insurance's surplus may be insufficient to enable it to remain in
operation. Pending


                                        8


<PAGE>
 
<PAGE>

implementation of the plan and the raising of additional capital,  First Central
Insurance has ceased the writing of new insurance business.

         The events and  uncertainties  discussed above raise  substantial doubt
about First  Central's  ability to continue as a going concern.  There can be no
assurance  that  First  Central  will be  successful  in its  attempt  to revise
operations to attain future  profitability,  raise additional capital and resume
normal operations.

         In February 1997,  Andrew W. Attivissimo  President and Chief Operating
Officer of each of First Central and First Central  Insurance was also appointed
as Chairman  and Chief  Executive  Officer of First  Central  and First  Central
Insurance, succeeding Martin J. Simon, the founder of First Central.

RESULTS OF OPERATIONS

NET INCOME LOSS

         First Central  reported net loss for the three month period ended March
31,  1997 of  $2,764,865  or $0.46 per share  primary  and $0.46 per share fully
diluted  compared to net income of $830,735 or $.14 per share  primary and $0.13
per share fully  diluted for the three month period  ended March 31,  1996.  The
decrease in net income is due  primarily  to a decrease in earned  premiums  and
realized gains on investments and increases in loss and loss adjustment  expense
incurred offset in part by increases in claims adjusting revenue, net investment
income,  rental income and decreased policy  acquisition  costs, other operating
expenses, interest and provision for doubtful accounts.

PREMIUMS WRITTEN AND EARNED

         Direct written  premiums of $8,953,076 for the three month period ended
March 31, 1997,  decreased  40.5% when compared to the  corresponding  period of
1996. The decrease in premium writing was a result of First Central  Insurance's
institution  of a lead paint  exclusion  during the first  quarter of 1997,  the
change of First Central Insurance's A.M. Best rating in February 1997 to D (Very
Vulnerable) and to First Central Insurance's ceasing to write new business after
March 10, 1997.

         Net premiums earned  decreased  $2,136,698  (16.5%) for the three month
period ended March 31, 1997 when compared to the same period in 1996 as a result
of lower premium  volume.  The rate of decrease in earned  premiums is less than
the rate of decrease in written  premiums  since  premiums are earned over a 365
day period following a policy's effective date.

NET INVESTMENT INCOME; REALIZED GAINS

         First Central's net investment income of $1,387,780 for the three month
period ended March 31, 1997, represents a 16.1% increase over the net investment
income from the three  month  period  ending  March 31,  1996.  Changes in First
Central  Insurance's  investment  portfolio  from  holdings  of  68.0%  in fixed
maturities (24.4% in government securities), 24.5% in equity securities and 7.5%
in  short-term  investments  as of March 31,  1996 to 74.0% in fixed  maturities
(50.3%  in  government  securities),  14.4% in  equity  securities  and 11.7% in
short-term  investments as of March 31, 1997 produced  increased interest income
on government securities which offset a decrease in dividend income and interest
income on other fixed maturity holdings compared to the three month period ended
March 31, 1996.  First  Central's net realized gain on investments for the three
month period ended March 31, 1997 was  $157,654,  a decline of $564,471 over the
corresponding  period in 1996. The decrease in net realized gains on investments
resulted  primarily from a reduction in sales of equity  securities due to First
Central's


                                        9


<PAGE>
 
<PAGE>



smaller  holdings  in equity  securities  during the first  quarter of 1997 when
compared to the first  quarter of 1996,  and more  favorable  market  conditions
experienced in the first three months of 1996.

         At March 31, 1997 First  Central held 74.0% of its  invested  assets in
fixed maturities  available-for-sale,  14.4%  in  equity securities  (common and
preferred  stocks)  available  for sale  and  11.7%  in  short-term  investments
(principally  money markets).  At December 31, 1996, First Central held 73.2% of
its  invested  assets in fixed  maturities  available-for-sale,  17.4% in equity
securities  (common  and  preferred  stocks)  available  for  sale  and  9.4% in
short-term investments.

         At March 31, 1997,  the total net unrealized  loss  applicable to First
Central's  available-for-sale  securities  amounted to $419,845.  The unrealized
loss is net of deferred  taxes of  $216,000.  At December 31, 1996 the total net
unrealized gain applicable to First Central's available-for-sale  securities was
$768,517 net of deferred taxes of $532,000.

         In  accordance  with FASB  Statement  No.  115,  the  following  is the
investment   classifications  at  March  31,  1997.  Under  Statement  No.  115,
unrealized  loss or gains on  available-for-sale  investments  are reported as a
reduction or increase in shareholders equity.


<TABLE>
<CAPTION>

                                                                                CHARGE TO
              MARCH 31, 1997            COST            MARKET                   SURPLUS
      ----------------------------------------------------------------------------------------
<S>                                     <C>              <C>                      <C>
       Debt Securities:
        Available for Sale              81,477,474       79,657,591               (1,819,883)
                                 -------------------------------------------------------------


       Equity Securities:
        Available for Sale              14,286,317       15,470,357                1,184,040
                                                                          --------------------
        Less deferred taxes                                                          216,000
                                                                          --------------------
       Reduction of Shareholder's Equity & Investments                    $         (419,843)
                                                                          ====================
</TABLE>


         At December  31, 1996,  First  Central  reassessed  its ability to hold
certain  securities to maturity and determined  that fixed  maturity  securities
with  an  amortized  cost  of  $45,284,608  and an  estimated  market  value  of
$45,019,345 should be reclassified from the  "held-to-maturity"  category to the
"available-for-sale"  category  because  of uncertainties  about First Central's
ability to hold these  securities  until their  maturity date. At March 31, 1997
100%  of the  debt  securities  held  by  First  Central  remain  classified  as
available-for-sale.

LOSS AND LOSS ADJUSTMENT EXPENSE

         It has been First Central Insurance's  practice to maintain reserves at
or near the middle range of an actuarial reasonableness range established by its
independent  actuary  to  evaluate  the  adequacy  of  reserves.  First  Central
Insurance's  reserves  are  analyzed on a quarterly  basis by such  independence
actuary.  As of March 31, 1997 and December 31, 1996,  the  independent  actuary
indicates  that  the  mid-point  of  the  actuarial   reasonableness  range  was
$87,619,000 and $85,126,000, respectively. First Central Insurance's carried net
reserves on a statutory basis were $91,648,000 and $88,599,000 at March 31, 1997
and  December  31,  1996  respectively.  The  reserves  above  the  midpoint  of
approximately  $4,000,000  at March 31,  1997 and  approximately  $3,500,000  at
December 31, 1996 were allocated to


                                       10


<PAGE>
 
<PAGE>



the  workers'  compensation  line of business  where First  Central  Insurance's
historical  loss  ratio of less than 65% per year (for the  prior  three  years)
would  result in a reduction  of  statutory  surplus if such  reserves  were not
increased to reflect a 65% loss ratio.

         During the three month period ended March 31, 1997, incurred losses net
of reinsurance  increased by 27.4% when compared to the corresponding  period in
1996. Such increases were due primarily to an approximate  $550,000  increase in
the change in loss reserves and an approximate  $1,200,000  increase in net paid
losses.

         During the three  month  period  ended  March 31,  1997  incurred  loss
adjustment expenses, net of reinsurance, increased by 33.4% when compared to the
corresponding  period in 1996.  The  increase  for the  three-month  period  was
primarily due to a $525,000  settlement relating to disputed legal fees with one
of First Central Insurance's former insurance defense law firms.

UNDERWRITING EXPENSES

         Underwriting expenses are a combination of policy acquisition costs and
other operating  expenses as shown on the income statement.  Policy  acquisition
costs  decreased  by 32.4% for the three months ended March 31, 1997 as compared
to the corresponding period in 1996. Other operating expenses decreased by 15.9%
for the three month period ended March 31, 1997 as compared to the corresponding
period in 1996. The decrease in policy acquisition cost for the first quarter of
1997 when compared to 1996 was primarily due to lower commission and premium tax
expense directly associated to the lower premium volume experienced in the first
quarter of 1997.  The decrease of 15.9% in operating  expenses was attributed to
cost containment procedures instituted in the first quarter of 1997.

PROVISION FOR DOUBTFUL ACCOUNTS

         Provision for doubtful accounts  decreased by 41.3% for the three month
period ended March 31, 1997 compared to the  corresponding  period in 1996.  The
decrease for the  three-month  period was primarily the result of a reduction in
the amount of uncollectible premiums on auditable policies.

INTEREST EXPENSE

         Interest expense decreased 22.6% for the three month period ended March
31, 1997 when compared to corresponding  period in 1996. This decrease is due to
the  reduction  of  $1,430,000  in  the  principal  amount  outstanding  of  the
Debentures from $6,330,000 at March 31, 1996 to $4,900,000 at March 31, 1997.

FINANCING ACTIVITIES

         For the three month  period ended March 31, 1997 net cash used in First
Central's operating  activities was $415,175 as compared to cash provided for of
$2,108,100 from the three-month  period ended March 31, 1996. The change in cash
used for  operating  activities  was due  primarily  to the net  operating  loss
experienced in the first quarter of 1997.


                                       11


<PAGE>
 
<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

         The business capacity of an insurance company is based on its liquidity
and  capital  resources.  Insurance  statutes  and  regulations  which  apply to
insurers  require  maintenance  of prescribed  amounts in capital and surplus as
well as statutory  deposits with insurance  authorities.  The assets of insurers
are maintained in statutorily prescribed investments. Insurers are also required
to  set  up  and  have  reserves  for  losses  and  loss  adjustment   expenses.
Furthermore,  substantial statutory and regulatory restrictions are imposed upon
an insurer's ability to declare and pay cash dividends.

         During 1996 and the three month  period  ended  March 31,  1997,  First
Central's  liquidity  and capital  resources  relative  to its assets  decreased
significantly  primarily as a result of First  Central  Insurance's  losses from
operations.  First Central  Insurance's  losses from operations  resulted in its
earned surplus declining to a deficit of $5,290,740 (excluding unrealized gains)
as of March 31, 1997.  First  Central  Insurance  will be precluded  from paying
dividends to First Central by reason of its earned surplus deficiency. Since the
only material source of income to First Central are dividends from First Central
Insurance,  First  Central will not declare any further  dividends on its common
stock for the foreseeable  future.  Management  anticipates that Mercury will be
able to pay a dividend to First Central  sufficient  for it to pay the August 1,
1997 interest of $220,500 due on the Debentures.  However,  unless First Central
obtains another source of funds,  First Central will be unable to pay the August
1, 1997 sinking fund obligation of $1.8 million on the Debentures. First Central
is not currently in default under such  Debentures but failure to pay either the
aforementioned  interest or sinking fund  obligation  will  constitute a default
under the Debentures entitling the holders to accelerate the outstanding amount,
currently $4.9 million.

         The Insurance  Department  has requested  that First Central  Insurance
submit and implement a plan designed to improve  operations and raise additional
capital. See "-- Recent Developments." Pending implementation of the operational
and  financial  plan and the raising of additional  capital,  on March 10, 1997,
First Central  Insurance ceased to write new business.  First Central  Insurance
continues to process  renewals and service its existing  business and expects to
cease  renewals on private  passenger  automobile  policies.  First  Central has
engaged  an  investment  banker  to assist  in its  effort  to raise  additional
capital.

         First Central Insurance's Statutory Surplus declined from $12.3 million
at December 31, 1996 to $10.8 million at March 31, 1997. Based upon the required
relationships between Net Premiums Written and Statutory Surplus,  First Central
Insurance  expects  that the  reduction  in  Statutory  Surplus will result in a
significantly reduced premium volume for the foreseeable future.  Primarily as a
result of First Central  Insurance's  current financial  condition,  in February
1997, A.M. Best reduced First Central Insurance's rating to D (Very Vulnerable).
The change in rating has adversely impacted policy renewals. The continuation of
a D rating will severely  affect First  Central  Insurance's  future  ability to
compete with other  insurers.  It is anticipated  that a reduced  premium volume
would have a further negative impact on First Central Insurance's  liquidity and
capital resources. Without additional capital, First Central Insurance's surplus
may be  insufficient  to enable it to remain in  operation.  Since First Central
Insurance  does not  intend to write new  business  until new  capital  has been
obtained,  First  Central  Insurance  may need to liquidate  certain  securities
during the second quarter of 1997 to pay Loss,  Loss  Adjustment  Expense and/or
operation expenses.

         The  computation  of risk-based  capital is a method of evaluating  the
minimum  amount of capital  which is  appropriate  for an  insurance  company to
maintain in order to support its overall  business  operations  considering  its
size and risk profile.  First Central Insurance's risk-based capital at December
31, 1996 is at the "regulatory  action level" requiring First Central  Insurance
to submit a comprehensive capital plan to the Insurance Department.


                                       12


<PAGE>
 
<PAGE>

         The events and  uncertainties  discussed above raise  substantial doubt
about First  Central's  ability to continue as a going concern.  There can be no
assurance  that  First  Central  will be  successful  in its  attempt  to revise
operations to attain future  profitability,  raise additional capital and resume
normal operations.

         First Central had gross deferred tax assets of approximately $9,125,000
and $9,153,000 and gross deferred tax  liabilities of  approximately  $1,349,000
and  $2,175,000  at March 31, 1997 and at December  31,  1996,  respectively.  A
$4,826,000 and $4,028,000  valuation allowance has been established with respect
to the gross  deferred  tax asset at March 31,  1997 and at December  31,  1996.
Management  believes that it is more likely than not that the deferred tax asset
may not be  fully  realized  due to the  uncertainties  with  respect  to  First
Central's future profitability.

         First Central funded its February 1, 1997 interest  payment of $220,500
under the Debentures from the dividends it received from First Central Insurance
during the 1996 year.

CAPITAL COMMITMENTS

         Neither the Company nor its subsidiaries  made any material  commitment
for capital expenditures.


                                       13


<PAGE>
 
<PAGE>



                                     PART II

                                OTHER INFORMATION

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

A.       Exhibits
<TABLE>
<CAPTION>
Exhibit
   No.                                                 Description
  ----                                                 -----------
<C>       <S>
   3.1    Certificate of  Incorporation of First Central  Financial  Corporation
          ("First  Central")  a copy of which was filed with the  Commission  on
          December  6,  1984 as  Exhibit  3.1 to  First  Central's  Registration
          Statement  on  Form  S-18  (Reg.   No.   2-94804-NY)   and  is  hereby
          incorporated herein by this reference).

   3.2    Certificate  of Amendment of  Certificate  of  Incorporation  of First
          Central dated the 30th day of November 1984 (a copy of which was filed
          with the  Commission  on  December  10,  1984 as Exhibit  3.2 to First
          Central's  Registration  Statement on Form S-18 (Reg. No.  2-94804-NY)
          and is hereby incorporated herein by this reference).

   3.3    Certificate  of Amendment of  Certificate  of  Incorporation  of First
          Central  dated  July 23,  1993 (a copy of  which  was  filed  with the
          Commission  on  August  15,  1994 as  Exhibit  3.1 to First  Central's
          Quarterly  Report  on Form  10-Q and is  hereby  incorporated  by this
          reference).

   3.4    Amended and  Restated  By-Laws of First  Central,  dated as of May 18,
          1994 (a copy of which was filed with the Commission on August 15, 1994
          as Exhibit 3.2 to First Central's Quarterly Report on Form 10-Q and is
          hereby incorporated by this reference).

   4.1    Specimen copy of First Central's  common stock  certificate (a copy of
          which was filed with the  Commission  on December  10, 1984 as Exhibit
          4.1 to First  Central's  Registration  Statement on Form S-1 (Reg. No.
          2-94804-NY), and is hereby incorporated herein by this reference).

   4.2    Specimen copy of First Central's 9% Convertible Subordinated Debenture
          Due 2000 (a copy of which was  filed as  Exhibit  4.2 to  Registrant's
          Amendment  No. 1 to its  Registration  Statement on Form S-1, Reg. No.
          33-25264, and is hereby incorporated herein by this reference).

   4.3    Indenture  dated as of  September 1, 1988  between  First  Central and
          United  States  Trust  Company of New York as Trustee (a copy of which
          was filed with the  Commission  on October  31, 1988 as Exhibit 4.3 to
          First  Central's   Registration   Statement  on  Form  S-1  (Reg.  No.
          33-25264), and is hereby incorporated herein by this reference).

   4.4    Form of Common Stock Purchase  Warrant (a copy of which was filed with
          the  Commission  on August 15, 1994 as Exhibit 4.4 to First  Central's
          Quarterly  Report  on Form  10-Q and is  hereby  incorporated  by this
          reference).

   4.5    Form of First Central's 1990 Stock Incentive Plan Stock Option (a copy
          of which was filed with the  Commission  on August 15, 1994 as Exhibit
          4.5 to First  Central's  Quarterly  Report  on Form 10-Q and is hereby
          incorporated by this reference).
</TABLE>


                                       14


<PAGE>
 
<PAGE>

<TABLE>
<C>      <S>

  *10.1   Agreement,  dated  February  12, 1997,  among  Martin J. Simon,  First
          Central and First Central Insurance.

  *11     Computation of Per Share Earnings.

  *27     Financial Data Schedule  (filed only with the electronic  EDGAR filing
          of this document).
</TABLE>

-------------------------
*  filed herewith

    B.    Reports on Form 8-K.

During the  three-month  period  ended March 31, 1997 one report on Form 8-K was
filed with the Securities and Exchange  Commission  with respect to Item 5-Other
Events. Such report was filed on February 20, 1997.


                                       15


<PAGE>
 
<PAGE>



                                   SIGNATURES

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

                              FIRST CENTRAL FINANCIAL CORPORATION


Dated: 5/14/97                 BY: /s/ Andrew W. Attivissimo
       -------------               ------------------------------------
                                   Andrew W. Attivissimo
                                   President, Chairman, Chief Executive Officer,
                                   Chief Operating Officer (Principal Executive
                                   Officer)



DATED:  5/14/97                BY: /s/ Joan M. Locascio
        ------------               ---------------------------------------------
                                   Joan M. Locascio, Treasurer, Vice President
                                   (Chief Financial and Accounting Officer)


                                       16



<PAGE>