SECURITIES  AND  EXCHANGE  COMMISSION
                           Washington, D. C. 20549



                                FORM 10-Q


              Quarterly Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                    For the quarter ended June 30, 1997 
                        Commission file number 0-10972


                  First Farmers and Merchants Corporation
         				(Exact name of registrant as specified in its charter)


                 Tennessee                                    62-1148660  

(State or other jurisdiction of incorporation 	         (I.R.S. Employer 
        or organization)                                Identification No.)


       		816 South Garden Street
           Columbia, Tennessee                             38402 - 1148
 (Address of principal executive offices) 				              (Zip Code)

                                 (615) 388-3145
              				(Registrant's telephone number, including area code)


                 (Former name, former address and former fiscal year, 
                      if changed since last report)


	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 common stock, as of June 30, 1997.    1,400,000  shares


             				This filing contains   11   pages.

<PAGE>

PART 1 - FINANCIAL INFORMATION


Item 1. Financial Statements

	The following unaudited consolidated financial statements of
the registrant and its subsidiary for the six months ended June
30, 1997, are as follows:

	Consolidated balance sheets - June 30, 1997, and December 31, 1996.

	Consolidated statements of income - For the three months and
 six months ended June 30, 1997, and June 30, 1996.

	Consolidated statements of cash flows - For the six months ended 
 June 30, 1997, and June 30, 1996.


<PAGE>
<TABLE>

          	FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                      	CONSOLIDATED BALANCE SHEETS
                  	JUNE 30, 1997 and DECEMBER 31, 1996    
<CAPTION>
ASSETS 	 	                                             1997           1996  
<S>                                              <C>            <C>
Cash and due from banks 	 	                      $ 	32,009,739 	$ 	27,916,507 
Federal funds sold 	 	 	                               800,000 	    	  - 
Securities 	 	 	 	 	 
 Available for sale (amortized cost $59,985,635
  and $55,898,299 respectively) 	 	 	               60,416,447 	 	 56,141,535 
 Held to maturity (fair value $100,856,527 and 
  $119,226,021 respectively) 	 	 	                 100,026,315 	 	118,541,750 
     Total securities 	 	 	                        160,442,762 	 	174,683,285 
Loans, net of unearned income  	 	 	               316,624,839 	 	303,732,044 
 Allowance for possible loan losses  	 	 	          (2,857,076) 	 	(2,926,063) 
     Net loans 	 	 	                               313,767,763 	 	300,805,981 
Bank premises and equipment, at cost less 
 allowance for depreciation and amortization  	   	 	6,615,895   	 	6,829,475 
Other assets 	 	 	                                  14,622,462 	  	15,094,426 
 	 	 	 	 	 
      TOTAL ASSETS 	 	                           $	528,258,621  $	525,329,674 

LIABILITIES 	 	 	 	 	 
 Deposits 	 	 	 	 	 
   Noninterest-bearing 	 	                       $ 	65,033,317 	$ 	75,589,511 
   Interest-bearing (including certificates of
    deposit over $100,000: 1997 - $38,026,724;
     1996 - $39,129,547) 	 	                      	399,667,531 	 	384,983,050 
     Total deposits 	 	 	                          464,700,848 	 	460,572,561 
 Federal funds purchased 	 	 	                          - 	 	       5,000,000 
 Dividends payable 	 	 	                               742,000 	 	    714,000 
 Accounts payable and accrued liabilities 	 	 	      5,457,943 	   	4,641,987 
 	 	 	 	 	 
      TOTAL LIABILITIES 	                       	 	470,900,791 	 	470,928,548 

STOCKHOLDERS' EQUITY 	 	 	 	 	 
 Common stock - $10 par value, authorized 
  4,000,000 shares; 1,400,000 shares issued 
  and outstanding 	 	 	                             14,000,000    	14,000,000 
 Retained earnings 	 	 	                            43,099,342  	 	40,255,185 
 Net unrealized loss on available-for-sale
  securities, net of tax 	 	 	                         258,488 	 	    145,941 
      TOTAL STOCKHOLDERS' EQUITY 	 	 	              57,357,830 		  54,401,126 

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $	528,258,621  $	525,329,674 
                                                	 	 	UNAUDITED 	      	(A) 
<FN>
<F1>
(A) The Consolidated Balance Sheet at December 31, 1996, has been taken from 
    the audited financial statements at that date. 
</FN>
</TABLE>

<PAGE>
<TABLE>
 	           	FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                  	 	CONSOLIDATED STATEMENTS OF INCOME   
                               	 	(Unaudited) 
<CAPTION>
   	                                    THREE MONTHS ENDED  	     SIX MONTHS ENDED 
                                             	JUNE 30, 	                JUNE 30, 
                                         1997   	     1996    	 	  1997   	 	   1996  
INTEREST INCOME 	 	 	 	 	 	 	 	 
<S>                                  <C>          <C>          <C>          <C>
 Interest and fees on loans 	        $	7,115,386 	$	6,765,396 	$13,962,854 	$13,696,667 
 	 	 	 	 	 	 	 	 
 Interest on investment securities 	 	 	 	 	 	 	 	 
  Taxable interest 	 	                 1,815,804 	 	1,753,259 	 	3,609,571 	 	3,232,123 
  Exempt from federal income tax 	 	     616,047   	 	570,910 	 	1,233,576 	 	1,151,093 
  Dividends 	 	                          121,226 	 	  126,043 	   	165,404 	 	  163,994 
                                    	 	2,553,077 	 	2,450,212 	 	5,008,551 	 	4,547,210 
 Other interest income 	 	                37,121 	 	   64,695 	 	   96,357 	 	   88,651 

   TOTAL INTEREST INCOME 	 	           9,705,584 	  9,280,303	 	19,067,762  	18,332,528 

INTEREST EXPENSE  	 	 	 	 	 	 	 	 
 Interest on deposits 	 	              4,289,096 	 	4,136,585 	 	8,525,068 	 	8,085,354 
 Interest on other short term 
  borrowings 	 	                          41,075 	    	16,474    	 	63,842 	 	   57,091 
 	 	 	 	 	 	 	 	 
   TOTAL INTEREST EXPENSE 	 	          4,330,171 	 	4,153,059 	 	8,588,910 	 	8,142,445 

   NET INTEREST INCOME 	 	             5,375,413 	 	5,127,244  	10,478,852  	10,190,083 
PROVISION FOR POSSIBLE LOAN LOSSES 	 	   290,000   	 	300,000 		   740,000 	 	  550,000 

   NET INTEREST INCOME AFTER 	 	 	 	 	 	 	 	 
    PROVISION FOR LOAN LOSSES 	 	      5,085,413 	 	4,827,244 	 	9,738,852 	 	9,640,083 

NONINTEREST  INCOME 	 	 	 	 	 	 	 	 
 Trust department income 	 	             345,797   	 	348,988 	   	720,507 		   684,196 
 Service fees on deposits accounts 	 	   938,217 	   	821,486  		1,843,456 	 	1,564,582 
 Other service fees 	 	                  184,086 	 	  204,229 	 	  364,820 		   353,965 
 Other operating income 	 	              109,530   	 	110,731   	 	234,312   		 202,335 
 Investment securities gains (losses) 	 	   - 	 	        - 		       (1,137) 	 	    -   

   TOTAL NONINTEREST INCOME 	 	        1,577,630 	 	1,485,434 	 	3,161,958 	 	2,805,078 

NONINTEREST  EXPENSES 	 	 	 	 	 	 	 	 
 Salaries and employee benefits 	 	    1,809,292 	 	1,759,213 	 	3,634,049 	 	3,511,697 
 Net occupancy expense 	 	               298,187 	 	  330,153 	 	  614,245 		   602,047 
 Furniture and equipment expense 	 	     389,164 	 	  422,019 		   782,058 	 	  792,442 
 Other operating expenses 	 	          1,486,834 	 	1,208,554 	 	2,932,434 	 	2,461,002 

   TOTAL NONINTEREST EXPENSES 	 	      3,983,477 	 	3,719,939 	 	7,962,786 	 	7,367,188 

     INCOME BEFORE PROVISION FOR 	 	 	 	 	 	 	 	 
      INCOME TAXES 	 	                 2,679,566 	 	2,592,739 	 	4,938,024 	 	5,077,973 

PROVISION FOR INCOME TAXES 	 	           795,731   	 	776,659 	 	1,351,865 		 1,553,978 

       NET INCOME  	                 $	1,883,835 	$	1,816,080 	$	3,586,159 	$	3,523,995 
EARNINGS PER COMMON SHARE 	 	 	 	 	 	 	 	 
 (1,400,000 outstanding shares) 	    $ 	    1.34 	$ 	    1.30 	$ 	    2.56	 $ 	    2.52 
</TABLE>

<PAGE>
<TABLE>
             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                    CONSOLIDATED STATEMENTS OF CASH FLOWS 
                  SIX MONTHS  ENDED JUNE 30, 1997 and 1996
                                 (Unaudited)
<CAPTION>
                                                  	   	1997	        	1996  
OPERATING ACTIVITIES 	 	 	 	 

<S>                                               <C>           <C>
 Net income 	                                     $ 	3,586,159 	$ 	3,523,995 
 Adjustments to reconcile net income to net 
  cash provided by operating activities 	 	 	 	 
   Excess (deficiency) of provision for possible 	 	 	 	 
    loan losses over net charge offs 	 	               (68,987) 		   263,306 
   Provision for depreciation and amortization of 	 	 	 	 
    premises and equipment 	 	                         334,200 	 	   332,007 
   Provision for depreciation of leased equipment 	 	  417,200 	 	      - 
   Amortization of deposit base intangibles 	 	        101,545 		    102,726 
   Amortization of investment security premiums, 	 	 	 	 
    net of accretion of discounts 	 	                  252,483 	 	   282,602 
   Donation of premises to municipalities 	 	             - 	 	       88,500 
   Increase in cash surrender value of life 
    insurance contracts 	 	                            (50,255) 	   	(50,255) 
   Deferred income taxes 	 	                           282,700 	   	(152,609) 
   (Increase) decrease in 	 	 	 	 
     Interest receivable 	 	                            33,176 	 	  (333,595) 
     Other assets 	 	                                   (2,435)  	 	(301,216) 
   Increase (decrease) in 	 	 	 	 
     Interest payable 	 	                              269,851 	   	(215,807) 
     Other liabilities 	 	                             466,533 	 	   408,285 
 	 	 	 	 
      TOTAL ADJUSTMENTS 	 	                          2,036,011 	 	   423,944 
 	 	 	 	 
      NET CASH PROVIDED BY OPERATING ACTIVITIES 	   	5,622,170 	  	3,947,939 
 	 	 	 	 
INVESTING ACTIVITIES 	 	 	 	 
 	 	 	 	 
 Proceeds from maturities, calls, and sales of 	 	 	 	 
  available-for-sale securities 	 	                       - 	 	    1,016,672 
 Proceeds from maturities and calls of 
  held-to-maturity securities 	 	                   25,320,475 	 	26,506,000 
 Purchases of investment securities 	 	 	 	 
  Available-for-sale 	 	                            (4,212,587) 	(40,061,888) 
  Held-to-maturity 	 	                              (6,932,270) 	(15,684,481) 
 Net (increase) decrease in loans 	 	              (12,892,795)   	 	403,251 
 Purchases of premises and equipment 	 	              (120,620)  	 	(790,639) 
 Purchases of deposit base intangibles 	 	                - 	 	   (1,124,258) 
 Purchase of leased equipment 	 	                         - 	 	   (2,266,394) 
 Purchase of single premium life insurance
  contracts                                          	(385,000)    	 	  - 
 	 	 	 	 
      NET CASH USED BY INVESTING ACTIVITIES 	 	        777,203	 	(32,001,737) 
 	 	 	 	 
FINANCING ACTIVITIES 	 	 	 	 

 Net increase in noninterest-bearing and  
  interest-bearing deposits 	 	                      4,128,287   	18,661,191 
 Assumption of deposit liabilities  	 	                   - 	 	   19,863,923 
 Net increase (decrease) in short term borrowings 		(4,920,428) 	(11,353,000) 
 Cash dividends 	 	                                   (714,000) 	  	(630,000) 
 	 	 	 	 
      NET CASH PROVIDED BY FINANCING ACTIVITIES 	  	(1,506,141)  	26,542,114 
 	 	 	 	 
      INCREASE (DECREASE) IN CASH AND CASH 
       EQUIVALENTS                                	 	4,893,232 	 	(1,511,684) 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 	 	27,916,507 	 	31,281,706 

CASH AND CASH EQUIVALENTS AT END OF PERIOD 	      $	32,809,739 	$	29,770,022 
</TABLE>


<PAGE>



	The unaudited consolidated financial statements have been
prepared on a consistent basis and in accordance with the
instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements.  In the
opinion of management, all adjustments considered necessary for
a fair presentation have been included.  These adjustments were
of a normal, recurring nature and consistent with generally
accepted accounting principles.  For further information, refer
to the consolidated financial statements and footnotes included
in the Corporation's annual report on Form 10-K for the year
ended December 31, 1996.

<PAGE>

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

Material Changes in Financial Condition

	Average earning assets increased 4.4% in the first half of 1997
compared to a 5.8% increase in the first half of 1996.   As a
financial institution, the Bank's primary earning asset is
loans.  At June 30, 1997, average net loans had grown 5.2% and
represented  64% of average earning assets.  Average net loans
began a period of growth in the first quarter of 1996 showing a
4.6% growth that continued throughout last year and the first
half of this year.  Management believes this growth is
indicative of the strengthening of its presence in the four
county area in middle Tennessee that it serves.  Average
investments represented 36% of average earning assets at June
30, 1997, an increase of 2.8% in the first half of 1997. 
Average total assets were $525 million at the end of the first
six months of 1997 compared to $502 million at the end of the
first six months of 1996.  Period-end assets were $528.2 million
compared to $525.3 million at December 31, 1996.  The Bank
maintains a formal asset and liability management process to
control interest rate risk and assist management in maintaining
reasonable stability in the gross interest margin as a result of
changes in the level of interest rates and/or the spread
relationships among interest rates.  The Bank uses an earnings
simulation model to evaluate the impact of different interest
rate scenarios on the gross margin.  Each month, the
Asset/Liability Committee monitors the relationship of rate
sensitive earning assets to rate sensitive interest bearing
liabilities (interest rate sensitivity) which is the principal
factor in determining the effect that fluctuating interest rates
will have on future net interest income.  Rate sensitive earning
assets and interest bearing liabilities are those which can be
repriced to current market rates within a defined time period. 
The following sections analyze the average balance sheet and the
major components of the period-end balance sheet.


SECURITIES

	Available-for-sale securities are an integral part of the
asset/liability management process.  As such, they represent an
important source of liquidity available to fund loans and
accommodate asset reallocation strategies dictated by changes in
bank operating and tax plans, shifting yield spread
relationships, and changes in configuration of the yield curve. 
At June 30, 1997, the Corporation's investment securities
portfolio had $60.4 million available-for-sale securities and
$100.0 million held-to-maturity securities.  This compares to
$56.1 and available-for-sale securities and $118.5 million
held-to-maturity securities at December 31, 1996.

LOANS

	The loan portfolio is the largest component of earning assets
and consequently provides the highest amount of revenues.  The
loan portfolio also contains, as a result of credit quality, the
highest exposure to risk.  When analyzing potential loans,
management assesses both interest rate objectives and credit
quality objectives in determining whether to make a given loan
and the appropriate pricing for that loan.  The Bank maintains a
diversified portfolio in order to spread its risk and reduce its
exposure to economic downturns which may occur in different segments
of the economy or in particular industries.  The average loan 
portfolio increased $15.1 million or 5.2% in the first six months of 
1997 compared to a $12.1 million or 4.4% increase in the first six 
months of 1996.  This growth reflects the consistent loan demand in 
the service area.  Commercial loans showed strong growth 


<PAGE>



posting almost 4.0% growth, personal loans declined slightly, but
loans secured by real estate posted a 7.6% growth for the first six 
months of 1997.  An asset/liability strategic decision to keep higher
quality bank customer loans secured by residential real estate in the
portfolio rather than sell them in the secondary market
contributed to the increase in this type of loans.



	The Corporation's subsidiary loan review function reviews lines
of credit over $50,000.  After this review during the first half
of 1997, loans totaling $4.6 million, 1.5% of the portfolio,
were classified as other assets especially mentioned at June 30,
1997, which is up from the $3.2 million and $3.4 million so
classified at March 31, 1997, and December 31, 1996.  Loans
totaling $4.3 million, 1.4% of the portfolio, were classified as
substandard at June 30, 1997, continuing the downward trend
compared to $5.4 million and $8.2 million so classified at March
31, 1997, and December 31, 1996.  Loans totaling $1.7 million,
 .5% of the portfolio, were classified as doubtful at June 30,
1997, compared to $1.6 million and $1.4 million at March 31,
1997, and December 31, 1996.  Any loans classified for
regulatory purposes as loss, doubtful, substandard, or special
mention do not represent or result from trends or uncertainties
which management reasonably expects will materially affect
operating results, liquidity, or capital resources.  Neither do
such loans represent material credits about which management is
aware of any information which causes management to have serious
doubts as to the ability of such borrowers to comply with the
loan repayment terms.  Management is not aware of any known
trends, events or uncertainties that will have or that are
reasonably likely to have a material effect on the corporation's
liquidity, capital resources or operations.  Loans having
recorded investments of $5.5 million, 1.7% of the total
portfolio, were identified as impaired at the end of the first
six months of 1997 compared to $5.1 million at December 31,
1996. 



DEPOSITS



	The Corporation's subsidiary bank does not have any foreign
offices and all deposits are serviced in its sixteen domestic
offices, the newest of which opened during the first week of
1997.  The bank's average deposits grew during the first six
months of 1997 reflecting a 4.2% growth compared to a 5.5%
growth in the first half of 1996, of which over 75% was due to
an acquisition of deposits in the second quarter of 1996.  Short
and medium term rates remained competitive compared to longer
term rates contributing to a 4.9% growth in average
interest-bearing checking accounts and almost no growth in
certificates of deposits less than $100,000 during the first
quarter of 1997.  Savings deposits with limited transactions
increased 16.2% during the first six months of 1997.  Savings
deposits have been strong historically providing a core, low
cost, source of funding.  Certificates of deposit over $100,000
increased 7.4% in the first half of 1997.



CAPITAL



 	Average shareholders' equity remained strong totaling $56.2 million at 
June 30, 1997, an 8.0% increase from 1996 year end. The Corporation and 
the Bank are subject to federal regulatory risk-adjusted capital adequacy 
standards.  Failure to meet capital adequacy requirements can initiate 
certain mandatory, and possibly additional discretionary, actions by 
regulators that could have a direct material effect on the consolidated 
financial statements of the Corporation and its subsidiary, the Bank.  The 
regulations require the Bank to meet specific capital adequacy guidelines
that involve quantitative measures of assets, liabilities, and certain 
off-balance-sheet items as calculated under regulatory

<PAGE>

accounting practices.  The capital classification is also subject to 
qualitative judgments by the regulators about components, risk weightings, 
and other factors. 



		Quantitative measures established by regulation to ensure
capital adequacy require the Corporation and the Bank to
maintain minimum amounts and ratios of Total Capital and Tier I
Capital to risk-weighted assets and of average Tier I Capital to
average assets.  Equity capital (net of certain adjustments for
intangible assets and investments in non-consolidated
subsidiaries and certain classes of preferred stock are
considered Tier 1 ("core") capital.  Tier 2 ("total") capital
consists of core capital plus subordinated debt, some types of
preferred stock, and varying amounts of the Allowance for
Possible Loan Losses.  The minimum standard for a "well
capitalized" bank is a risk-based core capital ratio of 6%, a
risk-based total capital ratio of 10%, and a core capital to
average total assets ratio of 5%.  As of  June 30, 1997, the
Bank's total risk-based and core capital ratios were 19.5% and
18.7% respectively.  The comparable ratios were 18.6% and 17.6%
at year end, 1996.  As of  June 30, 1997, the Corporation's
total risk-based and core capital ratios were 19.7% and 18.7%
respectively.  The comparable ratios were 18.7% and 17.7% at
year end, 1996.  At June 30, 1997, the Bank and the Corporation
had a ratio of average core capital to average total assets of
10.6% and 10.7%, respectively, compared to 10.1% and 10.4% at
December 31, 1996.  Management believes, as of June 30, 1997,
that the Corporation and the Bank meet all capital adequacy
requirements to which they are subject.  The Bank's calculated
risk-adjusted capital ratios exceeded the minimum standard for a
"well capitalized" bank.  Most of the capital needs of the Bank
have historically been financed through internal growth. 



Material Changes in Results of Operations



 	Total interest income was 4.0% higher in the first half of
1997 than the first half of 1996.  Interest and fees earned on
loans increased 1.9% despite a four basis point decline in
average yield that was influenced some by a large collection of
non-accrual income in the first quarter of 1996.  Interest
earned on investment securities and other investments increased
10.1% in the first half of 1997 due entirely to increased volume
as the average tax equivalent yield held steady at slightly over
6.5%.



	Total interest expense increased 5.5% in the first half of 1997
compared to the first half of 1996 due mostly to the increase in
interest-bearing deposits, part of which can be attributed to an
acquisition in the second quarter of 1996.  However, the total
cost of interest-bearing deposits remained steady all last year
and the first half of this year under monthly monitoring by the
Asset/Liability Committee.  As a policy, budgeted financial
goals are monitored on a monthly basis by the Asset/Liability
Committee where the actual dollar change in net interest income
given different interest rate movements is reviewed.  A negative
dollar change in net interest income for a twelve month period
of less than 3% of net interest income given a three hundred
basis point shift in interest rates is considered an acceptable
rate risk position.  The net interest margin, on a tax
equivalent basis, at June 30, 1997 and 1996 was 4.9%.



 	Net interest income on a fully taxable equivalent basis is influenced
primarily by changes in:  (1) the volume and mix of earning assets and
sources of funding; (2) market rates of interest, and (3) income tax rates.
The impact of some of these factors can be controlled by management 
policies and actions. External factors also can have a significant impact
on changes in net interest income from one period to another.  Some
examples of such factors are: (1) the strength of credit demands by

<PAGE>


customers; (2) Federal Reserve Board monetary policy, and (3) fiscal and debt 
management policies of the federal government, including changes in tax 
laws. 


	The analysis and review of asset quality by the Corporation's
subsidiary loan review function and credit administrator also
includes a formal review that is prepared quarterly to assess
the risk in the loan portfolio and to determine the adequacy of
the allowance for loans losses.  This review supported
management's assertion that the allowance was adequate at June
30, 1997.  Additions to the allowance during the first half of
1997 were 35% higher than the first half of 1996.



	There were no write downs of other real estate associated with
declines in real estate values subsequent to foreclosure and
disposition of the properties at less than their carrying value
during the first quarter of 1997.  The carrying value of Other
Real Estate is included in other assets on the face of the
balance sheet and represents real estate acquired through
foreclosure and is stated at the lower of cost or fair value
minus cost to sell.  An allowance for other real estate owned is
not maintained.  Historically, and at the present time, parcels
have not remained in this category for long periods of time and
any decreases or losses associated with the properties have been
charged to current income.  Management evaluates properties
included in this category on a regular basis.  Actual
foreclosures were included in the carrying value for Other Real
Estate at June 30, 1997, and totaled $392 thousand which
compares to $462 thousand at June 30, 1996.



	Noninterest income increased 12.7% during the first half of
1997 led by the increase in service charges from new and
acquired customers.  Use of the Bank's check card generates fee
income from the clearing agent for the electronic transaction
even though no service fee is charged to Bank customers for its
use.  Income from fiduciary services provided in the Bank's
Trust Department remained strong. 



	Noninterest expenses, excluding the provision for possible loan
losses, increased 8.1% in the first half of 1997.  A new branch
office, opened in the first quarter of 1997, technology
communication expenses, and depreciation of leased equipment are
the main increases.



	Net income increased 1.8% in the first half of 1997 compared to
the first half of 1996. The increase in interest income was
large enough to more than offset the volume related increase in
interest expense. The remaining increase in interest income
coupled with the strong increase in noninterest income was
sufficient to cover the increase in noninterest expense.   The
increase in additions to the allowance for loan and lease losses
was offset by the reduction in taxes.  The current year tax
reduction resulted from the sale of repossessed property in
other real estate that had unrecognized tax benefits.



	In February, 1997, the Financial Accounting Standards board
issued Statement No. 128, "Earnings per Share", which is
required to be adopted on December 31, 1997.  At that time, the
Corporation will be required to change the method currently used
to compute earnings per share and to restate all prior periods. 
As the Corporation has only one class of stock and does not
issue options, warrants, and convertible securities, there will
be no impact on the calculation of earnings per share.



	The shareholders of the Corporation at the annual meeting held
April 15, 1997, approved the recommendation to retain and use
the certified public accounting firm, Kraft Bros.,Esstman,
Patton & Harrell, PLLC, as auditors for the ensuing year.<PAGE>
SIGNATURES



<PAGE>

	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.



                 FIRST FARMERS AND MERCHANTS CORPORATION
                              (Registrant)



Date  August 13, 1997             		      /s/Waymon L. Hickman              
                                     								Waymon L. Hickman,
                                     								Chairman of the Board
                           							          (Chief Executive Officer)



Date  August 13, 1997         		         /s/Patricia N. McClanahan       
                                    								Patricia N. McClanahan,
                                         									Treasurer
                            							        (Principal Accounting Officer)