SECURITIES AND EXCHANGE COMMISSION                      
                             Washington, D.C. 20549                            

                                   FORM 10-K                                   

    [ X ]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES     
                              EXCHANGE ACT OF 1934                             
                  For the fiscal year ended September 30, 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  1-13842                        

                     Texarkana First Financial Corporation                     
            (Exact name of registrant as specified in its charter)             

                 Texas                                  71-0771419             
    (State or other jurisdiction of                 (I.R.S. Employer           
      incorporation or organization)                 Identification No.)       

        3rd and Olive Streets                                                  
         Texarkana, Arkansas                              71854                
            (Address)                                   (Zip Code)             

    Registrant's telephone number, including area code: (870) 773-1103         

    Securities registered pursuant to Section 12(b) of the Act: None           

    Securities registered pursuant to Section 12(g) of the Act:                
                   Common Stock (par value $.01 per share)                     
                              (Title of Class)                                 

Indicate by check mark whether the Registrant (1) has filed all reports required
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 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 ]

As of December 12, 1997, the aggregate value of the 1,655,298 shares of Common 
Stock of the Registrant outstanding on such date, which excludes 103,907 shares 
held by all directors and officers of the Registrant as a group, was 
approximately $42.6 million.  This figure is based on the closing sale price of 
$25.75 per share of the Registrant's Common Stock on December 12, 1997.

Number of shares of Common Stock outstanding as of December 12, 1997: 1,759,205

                    DOCUMENTS INCORPORATED BY REFERENCE                    
(1) Portions of the Annual Report to Stockholders for the year ended September 
    30, 1997 are incorporated into Part II, Items 5 through 8.
(2) Portions of the definitive proxy statement for the 1997 Annual Meeting of 
    Stockholders are incorporated into Part III, Items 10 through 13.


<PAGE>
                     TEXARKANA FIRST FINANCIAL CORPORATION

                                   Form 10-K

                              TABLE OF CONTENTS

                                                                        Page
                                    PART 1

    Item 1   Business..................................................   1

    Item 2   Properties................................................  36

    Item 3   Legal Proceedings.........................................  36

    Item 4   Submission of Matters To Vote of Security Holders.........  36

                                   PART II

    Item 5   Market for Registrant's Common Equity
             and Related Stockholder Matters...........................  37

    Item 6   Selected Financial Data...................................  37

    Item 7   Management's Discussion and Analysis of 
             Financial Condition and Results of Operations.............  37

    Item 8   Financial Statements and Supplementary Data...............  37

    Item 9   Changes in and Disagreements With Accountants
             on Accounting and Financial Disclosure....................  37

                                   PART III

    Item 10  Directors and Executive Officers of the Registrant........  38

    Item 11  Executive Compensation....................................  38

    Item 12  Security Ownership of Certain
             Beneficial Owners and Management..........................  38

    Item 13  Certain Relationships and Related Transactions............  38

                                   PART IV

    Item 14  Exhibits, Financial Statement Schedules
             and Reports on Form 8-K...................................  39


<PAGE>
PART I.

Item 1.  Business.

General

Texarkana First Financial Corporation (the "Company") is a Texas corporation 
organized in March 1995 by First Federal Savings and Loan Association of 
Texarkana ("First Federal" or the "Association") for the purpose of becoming a 
unitary holding company of the Association.  The only significant assets of the 
Company are the capital stock of the Association, the Company's loan to the 
Company's Employee Stock Ownership Plan ("ESOP"), and the portion of the net 
proceeds retained by the Company in connection with the conversion of the 
Association from the mutual to stock form of organization in July 1995 (the 
"Conversion").  The business and management of the Company consists of the 
business and management of the Association.

The Association is a federally chartered stock savings and loan association 
which conducts business through its main office and four full service branch 
offices.  In July 1995, the Association converted from a federally chartered 
mutual savings and loan association to a federally chartered stock savings and 
loan association.

First Federal is primarily engaged in attracting deposits from the general 
public through its branch offices and using such deposits primarily to 
originate single-family (one-to-four units) residential loans and to a 
significantly lesser extent, nonresidential or commercial real estate loans, 
construction loans on primarily residential properties, consumer loans and 
multi-family loans.  To a limited extent, the Association also invests in 
securities issued by the United States ("U.S.") Government and agencies thereof 
and mortgage-backed securities.  The Association derives its income principally 
from interest earned on loans and investments and, to a lesser extent, from 
fees received in connection with the origination of loans and for other 
services.  The Association's primary expenses are interest expense on deposits 
and general operating expenses.  Funds for activities are provided primarily by 
deposits, amortization and prepayments of outstanding loans and other sources.

The Association serves its market area of southwest Arkansas and northeast 
Texas as a community oriented, independent financial institution dedicated 
primarily to financing home ownership while providing needed financial services 
to its customers in an efficient manner.

The Association is subject to regulation by the Office of Thrift Supervision 
(the "OTS"), as its chartering authority and primary regulator, and by the 
Federal Deposit Insurance Corporation (the "FDIC"), which insures the 
Association's deposits up to applicable limits.  The Association also is 
subject to certain reserve requirements established by the Board of Governors 
of the Federal Reserve System ("Federal Reserve Board") and is a member of the 
Federal Home Loan Bank ("FHLB") of Dallas, which is one of the 12 banks which 
comprise the FHLB System.

The Company's executive offices are located at 3rd and Olive Streets, 
Texarkana, Arkansas 71854, and its telephone number is (870) 773-1103.

                                         1
<PAGE>


Market Area

First Federal is headquartered in Texarkana, Arkansas which is located where 
the southwest corner of Arkansas and the northeast corner of Texas meet.  It is 
approximately 70 miles north of Shreveport, Louisiana, 140 miles southwest of 
Little Rock, Arkansas and 180 miles northeast of Dallas, Texas.  Texarkana, 
Arkansas and Texarkana, Texas are the focal points of this general market area 
and serve as the hub of economic activity.  The Association's market area is 
comprised of Little River, Hempstead, Miller, Sevier and Howard Counties in 
Arkansas and Bowie County, Texas ("market area").  The Association conducts 
business through its five offices in the Arkansas cities of Texarkana, Ashdown, 
DeQueen, Hope and Nashville.  The Association's market area is characterized by 
a limited number of major employers or industries with a significantly higher 
level of residents employed in manufacturing and a lower level of people 
employed in the wholesale/retail trade industry.  The Association's market area 
has also been characterized by higher unemployment rates than Texas, Arkansas 
and the United States.  At September 30, 1997, The unemployment rate for the 
Association's principal market area of Miller County, Arkansas and Bowie 
County, Texas was 4.7% and 8.5%, respectively, and the statewide unemployment 
rate for Texas and Arkansas was 5.4% and 5.1%, respectively.

Due to defense cutbacks, Red River Army Depot, a major local employer which 
currently employees approximately 1,600 persons, was previously scheduled to be 
closed.  However, the Base Realignment and Closure Commission removed the depot 
from the closure list but proposed a transfer of certain operations to another 
depot in Alabama.  The transfer of operations and reduction due to base 
realignments was completed October 1997 and resulted in a local workforce 
reduction of approximately 600 employees.  Since the Red River Army Depot is 
located just outside Texarkana in Bowie County, Texas, any major employment 
reduction impacts the economy of Texarkana.  Management of the Association 
closely monitors all loans made to employees of the Red River Army Depot in 
order to mitigate the impact, if any, on its operations.


Lending Activities

General.  At September 30, 1997, the Association's total portfolio of loans 
receivable, net of unearned income, amounted to $148.5 million or 83.1% of the 
Company's $178.7 million of total assets at such time.  The Association has 
traditionally concentrated its lending activities on conventional first 
mortgage loans secured by single-family residential property.  Consistent with 
such approach, $105.2 million or 69.3% of the total loan portfolio consisted of 
one-to-four family residential loans.  To a lesser extent, the Association also 
originates multi-family residential loans, nonresidential real estate and land 
loans, construction loans, commercial business loans and consumer loans.  Such 
loan categories amounted to $.8 million or .5%, $25.9 million or 17.0%, $5.6 
million or 3.7%, $2.4 million or 1.6% and $11.9 million or 7.9% of the total 
loan portfolio, respectively.

                                         2
<PAGE>
Loan Portfolio Composition.  The following table sets forth the composition of 
First Federal's loan portfolio by type of loan at the dates indicated.

                                              September 30,
                           __________________________________________________
                                 1997             1996             1995      
                            _______________  _______________  _______________
   (Dollars in Thousands)    Amount    %      Amount    %      Amount    %   
                            ________ ______  ________ ______  ________ ______
Real estate loans:
 One-to-four family.........$105,163  69.27% $ 98,031  69.78% $ 91,811  72.94%
 Multi-family...............     806    .53     1,503   1.07     1,581   1.26
 Nonresidential and land....  25,889  17.05    19,765  14.07    17,741  14.09
 Construction...............   5,620   3.70     7,818   5.56     5,917   4.70
                             _______ ______   _______ ______   _______ ______
  Total real estate loans... 137,478  90.55   127,117  90.48   117,050  92.99
Commercial loans............   2,384   1.57     3,264   2.32       962    .76
Consumer loans..............  11,966   7.88    10,107   7.20     7,859   6.25
                             _______ ______   _______ ______   _______ ______
   Total loans.............. 151,828 100.00%  140,488 100.00%  125,871 100.00%
                                     ======           ======           ======
Less:
 Loans in process...........   3,241            3,571            2,444       
 Deferred fees and discounts     116              112              118       
                             _______          _______          _______       
   Net loans................$148,471         $136,805         $123,309       
                             =======          =======          =======       


Contractual Maturities.  The following table presents the scheduled maturities 
of First Federal's loans at September 30, 1997.  Demand loans, loans having no 
stated schedule of repayment and no stated maturity, and overdraft loans are 
reported as due in one year or less.  The amounts shown for each maturity 
period do not take into consideration loan prepayments but do reflect normal 
amortization.

                             Amounts Due After September 30, 1997 in Years    
                          ____________________________________________________
                            One      Two     Three     Six     After          
                             or             through  through    Ten           
   (Dollars in Thousands)   Less             Five      Ten              Total 
                           ______  _______  _______  _______  _______  _______
Real estate loans:
 One-to-four family.......$ 1,935 $    243 $  3,191 $ 13,454 $ 86,340 $105,163
 Multi-family.............     --       15       --      598      193      806
 Nonresidential and land..    608      130    3,142    5,790   16,219   25,889
 Construction.............  5,356      264       --       --       --    5,620
Commercial loans..........  1,620       75      348      311       30    2,384
Consumer loans............  2,983    1,687    5,192    1,712      392   11,966
                          _______  _______  _______  _______  _______  _______
  Total loans.............$12,502 $  2,414 $ 11,873 $ 21,865 $103,174 $151,828
                           ======  =======  =======  =======  =======  =======

                                   3
<PAGE>
The following table sets forth the dollar amount of total loans at September 
30, 1997 which have fixed interest rates or which have floating or adjustable 
interest rates.

                                               September 30, 1997         
                                      ____________________________________
                                                  Floating or             
                                       Fixed      Adjustable              
          (Dollars in Thousands)        Rate         Rate           Total 
                                      _______     ___________     ________
   Real estate loans:
    One-to-four family................$ 4,989       $100,174      $105,163
    Multi-family......................     15            791           806
    Nonresidential and land...........  4,362         21,527        25,889
    Construction......................  5,620             --         5,620
   Commercial loans...................  2,384             --         2,384
   Consumer loans..................... 11,966             --        11,966
                                       ______        _______       _______
     Total loans......................$29,336       $122,492      $151,828
                                       ======        =======       =======


Origination, Purchase and Sale of Loans.  The lending activities of the 
Association are subject to the written, non-discriminatory, underwriting 
standards and loan origination procedures established by the Association's 
Board of Directors and management.  Loan originations are obtained by a variety 
of sources, including builders, realtors, walk-in customers, branch managers 
and advertising.  The Association stresses its community ties, customized, 
personal service and an efficient underwriting and approval process.  The 
Association uses either an in-house or independent appraiser on all loans and 
typically uses an independent appraiser for nonresidential real estate loans 
over $400,000.  In addition, the Association requires hazard, title and, to the 
extent applicable, flood insurance on all secured property.

Loan applications are initially processed by branch managers or loan officers 
and all real estate loans up to $300,000 are approved by the Association's Loan 
Committee consisting of the Association's President, Executive Vice President, 
and certain employees.  The President and the Chairman of the Board have the 
ability to jointly approve loans between $300,000 and $500,000 and loans over 
$500,000 must be approved by the Board of Directors.  All loans are ratified by 
the Association's Board of Directors.

Since 1985, the Association has not been an active purchaser of loans.  No 
loans were purchased in fiscal 1997, a $1.0 million participation interest in a 
local retirement center construction loan was purchased in fiscal 1996 and no 
loans were purchased in fiscal 1995.

As part of its asset/liability management, the Association typically sells its 
conventional fixed-rate residential loans to the Federal Home Loan Mortgage 
Corporation ("FHLMC") with servicing retained and without recourse.  The 
Association sold $2.2 million, $2.2 million and $1.5 million of fixed-rate 
loans during fiscal 1997, 1996 and 1995, respectively.  Substantially all fixed-
rate loans with terms of 15 years or greater have been originated pursuant to 
commitments to sell such loans to the FHLMC, with servicing retained, in order 
to reduce interest rate risk.  Sales of loans produce future servicing income 
if servicing is retained and provide funds for additional lending and other 
purposes.

                                         4
<PAGE>
Loans sold to the FHLMC are sold pursuant to forward sales commitments and, 
therefore, an increase in interest rates after loan origination and prior to 
sale does not adversely affect the Association's income at the time of sale.  
When loans are sold to the FHLMC, the Association retains the responsibility 
for servicing the loans, including collecting and remitting mortgage loan 
payments, accounting for principal and interest and holding and disbursing 
escrow or impound funds for real estate taxes and insurance premiums.  The 
Association receives a servicing fee for performing these services for others.  
At September 30, 1997, mortgage loans serviced for others amounted to $23.4 
million.

During fiscal year 1998, the Association will initiate the origination of 
mortgage loans insured by the Federal Housing Administration ("FHA") and 
mortgage loans guaranteed by the Office of Veterans Affairs ("VA").  Such loans 
will be sold to an independent mortgage company with servicing rights and 
without recourse.


The following table shows total loans originated, purchased, sold and repaid 
during the periods indicated.

                                                 Year Ended September 30, 
                                               ___________________________
              (Dollars in Thousands)             1997      1996      1995 
                                                ______    ______    ______
   Loan originations:
    One-to-four family residential.............$18,172   $19,747   $14,003
    Multi-family residential...................    193        --        --
    Nonresidential and land....................  7,173     3,737     2,465
    Construction...............................  8,543     8,216     6,287
    Commercial.................................    714     2,783       702
    Consumer...................................  9,448     7,137     5,012
                                                ______    ______    ______
     Total loan originations................... 44,243    41,620    28,469
                                                ______    ______    ______

   Loan purchases..............................     --     1,000        --
                                                ______    ______    ______

     Total loan originations and purchases..... 44,243    42,620    28,469
                                                ______    ______    ______

   Less sales and loan principal repayments:
    Loans sold.................................  2,160     2,179     1,514
    Loan principal repayments.................. 29,948    24,737    18,637
                                                ______    ______    ______
     Total loans sold and principal repayments. 32,108    26,916    20,151
                                                ______    ______    ______

   Increase (decrease) due to other items, net.   (794)   (1,087)   (3,786)
                                                ______    ______    ______
   Net increase (decrease) in total loans......$11,341   $14,617   $ 4,532
                                                ======    ======    ======

                                         5
<PAGE>
Loans-to-One Borrower.  A savings institution generally may not make loans to 
one borrower and related entities in an amount which exceeds 15% of its 
unimpaired capital and surplus, although loans in an amount equal to an 
additional 10% of unimpaired capital and surplus may be made to a borrower if 
the loans are fully secured by readily marketable securities.  At September 30, 
1997, the Association's limit on loans-to-one borrower was approximately $4.3 
million.  The Association's largest loan or group of loans-to-one borrower, 
including persons or entities related to the borrower, is an aggregate of five 
loans with total outstanding balances of $3.6 million and includes three 
commercial real estate loans totaling $3.4 million, one commercial business 
loan of $30,000 and one consumer loan of $124,000.  The Association also has 
outstanding loans to three different borrowers in Ft. Worth, Texas secured by 
three commercial buildings with total outstanding balances of $2.7 million.  As 
of September 30, 1997, these loans are current as to payments of principal and 
interest and are performing according to the terms of the loan documents.

One-to-Four Family Residential Real Estate Loans.  The Association has 
historically concentrated its lending activities on the origination of loans 
secured by first mortgage liens on existing one-to-four family residences.  At 
September 30, 1997, $105.2 million or 69.3% of the total loan portfolio 
consisted of one-to-four family residential real estate loans.  The Association 
originated $18.2 million, $19.7 million and $14.0 million of one-to-four family 
residential loans in fiscal 1997, 1996 and 1995, respectively, and intends to 
continue to emphasize the origination of permanent loans secured by first 
mortgage liens on one-to-four family residential properties in the future.  Of 
the $105.2 million of such loans at September 30, 1997, $100.2 million or 95.3% 
had adjustable-rates of interest and $5.0 million or 4.7% had fixed-rates of 
interest.  The Association's fixed-rate loans are originated primarily with 
terms of 15, 20 and 30 years.  Substantially all of the Association's fixed-
rate residential loans are originated pursuant to commitments to sell such 
loans to the FHLMC with servicing retained.

The Association currently originates for its portfolio one-to-four family 
residential mortgage loans which typically provide for an interest rate which 
adjusts every year in accordance with a designated index (the weekly average 
yield on U.S. Treasury securities adjusted to a constant comparable maturity of 
one year) plus a margin.  Such loans are typically based on a 15 to 30-year 
amortization schedule.  The Association does not offer "teaser" rates, and, 
generally, the amount of any increase or decrease in the interest rate after 
the initial one year period is limited to 2% per year, with a limit of 6% over 
the life of the loan.  The Association also originates residential mortgage 
loans with an interest rate which is fixed for three or five years and adjusts 
every three or five year period thereafter.  Generally, such loans have a 
lifetime ceiling of 5% over the initial rate.  The Association's adjustable-
rate loans are assumable and do not contain prepayment penalties.  The 
Association underwrites its adjustable rate loans on the basis of the borrowers 
ability to pay at the rate after the first adjustment.

Adjustable-rate loans decrease the risks associated with changes in interest 
rates but involve other risks, primarily because as interest rates rise, the 
payment by the borrower rises to the extent permitted by the terms of the loan, 
thereby increasing the potential for default.  At the same time, the 
marketability of the underlying property may be adversely affected by higher 
interest rates.  The Association believes that these risks, which have not had 
a material adverse effect on the Association to date, generally are less than 
the risks associated with holding fixed-rate loans in an increasing interest 
rate environment.

                                         6
<PAGE>
The Association's residential mortgage loans typically do not exceed 80% of the 
appraised value of the security property.  However, the Association is 
permitted to lend up to 100% of the appraised value of the real property 
securing a residential loan; however, if the amount of a residential loan 
originated or refinanced exceeds 90% of the appraised value, the Association is 
required by federal regulations to obtain private mortgage insurance on the 
portion of the principal amount that exceeds 80% of the appraised value of the 
security property.  Pursuant to underwriting guidelines adopted by the Board of 
Directors, the Association can lend up to 95% of the appraised value of the 
property securing a one-to-four family residential loan, and generally requires 
borrowers to obtain private mortgage insurance on the portion of the principal 
amount of the loan that exceeds 80% of the appraised value of the security 
property.

Multi-Family Residential Real Estate Loans.  Although the Association does not 
emphasize multi-family residential loans and has not been active in this area, 
the Association has, in the past, originated mortgage loans for the acquisition 
and refinancing of existing multi-family residential properties.  At September 
30, 1997, $.8 million or .5% of the total loan portfolio consisted of loans 
secured by existing multi-family residential real estate properties.  Such 
amount primarily represents loans secured by apartment buildings located in the 
Association's primary market area. 

Multi-family loans are made on terms up to 25 years with adjustable rates.  
Loan to value ratios on the Association's multi-family real estate loans are 
currently limited to 75%.  It is also the Association's general policy to 
obtain corporate or personal guarantees, as applicable, on its multi-family 
residential real estate loans from the principals of the borrower.

Multi-family real estate lending entails significant additional risks as 
compared with one-to-four family residential property lending.  Such loans 
typically involve large loan balances to single borrowers or groups of related 
borrowers.  The payment experience on such loans is typically dependent on the 
successful operation of the real estate project.  The success of such projects 
is sensitive to changes in supply and demand conditions in the market for multi-
family real estate as well as economic conditions generally.  

Nonresidential Real Estate and Land Loans.  The Association originates mortgage 
loans for the acquisition and refinancing of nonresidential or commercial real 
estate properties and land development loans to local developers and 
individuals.  At September 30, 1997, $23.4 million or 15.4% of the total loan 
portfolio consisted of loans secured by existing commercial real estate 
properties and $2.5 million or 1.6% of the total loan portfolio consisted of 
land loans.  Management currently anticipates that commercial real estate loans 
will continue to comprise a substantial portion of the loan portfolio in the 
future. 

The majority of the Association's commercial real estate loans are secured by 
office buildings, churches, retail shops and manufacturing facilities.  
Substantially all of the Association's commercial real estate loans are secured 
by property located in the Association's market area.

The Association requires appraisals of all properties securing commercial real 
estate loans.  Appraisals are performed by an in-house appraiser or an 
independent appraiser designated by the Association, depending upon the size of 
the loan, all of which are reviewed by management.  The 

                                         7
<PAGE>
Association considers the quality and location of the real estate, the credit 
of the borrower, cash flow of the project and the quality of management 
involved with the property.

The Association will originate commercial real estate loans with fixed interest 
rates or interest rates which adjust in accordance with a designated index.  
Such loans are typically based on a 10 to 20 year amortization schedule.  Loan 
to value ratios on the Association's commercial real estate loans are generally 
limited to 85%.  As part of the criteria for underwriting multi-family and 
commercial real estate loans, the Association generally imposes a debt coverage 
ratio (the ratio of net cash from operations before payment of debt service to 
debt service) of not less than 1.25.  It is also the Association's policy to 
typically obtain corporate or personal guarantees, as applicable, on its 
commercial real estate loans from the principals of the borrower.

Commercial real estate lending entails significant additional risks as compared 
with single-family residential property lending.  Such loans typically involve 
large loan balances to single borrowers or groups of related borrowers.  The 
payment experience on such loans is typically dependent on the successful 
operation of the real estate project.  The success of such projects is 
sensitive to changes in supply and demand conditions in the market for 
commercial real estate as well as regional and economic conditions generally.

The Association originates land loans to local developers for the purpose of 
developing the land (i.e., roads, sewer and water).  In addition, the 
Association originates lot loans to individuals for the purpose acquiring home 
sites.  Such loans are secured by a lien on the property and are typically 
limited to 65% of the value of the secured property.  Land loans to developers 
are limited to a term of eight years while lot loans to individuals are limited 
to a term of 15 years.

Construction Loans.  The Association also originates primarily residential 
construction loans, although the Association has originated nonresidential 
construction loans to a limited degree.  Construction loans are classified as 
either residential or nonresidential at the time of origination, depending on 
the nature of the property securing the loan.  The Association's construction 
lending activities are limited to the Association's primary market area.  At 
September 30, 1997, construction loans amounted to $5.6 million or 3.7% of the 
total loan portfolio, of which $5.1 million consisted of residential 
construction loans and $.5 million consisted of nonresidential construction 
loans.  The Association's construction loans generally have fixed interest 
rates for a term of six months, with payments being made monthly on an interest-
only basis.  However, the Association is permitted to extend a construction 
loan up to two years under its loan policy.  Construction loans to builders are 
made with a maximum loan to value ratio of 75%.  Construction loans to 
individuals are typically made with a loan to value ratio of 80%, although the 
Association will make such loans with a loan to value ratio up to 95% with 
private mortgage insurance.

With limited exceptions, the Association's construction loans are made to 
individual homeowners and a limited number of local real estate builders and 
developers for the purpose of constructing one-to-four family residential 
homes.  Upon application, credit review and analysis of personal and corporate 
financial statements, the Association will make loans to local builders.  These 
loans may be used for the purpose of construction of speculative (or unsold) 
residential properties although a majority of the loans to builders are for the 
construction of pre-sold single-family homes.  Once approved for a construction 
line, draws are granted on a percentage of completion basis.  The Association 
also inspects construction projects as draws are requested.

                                         8
<PAGE>
Construction lending is generally considered to involve a higher level of risk 
as compared to one-to-four family residential lending, due to the concentration 
of principal in a limited number of loans and borrowers and the effects of 
general economic conditions on developers and builders.  Moreover, a 
construction loan can involve additional risks because of the inherent 
difficulty in estimating both a property's value at completion of the project 
and the estimated cost (including interest) of the project.  The nature of 
these loans is such that they are generally more difficult to evaluate and 
monitor.  In addition, speculative construction loans to a builder are not pre-
sold and thus pose a greater potential risk to the Association than 
construction loans to individuals on their personal residences.

The Association has attempted to minimize the foregoing risks by, among other 
things, limiting the extent of its construction lending generally and by 
limiting its construction lending to primarily residential properties.  In 
addition, the Association has adopted underwriting guidelines which impose 
stringent loan-to-value, debt service and other requirements for loans which 
are believed to involve higher elements of credit risk, by limiting the 
geographic area in which the Association will do business and by working with 
builders with whom it has established relationships.

Commercial Business Loans.  The Association offers commercial business loans 
which include working capital lines of credit and term loans for financing 
inventory, accounts receivable, equipment and acquisitions.  Depending on the 
collateral pledged to secure the extension of credit, maximum loan to value 
ratios range from 50% of used equipment value to 90% of pledged deposits at the 
Association.  Also, personal guarantees are generally obtained from the 
principals of the borrower.  Loan terms vary from one year for lines of credit 
to 10 years for equipment and business acquisition loans.  The interest rates 
can be fixed or adjustable.  At September 30, 1997, commercial business loans 
amounted to $2.4 million or 1.6% of the total loan portfolio.

Consumer Loans.  The Association offers consumer loans in order to provide a 
full range of financial services to its customers.  The consumer loans offered 
by the Association include home improvement loans, automobile loans, deposit 
account secured loans and other personal loans.  At September 30, 1997, 
consumer loans amounted to $12.0 million or 7.9% of the total loan portfolio 
with $2.9 million in home improvement loans, $4.2 million in automobile loans, 
$1.3 million in loans secured by deposit accounts and $3.6 million in other 
personal loans.

The Association's home improvement loans are typically adjustable rate loans 
with terms of between five and ten years.   Although the Association does not 
require that it hold the first mortgage on the secured property, the 
Association does hold the first mortgage on a significant majority of its home 
improvement loans.  The Association limits the mortgages on the secured 
property to 80% of the value of the secured property.

The Association's automobile loans are originated by the Association and are 
typically for the purchase of new and used cars and trucks.  Such loans are 
generally originated with a maximum term of five years.

                                         9
<PAGE>
Loans secured by deposit accounts are originated for up to 90% of the account 
balance, with a hold placed on the account restricting the withdrawal of the 
account balance.


Asset Quality

When a borrower fails to make a required payment on a loan, the Association 
attempts to cure the deficiency by contacting the borrower and seeking the 
payment.  Depending upon the type of loan, late notices are sent and/or 
personal contacts are made.  In most cases, deficiencies are cured promptly.  
While the Association generally prefers to work with borrowers to resolve such 
problems, when a mortgage loan becomes 90 days delinquent, the Association 
institutes foreclosure or other proceedings, as necessary, to minimize any 
potential loss.

Loans are placed on non-accrual status when, in the judgment of management, the 
probability of collection of interest is deemed to be insufficient to warrant 
further accrual.  When a loan is placed on non-accrual status, previously 
accrued but unpaid interest is deducted from interest income.  The Association 
does not accrue interest on real estate loans past due 90 days or more unless, 
in the opinion of management, the value of the property securing the loan 
substantially exceeds the outstanding balance of the loan (principal, interest 
and escrows) and collection is probable.  Loans may be reinstated to accrual 
status when all payments are brought current and, in the opinion of management, 
collection of the remaining balance can be reasonably expected.

Real estate acquired by the Association as a result of foreclosure or by deed-
in-lieu of foreclosure is classified as other real estate owned until sold.  
Pursuant to a statement of position ("SOP 92-3") issued by the AICPA in April 
1992, which provides guidance on determining the balance sheet treatment of 
foreclosed assets in annual financial statements for periods ending on or after 
December 15, 1992, there is a rebuttable presumption that foreclosed assets are 
held for sale and such assets are recommended to be carried at the lower of 
fair value minus estimated costs to sell the property, or cost (generally the 
balance of the loan on the property at the date of acquisition).  After the 
date of acquisition, all costs incurred in maintaining the property are 
expended and costs incurred for the improvement or development of such property 
are capitalized up to the extent of their net realizable value.  The 
Association's accounting for its real estate acquired by foreclosure complies 
with the guidance set forth in SOP 92-3.

Under generally accepted accounting principles, the Association is required to 
account for certain loan modifications or restructurings as "troubled debt 
restructurings."  In general, the modification or restructuring of a debt 
constitutes a troubled debt restructuring if the Association, for economic or 
legal reasons related to the borrower's financial difficulties, grants a 
concession to the borrower that the Association would not otherwise consider.  
Debt restructurings or loan modifications for a borrower do not necessarily 
always constitute troubled debt restructurings, however, and troubled debt 
restructurings do not necessarily result in non-accrual loans.  The Association 
did not have any troubled debt restructurings as of September 30, 1997.

                                        10
<PAGE>
Delinquent Loans.  The following table sets forth information concerning 
delinquent loans as of September 30, 1997, in dollar amounts and as a 
percentage of First Federal's total loan portfolio.  The amounts presented 
represent the total outstanding principal balances of the related loans, rather 
than the actual payment amounts which are past due.

                                          September 30, 1997
                           _________________________________________________
                                            Days Delinquent
                           _________________________________________________
                              30-59 Days       60-89 Days    90 or More Days
                           _______________  _______________  _______________
                                   Percent          Percent          Percent
                                  of Total         of Total         of Total
  (Dollars in Thousands)   Amount  Loans    Amount  Loans    Amount  Loans  
                           ______ ________  ______ ________  ______ ________
Real estate loans:
 One-to-four family........$1,250    .82%    $195    .13%     $ 26    .02%  
 Multi-family..............    --     --       --     --        --     --   
 Nonresidential and land...    21    .01      145    .10        22    .01   
 Construction..............    60    .04      223    .15        --     --   
Commercial loans...........    --     --       22    .01        --     --   
Consumer loans.............   105    .07       46    .03       232    .15   
                            _____             ___              ___          
  Total delinquent loans...$1,436    .94%    $631    .42%     $280    .18%  
                            =====             ===              ===          

The following table sets forth the amounts and categories of First Federal's 
nonperforming assets and troubled debt restructurings and other selected 
statistics at the dates indicated.

                                                      September 30,
                                                _________________________
                (Dollars in Thousands)           1997      1996      1995
                                                _____     _____     _____
     Non-accruing loans:
       One-to-four family residential..........$   --    $   66    $   40
       Multi-family residential................    --        --        --
       Nonresidential and land.................    --        --        --
       Construction............................    --        --        --
       Commercial..............................    --        --        --
       Consumer................................    --         2         2
                                                _____     _____     _____
         Total non-accruing loans..............    --        68        42
     Accruing loans 90 days or 
       more delinquent.........................   280       144       172
     Restructured debt.........................    --        --        --
                                                _____     _____     _____
         Total nonperforming loans.............   280       212       214
                                                _____     _____     _____
     Real estate owned, net....................   127        72       320
                                                _____     _____     _____
         Total nonperforming assets............$  407    $  284    $  534
                                                =====     =====     =====
     Total loans.............................$151,828  $140,488  $125,871
     Total assets............................ 178,710   165,747   160,652
     Total nonperforming loans to
       total loans.............................  .18%      .15%      .17%
     Total nonperforming assets to
       total assets............................  .23%      .17%      .33%

                                        11
<PAGE>
Interest income that would have been recorded under the original terms of the 
Association's non-accruing loans for fiscal years 1997, 1996 and 1995 amounted 
to $0, $6,000 and $7,000, respectively, and the interest recognized during 
fiscal years 1997, 1996 and 1995 amounted to $0, $2,000 and $3,000, 
respectively.

The $127,000 of REO at September 30, 1997 consists of three single-family 
residences located within our market area.

Classified Assets.  Federal regulations require that each insured savings 
association classify its assets on a regular basis.  In addition, in connection 
with examinations of insured institutions, federal examiners have authority to 
identify problem assets and, if appropriate, classify them.  There are three 
classifications for problem assets: "substandard," "doubtful" and "loss."  
Substandard assets have one or more defined weaknesses and are characterized by 
the distinct possibility that the insured institution will sustain some loss if 
the deficiencies are not corrected.  Doubtful assets have the weaknesses of 
substandard assets with the additional characteristic that the weaknesses make 
collection or liquidation in full on the basis of currently existing facts, 
conditions and values questionable, and there is a high possibility of loss.  
An asset classified loss is considered uncollectible and of such little value 
that continuance as an asset of the institution is not warranted.  At September 
30, 1997, the Association had $833,000 of loans which were classified as 
substandard.

Allowance for Loan Losses.  It is management's policy to maintain an allowance 
for estimated losses based on the perceived risk of loss in the loan portfolio 
and the adequacy of the allowance.  Management's periodic evaluation of the 
adequacy of the allowance is based on the Association's past loan loss 
experience, known and inherent risks in the portfolio, adverse situations that 
may affect the borrower's ability to repay, the estimated value of the 
underlying collateral and current economic conditions.  The allowance is 
increased by provisions for loan losses which are charged against income.

Although management uses the best information available to make determinations 
with respect to the provisions for loan losses, additional provisions for loan 
losses may be required to be established in the future should economic or other 
conditions change substantially.  In addition, the OTS and the FDIC, as an 
integral part of their examination process, periodically review the 
Association's allowance for possible loan losses.  Such agencies may require 
the Association to recognize additions to such allowance based on their 
judgments about information available to them at the time of their examination.

                                        12
<PAGE>
The following table summarizes changes in the allowance for possible loan 
losses and other selected statistics for the periods presented.

                                               Year Ended September 30,
                                          __________________________________
         (Dollars in Thousands)             1997         1996         1995  
                                          ________     ________     ________
Allowance for loan losses, beginning
 of period................................$  1,145     $  1,149     $    977
                                           _______      _______      _______
Loans charged-off:
  Residential real estate.................      (2)          --           (4)
  Nonresidential real estate..............      --           --           --
  Commercial loans........................      --           --           --
  Consumer loans..........................     (19)          (4)          (2)
                                           _______      _______      _______
   Total charge-offs......................     (21)          (4)          (6)
                                           _______      _______      _______
Recoveries of loans 
 previously charged-off:
  Residential real estate.................      --           --           --
  Nonresidential real estate..............      --           --           --
  Commercial loans........................      --           --           --
  Consumer loans..........................      --           --            1
                                           _______      _______      _______
   Total recoveries.......................      --           --            1
                                           _______      _______      _______
   Net charge-offs........................     (21)          (4)          (5)
                                           _______      _______      _______
Provision for loan losses.................      --           --          177
                                           _______      _______      _______
Allowance for loan losses, end
 of period................................$  1,124     $  1,145     $  1,149
                                           =======      =======      =======

Total loans...............................$151,828     $140,488     $125,871
Total nonperforming loans.................     280          212          214
Average total loans....................... 141,830      129,182      121,074

Allowance for loan losses to
 total loans..............................     .74%         .82%         .91%
Allowance for loan losses to
 nonperforming loans......................  401.43%      540.09%      536.92%
Net charge-offs to
 average total loans......................    .015%        .003%        .004%

                                        13
<PAGE>
The following table presents the allocation of First Federal's allowance for 
possible loan losses by loan classification at each of the dates indicated.

                                                September 30,
                                    _____________________________________
          (Dollars in Thousands)       1997          1996          1995  
                                    _________     _________     _________
   Real estate loans:
    One-to-four family.............. $  205        $  246        $  231  
    Multi-family....................      6            20            --  
    Nonresidential and land.........    542           494           548  
    Construction....................     12            10             9  
   Commercial loans.................     34            34            --  
   Consumer loans...................     86            52            35  
   Unallocated/general..............    239           289           326  
                                      _____         _____         _____  
     Total allowance................ $1,124        $1,145        $1,149  
                                      =====         =====         =====  


The following table presents, for each of the dates indicated, the percentage 
of the allowance for loan losses allocated to each loan classification, and the 
percentage of total loans applicable to each loan classification.

                                              September 30,
                            __________________________________________________
                                  1997             1996             1995      
                            ________________ ________________ ________________
                            Allowance Loans  Allowance Loans  Allowance Loans 
                            _________ ______ _________ ______ _________ ______
Real estate loans:
 One-to-four family.........   18.2%   69.3%    21.5%   69.8%    20.1%   72.9%
 Multi-family...............     .5      .5      1.8     1.1       --     1.3 
 Nonresidential and land....   48.2    17.0     43.1    14.1     47.7    14.1 
 Construction...............    1.1     3.7       .9     5.5       .8     4.7 
Commercial loans............    3.0     1.6      3.0     2.3       --      .8 
Consumer loans..............    7.7     7.9      4.5     7.2      3.0     6.2 
Unallocated/general.........   21.3      --     25.2      --     28.4      -- 
                              _____   _____    _____   _____    _____   _____ 
  Total.....................  100.0%  100.0%   100.0%  100.0%   100.0%  100.0%
                              =====   =====    =====   =====    =====   ===== 


Investment Activities

Mortgage-Backed Securities.  Mortgage-backed securities (which also are known 
as mortgage participation certificates or pass-through certificates) typically 
represent a participation interest in a pool of single-family or multi-family 
mortgages, the principal and interest payments on which are passed from the 
mortgage originators, through intermediaries (generally U.S. Government 
agencies and government sponsored enterprises) that pool and repackage the 
participation interests in the form of securities, to investors such as the 
Association.  Such U.S. Government agencies and government sponsored 
enterprises, which guarantee the payment of principal and interest to 
investors, primarily include the FHLMC, the Federal National Mortgage 
Association ("FNMA") and the Government National Mortgage Association ("GNMA").

                                        14
<PAGE>
The FHLMC is a public corporation chartered by the U.S. government and 
guarantees the timely payment of interest and the ultimate return of principal 
within one year.  The FHLMC mortgage-backed securities are not backed by the 
full faith and credit of the United States, but because the FHLMC is a U.S. 
government sponsored enterprise, these securities are considered high quality 
investments with minimal credit risks.  The GNMA is a government agency within 
the Department of Housing and Urban Development which is intended to help 
finance government assisted housing programs.  The GNMA guarantees the timely 
payment of principal and interest, and GNMA securities are backed by the full 
faith and credit of the U.S. Government.  The FNMA guarantees the timely 
payment of principal and interest, and FNMA securities are indirect obligations 
of the U.S. Government.

Mortgage-backed securities typically are issued with stated principal amounts, 
and the securities are backed by pools of mortgages that have loans with 
interest rates that are within a range and have varying maturities.  The 
underlying pool of mortgages, i.e., fixed rate or adjustable rate, as well as 
the prepayment risk, are passed on to the certificate holder.  Accordingly, the 
life of a mortgage-backed pass-through security approximates the life of the 
underlying mortgages.  At September 30, 1997, $5.5 million of the mortgage-
backed securities were classified as available for sale and $1.3 million were 
classified as held to maturity.


The following table presents the composition of the mortgage-backed securities 
portfolio at each of the dates indicated.

                                               September 30,
                             _________________________________________________
                                   1997             1996             1995     
                             _______________  _______________  _______________
                             Carrying Market  Carrying Market  Carrying Market
    (Dollars in Thousands)     Value   Value    Value   Value    Value   Value
                             ________ ______  ________ ______  ________ ______
Mortgage-backed securities:
Held to maturity:
  FHLMC...................... $  588  $  619   $  709  $  734   $1,301  $1,339
  FNMA.......................    705     711      809     804      979     984
                               _____   _____    _____   _____    _____   _____
    Total held to maturity...  1,293   1,330    1,518   1,538    2,280   2,323
                               _____   _____    _____   _____    _____   _____
Available for sale:
  GNMA.......................  5,460   5,460       --      --       --      --
                               _____   _____    _____   _____    _____   _____
    Total available for sale.  5,460   5,460       --      --       --      --
                               _____   _____    _____   _____    _____   _____
    Total Mortgage-backed
    securities............... $6,753  $6,790   $1,518  $1,538   $2,280  $2,323
                               =====   =====    =====   =====    =====   =====

                                        15
<PAGE>
The following table sets forth the contractual maturities of the mortgage-
backed securities portfolio at September 30, 1997.

                               Amounts at September 30, 1997 Which Mature In
                              ________________________________________________
                               1 Year    1 to 5    5 to 10   Over 10          
    (Dollars in Thousands)     or Less    Years     Years     Years     Total 
                              ________  ________  ________  ________  ________
Mortgage-backed securities:
Held to maturity:
  FHLMC....................... $   --    $   --    $  455    $  133    $  588 
  FNMA........................    164       541        --        --       705 
                                _____     _____     _____     _____     _____ 
    Total held to maturity....    164       541       455       133     1,293 
                                _____     _____     _____     _____     _____ 
Available for sale:
  GNMA........................     --        --        --     5,460     5,460 
                                _____     _____     _____     _____     _____ 
    Total available for sale..     --        --        --     5,460     5,460 
                                _____     _____     _____     _____     _____ 
    Total mortgage-backed
    securities................ $  164    $  541    $  455    $5,593    $6,753 
                                =====     =====     =====     =====     ===== 


Mortgage-backed securities generally increase the quality of the Association's 
assets by virtue of the insurance or guarantees that back them, are more liquid 
than individual mortgage loans and may be used to collateralize borrowings or 
other obligations of the Association.  At September 30, 1997, $5.5 million of 
the Association's mortgage-backed securities were pledged to secure obligations 
of the Association. 

The actual maturity of a mortgage-backed security may be less than its stated 
maturity due to prepayments of the underlying mortgages.  Prepayments that are 
faster than anticipated may shorten the life of the security and adversely 
affect its yield to maturity.  The yield is based upon the interest income and 
the amortization of any premium or discount related to the mortgage-backed 
security.  In accordance with generally accepted accounting principles, 
premiums and discounts are amortized over the estimated lives of the loans, 
which decrease and increase interest income, respectively.  The prepayment 
assumptions used to determine the amortization period for premiums and 
discounts can significantly affect the yield of the mortgage-backed security, 
and these assumptions are reviewed periodically to reflect actual prepayments.  
Although prepayments of underlying mortgages depend on many factors, including 
the type of mortgages, the coupon rate, the age of mortgages, the geographical 
location of the underlying real estate collateralizing the mortgages and 
general levels of market interest rates, the difference between the interest 
rates on the underlying mortgages and the prevailing mortgage interest rates 
generally is the most significant determinant of the rate of prepayments.  
During periods of falling mortgage interest rates, if the coupon rate of the 
underlying mortgages exceeds the prevailing market interest rates offered for 
mortgage loans, refinancing generally increases and accelerates the prepayment 
of the underlying mortgages and the related security.  Under such 
circumstances, the Association may be subject to reinvestment risk because to 
the extent that the Association's mortgage-backed securities amortize or prepay 
faster than anticipated, the Association may not be able to reinvest the 
proceeds of such repayments and prepayments at a comparable rate.

                                        16
<PAGE>
Investment Securities.  The investment policy, as established by the Board of 
Directors, is designed primarily to provide and maintain liquidity and to 
generate a favorable return on investments without incurring undue interest 
rate risk, credit risk, and investment portfolio asset concentrations.  The 
investment policy is currently implemented by the Chairman, President and Chief 
Financial Officer within the parameters set by the Board of Directors.

The Company and the Association are authorized to invest in obligations issued 
or fully guaranteed by the U.S. Government, certain federal agency obligations, 
certain time deposits, negotiable certificates of deposit issued by commercial 
banks and other insured financial institutions, investment grade corporate debt 
securities and other specified investments.

Securities that management has the intent and positive ability to hold to 
maturity are classified as held to maturity and are reported at amortized 
cost.  Securities classified as available for sale are reported at fair value, 
with unrealized gains and losses excluded from earnings and reported in a 
separate component of equity.  At September 30, 1997, $13.2 million of the 
investment securities were classified as available for sale and $1.1 million 
were classified as held to maturity.


The following table sets forth the composition of the investment securities 
portfolio at the dates indicated.

                                                September 30,
                              ________________________________________________
                                   1997             1996             1995     
                             _______________  _______________  _______________
                             Carrying Market  Carrying Market  Carrying Market
    (Dollars in Thousands)     Value   Value    Value   Value    Value   Value
                             ________ ______  ________ ______  ________ ______
Investment securities:
Available for sale:
 U.S. Government securities..$13,184 $13,307  $14,898 $14,887  $   999 $ 1,007
                              ______  ______   ______  ______   ______  ______
  Total available for sale... 13,184  13,307   14,898  14,887      999   1,007
                              ______  ______   ______  ______   ______  ______
Held to maturity:
 U.S. Government securities..     --      --       --      --   17,153  17,122
 Federal Home Loan Bank stock  1,116   1,116    1,053   1,053      992     992
                              ______  ______   ______  ______   ______  ______
  Total held to maturity.....  1,116   1,116    1,053   1,053   18,145  18,114
                              ______  ______   ______  ______   ______  ______
  Total investment securities$14,300 $14,423  $15,951 $15,940  $19,144 $19,121
                              ======  ======   ======  ======   ======  ======

                                        17
<PAGE>
The following table sets forth the amount of investment securities which mature 
during each of the periods indicated.

                               Amounts at September 30, 1997 Which Mature In 
                              _______________________________________________
                              1 Year     1 to 5   5 to 10   Over 10          
    (Dollars in Thousands)    or Less     Years    Years     Years     Total 
                              _______   _______   _______   _______   _______
Investment securities
Available for sale:
 U.S. Government securities...$ 1,000   $12,184   $    --   $    --   $13,184
                               ______    ______    ______    ______    ______
  Total available for sale..... 1,000    12,184        --        --    13,184
                               ______    ______    ______    ______    ______
Held to maturity:
 U.S. Government securities....    --        --        --        --        --
 Federal Home Loan Bank stock.. 1,116        --        --        --     1,116
                               ______    ______    ______    ______    ______
  Total held to maturity....... 1,116        --        --        --     1,116
                               ______    ______    ______    ______    ______
  Total investment securities $ 2,116   $12,184   $    --   $    --   $14,300
                               ======    ======    ======    ======    ======


Sources of Funds

General.  Deposits are the primary source of the Association's funds for 
lending and other investment purposes.  In addition to deposits, the 
Association derives funds from loan principal repayments, prepayments and 
advances from the FHLB of Dallas.  Loan repayments are a relatively stable 
source of funds, while deposit inflows and outflows are significantly 
influenced by general interest rates and money market conditions.  Borrowings 
may be used on a short-term basis to compensate for reductions in the 
availability of funds from other sources.  They may also be used on a longer 
term basis for general business purposes.

Deposits.  The Association's deposit products include a broad selection of 
deposit instruments, including NOW accounts, money market accounts, regular 
savings accounts and term certificate accounts.  Deposit account terms vary, 
with the principal differences being the minimum balance required, the time 
periods the funds must remain on deposit and the interest rate.

The Association considers its primary market area to be southwest Arkansas and 
northeast Texas.  The Association utilizes traditional marketing methods to 
attract new customers and savings deposits.  The Association does not advertise 
for deposits outside of its primary market area or utilize the services of 
deposit brokers, and management believes that an insignificant number of 
deposit accounts were held by non-residents of Arkansas and Texas at September 
30, 1997.

The Association has been competitive in the types of accounts and in interest 
rates it has offered on its deposit products but does not necessarily seek to 
match the highest rates paid by competing institutions.  Although market demand 
generally dictates which deposit maturities and rates will be accepted by the 
public, the Association intends to continue to promote longer term deposits to 
the extent possible and consistent with its asset and liability management 
goals.

                                        18
<PAGE>
The following table sets forth, by type of deposit, the distribution of the 
amount of deposits and the percentage of total deposits as of the dates 
indicated.

                                               September 30,                 
                             ________________________________________________
                                  1997             1996             1995     
                             ______________   ______________   ______________
    (Dollars in Thousands)    Amount    %      Amount    %      Amount    %  
                             ________ _____   ________ _____   ________ _____
Certificates of deposit:
    2.01% to  4.00%..........$    295    .2%  $    632   0.5%  $    627   0.5%
    4.01% to  6.00%.......... 109,606  76.6     98,572  74.1     73,363  58.7
    6.01% to  8.00%..........  13,923   9.7     13,577  10.2     31,063  24.9
    8.01% and over...........       4   0.0          4   0.0      1,287   1.0
                              _______ _____    _______ _____    _______ _____
 Total certificate accounts.. 123,828  86.5    112,785  84.8    106,340  85.1
                              _______ _____    _______ _____    _______ _____
Passbook and statement
 savings accounts............   5,257   3.7      5,917   4.4      5,025   4.0
Money market accounts........   7,500   5.2      8,045   6.0      7,742   6.2
NOW accounts.................   5,262   3.7      5,120   3.9      4,999   4.0
Noninterest bearing deposits.   1,360    .9      1,204    .9        847    .7
                              _______ _____    _______ _____    _______ _____
 Total deposits..............$143,207 100.0%  $133,071 100.0%  $124,953 100.0%
                              ======= =====    ======= =====    ======= =====


The following table presents, by type of deposit, the average balance and the 
average rate paid for the periods indicated.

                                         Year Ended September 30,            
                             ________________________________________________
                                  1997             1996             1995     
                             ______________   ______________   ______________
                                 Average          Average          Average   
    (Dollars in Thousands)    Balance  Rate    Balance  Rate    Balance  Rate
                             ________ _____   ________ _____   ________ _____

Certificates of deposit..... $117,718  5.42%  $107,866  5.49%  $106,087  5.10%
Passbook and statement
 savings accounts...........    5,417  3.26      5,280  3.18      5,676  3.70
Money market and
 NOW accounts...............   14,044  2.72     13,937  2.57     14,031  2.79
Noninterest bearing accounts    1,200    --      1,026    --        898    --
                              _______  ____    _______  ____    _______  ____
  Total deposits.............$138,379  5.01%  $128,109  5.05%  $126,692  4.77%
                              =======  ====    =======  ====    =======  ====

                                        19
<PAGE>
The following table sets forth the net deposit flows during the periods 
indicated.

                                                Year Ended September 30,   
                                            _______________________________
           (Dollars in Thousands)              1997       1996       1995  
                                            _________  _________  _________

Increase(decrease) before interest credited. $ 5,504    $ 3,844    $(3,646)
Interest credited...........................   4,632      4,274      4,103 
                                              ______     ______     ______ 
 Net increase(decrease) in deposits......... $10,136    $ 8,118    $   457 
                                              ======     ======     ====== 



The following table presents, by various interest rate categories, the amount 
of certificates of deposit at September 30, 1997 and the amounts which mature 
during the periods indicated.

                                             Amounts at September 30, 1997   
                            September 30,           Maturing Within          
                            _____________  __________________________________
                                                                       After 
   (Dollars in Thousands)        1997       1 Year  2 Years  3 Years  3 Years
                            _____________  _______  _______  _______  _______
Certificates of deposit:
    2.01% to 4.00%..........   $    295   $    295 $     -- $     -- $     --
    4.01% to 6.00%..........    109,606     86,802   14,623    2,690    5,491
    6.01% to 8.00%..........     13,923      2,231      911    8,913    1,868
    8.01% and over..........          4         --       --       --        4
                                _______    _______  _______  _______  _______
 Total certificate accounts.   $123,828   $ 89,328 $ 15,534 $ 11,603 $  7,363
                                =======    =======  =======  =======  =======



The following table sets forth maturities of certificates of deposit of 
$100,000 or more at September 30, 1997 by time remaining to maturity.

                       (Dollars in Thousands)        Amount
                                                    _______

                Three months or less................$ 4,781
                Three months through six months.....  6,414
                Six months through 12 months........  6,070
                Over 12 months......................  6,100
                                                     ______
                 Total..............................$23,365
                                                     ======

                                        20
<PAGE>
Borrowed Funds.  The Association may obtain advances from the FHLB of Dallas 
upon the security of the common stock it owns in that bank and certain of its 
residential mortgage loans and securities held to maturity, provided certain 
standards related to creditworthiness have been met.  Such advances are made 
pursuant to several credit programs, each of which has its own interest rate 
and range of maturities.  Such advances are generally available to meet 
seasonal and other withdrawals of deposit accounts and to permit increased 
lending.  Recently, the Association has utilized such advances as a 
supplemental source of funds for the Association's investment and lending 
activities.


The following table presents certain information regarding borrowed funds for 
the periods indicated.

                                                Year Ended September 30,    
                                            ________________________________
   (Dollars in Thousands)                      1997       1996       1995   
                                            __________ __________ __________
FHLB advances:
  Average balance outstanding.............. $     706  $      --  $     --  
  Maximum amount outstanding at any
    month-end during the period............     4,967         --        --  
  Balance outstanding at end of period.....     4,967         --        --  
  Weighted average interest rate
    during the period......................      5.53%        --        --  
  Weighted average interest rate
    at the end of the period...............      5.54%        --        --  

Repurchase agreements:
  Average balance outstanding.............. $      82  $      78  $     --  
  Maximum amount outstanding at any
    month-end during the period............        --      2,340        --  
  Balance outstanding at end of period.....        --      2,340        --  
  Weighted average interest rate
    during the period......................      5.58%      5.58%       --  
  Weighted average interest rate
    at the end of the period...............        --       5.58%       --  

Other borrowed money:
  Average balance outstanding.............. $      39  $      65  $     21  
  Maximum amount outstanding at any
    month-end during the period............        43        518        63  
  Balance outstanding at end of period.....        22        518        63  
  Weighted average interest rate
    during the period......................      6.61%      6.78%     6.50% 
  Weighted average interest rate
    at the end of the period...............      6.50%      8.10%     6.50% 

Total borrowings:
  Average balance outstanding.............. $     827  $     143  $     21  
  Maximum amount outstanding at any
    month-end during the period............     4,989      2,858        63  
  Balance outstanding at end of period.....     4,989      2,858        63  
  Weighted average interest rate
    during the period......................      5.72%      5.87%     6.50% 
  Weighted average interest rate
    at the end of the period...............      5.61%      5.49%     6.50% 

                                        21
<PAGE>
Employees

The Company and the Association had 34 full-time employees and two part-time 
employees at September 30, 1997.  None of these employees is represented by a 
collective bargaining agent, and the Company believes that it enjoys good 
relations with its personnel.

Subsidiaries

As of September 30, 1997, the Company had no subsidiaries other than First 
Federal, and First Federal had no subsidiaries.

Competition

The Association faces strong competition both in attracting deposits and making 
real estate loans.  Its most direct competition for deposits has historically 
come from other savings associations, credit unions and commercial banks, 
including many large financial institutions which have greater financial and 
marketing resources available to them.  In addition, during times of high 
interest rates, the Association has faced additional significant competition 
for investors' funds from short-term money market securities, mutual funds and 
other corporate and government securities.  The ability of the Association to 
attract and retain savings deposits depends on its ability to generally provide 
a rate of return, liquidity and risk comparable to that offered by competing 
investment opportunities.

The Association experiences strong competition for real estate loans 
principally from commercial banks and mortgage companies.  The Association 
competes for loans principally through the interest rates and loan fees it 
charges and the efficiency and quality of services it provides borrowers.  
Competition may increase as a result of the continuing reduction of 
restrictions on the interstate operations of financial institutions.


                                  REGULATION

The Company

General.  The Company, as a registered savings and loan holding company within 
the meaning of the Home Owners' Loan Act ("HOLA"), is subject to OTS 
regulations, examinations, supervision and reporting requirements.  As a 
subsidiary of a savings and loan holding company, First Federal is subject to 
certain restrictions in its dealings with the Company and affiliates thereof.

Activities Restrictions.  There are generally no restrictions on the activities 
of a savings and loan holding company which holds only one subsidiary savings 
institution.  However, if the Director of the OTS determines that there is 
reasonable cause to believe that the continuation by a savings and loan holding 
company of an activity constitutes a serious risk to the financial safety, 
soundness or stability of its subsidiary savings institution, the Director may 
impose such restrictions as deemed necessary to address such risk, including 
limiting (i) payment of dividends by the savings institution; (ii) transactions 
between the savings institution and its affiliates; and (iii) any activities of 
the savings institution that might create a serious risk that the liabilities 
of the holding company and its affiliates may be imposed on the savings 
institution.  Notwithstanding the above rules as to permissible business 
activities of unitary savings and loan holding companies, if the savings 
institution subsidiary of such a holding company fails to meet the QTL test, as 
discussed under "The Association - Qualified Thrift Lender Test", then such 
unitary holding company becomes subject to the activities restrictions 
applicable to multiple savings and loan holding companies and, unless the 
savings institution requalifies as a QTL within one year thereafter, must 
register as, and become subject to the restrictions applicable to, a bank 
holding company.

                                        22
<PAGE>
If the Company were to acquire control of another savings institution, other 
than through merger or other business combination with First Federal, the 
Company would thereupon become a multiple savings and loan holding company.  
Except where such acquisition is pursuant to the authority to approve emergency 
thrift acquisitions and where each subsidiary savings institution meets the QTL 
test, as set forth below, the activities of the Company and any of its 
subsidiaries (other than First Federal or other subsidiary savings 
institutions) would thereafter be subject to further restrictions.  Among other 
things, no multiple savings and loan holding company or subsidiary thereof 
which is not a savings institution may commence or continue for a limited 
period of time after becoming a multiple savings and loan holding company or 
subsidiary thereof any business activity, upon prior notice to, and no 
objection by the OTS, other than: (i) furnishing or performing management 
services for a subsidiary savings institution; (ii) conducting an insurance 
agency or escrow business; (iii) holding, managing, or liquidating assets owned 
by or acquired from a subsidiary savings institution; (iv) holding or managing 
properties used or occupied by a subsidiary savings institution; (v) acting as 
trustee under deeds of trust; (vi) those activities authorized by regulation as 
of March 5, 1987, to be engaged in by multiple savings and loan holding 
companies; or (vii) unless the Director of the OTS by regulation prohibits or 
limits such activities for savings and loan holding companies, those activities 
authorized by the FRB as permissible for bank holding companies.  Those 
activities described in (vii) above also must be approved by the Director of 
the OTS prior to being engaged in by a multiple savings and loan holding 
company.

Limitations on Transactions with Affiliates.  Transactions between savings 
institutions and any affiliate are governed by Sections 23A and 23B of the 
Federal Reserve Act.  An affiliate of a savings institution is any company or 
entity which controls, is controlled by or is under common control with the 
savings institution.  In a holding company context, the parent holding company 
of a savings institution (such as the Company) and any companies which are 
controlled by such parent holding company are affiliates of the savings 
institution.  Generally, Sections 23A and 23B (i) limit the extent to which the 
savings institution or its subsidiaries may engage in "covered transactions" 
with any one affiliate to an amount equal to 10% of such institution's capital 
stock and surplus, and contain an aggregate limit on all such transactions with 
all affiliates to an amount equal to 20% of such capital stock and surplus and 
(ii) require that all such transactions be on terms substantially the same, or 
at least as favorable, to the institution or subsidiary as those provided to a 
non-affiliate.  The term "covered transaction" includes the making of loans, 
purchase of assets, issuance of a guarantee and other similar transactions.  In 
addition to the restrictions imposed by Sections 23A and 23B, no savings 
institution may (i) loan or otherwise extend credit to an affiliate, except for 
any affiliate which engages only in activities which are permissible for bank 
holding companies, or (ii) purchase or invest in any stocks, bonds, debentures, 
notes or similar obligations of any affiliate, except for affiliates which are 
subsidiaries of the savings institution.

                                        23
<PAGE>
In addition, Sections 22(h) and (g) of the Federal Reserve Act place 
restrictions on loans to executive officers, directors and principal 
stockholders.  Under Section 22(h), loans to a director, an executive officer 
and to a greater than 10% stockholder of a savings institution, and certain 
affiliated interests of either, may not exceed, together with all other 
outstanding loans to such person and affiliated interests, the savings 
institution's loans to one borrower limit (generally equal to 15% of the 
institution's unimpaired capital and surplus).  Section 22(h) also requires 
that loans to directors, executive officers and principal stockholders be made 
on terms substantially the same as offered in comparable transactions to other 
persons and also requires prior board approval for certain loans.  In addition, 
the aggregate amount of extensions of credit by a savings institution to all 
insiders cannot exceed the institution's unimpaired capital and surplus.  
Furthermore, Section 22(g) places additional restrictions on loans to executive 
officers.  At September 30, 1997, First Federal was in compliance with the 
above restrictions.

Restrictions on Acquisitions.  Except under limited circumstances, savings and 
loan holding companies are prohibited from acquiring, without prior approval of 
the Director of the OTS, (i) control of any other savings institution or 
savings and loan holding company or substantially all the assets thereof or 
(ii) more than 5% of the voting shares of a savings institution or holding 
company thereof which is not a subsidiary.  Except with the prior approval of 
the Director of the OTS, no director or officer of a savings and loan holding 
company or person owning or controlling by proxy or otherwise more than 25% of 
such company's stock, may acquire control of any savings institution, other 
than a subsidiary savings institution, or of any other savings and loan holding 
company.

The Director of the OTS may only approve acquisitions resulting in the 
formation of a multiple savings and loan holding company which controls savings 
institutions in more than one state if (i) the multiple savings and loan 
holding company involved controls a savings institution which operated a home 
or branch office located in the state of the institution to be acquired as of 
March 5, 1987; (ii) the acquiror is authorized to acquire control of the 
savings institution pursuant to the emergency acquisition provisions of the 
Federal Deposit Insurance Act ("FDIA"); or (iii) the statutes of the state in 
which the institution to be acquired is located specifically permit 
institutions to be acquired by the state-chartered institutions or savings and 
loan holding companies located in the state where the acquiring entity is 
located (or by a holding company that controls such state-chartered savings 
institutions).

FIRREA amended provisions of the Bank Holding Company Act of 1956 to 
specifically authorize the FRB to approve an application by a bank holding 
company to acquire control of a savings institution.  FIRREA also authorized a 
bank holding company that controls a savings institution to merge or 
consolidate the assets and liabilities of the savings institution with, or 
transfer assets and liabilities to, any subsidiary bank which is a member of 
the Bank Insurance Fund ("BIF") with the approval of the appropriate federal 
banking agency and the FRB.  As a result of these provisions, there have been a 
number of acquisitions of savings institutions by bank holding companies in 
recent years.

                                        24
<PAGE>
The Association

General.  The OTS has extensive authority over the operations of federally 
chartered savings institutions.  As part of this authority, savings 
institutions are required to file periodic reports with the OTS and are subject 
to periodic examinations by the OTS and the FDIC.  The investment and lending 
authority of savings institutions are prescribed by federal laws and 
regulations, and such institutions are prohibited from engaging in any 
activities not permitted by such laws and regulations.  Those laws and 
regulations generally are applicable to all federally chartered savings 
institutions and may also apply to state-chartered savings institutions.  Such 
regulation and supervision is primarily intended for the protection of 
depositors.

The OTS' enforcement authority over all savings institutions and their holding 
companies was substantially enhanced by FIRREA.  This enforcement authority 
includes, among other things, the ability to assess civil money penalties, to 
issue cease and desist or removal orders and to initiate injunctive actions.  
In general, these enforcement actions may be initiated for violations of laws 
and regulations and unsafe or unsound practices.  Other actions or inactions 
may provide the basis for enforcement action, including misleading or untimely 
reports filed with the OTS.  FIRREA significantly increased the amount of and 
grounds for civil money penalties.

On December 19, 1991, the Federal Deposit Insurance Corporation Improvement Act 
of 1991 ("FDICIA") was enacted into law.  The FDICIA provides for, among other 
things, the recapitalization of the BIF, the authorization of the FDIC to make 
emergency special assessments under certain circumstances against BIF members 
and members of the Savings Association Insurance Fund ("SAIF"), the 
establishment of risk-based deposit insurance premiums, and improved 
examinations and reporting requirements.  The FDICIA also provides for enhanced 
federal supervision of depository institutions based on, among other things, an 
institution's capital level.

Insurance of Accounts.  The deposits of First Federal are insured to the 
maximum extent permitted by the SAIF, which is administered by the FDIC, and  
are backed by the full faith and credit of the U.S. Government.  As insurer, 
the FDIC is authorized to conduct examinations of, and to require reporting by, 
FDIC-insured institutions.  It also may prohibit any FDIC-insured institution 
from engaging in any activity the FDIC determines by regulation or order to 
pose a serious threat to the FDIC.  The FDIC also has the authority to initiate 
enforcement actions against savings institutions, after giving the OTS an 
opportunity to take such action.

On September 30, 1996, the Omnibus Appropriations Act was signed into law.  The 
legislation authorized a one-time charge of SAIF insured institutions at a rate 
of 65.7 basis points per $100.00 of March 31, 1995 deposits.  As a result, 
First Federal's assessment amounted to $834,839.  Additional provisions of the 
Act include new BIF and SAIF premiums and the merger of BIF and SAIF.  The new 
BIF and SAIF premiums will include a premium for repayment of the Financing 
Corporation ("FICO") bonds plus any regular insurance assessment.  Until full 
pro-rata FICO sharing is in effect, the FICO premiums for BIF and SAIF will be 
1.3 and 6.4 basis points, respectively, beginning January 1, 1997.  Full pro-
rata FICO sharing is to begin no later than January 1, 2000.  BIF and SAIF are 
to be merged on January 1, 1999, provided the bank and savings association 
charters are merged by that date.

                                        25
<PAGE>
Under the current risk classification system, institutions are assigned to one 
of three capital groups which are based solely on the level of an institution's 
capital--"well capitalized", "adequately capitalized" and "undercapitalized"--
which are defined in the same manner as the regulations establishing the prompt 
corrective action system under Section 38 of the FDIA, as discussed below.  
These three groups are then divided into three subgroups which reflect varying 
levels of supervisory concern, from those which are considered to be healthy to 
those which are considered to be of substantial supervisory concern.  The 
matrix so created results in nine assessment risk classifications, with rates 
ranging from zero basis points for well capitalized, healthy institutions to 27 
basis points for under capitalized institutions with substantial supervisory 
concerns.

The FDIC may terminate the deposit insurance of any insured depository 
institution, including First Federal, if it determines after a hearing that the 
institution has engaged or is engaging in unsafe or unsound practices, is in an 
unsafe or unsound condition to continue operations, or has violated any 
applicable law, regulation, order or any condition imposed by an agreement with 
the FDIC.  It also may suspend deposit insurance temporarily during the hearing 
process for the permanent termination of insurance, if the institution has no 
tangible capital.  If insurance of accounts is terminated, the accounts at the 
institution at the time of the termination, less subsequent withdrawals, 
continue to be insured for a period of six months to two years, as determined 
by the FDIC.  Management is aware of no existing circumstances which would 
result in termination of the Association's deposit insurance.

Regulatory Capital Requirements.  Federally insured savings institutions are 
required to maintain minimum levels of regulatory capital.  Pursuant to FIRREA, 
the OTS has established capital standards applicable to all savings 
institutions.  These standards generally must be as stringent as the comparable 
capital requirements imposed on national banks.  The OTS also is authorized to 
impose capital requirements in excess of these standards on individual 
institutions on a case-by-case basis.

Current OTS capital standards require savings institutions to satisfy three 
different capital requirements.  Under these standards, savings institutions 
must maintain "tangible" capital equal to at least 1.5% of adjusted total 
assets, "core" capital equal to at least 3.0% of adjusted total assets and 
"total" capital (a combination of core and "supplementary" capital) equal to at 
least 8.0% of "risk-weighted" assets.  For purposes of the regulation, core 
capital generally consists of common stockholders' equity (including retained 
earnings), noncumulative perpetual preferred stock and related surplus, 
minority interests in the equity accounts of fully consolidated subsidiaries, 
certain nonwithdrawable accounts and pledged deposits and "qualifying 
supervisory goodwill."  Tangible capital is given the same definition as core 
capital but does not include qualifying supervisory goodwill and is reduced by 
the amount of all the savings institution's intangible assets, with only a 
limited exception for purchased mortgage servicing rights.  Both core and 
tangible capital are further reduced by an amount equal to a savings 
institution's debt and equity investments in subsidiaries engaged in 
activities not permissible to national banks (other than subsidiaries engaged 
in activities undertaken as agent for customers or in mortgage banking 
activities and subsidiary depository institutions or their holding companies).  
At September 30, 1997, the Association had no goodwill or other intangible 
assets and had no subsidiaries engaged in impermissible activities.

                                        26
<PAGE>
In determining compliance with the risk-based capital requirement, a savings 
institution is allowed to include both core capital and supplementary capital 
in its total capital, provided that the amount of supplementary capital 
included does not exceed the savings institution's core capital.  Supplementary 
capital generally consists of hybrid capital instruments; perpetual preferred 
stock which is not eligible to be included as core capital; subordinated debt 
and intermediate-term preferred stock; and general allowances for loan losses 
up to a maximum of 1.25% of risk-weighted assets.  In determining the required 
amount of risk-based capital, total assets, including certain off-balance sheet 
items, are multiplied by a risk weight based on the risks inherent in the type 
of assets.  The risk weights assigned by the OTS for principal categories of 
assets are (i) 0% for cash and securities issued by the U.S. Government or 
unconditionally backed by the full faith and credit of the U.S. Government; 
(ii) 20% for securities (other than equity securities) issued by U.S. 
Government-sponsored agencies and mortgage-backed securities issued by, or 
fully guaranteed as to principal and interest by, the FNMA or the FHLMC, except 
for those classes with residual characteristics or stripped mortgage-related 
securities; (iii) 50% for prudently underwritten permanent one-to-four family 
first lien mortgage loans not more than 90 days delinquent and having a loan-to-
value ratio of not more than 80% at origination unless insured to such ratio by 
an insurer approved by the FNMA or the FHLMC, qualifying residential bridge 
loans made directly for the construction of one-to-four family residences and 
qualifying multi-family residential loans; and (iv) 100% for all other loans 
and investments, including consumer loans, commercial loans, and one-to-four 
family residential real estate loans more than 90 days delinquent, and for 
repossessed assets.

In August 1993, the OTS adopted a final rule incorporating an interest-rate 
risk component into the risk-based capital regulation.  Under the rule, an 
institution with a greater than "normal" level of interest rate risk will be 
subject to a deduction of its interest rate risk component from total capital 
for purposes of calculating its risk-based capital.  As a result, such an 
institution will be required to maintain additional capital in order to comply 
with the risk-based capital requirement.  An institution with a greater than 
"normal" interest rate risk is defined as an institution that would suffer a 
loss of net portfolio value exceeding 2.0% of the estimated economic value of 
its assets in the event of a 200 basis point increase or decrease (with certain 
minor exceptions) in interest rates.  The interest rate risk component will be 
calculated, on a quarterly basis, as one-half of the difference between an 
institution's measured interest rate risk and 2.0% multiplied by the economic 
value of its assets.  The rule also authorizes the Director of the OTS, or his 
designee, to waive or defer an institution's interest rate risk component on a 
case-by-case basis.  The final rule was originally effective as of January 1, 
1994, subject however to a two quarter "lag" time between the reporting date of 
the data used to calculate an institution's interest rate risk and the 
effective date of each quarter's interest rate risk component.  However, in 
October 1994 the Director of the OTS indicated that it would waive the capital 
deductions for institutions with a greater than "normal" risk until the OTS 
publishes an appeals process.  On August 21, 1995, the OTS released Thrift 
Bulletin 67 which established (i) an appeals process to handle "requests for 
adjustments" to the interest rate risk component and (ii) a process by which 
"well-capitalized" institutions may obtain authorization to use their own 
interest rate risk model to determine their interest rate risk component.  The 
Director of the OTS indicated, concurrent with the release of Thrift Bulletin 
67, that the OTS will continue to delay the implementation of the capital 
deduction for interest rate risk pending the testing of the appeals process set 
forth in Thrift Bulletin 67.

                                        27
<PAGE>
At September 30, 1997, First Federal exceeded all of its regulatory capital 
requirements, with tangible, core and risk-based capital ratios of 15.3%, 15.3% 
and 25.8%, respectively.

The following table sets forth First Federal's compliance with each of the 
above-described capital requirements as of September 30, 1997.

                                         Tangible        Core       Risk-Based
         (Dollars in Thousands)           Capital       Capital       Capital 
                                        __________    __________    __________
GAAP capital............................  $27,380       $27,380      $ 27,380 
Adjustments to capital:
   Non-allowable assets.................       --            --          (320)
   Unrealized gain on securities........      (81)          (81)          (81)
   Allowable allowance for loan losses..       --            --         1,076 

                                           ______        ______        ______ 
Regulatory capital......................   27,299        27,299        28,055 
Minimum required regulatory capital.....    2,679         5,358         8,693 
                                           ______        ______        ______ 
Excess regulatory capital...............  $24,620       $21,941      $ 19,362 
                                           ======        ======        ====== 

Total adjusted assets................... $178,587      $178,587     $ 108,657 
                                          =======       =======       ======= 

Regulatory capital ratio................    15.29%        15.29%        25.82%

Minimum required capital ratio..........     1.50%         3.00%         8.00%

Excess regulatory capital ratio.........    13.79%        12.29%        17.82%


Prompt Corrective Action.  Under the FDIA, each federal banking agency is 
required to implement a system of prompt corrective action for institutions 
which it regulates.  The federal banking agencies, including the OTS, have 
adopted substantially similar regulations, which became effective December 19, 
1992.  Under the regulations, an institution shall be deemed to be (i) "well 
capitalized" if it has total risk-based capital of 10.0% or more, has a Tier I 
risk-based capital ratio of 6.0% or more, has a Tier I leverage capital ratio 
of 5.0% or more and is not subject to any order or final capital directive to 
meet and maintain a specific capital level for any capital measure, (ii) 
"adequately capitalized" if it has a total risk-based capital ratio of 8.0% or 
more, a Tier I risk-based capital ratio of 4.0% or more and a Tier I leverage 
capital ratio of 4.0% or more (3.0% under certain circumstances) and does not 
meet the definition of "well capitalized", (iii) "undercapitalized" if it has a 
total risk-based capital ratio that is less than 8.0%, a Tier I risk-based 
capital ratio that is less than 4.0% or a Tier I leverage capital ratio that is 
less than 4.0% (3.0% under certain circumstances), (iv) "significantly 
undercapitalized" if it has a total risk-based capital ratio that is less than 
6.0%, a Tier I risk-based capital ratio that is less than 3.0% or a Tier I 
leverage capital ratio that is less than 3.0%, and (v) "critically 
undercapitalized" if it has a ratio of tangible equity to total assets that is 
equal to or less than 2.0%.  The FDIA and the regulations promulgated 
thereunder also specify circumstances under which a federal banking agency may 
reclassify a well capitalized institution as adequately capitalized and may 
require an adequately capitalized institution or an undercapitalized 
institution to comply with supervisory actions as if it were in the next lower 
category (except that the FDIC may not reclassify a significantly 
undercapitalized institution as critically undercapitalized).  At September 30, 
1997, the Association was in the "well capitalized" category.

                                        28
<PAGE>
Liquidity Requirements.  All savings institutions are required to maintain an 
average daily balance of liquid assets equal to a certain percentage of the sum 
of its average daily balance of net withdrawable deposit accounts and 
borrowings payable in one year or less.  The liquidity requirement may vary 
from time to time (between 4% and 10%) depending upon economic conditions and 
savings flows of all savings institutions.   At the present time, the required 
minimum liquid asset ratio is 5%.  At September 30, 1997, First Federal's 
liquidity ratio was 12.15%.

Capital Distributions.  OTS regulations govern capital distributions by savings 
institutions, which include cash dividends, stock redemptions or repurchases, 
cash-out mergers, interest payments on certain convertible debt and other 
transactions charged to the capital account of a savings institution to make 
capital distributions.  Generally, the regulation creates a safe harbor for 
specified levels of capital distributions from institutions meeting at least 
their minimum capital requirements, so long as such institutions notify the OTS 
and receive no objection to the distribution from the OTS.  Savings 
institutions that do not qualify for the safe harbor are required to obtain 
prior OTS approval before making any capital distributions.

Generally, a savings institution that before and after the proposed 
distribution meets or exceeds its fully phased-in capital requirements (Tier 1 
institutions) may make capital distributions during any calendar year equal to 
the higher of (i) 100% of net income for the calendar year-to-date plus 50% of 
its "surplus capital ratio" at the beginning of the calendar year or (ii) 75% 
of net income over the most recent four-quarter period.  The "surplus capital 
ratio" is defined to mean the percentage by which the institution's ratio of 
total capital to assets exceeds the ratio of its fully phased-in capital 
requirement to assets.  "Fully phased-in capital requirement" is defined to 
mean an institution's capital requirement under the statutory and regulatory 
standards to be applicable on December 31, 1994, as modified to reflect any 
applicable individual minimum capital requirement imposed upon the 
institution.  Failure to meet fully phased-in or minimum capital requirements 
will result in further restrictions on capital distributions, including 
possible prohibition without explicit OTS approval.  See "Regulatory Capital 
Requirements."

Tier 2 institutions, which are institutions that before and after the proposed 
distribution meet or exceed their minimum capital requirements, may make 
capital distributions up to a specified percentage of their net income during 
the most recent four quarter period, depending on how close the institution is 
to meeting its fully phased-in capital requirements.  Tier 2 institutions that 
meet the capital requirements in effect on January 1, 1993 (including the 8% 
risk-based requirement and then-applicable exclusions on non-permissible 
subsidiary investments and goodwill) are permitted to make distributions 
totaling up to 75% of their net income over the most recent four quarter 
period.  

In order to make distributions under these safe harbors, Tier 1 and Tier 2 
institutions must submit 30 days written notice to the OTS prior to making the 
distribution.  The OTS may object to the distribution during that 30-day period 
based on safety and soundness concerns.  In addition, a Tier 1 institution 
deemed to be in need of more than normal supervision by the OTS may be 
downgraded to a Tier 2 or Tier 3 institution as a result of such a 
determination.

                                        29
<PAGE>
Tier 3 institutions, which are institutions that do not meet current minimum 
capital requirements, or that have capital in excess of either their fully 
phased-in capital requirement or minimum capital requirement but which have 
been notified by the OTS that it will be treated as a Tier 3 institution 
because they are in need of more than normal supervision, cannot make any 
capital distribution without obtaining OTS approval prior to making such 
distributions.

At September 30, 1997, First Federal was a Tier 1 institution for purposes of 
this regulation.

On December 5, 1994, the OTS published a notice of proposed rulemaking to amend 
its capital distribution regulation.  Under the proposal, institutions would be 
permitted to only make capital distributions that would not result in their 
capital being reduced below the level required to remain "adequately 
capitalized."  An institution is adequately capitalized if it has a total 
risked-based capital ratio of 8.0% or more, a Tier 1 risk-based capital ratio 
of 4.0% or more and a Tier 1 leverage capital ratio of 4.0% or more and does 
not meet the definition of well capitalized.  Because the Association is a 
subsidiary of a holding company, the proposal would require the Association to 
provide notice to the OTS of its intent to make a capital distribution.  The 
Association does not believe that its ability to make capital distributions 
will be adversely affected.

Community Reinvestment.  Under the Community Reinvestment Act of 1977, as 
amended ("CRA"), as implemented by OTS regulations, a savings institution has a 
continuing and affirmative obligation consistent with its safe and sound 
operation to help meet the credit needs of its entire community, including low 
and moderate income neighborhoods.  The CRA does not establish specific lending 
requirements or programs for financial institutions nor does it limit an 
institution's discretion to develop the types of products and services that it 
believes are best suited to its particular community, consistent with the CRA.  
The CRA requires the OTS, in connection with its examination of a savings 
institution, to assess the institution's record of meeting the credit needs of 
its community and to take such record into account in its evaluation of certain 
applications by such institution.  FIRREA amended the CRA to require public 
disclosure of an institution's CRA rating and require the OTS to provide a 
written evaluation of an institution's CRA performance utilizing a rating 
system which identifies four levels of performance that may describe an 
institution's record of meeting community needs: outstanding, satisfactory, 
needs to improve and substantial noncompliance.  The CRA also requires all 
institutions to make public disclosure of their CRA ratings.

Qualified Thrift Lender Test.  All savings institutions are required to meet a 
QTL test set forth in Section 10(m) of the HOLA and regulations of the OTS 
thereunder to avoid certain restrictions on their operations.  A savings 
institution that does not meet the QTL test set forth in the HOLA and 
implementing regulations must either convert to a bank charter or comply with 
the following restrictions on its operations: (i) the institution may not 
engage in any new activity or make any new investment, directly or indirectly, 
unless such activity or investment is permissible for a national bank; (ii) the 
branching powers of the institution shall be restricted to those of a national 
bank; (iii) the institution shall not be eligible to obtain any advances from 
its FHLB; and (iv) payment of dividends by the institution shall be subject to 
the rules regarding payment of dividends by a national bank.  Upon the 
expiration of three years from the date the savings institution ceases to be a 
QTL, it must cease any activity and not retain any investment not permissible 
for a national bank and immediately repay any outstanding FHLB advances 
(subject to safety and soundness considerations).

                                        30
<PAGE>
Currently, the QTL test requires that 65% of an institution's "portfolio 
assets" (as defined) consist of certain housing and consumer-related assets on 
a monthly average basis in nine out of every 12 months.  Assets that qualify 
without limit for inclusion as part of the 65% requirement are loans made to 
purchase, refinance, construct, improve or repair domestic residential housing 
and manufactured housing; home equity loans; mortgage-backed securities (where 
the mortgages are secured by domestic residential housing or manufactured 
housing); stock issued by the FHLB of Dallas; and direct or indirect 
obligations of the FDIC.  In addition, the following assets, among others, may 
be included in meeting the test subject to an overall limit of 20% of the 
savings institution's portfolio assets: 50% of residential mortgage loans 
originated and sold within 90 days of origination; 100% of consumer and 
educational loans (limited to 10% of total portfolio assets); and stock issued 
by the FHLMC or the FNMA.  Portfolio assets consist of total assets minus the 
sum of (i) goodwill and other intangible assets, (ii) property used by the 
savings institution to conduct its business, and (iii) liquid assets up to 20% 
of the institution's total assets.  At September 30, 1997, the qualified thrift 
investments of First Federal were approximately 82% of its portfolio assets.

Branching by Federal Savings Institutions.  OTS policy permits interstate 
branching to the full extent permitted by statute (which is essentially 
unlimited).  Generally, federal law prohibits federal savings institutions from 
establishing, retaining or operating a branch outside the state in which the 
federal institution has its home office unless the institution meets the IRS 
domestic building and loan test (generally, 60% of a thrift's assets must be 
housing-related) ("IRS Test").  The IRS Test requirement does not apply if, 
among other things, the law of the state where the branch would be located 
would permit the branch to be established if the federal savings institution 
were chartered by the state in which its home office is located.  Furthermore, 
the OTS will evaluate a branching applicant's regulatory capital and record of 
compliance with the Community Reinvestment Act of 1977.  An unsatisfactory CRA 
record may be the basis for denial of a branching application.

Accounting Requirements.  FIRREA requires the OTS to establish accounting 
standards to be applicable to all savings institutions for purposes of 
complying with regulations, except to the extent otherwise specified in the 
capital standards.  Such standards must incorporate GAAP to the same degree as 
is prescribed by the federal banking agencies for banks or may be more 
stringent than such requirements.

The accounting principles for depository institutions are currently undergoing 
review to determine whether the historical cost model or market-based measure 
of valuation is the appropriate measure for reporting the assets of such 
institutions in their financial statements.  Such proposal is controversial 
because any change in applicable accounting principles which requires 
depository institutions to carry mortgage-backed securities and mortgage loans 
at fair market value could result in substantial losses to such institutions 
and increased volatility in their liquidity and operations.  Currently, it 
cannot be predicted whether there may be any changes in the accounting 
principles for depository institutions in this regard beyond those imposed by 
SFAS No. 115 or when any such changes might become effective.

                                        31
<PAGE>
Federal Home Loan Bank System.  First Federal is a member of the FHLB of 
Dallas, which is one of 12 regional FHLBs that administers the home financing 
credit function of savings institutions.  Each FHLB serves as a reserve or 
central bank for its members within its assigned region.  It is funded 
primarily from proceeds derived from the sale of consolidated obligations of 
the FHLB System.  It makes loans to members (i.e., advances) in accordance with 
policies and procedures established by the Board of Directors of the FHLB.  At 
September 30, 1997, the Association had $5.0 million in advances from the FHLB 
of Dallas.

As a member, First Federal is required to purchase and maintain stock in the 
FHLB of Dallas in an amount equal to at least 1% of its aggregate unpaid 
residential mortgage loans, home purchase contracts or similar obligations at 
the beginning of each year.  At September 30, 1997, First Federal had $1.1 
million in FHLB stock, which was in compliance with this requirement.

As a result of FIRREA, the FHLBs are required to provide funds for the 
resolution of troubled savings institutions and to contribute to affordable 
housing programs through direct loans or interest subsidies on advances 
targeted for community investment and low and moderate income housing projects.

Federal Reserve System.  The FRB requires all depository institutions to 
maintain reserves against their transaction accounts (primarily NOW and Super 
NOW checking accounts) and non-personal time deposits.  As of September 30, 
1997, no reserves were required to be maintained on the first $4.4 million of 
transaction accounts, reserves of 3% were required to be maintained against the 
next $44.9 million of net transaction accounts (with such dollar amounts 
subject to adjustment by the FRB), and a reserve of 10% against all remaining 
net transaction accounts.  Because required reserves must be maintained in the 
form of vault cash or a noninterest-bearing account at a Federal Reserve Bank, 
the effect of this reserve requirement is to reduce an institution's earning 
assets.


                                    TAXATION

Federal Taxation

General.  The Company and First Federal are subject to the generally applicable 
corporate tax provisions of the Code, and First Federal is subject to certain 
additional provisions of the Code which apply to thrift and other types of 
financial institutions.  The following discussion of federal taxation is 
intended only to summarize certain pertinent federal income tax matters and is 
not a comprehensive discussion of the tax rules applicable to the Company and 
First Federal.

Tax Year.  The Company and the Association file consolidated federal income tax 
returns on the basis of a fiscal year ending on September 30.  

                                        32
<PAGE>
Bad Debt Reserves.  Savings institutions, such as First Federal, which meet 
certain definitional tests primarily relating to their assets and the nature of 
their businesses, are permitted to establish a reserve for bad debts and to 
make annual additions to the reserve.  These additions may, within specified 
formula limits, be deducted in arriving at the institution's taxable income.  
For purposes of computing the deductible addition to its bad debt reserve, the 
institution's loans are separated into "qualifying real property loans" (i.e., 
generally those loans secured by certain interests in real property) and all 
other loans ("non-qualifying loans").  The deduction with respect to non-
qualifying loans must be computed under the experience method as described 
below.  The following formulas may be used to compute the bad debt deduction 
with respect to qualifying real property loans:  (i) actual loss experience, or 
(ii) a percentage of taxable income.  Reasonable additions to the reserve for 
losses on non-qualifying loans must be based upon actual loss experience and 
would reduce the current year's addition to the reserve for losses on 
qualifying real property loans, unless that addition is also determined under 
the experience method.  The sum of the additions to each reserve for each year 
is the institution's annual bad debt deduction.

Under the experience method, the deductible annual addition to the 
institution's bad debt reserves is the amount necessary to increase the balance 
of the reserve at the close of the taxable year to the greater of (a) the 
amount which bears the same ratio to loans outstanding at the close of the 
taxable year as the total net bad debts sustained during the current and five 
preceding taxable years bear to the sum of the loans outstanding at the close 
of the six years, or (b) the lower of (i) the balance of the reserve account at 
the close of the Association's "base year," which was its tax year ended 
September 30, 1988, or (ii) if the amount of loans outstanding at the close of 
the taxable year is less than the amount of loans outstanding at the close of 
the base year, the amount which bears the same ratio to loans outstanding at 
the close of the taxable year as the balance of the reserve at the close of the 
base year bears to the amount of loans outstanding at the close of the base 
year.

Under the percentage of taxable income method, the bad debt deduction equals 8% 
of taxable income determined without regard to that deduction and with certain 
adjustments.  The availability of the percentage of taxable income method 
permits a qualifying savings institution to be taxed at a lower effective 
federal income tax rate than that applicable to corporations in general.  This 
resulted generally in an effective federal income tax rate payable by a 
qualifying savings institution fully able to use the maximum deduction 
permitted under the percentage of taxable income method, in the absence of 
other factors affecting taxable income, of 31.3% exclusive of any minimum tax 
or environmental tax (as compared to 34% for corporations generally).  For tax 
years beginning on or after January 1, 1993, the maximum corporate tax rate was 
increased to 35%, which increased the maximum effective federal income tax rate 
payable by a qualifying savings institution fully able to use the maximum 
deduction to 32.2%.  Any savings institution at least 60% of whose assets are 
qualifying assets, as described in the Code, will generally be eligible for the 
full deduction of 8% of taxable income.  As of September 30, 1997, 
approximately 82% of the assets of First Federal were "qualifying assets" as 
defined in the Code.

Under the percentage of taxable income method, the bad debt deduction for an 
addition to the reserve for qualifying real property loans cannot exceed the 
amount necessary to increase the balance in this reserve to an amount equal to 
6% of such loans outstanding at the end of the taxable year.  The bad debt 
deduction is also limited to the amount which, when added to the addition to 
the reserve for losses on non-qualifying loans, equals the amount by which 12% 
of deposits at the close of the year exceeds the sum of surplus, undivided 
profits and reserves at the beginning of the year.  In addition, the deduction 
for qualifying real property loans is reduced by an amount equal to all or part 
of the deduction for non-qualifying loans.

                                        33
<PAGE>
In August 1996, the Small Business Job Protection Act was signed into law.  
This Act repealed the percentage method of computing the bad debt deduction for 
tax years beginning after December 31, 1995.  If certain conditions apply, the 
Company would have to include in income previous bad debt deductions.  For 
federal tax purposes the conditions do not apply, and so long as the 
Association continues to qualify as a thrift or a bank no repayment of the tax 
on prior bad debt deductions will be required.  Should the Association fail to 
qualify as a thrift or bank the tax would have to be repaid ratably over a six 
year period.  The Association is currently in no jeopardy of failing to qualify 
as a thrift or bank.

First Federal used the experience method for the period ended September 30, 
1997 and used the percentage method for the periods ended September 30, 1996 
and 1995.

Distributions.  If First Federal were to distribute cash or property to its 
sole stockholder, and the distribution was treated as being from its 
accumulated bad debt reserves, the distribution would cause First Federal to 
have additional taxable income.  A distribution is deemed to have been made 
from accumulated bad debt reserves to the extent that (a) the reserves exceed 
the amount that would have been accumulated on the basis of actual loss 
experience, and (b) the distribution is a "non-qualified distribution."  A 
distribution with respect to stock is a non-qualified distribution to the 
extent that, for federal income tax purposes, (i) it is in redemption of 
shares, (ii) it is pursuant to a liquidation of the institution, or (iii) in 
the case of a current distribution, together with all other such distributions 
during the taxable year, it exceeds the institution's current and post-1951 
accumulated earnings and profits.  The amount of additional taxable income 
created by a non-qualified distribution is an amount that when reduced by the 
tax attributable to it is equal to the amount of the distribution.

Minimum Tax.  The Code imposes an alternative minimum tax at a rate of 20%.  
The alternative minimum tax generally applies to a base of regular taxable 
income plus certain tax preferences ("alternative minimum taxable income" or 
"AMTI") and is payable to the extent such AMTI is in excess of an exemption 
amount.  The Code provides that an item of tax preference is the excess of the 
bad debt deduction allowable for a taxable year pursuant to the percentage of 
taxable income method over the amount allowable under the experience method.  
Other items of tax preference that constitute AMTI include (a) tax-exempt 
interest on newly issued (generally, issued on or after August 8, 1986) private 
activity bonds other than certain qualified bonds and (b) 75% of the excess (if 
any) of (i) adjusted current earnings as defined in the Code, over (ii) AMTI 
(determined without regard to this preference and prior to reduction by net 
operating losses).

Net Operating Loss Carryovers.  Prior to the 1997 Tax Law, a corporation could 
carry back net operating losses ("NOLs") to the preceding three taxable years 
and forward to the succeeding 15 taxable years, applicable to losses incurred 
in taxable years beginning after 1986.  The 1997 Tax Law reduced the carryback 
period from three years to two years and increased the carryforward period from 
15 years to 20 years, effective for NOLs for taxable years beginning after July 
1997.  At September 30, 1997, the Company and First Federal had no NOL 
carryforwards for federal income tax purposes.

                                        34
<PAGE>
Capital Gains and Corporate Dividends-Received Deduction.  Corporate net 
capital gains are taxed at a maximum rate of 34%.  The corporate dividends-
received deduction is 80% in the case of dividends received from corporations 
with which a corporate recipient does not file a consolidated tax return, and 
corporations which own less than 20% of the stock of a corporation distributing 
a dividend may deduct only 70% of dividends received or accrued on their 
behalf.  However, a corporation may deduct 100% of dividends from a member of 
the same affiliated group of corporations.

Other Matters.  Federal legislation is introduced from time to time that would 
limit the ability of individuals to deduct interest paid on mortgage loans.  
Individuals are currently not permitted to deduct interest on consumer loans.  
Significant increases in tax rates or further restrictions on the deductibility 
of mortgage interest could adversely affect First Federal.

First Federal's federal income tax returns for the tax years ended September 
30, 1994 forward are open under the statute of limitations and are subject to 
review by the IRS.

State Taxation

The Association is subject to Arkansas corporation income tax which includes a 
graduated rate schedule with the highest rate of 6.5% of earnings in excess of 
$100,000.

The state of Arkansas repealed the percentage method of computing the bad debt 
deduction for years beginning after January 1, 1997.  As a result, the Company 
will have to repay tax on approximately $1.5 million of bad debt deductions 
ratably over a six year period for state tax purposes.  The Company has made 
provision in the amount of $89,000 for this tax in the current and prior 
financial statements and expects this repayment to have no further effect on 
income.

The Company is incorporated under Texas law and, accordingly, is subject to 
Texas franchise tax in an amount equal to the greater of .25% of stockholders' 
equity or 4.5% of net income.

                                        35
<PAGE>
Item 2. Properties.

The Association conducts its business from its executive office in Texarkana, 
Arkansas, and four full-service offices, all of which are located in Southwest 
Arkansas.  The following table sets forth the net book value (including 
leasehold improvements and equipment) and certain other information with 
respect to the offices and other properties at September 30, 1997.

                               Leased/       Net Book Value      Amount of
                                Owned         of Property        Deposits
_________________________   ______________   ______________   ______________
                                                  (Dollars In Thousands)

Third & Olive Streets           Owned            $1,270          $97,544
Texarkana, Arkansas

611 East Wood Street            Owned                80           11,252
Ashdown, Arkansas

6th & S. Main                   Owned               127           13,890
Hope, Arkansas

1011 W. Collin Raye Drive       Owned               594           17,876
DeQueen, Arkansas

111 W. Shepherd                Leased(1)             --            2,645
Nashville, Arkansas

Richmond Road                   Owned(2)            311               --
Texarkana, Texas



____________________

(1)  Property is leased on a month to month basis.

(2)  Future building site.  Construction of a full-service branch office is 
     scheduled for fiscal year 1998.



Item 3.  Legal Proceedings.

The Company is not involved in any pending legal proceedings other than 
nonmaterial legal proceedings occurring in the ordinary course of business.



Item 4.  Submission of Matters to Vote of Security Holders.

None submitted during the fourth quarter of the fiscal year.

                                        36
<PAGE>
PART II.


Item 5. Market for Company's Common Equity and Related Stockholder Matters.

Shares of Texarkana First Financial Corporation's common stock are traded under 
the name Texarkana, symbol "FTF", on the American Stock Exchange.  At September 
30, 1997, the Company had approximately 436 stockholders of record.

Cash dividends declared and any additional information required herein, to the 
extent applicable, is incorporated by reference from pages 4 and 5 of the 
Company's 1997 Annual Report to Stockholders ("Annual Report").


Item 6. Selected Financial Data.

The information required herein is incorporated by reference from pages 4 and 5 
of the 1997 Annual Report.


Item 7. Management's Discussion and Analysis of Financial Condition and Results 
of Operations.

The information required herein is incorporated by reference from pages 6 to 17 
of the 1997 Annual Report.


Item 8. Financial Statements and Supplementary Data.

The information required herein is incorporated by reference from pages 18 to 
42 of the 1997 Annual Report.


Item 9. Changes in and Disagreements With Accountants on Accounting and 
Financial Disclosure.

None.

                                        37
<PAGE>
PART III.


Item 10. Directors and Executive Officers of the Company.

The information required herein is incorporated by reference from pages 2 and 3 
of the definitive proxy statement of the Company for the Annual Meeting of 
Stockholders to be held on January 27, 1998, which was filed on December 22, 
1997 ("Definitive Proxy Statement").


Item 11. Executive Compensation.

The information required herein is incorporated by reference from pages 7 to 9 
of the Definitive Proxy Statement.


Item 12. Security Ownership of Certain Beneficial Owners and Management.

The information required herein is incorporated by reference from pages 5 and 6 
of the Definitive Proxy Statement.


Item 13. Certain Relationships and Related Transactions.

The information required herein is incorporated by reference from page 10 of 
the Definitive Proxy Statement, and page 38 of the Annual Report, Note 18 in 
the Notes to the Consolidated Financial Statements

                                        38
<PAGE>
PART IV.


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

(a)  Documents Filed as Part of this Report

(1)  The following financial statements are incorporated by reference from Item 
     8 hereof (see Exhibit 13):

     Report of Independent Auditors
     Consolidated Statements of Financial Condition as of September 30, 1997 
       and 1996.
     Consolidated Statements of Income for the Fiscal Periods Ended September 
       30, 1997, 1996 and 1995
     Consolidated Statements of Changes in Shareholders' Equity for the Fiscal 
       Periods Ended September 30, 1997, 1996 and 1995.
     Consolidated Statements of Cash Flows for the Fiscal Periods ended 
       September 30, 1997, 1996 and 1995.
     Notes to Consolidated Financial Statements.

(2)  All schedules for which provision is made in the applicable accounting 
regulation of the Securities and Exchange Commission ("SEC") are omitted 
because of the absence of conditions under which they are required or because 
the required information is included in the consolidated financial statements 
and related notes thereto.

(3)  The following exhibits are filed as part of this Form 10-K, and this list 
includes the Exhibit index.

Exhibit Index                                                               Page

 2.1  Plan of Conversion                                                     *  
 3.1  Articles of Incorporation of Texarkana First Financial Corporation     *  
 3.2  Bylaws of Texarkana First Financial Corporation                        *  
 4.1  Stock Certificate of Texarkana First Financial Corporation             ** 
10.1  Employment Agreement among First Federal Savings and Loan 
        Association of Texarkana, Texarkana First Financial Corporation 
        and James W. McKinney                                                *  
10.2  Employment Agreement among First Federal Savings and Loan 
        Association of Texarkana, Texarkana First Financial Corporation 
        and John E. Harrison                                                 *  
10.3  1996 Key Employee Stock Compensation Program                           *  
10.4  1996 Management Recognition Plan for Officers                          *  
10.5  1996 Management Recognition Plan for Directors                         *  
10.6  1996 Directors' Stock Option Plan                                      *  
11.0  Earnings Per Share Computation                                         E-1
13.0  1997 Annual Report to Stockholders                                     ***

____________________

                                        39
<PAGE>
*   Incorporated herein by reference from the Corporation's Registration 
    Statement on Form S-1 (Registration No. 33-900834) filed by the Company 
    with the SEC on March 31, 1995, as subsequently amended.

**  Incorporated herein by reference from the Company's Form 10-K for the 
    year ended September 30, 1995.

*** Previously filed by EDGAR on December 22, 1997



(b)  Reports on Form 8-K.

None filed during the fourth quarter of the fiscal year.

(c)  See (a)(3) above for all exhibits and the Exhibit Index.

(d)  There are no other financial statements and financial statement schedules 
which were excluded from the 1997 Annual Report to Stockholders which are 
required to be included herein.

                                        40
<PAGE>
                                  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.


                                       TEXARKANA FIRST FINANCIAL CORPORATION


                                       By:  /s/ James W. McKinney           .
                                            James W. McKinney
                                            Chairman of the Board
                                             and Chief Executive Officer



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.


/s/ James W. McKinney                                       December 23, 1997
James W. McKinney
Chairman of the Board
 and Chief Executive Officer


/s/ John E. Harrison                                        December 23, 1997
John E. Harrison
President, Chief Operation Officer,
 and Director


/s/ John M. Andres                                          December 23, 1997
John M. Andres
Director


/s/ Arthur L. McElmurry                                     December 23, 1997
Arthur L. McElmurry
Director


/s/ Donald N. Morriss                                       December 23, 1997
Donald N. Morriss
Director


/s/ Josh R. Morriss, Jr.                                    December 23, 1997
Josh R. Morriss, Jr.
Director


/s/ James L. Sangalli                                       December 23, 1997
James L. Sangalli
Chief Financial Officer

                                        41
<PAGE>










                                 Exhibit 11.0

                        Earnings Per Share Computation





<PAGE>
Form 10-K
Exhibit 11
EARNINGS PER SHARE COMPUTATION


                                                 Years Ended September 30,
                                            __________________________________
                                               1997        1996      1995 (1) 
                                            __________  __________  __________

Net Income                                  $2,883,956  $2,401,180  $  733,000
                                             =========   =========   =========

Weighted average shares:
  Common shares outstanding                  1,686,598   1,832,272   1,844,928
  Common stock equivalents due to
    assumed exercise of stock options           33,472       1,514         -- 
                                             _________   _________   _________
      Common and common equivalent shares    1,720,070   1,833,786   1,844,928

  Additional common stock equivalents
    due to computation for full dilution        35,536      (1,292)        -- 
                                             _________   _________   _________
      Common shares assuming full dilution   1,755,606   1,832,494   1,844,928
                                             =========   =========   =========

Earnings per share:
  Basic                                          $1.71       $1.31       $ .40
  Primary                                         1.68        1.31         .40
  Fully diluted                                   1.64        1.31         .40

____________________

(1) For the year ended September 30, 1995, earnings per share is computed 
    for the period beginning July 7, 1995, the date of the initial public 
    offering.

                                        E-1
<PAGE>