U.S. SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549
                                   
                              FORM 10-QSB
                                   
              QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarter ended September 30, 1997        Commission file number 0-5559

                     FIRST FINANCIAL CORPORATION
     (Exact name of registrant as specified in its charter)


          Texas                             74-1502313
(State or other jurisdiction of          (I.R.S. Employer 
incorporation or organization)            Identification No.)


     800 Washington Avenue, Waco, Texas        76701
(Address of principal executive offices)     (Zip Code)


Registrant's telephone number, including area code (254) 757-2424

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes   ___X___          No _____.

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

  Common Stock, No Par Value              173,528            
        (Class)                    (Outstanding at November 15, 1997)


<PAGE>
                              FORM 10-QSB
                                   
                      FIRST FINANCIAL CORPORATION
                          SEPTEMBER 30, 1997
                                   
                                   
                                   
                                 INDEX


Part I Financial Information                      Page No.

     Item 1.   Financial Statements

               Consolidated Balance Sheet as of        1
               September 30, 1997

               Consolidated Statements of Income       2
               for the Three-Months and Nine-Months
               ended September 30, 1997 and 1996

               Consolidated Statements of Cash
               Flow for the Nine-Months
               ended September 30, 1997 and 1996       3

               Notes to Consolidated Financial
               Statements                              4-5

     Item 2.   Management's Discussion and Analysis
               of Results of Operations and Financial  5-7
               Condition


Part II Other Information

     Item 1.   Legal Proceedings                       7

     Item 6.   Exhibits and Reports on Form
               8-K                                     7



<PAGE>

                                            First Financial Corporation
                                            Consolidated Balance Sheet
                                                 September 30, 1997
                                                  (Unaudited)


                    Assets
                    ------
Cash and cash equivalents                                         $ 1,043,091
Restricted cash                                                       310,524
Accounts receivable                                                 1,298,824
Marketable investment securities                                      296,945
Real estate held for investment, at cost                              474,074
Mortgage loans                                                      2,278,569
Investment in and advances to
  affiliated companies                                                378,545
Property and equipment                                                751,451
Other assets                                                        1,114,126
                                                                  -----------
                Total Assets                                      $ 7,946,149
                                                                  ===========
   Liabilities and Stockholders' Equity
  --------------------------------------
Notes payable                                                               0
Estimated reserve for losses under servicing
  agreements                                                        1,002,816
Other liabilities                                                   1,737,095
                                                                  -----------
                Total Liabilities                                   2,739,911
                                                                  -----------

Minority interest                                                   1,787,636
                                                                  -----------

Stockholders' equity:
  Common stock - no par value; authorized
    500,000 shares; issued 183,750 shares,
    of which 10,222 shares are held in
    treasury shares                                                     1,000
  Additonal paid-in capital                                           518,702
  Retained earnings                                                 2,934,209
                                                                  -----------
                                                                    3,453,911
  Less:Treasury stock - at cost                                       (35,309)
       Net unrealized loss on marketable
        investment securities                                               0
                                                                  -----------
                Total Stockholders' Equity                          3,418,602
                                                                  -----------
                Total Liabilities and Stockholders' Equity        $ 7,946,149
                                                                  ===========

See accompanying notes to consolidated financial statements.



                                  1

<PAGE>
<TABLE>

                                                  First Financial Corporation
                                               Consolidated Statements of Income
                                      Three months and Nine months ended September 30,1997 and 1996
                                                         (Unaudited)

<CAPTION>
                                                              Three months ended                          Nine months ended
                                                                  September 30,                             September 30,
                                                          --------------------------------        --------------------------------
                                                              1997                1996                1997                1996
                                                           ----------          ----------          ----------          ----------
<S>                                                        <C>                 <C>                 <C>                 <C>
Revenues:
  Loan administration                                      $1,500,553          $1,062,055          $3,711,623          $2,811,142
  Interest income                                             358,219             383,227             924,842             942,888
  Other income                                                135,002             118,017             348,888             361,351
                                                           ----------          ----------          ----------          ----------
     Total Revenues                                         1,993,774           1,563,299           4,985,353           4,115,381
                                                           ----------          ----------          ----------          ----------

Expenses:
  Salaries and related expenses                             1,002,594             820,050           2,696,310           2,212,605
  Interest expense                                            250,348             265,884             557,177             617,540
  Provision for losses under servicing
    agreements                                                (59,214)           (121,000)           (246,500)           (385,000)
  Other operating expenses                                    663,838             535,858           1,700,935           1,547,276
                                                           ----------          ----------          ----------          ----------
     Total Expenses                                         1,857,566           1,500,792           4,707,922           3,992,421
                                                           ----------          ----------          ----------          ----------
     Income before income taxes,
      minority interest, equity in earnings
      (loss) of affiliates and extraordinary items            136,208              62,507             277,431             122,960

Federal income taxes                                                0                   0                   0                   0
                                                           ----------          ----------          ----------          ----------
     Income before minority interest                          136,208              62,507             277,431             122,960

Minority interest in net loss (income)                        (59,293)             11,945             (61,773)             63,271
                                                           ----------          ----------          ----------          ----------
     Income before equity in earnings (loss) of
      affiliates and extraordinary item                        76,915              74,452             215,658             186,231

Equity in earnings (loss) of affiliates                        15,741              32,526              44,548              32,069
                                                           ----------          ----------          ----------          ----------
     Income before extraorinary item                           92,656             106,978             260,206             218,300

Utilization of tax loss carryforward                                0                   0                   0                   0
                                                           ----------          ----------          ----------          ----------
     Net income                                            $   92,656          $  106,978          $  260,206          $  218,300
                                                           ==========          ==========          ==========          ==========
Income Per Common Share                                    $     0.46          $     0.53          $     1.30          $     1.09
                                                           ==========          ==========          ==========          ==========



See accompanying notes to consolidated financial statements.

</TABLE>



                                  2

<PAGE>
<TABLE>



                                    First Financial Corporation
                                 Consolidated Statement of Cash Flows
<CAPTION>

                                                                          (Unaudited)
                                                                       Nine Months Ended
                                                                          September 30,
                                                                    ----------------------------
                                                                      1997                1996
                                                                  -----------         -----------
<S>                                                              <C>                 <C>
Cash flows from operating activities:
   Net income (loss)                                             $     260,206       $     218,300
   Adjustments to reconcile net income(loss) to
    net cash used by operating activities:
   Depreciation                                                        108,503             143,162
   Provision for losses under servicing agreements                    (246,500)           (385,000)
   Equity in (income) loss of affiliates                               (42,817)            (32,526)
   Realized (gain) loss on marketable investment securities             (6,098)                  0
   Net (increase) decrease in accounts receivable                     (344,028)           (308,084)
   Net (increase) decrease in other assets                             (23,666)              3,943
   Net increase (decrease) in other liabilities                        145,677             (47,194)
   Increase in minority interest                                        61,773             (63,273)
   (Increase) decrease in restricted cash used
     in operating activities - net                                     100,000              16,606
   Increase in mortgage loans - net                                          0                   0
   Mortgage loans funded                                          (190,620,772)       (146,462,594)
   Mortgage loans sold                                             186,947,405         142,363,041
   Increase in mortgage loans participations sold                    3,377,896           4,086,694
   Other                                                              (114,962)              3,296
                                                                 --------------      --------------
        Net cash provided (used) for operating activities             (397,383)           (463,629)
                                                                 --------------      --------------

Cash flows from investing activities:
   Proceeds from sale of marketable investment securities                6,847                   0
   Purchases of marketable investment securities                             0                   0
   Purchase of property and equipment                                  (51,742)            (59,523)
   Principal collections on mortgage loans                             716,086             719,690
   Amortization of discount on mortgage loans purchased                (37,996)            (35,359)
   (Advances to) repayments from affiliates                             50,000              12,500
                                                                 --------------      --------------
        Net cash provided (used) for investing activities              683,195             637,308
                                                                 --------------      --------------
Cash flows from financing activities:
   Payment on notes payable                                                  0            (311,000)
                                                                 --------------      --------------
        Net cash used for financing activities                               0            (311,000)
                                                                 --------------      --------------

Net increase (decrease) in cash and cash equivalents                   285,812            (137,321)
Cash and cash equivalents at beginning of year                         757,279             755,691
                                                                 --------------      --------------
Cash and cash equivalents at end of period                       $   1,043,091       $     618,370
                                                                 =============       ==============
Supplemental Disclosure of Cash Flow Information
   Interest Paid                                                 $     541,810       $     612,996
                                                                 =============       ==============

See accompanying notes to consolidated financial statements.

</TABLE>

                                  3

<PAGE>

             FIRST FINANCIAL CORPORATION AND SUBSIDIARIES
                                   
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              (Unaudited)
1 - Basis of Presentation

The financial information included herein for First Financial
Corporation, and all of its wholly owned and majority owned
subsidiaries (the "Company") is unaudited; however, such unaudited
information reflects all adjustments which are, in management's
opinion, necessary for a fair presentation of the financial
position, results of operations and statement of cash flows for the
interim periods. Minority interest represents ownership of other
entities in the net assets and net earnings of Key Group, Ltd. ("Key
Group").

The results of operations and changes in cash flow for the nine-
month period ended September 30, 1997 are not necessarily indicative
of the results to be expected for the full year.

Certain reclassifications were made to prior periods to ensure
comparability with the current period.

2 - Earnings Per Share

Earnings per common share were computed by dividing net income by
the weighted average number of shares outstanding.

3 - Income Taxes

Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently
due plus deferred taxes related primarily to differences between the
basis of the loan loss reserve for financial and income tax
reporting.  The deferred tax assets and liabilities represent the
future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are
recovered or settled.  Deferred taxes also are recognized for
operating losses that are available to offset future taxable income
and tax credits that are available to offset future federal income
taxes.  The Company has approximately $5,800,000 in available net
operating loss carryforward benefits for financial statement
purposes to offset future income, if any.

4 - Contingencies

Substantially all of the conventional pools of manufactured
home loans serviced by the Company, approximately $3,800,000
at September 30, 1997, were sold to investors with recourse.
The recourse provisions typically require the Company to repurchase
delinquent loans at the unpaid balances plus accrued interest, or

                                  4

<PAGE>

replace delinquent loans with another loan which is current.  Further,
several of the agreements require the Company to establish and
maintain cash reserve accounts.  Deposits are periodically made to
the accounts equal to a specified percent of the outstanding loans.
The accounts may be used to cover deficiencies from foreclosure and
liquidation of delinquent pooled mortgage loans.  Such cash reserve
accounts totaled $10,524 and are included in restricted cash at
September 30, 1997.

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

Results of Operations

The Company had a net income of $260,206 for the nine months ended
September 30, 1997 compared to net income of $218,300  for the same
period in 1996.  Loan administration revenues were $3,711,623 for
the first nine months of 1997 compared to $2,811,142 for the same
period of 1996.  The increase in loan administration revenues is
primarily due to increased loan origination and service fees from
the Company's residential mortgage loan operations. During the nine
months ended September 30, 1997, originations of new residential
mortgage loans amounted to approximately $190.6 million compared to
approximately $146.5 million during the same period in 1996.

Interest income for the nine months ended September 30, 1997
amounted to $924,842 compared to $942,888 for the same period in
1996.  During the nine months ended September 30, 1997, the interest
income earned by the Company on investments declined by
approximately $55,000 or 18%. This decline is primarily due to the
decline in the Company's mortgages held for investment which
decreased by approximately $634,000 from September 30, 1996 to
September 30, 1997. During the first nine months of 1997, the
interest income earned on mortgages held for sale increased by
approximately $37,000, primarily due to the increased volume of new
residential mortgage loans originated during this time period as
discussed above.  First Preference Mortgage Corp., a third tier
subsidiary of Key Group, earns interest from the date the mortgage
loan is closed until the date the mortgage loan is sold to
investors.

Other income for the nine months ended September 30, 1997 amounted
to $348,888 as compared to $361,351 for the same period in 1996.
This decrease is primarily due to decreased insurance commissions
earned through a fronting and reinsurance agreement.

Salaries and related expenses increased to $2,696,310 for the nine
months ended September 30, 1997, compared to $2,212,605 for the nine
months ended September 30, 1996. This increase is primarily due to
the significant increase in the operations of the residential
mortgage origination and servicing activities of First Preference
Mortgage Corp.


                                  5

<PAGE>

For the nine months ended September 30, 1997, interest expense
amounted to $557,177 compared to $617,540 for the same period in
1996.  The decrease in interest expense for the nine months ended
September 30, 1997 and the  increase in the spread between interest
income and interest expense was primarily due to the utilization of
a loan participation agreement that provided that the yield earned
by the financial institution was at a specified rate above the
federal funds rate. During the first part of 1996, the primary loan
participation agreement utilized by the Company provided that the
yield earned by the financial institution was at a  specified rate
above the prime interest rate.

During the nine months ended September 30, 1997, the provision for
losses under servicing agreements was ($246,500) resulting in a
balance in the reserve for losses under servicing agreements of
$1,002,816 at September 30, 1997.  For the nine months ended
September 30, 1996, the Company had a negative provision for losses
under servicing agreements of ($385,000) which resulted in a balance
in the reserve for losses under servicing agreements of $1,490,102
at September 30, 1996.  As previously discussed, under the terms of
certain of its servicing agreements, the Company is at risk for any
credit losses and costs of foreclosure, net of credit insurance
proceeds, if any, sustained on default of the borrower. Based on an
analysis of the Company's servicing portfolio, it is the Company's
belief that its exposure to losses attributable to the servicing
agreements continues to decline.

The minority interest in the net income of Key Group amounted to
($61,733) for the nine months ended September 30, 1997.  For the
nine months ended September 30, 1996, the minority interest in the
net loss of Key Group amounted to $63,271.  The minority interest
represents the ownership of other entities in the Key Group net
income or net loss.

The consolidated statements of income for the nine months ended
September 30, 1997 reflect equity in net income of affiliates of
$44,548 compared to $32,069 for the nine months ended September 30,
1996.  This increase is primarily due to the affiliate realizing a
significant gain on the sale of certain real estate during the
period ended September 30, 1997.

Financial Condition

At September 30, 1997, the Company's total assets were $7,946,149.
Included in the Company's total assets are the assets of Key Group,
LTD. which amounted to $4,611,961 at September 30, 1997.  The Key
Group assets at September 30, 1997 consisted primarily of cash and
cash equivalents of $713,165, mortgage loans of $2,071,536, property
and equipment of $223,468 and accounts receivable, prepaid expenses
and other assets of $1,603,792.  The minority interest in the net
assets of Key Group at September 30, 1997 amounted to $1,787,636.


                                  6

<PAGE>

On consolidated basis, cash and cash equivalents (including
restricted cash) were $1,353,615 at September 30, 1997.  Included
therein was cash and cash equivalents for Key Group of $713,165 and
Apex Lloyds Insurance Company of $563,603.  The cash flow of Key
Group is only available to the Company to the extent that cash is
received in the form of partnership distributions.  Key Group has
paid no distributions and has no plans to pay distributions in the
foreseeable future.  The cash flow of Apex Lloyds Insurance Company
is only available to the Company as allowed by state insurance
regulations.

As more fully discussed in the Annual Report Form 10-KSB for the
year ended December 31, 1996, First Preference Mortgage Corp. has a
master loan participation with a financial institution totaling
$25,000,000 which expires August 31, 1998.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in routine litigation incidental to its
business, both as a plaintiff and a defendant. Management of the
Company, after consulting with legal counsel, feels that liability
resulting from the litigation, if any, will not have a material
effect on this financial position of the Company.

Item 6. Exhibits and Reports on Form 8-K

No Form 8-K was filed during the quarter ended September 30, 1997.

Exhibit 27 - Financial Data Schedule


                                  7


<PAGE>


                             SIGNATURES


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

                     First Financial Corporation
    ____________________________________________________________





Date   November 13, 1997         /s/ David W. Mann
                                 David W. Mann
                                 President
                                 Duly Authorized Officer and
                                 Principal Financial Officer


Date  November 13, 1997          /s/ Annie Laurie Miller
                                 Annie Laurie Miller
                                 Executive Vice President and
                                 Principal Accounting Officer




                                  8