UNITED STATES SECURITIES AND EXCHANGE
COMMISSION Washington, D.C.  20549  FORM 10-QSB   X    QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For
the quarterly period ended September 30, 2007   __      TRANSITION
REPORT UNDER SECTION 13 OR 15(D) ON THE EXCHANGE ACT  For the transition period from
_______________ to _______________   Commission file number 0-5559  FIRST FINANCIAL CORPORATION(Exact
name of small business issuer as specified in its charter)    Texas
  74-1502313(State or other jurisdiction of
  (I.R.S. Employer Identificationincorporation or organization)
  No.)800 Washington Avenue, Waco, Texas
  76701(Address of principal executive offices)
  (Zip Code)
  Issuers telephone number (254) 757-2424  Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange
Act)   Yes __     No  X  Number of shares of the
Issuers Common Stock outstanding on October 31, 2007 was 402,058.  Transitional Small Business Disclosure Format (check one)  Yes __     No X


FORM 10-QSB  FIRST FINANCIAL
CORPORATION September 30, 2007    INDEX    Part I Financial Information
  Page No.Item 1. Financial
  StatementsConsolidated Balance Sheet as of
  1September
  30, 2007Consolidated Statements of Income
  2for
  the Three-Months endedSeptember
  30, 2007 and 2006Consolidated
  Statements of CashFlow
  for the Three-Monthsended September 30, 2007 and 2006
  3Notes
  to Consolidated FinancialStatements
  4Item 2. Management's
  Discussion and AnalysisOr Plan of Operation
  8Item 3. Controls and Procedures
  11Part II Other
  InformationItem 1. Legal Proceedings
  11Item 4. Submission
  of Matters toa Vote of Security Holders
  11Item 6. Exhibits
  12
    
     Item 1. Financial StatementsFirst Financial CorporationConsolidated Balance SheetSeptember 30, 2007(Unaudited)Assets------Cash and cash equivalents
		
		
		
		
		
		$
		121,127Restricted cash
		
		
		
		
		
		
		
		-Accounts receivable
		
		
		
		
		
		
		
		92,548Notes receivable
		
		
		
		
		
		
		
		180,000Marketable investment securities
		
		
		
		
		
		2,122,680Restricted marketable investment securities
		
		
		
		
		-Real estate held for investment,at cost
		
		
		
		
		
		-Mortgage loans
		
		
		
		
		
		
		
		6,127Property and equipment
		
		
		
		
		
		
		7,142Other assets
		
		
		
		
		
		
		
		142,215Total Assets
		
		
		
		
		
		
		$2,671,838Liabilities and Stockholders' Deficit--------------------------------------Notes on line of credit
		
		
		
		
		
		
		$0Notes payable
		
		
		
		
		
		
		
		2,504,175Accounts payable
		
		
		
		
		
		
		
		23,758Estimated reserve for indemnifications and early payment
		default losses
		
		
		4,340,457Estimated reserve for losses under servicing agreements
		
		
		
		-Estimated reserve for losses under insurance policies
		
		
		
		
		-Other liabilities
		
		
		
		
		
		
		
		118,394Total Liabilities
		
		
		
		
		
		
		6,986,784Stockholders' deficit:Common stock - no par value; authorized500,000 shares; issued 402,058 shares
		
		
		
		
		
		1,000Additional paid-in capital
		
		
		
		
		
		
		1,471,004Retained earnings
		
		
		
		
		
		
		
		(7,540,289)Accumulated other comprehensive income:
		
		
		
		
		-Unrealized gain (loss) on marketable securities, net of
		tax
		
		
		
		1,753,339(4,314,946)Less:Treasury stock - at cost
		
		
		
		
		
		
		-Total Stockholders' Deficit
		
		
		
		
		
		(4,314,946)Total Liabilities and Stockholders' Deficit
		
		
		
		$
		2,671,838See accompanying notes to consolidated financial
		statements.-1-   
      First Financial CorporationConsolidated Statements of Income 
		Three months ended September 30, 2007 and 2006
		(Unaudited)Three Months Ended
		
		Nine Months EndedSeptember 30,
		
		September 30,2007
		
		2006
		
		2007
		
		2006Revenues:Loan administration
		
		
		
		$
		300
		$
		-
		$
		8,285
		$
		1,086,807Interest income
		
		
		
		
		4,013
		
		-
		
		13,715
		
		5,764Oil and gas royalties
		
		
		
		20,169
		
		271,243
		
		34,699
		
		290,460Net gain from sale of securities
		
		
		
		35,265
		
		-
		
		84,448
		
		11,669Other income
		
		
		
		
		-
		
		7,399
		
		9,226
		
		1,292,845Total Revenues
		
		
		
		
		59,747
		
		278,642
		
		150,373
		
		2,687,545Expenses:Salaries and related expenses
		
		
		
		34,340
		
		46,637
		
		109,855
		
		1,375,855Interest expense
		
		
		
		
		3,348
		
		45,003
		
		7,593
		
		159,331Provision for loan losses
		
		
		
		304,972
		
		-
		
		1,050,153
		
		1,936,667Impairment of assets
		
		
		
		-
		
		43,940
		
		-
		
		851,177Other operating expenses
		
		
		
		141,023
		
		7,140
		
		425,773
		
		1,572,207Total Expenses
		
		
		
		
		483,682
		
		142,720
		
		1,593,374
		
		5,895,237Income (loss) before income other income,
		
		(423,935)
		
		135,922
		
		(1,443,000)
		
		(3,207,692)and provision for income tax expenseOther non-operating incomeNet gain from settlement of note payable
		
		
		-
		
		620,000
		
		-
		
		620,000Total Other Income
		
		
		
		-
		
		620,000
		
		-
		
		620,000Income (loss) before provision for income tax
		
		(423,935)
		
		755,922
		
		(1,443,000)
		
		(2,587,692)Federal income taxes
		
		
		
		-
		
		-
		
		-
		
		64Net income (loss)
		
		
		
		
		(423,935)
		
		755,922
		
		(1,443,000)
		
		(2,587,756)Other comprehensive income:Unrealized holding gains (losses)
		
		
		(513,372)
		
		(78,835)
		
		995,529
		
		117,334Comprehensive income (loss)
		
		$
		(937,307)
		$
		677,087
		$
		(447,471)
		$
		(2,470,422)Income Per Common Share
		
		
		
		($2.33)
		
		$3.90
		
		($1.11)
		
		($14.24)See accompanying notes to consolidated financial
		statements.  -2- 
     First Financial CorporationConsolidated Statement of Cash Flows(Unaudited)Nine Months Ended2007
			
			2006Cash flows from operating activities:Net income (loss)
			
			
			
			
			
			
			
			(1,443,000)
			
			(2,587,756)Adjustments to reconcile net income(loss) tonet cash used by operating activities:Depreciation
			
			
			
			
			
			
			
			14,944
			
			1,345,026Provision for loan losses
			
			
			
			
			
			
			1,050,153
			
			1,936,667Loan and insurance losses paid
			
			
			
			
			
			170,023
			
			(1,785,156)Realized (gains) losses on marketable investment
			securities
			
			
			
			(84,448)
			
			(11,669)Gain on sale of real estate held for investment
			
			
			
			
			-
			
			(696,164)Net (increase) decrease in accounts receivable
			
			
			
			
			4,137
			
			84,893Net (increase) decrease in other assets
			
			
			
			
			
			32,138
			
			325,319Net increase (decrease) in accounts payable
			
			
			
			
			(182,347)
			
			(150,686)Net increase (decrease) in reserve for losses under
			
			
			
			
			-
			
			-insurance policies
			
			
			
			
			
			
			-
			
			-Net increase (decrease) in other liabilities
			
			
			
			
			
			118,394
			
			(380,676)(Increase) decrease in restricted cash used
			
			
			
			
			-
			
			-in operating activities - net
			
			
			
			
			
			
			-
			
			-Mortgage loans funded
			
			
			
			
			
			
			-
			
			(70,392,273)Mortgage loans sold
			
			
			
			
			
			
			17,506
			
			86,221,199Increase (decrease) in mortgage loans participations
			sold
			
			
			
			-
			
			(15,669,454)Other
			
			
			
			
			
			
			
			
			122
			
			(60,442)Net cash provided (used) for operating activities
			
			
			
			
			(302,377)
			
			(1,821,172)Cash flows from investing activities:Net (increase) decrease in notes receivable
			
			
			
			
			75,000
			
			-Proceeds from sale of marketable investment
			securities
			
			
			
			106,069
			
			61,669Purchases of marketable investment securities
			
			
			
			
			(279,883)
			
			(160,912)Proceeds from sale of real estate held for investment
			
			
			
			
			-
			
			1,250,000Purchase of property and equipment
			
			
			
			
			
			-
			
			(78,258)Principal collections on mortgage loans
			
			
			
			
			
			-
			
			53,708(Increase) decrease in deferred gain on sale of
			property & equipment
			
			
			-
			
			-Net cash provided (used) for investing activities
			
			
			
			
			(98,814)
			
			1,126,207Cash flows from financing activities:Net change in short term borrowings
			
			
			
			
			
			-
			
			-Proceeds from notes payable
			
			
			
			
			
			
			59,287
			
			1,138,343Payments on notes payable
			
			
			
			
			
			
			-
			
			(1,826,240)Proceeds from additional paid-in capital
			
			
			
			
			
			-
			
			-Proceeds from sale of treasury stock
			
			
			
			
			
			-
			
			-Net cash used for financing activities
			
			
			
			
			
			59,287
			
			(687,897)Net increase (decrease) in cash and cash equivalents
			
			
			
			
			(341,904)
			
			(1,382,863)Cash and cash equivalents at beginning of year
			
			
			
			
			463,031
			
			1,554,487Cash and cash equivalents at end of period
			
			
			
			
			
			$121,127
			
			$171,624Supplemental Disclosure of Cash Flow InformationInterest Paid
			
			
			
			
			
			
			
			$7,593
			
			$214,784See accompanying notes to consolidated financial
			statements.-3-
   
     FIRST FINANCIAL
CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Unaudited)  PART I  FINANCIAL INFORMATION  1 - Basis of Presentation  The financial information
included herein for First Financial Corporation, and all of its wholly 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, assuming that
the Company will continue as a going concern. In preparing these financial
statements, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of the
balance sheet and revenue and expense for the period. Actual results could
differ significantly from those estimates.  The results of operations
and changes in cash flow for the nine-month period ended September 30, 2007 are
not necessarily indicative of the results to be expected for the full year or
any future period.  Certain reclassifications
were made to prior periods to ensure comparability with the current period.  2  Going Concern  The accompanying financial statements have been prepared
assuming the Company will continue as a going concern.  At September 30, 2007,
the Company has unrestricted cash and cash equivalents of $.12 million and an
accumulated deficit of $7.5 million.  At December 31, 2006, the Company had
cash and cash equivalents of $.46 million and an accumulated deficit of $6.1
million.  The Company incurred a net loss before income taxes of $1.443 million
during the nine months ended September 30, 2007 and a net loss before income taxes
of $2.522 million during the year ended December 31, 2006.  First Preference Mortgage Corporation (FPMC), a wholly owned subsidiary
of the Company, had incurred net losses of $4.4 million and $4.9 million for
the years ended December 31, 2006 and 2005, respectively.  4 
       In prior years, FPMCs primary funding source was a mortgage warehouse
line of credit from Colonial Bank. During 2005, the Company was unable to
maintain certain borrowing covenants (i.e. minimum adjustable tangible net
worth) resulting in the Company being unable to borrow money under the line of
credit to fund mortgage loan originations.  Colonial Bank terminated the line
of credit, effective June 30, 2006.  In September 2005, FPMC entered into a Loan Participation Agreement with
Citizens State Bank of Woodville, Texas (CSB).  David W. Mann, the Companys
chief executive officer and controlling beneficial owner, is also chief
executive officer and controlling beneficial owner of CSB. The sale of
participations to CSB was the Companys only source of funding after October
2005.  On April 30, 2006 CSB terminated its Loan Participation Agreement with
FPMC.  In order to participate in the FHA mortgage insurance program, FPMC was
required to maintain a minimum net worth requirement.  As of December 31, 2005,
FPMC was below the minimum net worth requirement of the Department of Housing
and Urban Development (HUD), as a result of which FPMC became ineligible for
participation in the HUD mortgage insurance programs.  The significant losses for the years ended December 31, 2006, 2005, and
2004, the inability to fund new loan originations through a mortgage warehouse
line or participation agreement, and the violation of the minimum net worth
requirement of HUD, create significant doubt about FPMCs and the Companys
ability to continue as a going concern.  Management has discontinued the
mortgage operation, the Companys only significant source of revenue, with no
new mortgage loans being funded after April 28, 2006.  The financial statements
do not include any adjustments that might be necessary if FPMC or the Company
is unable to continue as a going concern.  On December 1, 2006 FPMC
and Citizens Mortgage Corporation (CMC), a wholly owned subsidiary of CSB,
executed an agreement entitled Memorandum of Asset Purchase (the Agreement)
under which FPMC sold to CMC substantially all of its furniture, fixtures and
equipment and its retail and wholesale loan production operations and going
concern value for a purchase price of $333,873, of which $78,873 was paid in
cash on the date of execution and the $255,000 balance was paid in the form of
CMSs promissory note.  The promissory note is unsecured, bears interest at
0.75% below the prime rate published in the Wall Street Journal (initially, 7.50%),
and is repayable in 12 quarterly installments of principal and accrued interest
starting March 15, 2007.  The effective date provided in the Agreement was May
1, 2006.  Under the Agreement CMC assumed no liabilities, obligations or
commitments of FPMC, other than certain equipment lease agreements.  In
connection with the discontinuance by FPMC of its loan production operations,
CMC employed certain of FPMCs former employees and took over the processing of
loan applications that had been received by FPMC.  The purchase price and
terms provided in the Agreement were negotiated on behalf of FPMC by the
independent directors of the Company and by legal counsel selected by them. 
The purchase price was based on an evaluation provided by an independent expert.  The revenue from FPMC represents over 90% of the Companys total revenue. 
Therefore, the financial condition of FPMC creates significant doubt about the
Companys ability to continue as a going concern.  5 
       3  Notes Payable  During the month of June 2006,
and subsequently, FPMC did not make payment to CitiMortgage, Inc. (CMI),
Washington Mutual Bank, FA (Washington Mutual) or the Department of Housing
and Urban Development (HUD) as required by FPMCs agreements with those
parties.  The last payments made by FPMC under each of these agreements were
remitted in May 2006.  The amounts payable to CMI and Washington Mutual are
zero interest obligations and are reflected on the accompanying balance sheet
as notes payable.  Upon FPMCs non-payment of the payments due after May 2006,
FPMC raised the note payable balance to reflect the total of the future
scheduled payments.  Previously, the Company reflected these notes on a net
present value basis.  This resulted in a total increase to notes payable in the
amount of $223,822. This increase was reflected in the previously reported
amounts for June 2006.  On September 15, 2006, FPMC entered into a Release and
Settlement Agreement with Washington Mutual.  For consideration of $65,000 paid
by FPMC, Washington Mutual released FPMC of any claims, complaints,
liabilities, obligations, promises, agreements, contracts and causes of action,
against FPMC.  Notes payable was decreased by $685,000.  On March 28, 2007 JRPM loaned the Company $110,000 in
order to fund the Companys exercise of a warrant held by the Company to
purchase 246,429 shares of Inspiration Mining Corporation (IMC) at a price of
$0.450 CAD per share, or $.0389 USD per share. At the time of the loan the
closing price of the IMC shares on the Toronto Stock Exchange was $3.12 CAD per
share, or $2.69 USD per share. The $110,000 loan is represented by a promissory
note that bears interest at 9.5% per year, was originally payable in full as to
principal and interest on July 25, 2007, and is secured by a pledge of 82,143
of the IMC shares.  As of July 31, 2007, the Company made a payment of
$8,578.75, including $3,578.75 in interest, to JRPM and renewed the note to be
payable in full on October 31, 2007.  On October 31, 2007, the Company made a
payment of $42,526 including $2,526 in interest, to JRPM, reducing the
principal amount of the note to $65,000, and renewed the note to be payable in
full on April 22, 2008.  4 - Earnings Per Share  Earnings per common share
were computed by dividing net income by the weighted average number of shares
outstanding during the period.    6 
   5 - 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.  As of December 31, 2006, the Company had approximately
$13.1 million in available net operating loss carryforward benefits for
financial statement purposes to offset future income, if any.  A valuation
allowance has been provided for all tax benefits; therefore, no asset is
reflected on the Companys balance sheet for the net operating loss
carryforward benefits.  6 - Contingencies  In the ordinary course of the Companys mortgage business, prior to its
discontinuance in April, 2006, the Company sold loans to institutional
investors without recourse that may have to be subsequently repurchased due to
defects that occurred during the origination of the loan.  In addition,
mortgage loans sold to investors were subject to repurchase or indemnification
if the loans became a specified number of months delinquent within a specified
period of time after the loans were sold (i.e., early payment default).  When a
loan sold to an investor without recourse failed to perform, the investor would
typically review the loan file to determine whether defects in the origination process
occurred.  If a defect was identified, the Company would be required to either
repurchase the loan or indemnify the investor for losses sustained.  If there
were no defects, the Company had no commitment to repurchase the loan.  The
Company has accrued for this potential loss exposure.  At September 30, 2007,
the estimated reserve for indemnifications and early payment default losses was
$4,340,457.  On August 28, 2006, CitiMortgage, Inc.
("CMI") filed suit in the United States District Court for the
Eastern District of Missouri against FPMC, David W. Mann, and Citizens Mortgage
Corporation ("CMC").  CMC is a subsidiary of Citizen's State
Bank, the president and chief executive officer of which is Mr. Mann and the
parent company of which is majority-owned by Mr. Mann and his affiliates. 
In this litigation CMI makes claims against FPMC based on allegations of
default in the repayment to CMI of amounts payable by FPMC under its July 20,
2006 Workout and Forbearance Agreement with CMI and under the underlying loan
agreements, as described under "Results of Operations" in Item 6 of
Part II of this report.  Amounts claimed by CMI to be payable under these
agreements total approximately $3,500,000.  CMI also makes claims in this
litigation against FPMC, Mr. Mann, and CMC based on allegations that FPMC made
transfers to CMC of assets related to its mortgage operations without receiving
reasonably equivalent value in exchange.  The amount of these claims is not
quantified.  FPMC filed an answer in this suit, contesting many of the
allegations and claims of CMI.  CMC moved to dismiss the suit against CMC
for lack of personal jurisdiction over CMC and improper venue.  CMCs motion to
dismiss for lack of personal jurisdiction was granted by the Court on September
7, 2007 and CMC was dismissed from the case.  Mr. Mann also moved to
dismiss the suit against Mann for lack of personal jurisdiction over Mann,
which motion was denied by the Court.  The case is now proceeding against FPMC
and Mann and is presently set for jury trial on September 8, 2008.  In addition to the foregoing, 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, believes that liability resulting from such litigation, if any, will
not have a material effect on the financial position of the Company.  7 
        Item 2.
Management's
Discussion and Analysis or Plan of Operation  Results of Operations  The Company had a net loss of $(1,443,000)
for the nine months ended September 30, 2007 compared to a net loss of $(2,587,756)
for the same period in 2006.  The Company had a net loss of $(423,935) for the
three months ended September 30, 2007 compared to net income of $755,922 for
the same period in 2006.  As a result of the discontinuance of the Companys
mortgage operations after April 28, 2006 described under Liquidity and Capital
Resources, the Companys total expenses during the nine months ended September
30, 2007 have decreased to $1,593,374 from $5,895,237 for the same time period
last year.  The total expenses during the quarter ended September 30, 2007 were
$483,682 as compared to $142,720 for the same period last year.  There were no
mortgage loans funded in the nine months ended September 30, 2007 compared to $70
million in mortgage loans funded during the same period in 2006.  During the quarter ended September 30, 2007, there was
loan administration revenues and interest income of $300 and $4,013 respectively,
compared to no loan administration revenue nor interest income for the same
period in 2006.  Loan administration revenues were $8,285 for the first nine
months of 2007 compared to $1,086,807 for the same period of 2006.  Interest
income for the nine months ended September 30, 2007 amounted to $13,715
compared to $5,764 for the same period in 2006.  In 2006 prior to the
discontinuance of its mortgage operations, FPMC earned interest on each
mortgage loan it originated from the date it was closed until the date it was
sold to investors.  For the nine months ended September 30, 2007, the Company
earned interest revenue in the amount of $12,372 from a note receivable from
its affiliate, CMC, as described under Liquidity and Capital Resources.  Oil and gas royalties for
the three months ended September 30, 2007 amounted to $20,169 compared to
$271,243 for the same period in 2006.  For the nine months ended September 30,
2007, oil and gas royalties amounted to $34,699 compared to $290,460 for the
same period in 2006.  The larger amount received in 2006 resulted from
retroactive royalties received at the final negotiation of the lease.  For the quarter ended September 30, 2007, other income
was zero compared to $7,399 for the same period in 2006.  Other Income for the
nine months ended September 30, 2007 was $9,226 compared to $1,292,845 for the
same period in 2006.  First Advisory Services, Inc., (FAS) a wholly-owned
subsidiary of the Company, has provided accounting, personnel, general and
administrative, and information technology services to entities that are
affiliated through common ownership.  Due to the discontinuance of the
Companys mortgage operation, the services provided by FAS have been reduced. 
The decrease in other income is primarily due to the reduction in revenue
generated from these services.  8 
       Other comprehensive income
consists of unrealized holding gains (losses) on marketable investment
securities. For the three months ended September 30, 2007, unrealized holding
losses amounted to ($513,372) compared to losses of $(78,835) for the same
period in 2006.  For the nine months ended September 30, 2007, unrealized
holding gains amounted to $995,529 compared to $117,334 for the same period in
2006.  Most of this gain is attributable to the increase in the market value of
shares of stock of a Canadian mining company, Inspiration Mining Corporation
(ISM), which is traded on the Toronto Stock Exchange.  Salaries and related
expenses decreased to $34,340 for the quarter ended September 30, 2007 compared
to $46,637 for the same period in 2006.  For the nine months ended September
30, 2007, salaries and related expenses were $109,855 compared to $1,375,855
for the same period in 2006.  This decrease is primarily due to the reduction
in staff and closing of mortgage operations during the quarter ended June 30,
2006.  Interest expense for the
quarter ended September 30, 2007 was $3,348 compared to $45,003 for the same
time period in 2006.  Interest expense for the nine months ended September 30,
2007 was $7,593 compared to $159,331 for the same time period in 2006.  The
reduction of interest expense is primarily due to the closing of the mortgage
operations.  Other operating expenses
for the three months ended September 30, 2007 amounted to $141,023 compared to
$7,140 for the same period in 2006.  Other operating expenses for the nine
months ended September 30, 2007 amounted to $425,773 compared to $1,572,207 for
the same period in 2006.  The reduction of other operating expenses is
primarily due to the closing of the mortgage operations.  During the nine months ended
September 30, 2007, FPMC increased its provision for loan losses,
indemnifications and early default losses by $1,050,153, resulting in a charge
against income in that amount, as compared to a charge of $1,936,667 for the
same period in 2006.  At September 30, 2007, the
reserve for loan losses amounted to $4,340,457 compared to $2,595,394 at
September 30, 2006.  During the three months ended September 30, 2007, FPMC
increased its provision for loan losses, indemnifications and early default
losses by a total of $304,972.  FPMC did not record a provision for loan losses
for the quarter ended September 30, 2006.  This increase was primarily due to
claims made by the Department of Housing and Urban Development (HUD) on loans
that were indemnified by the Company several years ago along with claims made
on loans with deficient and uncured document exceptions.  In the quarter ended
June 30, 2007, the Company recovered approximately $170,000 from an errors and
omissions insurance claim with regard to certain defaulted loans and there were
no loss charge-offs.  The Company is at risk under certain of its agreements
with private investors and HUD for credit losses and cost of foreclosure on
default of the borrower.  The Company calculates the loan loss reserve based on
historical loan losses, current claims against the Company, and recoverability
of losses under the Companys Errors and Omissions insurance policy as well as
other factors.    9 
   Financial Condition    At September 30, 2007, the Company's total assets were
$2,671,838 compared to $898,677 at September 30, 2006.  The increase in total
assets is primarily due to the increased value of marketable investment
securities of about $1.8 million in the last twelve months.  The increase is
also due to the note receivable balance of $180,000 from CMC described under
Liquidity and Capital Resources.  The
Companys primary source of potential value is the Companys approximate
$13.1 million of net operating loss carryforward, which would be available to
shelter income from any operations that the Company could acquire.  As
reflected in the financial statements, the stockholders deficit of the Company
was $(4,314,946) at September 30, 2007 and the stockholders deficit was
$(4,803,703) at September 30, 2006.  Liquidity and Capital Resources  As of April 28, 2006, the
Companys mortgage operations, its primary source of revenue ceased.  Further
discussion can be found under Liquidity and Capital Resources in the 10-KSB
filed by the Company on April 16, 2007 for the year ended December 31, 2006.  On a consolidated basis,
cash and cash equivalents were $121,127 at September 30, 2007. On that date the
Company had an accumulated deficit (that is, total liabilities in excess of
total assets) of approximately $4.3 million.  At this time, management does
not intend to cause the Company or FPMC to seek protection under the bankruptcy
laws.  If FPMC can settle the litigation with CMI reported in Note 6 to the
financial statements filed with this report and if its other creditors can be
satisfied, the Company may retain some residual value that will be preserved
for shareholders.  It is entirely possible, however, that this process will be
unsuccessful, in which case the Company or FPMC may be forced into bankruptcy
by its creditors or may have to seek protection under the bankruptcy laws or
may be forced into involuntary bankruptcy by its creditors.  If that occurs,
the Companys common stock would be likely to have no value.  Forward-looking
Information Certain
statements made above and elsewhere in this Form 10-QSB constitute
forward-looking statements, including but not limited to those identified by
the words expect, believe, seek to, intend, will, possible, may
and similar expressions that are attributed to the Company or its management.
No forward-looking statements of the Company or its management are guarantees
of future outcomes. These statements involve risks and uncertainties, and
actual results may differ materially from those in the forward-looking
statements as a result of various factors, including but not limited to the
value that can be obtained from the sale of the Companys mortgage
operations and Company assets and the terms on which creditors will agree
to be repaid.   10 
   Item 3. Controls and Procedures     The Company evaluated the effectiveness of the design and
operation of its disclosure controls and procedures (as defined in Rule
13a-15(e) under the Securities Exchange Act of 1934) as of September 30, 2007.
The evaluation was carried out under the supervision and with the participation
of the Companys management, including the Companys Chief Executive Officer and
Chief Financial Officer. Based on the evaluation, Mr. Mann, the Chief Executive
Officer and the Chief Financial Officer, concluded that the design and
operation of the Companys disclosure controls and procedures are effective in
providing assurance that information required to be disclosed by the Company in
the reports that it files or submits to the Securities and Exchange Commission
under the Securities Exchange Act of 1934 is recorded, processed, summarized
and reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission, and that such information is accumulated
and communicated to management as appropriate to allow timely decisions
regarding disclosure. There have been no changes during the fiscal quarter
ended September 30, 2007 in the Companys internal controls over financial
reporting that have materially affected, or are reasonably likely to materially
affect the Companys internal control over financial reporting  PART II -
OTHER INFORMATION  Item 1. Legal Proceedings  In addition to the
litigation with CMI reported in Note 6 to the financial statements filed with
this report, 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, believes that liability resulting from
such litigation, if any, will not have a material effect on the financial
position of the Company.  Item 4. Submission of Matters to a Vote of Security
Holders  The annual meeting of shareholders was held on August 16,
2007, pursuant to an Information Statement dated July 6, 2007, furnished by the
Board of Directors to the shareholders of record.  At the annual meeting, the
following matters were submitted to a vote of shareholders:   Matter
  For
  Against
  Withheld
  Abstain
  Non-VoteElection of DirectorsDavid W. Mann
  332,664
  -
  -
  -
  -James Lee Motheral
  332,664
  -
  -
  -
  -Dr. Raymond A. Parker
  332,664
  -
  -
  -
  -Joseph Edward Walker
  332,664
  -
  -
  -
  -Ratification of Pattillo, Brown & Hill, L.L.P., as the Companys
  independent accountants.
  332,664
  -
  -
  -
  -
   11 
       Item 6. Exhibits  Exhibit 3.1  Restated Articles of Incorporation of First
Financial Corporation (incorporated by reference to the Companys Annual Report
on Form 10-KSB for the fiscal year ended December 31, 2002).  Exhibit 3.2  Amended and Restated Bylaws of First
Financial Corporation (incorporated by reference to the Companys Annual Report
on Form 10-KSB for the fiscal year ended December 31, 2002).  Exhibit 31.1   Certification of the Chief Executive
Officer and Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 filed herewith.  Exhibit 32.1  
Certification of the Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350 filed herewith.      12 
         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 19 , 2007
		/s/ 
David W. MannDavid W. MannPresidentDuly
Authorized Officer andPrincipal
Financial Officer           (Remainder of page
purposely left blank.)  13