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 March 31, 1998           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 Identification
incorporation or organization)             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 April 30, 1998)


<PAGE>

                              FORM 10-QSB
                                   
                      FIRST FINANCIAL CORPORATION
                            MARCH 31, 1998
                                   
                                   
                                   
                                 INDEX


Part I Financial Information                      Page No.

     Item 1.   Financial Statements

               Consolidated Balance Sheet as of        1
               March 31, 1998

               Consolidated Statements of Income       2
               for the Three-Months ended
               March 31, 1998 and 1997

               Consolidated Statements of Cash
               Flow for the Three-Months
               ended March 31, 1998 and 1997           3

               Notes to Consolidated Financial
               Statements                              4

     Item 2.   Management's Discussion and Analysis
               of Results of Operations and Financial  5-6
               Condition


Part II Other Information

     Item 1.   Legal Proceedings                       6

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



<PAGE>
<TABLE>

                                  First Financial Corporation
                                Consolidated Balance Sheet
                                        March 31, 1998
                                         (Unaudited)                        
                                                                    
<CAPTION>                                         
        Assets                                
        ------
<S>                                                             <C>
Cash and cash equivalents                                       $   942,000
Restricted cash                                                     487,593 
Accounts receivable                                               1,965,940 
Marketable investment securities                                    297,087 
Real estate held for investment, at cost                            444,000 
Mortgage loans                                                    1,703,082
Investment in and advances to
  affiliated companies                                              399,440
Property and equipment                                              777,790
Other assets                                                      1,190,006
                                                                -----------
            Total Assets                                        $ 8,206,938 
                                                                ===========   
   Liabilities and Stockholders' Equity
  --------------------------------------
Notes payable                                                   $         0 
Estimated reserve for losses under servicing
  agreements                                                        823,639 
Other liabilities                                                 1,965,081 
                                                                -----------
            Total Liabilities                                     2,788,720 
                                                                -----------

Minority interest                                                 1,835,898  
                                                                ----------- 
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                                               3,097,927  
                                                                ----------- 
                                                                  3,617,629  
  Less:Treasury stock - at cost                                     (35,309) 
       Net unrealized loss on marketable
        investment securities                                             0  
                                                                ----------- 
            Total Stockholders' Equity                            3,582,320  
                                                                ----------- 
            Total Liabilities and Stockholders' Equity          $ 8,206,938  
                                                                ===========    

See accompanying notes to consolidated financial statements.

</TABLE>


                                1

<PAGE>
<TABLE>
 
                                      First Financial Corporation
                                   Consolidated Statements of Income
                               Three months ended March 31,1998 and 1997
                                            (Unaudited)


<CAPTION>


                                                                     1998               1997
                                                                  -----------       ----------
<S>                                                               <C>              <C>
Revenues:
  Loan administration                                             $1,593,595       $  957,081
  Interest income                                                    394,694          269,780
  Other income                                                       105,175          107,388
                                                                  -----------       ----------
     Total revenues                                                2,093,464        1,334,249

Expenses:
  Salaries and related expenses                                    1,088,133          794,508
  Interest expense                                                   312,203          142,094
  Provision for losses under servicing
    agreements                                                       (84,897)        (109,286)
  Other operating expenses                                           672,629          498,661
                                                                  -----------       -----------
     Total expenses                                                1,988,068        1,325,977
                                                                  -----------       -----------
     Income before income taxes,
      minority interest, and equity in earnings
      (loss) of affiliates                                           105,396            8,272

Federal income taxes                                                       0                0
                                                                  -----------       ----------
     Income before minority interest                                 105,396            8,272

Minority interest in net loss (income)                                (8,025)          34,609
                                                                  ------------      ----------
     Income before equity in earnings
      (loss) of affiliates                                            97,371           42,881

Equity in earnings (loss) of affiliates                               (3,426)          26,585
                                                                  -----------       ----------
     Net income                                                   $   93,945       $   69,466
                                                                  ===========       ==========
Income per common share                                                $0.54            $0.40
                                                                  ===========       ==========



See accompanying notes to consolidated financial statements.

</TABLE>


                                2

<PAGE>
<TABLE>

                        First Financial Corporation
                   Consolidated Statement of Cash Flows

<CAPTION>
                                                                                 (Unaudited)
                                                                         Three Months Ended March 31,
                                                                         ----------------------------
                                                                             1998             1997
                                                                         -----------      -----------
<S>                                                                      <C>              <C>
Cash flows from operating activities:
   Net income (loss)                                                     $     93,944     $     69,466
   Adjustments to reconcile net income(loss) to
    net cash used by operating activities:
   Depreciation                                                                39,722           35,428
   Provision for losses under servicing agreements                            (84,897)        (109,286)
   Equity in (income) loss of affiliates                                        3,426          (26,585)
   Realized losses on marketable investment securities                              0                0
   Net (increase) decrease in accounts receivable                            (634,162)        (196,521)
   Net (increase) decrease in other assets                                   (111,732)         110,306
   Net increase (decrease) in other liabilities                               362,050         (183,931)
   Increase in minority interest                                                7,079          (34,610)
   (Increase) decrease in restricted cash used
     in operating activities - net                                           (177,069)         100,000
   Increase in mortgage loans - net                                                 0                0
   Mortgage loans funded                                                  (92,580,474)     (49,301,379)
   Mortgage loans sold                                                     84,308,620       50,336,891
   Increase in mortgage loans participations sold                           8,336,664       (1,112,084)
   Other                                                                       22,028          (51,012)
                                                                       ---------------    --------------
        Net cash provided (used) for operating activities                    (414,801)        (363,318)
                                                                       ---------------    --------------
Cash flows from investing activities:
   Proceeds from sale of marketable investment securities                           0                0
   Purchases of marketable investment securities                                    0                0
   Purchase of property and equipment                                         (53,696)         (22,543)
   Principal collections on mortgage loans                                    251,187          307,517
   Amortization of discount on mortgage loans purchased                        (7,960)         (18,002)
   (Advances to) repayments from affiliates                                         0           50,000
                                                                       ---------------    ---------------
        Net cash provided (used) for investing activities                     189,531          316,972
                                                                       ---------------    ---------------
Cash flows from financing activities:
   Payment on notes payable                                                         0                0
                                                                       ---------------    ---------------
        Net cash used for financing activities                                      0                0
                                                                       ---------------    ---------------
Net increase (decrease) in cash and cash equivalents                         (225,270)         (46,346)
Cash and cash equivalents at beginning of year                              1,167,270          757,279
                                                                       ---------------    ---------------
Cash and cash equivalents at end of period                               $    942,000     $    710,933
                                                                       ===============    ===============
Supplemental Disclosure of Cash Flow Information
   Interest Paid                                                         $    241,860     $    170,762
                                                                       ===============    ===============

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  adjustment  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 three-month
period  ended  March 31, 1998 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 $5,500,000 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 $3,200,000 at March 31,  1998,
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 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 $10,533 and
are included in restricted cash at March 31, 1998.

                                4

<PAGE>

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

Results of Operations

The  Company  had a net income of $93,945 for the quarter ended  March
31,  1998  compared to net income of $69,466  for the same  period  in
1997.   Loan  administration revenues were $1,593,595  for  the  first
quarter  for 1998 compared to $957,081 for the first quarter of  1997.
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 quarter ended  March
31, 1998, First Preference Mortgage Corp., a third tier subsidiary  of
Key  Group,  funded  approximately $92.6 million  in  new  residential
mortgage loans compared to approximately $49.3 million during the same
period in 1997.

Interest  income  for  the quarter ended March 31,  1998  amounted  to
$394,694 compared to $269,780 for the same period in 1997.  During the
quarter  ended  March  31, 1998, the interest  income  earned  by  the
Company on investments declined by approximately $31,000 or 31%.  This
decline  is  primarily due to the decline  in the Company's  mortgages
held  for  investment which decreased by approximately  $606,000  from
March  31, 1997 to March 31, 1998. During the first quarter  of  1998,
the  interest  income earned on mortgages held for sale  increased  by
approximately $156,000, primarily due to the increased volume  of  new
residential  mortgage  loans originated during  this  time  period  as
discussed above.  First Preference Mortgage Corp. earns interest  from
the  date the mortgage loan is closed until the date the mortgage loan
is sold to investors.

Salaries  and related expenses increased to $1,088,133 for  the  three
months ended March 31, 1998, compared to $794,508 for the three months
ended  March 31, 1997. This increase is due to the continued expansion
of  the  residential mortgage origination and servicing activities  of
First Preference Mortgage Corp., as discussed above.

For  the  quarter ended March 31, 1998, interest expense  amounted  to
$312,203  compared  to  $142,094 for the same  period  in  1997.   The
significant  increase in interest expense for the quarter ended  March
31,  1998  is primarily due to increased utilization of the  Company's
loan participation agreement.  As previously discussed, the volume  of
new residential loan originations for the quarter ended March 31, 1998
increased by approximately 88% over the comparable period in 1997.

During  the  quarter  ended March 31, 1998, the provision  for  losses
under servicing agreements was ($84,897) resulting in a balance in the
reserve for losses under servicing agreements of $823,639 at March 31,
1998.   For  the  quarter  ended March 31, 1997,  the  Company  had  a
negative provision for losses under servicing agreements of ($109,286)
which  resulted in a balance in the reserve for losses under servicing
agreements  of $1,202,155 at March 31, 1997.  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.

                                5

<PAGE>

The  minority  interest  in the net income of Key  Group  amounted  to
$8,025  for  the quarter ended March 31, 1998.  For the quarter  ended
March  31,  1997, the minority interest in the net loss of  Key  Group
amounted  to $34,609.  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 three months ended March
31, 1998 reflect equity in net loss of affiliates of ($3,426) compared
to  net  income of $26,585 for the three months ended March 31,  1997.
During  the  quarter ended March 31, 1997,  the affiliate  realized  a
significant gain on the sale of certain real estate.

Financial Condition

At  March  31,  1998,  the  Company's total  assets  were  $8,206,938.
Included  in the Company's total assets are the assets of  Key  Group,
LTD.  which amounted to $5,232,678 at March 31, 1998.  The  Key  Group
assets  at  March  31,  1998  consisted primarily  of  cash  and  cash
equivalents  of $750,699, mortgage loans of $1,544,801,  property  and
equipment  of  $918,324 and accounts receivable, prepaid expenses  and
other  assets of $2,018,854.  The minority interest in the net  assets
of Key Group at March 31, 1998 amounted to $1,835,898.

On consolidated basis, cash and cash equivalents (including restricted
cash)  were $1,429,593 at March 31, 1998.  Included therein  was  cash
and  cash  equivalents  for  Key Group of  $750,699  and  Apex  Lloyds
Insurance  Company of $524,878.  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, 1997, First Preference Mortgage Corp. has a master
loan  participation with a financial institution totaling  $25,000,000
which  expires August 31, 1998. On March 10, 1998, the amount of  this
agreement  was increased to $30,000,000 and will remain at this  level
until  May  31,  1998,  at  which time the  amount  will  decrease  to
$25,000,000.
                                   
                      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 no have a material  effect
on this financial position of the Company.

Item 6. Exhibits and Reports on Form 8-K

Exhibit 27 - Financial Data Schedule

No Form 8-K was filed during  the quarter ended March 31, 1998.


                                6

<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   May 14, 1998           /s/ David W. Mann
                              David W. Mann
                              President
                              Duly Authorized Officer and
                              Principal Financial Officer


Date   May 14, 1998           /s/  Annie Laurie Miller
                              Annie Laurie Miller
                              Executive Vice President and
                              Principal Accounting Officer