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 June 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 Identification
		No.)incorporation or organization)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 July 31, 2007 was 402,058.  Transitional Small Business Disclosure Format (check one)    Yes __     No X


FORM 10-QSB  FIRST FINANCIAL
CORPORATION June 30, 2007    INDEX   Part I Financial
Information
		Page No.Item 1. Financial
StatementsConsolidated Balance Sheet as of
		1June 30, 2007Consolidated Statements of Income
		2for
the Three-Months endedJune
30, 2007 and 2006Consolidated
Statements of Cash
		3Flow
for the Three-Monthsended June 30, 2007 and 2006Notes
to Consolidated FinancialStatements
		4Item 2.
Management's
Discussion and AnalysisOr Plan of Operation
		9Item 3. Controls and Procedures
		11Part II Other InformationItem 1. Legal Proceedings
		11Item 6. Exhibits
		12    
    Item 1. Financial StatementsFirst Financial CorporationConsolidated Balance SheetJune 30, 2007(Unaudited)Assets------Cash and cash equivalents
			
			
			
			
			
			
			$387,575Restricted cash
			
			
			
			
			
			
			
			-Accounts receivable
			
			
			
			
			
			
			
			96,840Notes receivable
			
			
			
			
			
			
			
			200,000Marketable investment securities
			
			
			
			
			
			2,463,553Restricted marketable investment securities
			
			
			
			
			-Real estate held for investment,at cost
			
			
			
			
			
			-Mortgage loans
			
			
			
			
			
			
			
			7,238Property and equipment
			
			
			
			
			
			
			12,123Other assets
			
			
			
			
			
			
			
			153,441Total Assets
			
			
			
			
			
			
			$3,320,770Liabilities and Stockholders' Deficit--------------------------------------Notes on line of credit
			
			
			
			
			
			
			$0Notes payable
			
			
			
			
			
			
			
			2,508,382Accounts payable
			
			
			
			
			
			
			
			22,812Estimated reserve for indemnifications and early
			payment default losses
			
			
			4,035,484Estimated reserve for losses under servicing
			agreements
			
			
			
			-Estimated reserve for losses under insurance policies
			
			
			
			
			-Other liabilities
			
			
			
			
			
			
			
			131,731Total Liabilities
			
			
			
			
			
			
			6,698,410Stockholders' deficit:Common stock - no par value; authorized500,000 shares; issued 402,058
			shares
			
			
			
			
			
			1,000Additional paid-in capital
			
			
			
			
			
			
			1,471,004Retained earnings
			
			
			
			
			
			
			
			(7,116,355)Accumulated other comprehensive income:Unrealized gain (loss) on
			marketable securities, net of tax
			
			
			
			2,266,711(3,377,640)Less:Treasury stock - at cost
			
			
			
			
			
			
			-Total Stockholders' Deficit
			
			
			
			
			
			(3,377,640)Total Liabilities and
			Stockholders' Deficit
			
			
			
			
			$    3,320,770See accompanying notes to consolidated financial
			statements. -1- 
    First Financial CorporationConsolidated Statements of IncomeThree months ended June 30, 2007 and 2006(Unaudited)Three Months Ended
			
			Six Months EndedJune 30,
			
			June 30,2007
			
			2006
			
			2007
			
			2006Revenues:Loan administration
			
			
			
			
			$          
			7,799
			
			$       326,087
			
			$          
			7,985
			
			$      1,101,461Interest income
			
			
			
			
			9,126
			
			1,115
			
			9,702
			
			5,764Oil and gas royalties
			
			
			
			5,263
			
			7,756
			
			14,530
			
			19,217Other income
			
			
			
			
			49,856
			
			1,054,175
			
			58,409
			
			1,297,115Total Revenues
			
			
			
			
			72,044
			
			1,389,133
			
			90,626
			
			2,423,557Expenses:Salaries and related expenses
			
			
			
			37,423
			
			354,151
			
			75,515
			
			1,329,218Interest expense
			
			
			
			
			3,474
			
			38,577
			
			4,245
			
			114,328Provision for loan losses
			
			
			
			643,519
			
			1,704,067
			
			745,181
			
			1,712,845Impairment of assets
			
			
			
			-
			
			807,237
			
			-
			
			807,237Other operating expenses
			
			
			
			236,592
			
			1,074,983
			
			284,750
			
			1,803,543Total Expenses
			
			
			
			
			921,009
			
			3,979,015
			
			1,109,692
			
			5,767,171Income (loss) before income
			other income,
			
			(848,964)
			
			(2,589,882)
			
			(1,019,065)
			
			(3,343,614)and provision for
			income tax expenseOther non-operating incomeNet gain from settlement of note payable
			
			
			-
			
			-
			
			-
			
			-Total Other Income
			
			
			
			-
			
			-
			
			-
			
			-Income (loss) before
			provision for income tax
			
			(848,964)
			
			(2,589,882)
			
			(1,019,065)
			
			(3,343,614)Federal income taxes
			
			
			
			-
			
			64
			
			-
			
			64Net income (loss)
			
			
			
			
			(848,964)
			
			(2,589,946)
			
			(1,019,065)
			
			(3,343,678)Other comprehensive income:Unrealized holding gains (losses)
			
			
			1,039,703
			
			183,301
			
			1,508,901
			
			196,169Comprehensive income (loss)
			
			
			$       190,738
			
			$   (2,406,645)
			
			$       489,835
			
			$     (3,147,509)Income Per Common Share
			
			
			
			$0.47
			
			($13.87)
			
			$1.22
			
			($18.14)See accompanying notes to consolidated financial
			statements.  -2- 
   First Financial CorporationConsolidated Statement of Cash Flows(Unaudited)Six Months Ended2007
			
			2006Cash flows from operating activities:Net income (loss)
			
			
			
			
			
			
			
			($1,019,065)
			
			($3,343,678)Adjustments to reconcile net income(loss)
			tonet cash used by operating
			activities:Depreciation
			
			
			
			
			
			
			
			9,963
			
			1,285,455Provision for loan losses
			
			
			
			
			
			
			745,181
			
			1,340,045Loan and insurance losses paid
			
			
			
			
			
			170,022
			
			(1,188,551)Realized (gains) losses on marketable
			investment securities
			
			
			
			9,987
			
			(11,669)Gain on sale of real estate held for
			investment
			
			
			
			
			-
			
			(696,164)Net (increase) decrease in accounts
			receivable
			
			
			
			
			(155)
			
			152,011Net (increase) decrease in other assets
			
			
			
			
			
			20,912
			
			317,318Net increase (decrease) in accounts
			payable
			
			
			
			
			(75,751)
			
			(47,547)Net increase (decrease) in reserve for
			losses underinsurance policies
			
			
			
			
			
			
			-
			
			-Net increase (decrease) in other
			liabilities
			
			
			
			
			
			(23,871)
			
			(278,789)(Increase) decrease in restricted cash
			usedin operating activities -
			net
			
			
			
			
			
			
			-
			
			-Mortgage loans funded
			
			
			
			
			
			
			-
			
			(70,392,273)Mortgage loans sold
			
			
			
			
			
			
			-
			
			86,221,199Increase (decrease) in mortgage loans
			participations sold
			
			
			
			-
			
			(15,670,637)Other
			
			
			
			
			
			
			
			
			2,050
			
			108,508Net cash
			provided (used) for operating activities
			
			
			
			
			(160,727)
			
			(2,204,771)Cash flows from investing activities:Net (increase) decrease in notes
			receivable
			
			
			
			
			55,000Proceeds from sale of marketable
			investment securities
			
			
			
			-
			
			61,669Purchases of marketable investment
			securities
			
			
			
			
			(97,678)
			
			(136,669)Proceeds from sale of real estate held
			for investment
			
			
			
			
			-
			
			1250000Purchase of property and equipment
			
			
			
			
			
			-
			
			(78,258)Principal collections on mortgage loans
			
			
			
			
			
			16,395
			
			14,727(Increase) decrease in deferred gain on
			sale of property & equipment
			
			
			-
			
			-Net cash
			provided (used) for investing activities
			
			
			
			
			(26,284)
			
			1,111,469Cash flows from financing activities:Net change in short term borrowingsProceeds from notes payable
			
			
			
			
			
			
			-
			
			1,138,343Payments on notes payable
			
			
			
			
			
			
			111,554
			
			(1,145,878)Proceeds from additional paid-in capital
			
			
			
			
			
			-Proceeds from sale of treasury stock
			
			
			
			
			
			-Net cash
			used for financing activities
			
			
			
			
			
			111,554
			
			(7,535)Net increase (decrease) in cash and cash equivalents
			
			
			
			
			(75,456)
			
			(1,305,707)Cash and cash equivalents at beginning of year
			
			
			
			
			463,031
			
			1,554,487Cash and cash equivalents at end of period
			
			
			
			
			
			$387,575
			
			$248,780Supplemental Disclosure of Cash Flow InformationInterest Paid
			
			
			
			
			
			
			
			$6,936
			
			$193,749See 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 six-month period ended June 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 June 30, 2007, the
Company has unrestricted cash and cash equivalents of $.39 million and an
accumulated deficit of $7.1 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 $1.019 million
during the six months ended June 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.  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.   4 
        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 is
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 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 is unable to continue as a going
concern.  On December 1, 2006 FPMC
and CMC 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.  CMC is a wholly-owned
subsidiary of Citizens State Bank of Woodville, Texas, the president and chief
executive officer of which is David W. Mann and the parent company of which is
majority-owned by Mr. Mann and his affiliates.  Mr. Mann is also the chief
executive officer and a director of both FPMC and the Company.  Mr. Mann and
his affiliates have controlling beneficial ownership of the Company and the
parent company of CMC.  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.    5 
       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.  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 the agreements described in
Results of Operations.  The last payments due in May 2006 under each of these
three 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.  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 business, the Company sells 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 are subject to repurchase or
indemnification if the loans become a specified number of months delinquent
within a specified period of time after the loans are sold (i.e., early payment
default).  When a loan sold to an investor without recourse fails to perform,
the investor will typically review the loan file to determine whether defects
in the origination process occurred.  If a defect is identified, the Company
may be required to either repurchase the loan or indemnify the investor for
losses sustained.  If there are no defects, the Company has no commitment to
repurchase the loan.  The Company has accrued for this potential loss exposure
as further discussed in Item 2.  At June 30, 2007, the estimated reserve for
indemnifications and early payment default losses was $4,035,484.  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 has filed an answer in this suit, contesting many of
the allegations and claims of CMI.  CMC has moved to dismiss the suit for
lack of personal jurisdiction and improper venue and Mr. Mann has moved to
dismiss the suit for lack of personal jurisdiction.  The parties to this
have completed jurisdictional discovery and all briefs and memorandums on the
jurisdictional and venue issues have been filed with the court.  The court has
not yet ruled on whether the court has personal jurisdiction over CMC and Mr.
Mann.  7 
       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.  Item 2. Management's
Discussion and Analysis or Plan of Operation  Results of Operations  The Company had a net loss of
$1,019,065 for the six months ended June 30, 2007 compared to a net loss of
$3,343,678 for the same period in 2006.  The Company had a net loss of $848,964
for the three months ended June 30, 2007 compared to a net loss of $2,589,946
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 quarter ended
June 30, 2007 have decreased to $921,009 from $3.98 million for the same time
period last year.  There were no mortgage loans funded in the six months ended
June 30, 2007 compared to $70 million in mortgage loans funded during the same
period in 2006.  During the quarter ended
June 30, 2007, there were loan administration revenues and interest income of
$7,799 and $9,126 compared to $326,087 and $1,115 respectively for the same
period in 2006.  Loan administration revenues were $7,985 for the first six
months of 2007 compared to $1,101,461 for the same period of 2006.  Interest
income for the six months ended June 30, 2007 amounted to $9,702 compared to
$5,764 for the same period in 2006.  In 2006 prior to the doscontinuance 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
six months ended June 30, 2007, the Company earned interest revenue in the
amount of $8,653 from a note receivable from its affiliate, CMC, as described
under Liquidity and Capital Resources.  Oil and gas royalties for
the three months ended June 30, 2007 amounted to $5,263 compared to $7,756 for
the same period in 2006.  For the six months ended June 30, 2007, oil and gas
royalties amounted to $14,530 compared to $19,217 for the same period in 2006.  For the quarter ended June
30, 2007, other income was $49,856 compared to $1,054,175 for the same period
in 2006.  Other Income for the six months ended June 30, 2007 was $58,409
compared to $1,297,115 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 June 30, 2007, unrealized holding gains
amounted to $1,039,703 compared to $183,301 for the same period in 2006.  For
the six months ended June 30, 2007, unrealized holding gains amounted to
$1,508,901 compared to $196,169 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 $37,423 for the quarter ended June 30, 2007 compared to
$354,151 for the same period in 2006.  For the six months ended June 30, 2007,
salaries and related expenses were $75,515 compared to $1,329,218 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 June 30, 2007 was $3,474 compared to $38,577 for the same time
period in 2006.  Interest expense for the six months ended June 30, 2007 was
$4,245 compared to $114,328 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 June 30, 2007 amounted to $236,592 compared to
$1,074,983 for the same period in 2006.  Other operating expenses for the six
months ended June 30, 2007 amounted to $284,750 compared to $1,803,543 for the
same period in 2006.  The reduction of other operating expenses is primarily
due to the closing of the mortgage operations.  During the
six months ended June 30, 2007, FPMC increased its provision for loan losses,
indemnifications and early default losses by $915,204, resulting in a charge
against income in that amount, as compared to a charge of $647,060 for the same
period in 2006.During the three months ended June 30, 2007, FPMC
increased its provision for loan losses, indemnifications and early default
losses by $813,519, resulting in a charge against income in that amount, as
compared to a charge of $1,827,119 for the same period in 2006.  At June 30,
2007, the reserve for loan losses amounted to $4,035,484 compared to $2,595,377
at June 30, 2006.  For the quarter ended June 30, 2007, FPMC recorded a
provision for loan losses of $643,519.  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.  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 during the
quarter ended June 30, 2007.  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
(E&O) insurance policy as well as other factors.    9 
   Financial Condition    At June 30, 2007, the Company's total assets were
$3,320,770 compared to $1,106,961 at June 30, 2006.    The increase in total
assets is primarily due to the increased value of marketable investment
securities of about $2 million in the last twelve months.  The increase is also
due to the note receivable of $200,000 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 $3,377,640
at June 30, 2007 and the stockholders deficit was $5,480,791 at June 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 $387,575 at June 30, 2007. On that date the
Company had an accumulated deficit (that is, total liabilities in excess of
total assets) of approximately $3.4 million.  At this time, management does
not intend to cause the Company or FPMC to seek protection under the bankruptcy
laws.  If the Company 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 June 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 June 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.             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 August 14,
2007
		/s/  David W.
MannDavid
W. Mann
		President
		Duly Authorized Officer and  
		Principal Financial Officer          (Remainder of page
purposely left blank.)