** **

** **

**UNITED STATES SECURITIES AND EXCHANGECOMMISSIONWashington, D.C.  20549**

FORM 10-QSB

      X        QUARTERLY REPORTUNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Forthe quarterly period ended March 31, 2005

     __        TRANSITION REPORTUNDER SECTION 13 OR 15(D) ON THE EXCHANGE ACT

For the transition period from_______________ to _______________          

**Commission file number      0-5559     **

**FIRST FINANCIAL CORPORATION**(Exactname of small business issuer as specified in its charter)

| Texas                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 74-1502313                                |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
|  (State or other jurisdiction ofincorporation or organization)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | (I.R.S. EmployerIdentification No.)  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                      |
| 800 Washington Avenue, Waco, Texas
76701
(Address of principal executiveoffices)

 (Zip Code)
Issuer's telephone number       (254) 757-2424                    

Number of shares of theIssuer's Common stock outstanding on April 30, 2005 was 173,528.

Transitional SmallBusiness Disclosure Format (check one)                    Yes ____         No_X__

            

 

FORM 10-QSB

FIRST FINANCIAL CORPORATIONMARCH 31, 2005

INDEX

 
 				  				Part I FinancialInformationPage No.				  				           				Item 1. Financial Statements 				  
                                   				Consolidated Balance Sheet as of 
1
                                    March 31, 2005          				
 				  
                                   				Consolidated Statements of Income                 				
2
                                    forthe Three-Months ended
 
                                    March31, 2005 and 2004
 				  
                                   				ConsolidatedStatements of Cash
 
                                    Flowfor the Three-Months 
 
                                   				ended March 31, 2005 and 2004                    				
3				  
                                   				Notesto Consolidated Financial
 
                                   				Statements                                                       				
4-5				  
            Item 2.				Management'sDiscussion and Analysis
 
                                   				of Results of Operations and Financial   
5-7
                                    Condition                                                        				
 				  
           				Item 3. Controls and Procedures                                              				
8
                       				
 
                                   				
 
Part II Other Information
 				  
           				Item 1. Legal Proceedings                                                       				
8				  
           				Item 5. Other Information                                                        				
8				  
            Item 6.				Exhibitsand Reports on Form
 
                                   				8-K                                                             				

8
 

 

 First Financial Corporation

Consolidated Balance Sheet

 March 31, 2005

 (Unaudited)

Assets

------

Cash and cash equivalents

$1,992,955 

Restricted cash

                  -   	

Accounts receivable, net  of allowance for doubtful

 accounts of $86,980

         	742,625 	

Marketable investment  securities

          507,010 

Restricted marketable  investment securities

                  -  

Real estate held for  investment,at cost

          553,836 

Mortgage loans 

     23,939,416 

Property and equipment

       1,590,985 

Other assets

       1,277,552 

   -------------------- 

    Total Assets

$30,604,379 

    ===========

   Liabilities and Stockholders'  Equity

   --------------------------------------

Notes on line of credit

$23,347,607 

Note payable

       1,172,395 

Accounts payable

          769,511 

Estimated reserve for  indemnifications and early payment default losses

       1,777,523 

Estimated reserve for  losses under servicing agreements

          234,595 

Estimated reserve for  losses under insurance policies

                  -   

Other liabilities

          666,053 

   -------------------- 

    Total Liabilities

     27,967,684 

   -------------------- 

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 

 Additional paid-in  capital

          518,702 

 Retained earnings

       2,128,206 

 Accumulated other  comprehensive income:

    Unrealized gain (loss)  on marketable securities, net of tax

            24,096 

   -------------------- 

       2,672,004 

 Less:Treasury stock - at  cost

           (35,309)

   -------------------- 

    Total Stockholders'  Equity

       2,636,695 

   -------------------- 

    Total Liabilities and  Stockholders' Equity

 $   30,604,379 

    ===========

See accompanying notes to  consolidated financial statements.

1

 

      First Financial  Corporation

   Consolidated Statements  of Income 

Three months ended March 31,  2005 and 2004

 (Unaudited)

2005

2004

   ----------

   ----------

Revenues:

 Loan administration

 $    1,084,524 

 $    1,366,338 

 Interest income

          346,958 

          273,073 

 Other income

          331,738 

          404,434 

     Total Revenues

       1,763,220 

       2,043,845 

Expenses:

 Salaries and related  expenses

       1,139,323 

       1,277,530 

 Interest expense

          312,478 

          211,218 

 Other operating expenses

          803,838 

          849,277 

     Total Expenses

       2,255,639 

       2,338,025 

     Income (loss) before  income taxes,

         (492,419)

         (294,180)

Federal income taxes

                  -  	

                  -  	

     Net income (loss)

         (492,419)

         (294,180)

Other comprehensive  income:

 Unrealized holding gains  (losses)

           (14,327)

            13,951 

     Comprehensive income  (loss) 

 $      (506,746)

 $      (280,229)

 =========== 

 =========== 

Income Per Common Share

($2.92)

($1.61)

 =========== 

 =========== 

See accompanying notes to  consolidated financial statements.

2

First Financial Corporation

   Consolidated Statement of Cash Flows

(Unaudited)

 Three Months Ended March  31,

     ----------------------------

2005

2004

    -----------

    -----------

Cash flows from operating  activities:

   Net income (loss)

($492,419)

($294,180)

   Adjustments to  reconcile net income(loss) to

    net cash used by  operating activities:

   Depreciation

          105,443 

            24,078 

   Provision for loan  losses 

            15,576 

            65,972 

   Loan and insurance  losses paid

         (353,879)

         (922,793)

   Realized (gains) losses  on marketable investment securities

               (153)

             4,463 

   Net (increase) decrease  in accounts receivable

           (21,728)

       1,867,109 

   Net (increase) decrease  in other assets

         (176,391)

         (121,115)

   Net increase (decrease)  in accounts payable

          121,707 

            (5,944)

   Net increase (decrease)  in reserve for losses under

     insurance policies

         (309,696)

                  -  	

   Net increase (decrease)  in other liabilities

           (34,500)

          254,951 

   (Increase) decrease in  restricted cash used 

     in operating  activities - net

          479,495 

           (44,041)

   Mortgage loans funded

    (84,427,291)

    (85,008,806)

   Mortgage loans sold

     79,381,883 

     89,972,052 

   Increase in mortgage  loans participations sold

       4,334,666 

                  -  	

   Other

           (12,357)

         (139,443)

   -------------------- 

   -------------------- 

        Net cash provided  (used) for operating activities

      (1,389,644)

       5,652,302 

   -------------------- 

   -------------------- 

Cash flows from investing  activities:

   Proceeds from sale of  marketable investment securities

       1,724,520 

            33,696 

   Purchases of marketable  investment securities

         (904,648)

         (566,391)

   Unrealized holding  (gain) loss

           (14,327)

            13,951 

   Purchase of property  and equipment

           (94,238)

         (298,910)

   Principal collections  on mortgage loans

             4,674 

             7,453 

   (Increase) decrease in  deferred gain on sale of property & equipment

            43,780 

            43,780 

  -------------------- 

   -------------------- 

        Net cash provided  (used) for investing activities

          759,761 

         (766,422)

   -------------------- 

   -------------------- 

Cash flows from financing  activities:

   Net change in short  term borrowings

          947,374 

      (4,861,611)

   -------------------- 

   -------------------- 

        Net cash used for  financing activities

          947,374 

      (4,861,611)

   -------------------- 

   -------------------- 

Net increase (decrease) in  cash and cash equivalents

          317,491 

            24,270 

Cash and cash equivalents  at beginning of year

       1,675,465 

       2,388,739 

   -------------------- 

   -------------------- 

Cash and cash equivalents  at end of period

       1,992,955 

$2,413,009	

    ===========

    ===========

Supplemental Disclosure of  Cash Flow Information

   Interest Paid

$271,002 

$222,031	

    ===========

    ===========

See accompanying notes to  consolidated financial statements.

3

FIRST FINANCIALCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(Unaudited)

PART I - FINANCIAL INFORMATION

1 - Basis of Presentation

The financial informationincluded herein for First Financial Corporation, and all of its wholly ownedsubsidiaries (the "Company") is unaudited; however, such unauditedinformation reflects all adjustments which are, in management's opinion,necessary for a fair presentation of the financial position, results ofoperations and statement of cash flows for the interim periods. In preparingthese financial statements, management is required to make estimates andassumptions that affect the reported amounts of assets and liabilities as ofthe date of the balance sheet and revenue and expense for the period. Actualresults could differ significantly from those estimates. 

The results of operationsand changes in cash flow for the three-month period ended March 31, 2005 arenot necessarily indicative of the results to be expected for the full year orany future period.

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

2 - Earnings Per Share

Earnings per common sharewere computed by dividing net income by the weighted average number of sharesoutstanding during the period. 

3 - Income Taxes

Income taxes are providedfor the tax effects of transactions reported in the financial statements andconsist of taxes currently due plus deferred taxes related primarily todifferences between the basis of the loan loss reserve for financial and incometax reporting.  The deferred tax assets and liabilities represent the futuretax return consequences of those differences, which will either be taxable ordeductible when the assets and liabilities are recovered or settled.  Deferredtaxes also are recognized for operating losses that are available to offsetfuture taxable income and tax credits that are available to offset futurefederal income taxes.  The Company has approximately $6.8 million in availablenet operating loss carryforward benefits for financial statement purposes tooffset future income, if any. A valuation allowance has been provided for alltax benefits.

4

4 - Contingencies

Substantially all of theconventional pools of manufactured home loans serviced by the Company,approximately $277,000 at March 31, 2005, were sold to investors withrecourse.  The recourse provisions typically require the Company to repurchasedelinquent loans at the unpaid balances plus accrued interest, or replacedelinquent loans with another loan which is current.  

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

Results of Operations

The Company had a net lossof $(492,419) for the quarter ended March 31, 2005 compared to net loss of$(294,180) for the same period in 2004.  Loan administration revenues were $1,084,524for the first quarter for 2005 compared to $1,366,338 for the first quarter of2004.  The decrease in loan administration revenues is the result of decreasedretail loan origination fees from the Company's residential mortgage loanoperations. During the quarter ended March 31, 2005, FPMC funded approximately$14.1 million in retail residential mortgage loans and approximately $70.3million in wholesale loans compared to approximately $20.2 million and $64.8million, respectively during the same period in 2004. In addition, the revenuesfrom the sale of the mortgage loans to governmental and private investorsdecreased by approximately $140,000 for the three months ended March 31, 2005compared to the same period in 2004. This decrease is due to an approximately14% reduction in the net margins realized on the sale of these mortgage loansduring the quarter ended March 31, 2005 compared with the same period in 2004.In addition, the amount on loans sold during the period decreased by $10.8million from the same period in 2004. 

Interest income for thequarter ended March 31, 2005 amounted to $346,958 compared to $273,073 for thesame period in 2004. During this period, the interest income earned onmortgages held-for-sale increased by approximately $75,000 from the same periodin 2004 primarily due to increasing mortgage loan interest rates during theseperiods. FPMC earns interest from the date the mortgage loan is closed untilthe date the mortgage loan is sold to investors.

Other income for the quarterended March 31, 2005 amounted to $331,738     compared to $404,434 for the sameperiod in 2004. As more fully discussed in the Annual Report Form 10-KSB forthe year ended December 31, 2004, the Company sold First Apex Re ("FAR")effective December 29, 2004. The Company's consolidated statements of incomeinclude the revenue and expense of FAR for the period January 1, 2004 to March31, 2004. During the quarter ended March 31, 2004, FAR had total insurancerevenues of approximately $75,000. In addition, the net fees earned underfronting and reinsurance agreements decreased due to a reduction in the numberof policies written and changes in commissions paid under these agreements.  

As more fully discussed inthe Annual Report Form 10-KSB for the year ended December 31, 2004, the Companysold Apex Lloyds Insurance Company ("Apex Lloyds") on March 31, 2005. TheCompany realized a gain on the sale of $73,234.

5

Salaries and relatedexpenses increased to $1,139,323 for the three months ended March 31, 2005, comparedto $1,277,530 for the three months ended March 31, 2004. This decrease isprimarily due to the decrease in the volume of new retail residential mortgageloans originated during the quarter ended March 31, 2005 compared to the sameperiod in 2004 as previously discussed.

For the quarter endedMarch 31, 2005, interest expense amounted to $312,478 compared to $211,218 forthe same period in 2004.  The significant increase in interest expense for thequarter ended March 31, 2005 is primarily the result of the increase in theweighted average interest rate on the Company's financing of its mortgagelending activities. During this period, the weighted average interest rateincreased to approximately 4.86% compared to approximately 4.39% for the sameperiod in 2004.

Operating expenses for thequarter ended March 31, 2005 were $803,838 compared to $849,277 for the sameperiod in 2004. This decrease is primarily due to the overall decrease in thevolume of new residential mortgage loans originated during the quarter endedMarch 31, 2005 compared to the same period in 2004 as previously discussed.

During the quarter endedMarch 31, 2005, the Company recorded a provision for loan losses of $15,576compared to $65,972 for the same period in 2004. At March 31, 2005, the reservefor indemnifications and early payment default losses amounted to $1,777,523compared to $260,004 at March 31, 2004. The Company is at risk under certain ofits agreements with private investors for credit losses and cost of foreclosureon default of the borrower. The Company has analyzed certain attributes of themortgage loans that it has sold to investors, including delinquencies, creditquality, credit insurance, loss experience and insurance coverage. Based onthis review, the Company believes that its reserve for indemnifications andearly payment default losses is adequate for potential loan losses.

The Company made noprovision for losses under servicing agreements in either the quarter endedMarch 31, 2005 or 2004. The reserve for losses under servicing agreementsamounted to $234,595 at March 31, 2005 and 2004. Under the terms of certain ofits servicing agreements, the Company is at risk for any credit losses andcosts of foreclosure, net of credit insurance proceeds, if any, sustained ondefault of the borrower. The Company has analyzed its servicing portfoliocharacteristics, including servicing portfolio balance, loss experience,maturity and aging of the loans and the credit insurance coverage on the loans.Based on this analysis, it is the Company's belief that its reserve for lossesunder servicing agreements is adequate for potential losses attributable to theservicing agreements.

Other comprehensive incomeconsists of unrealized holding gains (losses) on marketable investmentsecurities net of income taxes. For the quarter ended March 31, 2005,unrealized holding losses amounted to $(14,327) compared to unrealized holdinggains of $13,951 for the quarter ended March 31, 2004.

6

Financial Condition

At March 31, 2005, the Company'stotal assets were $30,604,379 compared to $27,449,614 at March 31, 2004. Included in the total assets at March 31, 2004, are the total assets of ApexLloyds and FAR amounting to $3,827,761. The increase in the total assets isprimarily due to the reduction in the amount of residential mortgage loans soldto investors during the quarter ended March 31, 2005 as previously discussed.As reflected in the financial statements, the stockholders' equity of theCompany was $2,636,695 at March 31, 2005 and the stockholders' equity was$5,937,328 at March 31, 2004.

Liquidity and Capital Resources

The Company's primarysources of liquidity are proceeds from the sale of mortgage loans, net interestincome, fees earned from originating mortgage loans and borrowings under theCompany's warehouse credit facilities. The Company's use of cash include thefunding of mortgage loans prior to their sale, payment of interest, repaymentof amounts borrowed pursuant to warehouse lines of credit, operating andgeneral and administrative expenses and capital expenditures. On consolidatedbasis, cash and cash equivalents were $1,992,955 at March 31, 2005

As more fully discussed inthe Annual Report Form 10-KSB for the year ended December 31, 2004, FPMC has amortgage warehouse line of credit with a financial institution totaling$25,000,000 which expires on June 30, 2005. This agreement includes certainfinancial covenants including requirements to maintain adjusted-tangible-networth above $2,500,000. Also, FPMC's total liabilities to adjusted tangible networth may never exceed 15 to 1. The obligations under this agreement areguaranteed under an Unlimited Continuing Guaranty Agreement executed by DavidW. Mann. Management expects to renew this agreement or possibly seek an alternatefunding source for its financing of operations, and therefore, management doesnot believe that this matter will have a material adverse effect on thefinancial position of FPMC, however, the ability to provide adequate fundingsources for its financing of operations has a direct impact on maintaining thelevel of operations.

FPMC has a loanparticipation agreement in the amount of $10,000,000 with its line of creditlender. Under this agreement, the financial institution has the option topurchase an undivided interest in the residential mortgage loans originated byFPMC. When a subject mortgage loan is sold in the secondary market, thefinancial institution recoups its investment plus a specified yield on itsinvestment. At March 31, 2005, $6,184,893 in participations were outstandingunder this agreement.

In addition, FPMC has aloan participation agreement with another financial institution, which is arelated party by common ownership, amounting to $22,500,000. Under thisagreement, the financial institution has the option to purchase an undividedinterest in the residential mortgage loans originated by FPMC. When the subjectmortgage loan is sold in the secondary market, the financial institutionrecoups its investment plus a specified yield on its investment. At March 31,2005, no participations were outstanding under this agreement.

7

Item 3. Controls and Procedures

As of March 31, 2005, the Company evaluated theeffectiveness of the design and operation of its disclosure controls andprocedures. The evaluation was carried out under the supervision and with theparticipation of the Company's management, including the Company's ChiefExecutive Officer and Chief Financial Officer. Based on and as of the date ofthe evaluation, the Chief Executive Officer and the Chief Financial Officerconcluded that the Company's disclosure controls and procedures are effectivein timely alerting them to material information relating to the Company,including it consolidated subsidiaries, required to be included in reports theCompany files with or submits to the Securities and Exchange Commission underthe Securities Exchange Act of 1934. There have been no significant changes inthe Company's internal controls or in other factors that could significantlyaffect the Company's internal controls subsequent to the date of theevaluation.

PART II -OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved inroutine litigation incidental to its business, both as a plaintiff and adefendant. Management of the Company, after consulting with legal counsel,feels that liability resulting from the litigation, if any, will no have amaterial effect on this financial position of the Company.

Item 5. Other Information

This report on Form 10-Q is accompanied by a statement ofthe Chief Executive Officer and the Chief Financial Officer of the registrantmaking certain certifications as to the contents hereof, as required by Section906 of the Sarbanes-Oxley Act of 2002.

Item 6. Exhibits andReports on Form 8-K

A Form 8-K with a reportdate of March 31, 2005 was filed on April 6, 2005, pertaining to the sale ofApex Lloyds Insurance Company and First Apex Re, Inc.

8

SIGNATURES

Pursuant to therequirements of the Securities and Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

First FinancialCorporation

____________________________________________________________________________

Date                May 12,2005                              /s/  David W. Mann                                                                                                                       DavidW. Mann                                                                        President                                                                        DulyAuthorized Officer and                                                                          PrincipalFinancial Officer

Date                 May12, 2005                            /s/ Robert L. Harris                                                                                                                       RobertL. Harris                                                                        VicePresident and                                                                        PrincipalAccounting Officer

(Remainder of pagepurposely left blank.)

9 |