<PAGE>   1


                    U.S. SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                  FORM 10-QSB
MARK ONE

[ X ]              QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
-----                OF THE SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997


[   ]             TRANSITION REPORT UNDER SECTION 13 OR 15(d)
-----                        OF THE EXCHANGE ACT

       FOR THE TRANSITION PERIOD FROM _______________ TO _______________

Commission File Number 33-426222
                       ---------

                          FIRST FINANCIAL CORPORATION
-------------------------------------------------------------------------------
       (Exact Name of Small Business Issuer As Specified in its Charter)

                   Tennessee                          62-1474162
-------------------------------------------------------------------------------
       (State or Other Jurisdiction of       (IRS Employer Identification
        Incorporation or Organization)                   Number)

                1691 N. Mt. Juliet Road, Mount Juliet, TN  37122
                    (Address of Principal Executive Offices)

                                 (615) 754-2265
-------------------------------------------------------------------------------
                           (Issuer's Telephone Number)

                                 Not Applicable
-------------------------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                         If Changed Since Last Report)

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

                          YES   X            NO
                             ------            ------
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:      930,988   .
                                                 ----------------

Transitional Small Business Disclosure Format (check one)

                           YES                NO   X
                              ------            ------

This filing contains  16  pages.
                    ------
The Exhibit Index appears at sequential page number  15 
                                                   ------

                                        1
<PAGE>   2

                       PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements


The unaudited consolidated financial statements of the small business issuer
and its wholly-owned subsidiary are as follows:

         Consolidated Balance Sheets - March 31, 1997 and December 31, 1996.

         Consolidated Statements of Earnings - For the three months ended March
         31, 1997 and 1996.

         Consolidated Statements of Cash Flows - For the three months ended
         March31, 1997 and 1996.







                                      2
<PAGE>   3




                          FIRST FINANCIAL CORPORATION

                          Consolidated Balance Sheets

                      March 31, 1997 and December 31, 1996

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                          March 31,               December 31,
                                                            1997                      1996
                                                      ---------------           ---------------
       Assets                                                      (In Thousands)
<S>                                                   <C>                       <C>
Loans                                                 $       130,685                   124,312
   Less:   Allowance for loan losses                           (1,585)                   (1,541)
                                                      ---------------           ---------------
                 Net loans                                    129,100                   122,771

Securities:
   Securities available-for-sale, at market
     (amortized cost $42,737,000 and
     $42,427,000, respectively)                                42,522                    42,473
Loans held for sale                                             1,211                     1,723
Federal funds sold                                              4,025                     3,725
                                                      ---------------           ---------------
           Total earning assets                               176,858                   170,692

Cash and due from banks                                         6,162                     5,412
Bank premises and equipment, net of
   accumulated depreciation                                     5,467                     5,457
Accrued interest receivable                                     1,718                     1,638
Other real estate                                                   2                         2
Other assets                                                    1,035                       772
                                                      ---------------           ---------------
                                                      $       191,242                   183,973
                                                      ===============           ===============
    Liabilities and Stockholders' Equity

Deposits                                              $       174,082                   167,445
Short-term borrowings                                             800                       800
Accrued interest payable                                          886                       882
Other liabilities                                                 518                       289
Advances from Federal Home Loan Bank                              980                       993
Long-term debt                                                    390                       391
                                                      ---------------           ---------------
           Total liabilities                                  177,656                   170,800
                                                      ---------------           ---------------

Stockholders' equity:
   Preferred stock, no par value, authorized
     5,000,000 shares, no shares issued                          -                         -
   Common stock, $2.50 par value; authorized
     5,000,000 shares, issued 1,068,914 shares
     at March 31, 1997 and December 31, 1996                    2,672                     2,672
   Additional paid-in capital                                   3,850                     3,850
   Retained earnings                                            8,454                     7,879
   Net unrealized gains (losses) on
     available-for-sale securities, net of
     applicable income taxes                                     (133)                       29
   Less cost of 137,926 shares of treasury stock               (1,257)                   (1,257)
                                                      ---------------           ---------------
          Total stockholders' equity                           13,586                    13,173
                                                      ---------------           ---------------
                                                      $       191,242                   183,973
                                                      ===============           ===============                                    
</TABLE>

See accompanying notes to consolidated financial statements (unaudited).


                                      3
<PAGE>   4

                         FIRST FINANCIAL CORPORATION

                     Consolidated Statements of Earnings

                  Three Months Ended March 31, 1997 and 1996

                                 (Unaudited)


<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                                March 31,
                                                           ------------------
                                                           1997          1996
                                                           ----          ----
                                                         (Dollars In Thousands
                                                        Except Per Share Amount)

<S>                                                      <C>              <C>
Interest income:
    Interest and fees on loans                           $  3,127         2,782
    Interest and dividends on securities:
        Taxable securites                                     505           524
        Exempt from Federal income taxes                      132           103
    Interest on loans held for sale                            32            27
    Interest on federal funds sold                             69            11
    Interest on interest-bearing deposits       
        in other banks and other interest                       -             3
                                                         ---------    ---------
                Total interest income                        3,865        3,450
                                                         ---------    ---------
Interest expense:
    Interest on deposits                                     1,758        1,512
    Interest on short term borrowings                           15           19
    Interest on advances from Federal Home
        Loan Bank                                               18           24
   Interest on long-term debt                                    7            7
   Interest on Federal funds purchased                           -            3
                                                         ---------    ---------
                Total interest expense                       1,798        1,565
                                                         ---------    ---------
                Net interest income                          2,067        1,885
Provision for loan losses                                       60           80
                                                         ---------    ---------
                Net interest income after
                  provision for loan losses                  2,007        1,805
                                                         ---------    ---------
Non-interest income:
   Service charges on deposit accounts                         229          187
   Other fees and commissions                                   60           50
   Other income                                                170          162
   Gain on sale of securities                                    -            6
                                                         ---------    ---------
                                                               459          405
                                                         ---------    ---------
Non interest expenses:
   Salaries and employee benefits                              905          768
   Occupancy expenses, net                                      77           75
   Furnitire and equipment expense                             126          120
   Other operating expenses                                    435          372
   Loss on sale of securities                                    5            -
   Data processing fees                                         52           48
                                                         ---------    ---------
                                                             1,600        1,383 
                                                         ---------    ---------
Earnings before income taxes                                   866          827
Income taxes                                                   291          284
                                                         ---------    ---------
Net earnings                                             $     575          543
                                                         ---------    ---------
Weighted average number of common and
   common equivalents shares outstanding                   949,496      936,590
Net earnings per common and common                       =========    =========
   equivalent share                                      $     .61          .58
                                                         =========    =========
Dividends per share                                      $       -            -
                                                         =========    =========

</TABLE>
   See accompanying notes to consolidated financial statements (unaudited).

                                      4

<PAGE>   5

                          FIRST FINANCIAL CORPORATION

                     Consolidated Statements of Cash Flows

                   Three Months Ended March 31, 1997 and 1996

                Increase (Decrease) in Cash and Cash Equivalents

                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                         1997                    1996
                                                                         ----                    ----
                                                                                 (In Thousands)
<S>                                                               <C>                      <C>  
Cash flows from operating activities:
         Interest received                                        $      3,773                    3,320
         Fees and commissions received                                     289                      242
         Interest paid                                                  (1,794)                  (1,582)
         Originations of loans held for sale                            (7,056)                  (7,819)
         Proceeds from loan sales                                        7,738                    8,128
         Cash paid to suppliers and employees                           (1,695)                  (1,375)
         Income taxes paid                                                 (55)                     (41)
             Net cash provided by operating                       ------------             ------------
                activities                                               1,200                      873
                                                                  ------------             ------------
Cash flows from investing activities:
         Loans made to customers, net of repayments                     (6,389)                  (6,768)
         Proceeds from sales of available-for-sale
                 securities                                              1,246                    3,800
         Proceeds from maturities of available-for-
                 sale securities                                         1,528                    2,246
         Purchase of available-for-sale securities                      (3,043)                  (3,731)
         Decrease in interest bearing deposits in
                 other banks                                                 -                       98
         Purchase of premise and equipment                                (115)                     (22)
         Increase in other real estate                                       -                       (4)
         Proceeds from sale of other real estate                             -                       82
                                                                  ------------             ------------
             Net cash used in investing activities                      (6,773)                  (4,299)
                                                                  ------------             ------------
Cash flows from financing activities:
         Net increase in time deposits                                   1,703                    1,220
         Net increase in non-interest bearing,
                 savings, and NOW deposit accounts                       4,934                    4,069
         Repayment of long-term debt                                        (1)                      (1)
         Repayment of Federal Home Loan Bank advances                      (13)                     (79)
         Issuance of common stock                                            -                       11
             Net cash provided by financing                       ------------             ------------
               activities                                                6,623                    5,220
                                                                  ------------             ------------
Net increase in cash and cash equivalents                                1,050                    1,794

Cash and cash equivalents at beginning of period                         9,137                    5,633
                                                                  ------------             ------------
Cash and cash equivalents at end of period                        $     10,187                    7,427
                                                                  ============             ============                        
</TABLE>
   See accompanying notes to consolidated financial statements (unaudited).


                                      5
<PAGE>   6

                          FIRST FINANCIAL CORPORATION

                Consolidated Statements of Cash Flows, Continued

                   Three Months Ended March 31, 1997 and 1996

                Increase (Decrease) in Cash and Cash Equivalents

                                  (Unaudited)



<TABLE>
<CAPTION>
                                                              1997                             1996
                                                              ----        (In Thousands)       ----

<S>                                                         <C>                        <C>      
Reconciliation of net earnings to net cash
   provided by operating activities:
        Net earnings                                        $       575                        543
        Adjustments to reconcile net earnings to
          net cash provided by operating activities:
            Depreciation and amortization                            93                         89
            Provision for loan losses                                60                         80
            Loss (gain) on sale of available-for-
                     sale securities                                  5                         (6)
            Decrease in loans held for sale                         512                        152
            Increase in other assets, net                          (198)                       (80)
            Increase in interest receivable                         (80)                      (138)
            Increase (decrease) in interest payable                   4                        (17)
            Increase in other liabilities                           229                        250
                                                            -----------                -----------
                      Total adjustments                             625                        330
                                                            -----------                -----------
                      Net cash provided by operating
                         activities                         $     1,200                        873
                                                            ===========                ===========                      



Supplemental Schedule of Noncash Activities:

        Unrealized gain (loss) in values of
             securities available-for-sale, net
             of income tax benefits of $99,000
             and $181,000, respectively for the
             quarters ended March 31, 1997 and
             1996, respectively.                            $      (162)                      (296)
                                                            ===========                ===========                      
</TABLE>

   See accompanying notes to consolidated financial statements (unaudited).

                                      6


<PAGE>   7

                          FIRST FINANCIAL CORPORATION

                   Notes to Consolidated Financial Statements

                                  (Unaudited)


Basis of Presentation

The unaudited consolidated financial statements include the accounts of First
Financial Corporation and its wholly-owned subsidiary, First Bank and Trust
(First Bank).

The accompanying consolidated financial statements have been prepared, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission.  Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations.

In the opinion of management, the statements contain all adjustments and
disclosures necessary to summarize fairly the financial position of the Company
as of March 31, 1997 and December 31, 1996, and the results of operations for
the three months ended March 31, 1997 and 1996 and cash flows for the three
months ended March 31, 1997 and 1996.  All significant intercompany
transactions have been eliminated.  The interim consolidated financial
statements should be read in conjunction with the notes to the consolidated
financial statements presented in the Company's 1996 Annual Report to
stockholders.  The results for interim periods are not necessarily indicative
of results to be expected for the complete fiscal year.

Certain reclassifications have been made to the 1996 amounts to conform to the
March 31, 1997 presentation.

Allowance for Loan Losses

Transactions in the allowance for loan losses were as follows:

<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                              March 31,
                                                     -----------------------------
                                                     1997                     1996
                                                     ----                     ----
                                                           (In Thousands)
<S>                                             <C>                      <C>      
Balance, January 1, 1997 and 1996,
        respectively                            $        1,541                    1,246
Add (deduct):
        Losses charged to allowance                        (26)                     (25)
        Recoveries credited to allowance                    10                        9
        Provision for loan losses                           60                       80
                                                --------------           --------------
Balance, March 31, 1997 and 1996,
        respectively                            $        1,585                    1,310
                                                ==============           ==============
</TABLE>
Earnings Per Share

The computation of earnings per common and common equivalent share is based
upon the weighted average number of common shares outstanding during the period
plus the effect of common shares contingently issuable from stock options.  On
April 18, 1996 the stockholders approved a two-for-one stock split effective
for shareholders of record on May 1, 1996.  The weighted average number of
shares outstanding used in the computation of earnings per share has been
retroactively adjusted to reflect the stock split.

                                      7
<PAGE>   8

                          FIRST FINANCIAL CORPORATION

                             FORM 10-QSB, CONTINUED


Item 2.  Management's Discussion and Analysis or Plan of Operation

         The purpose of this discussion is to provide insight into the
financial condition and results of operations of the Registrant and its
subsidiary.  This discussion should be read in conjunction with the
consolidated financial statements.  Reference should also be made to the
Company's 1996 Annual Report to stockholders for a complete discussion of
factors that impact liquidity, capital and the results of operations.

         Management's discussion and analysis may include forward-looking
statements.  Many factors affect First Financial Corporation's (the "Company")
financial condition and profitability, including changes in economic
conditions, the volatility of interest rates, political events and competition
from other providers of financial services.  Because these factors are
unpredictable and beyond the Company's control, earnings may fluctuate from
period to period.  The purpose of this discussion and analysis is to provide
Form 10-QSB readers with information relevant to understanding and assessing
the financial condition and results of operations of the Company.

Liquidity and Interest Rate Sensitivity Management

         The concept of liquidity involves the ability of the Registrant and
its subsidiary to meet future cash flow requirements, particularly those of
customers who are either withdrawing funds from their accounts or borrowing to
meet their credit needs.

         Proper asset/liability management is necessary to maintain stability
in the balance of interest-sensitive assets to interest-sensitive liabilities
in order to provide a stable growth in net interest margins.  Earnings on
interest-sensitive assets such as loans tied to the prime rate of interest and
federal funds sold, may vary considerably from fixed rate assets such as
long-term investment securities and fixed rate loans.  Interest-sensitive
liabilities such as large certificates of deposit and money market
certificates, generally require higher costs than fixed rate instruments such
as passbook savings.

         Banks, in general, must maintain large cash balances to meet
day-to-day cash flow requirements as well as maintaining required reserves for
regulatory agencies.  The cash balances maintained are the primary source of
liquidity.  Federal funds sold, which are basically overnight or short-term
loans to other banks that increase the other bank's required reserves, are also
a major source of liquidity.

         The Company's investment portfolio consists of earning assets that
provide interest income.  Securities classified as available-for-sale include
securities intended to be used as a part of the Company's asset/liability
strategy and/or securities that may be sold in response to changes in interest
rate, prepayment risk, the need or desire to increase capital and similar
economic factors.  The Company has $7,297,000 of securities scheduled to mature
or reprice in the next twelve months.


                                      8
<PAGE>   9

                         FIRST FINANCIAL CORPORATION

                            FORM 10-QSB, CONTINUED


Item 2.  Management's Discussion and Analysis or Plan of Operation


Liquidity and Interest Rate Sensitivity Management, Continued


         A secondary source of liquidity is the Bank's loan portfolio.  At
March 31, 1997 commercial loans of approximately $28 million and other loans
(mortgage and consumer) of approximately $56 million either will become due or
will be subject to rate adjustments within twelve months from the respective
date.  Continued emphasis is placed on structuring adjustable rate loans.

         As for liabilities, certificates of deposit of $100,000 or greater of
approximately $26 million will become due during the next twelve months.  The
Bank's deposit base increased approximately $6.6 million during the quarter
ended March 31, 1997.

         The Company also has the ability to meet its liquidity needs through
advances from the Federal Home Loan Bank.  At March 31, 1997, the Bank had
$980,000 of these advances.

         As of March 31, 1997, the Bank's asset sensitivity was 5.6% (the
excess of earning assets over interest sensitive liabilities divided by total
assets at the one year threshold).  Management estimates an increase or
decrease in interest rates of 1% would have an immaterial impact on earnings.

         It is anticipated that with present maturities, the anticipated growth
in deposit base, and the efforts of management in its asset/liability
management program, liquidity will not pose a problem in the foreseeable
future.  At the present time, there are no known trends or any known
commitments, demands, events or uncertainties that will result in or that are
reasonably likely to result in the Company's liquidity changing in any material
way.  Liquidity was 22.4% at March 31, 1997 and 22.9% at December 31, 1996.


Capital Resources


         A primary source of capital is internal growth through retained
earnings.  The ratio of stockholders' equity to total assets was 7.1% at
March 31, 1997 and 7.2% at December 31, 1996.  Total assets increased 4.0%
during the three months ended March 31, 1997.  Cash dividends of $.20 per share
were declared during the year ended December 31, 1996.  Cash dividends will be
declared in 1997 only in the discretion of the Board of Directors to the extent
of available profits.  No material change in the mix or cost of capital is
anticipated in the foreseeable future.


         At the present time there are no material commitments for capital
expenditures other than the branch described below.


         The FDIC, which is the subsidiary's primary federal regulator, has
specific guidelines for purposes of evaluating a bank's capital adequacy.
Under these guidelines, a credit risk is assigned to various categories of
assets and commitments ranging from 0% to 100% based on the risk associated
with the asset or commitment.


                                      9
<PAGE>   10


                         FIRST FINANCIAL CORPORATION

                           FORM 10-QSB, CONTINUED



Item 2. Management's Discussion and analysis of Plan of Operation


         The following schedule details the Company's risk-based capital at
March 31, 1997 (excluding the effect of the adoption of SFAS No. 115):

<TABLE>
<CAPTION>
                                                             In Thousands
                                                         (except percentages)
         <S>                                               <C>
         Tier I capital:
             Stockholders' equity                          $       13,719

         Tier II capital:
             Allowable allowance for loan losses
                (limited to 1.25% of risk-weighted
                assets)                                             1,585
                                                           --------------
                    Total capital                          $       15,304
                                                           ==============
         Risk-weighted assets                              $      133,012
                                                           ==============
         Risk-based capital ratios:
                 Tier I capital ratio                               10.31%
                                                           ==============
                 Tier II capital ratio                              11.51%
                                                           ==============

</TABLE>

         The Company is required to maintain a Tier II capital to risk weighted
asset ratio of 8% and a Tier I capital to risk weighted asset ratio of 4%.  At
March 31, 1997 and December 31, 1996, the Company and its subsidiary bank were
in compliance with these requirements.

         In addition, the Company and its subsidiary are required to maintain a
leverage ratio (defined as equity divided by the most recent quarter average
total assets) of 4%.  The leverage ratio at March 31, 1997 was 7.21%.

         Management intends to maximize the leverage position of the company
consistent with safe and sound business practices and the current regulatory
environment.  Past decisions by management have committed the Company to a path
of growth to achieve the strategic goals of maximum leverage.  Management is
cognizant of the pressures of this philosophy but believes various combinations
of retained earnings, possible additional capital stock issues, possible
preferred stock offerings, and other avenues will maintain a capital position
consistent with sound banking principles and at the same time reward
stockholders with significant profits.

         Effective January 1, 1992, the Company acquired 100% of the common
stock of First Bank; and accordingly, became a one bank holding company.  The
Board of Directors and management believe that the holding company structure
enhances flexibility in the expansion of First Bank's business and enables the
Bank to be more responsive to its customers' broadening and changing financial
needs.  In particular, the holding company structure provides greater
flexibility in raising additional capital for First Bank.  Greater flexibility
in raising capital is important in seeking to insure that the growth of the
Bank's capital will keep pace with its asset growth.


                                     10

<PAGE>   11
                         FIRST FINANCIAL CORPORATION

                                 FORM 10-QSB


Item 2.  Management's Discussion and Analysis or Plan of Operation


         There is no established trading market for the Company's stock.  From
time to time the Company may acquire shares of its stock to provide some
liquidity in the shares.  During the quarter ended March 31, 1997, the Company
did not issue or redeem any shares of its common voting stock.  No shares of
the Company's common voting stock were redeemed for the year ending December
31, 1996.  Privately negotiated trades may involve the Company, its directors
and officers and, accordingly, may not be reliable indicators of value.  All
shares of common stock have been retroactively adjusted for a two-for-one stock
split approved on April 18, 1996.

         In April, 1993, the stockholders approved a stock option plan whereby
159,000 shares of the Company's stock is available for issuance to directors,
officers and employees of the Company.  At December 31, 1996, 79,400 shares of
the options had been granted at $10 per share (1,320 shares have been exercised
at March 31, 1997); 2,000 shares had been granted at $12 per share (200 shares
have been exercised at March 31, 1997), 4,000 shares had been granted at $13
per share (no shares have been exercised in 1997 as of March 31, 1997), 29,792
shares were granted at $15 per share (170 shares have been exercised in 1997 as
of March 31, 1997) and 528 shares were granted at $19 per share (no shares have
been exercised in 1997 as of March 31, 1997).  The options are granted at the
estimated market price of the stock at the date the option was granted.  At
March 31, 1997 there were 114,030 shares granted but not exercised.  The
options are generally exercisable ratably over a ten year period from the date
granted.  At March 31, 1997 options to purchase 43,280 common shares were
available for grant in future years.

         At present, the net book value of premises and equipment is 40.2% of
the Company's capital.  The subsidiary bank now has a significant presence in
the Wilson County market with offices in Mt. Juliet, Tennessee, Hermitage,
Tennessee and Lebanon, Tennessee.  The bank also has a new branch bank facility
in Smyrna, Rutherford County, Tennessee which opened in the fourth quarter of
1996.  The Company is also in the process of constructing a new branch bank
facility in Donelson, Tennessee.  Management believes that expansion into these
different markets diversifies its risk and provides increased opportunity for
generating growth and profits.  At present the ratio of fixed assets to capital
at the subsidiary bank level is 38.2%.  Investment in fixed assets can have a
detrimental impact on profits, particularly in the short term.


                                     11
<PAGE>   12

                         FIRST FINANCIAL CORPORATION

                           FORM 10-QSB, CONTINUED


Item 2.  Management's Discussion and Analysis or Plan of Operation


Results of Operations

         Net earnings were $575,000 for the three months ended March 31, 1997
as compared to $543,000 for the same period in 1996.  Earnings per share
increased from $.58 in 1996 to $.61 for the same period in 1997.

         As in most financial institutions, a major element in analyzing the
statement of earnings is net interest income, i.e., the excess of interest
earned over interest paid.  This is particularly true with the volatility in
interest rates encountered in recent years.

         The Company's interest income, excluding tax equivalent adjustments,
increased by $415,000 or 12.0% during the three months ended March 31, 1997 and
increased $783,000 or 29.4% for the same period in 1996.  The increases were
primarily attributable to higher volumes of earning assets.  The ratio of
average earning assets to total average assets was 90.4% for the quarter ended
March 31, 1997 and 93.2% for the year ended December 31, 1996.

         Interest expense increased by $233,000 for the three months ended
March 31, 1997 or 14.9% compared to $306,000 or 24.3% for the same period in
1996.  The increases in 1997 and 1996 can be attributable largely to an
increase in volume and an increase in weighted average interest rates.

         The foregoing increases in interest income and interest expenses
resulted in an increase in net interest income of $182,000 or 9.7% during the
first three months of 1997 and $477,000 or 33.9% in the comparable period of
1996.

         Since assets are more sensitive to movements in rates this should
favor the income statement.  Should loan demand not increase, and competition,
intent on increasing market share, drive interest expenses up, the net interest
margin can be expected to decline.

         The provision for loan losses was $60,000 for the first three months
of 1997 compared to $80,000 for the same period in 1996.  The provision for
loan losses is based on past loan experience and other factors which, in
management's judgment, deserve current recognition in estimating possible loan
losses.  Such other factors considered by management include growth and
composition of the loan portfolio, review of specific loan problems, the
relationship of the allowance for loan losses to outstanding loans, adverse
situations that may affect the borrowers ability to repay, the estimated value
of any underlying collateral and current economic conditions that may affect
the borrower's ability to repay.  Management has in place a system designed to
identify and monitor problems on a timely basis.


                                     12
<PAGE>   13

                         FIRST FINANCIAL CORPORATION

                           FORM 10-QSB, CONTINUED


Item 2.  Management's Discussion and Analysis or Plan of Operation


         The following schedule details selected information as to
non-performing loans of the Company at March 31, 1997:

<TABLE>
<CAPTION>
                                   Past Due
                                    90 Days                Non-Accrual

                                            (In Thousands)

<S>                                      <C>               <C>
        Real estate loans                $       39                88
        Installment loans                        52              -
        Commercial                              132              -
                                         ----------        ----------
                                         $      223                88
                                         ==========        ==========
            Renegotiated loans           $      322              -
                                         ==========        ==========
                                        
</TABLE>                              

         At March 31, 1997, loans, which include the above, totaling $1,169,167
were included in the Company's internal classified loan list.  Of these loans
$391,819 are consumer and $777,348 are commercial loans.  The collateral values
securing these loans total approximately $2,715,000 ($1,471,000 related to
consumer loans and $1,244,000 related to commercial loans).  Such loans are
listed as classified when information obtained about possible credit problems
of the borrower has prompted management to question the ability of the borrower
to comply with the repayment terms of the loan agreement.  The loan
classifications do not represent or result from trends or uncertainties which
management expects will materially impact future operating results, liquidity
or capital resources.

         There were no material amounts of other interest-bearing assets
(interest-bearing deposits with other banks, municipal bonds, etc.) at March
31, 1997 which would be required to be disclosed as past due, non-accrual,
restructured or potential problem loans, if such interest-bearing assets were
loans.

         Non-interest income increased $60,000 or 15.0% exclusive of any
securities gains during the three months ended March 31, 1997 and decreased
$79,000 or 24.7% for the same period in 1996.  The primary increase in
non-interest income resulted from increased service charges on deposit accounts
and an increase in income generated from sales of mortgage loans.  Mortgage
loan income (included in other income) for the three month period ended March
31, 1997 was $170,000 as compared to $157,000 for the period ending March 31,
1996.  The increase of $13,000 or 8.2% has been caused by the increase in the
refinancing of mortgage loans as compared to the same period in last year and
the increase in housing development in the subsidiary bank's service area.
Additionally, other fees and commissions increased $10,000 or 20.0%.

         Non-interest expense excluding securities transactions increased
$212,000 or 15.3% during the first three months of 1997 and $164,000 or 13.5%
during the same period in 1996.  The increases in 1997 and 1996 were primarily
attributable to increases in salaries and employee benefits which is due
toincreased number of employees and increases in annual compensation.

         There was a $5,000 security loss in the available-for-sale category
for the three months ended March 31, 1997 as compared to a $6,000 security gain
during the three months ended March 31, 1996.


                                     13
<PAGE>   14

                         FIRST FINANCIAL CORPORATION

                           FORM 10-QSB, CONTINUED

Item 2.  Management's Discussion and Analysis or Plan of Operation


         Management is not aware of any known trends, events or uncertainties
that will have or are reasonably likely to have a material effect on the
Company's liquidity, capital resources or operations of the Company.  The
Company is not aware of any current recommendations, which, if they were to be
implemented, would have a material effect on liquidity, capital resources or
operations other than as discussed in the capital resources section of this
plan.

Impact of Inflation

         The primary impact which inflation has on the results of the Company's
operations is evidenced by its effects on interest rates.  Interest rates tend
to reflect, in part, the financial market's expectations of the level of
inflation and, therefore, will generally rise or fall as the level of expected
inflation fluctuates.  To the extent interest rates paid on deposits and other
sources of funds rise or fall at a faster rate than the interest income earned
on funds, loans or investments, net interest income will vary.  Inflation also
impacts on non-interest expenses as goods and services are purchased, although
this has not had a significant effect on net earnings.  If the inflation rate
stays flat or increase slightly, the effect on profits will not be significant.


                                     14
<PAGE>   15

                         PART II.  OTHER INFORMATION





Item 6.  EXHIBITS AND REPORTS ON FORM 8-K


(a)  Exhibit 27 Financial Data Schedule (for SEC use only) - This schedule
     contains summary financial information extracted from the financial 
     statements of the Company at March 31, 1997 (unaudited) and is qualified
     in its entirety by reference to such financial statements as set forth in 
     the Company's quarterly report on Form 10-QSB for the period ending 
     March 31, 1997.

(b)  No reports on Form 8-K have been filed during the quarter for which
     this report is filed.



                                     15

<PAGE>   16

                                   SIGNATURES





         In accordance with the requirements of the Securities Exchange Act,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                           FIRST FINANCIAL CORPORATION
                                           ---------------------------
                                                  (Registrant)




DATE:       May 13, 1997                   /s/   David Major
     --------------------                  ---------------------------
                                           David Major
                                           Chairman, President and
                                             Chief Executive Officer



DATE:       May 13, 1997                   /s/   Sally P. Kimble
     --------------------                  ---------------------------          
                                           Sally P. Kimble
                                           Treasurer, Chief Financial Officer
                                           and Chief Accounting Officer





                                     16