FORM 10-Q


                                      SECURITIES AND EXCHANGE COMMISSION

                                            WASHINGTON, D.C. 20549

                              QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE

                                        SECURITIES EXCHANGE ACT OF 1934

                                          FIRST FINANCIAL CORPORATION

                                               March  31 , 1999 <PAGE> 





                                      SECURITIES AND EXCHANGE COMMISSION

                                            WASHINGTON, D.C.  20549


                              QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE

                                        SECURITIES EXCHANGE ACT OF 1934


For Quarter Ended   March 31,  1999   

Commission File Number 0-16759

                                          FIRST FINANCIAL CORPORATION
                          (Exact name of registrant as specified in its charter)

                      INDIANA                                        35-1546989
        (State or other jurisdiction                         (I.R.S. Employer
        Incorporation or organization)                       Identification No.)

        One First Financial Plaza, Terre Haute, IN      47807
        (Address of principal executive office)         (Zip Code)

        (812) -238-6000
        (Registrant s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such 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 _____.

As of March 31, 1999 were outstanding 6,975,219  shares without par value, of
the registrant.


















                                                       1 <PAGE> 





                                         FIRST FINANCIAL CORPORATION 

                                                   FORM 10-Q

                                                     INDEX


PART I.  Financial Information                                          Page No.

            Item 1.   Financial Statements:

                        
                    Consolidated Statements of Condition.... ...............3

                    Consolidated Statements of Income.......................4

                    Consolidated Statements of Shareholders
                      Equity and Comprehensive Income.......................5

                    Consolidated Statements of Cash Flows...................6

                    Notes to Consolidated Financial Statements..............7

            Item 2.   Management s Discussion and Analysis of
                                 Financial Condition and Results
                                   of Operations............................9

PART II.   Other Information:

                                                     
           
Signatures.................................................................14
















                                                       2 <PAGE>




<TABLE>
                                                  FIRST FINANCIAL CORPORATION
                                              CONSOLIDATED STATEMENTS OF CONDITION
<CAPTION>
                                                                                      March, 31       December, 31
                                                                                        1999              1998             
                                                                                     (Unaudited)
                                                                                            (Amounts in thousands)
<S>                                                                               <C>               <C>         
ASSETS                                                                              
Cash and due from banks                                                               $46,209           $54,877
Federal funds sold and securities purchased under agreement to resell                  27,410               450
Investments, available-for-sale                                                       594,833           633,365     
Loans:  
  Commercial, financial and agricultural                                              232,420           233,080
  Real estate - construction                                                           34,908            32,880
  Real estate - mortgage                                                              641,868           636,615
  Installment                                                                         205,329           205,251
  Lease financing                                                                       5,656             5,825
                                                                                    1,120,181         1,113,651
  Less:
    Unearned income                                                                     1,818             1,886
    Allowance for loan losses                                                          17,390            16,429
                                                                                    1,100,973         1,095,336
Accrued interest receivable                                                            12,718            14,704
Premises and equipment, net                                                            24,561            24,426
Other assets                                                                           27,330            26,594
           TOTAL ASSETS                                                            $1,834,034        $1,849,752

           LIABILITIES AND SHAREHOLDERS  EQUITY
Deposits:
  Noninterest-bearing                                                                $145,123          $148,747
  Interest-bearing:
    Certificates of deposit of $100,000 or more                                       199,690           196,773
    Other interest-bearing deposits                                                   895,467           914,845
                                                                                    1,240,280         1,260,365
Short-term borrowings:
  Federal funds purchased and securities
    sold under agreements to repurchase                                                80,736           100,571
  Treasury tax and loan open-end note                                                   2,429             3,061
  Advances from Federal Home Loan Bank                                                202,118           185,930
                                                                                      285,283           289,562
  Other liabilities                                                                    19,225            21,504                
  Long-term debt                                                                        6,613             6,619
  Long-term advances from Federal Home Loan Bank                                      105,353            89,519
           TOTAL LIABILITIES                                                        1,656,754         1,667,569

Shareholders  equity:
 Common stock, $.125 stated value per share;
  authorized 10,000,000 shares; issued and outstanding                                    903               903
  7,225,483 shares for 1998 and 1999 including treasury shares of
  91,093 in 1998 and 250,264 in 1999
  Additional capital                                                                   66,680            66,680                
  Retained earnings                                                                   115,558           110,566
  Accumulated other comprehensive income:
   Unrealized gains on investments, net of tax                                          5,988             8,123
  Less: Treasury shares at cost                                                       -11,849            -4,089
            TOTAL SHAREHOLDERS EQUITY                                                 177,280           182,183
            TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                              $1,834,034        $1,849,752
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


                                                                  3 <PAGE> 




<TABLE>
                                                  FIRST FINANCIAL CORPORATION
                                               CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
                                                                                        Three Months Ended
                                                                                              March 31
                                                                                        1999            1998 
                                                                                            (Unaudited)
                                                                                       (Amounts in thousands, 
                                                                                        except per share data)
<S>                                                                                    <C>            <C>
 INTEREST INCOME:

  Loans                                                                                 $23,434        $22,604
  Investment securities:
         Taxable                                                                          6,999          6,613
         Tax-exempt                                                                       1,999          1,964
                                                                                          8,998          8,577
 Other interest income                                                                      334            298
     TOTAL INTEREST INCOME                                                               32,766         31,479

 INTEREST EXPENSE:
     Deposits                                                                            11,431         12,191
     Other                                                                                4,852          3,883
         TOTAL INTEREST EXPENSE                                                          16,283         16,074
  
         NET INTEREST INCOME                                                             16,483         15,405
  
         Provision for loan losses                                                        1,482          1,407
  
         NET INTEREST INCOME AFTER
             PROVISION FOR LOAN LOSSES                                                   15,001         13,998
 OTHER INCOME
     Trust department income                                                                737            582    
     Service charges on deposit  accounts                                                   301            320
     Other service charges and fees                                                       1,116          1,080
     Investment securities gains                                                             24            352
     Other                                                                                  669            282
                                                                                          2,847          2,616
 OTHER EXPENSES
     Salaries and employee benefits                                                       6,064          5,994
     Occupancy expense                                                                      735            704
     Equipment expense                                                                      883            818
     Other                                                                                3,203          2,990                     
                                                                                         10,885         10,506

         INCOME BEFORE INCOME TAX
           EXPENSE                                                                        6,963          6,108
 Income Tax Expense                                                                       1,971          1,608
         NET INCOME                                                                     $ 4,992        $ 4,500
  
 BASIC EARNINGS PER SHARE                                                                 $0.71         $ 0.62
  
 Weighted average number of 
  shares outstanding                                                                      7,046          7,225
  

The accompanying notes are an integral part of the consolidated financial statements. 
</TABLE>

                                                               4 <PAGE> 




<TABLE>
                                                         FIRST FINANCIAL CORPORATION
                                              CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
                                                           AND COMPREHENSIVE INCOME   
                                                              Three Months Ended 
                                                            March 31, 1999 and 1998
<CAPTION>         

                                                                                           Accumulated
                                                                                              Other
 (Dollar amounts in thousands,                Common      Additional      Retained        Comprehensive      Treasury
     except per share data)                    Stock       Capital        Earnings           Income          Stock             Total
<S>                                           <C>          <C>            <C>                 <C>           <C>           <C>     
Balance, January 1, 1999                       $903         $66,680        $110,566            $8,123        $- 4,089      $182,183
Comprehensive income:                                                                           
     Net income                                                               4,992                                           4,992
     Other comprehensive income, 
      net of tax:
        Change in unrealized gains on securities,
        net of tax of $-1,141                                                                  -2,119                        -2,119 
     Less: reclassification adjustment 
            for gains included in net 
            income, net of tax of $-9                                                          -   16                       -    16
     Total comprehensive income                                                                                               2,857 


Treasury stock purchase                                                                                         - 7,760      -7,760 
                                                ____________________________________________________________________________________
Balance, March 31, 1999                          $903       $66,680        $115,558            $5,988          $-11,849    $177,280


Balance, January 1, 1998                         $877       $59,787        $ 98,046            $6,770                 -    $165,480
Comprehensive income:
     Net income                                                               4,500                                           4,500
     Other comprehensive income, 
      net of tax:
        Change in unrealized gains on securities,
        net of tax of $-281                                                                      -522                          -522
     Less: reclassification adjustment
            for gains included in net 
            income, net of tax of $-123                                                          -229                          -229
     Total comprehensive income                                                                                               3,749
      Issurance of shares for
      Morris Plan acquisition                      26         6,893                                                           6,919
                                                 ___________________________________________________________________________________
Balance, March 31, 1998                          $903       $66,680         $102,546           $6,019         $       -    $176,148
</TABLE>







                                                                    5 <PAGE> 




<TABLE>
                                                  FIRST FINANCIAL CORPORATION
                                             CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>                                                                                                                           

                                                                                          Three Months Ended
                                                                                               March  31, 
                                                                                          1999           1998
                                                                                               (Unaudited)
                                                                                        (Amounts in thousands)  
                              
<S>                                                                                  <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                                              $4,992         $4,500
Adjustment to reconcile net income to net cash                                                             
 provided by operating activities:
  Net amortization of discounts on investments                                            -375           -421
  Provision for loan losses                                                              1,482          1,407
  Investment gains                                                                         -24           -352  
  Provision for depreciation and amortization                                              703            637
  Provision for deferred income taxes                                                     -397            273
  Net decrease in accrued interest receivable                                            1,986            815
  Other, net                                                                             1,445            156
   NET CASH PROVIDED BY OPERATING ACTIVITIES                                             9,812          7,015

CASH FLOWS FROM INVESTING ACTIVITIES:

Sales and maturities of available-for-sale securities                                  100,905         87,284
Purchases of available-for-sale securities                                             -65,032       -105,125
Loans made to customers, net of repayments                                              -7,034         -6,328
Net increase in federal funds sold                                                     -26,960         -9,520
Additions to premises and equipment                                                       -909           -598
   NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                                        970        -34,287

CASH FLOWS FROM FINANCING ACTIVITIES:

Net (decrease) increase from sales and
 redemptions of certificates of deposit                                                 -8,172         61,528
Net decrease in other deposits                                                         -11,913        -40,057
Net (decrease) increase in short-term borrowings                                        -4,279         13,673
Cash dividends                                                                          -3,154         -2,740
Purchase of treasury stock                                                              -7,760              0
Net increase (decrease) in long-term debt and advances                                  15,828           -689
  NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES                                     -19,450         31,715
                
  NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                  -8,668          4,443
  CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                          54,877         54,285
                  
  CASH AND CASH EQUIVALENTS, END OF PERIOD                                             $46,209        $58,728

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the period for interest                                             $16,327        $15,537

  Income taxes paid                                                                      $ 721           $531
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


                                                                      6 <PAGE> 




                                          FIRST FINANCIAL CORPORATION
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The accompanying March 31, 1999 and 1998 consolidated financial statements
are unaudited.  The December 31, 1998 consolidated financial statements are as
reported in the First Financial Corporation (the Corporation) 1998 annual
report.  The following notes should be read together with notes to the
consolidated financial statements included in the 1998 annual report.

1.   The significant accounting policies followed by the Corporation and its
subsidiaries for interim financial reporting are consistent with the accounting
policies followed for annual financial reporting.  All adjustments which are,
in the opinion of management, necessary for a fair statement of the results for
the periods reported have been included in the accompanying consolidated 
financial statements and are of a normal recurring nature.

     Effective January 1, 1998, the Corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 130,  Reporting Comprehensive Income.   SFAS No.
130 establishes standards for the reporting and display of comprehensive income
and its components in a full set of general-purpose financial statements.

      SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, establishes a new framework for segment reporting. The Corporation
adopted SFAS No. 131 in 1998 and determined that it has only one segment of
reporting as presented in the consolidated balance sheets and statements of
income. The Corporation does not have significant revenues from external
customers domiciled outside of the United States or places significant reliance
on major customers. As many of the assets of the Corporation are used for the
various products and services provided to customers, an allocation of revenues
and expenses for each major product or service is considered impracticable to
determine for each period ended.

     SFAS No. 132,  Employers  Disclosures about Pensions and Other
Postretirement Benefits,  was adopted by the Corporation in 1998. This statement
does not change the measurement or recognition of the benefit plans, but it
standardizes the disclosure requirements for pensions and other postretirement
benefits.

     SFAS No. 133,  Accounting for Derivative Instruments and Hedging
Activities, establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities. SFAS No. 133, which will be adopted by the
Corporation in 2000, is not anticipated to have a material impact on the
Corporation's financial position or results of operations.
                 
2.  A loan is considered to be impaired when, based upon current information and
events, it is probable that the Corporation will be unable to collect all
amounts due according to the contractual terms of the loan.  Impairment is
primarily measured based on the fair value of the loan's collateral.      

The following table summarizes impaired loan information.
<TABLE>
<CAPTION>                                                     
                                                                                      (000's)
                                                                                      March 31,
                                                                                  1999         1998
<S>                                                                            <C>          <C>     
Impaired loans with related allowance for loan losses calculated under  
 SFAS No. 114...............................................................    $3,033       $1,440
</TABLE>

     Interest payments on impaired loans are typically applied to principal
unless collection of the principal amount is deemed to be fully assured, in
which case interest is recognized on a cash basis.




                                                       7 <PAGE> 




     Interest income on commercial loans and residential real estate loans is no
longer accrued at the time the loan is 90 days delinquent unless the credit is
well secured and in the process of collection. Commercial loans are charged off
at the time the loan becomes 180 days delinquent unless the loan is well secured
and in process of collection, or other circumstances support collection.  Credit
card loans and other unsecured personal credit lines are typically charged off
no later than 180 days delinquent.  Other consumer loans are typically charged 
off when they become 150 days delinquent. In all cases, loans must be placed on
nonaccrual status or charged off at an earlier date if collection of principal 
or interest is considered doubtful.

     The interest on these loans is accounted for on the cash basis or cost
recovery method, until qualifying for return to accrual status.  Loans may be
returned to accrual status when all the principal and interest amounts
contractually due are paid.

3.  Investments
     The cost and fair value of the Corporation s investments at March 31, 1999
 are shown below. All investments are classified as available-for-sale.
<TABLE>
<CAPTION>
                                                                                    (000's)
                                                                                 March 31, 1999
                                                                     Amortized Cost            Fair Value 
<S>                                                                     <C>                       <C>
 Available-For-Sale: 
  United States Government                                               $182,990                  $184,058   
  United States Government Agencies                                       204,658                   205,414
  State and Municipal                                                     151,514                   157,274
  Other                                                                    48,094                    48,087
                                                                         $587,256                  $594,833
</TABLE>
    
                                                                    
4.  Changes in Shareholders  Equity

Under the Corporation s common stock repurchase program announced in September
1998, the Corporation has repurchased 250,264 shares as of March 31, 1999
compared to 91,903 shares as of December 31, 1998.

In March 1998, the Corporation completed it s acquisition of The Morris Plan 
Company of Terre Haute, which was accounted for using the purchase method and
resulted in goodwill of $2.4 million.






















                                                       8 <PAGE> 






                                          FIRST FINANCIAL CORPORATION


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

         
     The purpose of this discussion is to point out key factors in the
Corporation's recent performance compared with earlier periods.  The discussion
should be read in conjunction with the financial statements beginning on page
three of this report.  All figures are for the consolidated entities. It is
presumed the readers of these financial statements and of the following
narrative have previously read the Corporation's annual report for 1998.

     Forward-looking statements contained in the following discussion are based
on estimates and assumptions that are subject to significant business, economic
and competitive uncertainties, many of which are beyond the Corporation's
control and are subject to change. These uncertainties can affect actual results
and could cause actual results to differ materially from those expressed in any
forward-looking statements in this discussion.

                                         Summary of Operating Results

  
     Net income of $5.0 million was up 10.9% from the $4.5 million reported in
1998. Basic earnings per share was up 14.5% from the $.62 reported in the first
quarter of 1998 to $.71 per share for the same period in 1999.

     The increased earnings are the result of a 7.0% increase in net interest
income and an 8.8% increase in non-interest income over the same period for
1998.

Net Interest Income

     The Corporation's primary source of earnings is net interest income, which
is the difference between the interest earned on loans and other investments and
the interest incurred for deposits and other sources of funds. Net interest
income increased to $16.5 million in the first three months of 1999 from $15.4
million in the same period of 1998 due to an increase in earning asset volume
while the net interest margin decreased to 4.08% in 1999 from 4.18% in the same
period of 1998. This decrease resulted from a shift in the deposit mix to higher
cost deposit products.  

   Other Income

     Other income for the three month period ending March 31, 1999, as compared
to the same period of 1998 increased $.2 million  or 8.8%. Trust department 
income and other income increased to $.7 million and $.7 million or 26.6% and
137.2% respectively compared to the same period of 1998. The main reason for the
increase of other income is the result of realized gains from the sale of other
real estate owned and the sale of mortgage loans in the secondary market for $.2
million and $.1 million, respectively. 

     These increases were partially offset by the reduction in  realized gains
from investments sales of $.3 million.         
    
Other Expenses

     Other expenses for the first three months of 1999, as compared to the same
period of 1998, increased to $10.9 million from $10.5 million.  Most categories
of other expenses increased due to overall growth.

                                                       9 <PAGE> 




Allowance for Loan Losses


    The Corporation s provision for loan losses increased to $1.5 million for
the first three months of 1999 compared to $1.4 million in the same period of
1998.        

   At March  31, 1999, the allowance for loan losses was 1.55% of net loans.
This compares with an allowance of 1.48%  at December 31, 1998. Net chargeoffs 
for the first three months of 1999 were $.5 million compared to $.7 million for 
the same period of 1998. The ratio of net chargeoffs to average loans
outstanding for the last five years ended December 31, 1998, was .33%. With this
experience and based on management's review of the portfolio, management
believes the allowance of $17.4 million at March 31, 1999 is adequate.

    
Underperforming Assets

     Underperforming assets consist primarily of (1) nonaccrual loans and leases
on which the ultimate collectability of the full amount of interest is
uncertain, (2) loans and leases which have been renegotiated to provide for a
reduction or deferral of interest or principal because of a deterioration in 
the financial position of the borrower, (3) loans and leases past due ninety
days or more as to principal or interest and (4) land sold on contract.  A
summary of underperforming assets at March 31, 1999 and December 31, 1998
follows:
<TABLE>
<CAPTION>                                                                                                              
                                                               (000')                      (000')
                                                          March 31, 1999             December 31, 1998
<S>                                                       <C>                           <C>   
Nonaccrual loans and leases                                $ 4,153                       $  4,103
Renegotiated loans and leases                                1,058                             70             
Land sold on contract and others                             1,957                          1,914   
   Total non-performing assets                             $ 7,168                       $  6,087

Ninety days past due loans and leases                        6,399                          8,184
   Total underperforming assets                            $13,567                       $ 14,271

Ratio of the allowance for loan losses
 as a percentage of non-performing assets                      243%                           270%
Ratio of the allowance for loan losses
 as a percentage of underperforming assets                     128%                           115%


















                                                      10 <PAGE> 




     The following loan categories comprise significant components of the under-
performing loans at March 31, 1999 and December 31, 1998.

Non-Accrual Loans:

</TABLE>
<TABLE>
<CAPTION>
                                                  (000's)                                   (000's)
                                              March 31, 1999                          December 31, 1998
       <S>                                   <C>        <C>                           <C>        <C>   
       1-4 family residential                 $ 2,004     48%                          $ 1,927     47%
       Commercial loans                         1,275     31                               587     14 
       Installment loans                          849     20                               879     22 
       Other, various                              25      1                               710     17
                                               $4,153    100%                           $4,103    100%        
Past due 90 days or more:

       1-4 family residential                  $3,487     55%                           $3,456     42% 
       Commercial loans                           589      9                             2,963     36 
       Installment loans                        1,985     31                               590      7
       Other, various                             338      5                             1,175     15        
                                               $6,399    100%                           $8,184    100%
</TABLE>
                            
     There are no material industry concentrations within the underperforming 
loans.  
     
     In addition to the above Underperforming loans, certain loans are felt by
management to be impaired for reasons other than the current repayment status. 
Such reasons may include but not be limited to previous payment history,
bankruptcy proceedings, industry concerns, or information related to a specific
borrower that may result in a negative future event to that borrower.  At
March  31, 1999 the Corporation had $1.9 million of these loans which are still
in accrual status. 

Interest Rate Sensitivity and Liquidity

     The Corporation charges the nine subsidiary banks with monitoring and
managing their individual sensitivity to fluctuations in interest rates and
assuring that they have adequate liquidity to meet loan demand or any potential
unexpected deposit withdrawals.  This function is facilitated by the
Asset/Liability Committee.  The primary goal of the committee is to maximize net
interest income within the interest rate risk limits approved by the Board of
Directors. This goal is accomplished through management of the subsidiary bank's
balance sheet liquidity and interest rate risk exposures due to the changes in
economic conditions and interest rate levels.

Interest Rate Risk
         
     Management considers interest rate risk to be the Corporation s most
significant market risk. Interest rate risk is the exposure to changes in net
interest income as a result of changes in interest rates.  Consistency in the
Corporation's net income is largely dependent on the effective management of
this risk.
                                                                               
     The Committee reviews a series of monthly reports to ensure that
performance objectives are being met.  The Committee monitors and controls 
interest rate risk through earnings simulation.  Simulation modeling measures
the effects of changes in interest rates, changes in the shape of the yield
curve, and changes in prepayment speeds on net interest income.  The primary
measure of Interest Rate Risk is "Earnings at Risk."  This measure projects the
earnings effect of various rate movements over the next three years on net
interest income.  It is important to note that measures of interest rate risk
have limitations and are dependent upon certain assumptions.  These assumptions
are inherently uncertain and, as a result, the model cannot precisely predict
the impact of interest rate fluctuations on net interest income. Actual results
will differ from simulated results due to timing, frequency and amount of
interest rate changes as well as overall market conditions. The Committee has
performed a thorough analysis and believes the assumptions to be valid and
theoretically sound.  The relationships are continuously monitored for
behavioral changes.    

                                                      11 <PAGE>




     In its interest rate risk management, the Corporation currently does not
utilize any derivative products and is not engaged in securities trading 
activity. The Corporation instead invests in assets whose value is derived from
an underlying asset. These assets include government agency issued mortgage-
backed securities.  The performance of these assets in changing rate
environments is included in the following table.

     The table below shows the Corporation's estimated earnings sensitivity
profile as of March 31, 1999.  Given a 100 basis point increase in rates, net
interest income would decrease 3.83% over the next 12 months and decrease 4.27% 
over the next 24 months.  A 100 basis point decrease would result in a 1.20%
increase in net interest income over the next 12 months and a .88% increase over
the next 24 month periods.  These estimates assume all rates changed overnight
and management took no action as a result of this change.


Basis Point                             Percentage Change in Net Interest Income
Interest Rate Change                    12 months      24 months      36 months 
Down 300                                   -.84%         -1.63%         -9.26%  
Down 200                                   1.44            .86          -4.24
Down 100                                   1.20            .88          -1.72
Up 100                                    -3.83         - 4.27          -1.95 
Up 200                                    -7.66          -8.24          -3.37
Up 300                                   -11.69         -12.32          -4.60





      The Corporation uses products which contain options, most notably callable
agency securities and putable Federal Home Loan Bank advances. The securities
pay a premium rate and the advances charge a discounted rate in exchange for the
option. Therefore, there is a benefit to current income by using these products.
Typical rate shock analysis does not reflect management s ability to react and
thereby reduce the effects of rate changes, and represents a worst case
scenario. The model assumes no actions are taken and prices change to the full
extent of the rate shock.

Liquidity Risk

     Liquidity is measured by each bank's ability to raise funds to meet the
obligations from its customers, including deposit withdrawals and credit needs.
This is accomplished primarily by maintaining sufficient liquid assets in the
form of investment securities and core deposits. The Corporation has $16.1
million of investments that mature throughout the coming 12 months. The
Corporation also anticipates $88.6 million of principal payments from mortgage-
backed securities.  Given the current interest rate environment, the Corporation
anticipates $27.0 million of securities to be called within the next 12 months.
With these sources of funds, the Corporation currently anticipates adequate
liquidity to meet the expected obligations of its customers. 


Capital Adequacy

     As of March 31, 1999 the Corporation's leverage ratio was 9.24% compared
to 9.51% at December 31, 1998.

     At March  31, 1999 the Corporation's total capital, which includes Tier II
capital, was 16.61% compared to 16.29% at December 31, 1998. These amounts
exceed minimum regulatory capital requirements.  

     


                                                      12 <PAGE> 





                                                                                
Year 2000

     The Year 2000 problem concerns the inability of information systems to
properly recognize and process date sensitive information beginning on December
31, 1999.  The Corporation has developed a Year 2000 team responsible for
ensuring that its information technology (IT)  systems and software, and non-IT 
systems are Year 2000 compliant in time to minimize any significant detrimental
effects on operations and service to its customers.

     The Corporation is currently in the validation stage of a five step Year
2000 program.  The awareness, assessment and renovation steps have been
completed for all mission critical applications.  The validation stage includes
the necessary software and hardware testing that is required as well as ongoing
discussions with vendors and customers on the success of their validation
efforts.  The Corporation utilizes Fiserv-CBS software for processing all of its
core applications. The testing of this software began on September 1, 1998, and
was substantially completed by the end of 1998. Currently the Corporation is
focusing on maintaining the internal core processing system s readiness and will
be continuing the effort until the Year 2000. In addition, the Corporation will
continue to manage third party system relationships, update disaster recovery
and contingency plans, and will also continue to test secondary computer
systems. The Corporation is confident that the remainder of the systems Year
2000 testing will be substantially completed by June 30, 1999.  

      The Corporation is in the process of corresponding with its major
commercial loan customers and major suppliers and vendors to assess the credit
risk related to the Year 2000 problem as well as the risk of business
interruption.  The majority of the Corporation s non-IT related systems have
been assessed as Year 2000 compliant or are in the final testing phase which
will be completed by June 30, 1999.

     The total estimated cost related to the Year 2000 issue, including the cost
of replacing equipment is $615,000.  Total incremental cost incurred through
March 31, 1999 is approximately $400,000.  The Corporation does not expect that
the cost relating to the Year 2000 project will have a material effect on the
results of its operations or financial condition.

     The above expectations are subject to inherent uncertainties of the Year
2000 problem, including the readiness of third-party suppliers and regulatory
agencies that the Corporation depends upon to meet customers  needs.  The
failure to correct a material problem could result in an interruption or failure
of normal business activities or operations.  Such failures could materially
affect the Corporation s ability to meet customers needs and ultimately affect
its results of operations and financial condition.  The Corporation believes
that with the successful completion of its Year 2000 program, the possibility of
significant interruptions will be reduced.

     Concurrently with the Year 2000 program described above, the Corporation is
developing contingency plans intended to mitigate the possible disruption in
business operations that may result from the year 2000 problem and is estimating
the costs for such plans.  Contingency plans may include increasing cash in
vault, ordering extra forms/supplies, increasing  allowance for loan loss
allocation for year 2000 credit risk, establishing trigger dates for activating
alternative solutions/vendors, identifying possible alternative vendors,
preparing for some manual preparation of checks, forms, etc. , and other
appropriate measures.  Once developed, contingency plans and related cost
estimates are being continually refined as information becomes available.

         





                                                      13 <PAGE> 




                                          FIRST FINANCIAL CORPORATION
                                           PART II OTHER INFORMATION
                                                   FORM 10-Q
                                                  SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                FIRST FINANCIAL CORPORATION
                                                       (Registrant)




Date: May 14, 1999                              By        (Signature)     
                                                Donald E. Smith, President




Date: May 14, 1999                              By       (Signature)           
                                                John W. Perry, Secretary




Date: May 14, 1999                              By       (Signature)           
                                                Michael A. Carty, Treasurer 


























                                                      14 <PAGE>