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

                                              September 30 , 1998 <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   September 30, 1998   

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 September 30, 1998 were outstanding 7,199,764  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 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:

     Item 4.   Submission of Matters to a Vote of
                  Security Holders............................................13
                                 
     Signatures...............................................................14
          
                                                       





















                                                       2 <PAGE> 




<TABLE>
                                          FIRST FINANCIAL CORPORATION
                                     CONSOLIDATED STATEMENTS OF CONDITION
<CAPTION>   
                                                                      September 30,         December 31.                         
                                                                             1998                  1997    
                                                                                  (Unaudited)
                        ASSETS                                                         (Amounts in thousands)
<S>                                                                                  <C>               <C>            
Cash and due from banks                                                                  $47,227           $53,815
Federal funds sold and securities purchased under agreement to resell                      2,630               280
Investments, available-for-sale                                                          569,687           527,993                
Loans:                                                                                                            
  Commercial, financial and agricultural                                                 220,327           229,855
  Real  estate - construction                                                             29,617            23,734
  Real estate - mortgage                                                                 632,075           561,466
  Installment                                                                            203,720           188,552
  Lease financing                                                                          5,824             3,271
                                                                                       1,091,563         1,006,878
  Less:
    Unearned income                                                                        1,951             1,079
    Allowance for loan losses                                                             16,348            13,503
                                                                                       1,073,264           992,296
    Accrued interest receivable                                                           13,998            14,086
    Premises and equipment, net                                                           24,466            24,925
    Other assets                                                                          30,526            21,541
              TOTAL ASSETS                                                            $1,761,798        $1,634,936

              LIABILITIES AND SHAREHOLDERS  EQUITY
Deposits:
 Noninterest-bearing                                                                    $142,446          $162,880
 Interest-bearing:
   Certificates of deposit of $100,000 or more                                           217,523           195,487
   Other interest-bearing deposits                                                       895,610           836,157
                                                                                       1,255,579         1,194,524
Short-term borrowings:
 Federal funds purchased and securities
  sold under agreements to repurchase                                                     39,039            47,015
 Treasury tax and loan open-end note                                                       4,801             4,282
 Advances from Federal Home Loan Bank                                                    177,932           167,680
                                                                                         221,772           218,977
Other liabilities                                                                         18,963            18,718                
Long-term debt                                                                             6,624             6,641
Long-term advances from Federal Home Loan Bank                                            71,177            30,596
              TOTAL LIABILITIES                                                        1,574,115         1,469,456

Shareholders equity:
 Common stock, $.125 stated value per share;
  authorized 10,000,000 shares; issued and outstanding                                       903               877
  7,015,504 shares for 1997 and 7,225,483 shares for 1998 
  including treasury shares of 25,719
 Additional capital                                                                       66,798            59,787
 Retained earnings                                                                       112,626            98,046
 Accumulated other comprehensive income:
  Unrealized gains on investments, net of tax                                              8,580             6,770
 Less: Treasury shares at cost                                                            -1,224                 0
              TOTAL SHAREHOLDERS EQUITY                                                  187,683           165,480
              TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                               $1,761,798        $1,634,936
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            Nine Months Ended
                                                                September 30,               September 30,
                                                            1998            1997           1998            1997 
                                                                                (Unaudited)
                                                              (Amounts in thousands, except per share amounts)
<S>                                                      <C>              <C>            <C>             <C> 
INTEREST INCOME:

 Loans                                                     $23,822          $21,322        $69,577        $61,764   
 Investment securities:
     Taxable                                                 6,807            7,963         20,079         24,168
     Tax-exempt                                              1,932            1,857          5,968          5,504
                                                             8,739            9,820         26,047         29,672
 Other interest income                                          28               23            550            100
   TOTAL INTEREST INCOME                                    32,589           31,165         96,174         91,536

INTEREST EXPENSE:
  Deposits                                                  12,779           11,662         37,855         34,551
  Other                                                      3,989            3,992         11,572         11,803          
    TOTAL INTEREST EXPENSE                                  16,768           15,654         49,427         46,354
  
    NET INTEREST INCOME                                     15,821           15,511         46,747         45,182
  
    Provision for loan losses                                1,345            1,251          4,301          3,988
  
    NET INTEREST INCOME AFTER
     PROVISION FOR LOAN LOSSES                              14,476           14,260         42,446         41,194
OTHER INCOME
 Trust department income                                       509              485          1,594          1,470      
 Service charges on deposit  accounts                          347              334            992          1,010
 Other service charges and fees                              1,204            1,000          3,468          2,690
 Investment securities gains                                   382               60            773            402
 Other                                                         487              318          1,043            903
                                                             2,929            2,197          7,870          6,475
OTHER EXPENSES
 Salaries and employee benefits                              5,712            5,560         17,689         16,161
 Occupancy expense                                             717              768          2,105          2,164
 Equipment expense                                             836              752          2,484          2,283
 Other                                                       3,156            2,973          9,346          8,653
                                                            10,421           10,053         31,624         29,261

   INCOME BEFORE INCOME TAX
    EXPENSE                                                  6,984            6,404         18,692         18,408
Income Tax Expense                                           2,124            1,785          5,162          4,984
    NET INCOME                                              $4,860           $4,619        $13,530        $13,424
  
BASIC EARNINGS PER SHARE                                     $0.67            $0.66          $1.87          $1.91
  
Weighted average number of      
  shares outstanding                                         7,209            7,016          7,217          7,016
  

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

                                                                  4 <PAGE>




<TABLE>

                                                FIRST FINANCIAL CORPORATION
                                           Consolidated Statements of Comprehensive Income


<CAPTION>
                                                                                                                  
                                                                        Three Months Ended          Nine Months Ended 
                                                                            September 30,              September 30,
                                                                         1998            1997       1998          1997
                                                                                            (Unaudited)
                                                                                        (Amounts in thousands)

<S>                                                                   <C>              <C>         <C>          <C>          
Net Income                                                              $4,860          $4,619      $13,530      $13,424

Other comprehensive income, net of tax:
 Unrealized gains on investments:
  Unrealized holding gains arising during period                         1,800           3,080        2,316        1,249
   Less: reclassification adjustment for gains                                
   included in net income                                                 -248            - 42        - 506        - 270
Other comprehensive income                                               1,552           3,038        1,810          979

Comprehensive income                                                    $6,412          $7,657      $15,340      $14,403      





</TABLE>















                                                 5 <PAGE> 




<TABLE>
                                                     FIRST FINANCIAL CORPORATION
                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>    
                                                                                     Nine Months Ended
                                                                                        September 30,
                                                                                    1998               1997
                                                                                        (Unaudited)
                                                                                    (Amounts in thousands)       
<S>                                                                              <C>               <C>    
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                                          $13,530           $13,424
Adjustment to reconcile net income to net cash                                                                
 provided by operating activities:               
  Net amortization of discounts on investments                                         -722            -1,462
  Provision for loan losses                                                           4,301             3,988
  Investment  gains                                                                    -773              -402
  Provision for depreciation and amortization                                         1,839             1,767
  Provision for deferred income taxes                                                  -604                 0
  Net decrease (increase) in accrued interest receivable                                 88              -416
  Other, net                                                                            680              -879
    NET CASH PROVIDED BY OPERATING ACTIVITIES                                        18,339            16,020

CASH FLOWS FROM INVESTING ACTIVITIES:

Net decrease from purchase and maturities of interest-bearing
 deposits with financial institutions                                                     0               796
Sales and maturities of available-for-sale securities                               179,224           149,156
Purchases of available-for-sale securities                                         -211,551          -129,281
Loans made to customers, net of repayments                                          -54,753           -63,422
Net (increase) decrease in federal funds sold                                        -1,950             2,000
Additions to premises and equipment                                                  -1,660            -1,092                 
  NET CASH USED BY INVESTING ACTIVITIES                                             -90,690           -41,843

CASH FLOWS FROM FINANCING ACTIVITIES:

Net increase from sales and
 redemptions of certificates of deposit                                              65,752             3,397
Net (decrease) increase  in other deposits                                          -36,970            13,549
Net increase in short-term borrowings                                                 2,795            30,383
Cash dividends                                                                       -5,624            -4,677
Purchase of treasury stock                                                           -1,224                 0         
Net increase (decrease) in long-term debt and advances                               40,564           -18,158
  NET CASH PROVIDED  BY FINANCING ACTIVITIES                                         65,293            24,494

  NET DECREASE IN CASH AND CASH EQUIVALENTS                                          -7,058            -1,329
  CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                       54,285            66,658
                  
  CASH AND CASH EQUIVALENTS, END OF PERIOD                                          $47,227           $65,329         

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the period for interest                                          $48,869           $47,676

  Income taxes paid                                                                  $5,345            $5,153
                             
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                                        6<PAGE>
















































                                                                          




                                        FIRST FINANCIAL CORPORATION
                                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   The accompanying September 30, 1998 and 1997 consolidated financial
statements are unaudited.  The December 31, 1997 consolidated financial
statements are as reported in the First Financial Corporation (the
Corporation) 1997 annual report.

     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.

   On March 16, 1998, the Corporation completed its previously announced
acquisition of Morris Plan Company of Terre Haute, Inc., (Morris Plan).  In
exchange for all of the outstanding common shares of Morris Plan, the
Corporation issued 210,000 shares of its common stock.  The acquisition was
originally accounted for as a pooling of interests. Due to a common stock
repurchase program announced September 16, 1998, the acquisition will be
accounted for as a purchase and the resulting goodwill of $6.5 million will
be amortized over approximately 15 years.  Prior periods have not been
restated because the impact is immaterial.

     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.
The Corporation s comprehensive income, determined in accordance with SFAS
No. 130 was $15.3 million and $14.4 million for the nine months ended
September 30, 1998 and 1997, respectively.  Accumulated other comprehensive
income, resulting from unrealized gains or losses on available for sale
investments at December 31, 1997, and September 30, 1998, was $6.8 and $8.6
million, respectively.

     SFAS No. 131,  Disclosures about Segments of an Enterprise and Related
Information  and SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities have been issued by the Financial Accounting Standards
Board. The Corporation is currently reviewing these two pronouncements and
does not anticipate the adoption of SFAS No. 131 and SFAS No. 133 to have a
material effect on the Corporation's financial position or results of
operation.        
         
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.                      
                                                                               
                                                                  (000's)   
                                                               September 30,
                                                             1998         1997

Impaired loans with related allowance for loan losses
 calculated under SFAS No. 114.........................    $1,874       $1,782

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

  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.




                                                     7 <PAGE> 





  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 September 30,
1998 are shown below. All investments are classified as available-for-sale.

                                                              (000's) 
                                                        September 30, 1998  
                                                 Amortized Cost     Fair Value 
 Available-For-Sale: 
  United States Government                          $139,077         $141,446   
  United States Government Agencies                  227,482          230,288
  State and Municipal                                151,184          157,238
  Other                                               40,535           40,715  
                                                    $558,278         $569,687   
                                                                               
                                                                             




                                                     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
1997.

  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 for the nine and three month periods ended September 30, 1998
was $13.53 million and $4.86 million, respectively.  Both the nine month and
current quarter results reflect slight increases from 1997 levels due in part
to a higher level of earning assets, particularly residential real estate
mortgages. Earnings per share for the nine month period ended September 30,
1998 reflects a 2% or $.04 per share decrease over the third quarter of 1997.
This is the result of the acquisition of Morris Plan in the first quarter,
which had a dilutive affect on the earnings per share.  Earnings per share
for the third quarter increased by $.01 to $.67 over the same period in 1997.
 
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 $46.7 million in the first nine months of 1998 from
$45.2 million  in the same period of 1997 due to an increase in earning asset
volume while the net interest margin decreased to 4.14% in 1998 from  4.24%
in the same period of 1997. This decrease resulted from a shift in the
deposit mix to higher cost deposit vehicles.  This also affected third
quarter net interest income which increased to $15.8 million from $15.5
million for the same quarter of 1997 while net interest margin decreased to
4.10% for the third quarter of 1998 from 4.32% in the same quarter of 1997.    

Other Income

     Other income for the nine months of 1998, as compared to the same period
of 1997, increased $1.4 million or 21.5%.  Trust income and other service fee
income increased to $1.6 million  and $3.5 million or 8.4% and 28.9%,
respectively, compared to the same period of 1997 as a result of increased
service volume and increased service charges.  Third quarter other income
increased to $2.9 million  from $2.2 million  compared to the same quarter of
1997. These increases are the result of a focused effort to increase fee
based income, as well as the result of realized gains from investments sales.

Other Expenses

     Other expenses for the first nine months of 1998, as compared to the
same period of 1997, increased to $31.6 million from $29.3 million.  This
represents an increase of $2.3 million  or 7.8%.  Most of the components of
other expenses increased slightly while salaries and related benefits, the
largest component of this group, increased from $16.2 million to almost $17.7
million or 9.3%.  The primary reason for this increase were higher average
salaries and higher health insurance costs.  This also affected third quarter
other expenses which increased to $10.4 million from $10.1 million for the
same quarter of 1997. Expenses were also increased by the acquisition of 
Morris Plan during the first quarter of 1998.  There were no other significant
changes.
  


                                                      9 <PAGE>




Allowance for Loan Losses                             

  The Corporation's provision for loan losses increased to  $4.3 million from
$4.0 million for the first nine months of 1998 compared to the same period a
year earlier.   
         
  At September 30, 1998, the allowance for loan losses was 1.50% of net
loans. This compares with an allowance of 1.34% at December 31, 1997.  Net
chargeoffs for the first nine months of 1998 were $2.4 million  compared to
$1.6 million for the same period of 1997. This increase was primarily due to the
higher volume of charge offs relating to problem consumer loans. The ratio of
net chargeoffs to average loans outstanding for the last five years ended
December 31, 1997, was .35%.  With this experience and based on management's
review of the portfolio, management believes the allowance of $16.3 million at
September 30, 1998 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 September 30, 1998 and
December 31, 1997 follows:
                                                                      
                                          (000')                   (000')
                                    September 30, 1998       December 31, 1997

Nonaccrual loans and leases               $ 4,083                $   3,866
Renegotiated loans and leases                  16                       17      
Land sold on contract and others            1,951                    2,236   
  Total non-performing assets             $ 6,050                $   6,119

Ninety days past due loans and leases       5,599                    4,384
   Total underperforming assets           $11,649                 $ 10,503

Ratio of the allowance for loan losses
 as a percentage of non-performing assets     270%                     221%
Ratio of the allowance for loan losses
 as a percentage of underperforming assets    140%                     129%

  The following loan categories comprise significant components of the
non-performing loans at September 30, 1998

Non-Accrual Loans:
                                                                               
                                           (000')                 (000's)
                                     September 30, 1998      December 31, 1997
    1-4 family residential             $1,731    42%          $  728    19%
    Commercial loans                    1,112    27            1,622    42 
    Installment loans                     969    24              872    23 
    Other, various                        271     7              644    16
                                       $4,083   100%          $3,866   100%
                                                                               
Past due 90 days or more:
  

    1-4 family residential             $3,262    58%          $2,785    64% 
    Commercial loans                    1,230    22              112     3 
    Installment loans                     736    13              851    19 
    Other, various                        371     7              636    14 
                                       $5,599   100%          $4,384   100%
                            
                                                     10 <PAGE>

  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 September 30, 1998 the Corporation had $513,000 of such 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.
         
  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 September 30, 1998.  Given a 100 basis point increase in rates,
net interest income would increase 2.18% over the next 12 months and
decrease 1.97% over the next 24 months.  A 100 basis point decrease would
result in a 4.07% decrease in net interest income over the next 12 months and
a 1.40% decrease 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                             -15.29%         -6.72%        -17.21% 
    Down 200                              -8.84          -3.33         -10.39 
    Down 100                              -4.07          -1.40         - 4.97 
    Up 100                                 2.18          -1.97           1.10 
    Up 200                                 4.75          -2.88           3.68
    Up 300                                 6.95          -4.26           6.08

                                                         11 <PAGE>
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
$14.0 million of investments that mature throughout the coming 12 months. The
Corporation also anticipates $95.5 million of principal payments from
mortgage-backed securities.  Given the current interest rate environment, the
Corporation anticipates $70.8 million of federal agency 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 September 30, 1998 the Corporation's leverage ratio was 9.86% compared
to 9.68% at December 31, 1997.

  At September 30, 1998 the Corporation's total capital, which includes Tier II
capital, was 17.26% compared to 17.10% at December 31, 1997. These amounts
exceed minimum regulatory capital requirements.

                                                                               
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 IT-systems, 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 testing of the mission critical hardware and software began on
September 1, 1998 and will be completed by the end of 1998.  The Corporation
utilizes Fiserv-CBS software for processing all of its core applications.
Testing is underway to ensure these applications will be year 2000 compliant.

  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 $760,000.  Total incremental cost incurred through
September 30, 1998 is approximately $100,000. 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 the 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 will be continually refined as additional information becomes
available.

         
                                         12<PAGE>



         
         



         
                                        FIRST FINANCIAL CORPORATION

                                         PART II OTHER INFORMATION



ITEM 4.  Submission of Matters to a Vote of Security Holders

(a)      The Annual meeting of the shareholders of the Corporation was held on 
         April 15, 1998.

(b)      The following were elected Directors of the Corporation for a three
         year term:
         Walter A. Bledsoe, Max Gibson, William Niemeyer and Donald E. Smith.

(c)      The shareholders unanimously approved the annual report of the 
         Corporation and unanimously approved the actions of the Directors 
         and Officers of the Corporation for the fiscal year ended
         December 31, 1997.
                           
                                                                 
No other information is required to be filed under Part II of this form.

                                                     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: November 13, 1998                            By       (Signature)       
                                                 Donald E. Smith, President


Date: November 13, 1998                            By       (Signature)       
                                                 John W. Perry, Secretary


Date: November 13, 1998                            By       (Signature)       
                                                 Michael A. Carty, Treasurer



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