United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB


(Mark  One)
[  X  ]     QUARTERLY  REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
            EXCHANGE  ACT  OF  1934
            For  the  quarterly  period  ended  June  30,  2002

[    ]     TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
           EXCHANGE  ACT  OF  1934
           For  the  transition  period  From             to
..

                        Commission file number  33-67312
                                                ----------

                           FIRST ALLIANCE CORPORATION
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


            Kentucky                                  61-1242009
----------------------------------------------  --------------------------
State  or  other jurisdiction of incorporation   (I.R.S.  Employer number)
or  organization)


2285 Executive Drive, Suite 308          Lexington, Kentucky      40505
--------------------------------------------------------------------------
               (Address of principal executive offices)


                                  (859) 299-7656
                           ---------------------------
                           (Issuer's telephone number)


                      APPLICABLE ONLY TO CORPORATE INSURERS

State the number of shares outstanding of each of the issuer's classes of common
equity,  as  of  the  latest  practical  date.

Common  Stock,  No  Par  Value  5,600,884  shares  as  of  July  31,  2002

Transitional  Small  Business  Disclosure  Format  (Check  one):  Yes     No X
                                                                      ---   ---


                                      -i-
<PAGE>

                           FIRST ALLIANCE CORPORATION

                              INDEX TO FORM 10-QSB


Part  I.    FINANCIAL  INFORMATION                                     Page  No.
-------    ------------------------------------------------           ----------

Item  1.  Financial  Statements

     Condensed  Consolidated  Balance  Sheets
     at  June  30,  2002  and  December  31,  2001                             1

     Condensed  Consolidated  Statements  of  Operations
     for  the  three  months  ended  June  30, 2002 and 2001 and               3
     for  the  six  months  ended  June  30,  2002  and  2001

     Condensed  Consolidated  Statements  of  Cash  Flows
     for  the  six  months  ended  June  30,  2002 and 2001                    4

     Notes  to  Condensed Consolidated Financial Statements                    6

Item  2.  Management's  Discussion  and  Analysis  or  Plan  of  Operation
9

Part  II.  OTHER  INFORMATION
--------  ------------------------------------------
Item  2.  Changes  in  Securities                                             11

Item  4.  Submission  of  Matters  to  a  Vote  of  Shareholders
11

Item  6.  Exhibits  and Reports on Form 8-K                                   11

Signatures                                                                    12

                                      -i-
<PAGE>
                           FIRST ALLIANCE CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                              June 30,       December 31,
                                                                               2002             2001
                                                                             ============    ============
ASSETS                                                                       (Unaudited)
<S>                                                                          <C>             <C>
Investments:
  Available-for-sale fixed maturities, at fair value
    (amortized cost, $14,105,394 and $8,530,517
    in 2002 and 2001, respectively)                                          $ 14,537,460   $   8,894,904
  Equity securities (cost of $2,324,377 in 2002 and 2001)                         861,836       1,099,707
  Policy loans                                                                    159,058          81,911
  Notes receivable (net of $110,000 and $116,616
    valuation allowance in 2002 and 2001, respectively)                           833,347         770,280
  Other invested assets                                                           575,000         425,000
                                                                             ------------   -------------
Total investments                                                              16,966,701      11,271,802

Cash and cash equivalents                                                       2,056,646       5,902,785
Investment in related parties                                                     366,650         371,276
Receivables from related parties                                                   60,451          48,038
Accrued investment income                                                         185,654         182,220
Premiums receivable                                                               110,141         131,638
Advances to agents                                                                 85,548          88,828
Reinsurance recoverable                                                         1,192,189       1,026,524
Deferred policy acquisition costs                                               5,069,723       4,718,225
Office furniture and equipment, less accumulated depreciation
  of $156,137 and $129,027 in 2002 and 2001, respectively                         124,682         125,121
Federal income tax recoverable                                                        143             143
Other assets                                                                       54,217          29,220
                                                                             ------------   -------------
Total assets                                                                  $26,272,745     $23,895,820
                                                                             ============    ============
</TABLE>

See  notes  to  condensed  consolidated  financial  statements.



                                      -1-
<PAGE>

                            FIRST ALLIANCE CORPORATION

                CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
<TABLE>
<CAPTION>



                                                                               June 30,     December 31,
                                                                                 2002           2001
                                                                             ============    ============
LIABILITIES AND SHAREHOLDERS' EQUITY                                         (Unaudited)
<S>                                                                          <C>             <C>
Policy and contract liabilities:
  Annuity contract liabilities                                               $ 8,739,457     $ 7,148,568
  Life policy reserves (net of reinsurance
     ceded reserves of $536,347 and $478,506
     in 2002 and 2001, respectively)                                           5,813,577       4,791,633
  Unearned premium reserves                                                      537,327         466,135
  Policy and contract claims                                                      17,764          57,301
  Policyholder premium deposits                                                  300,635         209,679
  Deposits on pending policy applications                                          3,984         193,313
  Unearned revenue                                                                60,451          63,263
  Reinsurance premiums payable                                                    67,505          66,901
                                                                             ------------   -------------
Total policy and contract liabilities                                         15,540,700      12,996,793

Commissions, salaries, wages and benefits payable                                262,147         269,100
Payables to related parties                                                      127,876         124,881
Accrued expenses and other liabilities                                            70,667          98,461
Federal income taxes payable
  Deferred                                                                     1,085,622         995,292
                                                                             ------------   -------------
Total liabilities                                                             17,087,012      14,484,527

Shareholders' equity:
Common stock, no par value, 8,000,000 shares
  authorized; 5,593,584 and 5,561,455 shares issued
  and outstanding at June 30, 2002 and December 31, 2001                         559,358         556,146
Additional paid in capital                                                    13,531,230      13,466,445
Accumulated other comprehensive income                                          (669,809)       (559,183)
Retained earnings - deficit                                                   (4,235,046)     (4,052,115)
                                                                             ------------   -------------
Total shareholders' equity                                                     9,185,733       9,411,293
                                                                             ------------   -------------
Total liabilities and shareholders' equity                                   $26,272,745   $  23,895,820
                                                                             ============    ============
</TABLE>


See  notes  to  condensed  consolidated  financial  statements.

                                      -2-
<PAGE>
                           FIRST ALLIANCE CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                   Three months ended             Six months ended
                                                                  June 30,        June 30,      June 30,       June 30,
                                                                    2002           2001          2002           2001
                                                                ============   ============   ============   ============
                                                                (Unaudited)    (Unaudited)    (Unaudited)    (Unaudited)
<S>                                                             <C>            <C>            <C>            <C>
REVENUES
  Premium income                                                $  1,332,855    $ 1,427,703    $ 3,120,232    $ 2,805,840
  Premiums ceded                                                    (314,429)      (273,494)      (676,033)      (533,045)
                                                                ------------    ------------   ------------   ------------
    Net premiums earned                                            1,018,426      1,154,209      2,444,199      2,272,795

  Net investment income                                              226,687        176,929        418,361        347,611
  Net realized investment gain (loss)                                      -         62,336              -       (152,212)
  Service fee revenue                                                 82,626         79,675        177,530        135,979
  Decrease in equity of
    unconsolidated affiliate                                          (7,312)             -        (14,431)             -
  Commission income                                                  181,212            885        283,585              96
  Other income                                                         7,713          8,920         16,373          17,733
                                                                ------------   ------------   ------------   ------------
    Total revenue                                                  1,509,352      1,482,954      3,325,617       2,622,002

BENEFITS AND EXPENSES
  Death claims                                                        90,942        114,528        192,236         160,140
  Death claims ceded                                                 (26,837)       (95,605)      (104,538)       (138,945)
                                                                ------------   ------------   ------------   ------------
    Net death claims                                                  64,105         18,923         87,698          21,195
  Increase in policy reserves                                        268,720        252,655        927,266         441,597
  Policyholder surrender values                                       33,565         48,443         59,304         111,007
  Interest credited on annuities and
    premium deposit fund                                             172,409        123,486        344,739         234,883
  Commissions                                                        324,568        386,359        711,800         706,477
  Policy acquisition costs deferred                                 (352,286)      (559,763)      (858,956)     (1,038,434)
  Amortization expense:
    Deferred policy acquisition costs                                145,934        212,489        507,458         335,311
    Value of insurance acquired                                            -              -              -             681
  Selling, administrative and
    general expense                                                   79,499        209,837        189,846         439,759
  Salaries, wages and employee benefits                              428,401        391,761        917,706         742,107
  Professional fees                                                  102,253         82,905        135,279         101,508
  Advisory board and directors fees                                    3,916         24,760         25,359          51,282
  Rent expense                                                        26,511         23,581         53,209          47,573
  Depreciation expense                                                13,863          4,878         27,110           9,481
  Other expenses                                                     127,660         16,092        230,833         109,534
                                                                 ------------   ------------   ------------   ------------
    Total benefits and expenses                                    1,439,118      1,236,406      3,358,651       2,313,961
                                                                 ------------   ------------   ------------   ------------
INCOME FROM OPERATIONS                                                70,234        246,548        (33,034)        308,041
                                                                 ------------   ------------   ------------   ------------
Federal income taxes                                                 128,847        125,077        149,897         266,716
                                                                 ------------   ------------   ------------   ------------
NET INCOME (LOSS)                                                $   (58,613)    $  121,471     $ (182,931)    $    41,325
                                                                 ============   ============   ============   ============
NET INCOME (LOSS) PER COMMON SHARE -
  BASIC AND DILUTED                                                    (0.01)          0.02          (0.03)           0.01
                                                                 ============   ============   ============   ============
</TABLE>

See  notes  to  condensed  consolidated  financial  statements.

                                      -3-
<PAGE>


                           FIRST ALLIANCE CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                 Six months ended
                                                                               June 30,         June 30,
                                                                                2002             2001
                                                                             ============    ============
<S>                                                                          <C>             <C>
                                                                             (Unaudited)     (Unaudited)
OPERATING ACTIVITIES:
Net income (loss)                                                             $  (182,931)   $    41,325
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
  Increase in policy reserves                                                   1,093,136        631,993
  Decrease in claim liabilities                                                   (39,537)       (63,242)
  Increase in reinsurance recoverable                                            (165,665)      (188,698)
  Interest credited on annuities and premium deposits                             340,292        239,278
  Provision for depreciation                                                       27,110          9,481
  Increase in deferred policy acquisition costs, net                             (351,498)      (703,123)
  Amortization of value of insurance acquired                                           -            681
  Amortization of premium and accretion of discount                                11,211         10,948
  Net realized investment loss                                                          -        143,481
  Increase in policy loans                                                        (77,147)        (3,584)
  Increase in receivables from related parties                                    (12,413)          (298)
  Increase in accrued investment income                                            (3,434)        (4,713)
  Decrease in premiums receivable                                                  22,947         12,177
  (Increase) decrease in advances to agents                                         3,280        (10,390)
  (Increase) decrease in other assets                                             (24,997)        27,254
  Increase (decrease) in deposits on pending policy applications                 (189,329)        16,328
  Increase (decrease) in unearned revenue                                          (2,812)        47,569
  Increase (decrease) in reinsurance premium payable                                 (846)         3,275
  Decrease in equity of unconsolidated affiliates                                  14,431              -
  Increase (decrease) in commissions, salaries, wages and benefits                 (6,953)        43,987
  Increase in payables to related parties                                           2,995              -
  Decrease in accrued expenses and other liabilities                              (27,794)        (1,749)
  Decrease in federal income taxes payable                                              -        (11,583)
  Increase in deferred federal income tax liability                               149,897        266,231
                                                                             ------------   -------------
Net cash provided by operating activities                                         579,943        506,628

INVESTING ACTIVITIES:
  Purchase of available-for-sale fixed maturities                              (5,921,089)    (1,586,189)
  Sale of available-for-sale fixed maturities                                     335,000      1,011,823
  Sale of common stock                                                                  -        581,841
  Purchase of limited partnership interest                                       (150,000)      (150,000)
  Purchase of limited liability company interest                                        -         (5,000)
  Sale of subsidiary net of cash disposed                                               -       (232,850)
  Increase in notes receivable                                                    (63,067)        (4,794)
  Investment in unconsolidated affiliates                                          (9,805)             -
  Purchase of furniture and equipment, net                                        (26,671)       (31,528)
                                                                             ------------   -------------
Net cash used in investing activities                                          (5,835,632)      (416,697)
</TABLE>

                                      -4-
<PAGE>
                           FIRST ALLIANCE CORPORATION

          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (continued)
<TABLE>
<CAPTION>


                                                                                  Six months ended
                                                                                June 30,        June 30,
                                                                                 2002            2001
                                                                             ============    ============
<S>                                                                          <C>             <C>
    (Unaudited)        (Unaudited)
FINANCING ACTIVITIES:
  Deposits on annuity contracts, net                                         $  1,254,707   $    733,917
  Policyholder premium deposits, net                                               86,846          4,542
  Policyholder dividend deposits, net                                                   -            223
  Proceeds from sale of company stock                                             112,451              -
  Cost of stock offering                                                          (44,454)             -
  Dividends paid                                                                        -           (335)
                                                                             ------------   -------------
Net cash provided by financing activities                                       1,409,550        738,347
                                                                             ------------   -------------
Increase (decrease) in cash and cash equivalents                               (3,846,139)       828,278
Cash and cash equivalents, beginning of period                                  5,902,785      4,044,915
                                                                             ------------   -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                     $  2,056,646    $ 4,873,193
                                                                             ============    ============

See notes to condensed consolidated financial statements.
</TABLE>



                                      -5-
<PAGE>

                           FIRST ALLIANCE CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)     BASIS  OF  PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared  in  accordance  with  generally  accepted  accounting  principles  for
interim  financial  information  and  with  the  instructions  to  Form  10-QSB.
Accordingly,  they  do not include all of the information and footnotes required
by  generally  accepted accounting principles for complete financial statements.
In  the  opinion  of management, all adjustments (consisting of normal recurring
accruals)  considered  necessary  for a fair presentation of the results for the
interim  periods  have  been  included.

Certain financial information which is normally included in financial statements
prepared  in accordance with generally accepted accounting principles, but which
is  not  required  for  interim  reporting  purposes,  has  been  omitted.  The
accompanying  condensed  consolidated  financial  statements  should  be read in
conjunction  with  the  financial  statements  and notes thereto included in the
Company's  Form  10-KSB  for  the  fiscal year ended December 31, 2001.  Certain
reclassifications  have  been  made  in the prior period financial statements to
conform  with  the  current  year  presentation.

(2)          SUBSIDIARY  OPERATIONS

First  Alliance  Corporation's  ("Company")  wholly  owned  subsidiaries', First
Alliance  Insurance  Company  ("FAIC"),  First  Kentucky  Capital  Corporation
("FKCC"),  Alliance  Insurance  Management,  Inc.  ("AIM")  and KYWIDE Insurance
Management,  ("KIM")  are  included  in  the  condensed  consolidated  financial
information.  Benefit  Capital Life Insurance Company ("BCLIC") is included from
the  date  of acquisition of December 30, 1999 until its sale effective February
28,  2001.

(3)          COMPREHENSIVE  INCOME

The  components  of  comprehensive income along with the related tax effects are
presented  for  the  three months and six months ended June 30, 2002 and 2001 as
follows:
<TABLE>
<CAPTION>

                                                                    Three months ended           Six months ended
                                                                  June 30,        June 30,       June 30,      June 30,
                                                                   2002            2001           2002          2001
                                                                ============   ============   ============   ============

<S>                                                             <C>            <C>            <C>            <C>
Unrealized gain (loss) on available-for-sale securities:
  Unrealized holding gain (loss) during the period              $     61,420   $    (28,430)  $   (170,193)  $   (45,459)
  Tax (expense) benefit                                              (21,497)        18,453         59,567        24,413
                                                                ------------   ------------   ------------   ------------
Other comprehensive income (loss) net of tax effect                   39,923         (9,977)      (110,626)      (21,046)
                                                                ============   ============   ============   ============

Net income (loss)                                               $    (58,613)  $    121,471   $  (182,931)   $    41,325
  Other comprehensive income (loss) net of tax effect                 39,923         (9,977)     (110,626)       (21,046)
                                                                ------------   ------------   ------------   ------------
Comprehensive income (loss)                                     $    (18,690)  $    111,494   $   (293,557)  $    20,279
                                                                ============   ============   ============   ============

</TABLE>


(4)     INVESTMENTS

On  January  31,  2002  the  Company,  through  its subsidiary, FAIC invested an
additional  $150,000 in Prosperitas Investment Partners, LP ("Prosperitas") as a
result  of  a  capital  call  by  Prosperitas.

                                      -6-
<PAGE>

5)          SEGMENT  INFORMATION

The  operations  of  the  Company and its subsidiaries have been classified into
three  operating  segments  as  follows:  life and annuity insurance operations,
venture  capital  operations, and corporate operations.  Segment information for
the  three  months  and  six  months ended June 30, 2002 and 2001 is as follows:

<TABLE>
<CAPTION>

                                                                    Three months ended            Six months ended
                                                                   June 30,      June 30,       June 30,      June 30,
                                                                    2002           2001           2002          2001
                                                                ============   ============   ============   ============
                                                                  (Unaudited)   (Unaudited)   (Unaudited)    (Unaudited)
<S>                                                             <C>             <C>           <C>            <C>
Revenues:
  Life and annuity insurance
    operations                                                   $ 1,265,756   $  1,400,768  $   2,899,275   $ 2,681,119
  Venture capital operations                                               -            884              -           884
  Corporate operations                                               243,596         81,302        426,342       (60,001)
                                                                ------------   ------------   ------------   ------------
    Total                                                        $ 1,509,352   $  1,482,954  $   3,325,617   $ 2,622,002
                                                                ============   ============   ============   ============
Income (loss) before income taxes:
  Life and annuity insurance
    operations                                                  $     94,256   $    254,807   $    (62,265)   $  573,294
  Venture capital operations                                            (264)           770           (327)          704
  Corporate operations                                               (23,758)        (9,029)        29,558      (265,957)
                                                                ------------   ------------   ------------   ------------
    Total                                                       $     70,234   $    246,548   $    (33,034)   $  308,041
                                                                ============   ============   ============   ============
Depreciation and amortization expense:
  Life and annuity insurance
    operations                                                  $          -   $          -   $         -   $        519
  Venture capital operations                                               -              -             -              -
  Corporate operations                                                13,863          4,878         27,110         8,962
                                                                ------------   ------------   ------------   ------------
    Total                                                       $     13,863   $      4,878   $     27,110   $     9,481
                                                                ============   ============   ============   ============

Segment asset information as of:                                                                 June 30,    December 31,
                                                                                                  2002           2001
                                                                                              ============   ============
                                                                                              (Unaudited)
Assets:
  Life and annuity insurance operations                                                       $ 24,644,119   $22,435,162
  Venture capital operations                                                                       309,308       309,635
  Corporate operations                                                                           1,319,318     1,151,023
                                                                                              ------------   ------------
    Total                                                                                     $ 26,272,745   $23,895,820
                                                                                              ============   ============

</TABLE>

(6)          EARNINGS  PER  SHARE

Net  income  (loss) per common share for basic and diluted earnings per share is
based  upon  the weighted average number of common shares outstanding during the
year.  The  weighted  average  outstanding  common  shares  for the three months
ending  June 30, 2002 and 2001 was 5,577,500 and 5,259,360, respectively and for
the  six  months  ending  June  30,  2002  and 2001 was 5,569,522 and 5,354,122,
respectively.

                                      -7-
<PAGE>
(7)     PRIVATE  PLACEMENT  OFFERING

On  April 9, 2002 the Company commenced an offering of 500,000 shares of class A
common  stock no par value for $3.50 per share. The securities are exempted from
registration  in  reliance  on Rule 506 of Regulation D of the Securities Act of
1933  and  related exemptions at the state level. Additionally, these securities
are  restricted  from  transfer for thirty months from the date of purchase. The
shares  of  common  stock  were  offered  directly to potential subscribers on a
direct  participation  basis  by employees of the Company. At June 30, 2002, the
Company  had  sold  32,129  shares  that  raised  total proceeds of $112,451 and
incurred  offering  cost  of  $44,454.

(8)          COMMITMENTS  AND  CONTINGENCIES

Mid-American  Alliance Corporation, a Missouri corporation  ("Mid-American") has
requested  FAC  loan  it  the  sum of $2.5 million  (the "Affiliate Loan") to be
secured  by a first security interest in, among other things, all of the capital
stock  of  Mid-American's  wholly-owned  subsidiary,  Mid  America  Century Life
Insurance  Company,  a  Missouri  corporation.  Mid-American  proposes to make a
similar  loan  to  its  wholly-owned subsidiary, Mid American Associates Agency,
Inc.  to  refinance  existing  debt  related  to  the  acquisition  of insurance
agencies.  FAC  is  willing  to make the Affiliate Loan if Registrant is able to
borrow  a  like  amount  from  a  non-affiliated  lender under acceptable terms.

On  March  26,  2002, the Board of Directors of FAC authorized the Registrant to
search  for  a  lender  willing  to  loan  $2.5  million  to the Registrant (the
"Registrant  Loan") secured by a first security interest in, among other things,
all of the capital stock of Registrant's wholly-owned subsidiary, First Alliance
Insurance  Company,  a  Kentucky  corporation.  Fifth  Third  Bank of Lexington,
Kentucky  has  agreed to make the loan, however, final terms and conditions have
yet  to  be  agreed  upon.

                                      -8-
<PAGE>
Item  2.    MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION

The  Company  makes  forward-looking statements from time to time and desires to
take  advantage of the "safe harbor" which is afforded such statements under the
Private  Securities  Reform  Act of 1995 when they are accompanied by meaningful
cautionary  statements  identifying  important  factors  that could cause actual
results  to  differ  materially  from  those  in the forward-looking statements.

The  statements contained in the following "Management's Discussion and Analysis
or  Plan  of  Operation",  statements  contained  in  future  filings  with  the
Securities and Exchange Commission and publicly disseminated press releases, and
statements  which  may  be made from time to time in the future by management of
the  Company in presentations to shareholders, prospective investors, and others
interested  in  the business and financial affairs of the Company, which are not
historical  facts,  are  forward-looking  statements  that  involve  risks  and
uncertainties  that  could  cause actual results to differ materially from those
set  forth  in  the  forward-looking  statements.  Any  projections of financial
performances  or  statements  concerning  expectations as to future developments
should  not  be  construed  in  any  manner  as a guarantee that such results or
developments  will,  in  fact,  occur.  There  can  be  no  assurance  that  any
forward-looking  statement  will  be realized or that actual results will not be
significantly  different from that set forth in such forward-looking statements.
In  addition to the risks and uncertainties of ordinary business operations, the
forward-looking  statements of the Company referred to above are also subject to
risks  and  uncertainties.

The  following  discussion  should  be  read  in  conjunction with the condensed
consolidated  financial  statements  and  the  notes  thereto.

For  the  six  months  ended June 30, 2002 net income decreased $224,256, from a
$41,325  gain  to  a  $(182,931) loss, compared to the six months ended June 30,
2001 results.  Earnings per share decreased to a loss per share of $.03 compared
to  a gain per share of $.01 for the six months ended June 30, 2001.  Equity per
share  decreased  2%  to  $1.64.  A  significant  portion  of  these  results is
attributable  to  the  amortization  of  deferred  acquisition  expense.

Consolidated  Financial  Condition

Shareholders'  equity  totaled  $9,185,733  and  $9,411,293 at June 30, 2002 and
December  31,  2001,  respectively.  The  June  30,  2002 balance reflects a net
decrease of approximately 2% for the six-month period then ended.  Comprehensive
income  (loss)  totaled $(293,557) and $20,279 for the six months ended June 30,
2002  and  2001,  respectively.  A  significant  portion of comprehensive income
activity  arose  from  the  Company's  fixed  maturity  and  equity  securities
portfolio.  Equity securities comprised approximately 3% and 5% of the Company's
total  assets  as  of June 30, 2002 and December 31, 2001, respectively.  Equity
portfolio  positions  did not change on a cost basis and decreased $237,871 on a
market  value  basis for the first six months of 2002.  Fixed maturity portfolio
positions  increased  $5,574,877  on an amortized cost basis and $5,642,556 on a
market  value  basis  during  the same time period.  The increase of $150,000 in
other  invested  assets during the period resulted from the Company's investment
in  a  venture capital limited partnership.  Cash and cash equivalents decreased
$3,846,139  during  the  period.

Consolidated  Results  of  Operations

Net  premiums  increased  approximately  8%  during the first six months of 2002
compared  to  the  first  six months of 2001.  Revenues for the six months ended
June  30  totaled  $3,325,617  in  2002 and $2,622,002 in 2001.  The increase is
primarily  attributable to an increase in net premiums of $171,404 that resulted
from  an  increase in preneed insurance sales and commission revenue of $283,585
that  resulted  from  brokerage insurance commissions and no realized investment
losses.  Service  fee  revenue  increased  $41,551  or  31%  during  the period.

                                      -9-
<PAGE>
Cash  Flow  And  Liquidity

Cash  flow provided by operations totaled $579,943 for the six months ended June
30,  2002 compared to $506,628 provided by operations for the same period in the
prior  year.  The  change resulted primarily from an increase in policy premiums
and  commission  income.  Cash  of  $5,835,632  was used in investing activities
during  the  first six months of 2002.  The change resulted primarily from a net
increase  in  available-for-sale  fixed maturities and the purchase of a limited
partnership  interest.  The  $1,409,550 of cash provided by financing activities
during  the  first  six  months  of 2002 is due primarily to annuity and premium
deposits  and  proceeds  from  the  sale  of  company  stock.

The  insurance  operations  generally  provide  adequate  cash flow from premium
collections  and  investment income to meet their obligations.  Insurance policy
liabilities  are  primarily  long-term  and  generally are paid from future cash
flows.  The  Company's  bonds  and  equity  security  investments  are  readily
marketable.  Although  there  is  no  present  need or intent to dispose of such
investments, the Company could liquidate portions of their investments if such a
need  arose.

                                      -10-
<PAGE>
Part  II.   OTHER  INFORMATION

Item  2.    Changes  in  Securities

On  April 9, 2002 the Company commenced an offering of 500,000 shares of class A
common  stock no par value for $3.50 per share. The securities are exempted from
registration  in  reliance  on Rule 506 of Regulation D of the Securities Act of
1933  and  related exemptions at the state level. Additionally, these securities
are  restricted  from  transfer for thirty months from the date of purchase. The
shares  of  common  stock  were  offered  directly to potential subscribers on a
direct  participation  basis  by employees of the Company. At June 30, 2002, the
Company  had  sold  32,129  shares  that  raised  total proceeds of $112,451 and
incurred  offering  cost  of  $44,454.

Item  4.  Submission  of  Matters  to  a  Vote  of  Shareholders

          (a)  The  annual  meeting  of the shareholders was held June  10, 2002
          at 10a.m.   The  purpose of the meeting was to elect directors, amend
          article 4 of the articles of incorporation and approve the independent
          auditors  for  2002
..

          (b) Individuals elected for a term of one year and the number of votes
           cast were as  follows:

<TABLE>
<CAPTION>
<S>         <C>                       <C>                      <C>        <C>       <C>
            Michael N.Fink           Number of votes cast FOR: 2,663,113 ;Withheld:132,821
            Jimmy  Dan Conner        Number of votes cast FOR: 2,664,463 ;Withheld:132,821
            Denzel  E.("Denny")Crum  Number of votes cast FOR: 2,662,268 ;Withheld:132,821
            Scott  J.Engebritson     Number of votes cast FOR: 2,659,633 ;Withheld:132,821
            James  M. Everett        Number of votes cast FOR: 2,659,643 ;Withheld:132,821
            Thomas I. Evans          Number of votes cast FOR: 2,658,793 ;Withheld:132,821
            Charles Hamilton         Number of votes cast FOR: 2,671,553  Withheld:132,821
            Ronda S. Paul            Number of votes cast FOR: 2,658,793 ;Withheld:132,821

</TABLE>

Approval  of  amending  article  4  of  the  articles  of  incorporation.


FOR:           2,451,996
AGAINST:         233,899
ABSTAIN:         126,931


Approval  of  the  appointment  of  Kerber,  Eck  & Braeckel, LLP as independent
auditors  for  2002.

FOR           2,741,289
AGAINST:         10,967
ABSTAIN:         60,472

Item  6.    Exhibits  and  Reports  on  Form  8-K

     b)     A  Form 8-K dated April 5, 2002 was filed relating to Item 5 - Other
Events.  The  form disclosed a request by an affiliate of the registrant to loan
it  $2.5  million.  The  registrant is willing to make the loan if it is able to
borrow  a  like  amount  from  a  non-affiliated  lender under acceptable terms.

                                      -11-
<PAGE>
Signatures


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


     First  Alliance  Corporation
---------------------------------
     (registrant)


August  13,  2002                    /s/  Michael  N.  Fink
-------------                        -----------------------------
Date                                 Michael N.  Fink, President

August  13,  2002                    /s/  Thomas  I.  Evans
--------------       ---------------------------------------------
Date                 Thomas  I.  Evans,  Vice  President/Secretary

                                      -12-
<PAGE>