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  March  31,  2001

                                       or

[ ] 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                    (I.R.S. Employer Number)
of  incorporation  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  5,259,360  shares  as  of  April  30,  2001

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

<PAGE>

                           FIRST ALLIANCE CORPORATION

                               INDEX TO FORM 10-Q
                               ------------------


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

Item  1.  Financial  Statements:


     Condensed  Consolidated  Balance  Sheets  at
          March  31,  2001  and  December  31,  2000                         1

     Condensed  Consolidated  Statements  of  Operations
          for  the  three  months  ended  March  31,  2001  and  2000        3

     Condensed  Consolidated  Statements  of  Cash  Flows  for  the
          three  months  ended March 31, 2001 and 2000                       4

     Notes  to  Condensed Consolidated Financial Statements                  6

     Management's  Discussion  and  Analysis  or  Plan  of  Operation        9


Part  II.
---------

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

Signatures                                                                  12
----------

<PAGE>

<TABLE>
<CAPTION>

                                 FIRST ALLIANCE CORPORATION

                           CONDENSED CONSOLIDATED BALANCE SHEETS



                                                                    March 31,  December 31,
                                                                      2001         2000
                                                                   -----------  -----------
ASSETS                                                              Unaudited

<S>                                                                <C>          <C>
Investments:
  Available-for-sale fixed maturities, at fair value
    (amortized cost, $8,004,150 and $8,548,507
      in 2001 and 2000, respectively)                              $ 8,309,959  $ 8,734,400
  Equity securities (cost of $2,698,312 and $3,168,318
      in 2001 and 2000, respectively)                                1,511,996    2,132,095
  Policy loans                                                          63,714      100,687
  Notes receivable (net of $149,698 valuation
    allowance in 2001 and 2000)                                        547,198      569,788
  Other invested assets                                                660,000      510,000
                                                                   -----------  -----------
Total investments                                                   11,092,867   12,046,970

Cash and cash equivalents                                            4,146,163    4,044,915
Investments in related parties                                         237,500      237,500
Receivables from related parties                                        32,510       35,675
Accrued investment income                                              159,573      144,074
Premiums receivable                                                    107,255      136,069
Advances to agents                                                      49,224       36,382
Reinsurance recoverable                                                737,854      714,561
Deferred policy acquisition costs                                    3,719,937    3,364,088
Value of insurance acquired                                                  -       57,224
Goodwill                                                                     -      151,027
Office furniture and equipment, less accumulated depreciation of
 $96,828 and $116,975 in 2001 and 2000, respectively                    43,824       45,580
Other assets                                                            58,218       71,184
                                                                   -----------  -----------
Total assets                                                       $20,384,925  $21,085,249
                                                                   ===========  ===========

See notes to condensed consolidated financial statements
</TABLE>

                                        1
<PAGE>

<TABLE>
<CAPTION>

                               FIRST ALLIANCE CORPORATION

                   CONDENSED CONSOLIDATED BALANCE SHEETS (continued)



                                                              March  31,  December  31,
                                                                 2001          2000
                                                             ------------  ------------
LIABILITIES AND SHAREHOLDERS' EQUITY                         (Unaudited)
<S>                                                          <C>           <C>
Policy and contract liabilities:
  Annuity contract liabilities                               $ 5,128,763   $ 4,629,330
  Life policy reserves (net of reinsurance ceded
    reserves of $347,141 and $340,172 in 2000 and
    1999, respectively)                                        3,695,212     4,379,730
  Unearned premium reserves                                      347,141       358,981
  Policy and contract claims                                      45,647       108,889
  Policyholder dividend deposits                                       -        42,726
  Policyholder premium deposits                                  193,223       187,798
  Deposits on pending policy applications                        375,783       276,287
  Unearned revenue                                               157,648        77,010
  Reinsurance premiums payable                                    56,772        56,349
                                                             ------------  ------------
Total policy and contract liabilities                         10,000,189    10,117,100

Commissions, salaries, wages and benefits payable                196,216       175,191
Accrued expenses and other liabilities                           101,411        55,232
Federal income taxes payable:
     Current                                                           -        11,583
     Deferred                                                    698,007       575,826
                                                             ------------  ------------
Total liabilities                                             10,995,823    10,934,932

Shareholders' equity:
Common stock, no par value, 8,000,000 shares
     authorized; 5,259,360 and 5,527,360 shares issued and
     outstanding at March 31, 2001 and December 31, 2000         525,936       552,736
Additional paid in capital                                    12,628,272    12,628,272
Retained Earnings - deficit                                   (3,192,820)   (2,469,474)
Accumulated other comprehensive income                          (572,286)     (561,217)
                                                             ------------  ------------
Total shareholders' equity                                     9,389,102    10,150,317
                                                             ------------  ------------
Total liabilities and shareholders' equity                   $20,384,925   $21,085,249
                                                             ============  ============

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

                                        2
<PAGE>

<TABLE>
<CAPTION>

                                FIRST ALLIANCE CORPORATION

                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                   Three months ended
                                                                 March 31,     March 31,
                                                                    2001          2000
                                                                ------------  ------------
                                                                (Unaudited)   (Unaudited)
<S>                                                             <C>           <C>
REVENUES
     Premium income (net of reinsurance of $259,551 in
       2001 and $234,873 in 2000)                               $ 1,118,586   $   916,043
     Net investment income                                          170,682       191,803
     Net realized investment losses                                (214,548)      (27,095)
     Service fee revenue                                             56,304        44,938
     Other income                                                     8,024         4,618
                                                                ------------  ------------
            Total revenue                                         1,139,048     1,130,307


BENEFITS AND EXPENSES
    Increase in policy reserves                                     188,942       188,645
    Death claims (net of reinsurance of $43,340 in 2001
        and  $1,815 in 2000)                                          2,272        12,586
    Policyholder surrender values                                    62,564        53,797
    Interest credited on annuities and premium deposit funds        111,397        68,630
    Payment of dividend accumulations                                     -           959
    Commissions                                                     320,118       361,695
    Policy acquisition costs deferred                              (478,671)     (407,157)
    Amortization expense:
      Deferred policy acquisition costs                             122,822       120,840
      Value of insurance acquired                                       681         1,022
    Selling, administrative and general insurance expense           229,922       181,833
    Salaries, wages and employee benefits                           350,346       289,726
    Professional fees                                                18,603        56,108
    Depreciation expense                                              4,603         4,562
    Other operating cost and expenses                               143,956       114,984
                                                                ------------  ------------

           Total benefits and expenses                            1,077,555     1,048,230
                                                                ------------  ------------

INCOME FROM OPERATIONS                                               61,493        82,077
                                                                ------------  ------------

Federal income taxes                                                141,639        89,839
                                                                ------------  ------------

NET LOSS                                                        $   (80,146)  $    (7,762)
                                                                ============  ============

NET INCOME(LOSS) PER COMMON SHARE-BASIC AND DILUTED             $     (0.01)  $      0.00
                                                                ============  ============

See notes to condensed consolidated financial statements.

</TABLE>

                                        3
<PAGE>

<TABLE>
<CAPTION>

                               FIRST ALLIANCE CORPORATION

                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                Three months ended
                                                               March 31,     March 31,
                                                                 2001          2000
                                                             ------------  ------------
                                                             (Unaudited)   (Unaudited)
Operating activities:
<S>                                                          <C>           <C>
Net loss                                                     $   (80,146)  $    (7,762)
Adjustments to reconcile net loss to net cash
provided by operating activities:
   Interest credited on annuities and premium deposits           118,757        65,839
   Provision for depreciation                                      4,603         4,562
   Amortization of premium and accretion of discount on
       fixed maturity investments                                  5,190         5,657
   Amortization of value of insurance acquired                       681         1,022
   Net realized investment (gains) loss                          204,565        27,095
   Provision for deferred federal income taxes                   141,154        92,031
   Increase in policy loans                                       (2,490)      (14,672)
   Increase in accrued investment income                         (25,206)      (45,129)
   (Increase) decrease in receivables from related parties         3,165       (45,894)
   (Increase) decrease in reinsurance recoverable                (23,293)        1,418
   Increase in federal income tax recoverable                          -         1,603
   Increase in deferred policy acquisition costs, net           (355,849)     (286,317)
   Increase (decrease) in unearned revenue                        80,638        (3,598)
   (Increase) decrease in premiums due                            26,893        (6,760)
   (Increase) decrease in other assets                            (2,703)        3,755
   Increase in policy reserves                                   212,948       188,645
   Increase in deposits on pending policy applications            99,496       100,617
   Decrease in claims payable                                    (63,242)      (29,845)
   Increase (decrease) in reinsurance premiums payable               423        (1,591)
   Decrease in federal income taxes payable                      (11,583)            -
   Increase in commissions, salaries, wages and benefits          21,025         9,351
   Increase (decrease) in accounts payable, accrued
       expenses and other liabilities                             48,563       (27,645)
                                                             ------------  ------------
Net cash provided by operating activities                        403,589        32,382

INVESTING ACTIVITIES:
   Purchase of available-for-sale fixed maturities            (1,586,189)   (2,188,995)
   Sale of available-for-sale fixed maturities                 1,011,823     1,851,840
   Purchase of common stock                                            -    (4,722,572)
   Sale of common stock                                          255,947       958,938
   Sale of subsidiary net of cash disposed                      (232,850)       (3,719)
   Purchase of limited partnership interest                     (150,000)            -
   Purchase of limited liability company interest                      -      (300,000)
   Short term investments disposed                                     -       200,000
   Decrease in notes receivable                                   22,590        18,051
   Purchase of furniture and equipment, net                       (9,986)         (294)
                                                             ------------  ------------
Net cash (used in) investing activities                         (688,665)   (4,186,751)
</TABLE>

                                        4
<PAGE>

<TABLE>
<CAPTION>

                           FIRST ALLIANCE CORPORATION

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

                                                        Three months ended
                                                      March 31,     March 31,
                                                         2001          2000
                                                     ------------  ------------
                                                     (Unaudited)   (Unaudited)

<S>                                                  <C>           <C>
FINANCING ACTIVITIES:
    Deposits on annuity contracts, net                   391,873       357,653
    Policyholder premium deposits, net                    (5,772)        6,299
    Policyholder dividend deposits, net                      223          (548)
    Proceeds from sale of common stock                         -       105,450
    Cost of stock offering                                     -        (1,050)
    Repurchase of company stock                                -       (14,400)
                                                     ------------  ------------
Net cash provided by (used in) financing activities      386,324       453,404
                                                     ------------  ------------

Increase(decrease) in cash and cash equivalents          101,248    (3,700,965)

Cash and cash equivalents beginning of period          4,044,915     5,540,571
                                                     ------------  ------------
Cash and cash equivalents at end of period           $ 4,146,163   $ 1,839,606
                                                     ============  ============
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, 2000.  Certain
reclassifications  have  been  made  in the prior period financial statements to
conform  with  the  current  year  presentation.

(2)     SUBSIDIARY  OPERATIONS

The  Company's  wholly  owned  subsidiaries',  First  Alliance Insurance Company
("FAIC")  and  First  Kentucky Capital Corporation ("FKCC"), 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  quarters ended March 31, 2001 and 2000 as follows:

<TABLE>
<CAPTION>
                                                     2001       2000
                                                   ---------  ---------
<S>                                                <C>        <C>
Unrealized loss on available-for-sale securities:
  Unrealized holding losses during the period      $(17,029)  $(74,473)
    Tax benefit                                       5,960     25,322
                                                   ---------  ---------
Other comprehensive income                          (11,069)   (49,151)
                                                   =========  =========

Net loss                                           $(80,146)  $ (7,762)
  Other comprehensive income(loss) net of tax
   effect:
         Unrealized investment loss                 (11,069)   (49,151)
                                                   ---------  ---------
Comprehensive loss                                 $(91,215)  $(56,913)
                                                   =========  =========

Net income(loss) per common share - basic
 and dilute                                        $  (0.02)  $   0.00
                                                   =========  =========

</TABLE>


(4)     INVESTMENTS

On  February  17,  2000  the  Company  executed  an agreement with Ken Belsky to
purchase  a  10%  interest  in  Ken     Belsky  &  Associates,  LLC ("KBA"), for
$300,000  cash.  The  Company  also  received  an  option  to  purchase up to an
additional  5%  interest  for  an  amount  equal  to  $30,000 for each 1% of the
additional  interest  purchased.  The  option  expires  February  17, 2001.  The
Company  did  not  exercise  its  option  to  purchase  any  additional

                                        6
<PAGE>

(4)     INVESTMENTS  (CONTINUED)

interest  in  KBA.  Ken Belsky and Associates LLC is a general  insurance agency
specializing  in  the  marketing  of  substandard  life  insurance  policies.

On  January  31, 2001 the Company invested an additional $150,000 in Prosperitas
Investment  Partners,  LP ("Prosperitas")  as  a  result  of  a  capital  call
by  Prosperitas.

(5)     RELATED  PARTY  TRANSACTIONS

The Company entered into a service agreement  with Integrity Capital Corporation
effective  March  1,  2001.  Pursuant to the terms of the agreement, the Company
provides  data  processing,  accounting  and  reporting services in return for a
$4,000  per  month  service  fee.

(6)     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 as of
March  31,  2001 and December 31, 2000 and for the quarters ended March 31, 2001
and  2000  is  as  follows:


<TABLE>
<CAPTION>

                                             2001          2000
                                         ------------  ------------
<S>                                      <C>           <C>
Revenues:
  Life and annuity insurance operations  $ 1,280,351   $ 4,235,693
  Venture capital operations                       -             -
  Corporate operations                      (141,303)      245,280
                                         ------------  ------------
    Total                                $ 1,139,048   $ 4,480,973
                                         ============  ============

Income (loss) before income taxes:
  Life and annuity insurance operations  $   318,487   $   873,928
  Venture capital operations                     (66)            -
  Corporate operations                      (256,928)     (672,810)
                                         ------------  ------------
    Total                                $    61,493   $   201,118
                                         ============  ============

Assets:
  Life and annuity insurance operations  $19,138,989   $19,163,645
  Venture capital operations                 308,700       208,766
  Corporate operations                       937,236     1,712,838
                                         ------------  ------------
    Total                                $20,384,925   $21,085,249
                                         ============  ============

Depreciation and amortization expense:
  Life and annuity insurance operations  $   124,022   $   645,784
  Venture capital operations                       -             -
  Corporate operations                         4,084        17,111
                                         ------------  ------------
    Total                                $   128,106   $   662,895
                                         ============  ============
</TABLE>

                                        7
<PAGE>

                           FIRST ALLIANCE CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(7)     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 was 5,449,938 in 2001 and
5,659,064  in  2000
 .

(8)     SALE  OF  BENEFIT  CAPITAL  LIFE  INSURANCE  COMPANY

On  June  27,  2000,  the  Company  entered  into  an  agreement with Chris Haas
("Haas"),  former  Chairman  of  the  Board  of the Company, to exchange all the
outstanding  common  capital  stock  of  BCLIC  for 268,000 shares of FAC common
stock.  Under  the terms of the agreement, FAC will purchase BCLIC from FAIC for
$670,000 cash and FAC will exchange BCLIC for HAAS FAC shares.  On March 5, 2001
the  sale  of  BCLIC  to  Chris  Haas  was  completed.  Under  the  terms of the
agreement,  FAC  purchased  BCLIC  from FAIC for $670,000 cash and FAC exchanged
BCLIC  for  268,000  shares  of  FAC  stock.

(9)     COMMITMENTS

On  June  16,  1999, First Kentucky Capital Corporation executed a commitment to
purchase  three units of the Prosperitas Investment Partners, LP ("Prosperitas")
for  $450,000.  Prosperitas  is  a  venture  capital  fund  based in Louisville,
Kentucky.  An  initial  payment of $22,500, which represents five percent of the
total  investment,  was  paid upon the execution of the subscription  agreement.
Total payments in the amount of $300,000 have been made and the remaining amount
of  the  commitment  is  due  on  the  fourth anniversary of the initial capital
contribution.

On  May  2,  2000  the  Company  entered  into  an agreement with Ken Belsky and
Associates,  LLC  to  provide  a  credit  facility  of $600,000 at a 10% rate of
interest  to  Ken  Belsky  &  Associates,  LLC ("Borrower").  Advances under the
credit  facility  will  be  made as follows: (I) $300,000 as of the closing date
through  March  31, 2001 and (ii) $300,000 as of the satisfaction of the funding
conditions  through  March  31,  2001,  funding conditions were met on March 10,
2000.  Upon  the  Company's  advance to Borrower of the first $100,000, Borrower
will issue a one percent (1%) membership interest in Borrower to the Company and
upon  the  Company's  advance  to  borrow  of  any amount in excess of $300,000,
Borrower  will  issue  an  additional  one  percent  (1%) membership interest in
Borrower  to  the  Company.   Principal  and  interest under the credit facility
shall  be  due  and payable as follows: monthly payments of interest only on the
outstanding  balance  of  the loans through March 1, 2001 and then principal and
interest  will  be  payable  in thirty (30) equal monthly installments beginning
April  1,  2001.  At  March  31,  2001, $250,000 had been loaned pursuant to the
agreement.

On  June  21,  2000  the Company agreed to purchase 100,000 shares of its common
stock  from  Stephen  T.  Haas  and  Tracy M. Hoggard for $1.50 per share for an
aggregate  purchase price of $150,000, over a period not to exceed 30 months, if
certain  conditions  occur.  On  December  7,  2000 a new purchase agreement was
entered  into  whereby  the  Company will purchase 12,500 shares per quarter for
eight  consecutive  quarters,  beginning  December  7, 2000.  At March 31, 2001,
12,500  shares  have  been  purchased  under  the  agreement.

                                        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 three months ended March 31, 2001 net loss increased $72,384 compared to
the  three  months ended March 31, 2000 results and earnings per share decreased
to  a  loss  per  share  of  $.01 compared to the quarter ending March 31, 2000.
Equity  per  share decreased 3% to $1.79. A significant portion of these results
is  attributable  to  the  timing  of  the  Company  s decision to substantially
increase  its  investment  in  equity  securities.

Dispositions
------------

Purchase  of  FAC  Stock  and  Sale  of  Benefit  Capital Life Insurance Company

On  June  27,  2000,  the  Company  entered  into  an  agreement with Chris Haas
("Haas"),  former  Chairman  of  the  Board  of the Company, to exchange all the
outstanding  common  capital  stock  of  BCLIC for 268,000 shares of  FAC common
stock.  Under  the terms of the agreement, FAC will purchase BCLIC from FAIC for
$670,000 cash and FAC will exchange BCLIC for HAAS FAC shares.  On March 5, 2001
the  sale  of  BCLIC  to  Chris  Haas  was  completed.  Under  the  terms of the
agreement,  FAC  purchased  BCLIC  from FAIC for $670,000 cash and FAC exchanged
BCLIC  for  268,000  shares  of  FAC  stock.

Consolidated  Financial  Condition
----------------------------------

Shareholders'  equity  totaled  $9,389,102 and $10,150,317 at March 31, 2001 and
December  31,  2000,  respectively.  The  March  31, 2001 balance reflects a net
decrease  of  approximately  3%  for  the  three  month  period  then  ended.
Comprehensive income (loss) totaled $(91,215) and $(56,913) for the three months
ended  March  31,  2001  and  2000,  respectively.  A  significant  portion  of
comprehensive  income  activity  arose  from  the  Company's  equity  securities
portfolio.  Equity  securities  comprised  approximately  7%  and  21%  of  the
Company's  total  assets  as  of  March 31, 2001 and 2000, respectively.  Equity
portfolio  positions decreased $470,000 on a cost basis and $620,099 on a market
value  basis  for  the  first  three  months  of 2001.  Fixed maturity portfolio
positions  decreased  $544,357  on  an  amortized  cost  basis and $424,441 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 increased
$101,248  during  the  period.

                                        9
<PAGE>

Consolidated  Results  of  Operations
-------------------------------------

Net  premiums  increased approximately 22% during the first three months of 2001
compared to the first three months of 2000.  Revenues for the three months ended
March  31  totaled  $1,139,048  in  2001  and 1,232,773 in 2000. The decrease is
primarily  attributable  to  realized  investment  losses  of $214,548 primarily
resulting  from the sale of equity securities and a $9.982 loss from the sale of
its  subsidiary  Benefit  Capital  Life  Insurance Company.  Service fee revenue
increased  $11,366  or  25%  during  the  period.

Cash  Flow  And  Liquidity
--------------------------

Cash  flow  provided  by  operations totaled $403,589 for the three months ended
March 31, 2001 compared to $32,382 provided by operations for the same period in
the  prior  year.  The  change  resulted  primarily from the increase in premium
income.  $688,665  of  cash  was  used  in investing activities during the first
three  months  of  2001.  The  change  resulted primarily from a net increase in
available for sale fixed maturities.  $386,324 of  cash  provided  by  financing
activities  during  the  first  three  months  of  2001  is  due  primarily   to
annuity  deposits.

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.  The Company has commitments to (I) purchase investments of 150,000
in  2003 (ii) purchase shares of its common stock of $60,000 in 2001, $60,000 in
2002  and  $11,250  in 2003 and (ii) fund a credit facility of $300,000 in 2001.

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Part  II.  -  Other  information

Item  6.   Exhibits  and  Reports  on  Form  8-K

     (b)  The  Company  did not file any reports on Form 8-K during the three
          months ended  March  31,  2000

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Signatures


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


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




Date    May  15,  2001                                 /s/  Michael  N.  Fink
    --------------------------                         ----------------------
Michael  N.  Fink,  President



Date    May  15,  2001                                 /s/  Thomas  I.  Evans
     -------------------------                         ----------------------
Thomas  I.  Evans,  Vice  President/Secretary

                                       12
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