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  September  30,  2002

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

                        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  5,602,584  shares  as  of  October  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  September  30,  2002  (Unaudited)  and  December  31,  2001      1

     Condensed  Consolidated  Statements  of  Operations
     for  the  three  and  nine  months  ended
     September  30,  2002  and  2001  (Unaudited)                         3

     Condensed  Consolidated  Statements  of  Cash  Flows
     for  the  nine  months  ended  September  30,  2002
     and  2001  (Unaudited)                                               4

     Notes  to  Condensed  Consolidated  Financial  Statements            6

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

     Item  3.  Controls  and  Procedures                                 11

PART  II.  OTHER  INFORMATION
-----------------------------

     Item  2.  Changes  in  Securities                                   12

     Item  6.  Exhibits  and Reports on Form 8-K                         12

Signatures                                                               13

Certifications                                                           14

                                                -ii-
<PAGE>

<TABLE>
<CAPTION>


                                  FIRST ALLIANCE CORPORATION

                             CONDENSED CONSOLIDATED BALANCE SHEETS



                                                                 September 30,   December 31,
                                                                     2002            2001
                                                                ---------------  -------------
ASSETS                                                            (Unaudited)
<S>                                                             <C>              <C>
Investments:
  Available-for-sale fixed maturities, at fair value
    (amortized cost, $16,719,512 and $8,530,517
    in 2002 and 2001, respectively). . . . . . . . . . . . . .  $    17,311,496  $   8,894,904
  Equity securities (cost of $2,324,377 in 2002 and 2001). . .          655,623      1,099,707
  Policy loans . . . . . . . . . . . . . . . . . . . . . . . .          194,910         81,911
  Notes receivable (net of $110,000 and $116,616
    valuation allowance in 2002 and 2001, respectively). . . .          801,814        770,280
  Other invested assets. . . . . . . . . . . . . . . . . . . .          575,000        425,000
                                                                ---------------  -------------
Total investments. . . . . . . . . . . . . . . . . . . . . . .       19,538,843     11,271,802

Cash and cash equivalents. . . . . . . . . . . . . . . . . . .        1,872,607      5,902,785
Investment in related parties. . . . . . . . . . . . . . . . .          306,969        371,276
Receivables from related parties . . . . . . . . . . . . . . .           32,114         48,038
Accrued investment income. . . . . . . . . . . . . . . . . . .          216,490        182,220
Premiums receivable. . . . . . . . . . . . . . . . . . . . . .          177,435        131,638
Advances to agents . . . . . . . . . . . . . . . . . . . . . .          106,279         88,828
Reinsurance recoverable. . . . . . . . . . . . . . . . . . . .        1,212,547      1,026,524
Deferred policy acquisition costs. . . . . . . . . . . . . . .        4,922,677      4,718,225
Office furniture and equipment, less accumulated depreciation
  of $169,687 and $129,027 in 2002 and 2001, respectively. . .          115,461        125,121
Federal income tax recoverable . . . . . . . . . . . . . . . .           83,872            143
Other assets . . . . . . . . . . . . . . . . . . . . . . . . .           76,480         29,220
                                                                ---------------  -------------
Total assets                                                   $    28,661,774  $  23,895,820
                                                                ===============  =============

</TABLE>

See notes to condensed consolidated financial statements.
                                                -1-
<PAGE>

<TABLE>
<CAPTION>

                                   FIRST ALLIANCE CORPORATION

                       CONDENSED CONSOLIDATED BALANCE SHEETS (continued)



                                                                 September 30,    December 31,
                                                                     2002             2001
                                                                ---------------  --------------
LIABILITIES AND SHAREHOLDERS' EQUITY                              (Unaudited)
<S>                                                             <C>              <C>
Policy and contract liabilities:
  Annuity contract liabilities . . . . . . . . . . . . . . . .  $    9,372,755   $   7,148,568
  Life policy reserves (net of reinsurance
     ceded reserves of $539,292 and $478,506
     in 2002 and 2001, respectively) . . . . . . . . . . . . .       6,025,147       4,791,633
  Unearned premium reserves. . . . . . . . . . . . . . . . . .         550,113         466,135
  Policy and contract claims . . . . . . . . . . . . . . . . .          32,813          57,301
  Policyholder premium deposits. . . . . . . . . . . . . . . .         299,797         209,679
  Deposits on pending policy applications. . . . . . . . . . .          10,938         193,313
  Unearned revenue . . . . . . . . . . . . . . . . . . . . . .          58,697          63,263
  Reinsurance premiums payable . . . . . . . . . . . . . . . .          63,091          66,901
                                                                ---------------  --------------
Total policy and contract liabilities. . . . . . . . . . . . .      16,413,351      12,996,793

Commissions, salaries, wages and benefits payable. . . . . . .         260,098         269,100
Payables to related parties. . . . . . . . . . . . . . . . . .               -         124,881
Payable for securities . . . . . . . . . . . . . . . . . . . .         500,000               -
Accrued expenses and other liabilities . . . . . . . . . . . .          94,019          98,461
Federal income taxes payable:
  Deferred . . . . . . . . . . . . . . . . . . . . . . . . . .       1,063,584         995,292
                                                                ---------------  --------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . .      18,331,052      14,484,527

Shareholders' equity:
Common stock, no par value, 8,000,000 shares
  authorized; 5,602,584 and 5,561,455 shares issued
  and outstanding at September 30, 2002 and December 31, 2001.         560,258         556,146
Additional paid in capital . . . . . . . . . . . . . . . . . .      13,529,113      13,466,445
Accumulated other comprehensive income . . . . . . . . . . . .        (699,900)       (559,183)
Retained earnings - deficit. . . . . . . . . . . . . . . . . .      (3,058,749)     (4,052,115)
                                                                ---------------  --------------
Total shareholders' equity . . . . . . . . . . . . . . . . . .      10,330,722       9,411,293
                                                                ---------------  --------------
Total liabilities and shareholders' equity . . . . . . . . . .  $   28,661,774   $  23,895,820
                                                                ===============  ==============

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

                                                -2-
<PAGE>

<TABLE>
<CAPTION>

                                                  FIRST ALLIANCE CORPORATION

                                        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                  Three months ended                    Nine months ended

                                                             September 30,    September 30,    September 30,    September 30,
                                                                 2002             2001             2002             2001
                                                            ---------------  ---------------  ---------------  ---------------
                                                               (Unaudited)       (Unaudited)      (Unaudited)      (Unaudited)
<S>                                                         <C>              <C>              <C>              <C>
REVENUES
  Premium income . . . . . . . . . . . . . . . . . . . . .  $    1,274,124   $    1,294,566   $    4,394,356   $    4,100,406
  Premiums ceded . . . . . . . . . . . . . . . . . . . . .        (250,150)        (168,455)        (926,183)        (701,500)
                                                            ---------------  ---------------  ---------------  ---------------
    Net premiums earned. . . . . . . . . . . . . . . . . .       1,023,974        1,126,111        3,468,173        3,398,906

  Net investment income. . . . . . . . . . . . . . . . . .         242,733          195,505          661,094          543,116
  Net realized investment gain (loss). . . . . . . . . . .         951,595           (7,196)         951,595         (159,408)
  Service fee revenue. . . . . . . . . . . . . . . . . . .         277,214           79,867          454,744          215,846
  Decrease in equity of
    unconsolidated affiliate . . . . . . . . . . . . . . .          (7,181)               -          (21,612)               -
  Commission income. . . . . . . . . . . . . . . . . . . .          94,417            8,225          378,002            8,321
  Other income . . . . . . . . . . . . . . . . . . . . . .           7,189            4,073           23,562           21,806
                                                            ---------------  ---------------  ---------------  ---------------
    Total revenue. . . . . . . . . . . . . . . . . . . . .       2,589,941        1,406,585        5,915,558        4,028,587

BENEFITS AND EXPENSES
  Death claims . . . . . . . . . . . . . . . . . . . . . .          83,537         (106,195)         275,773           53,945
  Death claims ceded . . . . . . . . . . . . . . . . . . .         (15,633)         138,945         (120,171)               -
                                                            ---------------  ---------------  ---------------  ---------------
    Net death claims . . . . . . . . . . . . . . . . . . .          67,904           32,750          155,602           53,945
  Increase in policy reserves. . . . . . . . . . . . . . .         203,297          267,081        1,130,563          708,678
  Policyholder surrender values. . . . . . . . . . . . . .          88,130           35,718          147,434          146,725
  Interest credited on annuities and
    premium deposit fund . . . . . . . . . . . . . . . . .         128,664          156,018          473,403          390,901
  Commissions. . . . . . . . . . . . . . . . . . . . . . .         167,584          397,250          879,384        1,103,727
  Policy acquisition costs deferred. . . . . . . . . . . .         (18,485)        (747,191)        (877,441)      (1,785,625)
  Amortization expense:
    Deferred policy acquisition costs. . . . . . . . . . .         165,530          321,972          672,988          657,283
    Value of insurance acquired. . . . . . . . . . . . . .               -                -                -              681
  Selling, administrative and
    general expense. . . . . . . . . . . . . . . . . . . .          77,122          305,688          266,968          745,447
  Salaries, wages and employee benefits. . . . . . . . . .         362,095          429,801        1,279,801        1,171,908
  Professional fees. . . . . . . . . . . . . . . . . . . .          52,680         (101,508)         187,959                -
  Advisory board and directors fees. . . . . . . . . . . .           6,400          (51,282)          31,759                -
  Rent expense . . . . . . . . . . . . . . . . . . . . . .          26,512          (47,573)          79,721                -
  Depreciation expense . . . . . . . . . . . . . . . . . .          13,550            5,884           40,660           15,365
  Other expenses . . . . . . . . . . . . . . . . . . . . .         162,225          337,162          393,058          446,696
                                                            ---------------  ---------------  ---------------  ---------------
    Total benefits and expenses. . . . . . . . . . . . . .       1,503,208        1,341,770        4,861,859        3,655,731
                                                            ---------------  ---------------  ---------------  ---------------

INCOME FROM OPERATIONS . . . . . . . . . . . . . . . . . .       1,086,733           64,815        1,053,699          372,856
                                                            ---------------  ---------------  ---------------  ---------------

Federal income taxes . . . . . . . . . . . . . . . . . . .         (89,564)         135,383           60,333          402,099
                                                            ---------------  ---------------  ---------------  ---------------

NET INCOME (LOSS). . . . . . . . . . . . . . . . . . . . .  $    1,176,297   $      (70,568)  $      993,366   $      (29,243)
                                                            ===============  ===============  ===============  ===============

NET INCOME (LOSS) PER COMMON SHARE -
  BASIC AND DILUTED. . . . . . . . . . . . . . . . . . . .            0.21            (0.01)            0.18            (0.01)
                                                            ===============  ===============  ===============  ===============

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

                                                -3-
<PAGE>

<TABLE>
<CAPTION>

                                      FIRST ALLIANCE CORPORATION

                           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                            Nine months ended

                                                                      September 30,    September 30,
                                                                          2002             2001
                                                                     ---------------  ---------------
                                                                      (Unaudited)      (Unaudited)
<S>                                                                  <C>              <C>
OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . .  $      993,366   $      (29,243)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
  Increase in policy reserves . . . . . . . . . . . . . . . . . . .       1,317,492          931,613
  Decrease in claim liabilities . . . . . . . . . . . . . . . . . .         (24,488)         (63,242)
  Increase in reinsurance recoverable . . . . . . . . . . . . . . .        (186,023)        (220,785)
  Interest credited on annuities and premium deposits . . . . . . .         464,519          386,022
  Provision for depreciation. . . . . . . . . . . . . . . . . . . .          40,660           15,365
  Increase in deferred policy acquisition costs, net. . . . . . . .        (204,452)      (1,128,341)
  Amortization of value of insurance acquired . . . . . . . . . . .               -              681
  Amortization of premium and accretion of discount . . . . . . . .          17,738           16,864
  Net realized investment (gain) loss . . . . . . . . . . . . . . .        (951,595)         135,368
  Increase in policy loans. . . . . . . . . . . . . . . . . . . . .        (112,999)          (8,113)
  (Increase) decrease in receivables from related parties . . . . .          15,924          (28,638)
  Increase in accrued investment income . . . . . . . . . . . . . .         (34,270)         (46,864)
  (Increase) decrease in premiums receivable. . . . . . . . . . . .         (44,347)          35,175
  (Increase) decrease in advances to agents . . . . . . . . . . . .         (17,451)          (7,482)
  Increase in federal income tax recoverable. . . . . . . . . . . .         (83,729)               -
  (Increase) decrease in other assets . . . . . . . . . . . . . . .         (47,260)          11,651
  Increase (decrease) in deposits on pending policy applications. .        (182,375)          34,087
  Increase (decrease) in unearned revenue . . . . . . . . . . . . .          (4,566)          13,189
  Increase (decrease) in reinsurance premium payable. . . . . . . .          (5,260)           9,583
  Decrease in equity of unconsolidated affiliates . . . . . . . . .          21,612                -
  Increase (decrease) in commissions, salaries, wages and benefits.          (9,002)          64,076
  Decrease in payables to related parties . . . . . . . . . . . . .        (124,881)               -
  Increase (decrease) in accrued expenses and other liabilities . .          (4,442)          31,099
  Decrease in federal income taxes payable. . . . . . . . . . . . .               -          (11,726)
  Increase in deferred federal income tax liability . . . . . . . .         144,062          401,757
                                                                     ---------------  ---------------
Net cash provided by operating activities . . . . . . . . . . . . .         978,233          542,096

INVESTING ACTIVITIES:
  Purchase of available-for-sale fixed maturities . . . . . . . . .      (9,140,388)      (1,936,189)
  Sale of available-for-sale fixed maturities . . . . . . . . . . .       1,435,000        1,011,822
  Sale of common stock. . . . . . . . . . . . . . . . . . . . . . .               -          681,118
  Purchase of limited partnership interest. . . . . . . . . . . . .        (150,000)        (150,000)
  Purchase of limited liability company interest. . . . . . . . . .               -           (5,000)
  Sale of subsidiary net of cash disposed . . . . . . . . . . . . .               -         (232,849)
  (Increase) decrease in notes receivable . . . . . . . . . . . . .         (31,534)          12,304
  Investment in unconsolidated affiliates . . . . . . . . . . . . .          (9,805)         (25,000)
  Sale of investment in related party . . . . . . . . . . . . . . .       1,002,750                -
  Purchase of furniture and equipment, net. . . . . . . . . . . . .         (31,000)         (51,084)
                                                                     ---------------  ---------------
Net cash used in investing activities . . . . . . . . . . . . . . .      (6,924,977)        (694,878)

</TABLE>
                                                -4-
<PAGE>


<TABLE>
<CAPTION>

                                 FIRST ALLIANCE CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (continued)

                                                                           Nine months ended

                                                                     September 30,    September 30,
                                                                         2002             2001
                                                                     ---------------  ---------------
                                                                     (Unaudited)      (Unaudited)
<S>                                                                  <C>              <C>
FINANCING ACTIVITIES:
  Deposits on annuity contracts, net . . . . . . . . . . .           $    1,763,778   $    1,318,480
  Policyholder premium deposits, net . . . . . . . . . . .                   86,008            6,715
  Policyholder dividend deposits, net. . . . . . . . . . .                        -              223
  Proceeds from sale of company stock. . . . . . . . . . .                  143,951           93,000
  Cost of stock offering . . . . . . . . . . . . . . . . .                  (77,171)         (20,180)
  Dividends paid . . . . . . . . . . . . . . . . . . . . .                        -             (335)
                                                                     ---------------  ---------------
Net cash provided by financing activities. . . . . . . . .                1,916,566        1,397,903
                                                                     ---------------  ---------------
Increase (decrease) in cash and cash equivalents . . . . .               (4,030,178)       1,245,121

Cash and cash equivalents, beginning of period . . . . . .                5,902,785        4,044,915
                                                                     ---------------  ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . .           $    1,872,607   $    5,290,036
                                                                     ===============  ===============

See notes to condensed consolidated financial statements.
</TABLE>
                                                -5-
<PAGE>

                           FIRST ALLIANCE CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(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 accepted in
the  United  States  of America, 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, Second
Alliance  Corporation  ("SAC"),  First  Alliance  Insurance  Company  ("FAIC"),
Alliance Insurance Management,Inc. ("AIM") and KYWIDE Insurance Management, Inc.
("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.

On August 13, 2002 FAC capitalized a wholly owned subsidiary, SAC.  On September
13, 2002 FAC transferred all the shares of its wholly owned subsidiary, FAIC, to
SAC  solely in exchange for all the authorized and unissued shares of SAC.  FAIC
became  an  indirect  subsidiary  of  FAC.

(3)     COMPREHENSIVE  INCOME

The  components  of  comprehensive income along with the related tax effects are
presented for the three months and nine months ended September 30, 2002 and 2001
as  follows:

<TABLE>

<CAPTION>

                                                                 Three months ended                    Nine months ended

                                                            September 30,    September 30,    September 30,    September 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. . . .  $      (46,294)  $      (38,168)  $     (216,487)  $      (83,627)
  Tax (expense) benefit . . . . . . . . . . . . . . . . .          16,204           13,359           75,771           37,772
                                                           ---------------  ---------------  ---------------  ---------------
Other comprehensive income (loss) net of tax effect . . .         (30,090)         (24,809)        (140,716)         (45,855)
                                                           ===============  ===============  ===============  ===============

Net income (loss) . . . . . . . . . . . . . . . . . . . .  $    1,176,297   $      (70,568)  $      993,366   $      (29,243)
  Other comprehensive income (loss) net of tax effect . .         (30,090)         (24,809)        (140,716)         (45,855)
                                                           ---------------  ---------------  ---------------  ---------------
Comprehensive income (loss) . . . . . . . . . . . . . . .  $    1,146,207   $      (95,377)  $      852,650   $      (75,098)
                                                           ===============  ===============  ===============  ===============
</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  nine  months  ended  September  30, 2002 and 2001 is as
follows:

<TABLE>

<CAPTION>


                                                Three months ended                    Nine months ended

                                           September 30,    September 30,    September 30,    September 30,
                                               2002             2001             2002             2001
                                          ---------------  ---------------  ---------------  ---------------
                                           (Unaudited)      (Unaudited)      (Unaudited)      (Unaudited)
<S>                                       <C>              <C>              <C>              <C>
Revenues:
  Life and annuity insurance
    operations . . . . . . . . . . . . .  $     1,274,810  $    1,323,249   $    4,174,085   $    4,004,368
  Venture capital operations . . . . . .                -               -                -              884
  Corporate operations . . . . . . . . .        1,315,132          83,337        1,741,474           23,336
                                          ---------------  ---------------  ---------------  ---------------
    Total. . . . . . . . . . . . . . . .  $     2,589,942  $    1,406,586   $    5,915,558   $    4,028,588
                                          ===============  ===============  ===============  ===============

Income (loss) before income taxes:
  Life and annuity insurance
    operations . . . . . . . . . . . . .  $       165,241  $       51,212   $      102,976   $      624,506
  Venture capital operations . . . . . .                -            (604)            (327)             100
  Corporate operations . . . . . . . . .          921,492          14,207          951,050         (251,750)
                                          ---------------  ---------------  ---------------  ---------------
    Total. . . . . . . . . . . . . . . .  $     1,086,733  $       64,815   $    1,053,699   $      372,856
                                          ===============  ===============  ===============  ===============

Depreciation and amortization expense:
  Life and annuity insurance
    operations . . . . . . . . . . . . .  $             -  $            -   $            -   $          519
  Venture capital operations . . . . . .                -               -                -                -
  Corporate operations . . . . . . . . .           13,550           5,884           40,660           14,846
                                          ---------------  ---------------  ---------------  ---------------
    Total. . . . . . . . . . . . . . . .  $        13,550  $        5,884   $       40,660   $       15,365
                                          ===============  ===============  ===============  ===============


Segment asset information as of: . . . .                                       September 30,    December 31,
                                                                                   2002            2001
                                                                            ---------------  ---------------
                                                                            (Unaudited)
Assets:
  Life and annuity insurance operations.                                    $    26,216,794  $   22,435,162
  Venture capital operations . . . . . .                                                  -         309,635
  Corporate operations . . . . . . . . .                                          2,444,980       1,151,023
                                                                            ---------------  ---------------
    Total. . . . . . . . . . . . . . . .                                    $    28,661,774  $   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 September 30, 2002 and 2001 was 5,661,802 and 5,525,397, respectively and
for  the  nine  months  ending  September  30,  2002  and 2001 was 5,580,131 and
5,413,659,  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 September 30, 2002, the Company had sold 41,129 shares that
raised total  proceeds of $143,951  and incurred  offering  cost  of  $77,171.
The offering was terminated on August 15, 2002.

(8)     RELATED  PARTY  TRANSACTIONS

The  Company  and First American Capital Corporation ("FACC") mutually agreed to
terminate  the  existing  administration agreement effective September 30, 2002.
The Company received $212,000 as the agreed upon payment of the present value of
future  residuals due under the agreement.  The Company waived its September 30,
2002  residuals  and fees and agreed to provide advisory and consulting services
with  regard  to  the  services  previously  provided  under  the administration
agreement  until  March  31,  2003.

(9)     SALE  OF  FIRST  AMERICAN  CAPITAL  CORPORATION  COMMON  STOCK

     On  September  30,  2002 the Company sold 525,000 shares of common stock of
FACC  for  $1.91  per  share for a total of $1,002,750.  The shares were sold to
FACC.

(10)    SUBSEQUENT  EVENT

On  November 8, 2002 FAC entered into an agreement to exchange all the shares of
FAC  for  shares  of  Citizens,  Inc., ("Citizens") a Colorado corporation.  FAC
shareholders  will  receive  shares  of  Citizens  Class A common stock equal in
market  value  to the average closing price of such stock as reported by the New
York  Stock  Exchange for  the 20 trading days preceding closing for every share
of  FAC owned  based on a value of $3.02 per share of the common stock of FAC.
The transaction is subject to approval by FAC shareholders and insurance
regulatory authorities in Kentucky, Missouri and Arkansas.

                                                -8-
<PAGE>

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

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  nine  months  ended September 30, 2002 net income increased $1,022,609
from $(29,243) to $993,366, compared to the nine months ended September 30, 2001
results.  Earnings per share increased to a gain per share of $.18 compared to a
loss per share of $.01 for the nine months ended September 30, 2001.  Equity per
share  increased  9%  to  $1.84.  A  significant  portion  of  these  results is
attributable  to a realized investment gain,  settlement of future residuals due
under  an  administration  agreement  and  a federal income tax refund partially
offset  by  amortization  of  deferred  acquisition  expense.

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

Shareholders'  equity  totaled  $10,330,722 and $9,411,293 at September 30, 2002
and December 31, 2001, respectively.  The  September 30, 2002 balance reflects a
net  increase  of  approximately  9.8%  for  the  nine-month  period then ended.
Comprehensive  income  (loss) totaled $852,650 and $(75,098) for the nine months
ended  September  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 2% and 5% of
the  Company's  total  assets  as  of  September 30, 2002 and December 31, 2001,
respectively.  Equity  portfolio  positions  did  not change on a cost basis and
decreased  $444,084  on  a market value basis for the first nine months of 2002.
Fixed  maturity  portfolio  positions  increased $8,188,995 on an amortized cost
basis  and  $8,416,592 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  $4,030,178  during  the  period.

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

Net  premiums  increased  approximately 7% during the first nine months of 2002
compared  to  the first nine months of 2001. Revenues for the nine months ended
September30,2002 totaled $5,915,558 in 2002 and $4,028,587 in 2001.The increase
is primarily attributable to an increase in net premiums of$69,267 that resulted
primarily  from  an  increase  in  preneed  insurance  sales, an increase in net
investment  income of $117,978 due to an increase in fixed maturity investments,
net  realized  investment gains of $951,595, primarily from a $950,250 gain from
the  sale of common stock of a related party, an increase in service fee revenue
of $238,898 primarily due to the termination and settlement of an administration
agreement with a related party and an increase in commission revenue of $283,585
from  brokerage  insurance  commissions


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

Cash  flow  provided  by  operations  totaled $978,233 for the nine months ended
September  30,  2002  compared  to  $542,096 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 $6,924,977 was used in investing
activities  during

                                                -9-
<PAGE>

the  first  nine  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  offset  be  the sale of an investment in a related party.
The  $1,916,566  of  cash provided by financing activities during the first nine
months of 2002 is due 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>

Item 3.  Controls  and  Procedures

(a)      Evaluation  of  Disclosure  Controls  and  Procedures.

The  Company  maintains  controls  and  procedures  designed  to ensure that
information  required to be disclosed in the reports that the Company files or
submits  under  the  Securities  Exchange  Act of 1934 is recorded, processed,
summarized and reported within the time periods specified inthe rules and forms
of the Securities and Exchange Commission. Based upon their evaluation of those
controls and  procedures  performed  within  90 days of the filing date of this
report, the  chief  executive  and  chief  financial  officers  of  the Company
concluded that  the Company's disclosure controls and procedures were adequate.


(b)      Changes  in  Internal  Controls.

The  Company  made  no significant changes in its internal controls or in other
factors that could significantly affect these controls subsequent to the date of
the  evaluation of those  controls  by the Chief Executive and Chief Financial
officers.

                                                -11-
<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
September 30, 2002,the Company had sold 41,129 shares that raised total proceeds
of  $143,951  and  incurred  offering  cost  of  $77,171.  The offering was
terminated on August 15, 2002.

Item  6. Exhibits  and  Reports  on  Form  8-K

a)       Exhibits.  The  following  exhibits  are  filed  with  this  report.

         Exhibit No.                             Description  of Exhibit
         ----------                   ------------------------------------------

         99.1                         CEO Certification pursuant to 18 USC 1350,
                                              dated November 13, 2002
         99.2                         CFO Certification pursuant to 18 USC 1350,
                                               dated November 13, 2002



b)       Reports on Form 8-K

         No reports on Form 8-K were filed for the quarter ended
         September 30,2002

                                                -12-
<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)




Date  November  13,  2002                           /s/  Michael  N.  Fink
--------------------------                          ----------------------
                                                        Michael  N.  Fink,
                                                    Chief Executive Officer

Date  November  13,  2002                           /s/  Thomas  I.  Evans
--------------------------                          ----------------------
                                                        Thomas  I.  Evans,
                                                     Chief Financial Officer

                                                -13-
<PAGE>

                                 CERTIFICATIONS

I,  Michael  N.  Fink,  certify,  that:

1.   I  have  reviewed  this  quarterly  report on Form 10-QSB of First Alliance
     Corporation;

2.   Based  on  my  knowledge, this quarterly report does not contain any untrue
     statement  of a material fact or omit to state a material fact necessary to
     make  the  statements  made, in light of the circumstances under which such
     statements  were made, not misleading with respect to the period covered by
     this  quarterly  report;

3.   Based  on  my  knowledge,  the  financial  statements,  and other financial
     information  included  in  this  quarterly  report,  fairly  present in all
     material  respects  the financial condition, results of operations and cash
     flows  of  the  registrant  as  of,  and for, the periods presented in this
     quarterly  report;

4.   The  registrant's  other  certifying  officer  and  I  are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in  Exchange  Act  Rules  13a-14  and  15d-14) for the registrant and have:

     (a)  designed  such  disclosure  controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;

     (b)  evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date
          of this quarterly  report (the  "Evaluation  Date");  and

     (c)  presented  in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation  Date;

5.   The  registrant's  other  certifying officer and I have disclosed, based on
     our  most  recent  evaluation,  to  the registrant's auditors and the audit
     committee  of  registrant's  board  of  directors:

     (a)  all significant deficiencies in the design or operation of the
          internal controls which could adversely affect the registrant's
          ability to record, process, summarize and  report financial data and
          have identified for the registrant's auditors  any  material
          weaknesses in internal controls; and

     (b)  any fraud, whether or  not  material, that involves management or
          other employees  who  have  a significant role  in  the  registrant's
          internal controls;  and

6.   The  registrant's  other  certifying  officer  and I have indicated in this
     quarterly  report whether or not there were significant changes in internal
     controls  or  in other factors that could significantly affect the internal
     controls  subsequent  to  the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date        November  13,  2002                        /s/  Michael  N.  Fink
  ------------------------------                       ----------------------
                                                           Michael  N.  Fink,
                                                      Chief Executive Officer
                                                -14-
<PAGE>
                                 CERTIFICATIONS

I,  Thomas  I.  Evans,  certify,  that:

1.   I  have  reviewed  this  quarterly  report on Form 10-QSB of First Alliance
     Corporation;

2.   Based  on  my  knowledge, this quarterly report does not contain any untrue
     statement  of a material fact or omit to state a material fact necessary to
     make  the  statements  made, in light of the circumstances under which such
     statements  were made, not misleading with respect to the period covered by
     this  quarterly  report;

3.   Based  on  my  knowledge,  the  financial  statements,  and other financial
     information  included  in  this  quarterly  report,  fairly  present in all
     material  respects  the financial condition, results of operations and cash
     flows  of  the  registrant  as  of,  and for, the periods presented in this
     quarterly  report;

4.   The  registrant's  other  certifying  officer  and  I  are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in  Exchange  Act  Rules  13a-14  and  15d-14) for the registrant and have:

     (a) designed such disclosure controls and procedures to ensure that
         material information  relating  to  the  registrant,  including  its
         consolidated subsidiaries,  is  made  known  to  us  by  others within
         those entities, particularly  during  the  period  in  which this
         quarterly report is being prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and
         procedures  as  of  a  date within 90 days prior to the filing date of
         this quarterly  report  (the  "Evaluation  Date");  and

     (c) presented  in  this  quarterly report our conclusions  about  the
         effectiveness  of  the disclosure controls and procedures based on our
         evaluation  as  of  the  Evaluation  Date;

5.   The  registrant's other certifying officer and I have disclosed, based
     on  our  most  recent evaluation, to the registrant's auditors and the
     audit  committee  of  registrant's  board  of  directors:

     (a) all significant deficiencies in the design  or  operation  of the
         internal  controls  which  could  adversely  affect  the  registrant's
         ability  to  record,  process, summarize and report financial data and
         have  identified for the registrant's auditors any material weaknesses
         in  internal  controls;  and

     (b) any fraud,whether or not material, that involves management or
         other employees  who  have  a  significant role in the registrant's
         internal controls;  and

6.   The registrant's other certifying officer and I have indicated in this
     quarterly  report  whether  or  not  there were significant changes in
     internal  controls or in other factors that could significantly affect
     the  internal  controls  subsequent  to  the  date  of our most recent
     evaluation,  including  any  corrective  actions  with  regard  to
     significant  deficiencies  and  material  weaknesses.


Date  November  13,  2002                              /s/  Thomas  I.  Evans
------------------------------                         ----------------------
                                                           Thomas  I.  Evans,
                                                        Chief Financial Officer

                                                -15-
<PAGE>

                                  EXHIBIT 99.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In  connection  with  the  Quarterly  Report  of First Alliance Corporation (the
"Company") on Form 10-QSB for the period ending September 30, 2002 as filed with
the Securities and Exchange Commission (the "Report"), I, Michael N. Fink, Chief
Executive  Officer  of  the Company, certify, pursuant to 18 U.S.C. ss. 1350, as
adopted  pursuant  to  ss.  906  of  the  Sarbanes-Oxley  Act  of  2002,  that:

1.      The  Report  fully  complies  with  the requirements of Section 13(a) or
        15(d)  of  the  Securities  Exchange  Act  of  1934;  and

2.      To  my  knowledge,  the  information  contained in the Report fairly
        presents,  in  all  material  respects,  the  financial condition and
        results of operations  of  the  Company  as  of  and  for the period
        covered by the Report.


Date    November  13,  2002                            /s/  Michael  N.  Fink
------------------------------                         ----------------------
                                                           Michael  N.  Fink,
                                                      Chief Executive Officer

                                                -16-
<PAGE>

                                  EXHIBIT 99.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In  connection  with  the  Quarterly  Report  of First Alliance Corporation (the
"Company") on Form 10-QSB for the period ending September 30, 2002 as filed with
the  Securities and Exchange Commission (the "Report"), I, Thomas I. Evans, Vice
President and Secretary of the Company, certify, pursuant to 18 U.S.C. ss. 1350,
as  adopted  pursuant  to  ss.  906  of  the  Sarbanes-Oxley  Act of 2002, that:

1.      The  Report  fully  complies  with  the requirements of Section 13(a) or
        15(d)  of  the  Securities  Exchange  Act  of  1934;  and

2.      To  my  knowledge,  the  information  contained in the Report fairly
        presents,  in  all  material  respects,  the  financial condition and
        results of operations  of  the  Company  as  of  and  for the period
        covered by the Report.



Date November  13,  2002                               /s/  Thomas  I.  Evans
----------------------------                           ----------------------
                                                           Thomas  I.  Evans,
                                                        Chief Financial Officer

                                                -17-
<PAGE>