<PAGE> 1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001.

[ ]  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 000-22469

                            LAFAYETTE BANCORPORATION
             (Exact name of registrant as specified in its charter)

         INDIANA                                      35-1605492
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                     Identification No.)

133 North 4th Street, Lafayette, Indiana               47902
(Address of principal executive offices)             (Zip Code)

                                 (765) 423-7100
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1994 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days: Yes (x) No ( )

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:

Class                                     Outstanding at November 9, 2001
Common Stock, without par value                 3,961,589 shares

<PAGE>

                            LAFAYETTE BANCORPORATION

                                      INDEX


PART I.             FINANCIAL INFORMATION

Item 1.

          Consolidated  Balance  Sheets --  September  30, 2001 and December 31,
          2000

          Consolidated  Statements of Income and  Comprehensive  Income -- Three
          Months Ended September 30, 2001 and 2000

          Consolidated  Statements  of Income and  Comprehensive  Income -- Nine
          Months Ended September 30, 2001 and 2000

          Consolidated  Statements of Cash Flows -- Nine Months Ended  September
          30, 2001 and 2000

          Notes to Consolidated Financial Statements -- September 30, 2001


Item 2.

          Management's  Discussion  and  Analysis  of  Financial  Condition  and
          Results of Operations


Item 3.

       Quantitative and Qualitative Disclosures About Market Risk




PART II.            OTHER INFORMATION


Item 6.       Exhibits and Reports on Form 8-K

       a)     Exhibits


       b)     Reports on Form 8-K



SIGNATURES





<PAGE>




ITEM 1.
                            LAFAYETTE BANCORPORATION
                           CONSOLIDATED BALANCE SHEETS
                          (Dollar amounts in thousands)


-------------------------------------------------------------------------------

<TABLE>
                                                                                (Unaudited)
<S>                                                                                       <C>                <C>
                                                                                September 30,       December 31,
                                                                                   2001                2000
                                                                                   ----                ----
ASSETS
Cash and due from banks                                                       $       22,416      $      26,452
Interest-bearing balances with other financial institutions                           14,942             21,820
Federal funds sold                                                                     8,800             25,200
                                                                              --------------      -------------
    Total cash and cash equivalents                                                   46,158             73,472

Securities available-for-sale (at market)                                             94,235             78,857
Securities held-to-maturity (market value $4,095
  and $4,580)                                                                          3,918              4,484
Loans held for sale                                                                    9,253              5,949
Loans                                                                                555,238            537,725
    Less:  Allowance for loan losses                                                  (5,445)            (5,071)
                                                                              --------------      -------------
       Loans, net                                                                    549,793            532,654
Federal Home Loan Bank stock (at cost)                                                 2,344              2,200
Premises, furniture and equipment, net                                                10,756             11,353
Intangible assets                                                                     12,470             13,007
Accrued interest receivable and other assets                                          18,626             19,171
                                                                              --------------      -------------

          Total assets                                                        $      747,553      $     741,147
                                                                              ==============      =============




LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
    Noninterest-bearing deposits                                              $       65,432      $      70,866
    Interest-bearing demand and savings deposits                                     259,973            230,984
    Interest-bearing time deposits                                                   278,055            276,447
                                                                              --------------      -------------
       Total deposits                                                                603,460            578,297
    Short-term borrowings                                                             32,519             55,572
    FHLB advances                                                                     35,066             35,737
    Note payable                                                                      10,500             11,550
    Accrued interest payable and other liabilities                                     7,354              7,190
                                                                              --------------      -------------
       Total liabilities                                                             688,899            688,346
</TABLE>
-------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

<PAGE>

Shareholders' equity
    Common stock, no par value:  20,000,000 shares authorized;
<TABLE>
<S>                                                                              <C>                <C>
    3,961,589 and 3,953,616 shares issued and outstanding                              3,962              3,954
    Additional paid-in capital                                                        38,119             38,024
    Retained earnings                                                                 15,461             11,086
    Accumulated other comprehensive income                                             1,112               (263)
                                                                              --------------      --------------
       Total shareholders' equity                                                     58,654             52,801
                                                                              --------------      -------------

          Total liabilities and shareholders' equity                          $      747,553      $     741,147
                                                                              ==============      =============
</TABLE>























-------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

<PAGE>

                            LAFAYETTE BANCORPORATION
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                    For the three months ended September 30,
                        2001 and 2000 (Dollar amounts in
                        thousands, except per share data)
                                   (Unaudited)

-------------------------------------------------------------------------------

<TABLE>
<S>                                                                                <C>                 <C>
                                                                                   2001                2000
                                                                                   ----                ----
Interest income
    Loans                                                                     $       11,747      $      12,036
Taxable securities                                                                       838                826
    Tax exempt securities                                                                427                413
    Other                                                                                361                152
                                                                              --------------      -------------
       Total interest income                                                          13,373             13,427
Interest expense
    Deposits                                                                           5,468              6,069
    Short-term borrowings                                                                393                416
    Other borrowings                                                                     677                716
                                                                              --------------      -------------
       Total interest expense                                                          6,538              7,201
                                                                              --------------      -------------
Net interest income                                                                    6,835              6,226
Provision for loan losses                                                                300                300
                                                                              --------------      -------------
Net interest income after provision for loan losses                                    6,535              5,926
Noninterest income
    Income from fiduciary activities                                                     296                245
    Service charges on deposit accounts                                                  541                507
    Net realized gain on securities                                                        -                (12)
    Net gain on loan sales                                                               527                193
    Other service charges and fees                                                       267                271
    Investment product commissions                                                        93                135
    Other operating income                                                               126                 64
                                                                              --------------      -------------
       Total noninterest income                                                        1,850              1,403
                                                                              --------------      -------------
Noninterest expense
    Salaries and employee benefits                                                     3,156              2,776
    Occupancy expenses, net                                                              320                325
    Equipment expenses                                                                   466                446
    Intangible amortization                                                              179                185
    Other operating expenses                                                           1,279              1,203
                                                                              --------------      -------------
       Total noninterest expense                                                       5,400              4,935
                                                                              --------------      -------------
Income before income taxes                                                             2,985              2,394
Income taxes                                                                             966                760
                                                                              --------------      -------------
Net income                                                                             2,019              1,634
                                                                              --------------      -------------
Other comprehensive income, net of tax:
    Change in unrealized gains / (losses) on securities                                  709                460
                                                                              --------------      -------------
Comprehensive income                                                          $        2,728      $       2,094
                                                                              ==============      =============

Basic earnings per share                                                      $          .51      $         .41
                                                                              ==============      =============
Diluted earnings per share                                                    $          .50      $         .41
                                                                              ==============      =============
Dividend per share                                                            $          .11      $         .10
                                                                              ==============      =============

</TABLE>

-------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

<PAGE>

                            LAFAYETTE BANCORPORATION
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                     For the nine months ended September 30,
                        2001 and 2000 (Dollar amounts in
                        thousands, except per share data)
                                   (Unaudited)

-------------------------------------------------------------------------------

<TABLE>
<S>                                                                                <C>                 <C>
                                                                                   2001                2000
                                                                                   ----                ----
Interest income
    Loans                                                                     $       35,581      $      34,276
Taxable securities                                                                     2,473              2,508
    Tax exempt securities                                                              1,279              1,239
    Other                                                                              1,571                405
                                                                              --------------      -------------
       Total interest income                                                          40,904             38,428
Interest expense
    Deposits                                                                          17,876             16,696
    Short-term borrowings                                                              1,291              1,241
    Other borrowings                                                                   2,114              1,884
                                                                              --------------      -------------
       Total interest expense                                                         21,281             19,821
                                                                              --------------      -------------
Net interest income                                                                   19,623             18,607
Provision for loan losses                                                                900                900
                                                                              --------------      -------------
Net interest income after provision for loan losses                                   18,723             17,707
Noninterest income
    Income from fiduciary activities                                                     890                878
    Service charges on deposit accounts                                                1,551              1,373
    Net realized gain on securities                                                        -                (12)
    Net gain on loan sales                                                             1,397                464
    Other service charges and fees                                                       793                796
    Investment product commissions                                                       308                574
    Other operating income                                                               376                216
                                                                              --------------      -------------
       Total noninterest income                                                        5,315              4,289
                                                                              --------------      -------------
Noninterest expense
    Salaries and employee benefits                                                     9,226              7,806
    Occupancy expenses, net                                                              965                907
    Equipment expenses                                                                 1,395              1,279
    Intangible amortization                                                              537                555
    Other operating expenses                                                           3,732              3,536
                                                                              --------------      -------------
       Total noninterest expense                                                      15,855             14,083
                                                                              --------------      -------------
Income before income taxes                                                             8,183              7,913
Income taxes                                                                           2,580              2,674
                                                                              --------------      -------------
Net income                                                                             5,603              5,239
                                                                              --------------      -------------
Other comprehensive income, net of tax:
    Change in unrealized gains / (losses) on securities                                1,375                543
                                                                              --------------      -------------
Comprehensive income                                                          $        6,978      $       5,782
                                                                              ==============      =============

Basic earnings per share                                                      $         1.41      $        1.33
                                                                              ==============      =============
Diluted earnings per share                                                    $         1.40      $        1.31
                                                                              ==============      =============
Dividend per share                                                            $          .31      $         .28
                                                                              ==============      =============
</TABLE>

-------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.


<PAGE>


                            LAFAYETTE BANCORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the nine months ended September 30, 2001 and 2000
                          (Dollar amounts in thousands)
                                   (Unaudited)

-------------------------------------------------------------------------------

<TABLE>
<S>                                                                       <C>             <C>
                                                                          2001            2000
                                                                          ----            ----

Cash flows from operating activities
    Net income                                                         $     5,603    $     5,239
    Adjustments to reconcile net income to net cash
      from operating activities
       Depreciation                                                          1,092            983
       Net amortization                                                        572            546
       Provision for loan losses                                               900            900
       Net realized (gain) loss on sale of :
          Securities                                                             -             12
          Other real estate                                                     (5)            (5)
       Change in assets and liabilities:
          Loans originated for sale                                        (93,225)       (37,190)
          Loans sold                                                        89,921         36,818
          Accrued interest receivable and other assets                        (244)        (1,206)
          Accrued interest payable and other liabilities                       164            442
                                                                       -----------    -----------
              Net cash from operating activities                             4,778          6,539
Cash flows from investing activities
    Purchase of securities available-for-sale                              (79,877)       (49,160)
    Proceeds from sales of securities available-for-sale                         -          2,375
    Proceeds from maturities of securities available-for-sale               66,746         49,520
    Proceeds from maturities of securities held-to-maturity                    566            229
    Loans made to customers, net of payments collected                     (18,314)       (45,687)
    Purchase of Federal Home Loan Bank stock                                  (144)          (303)
    Property and equipment expenditures                                       (495)        (1,975)
    Proceeds from sales of other real estate                                   162            470
                                                                       -----------    -----------
              Net cash from investing activities                           (31,356)       (44,531)
Cash flows from financing activities
    Net change in deposit accounts                                          25,163         35,434
    Net change in short-term borrowings                                    (23,053)           791
    Proceeds from FHLB advances                                                  -         17,000
    Payments on FHLB advances                                                 (671)       (16,204)
    Payments on note payable                                                (1,050)        (1,050)
    Common stock issued                                                        103             98
    Dividends paid                                                          (1,228)        (1,113)
                                                                       ------------   ------------
              Net cash from financing activities                              (736)        34,956
                                                                       ------------   ------------
Net change in cash and cash equivalents                                    (27,314)        (3,036)
Cash and cash equivalents at beginning of period                            73,472         30,570
                                                                       -----------    -----------
Cash and cash equivalents at end of period                             $    46,158    $    27,534
                                                                       ===========    ===========
</TABLE>



Supplemental disclosures of cash flow information Cash paid during the period
    for:
<TABLE>
<S>                                                                    <C>            <C>
       Interest                                                        $    21,694    $    19,386
       Income taxes                                                          3,040          2,610
Non-cash investing activity
     Loans transferred to other real estate                            $       298    $        50
</TABLE>

-------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

<PAGE>





                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2001
              (Dollar amounts in thousands, except per share data)
                                   (Unaudited)

-------------------------------------------------------------------------------

NOTE 1 - BASIS OF PRESENTATION

The significant  accounting  policies followed by Lafayette  Bancorporation (the
"Corporation")   for  interim  financial   reporting  are  consistent  with  the
accounting  policies followed for annual financial  reporting.  The consolidated
interim  financial  statements  have been prepared in accordance  with Generally
Accepted Accounting  Principles and in accordance with instructions to Form 10-Q
and may not include all  information and footnotes  normally  disclosed for full
annual  financial  statements.  All  adjustments  which are,  in the  opinion of
management,  necessary  for a fair  presentation  of the results for the periods
reported have been included in the accompanying unaudited consolidated financial
statements and all such  adjustments are of a normal recurring  nature.  Certain
prior period  information  has been  reclassified  to  correspond  with the 2001
presentation.



NOTE 2 - PENDING MERGER

On October 15, 2001, Lafayette Bancorporation signed a definitive agreement with
First Merchants Corporation,  located in Muncie, Indiana, to merge with and into
First Merchants Corporation.

Under  the  terms  of the  agreement,  upon  the  closing  of this  transaction,
Lafayette  Bank and Trust  Company will be a  wholly-owned  subsidiary  of First
Merchants Corporation.

The  transaction  is subject  to  shareholder  and  regulatory  approval  and is
expected to be effective in the first quarter of 2002.



NOTE 3 - PER SHARE DATA

The following  illustrates  the  computation  of basic and diluted  earnings per
share,  and includes the weighted  average  number of shares used in calculating
earnings and dividends per share amounts for the periods presented. The weighted
average number of shares has been retroactively restated for stock dividends and
splits.

                                                              Nine Months Ended
                                                              -----------------
<TABLE>
<S>                                                                  <C>                 <C>
                                                           September 30,       September 30,
                                                               2001                2000
                                                               ----                ----
Basic earnings per share
 Net income                                                $       5,603      $        5,239
Weighted average shares outstanding                            3,958,906           3,949,445
                                                           -------------      --------------

    Basic earnings per share                               $        1.41      $         1.33
                                                           =============      ==============


Diluted earnings per share
 Net income                                                $       5,603      $        5,239
Weighted average shares outstanding                            3,958,906           3,949,445
Dilutive effect of assumed exercise
  of Stock Options                                                38,634              40,400
                                                           -------------      --------------
    Diluted average shares outstanding                          3,997,540          3,989,845
                                                           --------------     --------------

    Diluted earnings per share                             $         1.40     $         1.31
                                                           ==============     ==============
</TABLE>
<PAGE>

                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2001
              (Dollar amounts in thousands, except per share data)
                                   (Unaudited)
-------------------------------------------------------------------------------

                                                             Three Months Ended
                                                             ------------------
<TABLE>
<S>                                                                  <C>                 <C>
                                                           September 30,       September 30,
                                                               2001                2000
                                                               ----                ----
Basic earnings per share
 Net income                                                $       2,019      $        1,634
Weighted average shares outstanding                            3,961,589           3,952,256
                                                           -------------      --------------

    Basic earnings per share                               $         .51      $          .41
                                                           =============      ==============


Diluted earnings per share
 Net income                                                $       2,019      $        1,634
Weighted average shares outstanding                            3,961,589           3,952,256
Dilutive effect of assumed exercise
  of Stock Options                                                48,139              25,089
                                                           -------------      --------------
    Diluted average shares outstanding                         4,009,728           3,977,345
                                                           -------------      --------------
         Diluted earnings per share                        $         .50      $          .41
                                                           =============      ==============
</TABLE>


NOTE 4 - SECURITIES

The  amortized  cost and estimated  fair values of securities  are as follows at
September 30, 2001:

<TABLE>
<S>                                                     <C>                             <C>
                                                         Amortized                      Estimated
                                                           Cost                        Fair Value
Securities Available-for-Sale
U.S. Government and its agencies                       $     3,000                    $     3,030
Obligations of states and political subdivisions            31,352                         32,109
Corporate obligations                                       10,108                         10,534
Mortgage-backed and other asset-backed securities           45,379                         45,996
Other securities                                             2,554                          2,566
                                                       -----------                    -----------
                                                       $    92,393                    $    94,235
                                                       ===========                    ===========

Securities Held-to-Maturity
Obligations of states and political subdivisions       $     3,918                    $     4,095
                                                       ===========                    ===========
</TABLE>

The  amortized  cost and estimated  fair values of securities  are as follows at
December 31, 2000:

<TABLE>
<S>                                                     <C>                             <C>
                                                         Amortized                      Estimated
                                                           Cost                        Fair Value
Securities Available-for-Sale
U.S. Government and its agencies                       $     4,201                    $     4,193
Obligations of states and political subdivisions            30,880                         31,012
Corporate obligations                                        3,953                          4,001
Mortgage-backed and other asset-backed securities           37,699                         37,105
Other securities                                             2,560                          2,546
                                                       -----------                    -----------
                                                       $    79,293                    $    78,857
                                                       ===========                    ===========

Securities Held-to-Maturity
Obligations of states and political subdivisions       $     4,484                    $     4,580
                                                       ===========                    ===========
</TABLE>
<PAGE>


                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2001
              (Dollar amounts in thousands, except per share data)
                                   (Unaudited)
-------------------------------------------------------------------------------

NOTE 5 - LOANS

Loans are comprised of the following:
<TABLE>
<S>                                                                                      <C>                <C>
                                                                               September 30,       December 31,
                                                                                   2001                2000
                                                                                   ----                ----

         Commercial and agricultural loans                                   $        228,914    $       215,087
         Real estate construction loans                                                64,171             54,768
         Residential real estate loans                                                210,843            212,190
         Installment loans to individuals                                              46,323             50,696
         Commercial paper                                                               4,987              4,984
                                                                             ----------------    ---------------

             Total loans                                                     $        555,238    $       537,725
                                                                             ================    ===============
</TABLE>

NOTE 6 - ALLOWANCE FOR LOAN LOSSES

The activity in the allowance for loan losses is as follows:

<TABLE>
<S>                                                            <C>                 <C>
                                                               2001                2000
                                                               ----                ----

    Balance, January 1                                     $       5,071      $        4,618
    Provision charged to operations                                  900                 900
    Loans charged-off                                               (605)               (527)
    Recoveries on loans previously charged-off                        79                  95
                                                           -------------      --------------

    Balance, September 30                                  $       5,445      $        5,086
                                                           =============      ==============
</TABLE>



NOTE 7 - SHORT-TERM BORROWINGS

Short-term borrowings are comprised of the following:
<TABLE>
<S>                                                                                      <C>                <C>
                                                                               September 30,       December 31,
                                                                                   2001                2000
                                                                                   ----                ----

         Repurchase agreements                                               $         29,719    $        54,275
         Treasury tax and loan open-end note                                            2,800              1,297
                                                                             ----------------    ---------------

             Total short-term borrowings                                     $         32,519    $        55,572
                                                                             ================    ===============
</TABLE>


<PAGE>

                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2001
              (Dollar amounts in thousands, except per share data)
                                   (Unaudited)
-------------------------------------------------------------------------------

NOTE 8 - SEGMENT INFORMATION

The Corporation's operations include three primary segments:  banking,  mortgage
banking, and trust.  Through its banking  subsidiary's  locations in Tippecanoe,
White,  and Jasper  Counties,  the Corporation  provides  traditional  community
banking services, such as accepting deposits and making commercial,  residential
and consumer  loans.  Mortgage  banking  activities  include the  origination of
residential  mortgage  loans for sale on a servicing  released  basis to various
investors.  The  Corporation's  trust  department  provides  both  personal  and
corporate trust services.

The Corporation's  three reportable  segments are determined by the products and
services  offered.  Interest on loans,  investments  and  deposits  comprise the
primary revenues and expenses of the banking operation,  net gains on loans sold
account  for  the  revenues  in  the  mortgage   banking   segment,   and  trust
administration fees provide the primary revenues in the trust department.

The following segment  financial  information has been derived from the internal
profitability  reporting system utilized by management to monitor and manage the
financial  performance of the Corporation.  The accounting policies of the three
segments  are  the  same  as  those  described  in the  summary  of  significant
accounting  policies of the annual report.  The  Corporation  evaluates  segment
performance based on profit or loss before income taxes. The evaluation  process
for the mortgage banking and trust segments include only direct expenses,  while
certain  indirect  expenses,  including  goodwill,  are  absorbed by the banking
operation.  The difference  between segment totals and  consolidated  totals are
holding company amounts and income tax expense.

Quarter ended September 30:


<TABLE>
<S>                                             <C>                 <C>                 <C>             <C>

2001                                                                  Mortgage                               Total
----                                                Banking            Banking            Trust            Segments

     Net interest income                    $         6,894    $           81     $            -    $         6,975
     Net gain on loan sales                               -               527                  -                527
     Other revenue                                    1,027                 -                296              1,323
     Noncash items:
         Depreciation                                   347                14                 12                373
         Provision for loan loss                        300                 -                  -                300
     Segment profit                                   2,864               287                 92              3,243
     Segment assets                                 737,532             9,408                145            747,085


</TABLE>


<TABLE>
<S>                                             <C>             <C>             <C>               <C>

2000                                                                  Mortgage                               Total
----                                                Banking            Banking            Trust            Segments

     Net interest income                    $         6,434    $           35     $            -    $         6,469
     Net gain on loan sales                               -               193                  -                193
     Other revenue                                      965                 -                245              1,210
     Noncash items:
         Depreciation                                   324                13                 12                349
         Provision for loan loss                        300                 -                  -                300
     Segment profit                                   2,646               (21)                62              2,687
     Segment assets                                 682,097             3,700                191            685,988

</TABLE>
<PAGE>


                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2001
              (Dollar amounts in thousands, except per share data)
                                   (Unaudited)
-------------------------------------------------------------------------------


Nine months ended September 30:

<TABLE>
<S>                                     <C>                     <C>             <C>                 <C>

2001                                                                  Mortgage                               Total
----                                                Banking            Banking            Trust            Segments

     Net interest income                    $        19,912    $          207     $            -    $        20,119
     Net gain on loan sales                               -             1,397                  -              1,397
     Other revenue                                    3,027                 1                890              3,918
     Noncash items:
         Depreciation                                 1,013                43                 36              1,092
         Provision for loan loss                        900                 -                  -                900
     Segment profit                                   8,018               692                230              8,940
     Segment assets                                 737,532             9,408                145            747,085

</TABLE>

<TABLE>
<S>                                             <C>             <C>             <C>                <C>

2000                                                                  Mortgage                               Total
----                                                Banking            Banking            Trust            Segments

     Net interest income                    $        19,201    $          105     $            -    $        19,306
     Net gain on loan sales                               -               464                  -                464
     Other revenue                                    2,941                 6                878              3,825
     Noncash items:
         Depreciation                                   912                35                 36                983
         Provision for loan loss                        900                 -                  -                900
     Segment profit                                   7,993                85                312              8,390
     Segment assets                                 682,097             3,700                191            685,988

</TABLE>

NOTE 9 - NEW ACCOUNTING PRONOUNCEMENT

In 2001, new accounting guidance was issued that will, beginning in 2002, revise
the  accounting  for  goodwill and  intangible  assets.  Intangible  assets with
indefinite lives and goodwill will no longer be amortized, but will periodically
be reviewed for impairment and written down if impaired.  Additional disclosures
about  intangibles  assets and  goodwill may be  required.  An initial  goodwill
impairment   test  is  required  during  the  first  six  months  of  2002.  The
Corporation's  management  is  currently  evaluating  the  impact  of  this  new
guidance.

<PAGE>

ITEM 2.
                            LAFAYETTE BANCORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                       FINANCIAL CONDITION AND RESULTS OF
                          OPERATIONS (Dollar amounts in
                        thousands, except per share data)

Lafayette  Bancorporation  (the  "Corporation")  is a one-bank  holding  company
located  in  Lafayette,  Indiana.  The  Corporation's  wholly-owned  subsidiary,
Lafayette Bank and Trust Company ("Bank") conducts business from its main office
and seventeen offices in Tippecanoe,  White, and Jasper Counties,  Indiana.  The
Corporation provides a wide range of commercial and personal banking activities,
including accepting deposits;  making commercial and consumer loans; originating
mortgage  loans;  providing  personal and corporate  trust  services;  providing
investment advisory and brokerage services; and providing auto, homeowners,  and
other insurance products.

On October 15, 2001, Lafayette Bancorporation signed a definitive agreement with
First Merchants Corporation,  located in Muncie, Indiana, to merge with and into
First Merchants Corporation.  Under the terms of the agreement, upon the closing
of this  transaction,  Lafayette  Bank and Trust Company will be a  wholly-owned
subsidiary  of First  Merchants  Corporation.  The  transaction  is  subject  to
shareholder and regulatory approval and is expected to be effective in the first
quarter of 2002.

On March 14, 2001,  the  Corporation  established  a loan  production  office in
Flora,  Indiana. This Carroll County Loan Center, which provides a full-range of
lending products, is currently staffed by four individuals. In order to meet all
the banking needs of Carroll County  residents,  the Corporation plans to open a
full-service branch in Flora later this year.

On March 15, 2000, the Corporation  opened a full-service  branch located in the
Super  Wal-Mart  in  Monticello,  Indiana.  Also,  on July 19,  2000,  a similar
full-service branch was opened in the Super Wal-Mart in Lafayette, Indiana. Both
of  these  locations  are open  seven  days a week to  serve  the  Corporation's
customers.

The  Corporation  established a new mortgage line of business  during the second
quarter of 2000, which assists  customers in securing  financing who do not meet
the  qualifications of conventional or traditional  mortgage loan programs.  The
Mortgage Alternative Department only offers mortgage products, such as first and
second  mortgages  and lines of credit,  that are secured by real estate.  Loans
originated  in this  department  are  pre-approved  for sale and are sold in the
secondary mortgage market with no servicing retained.

<PAGE>


RESULTS OF OPERATIONS


Net Income

The Corporation  earned $2,019,  or $.51 per share for the third quarter of 2001
compared to $1,634,  or $.41 per share for the third quarter of 2000. Net income
increased $364, or 6.9% to $5,603 for the nine month period ending September 30,
2001 compared to the same 2000 time period.  Basic earnings per share were $1.41
and  $1.33  for the nine  month  periods  ending  September  30,  2001 and 2000.
Although the Federal Reserve  reduced  interest rates a total of 75 basis points
during the third  quarter,  the  Corporation's  net  interest  margin  increased
slightly when compared to the net interest  margin during the second  quarter of
2001.  This  increased  was  primarily  caused  by  approximately   20%  of  the
Corporation's  interest-bearing  time deposits maturing and ultimately repricing
at  significantly  lower rates,  given the 350 basis point reduction in interest
rates through the nine months ended  September 30, 2001.  Also  contributing  to
2001 earnings were  increases in service  charges,  net gain on loan sales,  and
other operating  income.  The increase in 2001 noninterest  income was partially
offset by lower investment product commissions and higher noninterest  expenses.
Salaries and employee benefits and occupancy and equipment  expenses  increased,
predominately  due to the full-year effect in 2001 of the two Wal-Mart  branches
and  Mortgage  Alternative  Department,  in addition to the Carroll  County Loan
Center, located in Flora, Indiana, which was established in March 2001.



Return on average assets (ROA) and return on average equity (ROE) are summarized
below.

<TABLE>
                                   Three Months Ending                 Nine Months Ending
                                      September 30,                       September 30,

<S>                                <C>            <C>                 <C>            <C>
                                   2001           2000                2001           2000
                                   ----           ----                ----           ----

               ROA                  1.08%           .96%               1.01%           1.05%

               ROE                 14.03%         13.11%              13.43%          14.52%
</TABLE>


The increase in ROA and ROE for the three months  ending  September 30, 2001 was
primarily due to the increased  net interest  margin.  Although the net interest
margin  increased for the three months ending  September 30, 2001, the lower net
interest margin for the nine months ending  September 30, 2001 accounted for the
lower ROA and ROE for that period.
<PAGE>

Net Interest Income

Net  interest  income is the most  significant  component  of the  Corporation's
earnings.  Net  interest  income is the  difference  between  interest  and fees
realized on earning assets, primarily loans and securities, and interest paid on
deposits and other borrowed  funds.  The net interest  margin is this difference
expressed as a percentage  of average  earning  assets.  Net interest  income is
determined  by several  factors,  including  the  volume of  earning  assets and
liabilities,  the mix of earning assets and liabilities, and interest rates. For
the nine months  ended  September  30, 2001 and 2000,  net  interest  income was
$19,623  and  $18,607,  respectively.  The 2001  amount  was a  $1,016,  or 5.5%
increase over the prior year and was attributed to the combination of the volume
of earning assets increasing at a faster pace than interest-bearing liabilities,
along  with the  volume  of  interest-bearing  liabilities  that  repriced  at a
significantly  lower rate during 2001.  From September 30, 2000 to September 30,
2001, total average earning assets  increased  approximately  $61,424,  or 9.9%,
while total  interest-bearing  liabilities increased  approximately  $50,808, or
8.9%. Net interest  income for the third quarter of 2001 increased $609, or 9.8%
from that same three month period ending September 30, 2000.

Total interest  income for the nine month periods ending  September 30, 2001 and
2000 was $40,904 and $38,428,  respectively,  an increase in 2001 of $2,476,  or
6.4%.  Total interest income for the third quarter of 2001 decreased $54, or .4%
from that same 2000 quarter.  Interest and fees on loans  increased  $1,305,  or
3.8% to $35,581  for the first nine  months of 2001  compared to $34,276 for the
first nine months of 2000.  For the third quarter of 2001,  interest and fees on
loans  decreased  $289, or 2.4% compared to the third quarter of 2000.  Although
the Corporation's average loan balances have increased approximately $21,873, or
4.1% from September 30, 2000 to September 30, 2001,  the lower rate  environment
that existed  resulted in lower interest and fees on loans  recorded  during the
third  quarter  of 2001.  Other  interest  income  increased  $235  and  $1,171,
respectively,  for the three and nine month periods  ending  September 30, 2001.
The  Corporation  continued to  experience a high level of liquidity  during the
third quarter,  apparently due to the  instability of consumer's  confidence and
the prolonged downturn in the economy. Management believes customers have placed
their  funds in high  interest-bearing  money  market  accounts  and  short-term
certificate  of deposits,  rather than investing such funds in the stock market.
Because   management   believes  these  funds  are  short-term  in  nature,  the
Corporation's strategy is not to fund longer-term loans or investment securities
with these particular deposits.

Total interest  expense for the nine month period ending  September 30, 2001 and
2000 was $21,281 and $19,821, respectively. For the third quarter of 2001, total
interest expense decreased $663, or 9.2%, compared to the third quarter of 2000.
From  September 30, 2000 to September 30, 2001,  total average  interest-bearing
liabilities,  including short-term and long-term borrowings,  increased $50,808,
or 8.9%. In general, the increased volume of interest-bearing liabilities led to
the higher interest  expense recorded for the nine month period ending September
30, 2001.  This increase,  however,  was  significantly  offset during the third
quarter as a result of  approximately  $55,000,  or 19.7% of total time deposits
maturing and repricing downward approximately 200-300 basis points.

<PAGE>

The following table summarizes the Corporation's net interest income (on a
tax-equivalent basis) for each of the periods presented. A marginal federal
income tax rate of 34% for each period was used.

<TABLE>

                                       Nine Months                         Change from
                                   Ended September 30,                    Prior Period

<S>                                <C>              <C>            <C>              <C>
                                   2001             2000             Amount        Percent
                                   ----             ----             ------        -------


Interest income                  $41,624           $39,094           $2,530           6.5%

Interest expense                  21,281            19,821            1,460           7.4%
                                  ------            ------           ------
     Net interest income         $20,343           $19,273           $1,070           5.6%
                                 =======           =======          =======
</TABLE>


<TABLE>

                                      Three Months                         Change from
                                   Ended September 30,                    Prior Period

<S>                                <C>              <C>              <C>              <C>
                                   2001             2000             Amount        Percent
                                   ----             ----             ------        -------


Interest income                  $13,611           $13,661          ($  50)          (.4%)

Interest expense                   6,538             7,201            (663)         (9.2%)
                                   -----             -----            -----
     Net interest income          $7,073            $6,460           $  613           9.5%
                                  ======            ======           ======
</TABLE>


The net interest  margin,  on a tax equivalent  basis for the nine months ending
September 30, 2001 and 2000 was 3.93% and 4.24%, respectively.


Provision for Loan Losses and Asset Quality

The provision for loan losses represents charges made to earnings to maintain an
adequate  allowance  for loan losses.  The  allowance is maintained at an amount
believed by management to be sufficient to absorb losses  inherent in the credit
portfolio.  Management conducts,  on a quarterly basis, a detailed evaluation of
the adequacy of the allowance.

The  consolidated  provision for loan losses was $900 for the nine months ending
September 30, 2001 and 2000. The allowance for loan losses was $5,445 and $5,071
at September  30, 2001 and December 31, 2000,  respectively.  The allowance as a
percentage  of loans was .98% and .94% at  September  30, 2001 and  December 31,
2000,  respectively.  Although net charge-offs  increased $94, or 21.8% in 2001,
the provision  for loan losses  remained  unchanged  from that of the prior year
primarily due to only a slight 3.26% increase in the  outstanding  loan balances
during the current year.

Nonperforming  loans include  nonaccrual  loans,  restructured  loans, and loans
delinquent 90 days or more.  Loans are classified as nonaccrual  when management
believes that  collection of interest is doubtful,  typically  when payments are
past due 90 days,  unless  the  loans are well  secured  and in the  process  of
collection.
<PAGE>

The following table indicated the composition of nonperforming loans:

<TABLE>
<S>                                                                                      <C>                <C>
                                                                               September 30,       December 31,
                                                                                   2001                2000
                                                                                   ----                ----

         Loans past due 90 days or more                                      $            543    $         1,052
         Nonaccrual loans                                                               2,355              2,718
         Restructured loans                                                                27                 55
                                                                             ----------------    ---------------

             Total nonperforming loans                                       $          2,925    $         3,825
                                                                             ================    ===============
</TABLE>


Management believes overall asset quality remains satisfactory, as nonperforming
loan totals have  declined $900 since  year-end.  Loans past due 90 days or more
have  declined  $509 since  December 31, 2000,  with  approximately  47% of that
balance change related to two mortgage loans being placed on nonaccrual  status.
Likewise, nonaccrual loan balances have declined $363 since year-end. A majority
of the  decrease  related  to one  large  commercial  loan  being  removed  from
nonaccrual  status and a portion  charged-off  to the allowance for loan losses.
Total  nonperforming  loans  as a  percentage  of  assets  declined  to  .39% at
September 30, 2001, compared to .52% at December 31, 2000.


Noninterest Income and Expense

Noninterest  income totaled $5,315 for the first nine months of 2001 compared to
$4,289 for the same period in 2000, an increase of $1,026, or 23.9%. Noninterest
income  for the third  quarter  of 2001  increased  $447,  or  31.9%,  to $1,850
compared to the prior year.

Income from  fiduciary  activities  increased for the first nine months and also
for the third quarter of 2001 when  compared to the same 2000 time periods.  The
higher fees recorded  were a direct  result of the  increases  recognized in the
trust and farm management services provided.

Service  charges  on  deposit  accounts   comprise  the  largest   component  of
noninterest  income.  The $178, or 13.0%  increase in revenue for the first nine
months of 2001 was attributed to the  combination of a larger deposit base being
assessed  fees,  along with the full  period  effect of an  increase  in the fee
structure made in June 2000. For the third quarter of 2001,  service  charges on
deposit accounts increased $34, or 6.7%, compared to the prior year.

Net gain on loans  originated  and sold in the  secondary  mortgage  market were
$1,397  and  $464  for the nine  months  ending  September  30,  2001 and  2000,
respectively, an increase of $933, or 201.1%. For the third quarter of 2001, net
gain on loans sold in the secondary mortgage market was $334, or 173.1%,  higher
than the 2000 time period.  The continued lower interest rate environment led to
additional new home purchases and refinancing activities of existing homeowners,
and the increase in market  activity has also  increased  profit margins on loan
sales.  Loan  fundings for the nine months ended  September  30, 2001  increased
$53,103,  or 144.2%  compared to the prior year,  while  fundings  for the three
months ended  September 30, 2001 rose  $19,898,  or 143.3% when compared to that
same time period one year earlier.
<PAGE>

For  customers of the  Investment  Center,  a full service  brokerage  operation
offered  exclusively  through Raymond James  Financial  Services,  Inc.,  member
NASD/SIPC,  the lackluster performance of the stock market resulted in a decline
in  investor  activity.  This  decline  led to a 46.3%  and  31.1%  decrease  in
investment  product  commissions  recorded for the nine and three month  periods
ending September 30, 2001.

Other  operating  income  increased  $160, or 74.1%,  to $376 for the first nine
months of 2001,  while also  increasing  $62, or 96.9% for the third  quarter of
2001 when compared to the corresponding prior year time periods. These increases
were  attributed to the income earned on the additional  $2,995  director's life
insurance coverage purchased in November 2000.

Noninterest  expense totaled $15,855 for the first nine months of 2001, compared
to $14,083 for that same 2000  period,  an increase of $1,772,  or 12.6%.  Total
noninterest  expense for the third quarter of 2001 increased  $465, or 9.4% from
the prior year.

Salaries and  employee  benefits  expense was $9,226 for the nine months  ending
September 30, 2001, an increase of $1,420,  or 18.2% from the $7,806 recorded in
the first nine months of 2000. Total salaries and benefits expense for the third
quarter of 2001 increased  $380, or 13.7%, to $3,156 compared to $2,776 recorded
for the three  months  ending  September  30, 2000.  The  valuation of the stock
appreciation  rights granted to certain senior executives  accounted for a large
portion of the increases  reported in each of these  periods,  as an increase of
$450 and $31 was recorded for the nine months and three months ending  September
30, 2001,  respectively.  The remaining increases were predominately  associated
with staff  additions in the new  Wal-Mart  branches,  the Mortgage  Alternative
Department, and the Carroll County Loan Center.

Occupancy  and  equipment  expenses  increased  $58, or 6.4% and $116,  or 9.1%,
respectively for the nine months ending September 30, 2001. For the three months
ending  September 30, 2001,  occupancy  expenses  decreased  $5, or 1.5%,  while
equipment expenses increased $20, or 4.5%. Expenses associated with the Wal-Mart
branches,  the  Mortgage  Alternative  Department,  and the Carroll  County Loan
Center, such as rent, depreciation, and utilities, accounted for the majority of
the recorded increases.

Other  operating  expenses  increased $196, or 5.5% to $3,732 for the first nine
months of 2001  compared to the same 2000 time  period.  For the third  quarter,
other  operating  expenses  increased $76, or 6.3%, to $1,279 compared to $1,203
for the three months ending  September 30, 2000.  Accounting for the majority of
the  increases  in both periods were higher  advertising,  marketing,  and legal
expenses,  along with increased operational costs of the new Carroll County Loan
Center,  such as telephone  and postage.  Mortality  costs  associated  with the
additional $2,995 of director's life insurance  coverage purchased and increased
fees associated with higher ATM volumes also led to higher costs incurred.


Income Taxes

The  Corporation's  effective  tax rate for the nine months ended  September 30,
2001 and 2000 was  31.5%  and  33.8%,  respectively.  The  current  year-to-date
effective tax rate is lower primarily due to a change in state tax law reflected
beginning in late 2000. For the three months ended  September 30, 2001 and 2000,
the effective tax rate for the Corporation was 32.4% and 31.7% respectively.
<PAGE>


FINANCIAL CONDITION

Total  assets  were  $747,553  at  September  30,  2001  compared to $741,147 at
December 31, 2000, an increase of $6,406. Investment securities,  loans held for
sale, and net loans increased $14,812, $3,304, and $17,139, respectively,  while
cash and cash  equivalents  and accrued  interest  receivable  and other  assets
decreased $27,314 and $545, respectively.

Total deposits  increased  $25,163 to $603,460 at September 30, 2001 compared to
$578,297 at December 31, 2000.  Short-term  borrowings,  consisting primarily of
repurchase   agreements,   and  FHLB  advances   decreased   $23,053  and  $671,
respectively,  while quarterly principal  repayments on the note payable totaled
$1,050.

Capital

The Corporation and Bank are subject to various regulatory capital guidelines as
required by federal and state  banking  agencies.  These  guidelines  define the
various components of core capital and assign risk weights to various categories
of assets.

Tier 1 capital consists of  shareholders'  equity less goodwill and core deposit
intangibles,  as defined by bank  regulators.  The  definition of Tier 2 capital
includes the amount of allowance  for loan losses which does not exceed 1.25% of
gross  risk  weighted  assets.  Total  capital  is the sum of Tier 1 and  Tier 2
capital.

The minimum requirements under the capital guidelines are a 4.00% leverage ratio
(Tier 1 capital divided by average assets less intangible  assets and unrealized
gains/losses),  a 4.00% Tier 1 risk-based  capital ratio (Tier 1 capital divided
by risk-weighted  assets), and an 8.00% total capital ratio (Tier 1 capital plus
Tier 2 capital divided by risk-weighted assets).

The Federal  Deposit  Insurance  Corporation  Improvement  Act of 1991  (FDICIA)
required  federal  regulatory  agencies  to define  capital  tiers.  These  are:
well-capitalized,   adequately  capitalized,   undercapitalized,   significantly
undercapitalized,  and critically  undercapitalized.  Under these regulations, a
"well-capitalized" institution must achieve a Tier 1 risk-based capital ratio of
at least 6.00%,  a total capital ratio of at least 10.00%,  and a leverage ratio
of at least 5.00% and not be under a capital  directive  order.  Failure to meet
capital  requirements can initiate  regulatory action. If an institution is only
adequately  capitalized,  regulatory  approval is  required  to accept  brokered
deposits.  If  undercapitalized,   capital  distributions,   asset  growth,  and
expansion  may be  limited,  and the  institution  may be  required  to submit a
capital restoration plan.

At September 30, 2001,  management was not aware of any current  recommendations
by banking regulatory  authorities which, if they were to be implemented,  would
have, or are reasonably  likely to have, a material effect on the  Corporation's
consolidated liquidity, capital resources or operations.

The  Corporation's  actual  consolidated  capital  amounts are  presented in the
following table.

<TABLE>
<S>                                                                                      <C>                <C>
                                                                               September 30,       December 31,
                                                                                   2001                2000
                                                                                   ----                ----

       Tier 1 capital
         Shareholders' equity                                                $         58,654    $        52,801
         Less:  Intangibles                                                           (12,470)           (13,007)
                  Net unrealized losses on available-for-sale
                     equity securities                                                      -                (14)
         Add/less:  Unrealized loss/(gain) on securities                               (1,112)               263
                                                                             -----------------   ---------------

             TOTAL TIER 1 CAPITAL                                            $         45,072    $        40,043
                                                                             ================    ===============

       Total capital
         Tier 1 capital                                                      $         45,072    $        40,043
         Allowable allowance for loan losses                                            5,445              5,071
                                                                             ----------------    ---------------

             TOTAL  CAPITAL                                                  $         50,517    $        45,114
                                                                             ================    ===============

       RISK WEIGHTED ASSETS                                                  $        562,410    $       541,362
                                                                             ================    ===============

       AVERAGE ASSETS                                                        $        735,872    $       692,178
                                                                             ================    ===============
</TABLE>
<PAGE>


The Corporation and Bank's actual capital ratios and minimum required levels are
presented in the following table.
<TABLE>

                                   Actual ratios as of                       Minimum

<S>                                     <C>             <C>                           <C>                      <C>
                              September 30,    December 31,             Capital Adequacy          Well-Capitalized
                                  2001             2000                    Requirement               Requirement
                                  ----             ----                    -----------               -----------

Tier I Capital
 (to average assets)
    Consolidated                  6.12%              5.79%                    4.00%                     5.00%
    Lafayette Bank and Trust      7.45%              7.29%                    4.00%                     5.00%


Tier I Capital
 (to risk weighted assets)
    Consolidated                  8.01%             7.40%                     4.00%                     6.00%
    Lafayette Bank and Trust      9.71%             9.26%                     4.00%                     6.00%


Total Capital
 (to risk weighted assets)
    Consolidated                   8.98%              8.33%                   8.00%                    10.00%
    Lafayette Bank and Trust      10.68%             10.19%                   8.00%                    10.00%
</TABLE>


Management  believes the Bank met all the capital  requirements  as of September
30, 2001 and December 31, 2000,  and was  well-capitalized  under the regulatory
framework  for  prompt  corrective   action.   The  Corporation  was  adequately
capitalized  as  of  September  30,  2001  and  December  31,  2000.  While  the
Corporation's total capital status was below the well-capitalized  category as a
result of the Jasper County branch  acquisitions  in 1999,  capital  ratios have
improved each quarter since the transaction occurred, and management anticipates
maintaining its adequately  capitalized  status for the foreseeable  future. The
Federal  Reserve  Bank  considers  the  holding  company  capital   adequacy  in
connection with any application activity which requires their approval. Further,
since the Corporation's capital levels are below the well-capitalized  category,
the use of expedited Federal Reserve Bank procedures in any application activity
which requires their approval will not be available to the Corporation  until it
once  again  becomes  well-capitalized.  Certain  statements  in this  paragraph
relating   to  future   capital   levels  of  the   Corporation   and  Bank  are
forward-looking  which may or may not be accurate  due to the  impossibility  of
predicting  future  economic and business  events,  including the ability of the
Corporation to raise  additional  capital,  if needed,  as well as other factors
that are beyond the control of the Corporation.

<PAGE>

Liquidity

The  consolidated  statement of cash flows  illustrates  the elements which gave
rise to the change in the  Corporation's  cash and cash equivalents for the nine
months ended  September 30, 2001 and 2000.  Including net income of $5,603,  the
net cash from operating  activities for the nine months of 2001 generated $4,778
of  available  cash.  Net cash from  investing  activities  utilized  $31,356 of
available  cash  primarily as a result of $12,565 of net purchases of securities
and $18,314 of net loan  fundings by the  Corporation.  Net cash from  financing
activities utilized $736 of available cash as a result of an $25,163 increase in
deposits, offset by a $23,053 decrease in short-term borrowings,  $1,050 of note
payable principal repayments, and $1,228 in dividends paid.

Total cash outflows for the  nine-month  period in 2001 exceeded cash inflows by
$27,314 resulting in a cash and cash equivalent  balance of $46,158 at September
30, 2001.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market  risk of the  Corporation  encompasses  exposure  to both  liquidity  and
interest rate risk and is reviewed  quarterly by the Funds Management  Committee
and the  Board  of  Directors.  There  have  been  no  material  changes  in the
quantitative and qualitative  disclosures about market risks as of September 30,
2001 from the analysis and disclosures  provided in the Corporation's  Form 10-K
for the year ended December 31, 2000.


<PAGE>
PART II.   OTHER INFORMATION

Item 5.  Other Events

          On October 15,  2001,  Lafayette  Bancorporation  signed a  definitive
          agreement  with  First  Merchants  Corporation,   located  in  Muncie,
          Indiana, to merge with and into First Merchants Corporation.

          Under  the  terms  of  the   agreement,   upon  the  closing  of  this
          transaction,  Lafayette  Bank and Trust Company will be a wholly-owned
          subsidiary of First Merchants Corporation.

          The transaction is subject to shareholder and regulatory  approval and
          is expected to be effective in the first quarter of 2002.


Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

          No  exhibits  were  filed  with the  submission  of Form  10-Q for the
          quarter ended September 30, 2001

(b)      Reports on Form 8-K

          No Form 8-K was filed with the SEC during the quarter ended  September
          30, 2001.


SIGNATURES

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


Date:  November 9, 2001                 By /s/ Robert J. Weeder
                                        ---------------------------------------
                                        Robert J. Weeder
                                        President and CEO


Date:  November 9, 2001                 By /s/ Marvin S. Veatch
                                        ---------------------------------------
                                        Marvin S. Veatch
                                        Vice President and Controller




<PAGE>