<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-K

                Annual Report Pursuant to Section 13 or 15 (d) of
                       the Securities Exchange Act of 1934

For the Fiscal year ended December 31, 1999       Commission file number 0-17071

                           FIRST MERCHANTS CORPORATION

             (Exact name of registrant as specified in its charter)

           Indiana                                               35-1544218
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

       200 East Jackson                                         47305-2814
        Muncie, Indiana                                         (Zip Code)

(Address of principal executive offices)

        Registrant's telephone number, including area code: (765) 747-1500

Securities registered pursuant to Section 12 (b) of the Act: None

Securities registered pursuant to Section
12 (g) of the Act:

                   Common Stock, $.125 stated value per share

                                (Title of Class)

Indicate by check mark whether the registrant(1) has filed all reportsrequired
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein,and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

The aggregate  market value (not necessarily a reliable indication of the price
at which more than a limited number of shares would  trade) of the voting stock
held by non-affiliates of the registrant was $ as of March 6, 2000.

As of March 6,2000 there were 10,870,921 outstanding common shares, without par
value, of the registrant.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                                       Part of Form 10-K
        Documents                                  Into Which Incorporated

1999 Annual Report to Stockholders            Part II (Items 5, 6, 7, 7A, and 8)
Definitive Proxy Statement for
  Annual Meeting of Shareholders
  to be held April 12, 2000                       Part III (Items 10 through 13)


Exhibit Index:  Page


<PAGE>



FORM 10-K TABLE OF CONTENTS

                                                                       Form 10-K
                                                                          Page
                                                                         Number

Part I

  Item 1 - Business............................................................3

  Item 2 - Properties.........................................................22

  Item 3 - Legal Proceedings..................................................22

  Item 4 - Submission of Matters to a Vote of Security Holders................22
 ..
  Supplemental Information - Executive Officers of the Registrant.............23

Part II

  Item 5 -  Market For the Registrant's Common Equity and
            Related Stockholder Matters.......................................23

  Item 6 -  Selected Financial Data...........................................23

  Item 7 -  Management's Discussion and Analysis of Financial
            Condition and Results of Operations...............................23

  Item 7A- Quantitative and Qualitative Disclosures about Market Risk.........23

  Item 8 -  Financial Statements and Supplementary Data.......................23

  Item 9 -  Changes In and Disagreements With Accountants on
            Accounting and Financial Disclosures..............................23

Part III

  Item 10- Directors and Executive Officers of the Registrant.................23

  Item 11- Executive Compensation.............................................23

  Item 12- Security Ownership of Certain Beneficia
           Owners and Management..............................................23

  Item 13- Certain Relationships and Related Transactions.....................24

Part IV

  Item 14- Exhibits, Financial Statement Schedules, and
           Reports on Form 8-K................................................24

Signatures....................................................................26

                                                                       Page 2

<PAGE>

                                     PART I

ITEM 1.  BUSINESS
--------------------------------------------------------------------------------

GENERAL

First Merchants  Corporation (the  "Corporation") was incorporated under Indiana
law on September 20, 1982, as the bank holding company for First Merchants Bank,
National  Association  ("First  Merchants"),   a  national  banking  association
incorporated in 1893.  Prior to December 16, 1991, First Merchants' name was The
Merchants  National  Bank of Muncie.  On  November  30,  1988,  the  Corporation
acquired Pendleton Banking Company  ("Pendleton"),  a state chartered commercial
bank organized in 1872. On July 31, 1991, the Corporation  acquired First United
Bank ("First United"),  a state chartered  commercial bank organized in 1882. On
August 1, 1996,  the  Corporation  acquired  The Union County  National  Bank of
Liberty ("Union County"),  a national banking association  incorporated in 1872.
On October 2, 1996, the Corporation acquired The Randolph County Bank ("Randolph
County"),  a state chartered  commercial bank founded in 1865. On April 1, 1998,
Pendleton  acquired the Muncie  office of Insurance and Risk  Management,  Inc.,
which was renamed, on April 1, 1998, First Merchants Insurance Services, Inc. On
April 1, 1999,  the  Corporation  acquired The First  National  Bank of Portland
("First  National"),  a national  banking  association  incorporated in 1904. On
April 21, 1999, the Corporation acquired Anderson Community Bank ("Anderson"), a
state  charted  commercial  bank founded in 1995.  Pendleton  and Anderson  were
combined on April 21, 1999, to form Madison Community Bank ("Madison").

 As of December 31, 1999,  the  Corporation  had  consolidated  assets of $1.474
billion,  consolidated  deposits of $1.147 billion and  stockholders'  equity of
$126.3 million.

The Corporation is headquartered in Muncie, Indiana, and is presently engaged in
conducting  commercial  banking  business  through  the 27  offices  of its five
banking  subsidiaries.  As  of  December  31,  1998,  the  Corporation  and  its
subsidiaries had 492 full-time equivalent employees.

Through its  subsidiaries,  the  Corporation  offers a broad range of  financial
services,  including:  accepting time and transaction deposits; making consumer,
commercial,  agri-business and real estate mortgage loans; issuing credit cards;
renting  safe  deposit  facilities;   providing  personal  and  corporate  trust
services;  and  providing  other  corporate  services,  letters  of  credit  and
repurchase agreements.

Acquisition Policy and Pending Transactions

The  Corporation  anticipates  that it will  continue  its policy of  geographic
expansion  through   consideration  of  acquisitions  of  additional   financial
institutions.  Management of the Corporation  periodically  engages in reviewing
and analyzing potential acquisitions.

At the  present  time,  management  of the  Corporation  has  signed  definitive
agreements  with Decatur  Financial,  Inc.  regarding its  affiliation  with the
Corporation. See note 2 on page 29 of exhibit 13.
                                                                       Page 3
<PAGE>

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

COMPETITION

The  Corporation's  banking  subsidiaries  are  located  in  Delaware,  Fayette,
Hamilton,  Henry, Jay, Madison,  Wayne,  Randolph, and Union counties in Indiana
and Butler  county in Ohio.  In  addition  to the  competition  provided  by the
lending and deposit gathering subsidiaries of national manufacturers, retailers,
insurance companies and investment  brokers,  the banking  subsidiaries  compete
vigorously  with other  banks  thrift  institutions,  credit  unions and finance
companies located within their service areas.


                           REGULATION AND SUPERVISION

             OF FIRST MERCHANTS, DECATUR FINANCIAL AND SUBSIDIARIES

BANK HOLDING COMPANY REGULATION

First Merchants is registered as a bank holding company and is subject to the
regulations  of the  Federal  Reserve  Board ("Federal  Reserve") under the Bank
Holding Company Act of 1956, as amended (the "BHC Act").  Bank holding companies
are required to file periodic  reports with and are subject to periodic
examination  by the  Federal  Reserve.  The Federal Reserve  has  issued
regulations  under the BHC Act  requiring  a bank  holding  company  to  serve
as a source  of  financial  and  managerial  strength  to its subsidiary  banks.
Thus,  it is the policy of the Federal  Reserve that, a bank  holding  company
should stand ready to use its  resources  to provide  adequate  capital  funds
to its  subsidiary  banks during  periods of financial  stress or adversity.
Additionally,  under  the  Federal  Deposit  Insurance  Corporation
Improvement  Act of 1991  ("FDICIA"),  a bank  holding  company is  required  to
guarantee   the   compliance   of  any   subsidiary   bank   that   may   become
"undercapitalized"  (as  defined in the  FDICIA)  with the terms of any  capital
restoration  plan filed by such subsidiary with its appropriate  federal banking
agency up to the lesser of (i) an amount equal to 5% of the institution's  total
assets at the time the institution became  undercapitalized,  or (ii) the amount
that is necessary (or would have been necessary) to bring the  institution  into
compliance with all applicable  capital standards as of the time the institution
fails to comply  with such  capital  restoration  plan.  Under the BHC Act,  the
Federal Reserve has the authority to require a bank holding company to terminate
any activity or relinquish control of a nonbank subsidiary (other than a nonbank
subsidiary of a bank) upon the  determination  that such activity  constitutes a
serious risk to the financial stability of any bank subsidiary.

The BHC Act prohibits First Merchants from doing any of the following without
the prior approval of the Federal Reserve:

1.  Acquiring  direct or  indirect  control of more than 5% of the outstanding
    shares  of  any   class  of   voting   stock  or substantially  all  of  the
    assets  of any  bank  or  savings association.

2.  Merging or consolidating with another bank holding company.

3.  Engaging in or acquiring  ownership or control of more than 5% of the
    outstanding  shares of any class of voting stock of any company engaged in a
    nonbanking  business unless such business is determined by the Federal
    Reserve to be closely related to banking.

The BHC Act does not place territorial  restrictions on such  nonbanking-related
activities.

                                                                       Page 4
<PAGE>


CAPITAL ADEQUACY GUIDELINES FOR BANK HOLDING COMPANIES

     Bank holding companies are required to comply with the Federal Reserve's
risk-based capital guidelines. These guidelines require a minimum ratio of
capital to risk-weighted assets of 8% (including certain off-balance sheet
activities such as standby letters of credit). At least half of the total
required capital must be "Tier 1 capital," consisting principally of common
shareholders' equity, noncumulative perpetual preferred stock, a limited amount
of cumulative perpetual preferred stock and minority interest in the equity
accounts of consolidated subsidiaries, less certain goodwill items. The
remainder may consist of a limited amount of subordinate debt and
intermediate-term preferred stock, certain hybrid capital instruments and other
debt securities, cumulative perpetual preferred stock, and a limited amount of
the general loan loss allowance.

     In addition to the risk-based capital  guidelines,  the Federal Reserve has
adopted a Tier 1  (leverage)  capital  ratio  under  which the bank  holding
company  must  maintain  a minimum  level of Tier 1  capital  to  average  total
consolidated assets. The ratio is 3% in the case of bank holding companies which
have  the  highest  regulatory  examination  ratings  and are not  contemplating
significant  growth or expansion.  All other bank holding companies are expected
to maintain a ratio of at least 1% to 2% above the stated minimum.

     The following are the Corporation's regulatory capital ratios as of
December  31, 1999:

                                      Corporation       Regulatory Minimum
                                                            Requirement

Tier 1 Capital:                          12.7%                 4.0%

Total Capital:                           13.7%                 8.0%


BANK REGULATION

     First Merchants Bank, National  Association,  The Union County National
Bank,  and The  First  National  Bank of  Portland  are  national  banks and are
supervised,  regulated  and  examined  by the Office of the  Comptroller  of the
Currency  (the "OCC").  First  United  Bank,  The Madison  Community  Bank, and
The Randolph  County Bank are state banks chartered in Indiana and are
supervised, regulated and examined by the Indiana Department. In addition, three
of First Merchants' subsidiaries, The Madison Community Bank, First United Bank
and The Randolph  County Bank, are supervised and regulated by the  FDIC. Each
regulator has the authority to issue cease-and-desist orders if it determines
that activities of the bank regularly represent an unsafe and unsound banking
practice or a violation of law.

     Both federal and state law extensively  regulate various aspects of the
banking   business   such  as   reserve   requirements,   truth-in-lending   and
truth-in-savings  disclosure,  equal credit opportunity,  fair credit reporting,
trading in securities and other aspects of banking  operations.  Current federal
law also requires banks,  among other things,  to make deposited funds available
within specified time periods.
                                                                        Page 5
<PAGE>

BANK REGULATION continued

     Insured state-chartered banks are prohibited under FDICIA from engaging
as the principal in activities that are not permitted for national banks, unless
(i) the FDIC determines that the activity would pose no significant  risk to the
appropriate  deposit  insurance fund, and (ii) the bank is, and continues to be,
in compliance with all applicable capital standards.

BANK CAPITAL REQUIREMENTS

     The FDIC and the OCC have adopted  risk-based  capital ratio guidelines
to which  state-chartered  banks and national banks are subject.  The guidelines
establish a framework that makes regulatory capital  requirements more sensitive
to  differences in risk  profiles.  Risk-based  capital ratios are determined by
allocating   assets  and  specified   off-balance   sheet  commitments  to  four
risk-weighted  categories,  with higher levels of capital being required for the
categories perceived as representing greater risk.

     Like the capital guidelines  established by the Federal Reserve,  these
guidelines divide a bank's capital into tiers.  Banks are required to maintain a
total risk-based  capital ratio of 8%. The FDIC or OCC may, however,  set higher
capital  requirements  when a bank's  particular  circumstances  warrant.  Banks
experiencing or anticipating significant growth are expected to maintain capital
ratios, including tangible capital positions, well above the minimum levels.

     In addition,  the FDIC and the OCC established guidelines prescribing a
minimum  Tier 1 leverage  ratio  (Tier 1 capital  to  adjusted  total  assets as
specified  in the  guidelines).  These  guidelines  provide for a minimum Tier 1
leverage ratio of 3% for banks that meet specified criteria, including that they
have the highest  regulatory  rating and are not  experiencing  or  anticipating
significant  growth.  All other banks are required to maintain a Tier 1 leverage
ratio of 3% plus an additional 100 to 200 basis points.

     All of First Merchants' affiliate banks exceed the risk-based  capital
guidelines of the FDIC and/or the OCC as of December 31, 1999.

     The  Federal  Reserve,  the  FDIC  and the OCC  have  adopted  rules to
incorporate  market and  interest  rate risk  components  into their  risk-based
capital   standards.   Amendments  to  the  risk-based   capital   requirements,
incorporating  market  risk,  became  effective  January 1, 1998.  Under the new
market risk  requirements,  capital  will be  allocated to support the amount of
market risk related to a financial institution's ongoing trading activities.

FDICIA

     FDICIA   requires,   among  other  things,   federal  bank   regulatory
authorities  to take "prompt  corrective  action" with respect to banks which do
not meet minimum capital  requirements.  For these purposes,  FDICIA establishes
five capital tiers: well capitalized, adequately capitalized,  undercapitalized,
significantly  undercapitalized  and critically  undercapitalized.  The FDIC has
adopted  regulations  to implement the prompt  corrective  action  provisions of
FDICIA.

     "Undercapitalized"  banks are  subject  to growth  limitations  and are
required to submit a capital  restoration  plan. A bank's  compliance  with such
plan is required to be guaranteed by the bank's parent  holding  company.  If an
"undercapitalized"  bank fails to submit an acceptable plan, it is treated as if
it is significantly undercapitalized. "Significantly undercapitalized" banks are
subject  to one or more  restrictions,  including  an  order by the FDIC to sell
sufficient voting stock to become adequately capitalized, requirements to reduce
total  assets and cease  receipt  of  deposits  from  correspondent  banks,  and
restrictions    on    compensation    of   executive    officers.    "Critically
undercapitalized"   institutions  may  not,   beginning  60  days  after  become
"critically  undercapitalized,"  make any  payment of  principal  or interest on
certain subordinated debt or extend credit for a highly leveraged transaction or
enter into any transaction outside the ordinary course of business. In addition,
"critically  undercapitalized"  institutions  are  subject to  appointment  of a
receiver or conservator.

                                                                        Page 6
<PAGE>

FDICIA continued

     As of December 31, 1999,  each bank  subsidiary of First  Merchants is
"well capitalized" based on the "prompt corrective action" ratios and deadlines
described above. It should be noted, however, that a bank's capital category is
determined  solely for the purpose of applying the OCC's (or the FDIC's) "prompt
corrective action" regulations and that the capital category may not constitute
an accurate  representation  of the bank's overall  financial condition or
prospects.

DEPOSIT INSURANCE

     First Merchants' affiliated banks are insured up to  regulatory  limits by
the FDIC and,  accordingly,  are subject to deposit insurance  assessments  to
maintain the Bank  Insurance Fund (the "BIF") and the Savings Association
Insurance Fund ("SAIF")  administered by the FDIC. The FDIC has adopted
regulations  establishing a permanent risk-related deposit insurance assessment
system.  Under this system, the FDIC places each insured bank in one of nine
risk  categories  based  on (i) the  bank's  capitalization,  and  (ii)
supervisory  evaluations  provided  to the  FDIC  by the  institution's  primary
federal  regulator.  Each  insured  bank's  insurance  assessment  rate  is then
determined by the risk category in which it is classified by the FDIC.

     Effective  January  1,  1997,  the annual  insurance  premiums  on bank
deposits insured by the BIF and the SAIF vary between $0.00 per $100 of deposits
for  banks  classified  in  the  highest  capital  and  supervisory   evaluation
categories  to $0.27 per $100 of  deposits  for banks  classified  in the lowest
capital and supervisory evaluation categories.

     The Deposit  Insurance Funds Act of 1996 provides for assessments to be
imposed on insured  depository  institutions with respect to deposits insured by
the BIF and the SAIF (in addition to assessments currently imposed on depository
institutions with respect to BIF- and SAIF-insured deposits) to pay for the cost
of  Financing  Corporation  ("FICO")  funding.  The  FDIC  established  the FICO
assessment  rates  effective  January  1, 1997 at $0.013 per $100  annually  for
BIF-assessable  deposits  and  $0.0648  per $100  annually  for  SAIF-assessable
deposits.  The  FICO  assessments  do  not  vary  depending  upon  a  depository
institution's capitalization or supervisory evaluations.

BROKERED DEPOSITS

     Under FDIC  regulations,  no  FDIC-insured  depository  institution can
accept  brokered  deposits  unless  it (i)  is  well  capitalized,  or  (ii)  is
adequately  capitalized and received a waiver from the FDIC. In addition,  these
regulations  prohibit any depository  institution  that is not well  capitalized
from (a) paying an interest  rate on deposits in excess of 76 basis  points over
certain prevailing market rates or (b) offering "pass through" deposit insurance
on certain  employee  benefit plan accounts unless it provides certain notice to
affected depositors.

INTERSTATE BANKING AND BRANCHING

     Under the Riegle-Neal  Interstate Banking and Branching  Efficiency Act
of 1994  ("Riegle-Neal")  subject  to  certain  concentration  limits,  required
regulatory approvals and other requirements,  (i) bank holding companies such as
First  Merchants is permitted to acquire banks and bank holding  companies
located in any state; (ii) any bank that is a subsidiary of a bank  holding
company is permitted to receive  deposits,  renew time  deposits, close loans,
service  loans and receive loan payments as an agent for any other bank
subsidiary  of that  holding  company;  and (iii) banks are  permitted  to
acquire  branch offices outside their home states by merging with  out-of-state
banks,  purchasing  branches in other states, and  establishing  de novo branch
offices in other states.
                                                                        Page 7
<PAGE>


FINANCIAL SERVICES MODERNIZATION ACT

     On  November  12,  1999,   President   Clinton   signed  into  law  the
Gramm-Leach-Bliley Act of 1999 (the "Financial Services Modernization Act"). The
general  effect of the Financial  Services  Modernization  Act is to establish a
comprehensive framework to permit affiliations among commercial banks, insurance
companies,  securities  firms, and other financial service providers by revising
and  expanding  the  existing  BHC Act.  Under this  legislation,  bank  holding
companies  would be permitted to conduct  essentially  unlimited  securities and
insurance  activities  as well as other  activities  determined  by the  Federal
Reserve Board to be financial in nature or related to financial  services.  As a
result,  First  Merchants  would be able to  provide  securities  and  insurance
services.  Furthermore, under this legislation, First Merchants would be able to
acquire,  or be  acquired  by,  brokerage  and  securities  firms and  insurance
underwriters. In addition, the Financial Services Modernization Act broadens the
activities  that may be conducted  by national  banks  through the  formation of
financial  subsidiaries.  Finally,  the  Financial  Services  Modernization  Act
modifies the laws governing the implementation of the Community Reinvestment Act
and  addresses a variety of other legal and  regulatory  issues  affecting  both
day-to-day operations and long-term activities of financial institutions.

     First  Merchants has not had an opportunity to assess the impact of the
legislation on its operations, but at the present time does not believe that the
legislation  will have a material  adverse  effect on its operations in the near
future. In addition,  First Merchants does not anticipate significant changes in
its products or services as a result of this legislation. However, to the extent
that this legislation permits banks, securities firms and insurance companies to
affiliate,  the financial services industry may experience further consolidation
and may  increase  the amount of  competition  that First  Merchants  faces from
larger institutions and other types of companies offering financial products.

ADDITIONAL MATTERS

     In addition to the matters discussed above, First Merchants'  affiliate
banks are subject to  additional  regulation of their  activities,  including  a
variety  of  consumer  protection  regulations affecting  their  lending,
deposit and collection  activities  and  regulations affecting secondary
mortgage market activities.

     The earnings of  financial  institutions  are also  affected by general
economic  conditions and prevailing  interest rates,  both domestic and foreign,
and by the monetary and fiscal policies of the United States  Government and its
various agencies, particularly the Federal Reserve.

     Additional legislation and administrative actions affecting the banking
industry may be considered by the United States Congress, state legislatures and
various  regulatory  agencies,  including  those referred to above. It cannot be
predicted with certainty whether such legislation or administrative  action will
be  enacted  or the  extent to which the  banking  industry  in general or First
Merchants and its affiliate banks in particular would be affected thereby.



                                                                        Page 8

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STATISTICAL DATA

The following tables set forth statistical data relating the Corporation and its
subsidiaries.

DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS" EQUITY;
      INTEREST RATES AND INTEREST DIFFERENTIAL

The daily average balance sheet amounts, the related interest income or expense,
and average rates earned or paid are presented in the following table.
<TABLE>
<CAPTION>
                                                 1999                            1998                             1997
                                    -------------------------------  ------------------------------   ------------------------------
                                               Interest                         Interest                         Interest
                                    Average    Income/    Average    Average    Income/                Average    Income/   Average
                                    Balance    Expense      Rate     Balance    Balance      Rate      Balance    Expense     Rate
                                   ---------  ---------  ---------  ---------  ---------  ---------  ---------- ---------  ---------
<S>                                <C>          <C>          <C>   <C>           <C>           <C>     <C>         <C>          <C>
Assets:
Federal funds sold ........       $   14,369    $    657     4.6%  $   23,236    $  1,026      4.4%    $    4,602  $   261      5.7%
Interest-bearing deposits......        1,105          59     5.3          654          30      4.6            693       35      5.1
Federal Reserve and
  Federal Home Loan Bank stock.        5,121         446     8.7        4,322         398      9.2          3,617      346      9.6
Securities: (1)
  Taxable .......................    256,424      15,459     6.0      189,285      11,596      6.1        185,896   11,587      6.2
  Tax-exempt ....................    111,437       8,066     7.2      100,304       7,547      7.5         94,548    7,013      7.4
                                  ----------    --------           ----------    --------              ----------  -------
    Total Securities.............    367,861      23,525     6.4      289,589      19,143      6.6        280,444   18,600      6.6
Mortgage loans held for sale.....        125          15    12.0          773          98     12.7            406       47     11.6
Loans: (2)
  Commercial ....................    415,840      35,616     8.6      379,897      33,902      8.9        340,767   31,608      9.3
  Bankers' acceptance and
    Commercial paper purchased...        371          18     4.9        1,366          67      4.9          1,193       68      5.7
  Real estate mortgage...........    332,670      26,604     8.0      320,194      26,484      8.3        300,596   25,262      8.4
  Installment ...................    183,095      16,113     8.8      165,349      15,420      9.3        154,853   14,342      9.3
  Tax-exempt ....................      3,615         358     9.9        3,511         360     10.3          2,021      226     11.2
                                  ----------    --------           ----------    --------              ----------  -------
    Total loans .................    935,591      78,709     8.4      870,317      76,233      8.8        799,430   71,506      8.9
                                  ----------    --------           ----------    --------              ----------  -------
    Total earning assets......... $1,324,172    $103,411     7.8   $1,188,981    $ 96,928      8.2     $1,089,192  $90,795      8.3
                                  ----------    --------           ----------    --------              ----------  -------
Net unrealized gain on securities
Available for sale...............        (47)                           3,041                               1,284
Allowance for loan losses........    (10,821)                          (8,769)                             (8,280)
Cash and due from banks..........     36,873                           31,015                              37,167
Premises and equipment ..........     19,794                           18,706                              16,621
Other assets ....................     27,259                           21,249                              15,097
                                   ---------                        ---------                           ---------
    Total assets ................ $1,397,230                       $1,254,223                          $1,151,081
                                  ==========                       ==========                          ==========
Liabilities:
  Interest-bearing deposits:
    NOW accounts ................ $  152,268    $  2,642     1.7%  $  145,224    $  2,977      2.1%    $  122,125  $ 2,800      2.3%

    Money market deposit accounts    177,091       6,804     3.8      146,745       5,921      4.0        123,302    4,895      4.0
    Savings deposits ............     95,344       2,399     2.5       91,842       2,388      2.6         81,284    2,031      2.5
    Certificates and other
      time deposits .............    518,624      26,694     5.1      519,625      28,587      5.5        499,097   27,644      5.5
                                  ----------    --------           ----------    --------              ----------  -------
      Total interest-bearing
        deposits.................    943,327      38,539     4.1      903,436      39,873      4.4        825,808   37,370      4.5

Borrowings ......................    154,839       8,359     5.4       78,737       4,592      5.8         72,950    4,023      5.5
                                  ----------    --------           ----------    --------              ----------  -------
  Total interest-bearing
    liabilities..................  1,098,166      46,898     4.3      982,173      44,465      4.5        898,758   41,393      4.6
Noninterest-bearing deposits.....    129,747                          113,193                             107,642
Other liabilities ...............     19,590                           10,805                               8,723
                                  ----------                       ----------                          ----------
    Total liabilities............  1,247,503                        1,106,171                           1,015,123
Stockholders' equity ............    149,727                          148,052                             135,958
                                  ----------                       ----------                          ----------
    Total liabilities and
     stockholders' Equity........ $1,397,230      46,898     3.5(3)$1,254,223      44,465      3.7(3)  $1,151,081   41,393      3.83
                                  ==========    --------           ==========    --------              ==========  -------
    Net interest income .........               $ 56,513     4.3                 $ 52,463      4.4                 $49,402      4.5
                                                ========                         ========                          =======

(1)     Average  balance of securities  is computed  based on the average of the
        historical amortized cost balances without the effects of the fair value
        adjustment.

(2)     Nonaccruing loans have been included in the average balances.
(3)     Total interest expense divided by total earning assets adjustment
        to convert tax exempt investment  securities to fully taxable equivalent
        basis,    using   marginal   rate   of   35%   for   1997,   1998,   and
        1999.............................
                                                 $2,948                            $2,676                            $2,611
                                                 ======                            ======                            ======
</TABLE>
                                                                        Page 9
<PAGE>

STATISTICAL DATA (continued)
----------------

ANALYSIS OF CHANGES IN NET INTEREST INCOME

The following table presents net interest income  components on a tax-equivalent
basis and reflects  changes between  periods  attributable to movement in either
the  average  balance  or  average  interest  rate for both  earning  assets and
interest-bearing  liabilities.  The  volume  differences  were  computed  as the
difference in volume  between the current and prior year times the interest rate
of the  prior  year,  while the  interest  rate  changes  were  computed  as the
difference  in rate  between  the current and prior year times the volume of the
prior  year.  Volume/rate  variances  have  been  allocated  on the basis of the
absolute relationship between volume variances and rate variances.
<TABLE>
<CAPTION>

                                                 1999 Compared to 1998                             1998 Compared to 1997
                                               Increase (Decrease) Due To                        Increase (Decrease) Due To
                                        -----------------------------------------          ---------------------------------------


                                          Volume         Rate          Total                Volume         Rate          Total
                                          ------         ----          -----                ------         ----          -----
                                                        (Dollars in Thousands on Fully Taxable Equivalent Basis)
<S>                                     <C>            <C>          <C>                    <C>            <C>            <C>

Interest income:
  Federal funds sold ...............     $  (404)      $     35     $   (369)               $   835       $    (70)      $    765
  Interest-bearing deposits ........          23              6           29                     (2)            (3)            (5)
  Federal Reserve and Federal
    Home Loan Bank stock ...........          70            (22)          48                    179           (127)            52
  Securities .......................       5,024           (642)       4,382                    605            (62)           543


  Mortgage loans held for sale .....         (78)            (5)         (83)                    46              5             51
  Loans ............................       5,569         (3,093)       2,476                  6,234         (1,507)         4,727
                                         --------      ---------    ---------                -------      ---------      --------
  Totals ...........................      10,204         (3,721)       6,483                  7,897         (1,764)         6,133
                                         --------      ---------    ---------                -------      ---------      --------
Interest expense:
  NOW accounts .....................         139           (474)        (335)                   494           (317)           177
  Money market deposit
    accounts........................       1,177           (294)         883                    945             81          1,026
  Savings deposits..................          89            (78)          11                    272             85            357
  Certificates and other
    time deposits...................         (55)        (1,838)      (1,893)                 1,130           (187)           943
  Borrowings........................       4,132           (365)       3,767                    330            239            569
                                         --------      ---------    ---------               --------      ---------      --------
    Totals..........................       5,482         (3,049)       2,433                  3,171            (99)         3,072
                                         --------      ---------    ---------               --------      ---------      --------

Change in net interest
  income (fully taxable
  equivalent basis)................      $ 4,722       $   (672)    $  4,050                $ 4,726       $ (1,665)     $   3,061
                                         ========      =========                            ========      =========


Tax equivalent adjustment
  using marginal rate
  of 35% for 1997, 1998,
 and 1999..........................                                     (181)                                                (157)
                                                                   ----------                                           ----------


Change in net interest
  income...........................                                $   3,869                                            $   2,904
                                                                   ==========                                           ==========

</TABLE>
                                                                        Page 10
<PAGE>

STATISTICAL DATA (continued)

INVESTMENT SECURITIES

The  amortized  cost,  gross  unrealized  gains,  gross  unrealized  losses  and
approximate  market value of the  investment  securities at the dates  indicated
were:
<TABLE>
<CAPTION>
                                                                          Gross            Gross
                                                       Amortized        Unrealized      Unrealized          Fair
                                                         Cost             Gains           Losses            Value
                                                    ----------------  ---------------  --------------  --------------
                                                                          (Dollars in Thousands)
<S>                                                   <C>               <C>              <C>             <C>
Available for sale at December 31, 1999:
    U.S. Treasury..............................       $   7,337         $      3         $    72         $  7,268
    Federal agencies...........................          61,215               50           1,199           60,066
    State and municipal........................          94,598              568             945           94,221
    Mortgage-backed securities.................         141,673               58           4,332          137,399
    Other asset-backed securities  ............          21,773                              758           21,015
    Corporate obligations  ....................           9,082                4             140            8,946
    Marketable equity securities...............             915                              162              753
                                                      ---------         --------         -------         --------
       Total available for sale................         336,593              683           7,608          329,668
                                                      ---------         --------         -------         --------

Held to maturity at December 31, 1999:
   U.S. Treasury...............................             250                                2              248
   State and municipal.........................          13,243               77              13           13,307
   Mortgage-backed securities..................             311                1               1              311
   Other asset-backed securities...............             499                               81              418
                                                      ---------         --------         -------         --------
      Total held to maturity...................          14,303               78              97           14,284
                                                      ---------         --------         -------         --------
      Total investment securities..............       $ 350,896         $    761         $ 7,705         $343,952
                                                      =========         ========         =======         ========




Available for sale at December 31, 1998:

   U.S. Treasury...............................       $  22,275         $    120                         $ 22,395
   Federal agencies............................          61,605              627         $    32           62,200
   State and municipal.........................          93,198            2,778              21           95,955
   Mortgage-backed securities..................         128,610              440             198          128,852
   Other asset-backed securities...............             265                1              11              255
   Corporate obligations.......................          18,624              143               8           18,759
   Marketable equity securities................           1,200                              108            1,092
                                                      ---------         --------         -------         --------
      Total available for sale.................         325,777            4,109             378          329,508
                                                      ---------         --------         -------         --------

Held to maturity at December 31, 1998:
   U.S. Treasury...............................             249                4                              253
   Federal agencies............................             500                1                              501
   State and municipal.........................          18,335              370               1           18,704
   Mortgage-backed securities..................             864                3                              867
   Other asset-backed securities...............           1,761                2              27            1,736
                                                      ---------         --------         -------         --------
      Total held to maturity...................          21,709              380              28           22,061
                                                      ---------         --------         -------         --------
      Total investment securities..............       $ 347,486         $  4,489         $   406         $351,569
                                                      =========         ========         =======         ========


</TABLE>


                                                                        Page 11

<PAGE>
--------------------------------------------------------------------------------
STATISTICAL DATA (continued)
<TABLE>
<CAPTION>
                                                                            Gross              Gross
                                                       Amortized         Unrealized         Unrealized            Fair
                                                          Cost              Gains             Losses             Value
                                                     ---------------    --------------     --------------    ---------------
<S>                                                   <C>                <C>                 <C>               <C>
Available for sale at December 31, 1997:
   U.S. Treasury ..............................       $ 19,706           $   108              $    11          $ 19,803
   Federal agencies............................         74,172               451                   50            74,573
   State and municipal.........................         74,073             1,946                   29            75,990
   Mortgage-backed securitie...................         39,832               386                  106            40,112
   Other asset-backed securities...............            487                 2                   54               435
   Corporate obligations.......................         18,219               139                   30            18,328
   Marketable equity securities................          1,445                                    103             1,342
                                                      --------           -------              -------          --------
      Total available for sale ................        227,934             3,032                  383           230,583
                                                      --------           -------              -------          --------

Held to maturity at December 31, 1997:
   U.S. Treasury ..............................            249                                      2               247
   Federal agencies ...........................          3,412                 6                    1             3,417
   State and municipal ........................         27,137               275                    2            27,410
   Mortgage-backed securities .................          1,255                 4                    1             1,258
   Other asset-backed securities ..............          4,210                 7                  166             4,051
                                                      --------           -------              -------          --------
      Total held to maturity  .................         36,263               292                  172            36,383
                                                      --------           -------              -------          --------
      Total investment securities .............       $264,197          $  3,324               $  555          $266,966
                                                      ========          ========              =======          ========
</TABLE>

<TABLE>
<CAPTION>
                                                                              Cost
                                                    ----------------------------------------------------------
                                                          1999                 1998                1997
                                                          ----                 ----                ----
<S>                                                     <C>                  <C>                  <C>
Federal Reserve and Federal Home Loan
Bank stock at December 31:
Federal Reserve Bank stock ....................         $  493               $  493               $  493
Federal Home Loan Bank stock ..................          5,365                3,962                3,560
                                                         -----               ------                -----
    Total .....................................         $5,858               $4,455               $4,053
                                                        ======               ======                =====
</TABLE>

The Fair value of Federal Reserve and Federal Home Loan Bank stock  approximates
cost.

The maturity  distribution  (dollars in  thousands)  and average  yields for the
securities portfolio at December 31, 1999 were:

Securities available for sale December 31, 1999:
<TABLE>
<CAPTION>
                                                 Within 1 Year                 1-5 Years                  5-10 Years
                                                 -------------                 ---------                  ----------
                                              Amount        Yield*        Amount        Yield*       Amount        Yield*
                                              ------        ------        ------        ------       ------        ------
<S>                                          <C>              <C>        <C>             <C>        <C>              <C>
U.S. Treasury......................          $ 2,277          5.8%       $ 4,991         5.5%
Federal Agencies...................           38,178          5.9         14,938         5.9        $ 2,000          6.3%
State and Municipal................           10,481          7.2         56,841         7.0         15,228          8.1
Corporate Obligations..............            1,622          7.0          7,324         6.5
                                             -------                     -------                    -------
    Total..........................          $52,558          6.2%       $84,094         6.7%       $17,228          7.9%
                                             =======                     =======                    =======
</TABLE>

                                                                        Page 12
<PAGE>
--------------------------------------------------------------------------------

STATISTICAL DATA (continued)
<TABLE>
<CAPTION>
                                                                            Marketable Equity,
                                                                            Mortgage and Other
                                             Due After Ten Years         Asset-Backed Securities                Total
                                             -------------------         -----------------------                -----
                                            Amount         Yield*         Amount         Yield*          Amount        Yield*
                                            ------         ------         ------         ------          ------        ------
<S>                                        <C>               <C>       <C>                <C>          <C>              <C>
U.S. Treasury........................                                                                  $  7,268         5.6%
Federal Agencies.....................     $  4,950           6.1%                                        60,066         5.9
State and Municipal..................       11,671           8.1                                         94,221         7.4
Corporate Obligations................                                                                     8,946         6.6
Marketable Equity Security...........                                  $     753           5.5%             753         5.5
Mortgage-backed securities...........                                    137,399           6.1          137,399         6.1
Other asset-backed securities........                                     21,015           5.1           21,015         5.1
                                          --------                     ---------                       --------
    Total............................     $ 16,621           7.5%      $ 159,167           6.0%        $329,668         6.4%
                                          ========                     =========                       ========
</TABLE>

Securities held to maturity at December 31, 1999:
<TABLE>
<CAPTION>

                                                  Within 1 Year                1-5 Years                   5-10 Years
                                                  -------------                ---------                   ----------
                                            Amount         Yield*         Amount        Yield*       Amount         Yield*
                                            ------         ------         ------        ------       ------         ------
<S>                                       <C>                <C>         <C>              <C>        <C>              <C>
U.S. Treasury........................                                    $   250          5.3%
State and Municipal..................     $  5,330           7.4%          7,293          7.5        $  620           8.9%
                                          --------                       -------                     ------
    Total............................     $  5,330           7.4%        $ 7,543          7.4%       $  620           8.9%
                                          ========                       =======                     ======
</TABLE>

<TABLE>
<CAPTION>
                                                                             Mortgage and other
                                            Due After Ten Years                Asset-backed                    Total
                                            -------------------                ------------                    -----
                                           Amount          Yield*         Amount        Yield*        Amount        Yield*
                                           ------          ------         ------        ------        ------        ------
<S>                                        <C>               <C>         <C>              <C>         <C>             <C>
U.S. Treasury........................                                                                 $   250         5.3%
State and Municipal..................                                                                  13,243         7.5
Mortgage-backed securities...........                                    $   311          5.6%            311         5.6
Other asset-backed securities........                                        499          6.2             499         6.2
                                          -------                        -------                      -------
     Total............................                                   $   810          6.0%        $14,303         7.4%
                                          =======                        =======                      =======

</TABLE>

   *Interest  yields on state and municipal  securities are presented on a fully
   taxable equivalent basis using a 35% rate.

Federal Reserve and Federal Home Loan Bank stock at December 31, 1999:
<TABLE>
<CAPTION>

                                           Amount          Yield
<S>                                       <C>               <C>
Federal Reserve Bank Stock...........     $  493            6.0%
Federal Home Loan Bank stock.........      5,365            7.9
                                          -------
    Total............................     $5,858            7.7%
                                          =======
</TABLE>

                                                                        Page 13

<PAGE>

STATISTICAL DATA (continued)

LOAN PORTFOLIO

TYPES OF LOANS

The loan portfolio at the dates indicated is presented below:
<TABLE>
<CAPTION>

                                                     1999             1998            1997            1996             1995
                                                     ----             ----            ----            ----             ----
                                                                             (Dollars in Thousands)
<S>                                                 <C>             <C>              <C>             <C>              <C>
Loans at December 31:
  Commercial and
    industrial loans...........................     $224,712        $188,841         $178,696        $157,317         $112,915
  Bankers acceptances and loans
    to financial institutions..................                          900              705             625            2,925
  Agricultural production
    financing and other loans
    to farmers.................................       21,547          21,951           16,764          18,906           17,203
  Real estate loans:
    Construction...............................       31,996          31,719           22,710          14,533           11,053
    Commercial and farmland....................      150,544         137,671          142,394         133,435          126,341
    Residential................................      380,596         361,611          331,405         290,705          238,298
  Individuals' loans for
    Household and other
    Personal expenditures......................      181,906         143,075          139,620         126,718          111,433
  Tax-exempt loans.............................        4,070           2,652            2,598           1,643            1,204
  Other loans..................................        3,552           2,073            3,782           1,672              949
                                                    ---------       ---------        ---------       ---------        ---------
                                                     998,923         890,493          838,674         745,554          622,321
  Unearned interest on loans...................          (28)           (137)            (487)         (1,364)          (1,518)
                                                    ---------       ---------        ---------       ---------        ---------
            Total loans........................     $998,895        $890,356         $838,187        $744,190         $620,803
                                                    =========       =========        =========       =========        =========
</TABLE>

Residential  Real Estate Loans Held for Sale at December 31, 1999,  1998,  1997,
1996, and 1995 were $61,000, $775,800, $471,400, $284,020 and $735,522.

MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES


Presented in the table below are the maturities of loans  (excluding  commercial
real  estate,  banker  acceptances,   farmland,   residential  real  estate  and
individuals'  loans) outstanding as of December 31, 1999. Also presented are the
amounts due after one year classified according to the sensitivity to changes in
interest rates.

<TABLE>
<CAPTION>
                                                                               Maturing
                                                    Within              1-5               Over
                                                    1 Year             Years             5 Years            Total
                                                 --------------    ---------------    --------------     ------------
                                                                        (Dollars in Thousands)
<S>                                              <C>               <C>                  <C>               <C>
Commercial and industrial loans................  $  178,945        $  24,613            $  21,154         $  224,712
Agricultural production financing
  And other loans to farmers...................      18,024            2,891                  632             21,547
Real estate - Construction.....................      23,309            7,347                1,340             31,996
Tax-exempt loans...............................       2,107              690                1,273              4,070
Other loans....................................         304            3,248                                   3,552
                                                 ----------        ---------            ---------         ----------
      Total....................................  $  222,689        $  38,789            $  24,399         $  285,877
                                                 ==========        =========            =========         ==========

</TABLE>
                                                                        Page 14
<PAGE>

STATISTICAL DATA  (continued)

<TABLE>
<CAPTION>
                                                                       Maturing
                                                  ---------------------------------------------------
                                                           1 - 5                       Over
                                                           Years                     5 Years
                                                           -----                     -------
                                                                (Dollars in Thousands)
<S>                                                 <C>                         <C>
Loans maturing after one Year with:

  Fixed rates.............................          $     23,880                $     24,257
  Variable rate...........................                14,909                         142
                                                    -------------               ------------
    Total.................................          $     38,789                $     24,399
                                                    =============               ============
</TABLE>

RISK ELEMENTS

<TABLE>
<CAPTION>
                                                                              December 31
                                                  --------------------------------------------------------------------
                                                   1999           1998            1997           1996           1995
                                                   ----           ----            ----           ----           ----
                                                                         (Dollars in Thousands)
<S>                                               <C>            <C>             <C>            <C>            <C>
Nonaccruing loans.........................        $1,280         $1,073          $2,146         $3,547         $  914
Loans contractually past due 90
  days or more other than
  nonaccruing.............................         2,327          2,334           2,034          1,790          1,135
Restructured loans........................           908          1,110             469          1,766          1,254

</TABLE>

Nonaccruing loans are loans which are reclassified to a nonaccruing  status when
in  management's  judgment the collateral  value and financial  condition of the
borrower do not justify accruing interest.  Interest previously recorded but not
deemed  collectible is reversed and charged  against  current  income.  Interest
income on these loans is then recognized when collected.

Restructured  loans are loans for which the  contractual  interest rate has been
reduced  or  other  concessions  are  granted  to  the  borrower  because  of  a
deterioration  in the  financial  condition  of the  borrower  resulting  in the
inability of the borrower to meet the original contractual terms of the loans.

Interest  income of $94,000 for the year ended December 31, 1999, was recognized
on the nonaccruing  and  restructured  loans listed in the table above,  whereas
interest income of $223,000 would have been recognized under their original loan
terms.

Potential problem loans:

Management  has  identified  certain  other  loans  totaling  $10,590,000  as of
December 31, 1999,  not included in the risk  elements  table,  or impaired loan
table,  about which there are doubts as to the borrowers' ability to comply with
present repayment terms.

The Banks  generate  commercial,  mortgage  and  consumer  loans from  customers
located  primarily in central and east central Indiana and Butler County,  Ohio.
The  Banks'  loans  are  generally  secured  by  specific  items of  collateral,
including real property,  consumer  assets,  and business  assets.  Although the
Banks have diversified loan portfolio,  a substantial  portion of their debtors'
ability to honor their  contracts is dependent  upon economic  conditions in the
automotive and agricultural industries.
                                                                        Page 15
<PAGE>

STATISTICAL DATA (continued)
----------------

SUMMARY OF LOAN LOSS EXPERIENCE

The following table summarizes the loan loss experience for the years indicated.

<TABLE>
<CAPTION>
                                                    1999            1998            1997           1996           1995
                                                    ----            ----            ----           ----           ----
                                                                            (Dollars in Thousands)
<S>                                               <C>             <C>             <C>            <C>            <C>
Allowance for loan losses:
  Balance at January 1....................        $  9,209        $ 8,429         $ 8,010        $ 7,702        $ 7,510

  Chargeoffs:
    Commercial.............................            361            794             543            873            794
    Real estate mortgage...................             40             44              31             14              1
    Installment............................          1,368          1,393           1,375            945            919
                                                  --------        -------         -------        -------        -------
      Total chargeoffs.....................          1,769          2,231           1,949          1,832          1,714
                                                  --------        -------         -------        -------        -------
  Recoveries:
    Commercial.............................            114            325             364            106            127
    Real estate mortgage...................             32             20               1              7              4
    Installment............................            301            294             268            237            232
                                                  --------        -------         -------        -------        -------
      Total recoveries.....................            447            639             633            350            363
                                                  --------        -------         -------        -------        -------

  Net chargeoffs...........................          1,322          1,592           1,316          1,482          1,351
                                                  --------        -------         -------        -------        -------
  Provisions for loan losses...............          2,241          2,372           1,735          1,790          1,543
                                                  --------        -------         -------        -------        -------
  Balance at December 31...................        $10,128        $ 9,209         $ 8,429        $ 8,010        $ 7,702
                                                  ========        =======         =======        =======        =======

  Ratio of net chargeoffs during the
   period to average loans
   outstanding during the period..........           .14%           .18%            .16%           .21%            .22%

  Peer Group................................          N/A           .26%            .29%           .26%            .26%

</TABLE>


                                                                        Page 16
<PAGE>

STATISTICAL DATA (continued)
----------------

Allocation of the Allowance for Loan Losses at December 31:

Presented  below is an analysis of the  composition  of the  allowance  for loan
losses and per cent of loans in each category to total loans:
<TABLE>
<CAPTION>
                                                                     1999                             1998
                                                         ------------------------------   ------------------------------
                                                         Amount           Per Cent        Amount           Per Cent
                                                         --------         --------        --------         --------
                                                                             (Dollars in Thousands)
<S>                                                      <C>                 <C>          <C>                <C>
Balance at December 31:
  commercial, financial and
    agricultural..............................           $  3,344            24.6%        $  2,950           23.7%
  Real estate - construction..................                  3             3.2                4            3.6
  Real estate - mortgage......................              1,297            53.2            1,313           56.1
  Installment.................................              3,909            18.6            3,509           16.3
  Tax-exempt loans............................                  5              .4                5             .3
  Unallocated.................................              1,570            N/A             1,428            N/A
                                                         --------           ------        --------          ------
  Totals......................................           $ 10,128           100.0%        $  9,209          100.0%
                                                         ========           ======        ========          ======


                                                                     1997                             1996
                                                         ------------------------------   ------------------------------
                                                         Amount           Per Cent        Amount           Per Cent
                                                         --------         --------        --------         ---------
                                                                             (Dollars in Thousands)
Balance at December 31:
  commercial, financial and
    agricultural..............................           $  3,226            23.4%        $  3,537            23.5%
  Real estate - construction..................                  4             2.7                4             2.0
  Real estate - mortgage......................              1,319            56.5            1,259            57.0
  Installment.................................              2,117            17.1            1,906            17.3
  Tax-exempt loans............................                  5              .3               19              .2
  Unallocated.................................              1,758            N/A             1,285            N/A
                                                         --------           ------        --------           ------
  Totals......................................           $  8,429           100.0%        $  8,010           100.0%
                                                         ========           ======        ========           ======

                                                                     1995

                                                         ------------------------------
                                                         Amount           Per Cent
                                                         --------         --------
                                                         (Dollars in Thousands)
Balance at December 31:
  commercial, financial and
    agricultural..............................           $   3,572           21.2%
  Real estate - construction..................                   1            1.8
  Real estate - mortgage..  ..................               1,289           58.7
  Installment.................................               1,732           18.1
  Tax-exempt loans............................                   5             .2
  Unallocated. .... ..........................               1,103           N/A
                                                         ---------          ------
  Totals......................................           $   7,702          100.0%
                                                         =========          ======
</TABLE>
                                                                        Page 17
<PAGE>

STATISTICAL DATA (continued)
----------------

Loan Loss Charegoff Procedures

The Banks have  weekly  meetings  at which loan  delinquencies,  maturities  and
problems  are  reviewed.  The Board of Directors  receive and review  reports on
loans monthly.

The Executive  Committee of First Merchants' Board meets bimonthly to approve or
disapprove  all new loans in  excess of  $1,000,000  and the Board  reviews  all
commercial  loans in excess of $50,000  which  were made or  renewed  during the
preceding month.  Madison's   and First United's loan committees,  consisting of
all loan officers and the  president,  meet as required to approve or disapprove
any loan which is in excess of an individual loan officer's lending limit.

The Loan/Discount  Committee of Union County's Board meets monthly to approve or
disapprove all loans to borrowers  with  aggregate  loans in excess of $300,000.
The Loan  Committee  of  Randolph  County's  Board  meets  weekly to  approve or
disapprove any loan which is in excess of an individual  loan officer's  lending
limit.

All  chargeoffs  are approved by the senior loan officer and are reported to the
Banks' Boards.  The Banks charge off loans when a determination is made that all
or a  portion  of a loan is  uncollectible  or as a result  of  examinations  by
regulators and the independent auditors.

Provision for Loan Losses

In banking,  loan losses are one of the costs of doing  business.  Although  the
Banks' management emphasize the early detection and chargeoff of loan losses, it
is inevitable  that at any time certain losses exist in the portfolio which have
not been specifically identified.  Accordingly, the provision for loan losses is
charged to earnings on an  anticipatory  basis,  and recognized  loan losses are
deducted from the allowance so established.  Over time, all net loan losses must
be charged to earnings.  During the year, an estimate of the loss experience for
the year serves as a starting point in determining the appropriate level for the
provision. However, the amount actually provided in any period may be greater or
less than net loan losses, based on management's  judgment as to the appropriate
level of the allowance for loan losses.  The  determination  of the provision in
any period is based on management's continuing review and evaluation of the loan
portfolio,  and its judgment as to the impact of current economic  conditions on
the portfolio.  The evaluation by management includes consideration of past loan
loss  experience,  changes in the  composition  of the loan  portfolio,  and the
current condition and amount of loans outstanding.

Impaired loans are measured by the present value of expected  future cash flows,
or the fair value of the  collateral  of the  loans,  if  collateral  dependent.
Information on impaired loans is summarized below:

<TABLE>
<CAPTION>
                                                                          1999               1998                1997
                                                                     ---------------    ----------------    ---------------
                                                                                    (Dollars in Thousands)
<S>                                                                   <C>                <C>                 <C>
For the year ending December 31:
  Impaired loans with an allowance...................                 $      2,742       $     2,105         $      1,956
  Impaired loans for which the discounted
    cash flows or collateral value exceeds the
    carrying value of the loan.......................                        4,398             6,982                1,158
                                                                      ------------       -----------         ------------

        Total impaired loans.........................                 $      7,140       $     9,087         $      3,114
                                                                      ============       ===========         ============

  Allowance for impaired loans (included in the
    Corporation's allowance for loan losses).........                 $      1,061       $       795         $        448
  Average balance of impaired loans..................                        8,770             8,881                4,155
  Interest income recognized on impaired loans.......                          705               873                  191
  Cash basis interest included above.................                          637               745                  173
</TABLE>
                                                                        Page 18
<PAGE>
--------------------------------------------------------------------------------
STATISTICAL DATA (continued)

DEPOSITS

The  following  table shows the average  amount of deposits  and average rate of
interest paid thereon for the years indicated.

<TABLE>
<CAPTION>
                                                  1999                        1998                         1997
                                        -------------------------    ------------------------    -------------------------
                                          Amount         Rate         Amount          Rate        Amount          Rate
                                        ------------   ---------    ------------    ---------   ------------     --------
                                                                      (Dollars in Thousands)
<S>                                    <C>               <C>         <C>              <C>       <C>               <C>
Balance at December 31:
  Noninterest bearing deposits.......  $   129,747                   $   113,193                $  107,642
  NOW accounts.......................      152,268       1.7%            145,224      2.1%         122,125       2.3%
  Money market deposit accounts....        177,091       3.8             146,745      4.0          123,302       4.0
  Savings deposits...................       95,344       2.5              91,842      2.6           81,284       2.5
  Certificates of deposit and
   other time deposits..............       518,624       5.1             519,625      5.5          499,097       5.5
                                        ----------                   -----------                ----------
      Total deposits.................   $1,073,074       3.6%        $ 1,016,629      3.9%      $  933,450       4.0%
                                        ==========                   ===========                ==========
</TABLE>

As of December  31,  1999,  certificates  of deposit and other time  deposits of
$100,000 or more mature as follows:

<TABLE>
<CAPTION>
                                                                       Maturing
                                                   -------------------------------------------------
                                    3 Months            3-6              6-12            Over 12
                                    or less           Months            Months           Months             Total
                                  -------------    --------------    --------------   --------------    --------------
                                                                (Dollars in Thousands)
<S>                                 <C>              <C>                <C>              <C>               <C>
Certificates of deposit and
  other time deposits..........     $121,604         $ 22,092           $ 23,519         $ 30,443          $197,658
Per cent.......................           62%              11%                12%              15%              100%

</TABLE>

RETURN ON EQUITY AND ASSETS

<TABLE>
<CAPTION>
                                                                1999                 1998                 1997
                                                           ----------------    -----------------    -----------------
<S>                                                              <C>                 <C>                   <C>
Return on assets (net income divided by
  average total assets)..........................                 1.37%                1.43%                1.43%
Return on equity (net income divided by
  average equity).................................               12.75                12.09                12.12
Dividend payout ratio (dividends per
  share divided by net income per share)..........               53.16                52.03                50.00
Equity to assets ratio (average equity
  divided by average total assets)...............                10.72                11.80                11.81

</TABLE>

                                                                        Page 19
<PAGE>

STATISTICAL DATA (continued)
----------------

SHORT-TERM BORROWINGS

<TABLE>
<CAPTION>
                                                                      1999                 1998                1997
                                                                -----------------    -----------------    ----------------
                                                                                 (Dollars in Thousands)
<S>                                                              <C>                   <C>                 <C>
Balance at December 31:
  Securities sold under repurchase
    agreements (short-term portion)........                       $  15,271            $  11,598           $  15,398
  Federal funds purchased..................                          28,885               15,170               5,370
  U.S. Treasury demand notes...............                           9,506                2,629               8.211
                                                                  ---------            ---------           ---------

          Total short-term borrowings.........                    $  53,662            $  29,397           $  28,979
                                                                  =========            =========           =========
</TABLE>


Securities sold under repurchase  agreements are borrowings  maturing within one
year and are secured by U.S. Treasury and Federal agency obligations.

Pertinent information with respect to short-term borrowings is summarized below:

<TABLE>
<CAPTION>
                                                                       1999                 1998                 1997
                                                                 -----------------    -----------------    -----------------
                                                                                   (Dollars in Thousands)
<S>                                                                     <C>                  <C>                 <C>
Weighted average interest rate on outstanding
balance at December 31:

    Securities sold under repurchase
        agreements(short-term portion)..............                   4.7%                   5.1%                 5.1%
    Total short-term borrowings.....................                   5.3                    5.3                  5.4

Weighted average interest rate during the year:
    Securities sold under repurchase
        Agreements (short-term portion).............                   4.5%                   5.1%                 5.0%
    Total short-term borrowings.....................                   4.5                    5.0                  5.4

Highest amount outstanding at any month end
During the year:
    Securities sold under repurchase
        Agreements (short-term portion).............             $  19,700              $  27,002            $  49,750
    Total short-term borrowings.....................                55,893                 67,968               85,612

Average amount outstanding during the year:
    Securities sold under repurchase
        Agreements (short-term portion).............             $  17,696              $  24,526            $  31,327
    Total short-term borrowings.....................                36,157                 44,467               53,937


</TABLE>

                                                                        Page 20
<PAGE>

ITEM 2.  PROPERTIES.
--------------------------------------------------------------------------------

The headquarters of the Corporation and First Merchants are located in a
five-story building at 200 East Jackson Street, Muncie, Indiana. This building
and eight branch buildings are owned by First Merchants; four remaining branches
of First Merchants are located in leased  premises. Twelve automated cash
dispensers are located  in leased  premises.  All of the Corporation's and First
Merchants'facilities are located in Delaware and Madison Counties of Indiana.

The  principal  offices of  Pendleton  are  located  at 100 West  State  Street,
Pendleton,  Indiana.  Pendleton also operates three branches. All of Pendleton's
properties  are owned by Pendleton and are located in Madison  County,  Indiana.
Two automated  dispensers are located in Madison County,  Indiana. Two automated
dispensers are located in leased premises.

The  principal  offices  of First  United are  located at 790 West Mill  Street,
Middletown,  Indiana.  First  United also  operates two  branches.  All of First
United's  properties  are owned by First United and are located in Henry County,
Indiana.

The  principal  office of  Randolph  County is  located  at 122 West  Washington
Street,  Winchester,  Indiana.  This building is owned by Randolph County and is
located in Randolph County, Indiana.

None of the properties owned by the banks are subject to any major encumbrances.
The net  investment  of the  Corporation  and  subsidiaries  in real  estate and
equipment at December 31, 1999 was $20,073,000.

--------------------------------------------------------------------------------
ITEM 3.  LEGAL PROCEEDINGS.

There is no pending legal  proceeding,  other than ordinary  routine  litigation
incidental to the business of the Corporation or its subsidiaries, of a material
nature to which the  Corporation or its  subsidiaries is a party or of which any
of their properties are subject.  Further, there is no material legal proceeding
in which any  director,  officer,  principal  shareholder,  or  affiliate of the
Corporation,  or any  associate  of any  such  director,  officer  or  principal
shareholder, is a party, or has a material interest, adverse to the Corporation.

None of the routine legal  proceedings,  individually  or in the  aggregate,  in
which the  Corporation  or its  affiliates  are  involved are expected to have a
material  adverse impact on the financial  position or the results of operations
of the Corporation.

--------------------------------------------------------------------------------
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No  matters  were  submitted  during  the  fourth  quarter  of 1999 to a vote of
security holders, through the solicitation of proxies or otherwise.

                                                                        Page 21
<PAGE>

SUPPLEMENTAL INFORMATION - EXECUTIVE OFFICERS OF THE REGISTRANT.
--------------------------------------------------------------------------------
The names,  ages, and positions with the Corporation and subsidiary banks of all
executive officers of the Corporation are listed below.
<TABLE>
<CAPTION>

<S>                                         <C>                                      <C>
                                                 Offices with the Corporation                 Principal Occupation
               Name and Age                          And Subsidiary Banks                    During Past Five Years
------------------------------------------- ---------------------------------------- ----------------------------------------

Stefan S. Anderson                          Chairman of the Board,                   Chairman the Board of the Corporation
65                                          Chief Executive Officer,                 and First Merchants since 1987; Chief
                                            (CEO until April 16, 1999),              Executive officer of the Corporation
                                            Corporation and First Merchants          from 1982 to April 1999; President of
                                                                                     the Corporation from 1982 to August
                                                                                     1998, and Chief Executive Officer of
                                                                                     First Merchants Bank from 1979 to April
                                                                                     1999

Michael L. Cox                              President, Chief Executive Officer       Chief Executive Officer of the
55                                          (CEO since April 16, 1999),              Corporation and First Merchants since
                                            Corporation and First Merchants          April 1999.  President and Chief
                                                                                     Operating Officer, Corporation since
                                                                                     August 1998 and May, 1994 to April
                                                                                     1999 respectively; President and Chief
                                                                                     Operating Officer, First Merchants
                                                                                     from April, 1996 to April 1999;
                                                                                     Director, Corporation and First
                                                                                     Merchants since December, 1984;
                                                                                     President, Information Services Group,
                                                                                     Ontario Corporation prior to May 1994

Roger M. Arwood                             Executive Vice President, Corporation    Executive Vice President of the
48                                          and First Merchants                      Corporation and First Merchants since
                                                                                     February of 2000; Executive Vice President,
                                                                                     Bank of America from 1983 to February 2000.

Charles R. Phillips                         Senior Vice President, Corporation and   Senior Vice President of the
54                                          First Merchants                          Corporation and First Merchants since

                                                                                     September 1998; Chief Information Officer,
                                                                                     Amerisure Insurance Company from December
                                                                                     1997 to September 1998; Senior Vice President
                                                                                     and Chief Information Officer, NBD Bank from
                                                                                     June 1994 to December 1997.

Larry R. Helms                              Senior Vice President, Corporation and   Senior Vice President, Corporation
59                                          First Merchants; General Counsel and     since 1982; General Counsel,
                                            Secretary, Corporation                   Corporation since 1990 and Secretary
                                                                                     since January 1, 1997; Senior Vice
                                                                                     President, First Merchants since
                                                                                     January 1979; Director of First United
                                                                                     Bank since 1991 and Pendleton Banking
                                                                                     Company since 1992

Ted J. Montgomery                           Senior Vice President , Corporation;     Senior Vice President and Director,
60                                          (also, President, Union County, Until    Corporation since August 1996;
                                            September 3, 1999)                       President, Union County National Bank
                                                                                     since 1983 and Director since 1981

James L. Thrash                             Senior Vice President , Corporation      Senior Vice President and Chief
50                                          and First Merchants; Chief Financial     Financial Officer of the Corporation
                                            Officer, Corporation                     since 1990; Senior Vice President,
                                                                                     First Merchants since 1990


</TABLE>

                                                                        Page 22
<PAGE>

                                     PART II

ITEM 5.     MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS.
--------------------------------------------------------------------------------

The information required under this item is incorporated by reference to page 46
of the  Corporation's  1999  Annual  Report to  Stockholders  under the  caption
"Stockholder Information," Exhibit 13.

ITEM 6.      SELECTED FINANCIAL DATA.
--------------------------------------------------------------------------------

The information required under this item is incorporated by reference to page 15
of the Corporation's 1999 Annual Report to Stockholders - Financial Review under
the caption "Five-Year Summary of Selected Financial Data," Exhibit 13.

ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                  RESULTS OF OPERATIONS.
--------------------------------------------------------------------------------

The information required under this item is incorporated by reference to page 16
through 23 of the  Corporation's  1999 Annual Report to Stockholders - Financial
Review under the caption "Management's Discussion and Analysis," Exhibit 13.

ITEM 7A.   QUNTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
--------------------------------------------------------------------------------

The information required under this item is incorporated by reference to page 18
and 19 of the  Corporation's  1999  Annual  Report to  Stockholders  - Financial
Review under the caption "Management's Discussion and Analysis," Exhibit 13.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
--------------------------------------------------------------------------------

The financial  statements  and  supplementary  data required under this item are
incorporated  herein  by  reference  to page 14 and pages 24  through  43 of the
Corporation's 1999 Annual Report to Stockholders - Financial Review, Exhibit 13.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                 FINANCIAL DISCLOSURE.
--------------------------------------------------------------------------------

In  connection  with its  audits  for the two most  recent  fiscal  years  ended
December  31,  1999,  there have been no  disagreements  with the  Corporation's
independent  certified public accountants on any matter of accounting principles
or practices,  financial statement  disclosure or audit scope or procedure,  nor
have there been any changes in accountants.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
--------------------------------------------------------------------------------

The  information  required under this item relating to directors is incorporated
by  reference  to  the  Corporation's  1999  Proxy  Statement  furnished  to its
stockholders in connection with an annual meeting to be held April 12, 2000 (The
"1999 Proxy Statement"),  under the caption "Election of Directors," which Proxy
Statement has been filed with the  Commission.  The  information  required under
this item relating to executive  officers is set forth in part I,  "Supplemental
Information  - Executive  Officers of the  Registrant"  of this annual report on
Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION.
--------------------------------------------------------------------------------

The  information  required under this item is  incorporated  by reference to the
Corporation's  1999  Proxy  Statement,  under  the  captions,  "Compensation  of
Directors" and  "Compensation of Executive  Officers," which Proxy Statement has
been filed with the Commission.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
--------------------------------------------------------------------------------

The  information  required under this item is  incorporated  by reference to the
Corporation's 1999 Proxy Statement,  under the caption,  "Security  Ownership of
Certain  Beneficial Owners and Management," which Proxy Statement has been filed
with the Commission.
                                                                        Page 23
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

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

The  information  required under this item is  incorporated  by reference to the
Corporation's 1999 Proxy Statement, under the caption "Interest of Management in
Certain Transactions," which Proxy Statement has been filed with the Commission.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                           Exhibit 13
                                                                              Page
                                                                             Number
                                                                     --------------------
<S>                                                                          <C>

(a) 1.      Financial Statements:
                 Independent auditor's report.................................14
                 Consolidated balance sheet at
                      December 31, 1999 and 1998..............................24
                 Consolidated statement of income,
                      years ended December 31, 1999,
                      1998 and 1997...........................................25
                 Consolidated statement of comprehensive income,
                      Years ended December 31, 1999, 1998, and 1997...........26
                 Consolidated statement of cash flows,
                      years ended December 31, 1999,
                      1998 and 1997...........................................27
                 Notes to consolidated financial
                      statements.............................................28-43

</TABLE>

(a) 2.      Financial statement schedules:
                          All schedules are omitted because
                          they are not applicable or not required,
                          or because the required information is included in the
                          consolidated financial statements or related notes.


(a) 3.      Exhibits:


Exhibit No:                           Description of Exhibit:
-----------                           -----------------------


    3a         First Merchants Corporation Articles of Incorporation and the
               Articles and amendment  thereto is  incorporated by reference
               to registrant's Form 10-Q for quarter ended June 30, 1999.

    3b         First Merchants Corporation Bylaws and amendments thereto is
               incorporated by reference to registrant's Form 10-Q for quarter
               ended June 30, 1997.

   10a         First   Merchants   Corporation  and  First  Merchants  Bank,
               National    Association    Management   Incentive   Plan   is
               incorporated by reference to registrant's  Form 10-K for year
               ended December 31, 1996.

   10b         First Merchants Bank, National  Association Unfunded Deferred
               Compensation Plan, as amended is incorporated by reference to
               registrant's Form 10-K for year ended December 31, 1996.

   10c         First  merchants   Corporation  1989  Stock  Option  Plan  is
               incorporated  by  reference  to   Registrant's   Registration
               Statement  on Form S08 (SEC File No.  33-28901)  effective on
               May 24, 1989.

   10d         First  Merchants   Corporation  1994  Stock  Option  Plan  is
               incorporated by reference to Registrant's  Form 10-K for year
               ended December 31, 1993.

                                                                        Page 24
<PAGE>

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
              FORM 8-K (continued)
--------------------------------------------------------------------------------

       10e         First Merchants  Corporation Change of Control Agreements are
                   incorporated by reference to registrant's  Form 10-Q for
                   quarter ended June 30, 1999.

       10f         First Merchants  Corporation  Unfunded Deferred  Compensation
                   Plan is incorporated  by reference to registrant's  Form 10-K
                   for year ended December 31, 1996

       10g         First Merchants Corporation Supplemental Executive Retirement
                   Plan and amendments  thereto is  incorporated by reference to
                   registrant's Form 10-K for year ended December 31, 1997.

       10h         First Merchants Corporation 1999 Long-term Equity Incentive
                   Plan is incorporated by reference to registrant's
                   registration statement on Form S-8 (see File No. 333-80117)
                   effective on June 7, 1999.

       13          1999 Annual Report to Stockholders  (except for the Pages and
                   information  thereof  expressly  incorporated by reference in
                   this Form 10-K, the Annual Report to Stockholders is provided
                   solely for the  information  of the  Securities  and  Exchang
                   Commission  and is not  deemed  "filed"  as part of this Form
                   10-K)

       21          Subsidiaries of Registrant

       23          Consent of Independent Auditors

       24          Limited Power of Attorney

       27          Financial Data Schedule, year ended December 31, 1999

       99.1        Financial statements and independent auditor's report for
                   First Merchants Corporation Employee Stock Purchase Plan

(b) Reports on Form 8-K:

          None

                                                                        Page 25
<PAGE>


Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on this 30th day of March,
2000.

                                     FIRST MERCHANTS CORPORATION

                                     By /s/ Michael L.Cox
                                        -----------------------------
                                            Michael L. Cox, President
                                            & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
on Form  10-K  has  been  signed  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

        Signature              Capacity                           Date
---------------------------    -------------------------------    -----

/s/ Michael L. Cox              President,                        March 30, 2000
---------------------------
    Michael L. Cox              Chief Executive Officer

/s/ James L. Thrash             Principal Financial and           March 30, 2000
---------------------------
    James L. Thrash             Principal Accounting Officer

/s/ Stefan S. Anderson          Director                          March 30, 2000
---------------------------
    Stefan S. Anderson

/s/ Frank A. Bracken           *Director                          March 30, 2000
---------------------------
    Frank A. Bracken

/s/ Thomas B. Clark            *Director                          March 30, 2000
---------------------------
    Thomas B. Clark

/s/ David A. Galliher          *Director                          March 30, 2000
---------------------------
    David A. Galliher

/s/ Norman M. Johnson          *Director                          March 30, 2000
---------------------------
    Norman M. Johnson

/s/ Ted J. Montgomery          *Director                          March 30, 2000
---------------------------
    Ted J. Montgomery

/s/ George A. Sissel           *Director                          March 30, 2000
---------------------------
    George A. Sissel

                                                                        Page 26
<PAGE>



        Signature              Capacity                           Date
---------------------------    -------------------------------    -----


/s/ Robert M. Smitson          *Director                          March 30, 2000
---------------------------
    Robert M. Smitson

/s/ Michael D. Wickersham      *Director                          March 30, 2000
---------------------------
    Michael D. Wickersham

/s/ John E. Worthen            *Director                          March 30, 2000
---------------------------
    John E. Worthen

* By James L. Thrash as Attorney-in Fact pursuant to a limited Power of Attorney
executed by the directors  listed above,  which Power of Attorney has been filed
with the Securities and Exchange Commission.

                                               By  /s/  James L. Thrash
                                                 ------------------------------
                                                        James L. Thrash
                                                        As Attorney-in-Fact
                                                        March 30, 2000


                                                                        Page 27
<PAGE>

INDEX TO EXHIBITS
--------------------------------------------------------------------------------


(a) 3.   Exhibits:

      Exhibit No:                          Description of Exhibit:

          13               1999 Annual Report to  Stockholders  (Except for the
                           Pages and information thereof expressly incorporated
                           by reference in this Form 10-K, the Annual Report to
                           Stockholders  is provided solely for the information
                           of the Securities and Exchange Commission and is not
                           deemed "filed" as part of this Form 10-K.)

          21               Subsidiaries of Registrant

          23               Consent of Independent Auditors

          24               Limited Power of Attorney

          27               Financial Data Schedule, year ended December 31, 1999

         99.1              Financial statements and independent auditor's
                           report for First Merchants Corporation Employee
                           Stock Purchase Plan

                                                                        Page 28
<PAGE>