FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



          [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2005

                                       OR
         [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

                        SECURITIES EXCHANGE ACT OF 1934

               For the Transition Period from _______ to _______

                         Commission File Number 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 Street
         Muncie, IN                                                47305-2814

(Address of principal executive offices)                           (Zip code)

                                 (765) 747-1500

              (Registrant's telephone number, including area code)

                                 Not Applicable

               (Former name, former address and former fiscal year,
                         if changed since last report)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.  Yes [X] No [ ]

Indicate by checkmark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Exchange Act).  Yes [x] No [ ]

As of April 30, 2005, there  were  18,499,954 outstanding common shares, without
par value, of the registrant.



<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                                      INDEX

                                                                        Page No.


PART I.  Financial Information:

 Item 1.          Financial Statements:

                  Consolidated Condensed Balance Sheets........................3

                  Consolidated Condensed Statements of Income..................4

                  Consolidated Condensed Statements of
                  Comprehensive Income.........................................5

                  Consolidated Condensed Statements of
                  Stockholders' Equity.........................................6

                  Consolidated Condensed Statements of Cash Flows..............7

                  Notes to Consolidated Condensed Financial Statements.........8

 Item 2.          Management's Discussion and Analysis of Financial
                  Condition and Results of Operations.........................14

 Item 3.          Quantitative and Qualitative Disclosures About
                  Market Risk.................................................24

 Item 4.          Controls and Procedures.....................................24

PART II. Other Information:

 Item 1.          Legal Proceedings...........................................25

 Item 2.          Unregistered Sales of Equity
                  Securities and Use of Proceeds..............................25

 Item 3.          Defaults Upon Senior Securities.............................25

 Item 4.          Submission of Matters to a Vote of Security Holders.........25

 Item 5.          Other Information...........................................25

 Item 6.          Exhibits....................................................26

 Signatures...................................................................27

 Index to Exhibits............................................................28


                                                                          Page 2
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
                          PART I. FINANCIAL INFORMATION
                          Item 1. FINANCIAL STATEMENTS
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                (Dollars in thousands, except per share amounts)
<TABLE>

                                                                      March 31,   December 31,
                                                                        2005          2004
                                                                   ------------   ------------
                                                                    (Unaudited)
  <S>                                                               <C>            <C>
  ASSETS:
  Cash and due from banks .......................................   $    67,904    $    69,960
  Federal funds sold ............................................        22,075
                                                                    -----------    -----------
    Cash and cash equivalents ...................................        89,979         69,960
  Interest-bearing deposits......................................        10,737          9,343
  Investment securities available for sale ......................       405,510        416,177
  Investment securities held to maturity ........................         4,310          5,358
  Mortgage loans held for sale...................................         3,084          3,367
  Loans, net of allowance for loan losses of $24,488 and $22,548.     2,389,611      2,405,503
  Premises and equipment ........................................        37,525         38,254
  Federal Reserve and Federal Home Loan Bank stock...............        22,883         22,858
  Interest receivable ...........................................        16,606         17,318
  Goodwill ......................................................       120,697        120,615
  Core deposit intangibles ......................................        19,881         20,669
  Cash surrender value of life insurance.........................        42,426         42,061
  Other assets ..................................................        24,337         20,185
                                                                    -----------    -----------
      Total assets ..............................................   $ 3,187,586    $ 3,191,668
                                                                    ===========    ===========
  LIABILITIES:
  Deposits:
    Noninterest-bearing .........................................   $   333,614    $   330,685
    Interest-bearing ............................................     2,118,605      2,077,465
                                                                    -----------    -----------
      Total deposits ............................................     2,452,219      2,408,150
  Borrowings ....................................................       391,193        440,891
  Interest payable ..............................................         5,296          4,411
  Other liabilities..............................................        28,280         23,613
                                                                    -----------    -----------
      Total liabilities .........................................     2,876,988      2,877,065

  COMMITMENTS AND CONTINGENT LIABILITIES

  STOCKHOLDERS' EQUITY:
  Perferred stock, no-par value:
    Authorized and unissued - 500,000 shares
  Common Stock, $.125 stated value:
    Authorized --- 50,000,000 shares
    Issued and outstanding - 18,497,462 and 18,573,997 shares....         2,312          2,322
  Additional paid-in capital ....................................       148,347        150,862
  Retained earnings .............................................       163,761        161,459
  Accumulated other comprehensive income (loss)..................        (3,822)           (40)
                                                                    -----------    -----------
      Total stockholders' equity ................................       310,598        314,603
                                                                    -----------    -----------
      Total liabilities and stockholders' equity ................   $ 3,187,586    $ 3,191,668
                                                                    ===========    ===========
</TABLE>

  See notes to consolidated condensed financial statements.




                                                                          Page 3
<PAGE>



                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                (Dollars in thousands, except per share amounts)
                                   (Unaudited)
<TABLE>

                                                                   Three Months Ended
                                                                        March 31,
<S>                                                               <C>          <C>
                                                                    2005        2004
Interest Income:
  Loans receivable
    Taxable ...................................................   $ 36,822    $ 34,227
    Tax exempt ................................................        134         163
  Investment securities
    Taxable ...................................................      2,329       1,949
    Tax exempt ................................................      1,553       1,430
  Federal funds sold ..........................................         27          18
  Deposits with financial institutions ........................        142         109
  Federal Reserve and Federal Home Loan Bank stock ............        308         328
                                                                  --------    --------
    Total interest income .....................................     41,315      38,224
                                                                  --------    --------
Interest expense:
  Deposits ....................................................      9,806       8,190
  Borrowings ..................................................      4,567       4,402
                                                                  --------    --------
    Total interest expense ....................................     14,373      12,592
                                                                  --------    --------
Net Interest Income ...........................................     26,942      25,632
Provision for loan losses .....................................      2,667       1,372
                                                                  --------    --------
Net Interest Income After Provision for Loan Losses ...........     24,275      24,260
                                                                  --------    --------
Other Income:
  Net realized gains on sales of available-for-sale securities.                     37
  Other income ................................................      9,046       8,179
                                                                  --------    --------
Total other income ............................................      9,046       8,216
Total other expenses ..........................................     24,231      22,564
                                                                  --------    --------
Income before income tax ......................................      9,090       9,912
Income tax expense ............................................      2,523       2,977
                                                                  --------    --------
Net Income ....................................................   $  6,567    $  6,935
                                                                  ========    ========


Per share:

    Basic .....................................................        .35         .37
    Diluted ...................................................        .35         .37
    Dividends .................................................        .23         .23


</TABLE>
See notes to consolidated condensed financial statements.
                                                                          Page 4
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
           CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
                                                                                   Three Months Ended
                                                                                        March 31
                                                                                 ----------------------
                                                                                    2005         2004
                                                                                 ---------    ---------
<S>                                                                              <C>          <C>
Net Income...................................................................... $  6,567     $  6,935

Other comprehensive income (loss), net of tax:
  Unrealized gains (losses) on securities available for sale:
    Unrealized holding gains (losses) arising during the period, net of
      income tax benefit (expense) of $2,522, and $(1,438)......................   (3,783)       2,157
    Less:  Reclassification adjustment for gains included
      in net income, net of income tax expense of $15 ..........................                    22
                                                                                 ---------    ---------
                                                                                   (3,783)       2,135
                                                                                 ---------    ---------
Comprehensive income ........................................................... $  2,784     $  9,070
                                                                                 =========    =========

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







                                                                          Page 5
<PAGE>



                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
            CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (Dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                      2005         2004
                                                                   ---------    ---------
<S>                                                                <C>          <C>
Balances, January 1 ............................................   $ 314,603    $ 303,965

Net income .....................................................       6,567        6,935

Cash dividends .................................................      (4,264)      (4,260)

Other comprehensive income (loss), net of tax...................      (3,783)       2,135

Stock issued under dividend reinvestment and stock purchase plan         335          342

Stock options exercised ........................................         757           95

Stock redeemed .................................................      (3,617)         (65)
                                                                   ---------    ---------

Balances, March 31 .............................................   $ 310,598    $ 309,147
                                                                   =========    =========
</TABLE>
   See notes to consolidated condensed financial statements.
                                                                          Page 6
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)
<TABLE>

                                                                                             Three Months Ended
                                                                                                  March 31,
                                                                                      ------------------------------------
                                                                                            2005                2004
                                                                                      ----------------    ----------------
<S>                                                                                   <C>                 <C>
Cash Flows From Operating Activities:
  Net income........................................................................  $         6,567     $         6,935
  Adjustments to reconcile net income to net cash provided by operating activities
    Provision for loan losses.......................................................            2,667               1,372
    Depreciation and amortization...................................................            2,276               1,288
    Mortgage loans originated for sale..............................................          (12,840)            (25,054)
    Proceeds from sales of mortgage loans...........................................           13,123              24,214
    Change in interest receivable...................................................              712               1,779
    Change in interest payable......................................................              885                (138)
    Other adjustments...............................................................            2,111                (141)
                                                                                      ----------------    ----------------
      Net cash provided by operating activities.....................................           15,501              10,255
                                                                                      ----------------    ----------------


Cash Flows From Investing Activities:
  Net change in interest-bearing deposits...........................................           (1,394)             (2,533)
  Purchases of
    Securities available for sale...................................................          (11,654)            (41,837)
  Proceeds from maturities of
    Securities available for sale...................................................           16,246              19,314
    Securities held to maturity.....................................................            1,048
  Proceeds from sales of
    Securities available for sale...................................................                                4,728
  Purchase of Federal Reserve and
    Federal Home Loan Bank Stock....................................................              (25)             (6,454)
  Net change in loans...............................................................           13,225              32,994
  Other adjustments.................................................................             (510)               (624)
                                                                                      ----------------    ----------------
      Net cash provided by investing activities.....................................           16,936               5,588
                                                                                      ----------------    ----------------

Cash Flows From Financing Activities:
  Net change in
    Demand and savings deposits.....................................................          (95,211)            (37,002)
    Certificates of deposit and other time deposits.................................          139,280             (11,680)
    Borrowings......................................................................          (49,698)            (12,434)
  Cash dividends....................................................................           (4,264)             (4,260)
  Stock issued under dividend reinvestment and stock purchase plan..................              335                 342
  Stock options exercised...........................................................              757                  95
  Stock redeemed....................................................................           (3,617)                (65)
                                                                                      ----------------    ----------------
      Net cash used by financing activities.........................................          (12,418)            (65,004)
                                                                                      ----------------    ----------------
Net Change in Cash and Cash Equivalents.............................................           20,019             (49,161)
Cash and Cash Equivalents, January 1................................................           69,960             109,527
                                                                                      ----------------    ----------------
Cash and Cash Equivalents, March 31.................................................  $        89,979     $        60,366
                                                                                      ================    ================

</TABLE>
See notes to consolidated condensed financial statements.
                                                                          Page 7

<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                          (Table dollars in thousands)
                                   (Unaudited)

NOTE 1.  General

     The significant accounting policies followed by First Merchants Corporation
("Corporation")   and  its  wholly  owned  subsidiaries  for  interim  financial
reporting  are  consistent  with the  accounting  policies  followed  for annual
financial reporting.  All adjustments which are of a normal recurring nature and
are in the opinion of management  necessary for a fair  statement of the results
for the periods  reported  have been included in the  accompanying  consolidated
condensed financial statements.

     The consolidated condensed  balance sheet of the Corporation as of December
31, 2004 has been derived  from the audited  consolidated  balance  sheet of the
Corporation as of that date. Certain  information and note disclosures  normally
included in the Corporation's annual financial statements prepared in accordance
with accounting  principles  generally  accepted in the United States of America
have  been  condensed  or  omitted.   These  consolidated   condensed  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and notes  thereto  included in the  Corporation's  Form 10-K annual
report filed with the Securities and Exchange Commission.

     The results of operations  for the three month period ended  March 31, 2005
are not necessarily indicative of the results to be expected for the year.

     Stock  options  are  granted  for a fixed  number of shares  to  employees.
The  Corporation's  stock  option plans are  accounted  for in  accordance  with
Accounting  Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued
to  Employees,  and related  interpretations.  APB No. 25 requires  compensation
expense  for stock  options to be  recognized  only if the  market  price of the
underlying  stock exceeds the exercise  price on the date of the grant.  For all
grants, no stock-based employee compensation cost is reflected in net income, as
options  granted  under those  plans had an  exercise  price equal to the market
value of the underlying common stock on the grant date.

     The  following table  illustrates the effect on net income and earnings per
share if the Corporation has applied the fair value provisions of FASB Statement
No. 123,  Accounting  for  Stock-Based  Compensation,  to  stock-based  employee
compensation.

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                         March 31,
                                                                     2005          2004
                                                                -------------------------
<S>                                                             <C>           <C>
Net income, as reported .....................................   $    6,567    $    6,935
Less:  Total stock-based employee compensation
   cost determined under the fair value based
   method, net of income taxes ..............................         (276)         (230)
                                                                ----------    ----------
Pro forma net income ........................................   $    6,291    $    6,705
                                                                ==========    ==========

Earnings per share:
   Basic - as reported ......................................   $      .35    $      .37
   Basic - pro forma ........................................          .34           .36
   Diluted - as reported ....................................          .35           .37
   Diluted - pro forma ......................................          .34           .36
</TABLE>

                                                                          Page 8

<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                          (Table dollars in thousands)
                                   (Unaudited)

NOTE 1.  General (continued)

     The Corporation makes its Annual Report on Form 10-K,  Quarterly Reports on
Form 10-Q,  Current Reports on Form 8-K and amendments to those reports filed or
furnished  pursuant to Section 13(a) or 15(d) of the Securities  Exchange Act of
1934,  as amended,  available on its website at  www.firstmerchants.com  without
charge, as soon as reasonably  practicable after such reports are electronically
filed  with,  or  furnished  to,  the   Securities   and  Exchange   Commission.
Additionally,  upon request the Corporation  will also provide without charge, a
copy of its Form 10-Q to any shareholder by mail. Requests should be sent to Mr.
Brian Edwards, Shareholder Relations Officer, First Merchants Corporation,  P.O.
Box 792, Muncie, IN 47308-0792.

NOTE 2.  Impact of Accounting Changes

     On  April 14, 2005, the SEC issued an amendment  to SFAS No. 123(R),  which
allows  companies to implement SFAS 123(R) at the beginning of their next fiscal
year, instead of the next reporting period, that begins after June 15, 2005. The
new rule does not change the  accounting  required by SFAS No.  123(R),  it only
changes the dates for compliance with the standard.  Early adoption is permitted
in  periods  in  which  financial  statemetns  have  not yet  been  issued.  The
Corporation expects to adopt SFAS No. 123(R) on January 1, 2006.

<TABLE>

NOTE 3.  Investment Securities
                                                    Gross       Gross
                                       Amortized  Unrealized  Unrealized    Fair
                                          Cost       Gains      Losses     Value
<S>                                    <C>         <C>        <C>        <C>

Available for sale at March 31, 2005
  U.S. Treasury ....................   $  1,743                         $  1,743
  Federal agencies..................     69,975   $     26   $ (1,391)    68,610
  State and municipal ..............    151,087      3,364       (281)   154,170
  Mortgage-backed securities .......    172,698        256     (4,396)   168,558
  Other asset-backed securities.....         17                               17
  Marketable equity securities......     12,402         10                12,412
                                       --------   --------   --------   --------
      Total available for sale .....    407,922      3,656     (6,068)   405,510
                                       --------   --------   --------   --------


Held to maturity at March 31, 2005
  State and municipal...............      4,262        108                 4,370
  Mortgage-backed securities........         48                               48
                                       --------   --------   --------   --------
      Total held to maturity .......      4,310        108                 4,418
                                       --------   --------   --------   --------
      Total investment securities ..   $412,232   $  3,764   $ (6,068)  $409,928
                                       ========   ========   ========   ========


</TABLE>

                                                                         Page 9
<PAGE>



                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                          (Table dollars in thousands)
                                   (Unaudited)

<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, 2004
  U.S. Treasury .........................$  1,745             $     (1) $  1,744
  Federal agencies ......................  65,325  $     73       (332)   65,066
  State and municipal ................... 150,284     5,243        (82)  155,445
  Mortgage-backed securities ............ 183,200       485     (1,980)  181,705
  Other asset-backed securities..........      18                             18
  Marketable equity securities ..........  12,191         8               12,199
                                         --------  --------   --------  --------
     Total available for sale ........... 412,763     5,809     (2,395)  416,177
                                         --------  --------   --------  --------

Held to maturity at December 31, 2004
  State and municipal ...................   5,306       162                5,468
  Mortgage-backed securities ............      52                             52
                                         --------  --------   --------  --------
     Total held to maturity .............   5,358       162                5,520
                                         --------  --------   --------  --------
     Total investment securities ........$418,121  $  5,971   $ (2,395) $421,697
                                         ========  ========   ========  ========


</TABLE>

                                                                         Page 10
<PAGE>



                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                          (Table dollars in thousands)
                                   (Unaudited)

NOTE 4.  Loans and Allowance
<TABLE>
                                                                                      March 31,    December 31,
                                                                                        2005          2004
                                                                                        ----          ----
<S>                                                                                <C>            <C>
Loans:
  Commercial and industrial loans ..............................................   $   447,552    $   462,538
  Agricultural production financing and other loans to farmers .................        83,800         98,902
  Real estate loans:
    Construction ...............................................................       170,498        164,738
    Commercial and farmland ....................................................       726,345        709,163
    Residential ................................................................       760,560        761,163
  Individuals' loans for household and other personal expenditures .............       187,552        198,532
  Tax-exempt loans .............................................................        10,592          8,203
  Lease financing receivables, net of unearned income...........................        10,704         11,305
  Other loans ..................................................................        16,496         13,507
                                                                                   -----------    -----------
                                                                                     2,414,099      2,428,051
  Allowance for loan losses.....................................................       (24,488)       (22,548)
                                                                                   -----------    -----------
      Total Loans...............................................................   $ 2,389,611    $ 2,405,503
                                                                                   ===========    ===========

                                                                                      Three Months Ended
                                                                                           March 31,

                                                                                       2005           2004
                                                                                   -----------    -----------
Allowance for loan losses:
  Balances, January 1 ..........................................................   $    22,548    $    25,493

  Provision for losses .........................................................         2,667          1,372

  Recoveries on loans ..........................................................           222            297

  Loans charged off ............................................................          (949)          (703)
                                                                                   -----------    -----------
  Balances, March 31 ...........................................................   $    24,488    $    26,459
                                                                                   ===========    ===========
</TABLE>

Information on nonaccruing, contractually
past due 90 days or more other than
nonaccruing and restructured loans is                March 31,      December 31,
summarized below:                                      2005            2004
================================================================================

Non-accrual loans................................    $ 13,272       $ 15,355

Loans contractually past due 90 days
  or more other than nonaccruing.................       1,948          1,907

Restructured loans...............................         337          2,019
                                                     --------       --------
    Total........................................    $ 15,557       $ 19,281
                                                     ========       ========

                                                                         Page 11
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                          (Table dollars in thousands)
                                   (Unaudited)

NOTE 5.  Net Income Per Share
<TABLE>

                                                                      Three Months Ended March 31,
                                                           2005                                           2004
                                        -------------------------------------------    -------------------------------------------
                                                        Weighted-                                      Weighted-
                                                         Average        Per Share                       Average        Per Share
                                         Income           Shares         Amount         Income           Shares         Amount
                                         ------           ------         ------         ------           ------         ------
<S>                                      <C>            <C>             <C>             <C>            <C>             <C>
Basic net income per share:
  Net income available to
    common stockholders................. $    6,567        18,559,664    $     .35      $    6,935        18,518,282    $     .37
                                                                         ==========                                     ==========
Effect of dilutive stock options........                      136,862                                        127,289
                                         ----------       ------------                  ----------       ------------
Diluted net income per share:
  Net income available to
    common stockholders
    and assumed conversions............. $    6,567        18,696,526    $     .35      $    6,935        18,645,571    $     .37
                                         ==========       ============   ==========     ==========       ============   ==========

</TABLE>
Options to purchase  152,158 and 234,285 shares for the three months ended March
31,  2005 and 2004 were not  included  in the  earnings  per  share  calculation
because the exercise price exceeded the average market price.


                                                                         Page 12
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                          (Table dollars in thousands)
                                   (Unaudited)

Note 6.  Defined Benefit Pension Costs

     The Corporation has defined  benefit  pension plans covering  substantially
all  employees.  The plans  provide  benefits  that are based on the  employees'
compensation and years of service. The Corporation uses an actuarial calculation
to determine pension plan costs.

     In  January  2005,  the  Board of  Directors  of the  Corporation  approved
the  curtailment of the  accumulation  of defined  benefits for future  services
provided by certain participants in the First Merchants  Corporation  Retirement
Pension  Plan (the  "Plan").  Employees  of the  Corporation  and certain of its
subsidiaries  who are  participants in the Plan were notified that, on and after
March 1, 2005,  no additional  pension  benefits will be earned by employees who
have not both attained the age of fifty-five  (55) and accrued at least ten (10)
years of "Vesting  Service".  As a result of this action,  the  Corporation  has
decided to record a $1,630,000  pension  curtailment  loss to record  previously
unrecognized  prior service costs in  accordance  with SFAS No. 88,  "Employers'
Accounting for  Settlements  and  Curtailments  of Defined Benefit Plans and for
Termination  Benefits." This loss was recognized and recorded by the Corporation
in the first quarter of 2005.

     The following represents the pension cost for  the three months ended March
31, 2005.

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                     March 31,
                                                                2005          2004
                                                           --------------------------
Pension Cost
------------
<S>                                                        <C>           <C>
Service cost............................................   $      145    $      550

Interest cost ..........................................          658           698

Expected return on plan assets .........................         (768)         (660)

Amortization of the transition asset....................           (7)          (38)

Amortization of prior service cost......................            1            34

Amortization of the net loss............................           24            88

Curtailment loss........................................        1,630
                                                           ----------    ----------
      Total Pension Cost................................   $    1,683    $      672
                                                           ==========    ==========

</TABLE>

                                                                        Page 13
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

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

FORWARD-LOOKING STATEMENTS

     The Corporation  from  time  to time includes forward-looking statements in
its oral and written communication.  The Corporation may include forward-looking
statements in filings with the Securities and Exchange Commission,  such as this
Form 10-Q, in other  written  materials  and in oral  statements  made by senior
management to analysts, investors,  representatives of the media and others. The
Corporation intends these  forward-looking  statements to be covered by the safe
harbor  provisions  for  forward-looking  statements  contained  in the  Private
Securities  Litigation Reform Act of 1995, and the Corporation is including this
statement  for  purposes  of  these  safe  harbor  provisions.   Forward-looking
statements  can  often  be  identified  by the  use  of  words  like  "believe",
"continue",  "pattern",  "estimate", "project", "intend", "anticipate", "expect"
and similar expressions or future or conditional verbs such as "will",  "would",
"should",  "could",  "might",  "can",  "may",  or  similar  expressions.   These
forward-looking statements include:

     *  statements of the Corporation's goals, intentions and expectations;

     *  statements regarding the Corporation's business plan and growth
        strategies;

     *  statements regarding the asset quality of the Corporation's loan and
        investment portfolios; and

     *  estimates of the Corporation's risks and future costs and benefits.

     These   forward-looking  statements  are  subject  to  significant   risks,
assumptions  and  uncertainties,  including,  among other things,  the following
important factors which could affect the actual outcome of future events:

     *  fluctuations in market rates of interest and loan and deposit pricing,
        which could negatively affect the Corporation's net interest margin,
        asset valuations and expense expectations;

     *  adverse changes in the economy, which might affect the Corporation's
        business prospects and could cause credit-related losses and expenses;

     *  adverse developments in the Corporation's loan and investment
        portfolios;

     *  competitive factors in the banking industry, such as the trend towards
        consolidation in the Corporation's market;

     *  changes in the banking legislation or the regulatory requirements of
        federal and state agencies applicable to bank holding companies and
        banks like the Corporation's affiliate banks;

     *  acquisitions  of other businesses by the Corporation and integration of
        such acquired businesses;

     *  changes in market, economic, operational, liquidity, credit and interest
        rate risks  associated  with the  Corporation's business; and

     *  the  continued availability of  earnings and  excess  capital sufficient
        for the lawful and prudent declaration and payment of cash dividends.

     Because of these  and other uncertainties,  the Corporation's actual future
results may be materially different from the results indicated by these forward-
looking statements. In addition, the Corporation's past results of operations do
not necessarily indicate its future results.

                                                                         Page 14
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

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

CRITICAL ACCOUNTING POLICIES

      Generally  accepted   accounting   principles   are  complex  and  require
management to apply significant  judgments to various accounting,  reporting and
disclosure  matters.  Management of the  Corporation  must use  assumptions  and
estimates to apply these principles where actual  measurement is not possible or
practical. For a complete discussion of the Corporation's significant accounting
policies,   see  "Notes  to  the  Consolidated   Financial  Statements"  in  the
Corporation's  2004 Annual  Report.  Certain  policies are  considered  critical
because  they  are  highly  dependent  upon  subjective  or  complex  judgments,
assumptions  and  estimates.  Changes in such  estimates  may have a significant
impact on the financial  statements.  Management has reviewed the application of
these policies with the Audit Committee of the Corporation's Board of Directors.
For a  discussion  of  applying  critical  accounting  policies,  see  "Critical
Accounting  Policies"  within the  Corporation's  2004  Annual Report.

BUSINESS SUMMARY

      The Corporation is a diversified financial  holding company  headquartered
in Muncie, Indiana. Since its organization in 1982, the Corporation has grown to
include 9  affiliate  banks  with over 70  locations  in 17  Indiana  and 3 Ohio
counties. In addition to its branch network, the Corporation's delivery channels
include  ATMs,  check cards,  interactive  voice  response  systems and internet
technology.

      The  Corporation's  business  activities  are  currently  limited  to  one
significant  business  segment,  which is community  banking.  The Corporation's
financial  service  affiliates  include  9  nationally  chartered  banks:  First
Merchants Bank, N.A., The Madison Community Bank, N.A., First United Bank, N.A.,
United  Communities  National Bank, First National Bank,  Decatur Bank and Trust
Company,  N.A.,  Frances Slocum Bank & Trust Company,  N.A.,  Lafayette Bank and
Trust Company, N.A. and Commerce National Bank. The banks provide commercial and
retail  banking  services.   In  addition,   the  Corporation's  trust  company,
multi-line  insurance  company and title company provide trust asset  management
services,  retail and commercial  insurance  agency services and title services,
respectively.

      Management believes that its  mission, guiding  principles  and  strategic
initiatives produce profitable growth for stockholders. Our vision is to satisfy
all the financial needs of our customers,  help them succeed  financially and be
recognized as the premier financial services company in our markets. Our primary
strategy  to  achieve  this  vision is to  increase  product  usage and focus on
providing  each customer  with all of the financial  products that fulfill their
needs. Our cross-sell strategy and diversified  business model facilitate growth
in strong and weak economic cycles.

      Management  believes  it  is  important  to  maintain  a  well  controlled
environment  as we continue to grow our  businesses.  Sound credit  policies are
maintained  and  have  resulted  in  declining   nonperforming   loans  and  net
charge-offs as a percentage of loans outstanding from the prior period. Interest
rate and market risks  inherent in our asset and liability  balances are managed
within  prudent  ranges,  while  ensuring  adequate  liquidity and funding.  Our
stockholder value has continued to increase due to customer satisfaction and the
balanced way we manage our business risk.

RESULTS OF OPERATIONS

        Net  income  for  the  three  months  ended   March  31,  2005,  equaled
$6,567,000,  compared to $6,935,000 in the same period of 2004. Diluted earnings
per share were $.35,  a decrease of 5.4 percent  from the $.37  reported for the
first quarter 2004.

        Annualized  returns  on  average assets and average stockholders' equity
for the three  months  ended March 31,  2005 were .83 percent and 8.33  percent,
respectively,  compared with .91 percent and 9.05 percent for the same period of
2004.

        The  decreases in  diluted   earning  per  share,  return   on   average
stockholders'  equity and return on average  assets for the three  months  ended
March 31, 2005, are primarily  due to increased  provision for loan losses and a
pension  accounting loss resulting from the  curtailment of the  accumulation of
defined benefits in the Corporation's defined benefit pension plan. These losses
were somewhat  mitigated by an increase in net interest margin of 2 basis points
from the same period in 2004. For further analysis,  see the respective sections
of Management's  Discussion and Analysis of Financial  Conditions and Results of
Operations.

                                                                         Page 15
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

CAPITAL

         The Corporation's  regulatory  capital continues  to exceed  regulatory
"well  capitalized"  standards.  Tier I regulatory capital consists primarily of
total stockholders' equity and subordinated debentures issued to business trusts
categorized as qualifying borrowings,  less non-qualifying intangible assets and
unrealized net securities  gains.  The  Corporation's  Tier I capital to average
assets ratio was 7.6 percent at March 31, 2005 and 7.5 percent at year end 2004.
In addition,  at March 31, 2005, the Corporation had a Tier I risk-based capital
ratio of 9.8  percent  and  total  risk-based  capital  ratio  of 11.9  percent.
Regulatory  capital  guidelines require a Tier I risk-based capital ratio of 4.0
percent and a total risk-based capital ratio of 8.0 percent.

         The  Corporation's  GAAP  capital ratio, defined as total stockholders'
equity to total assets, equaled 9.7 percent at March 31, 2005 and 9.9 percent at
December 31, 2004. When the Corporation acquires other companies for stock, GAAP
capital increases by the entire amount of the purchase price.

         The   Corporation's   tangible   capital   ratio,   defined   as  total
stockholders'   equity  less  intangibles  net  of  tax  to  total  assets  less
intangibles net of tax,  equaled 5.8 percent as of March 31, 2005, down from 5.9
percent as of December 31, 2004.

         Management believes that all of the above capital ratios are meaningful
measurements  for  evaluating  the  safety  and  soundness  of the  Corporation.
Additionally, management  believes  the following  table is also meaningful when
considering  performance measures of  the  Corporation. The  table  details  and
reconciles tangible earnings per share, return on tangible capital and  tangible
assets to traditional GAAP measures.

                                               March 31,     December 31,
(Dollars in thousands)                           2005           2004

Average Goodwill ..........................  $   112,281    $   112,281
Average Core Deposit Intangible (CDI) .....       20,152         22,164
Average Deferred Tax on CDI ...............       (7,376)        (8,105)
                                             -----------    -----------
  Intangible Adjustment ...................  $   125,057    $   126,340
                                             ===========    ===========

Average Stockholders' Equity (GAAP Capital)  $   315,326    $   310,004
Intangible Adjustment .....................     (125,057)      (126,340)
                                             -----------    -----------
  Average Tangible Capital ................  $   190,269    $   183,664
                                             ===========    ===========

Average Assets ............................  $ 3,163,548    $ 3,109,104
Intangible Adjustment .....................     (125,057)      (126,340)
                                             -----------    -----------
  Average Tangible Assets .................  $ 3,038,491    $ 2,982,764
                                             ===========    ===========

Net Income ................................  $     6,567    $    29,411
CDI Amortization, net of tax ..............          497          2,133
                                             -----------    -----------
  Tangible Net Income .....................  $     7,064    $    31,544
                                             ===========    ===========

Diluted Earnings per Share ................  $      0.35    $      1.58
Diluted Tangible Earnings per Share .......  $      0.38    $      1.69

Return on Average GAAP Capital ............         8.33%          9.49%
Return on Average Tangible Capital ........        14.85%         17.49%

Return on Average Assets ..................         0.83%          0.95%
Return on Average Tangible Assets .........         0.93%          1.06%


                                                                         Page 16
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q


ASSET QUALITY/PROVISION FOR LOAN LOSSES

         The  Corporation's  primary  business focus is middle market commercial
and residential real estate,  auto and small consumer lending,  which results in
portfolio  diversification.  Management  ensures  that  appropriate  methods  to
understand and underwrite risk are utilized.  Commercial  loans are individually
underwritten and judgmentally  risk rated.  They are periodically  monitored and
prompt  corrective  actions are taken on deteriorating  loans.  Retail loans are
typically  underwritten with statistical  decision-making  tools and are managed
throughout their life cycle on a portfolio basis.

         The  allowance  for loan  losses  is maintained  through the  provision
for loan losses,  which is a charge against  earnings.  The amount  provided for
loan losses and the  determination of the adequacy of the allowance are based on
a continuous review of the loan portfolio,  including an internally administered
loan "watch" list and an  independent  loan review.  The  evaluation  takes into
consideration  identified credit problems,  as well as the possibility of losses
inherent in the loan portfolio that are not specifically identified.

         At  March  31,  2005,  non-performing  loans  totaled   $15,557,000,  a
decrease of  $3,724,000  from  December 31, 2004,  as noted in Note 4. Loans and
Allowance,  included  within  the  Notes  to  Consolidated  Condensed  Financial
Statements of this Form 10-Q.

         At  March  31, 2005, impaired  loans totaled  $45,232,000,  a  decrease
of  $4,179,000 from  December 31, 2004.  At March 31, 2005,  an allowance  for
losses was not deemed necessary for impaired loans totaling $35,515,000,  but an
allowance of $2,535,000 was recorded for the remaining balance of impaired loans
of $9,717,000 and is included in the  Corporation's  allowance for loan losses.

         At December 31, 2004, impaired loans totaled $49,411,000.  An allowance
for losses was not deemed necessary for impaired loans totaling $41,683,000, but
an allowance of $1,673,000  was recorded for the  remaining  balance of impaired
loans of  $7,728,000  and is included in the  Corporation's  allowance  for loan
losses. The average balance of impaired loans for 2004 was $59,568,000.

         At  March  31, 2005, the  allowance for loan losses was $24,488,000, an
increase of $1,940,000 from year end 2004. As a percent of loans,  the allowance
was 1.01  percent at March 31, 2005 and .93 percent at December  31,  2004.  The
allowance for loan losses  increased due to  additional  provisioning,  which is
discussed below.

      The  provision for  loan  losses for  the  first three months of  2005 was
$2,667,000, an increase of  $1,295,000  from  $1,372,000  for the same period in
2004. The  Corporation's  provision  for loan losses  increased primarily due to
a  higher  historical  loan  charge-off ratio  utilized within the Corporation's
allowance  for  loan  losses  calculation and due to an increase in the specific
reserve for one commercial loan.
                                                                         Page 17

<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
LIQUIDITY

      Liquidity management  is the process by which the Corporation ensures that
adequate liquid funds are available for the  Corporation  and its  subsidiaries.
These funds are necessary in order for the Corporation  and its  subsidiaries to
meet  financial  commitments  on  a  timely  basis.  These  commitments  include
withdrawals by  depositors,  funding  credit  obligations  to borrowers,  paying
dividends  to   shareholders,   paying  operating   expenses,   funding  capital
expenditures,  and  maintaining  deposit  reserve  requirements.   Liquidity  is
monitored  and  closely  managed  by  the  asset/liability  committees  at  each
subsidiary and by the Corporation's asset/liability committee.

      The  liquidity  of  the  Corporation  is  dependent  upon  the  receipt of
dividends from its bank  subsidiaries,  which are subject to certain  regulatory
limitations and access to other funding sources.  Liquidity of the Corporation's
bank  subsidiaries  is derived  primarily  from core deposit  growth,  principal
payments received on loans, the sale and maturity of investment securities,  net
cash provided by operating activities,  and access to other funding sources.

      The most stable  source of  liability-funded liquidity  for both the long-
term and short-term is deposit growth and retention in the core deposit base. In
addition,  the  Corporation  utilizes  advances from the Federal Home Loan Bank.
("FHLB")  and a revolving  line of credit  with  LaSalle  Bank,  N.A. as funding
sources.  At March 31, 2005, total  borrowings from the FHLB were  $221,791,000.
The  Corporation's  bank  subsidiaries  have pledged certain  mortgage loans and
certain  investments  to the  FHLB.  The  total  available  remaining  borrowing
capacity from the FHLB at March 31, 2005, was  $132,228,000.  At March 31, 2005,
the  Corporation's  revolving line of credit had a balance of $12,588,000  and a
remaining borrowing capacity of $7,412,000.

      The principal  source  of asset-funded  liquidity is investment securities
classified   as   available-for-sale,   the  market   values  of  which  totaled
$405,510,000  at March 31, 2005, a decrease of  $10,667,000  or 2.6 percent over
December 31, 2004.  Securities  classified as held-to-maturity that are maturing
within a short  period  of time can also be a source  of  liquidity.  Securities
classified as held-to-maturity and that are maturing in one year or less totaled
$1,270,000  at March 31, 2005.  In addition,  other types of assets such as cash
and due from banks, federal funds sold and securities purchased under agreements
to resell,  and loans and  interest-bearing  deposits with other banks  maturing
within one year are sources of liquidity.

      In the  normal  course of business, the Corporation is a party to a number
of  other  off-balance   sheet  activities  that  contain  credit,   market  and
operational risk that are not reflected in whole or in part in the Corporation's
consolidated   financial  statements.   Such  activities  include:   traditional
off-balance  sheet  credit-related  financial  instruments,   commitments  under
operating leases and long-term debt.

     The  Corporation  provides  customers with off-balance sheet credit support
through   loan   commitments   and   standby   letters  of  credit.   Summarized
credit-related financial instruments at March 31, 2005 are as follows:

                                                                  At March 31,
(Dollars in thousands)                                                2005
================================================================================
Amounts of commitments:
Loan commitments to extend credit ............................... $  584,255
Standby letters of credit .......................................     20,554
                                                                  ----------
                                                                  $  604,809
                                                                  ==========

      Since  many  of  the  commitments are expected to expire unused or be only
partially  used, the total amount of unused  commitments in the preceding  table
does not necessarily represent future cash requirements.

     In addition to owned banking facilities, the Corporation has entered into a
number of long-term  leasing  arrangements to support the ongoing  activities of
the Corporation. The required payments under such commitments and long-term debt
at March 31, 2005 are as follows:
<TABLE>
<CAPTION>
                                2005       2006       2007       2008       2009      2010       Total
(Dollars in thousands)       remaining                                              and after
=======================================================================================================
<S>                          <C>        <C>        <C>        <C>        <C>        <C>        <C>
Operating leases .........   $  1,311   $  1,515   $  1,144   $    880   $    829   $  2,286   $  7,965
Long-term debt ...........     95,614     42,417     24,995     21,272      9,423    197,471    391,192
                             --------   --------   --------   --------   --------   --------   --------
Total ....................   $ 96,925   $ 43,932   $ 26,139   $ 22,152   $ 10,252   $199,757   $399,157
                             ========   ========   ========   ========   ========   ========   ========
</TABLE>
                                                                         Page 18
<PAGE>
                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK

         Asset/Liability   Management  has  been  an  important  factor  in  the
Corporation's  ability to record  consistent  earnings growth through periods of
interest rate volatility and product  deregulation.  Management and the Board of
Directors monitor the Corporation's liquidity and interest sensitivity positions
at regular meetings to review how changes in interest rates may affect earnings.
Decisions regarding  investment and the pricing of loan and deposit products are
made after analysis of reports designed to measure liquidity,  rate sensitivity,
the Corporation's  exposure to changes in net interest income given various rate
scenarios and the economic and competitive environments.

         It  is  the  objective  of the  Corporation to monitor and  manage risk
exposure to net interest  income caused by changes in interest  rates. It is the
goal of the Corporation's Asset Liability function to provide optimum and stable
net interest  income.  To accomplish  this,  management uses two asset liability
tools.  GAP/Interest Rate Sensitivity Reports and Net Interest Income Simulation
Modeling are both constructed, presented, and monitored quarterly.

         Management  believes  that  the  Corporation's  liquidity  and interest
sensitivity   position  at  March  31,  2005,  remained  adequate  to  meet  the
Corporation's  primary goal of achieving optimum interest margins while avoiding
undue interest rate risk.

         The  Corporation  places  its  greatest credence in net interest income
simulation modeling. The GAP/Interest Rate Sensitivity Report is believed by the
Corporation's  management to have two major  shortfalls.  The GAP/Interest  Rate
Sensitivity Report fails to precisely gauge how often an interest rate sensitive
product reprices, nor is it able to measure the  magnitude  of potential  future
rate movements.

         Net interest  income simulation modeling, or earnings-at-risk, measures
the sensitivity of net interest income to various  interest rate movements.  The
Corporation's  asset liability  process  monitors  simulated net interest income
under  three  separate  interest  rate  scenarios;  base,  rising  and  falling.
Estimated net interest  income for each  scenario is calculated  over a 12-month
horizon.  The immediate  and parallel  changes to the base case scenario used in
the  model  are  presented  below.  The  interest  rate  scenarios  are used for
analytical purposes and do not necessarily represent management's view of future
market movements.  Rather, these are intended to provide a measure of the degree
of  volatility  interest rate  movements may introduce  into the earnings of the
Corporation.

         The base  scenario is highly dependent on numerous assumptions embedded
in the model,  including assumptions related to future interest rates. While the
base sensitivity  analysis  incorporates  management's best estimate of interest
rate and balance sheet dynamics under various market rate movements,  the actual
behavior and resulting  earnings  impact will likely differ from that projected.
For  mortgage-related  assets,  the base simulation  model captures the expected
prepayment  behavior under changing interest rate environments.  Assumptions and
methodologies  regarding the interest rate or balance  behavior of indeterminate
maturity products,  e.g., savings, money market, NOW and demand deposits reflect
management's best estimate of expected future behavior.

                                                                         Page 19
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

NOW  and  demand  deposits reflect management's best estimate of expected future
behavior.

The comparative rising and falling scenarios for the  period  ended February 28,
2006 assume  further  interest  rate changes in addition to the base  simulation
discussed  above.  These changes are immediate and parallel  changes to the base
case scenario.  In addition,  total rate movements (beginning point minus ending
point) to each of the various  driver rates  utilized by  management in the base
simulation for the period ended February 28, 2006 are as follows:

Driver Rates            RISING             FALLING
=============================================================
Prime                   200 Basis Points   (200) Basis Points
Federal Funds           200                (200)
One-Year CMT            200                (200)
Two-Year CMT            200                (200)
CD's                    200                 (91)
FHLB Advances           200                (200)

Results for the base,  rising and falling  interest  rate  scenarios  are listed
below,  based upon the  Corporation's  rate sensitive  assets and liabilities at
February 28, 2005.  The net interest  income  shown  represents  cumulative  net
interest income over a 12-month time horizon. Balance sheet assumptions used for
the base scenario are the same for the rising and falling simulations.

                                              BASE     RISING    FALLING
                                                (Dollars in thousands)
=========================================================================
Net Interest Income                         $114,655  $121,441   $100,057

Variance from base                                    $  6,786   $(14,598)

Percent of change from base                               5.92%    (12.73)%

The comparative  rising and falling  scenarios for the period ended December 31,
2005 assume  further  interest  rate changes in addition to the base  simulation
discussed  above.  These changes are immediate and parallel  changes to the base
case scenario.  In addition,  total rate movements (beginning point minus ending
point) to each of the various  driver rates  utilized by  management in the base
simulation for the period ended December 31, 2005 are as follows:

Driver Rates            RISING             FALLING
=============================================================
Prime                   200 Basis Points   (200) Basis Points
Federal Funds           200                (200)
One-Year CMT            200                (200)
Two-Year CMT            200                (200)
CD's                    200                 (74)
FHLB Advances           200                (200)

Results for the base, rising and falling interest rate scenarios are listed
below. The net interest income shown represents cumulative net interest income
over a 12-month time horizon. Balance sheet assumptions used for the base
scenario are the same for the rising and falling simulations.

                                              BASE     RISING    FALLING
                                                (Dollars in thousands)
=========================================================================
Net Interest Income                         $109,311  $117,212   $ 97,757

Variance from base                                    $  7,901   $(11,554)

Percent of change from base                                7.2%     (10.6)%

                                                                         Page 20
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

EARNING ASSETS

     The  following  table  presents  the  earning  asset  mix  as  of March 31,
2005, and December 31, 2004.

     Loans decreased  approximately  $13,952,000 from December 31, 2004 to March
31, 2005, while  investment  securities  decreased by approximately  $11,715,000
during the same period.  Real estate  construction,  real estate  commercial and
farmland and commercial and industrial loans increased approximately  $7,956,000
during the first  quarter of 2005 as compared  to the  balances  outstanding  at
December 31, 2004.  These  increases were mitigated by declines in  agricultural
loans and loans to  individuals of  approximately  $15,102,000  and  $10,980,000
respectively.

<TABLE>

----------------------------------------------------------------------------------------------------
EARNING ASSETS
(Dollars in thousands)                                            March 31,             December 31,
                                                                    2005                    2004
---------------------------------------------------------------------------------------------------
<S>                                                            <C>                     <C>
Federal funds sold and interest-bearing time deposits          $   32,812               $    9,343

Investment securities available for sale ............             405,510                  416,177

Investment securities held to maturity ..............               4,310                    5,358

Mortgage loans held for sale ........................               3,084                    3,367

Loans ...............................................           2,414,099                2,428,051

Federal Reserve and Federal Home Loan Bank stock                   22,883                   22,858
                                                               ----------               ----------

                     Total ..........................          $2,882,698               $2,885,154
                                                               ==========               ==========

</TABLE>
--------------------------------------------------------------------------------
DEPOSITS AND BORROWINGS

         The  table  below  reflects  the  level of  deposits and borrowed funds
(federal funds purchased; repurchase agreements; Federal Home Loan Bank advances
and  subordinated  debentures,  revolving  credit lines and term loans) based on
period ending amounts as of March 31, 2005 and December 31, 2004.

(Dollars in thousands)                               March 31,    December 31,
                                                       2005           2004
                                                    ----------     ----------
Deposits ........................................   $2,452,219     $2,408,150
Federal funds purchased..........................                      32,550
Securities sold under repurchase agreements......       67,887         87,472
Federal Home Loan Bank advances .................      221,791        223,663
Subordinated debentures, revolving credit lines
   and term loans................................      101,514         97,206
                                                    ----------     ----------
                                                    $2,843,411     $2,849,041
                                                    ==========     ==========

The Corporation has continued to leverage its capital position with Federal Home
Loan Bank advances,  as well as repurchase  agreements which are pledged against
acquired  investment  securities as collateral for the borrowings.  The interest
rate risk is included as part of the Corporation's interest simulation discussed
in  Management's  Discussion and Analysis of Financial  Condition and Results of
Operations  under  the  headings  "LIQUIDITY"  and  "INTEREST   SENSITIVITY  AND
DISCLOSURES ABOUT MARKET RISK".

                                                                         Page 21
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

NET INTEREST INCOME

         Net  Interest  Income  is  the  primary  source  of  the  Corporation's
earnings.  It is a  function  of net  interest  margin  and the level of average
earning  assets.  The table  below  presents  the  Corporation's  asset  yields,
interest expense, and net interest income as a percent of average earning assets
for the three months ended March 31, 2005 and 2004.

<TABLE>
                                                            Three Months Ended
                                                                 March 31,
<S>                                                     <C>           <C>
(Dollars in thousands)                                      2005          2004

Annualized Net Interest Income........................  $  107,768    $  102,528

Annualized FTE Adjustment.............................  $    3,634    $    3,433

Annualized Net Interest Income
  On a Fully Taxable Equivalent Basis.................  $  111,402    $  105,961

Average Earning Assets................................  $2,866,551    $2,739,297

Interest Income (FTE) as a Percent
  of Average Earning Assets...........................        5.90%         5.71%

Interest Expense as a Percent
  of Average Earning Assets...........................        2.01%         1.84%

Net Interest Income (FTE) as a Percent
  of Average Earning Assets...........................        3.89%         3.87%


         Average  earning  assets  include  the  average  balance  of securities
classified  as  available  for  sale,  computed  based  on  the  average  of the
historical  amortized  cost  balances  without  the  effects  of the fair  value
adjustment. In addition,  annualized amounts are computed utilizing a 30/360 day
basis.

</TABLE>

                                                                         Page 22
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
OTHER INCOME

         Other income in the first quarter of 2005  was $830,000 or 10.1 percent
greater than the same quarter of 2004.

Two items primarily account for most of the change:

1.       Insurance commissions increased by $551,000, due to the receipt of
         larger profit sharing payments from insurance underwriters, as compared
         to the same period in 2004.

2.       A cash payment was received of approximately $200,000, related to the
         Corporation's membership in a credit card network that was merged with
         another card network.

OTHER EXPENSES

         Total  other  expenses   represent   non-interest   expenses   of   the
Corporation.  Total other  expenses  during the first  quarter of 2005 increased
from the same  quarter of 2004 by $1,667,000 or 7.4 percent.

         The  primary  reason  for  the increase is due to a pension  accounting
loss, totaling  approximately  $1,630,000,  recorded during the first quarter of
2005.  The loss resulted from the  curtailment  of the  accumulation  of defined
benefits in the Corporation's defined benefit pension plan.

                                                                         Page 23
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

INCOME TAXES

         Income  tax  expense,  for  the  three  months  ended  March  31, 2005,
decreased by $454,000  from the same period in 2004.  The effective tax rate was
27.8 and 30.0 percent for the 2005 and 2004 periods.

OTHER

         The  Securities  and  Exchange  Commission  maintains  a Web  site that
contains  reports,  proxy  and  information  statements  and  other  information
regarding  registrants that file electronically  with the Commission,  including
the Corporation, and that address is (http://www.sec.gov).


Item 3.  Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------

         The  information  required  under  this  item  is  included  as part of
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  under  the  headings  "LIQUIDITY"  and  "INTEREST  SENSITIVITY  AND
DISCLOSURES ABOUT MARKET RISK".

Item 4.  Controls and Procedures
-------------------------------------------------------------------

         At  the  end  of  the  period  covered  by this report, the Corporation
carried out an evaluation,  under the supervision and with the  participation of
the  Corporation's  management,  including  the  Corporation's  Chief  Executive
Officer and Chief  Financial  Officer,  of the  effectiveness  of the design and
operation  of  it's  disclosure   controls  and  procedures.   Based  upon  that
evaluation,  the  Corporation's  Chief  Executive  Officer  and Chief  Financial
Officer concluded that the Corporation's  disclosure controls and procedures are
effective.  Disclosure  controls and procedures are controls and procedures that
are designed to ensure that information  required to be disclosed in Corporation
reports  filed  or  submitted  under  the  Securities  Exchange  Act of  1934 is
recorded,  processed,  summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms.

         There have been no changes in the Corporation's internal  controls over
financial  reporting  identified in connection  with the  evaluation  referenced
above that  occurred  during the  Corporation's  last fiscal  quarter  that have
materially  affected,   or  is  reasonably  likely  to  materially  affect,  the
Corporation's internal control over financial reporting.

                                                                         Page 24
<PAGE>
                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
--------------------------

         None

Item 2.  Unregistered Sales of Equity
         Securities and Use of Proceeds
---------------------------------------------------

         a.  None

         b.  None

         c.  Issuer Purchases of Equity Securities

The following table presents information relating to the Corporation's purchases
of its equity securities during the quarter ended March 31, 2005, as follows(1):
<TABLE>
<CAPTION>
                                                                  TOTAL NUMBER OF            MAXIMUM NUMBER OF
                                                              SHARES PURCHASED AS PART      SHARES THAT MAY YET
                        TOTAL NUMBER OF     AVERAGE PRICE     OF PUBLICLY ANNOUNCED          BE PURCHASED UNDER
      PERIOD            SHARES PURCHASED    PAID PER SHARE      PLANS OR PROGRAMS           THE PLANS OR PROGRAMS
      ------            ----------------    --------------    -------------------------    -----------------------
<S>                      <C>                 <C>               <C>                          <C>
01/01/05 - 01/31/05           3,489(2)          $28.08                    0                            0
02/01/05 - 02/28/05          57,000(3)          $26.35                    0                            0
03/01/05 - 03/31/05          76,841(4)          $26.24                    0                            0

(1) On  February 8, 2005,  the  Corporation's  Board  authorized  management  to
repurchase  up to  250,000  shares  of  the  Corporation's  Common  Stock.  This
authorization expires February 14, 2006.

(2) These  shares  were  purchased  in connection  with  the exercise of certain
outstanding options.

(3) These shares were purchased in open-market  transactions  pursuant
to the Board's  authorization to repurchase  shares.

(4) 74,500 of  these  shares were purchased in open-market transactions pursuant
to the board's  authorization to repurchase  shares.  The remaining 2,341 shares
were purchased in connection with the exercise of certain outstanding options.
</TABLE>

Item 3.  Defaults Upon Senior Securities
----------------------------------------

         None

Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

         None

Item 5.  Other Information
--------------------------


         a.  None

         b.  None
                                                                        Page 25

<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                           PART II. OTHER INFORMATION


Item 6.  Exhibits
-----------------------------------------

         a.  Exhibits

             Exhibit No.:       Description of Exhibit:      Form 10-Q Page No.:
             ------------       -------------------------    -------------------

                10.1            First Merchants Corporation          29
                                Senior Management Incentive
                                Compensation Program, as
                                amended on February 1, 2005

                31.1            Certification of Chief               35
                                Executive Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

                31.2            Certification of Chief               36
                                Financial Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

                32              Certifications Pursuant to           37
                                18 U.S.C. Section 1350, as
                                Adopted Pursuant to Section
                                906 of the Sarbanes-Oxley
                                Act of 2002


                                                                         Page 26


<PAGE>


                          FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                                   SIGNATURES

                  Pursuant to the requirements 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.

                                          First Merchants Corporation
                                          ---------------------------
                                                   (Registrant)


Date  05/10/05                          by /s/ Michael L. Cox
    ---------------------------            -------------------------------------
                                           Michael L. Cox
                                           President and Chief Executive Officer


Date  05/10/05                          by /s/ Mark K. Hardwick
    ---------------------------            -------------------------------------
                                           Mark K. Hardwick
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial and Chief
                                           Accounting Officer)


                                                                         Page 27

<PAGE>
                          FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                               INDEX TO EXHIBITS

INDEX TO EXHIBITS

      (a)3.  Exhibits:

             Exhibit No.:       Description of Exhibit:      Form 10-Q Page No.:
             ------------       -------------------------    -------------------

                10.1            First Merchants Corporation          29
                                Senior Management Incentive
                                Compensation Program, as
                                amended on February 1, 2005

                31.1            Certification of Chief               35
                                Executive Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

                31.2            Certification of Chief               36
                                Financial Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

                32              Certifications Pursuant to           37
                                18 U.S.C. Section 1350, as
                                Adopted Pursuant to Section
                                906 of the Sarbanes-Oxley
                                Act of 2002


                                                                         Page 28

<PAGE>

                                  EXHIBIT-10.1

                           First Merchants Corporation
                           Senior Management Incentive
                              Compensation Program
                              Adopted May 22, 2000
                            Amended February 1, 2005

I.       Purpose

The Board of Directors of First Merchants  Corporation  (FMC) has established an
executive  compensation  program,  which is  designed to provide  incentives  to
executive  officers to achieve  short-term  and  long-term  corporate  strategic
management goals, with the ultimate  objective of obtaining a superior return on
the  shareholders'  investment.  The purpose of the plan is to: (1)  incorporate
modern incentive plan techniques;  (2) incorporate executive retention features;
and (3) to closely align the interests of executives with those of shareholders.

II.      Administration

This plan will be administered  solely by the  Compensation  and Human Resources
Committee (Committee) of FMC, with supporting  documentation and recommendations
provided  by the  Chief  Executive  Officer  (CEO) of FMC.  The  Committee  will
annually review the targets for applicability and competitiveness.

The Committee  will have the authority to: (a) modify the formal plan  document;
(b) make the final award determinations;  (c) set conditions for eligibility and
awards; (d) define extraordinary  accounting events in calculating earnings; (e)
establish future payout schedules; (f) determine  circumstances/causes for which
payouts can be withheld; and (g) abolish the plan.

III.     Covered Individuals by Title and Position Description

         A. President and Chief Executive Officer of FMC;
         B. Executive Vice President and Chief Operating Officer of FMC;
         C. Senior Executives of FMC as recommended by CEO;
         D. Affiliate Bank CEOs; and
         E. Non-Bank Affiliate CEOs.

In order to receive an award, a participant  must be employed at the time of the
award except for conditions of death, disability or retirement.


                                                                         Page 29
<PAGE>

IV.      Implementation Parameters

         A.    The FMC CEO and COO earnings component payouts will be determined
               by changes in FMC EPS calculated on both a GAAP and "cash basis".
               When an FMC  earnings  component  is included in the plans of all
               other participants, it will be based on cash basis EPS growth.

               Payouts to affiliate participants on their respective company
               earnings component  will be determined by changes in "operating
               earnings" (net income plus or minus  non-operating items
               including goodwill amortization and corporate administrative
               charges.)

          B.   To calculate the payouts  under the plan,  the prior year payouts
               will weight at 40% and the current year will weight at 60%.

          C.   Affiliate  participants'  bonus will be  determined by a balanced
               scorecard   tailored  to  each  unit   incorporating  a  specific
               weighting on various operating  initiatives as set by the CEO and
               COO.

          D.   Two-thirds (2/3) of the bonus will be paid in cash after approval
               of the bonus by the Committee following the end of the applicable
               plan year and one-third  (1/3) in deferred stock units payable in
               January after the end of the second plan year  following the plan
               year for which the deferred  stock units were  allocated,  unless
               the  deferred  component  is less than  $1,000 in which event the
               entire bonus will be paid in cash. The deferred stock units, when
               paid,  will be paid in cash at a value  equal to the fair  market
               value of FMC stock on the December 31 preceding  the payment date
               plus  accumulated  dividends.  Termination for cause or voluntary
               termination,  excluding retirement, death or disability, prior to
               the payment date will cancel these deferred stock units.

          E.   Participants  may elect to defer all or part of the cash bonus to
               be paid at a future  time  determined  by the  participant.  Such
               deferral elections must be made no later than November 30 of each
               year  and  will  be  credited  quarterly  at an  interest  factor
               equivalent to the current five-year Treasury bond.

                                                                         Page 30
<PAGE>


V.       Plan Structure
         All payouts will be  determined  from the attached  schedules of
         percentage  change in EPS (Section VI, B) and ROE  attainment
         (Section VI, C).

         A.       CEO of FMC
                  1.       Target bonus of 45% of base compensation
                  2.       A weighting of % change in:
                           a.       Operating EPS at 40%;
                           b.       Diluted GAAP EPS at 30%; and
                           c.       30% based on a target ROE of 15%
         B.       EVP & COO of FMC
                  1.       Target bonus of 40% of base compensation
                  2.       A weighting of % change in:
                           a.       Operating EPS at 40%;
                           b.       Diluted GAAP EPS at 30%; and
                           c.       30% based on a target ROE of 15%
         C.       SVP of FMC
                  1.       Target bonus of 30% of base compensation.
                  2.       A weighting of % change in:
                           a.       FMC Operating EPS at 70%; and
                           b.       Personal objectives at 30%.
         D.       Senior Officers of FMC
                  1.       Target bonus of 25% of base compensation
                  2.       A weighting of % change in:
                           a.       FMC Operating EPS at 70%; and
                           b.       Personal objectives at 30%
         E.       Division Heads of FMC
                  1.       Target bonus of 15% of base compensation
                  2.       A weighting of % change in:
                           a.       FMC Operating EPS at 70%; and
                           b.       Personal objectives at 30%

                                                                         Page 31
<PAGE>


         F.       Affiliate Bank CEOs (see attached balanced scorecard schedule)
                  1.       Target bonus of 25% of base compensation
                  2.       A % weighting of:  (to be determined annually by CEO
                           & COO)
                           a.       Balanced scorecard objectives;
                           b.       FMC Operating EPS; and
                           c.       Personal objectives

         G.       Non-Bank Affiliate CEOs
                  1.       Target bonus of 25% of base compensation
                  2.       A weighting of % change in:
                           a.       Affiliate revenue growth predetermined by
                                    FMC CEO;
                           b.       Affiliate operating earnings predetermined
                                    by CEO; and
                           c.       Personal objectives

VI.      Supporting Parameters

          A.   Where  individual   components  are  applicable,   they  must  be
               measurable with both beginning points and standard targets cited.

          B.   Schedule  Determining  both  Operating  earnings and EPS and GAAP
               earnings and EPS Payouts for Year 2005

                  Operating Earnings % Change*             Payout %
                                    <3%                                   0%
                                     3%                                  30%
                                     4%                                  40%
                                     5%                                  50%
                                     6%                                  60%
                                     7%                                  70%
                                     8%                                  80%
                                     9%                                  90%
                  Target            10%                                 100%
                                    12%                                 120%
                                    14%                                 140%
                                    16%                                 160%
                                    18%                                 180%
                                    20%                                 200%

          *Operating  earnings  adds back charges for  amortization  of goodwill
          and other  non-operating  expenses as determined by the Committee.

                                                                         Page 32
<PAGE>


          C.   Schedule ROE Payouts for Year 2005

                      Operating ROE*Payout %
                                  <10%                                   0%
                                   10%                                  10%
                                   11%                                  20%
                                   12%                                  40%
                                   13%                                  60%
                                   14%                                  80%
                 Target            15%                                 100%
                                   16%                                 120%
                                   17%                                 140%
                                   18%                                 160%
                                   19%                                 180%
                                   20%                                 200%

          *Operating  earnings  adds back charges for  amortization  of goodwill
          and other  non-operating  expenses as determined by the Committee.


          D.   Schedule Determining Operating Earnings Payouts for Year 2005 for
               Non-Bank Affiliates

                     Operating Earnings % Change*                  Payout %
                                  <15%                                  0%
                                   15%                                 30%
                                   20%                                 40%
                                   25%                                 50%
                                   30%                                 60%
                                   35%                                 70%
                                   40%                                 80%
                                   45%                                 90%
                 Target   >50%    100%

          *Operating  earnings  adds back charges for  amortization  of goodwill
          and other  non-operating  expenses as determined by the Committee.

                                                                         Page 33
<PAGE>

          E.   Schedule of Participants (referenced in Section III)

                  Section           Group                     Name
                  VII, A            FMC CEO                   Michael L. Cox
                  VII, B            FMC COO                   Roger M. Arwood

                  VII, C            FMC SVP                   Bob Connors
                                                              Kim Ellington
                                                              Mark Hardwick
                                                              Larry R. Helms



                  VII, D            FMC Senior Officers

                  VII, E            FMC Division Heads        Jeff Davis
                                                              Stephan Fluhler
                                                              Phil Fortner
                                                              Chris Hoyt
                                                              Jeff Lorentson
                                                              Gary Marshall
                                                              Pam Miller
                                                              David Ortega
                                                              Bob Rhoades


                  VII, F            Affiliate Bank CEOs       Tony Albrecht
                                                              Mike Baker
                                                              Bob Bell
                                                              Dennis Bieberich
                                                              Jack Demaree
                                                              John Finnerty
                                                              Hal Job
                                                              Jim Meinerding
                                                              Tom McAuliffe
                                                              James Thrash

                  VII, G            Non-Bank Affiliate CEOs   Dan VanTreese

                                                                         Page 34
<PAGE>

                                  EXHIBIT-31.1

                           FIRST MERCHANTS CORPORATION

                                   FORM 10-Q
                           CERTIFICATIONS PURSUANT TO
                                 SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION
-------------

I, Michael L. Cox,  President  and Chief  Executive  Officer of First  Merchants
Corporation, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of First Merchants
       Corporation;

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

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

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

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

       (b) Designed such internal control over financial reporting, or caused
           such internal control over financial reporting to be designed under
           our supervision, to provide reasonable assurance regarding the
           reliability of financial reporting and the preparation of financial
           statements for external purposes in accordance with generally
           accepted accounting principles;

       (c) Evaluated the effectiveness of the registrant's disclosure controls
           and procedures and presented in this report our conclusions about the
           effectiveness of the disclosure controls and procedures, as of the
           end of the period covered by this report, based on such evaluation;
           and

       (d) Disclosed in this report any change in the registrant's internal
           control over financial reporting that occurred during the
           registrant's most recent fiscal quarter (the registrant's fourth
           fiscal quarter in the case of an annual report) that has materially
           affected, or is reasonably likely to materially affect, the
           registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed, based on
       our most recent evaluation of internal control over financial reporting,
       to the registrant's auditors and the audit committee of the registrant's
       board or directors (or persons performing the equivalent functions):

       (a) All significant deficiencies and material weaknesses in the design or
           operation of internal control over financial reporting which are
           reasonably likely to adversely affect the registrant's ability to
           record, process, summarize and report financial information; and

       (b) Any fraud, whether or not material, that involves management or other
           employees who have a significant role in the registrant's internal
           control over financial reporting.

Date:  May 10, 2005                     /s/Michael L. Cox
                                        ----------------------------------------
                                           Michael L. Cox
                                           President and Chief Executive Officer

                                                                         Page 35
<PAGE>
                                  EXHIBIT-31.2

                           FIRST MERCHANTS CORPORATION

                                   FORM 10-Q
                           CERTIFICATIONS PURSUANT TO
                                 SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION
-------------

I, Mark K. Hardwick,  Senior Vice President and Chief Financial Officer of First
Merchants Corporation, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of First Merchants
       Corporation;

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

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

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

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

       (b) Designed such internal control over financial reporting, or caused
           such internal control over financial reporting to be designed under
           our supervision, to provide reasonable assurance regarding the
           reliability of financial reporting and the preparation of financial
           statements for external purposes in accordance with generally
           accepted accounting principles;

       (c) Evaluated the effectiveness of the registrant's disclosure controls
           and procedures and presented in this report our conclusions about the
           effectiveness of the disclosure controls and procedures, as of the
           end of the period covered by this report, based on such evaluation;
           and

       (d) Disclosed in this report any change in the registrant's internal
           control over financial reporting that occurred during the
           registrant's most recent fiscal quarter (the registrant's fourth
           fiscal quarter in the case of an annual report) that has materially
           affected, or is reasonably likely to materially affect, the
           registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed, based on
       our most recent evaluation of internal control over financial reporting,
       to the registrant's auditors and the audit committee of the registrant's
       board or directors (or persons performing the equivalent functions):

       (a) All significant deficiencies and material weaknesses in the design or
           operation of internal control over financial reporting which are
           reasonably likely to adversely affect the registrant's ability to
           record, process, summarize and report financial information; and

       (b) Any fraud, whether or not material, that involves management or other
           employees who have a significant role in the registrant's internal
           control over financial reporting.

Date:  May 10, 2005                     /s/Mark K. Hardwick
                                        ----------------------------------------
                                           Mark K. Hardwick
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial  and Chief
                                           Accounting Officer)

                                                                         Page 36
<PAGE>

                                  EXHIBIT-32

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

In connection  with the quarterly  report of First  Merchants  Corporation  (the
"Corporation")  on Form 10-Q for the period  ending March 31, 2005 as filed with
the  Securities  and Exchange  Commission on the date hereof (the  "Report"),  I
Michael L. Cox,  President and Chief Executive  Officer of the  Corporation,  do
hereby certify,  in accordance with 18 U.S.C.  Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:

        (1) The Report fully complies with the requirements of  section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)); and

        (2) The  information  contained  in  the  Report fairly presents, in all
material  respects,  the  financial  condition  and results of operations of the
Corporation.

Date  May 10, 2005                      by /s/ Michael L. Cox
    ---------------------------            -------------------------------------
                                           Michael L. Cox
                                           President and Chief Executive Officer

A  signed  copy of this  written  statement  required  by  Section  906 has been
provided to First Merchants  Corporation and will be retained by First Merchants
Corporation and furnished to the Securities and Exchange Commission or its staff
upon request.



In connection  with the quarterly  report of First  Merchants  Corporation  (the
"Corporation")  on Form 10-Q for the period  ending March 31, 2005 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I Mark
K.  Hardwick,   Senior  Vice  President  and  Chief  Financial  Officer  of  the
Corporation,  do hereby certify,  in accordance with 18 U.S.C.  Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

        (1) The Report fully  complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)); and

        (2) The  information  contained  in  the  Report fairly presents, in all
material  respects,  the  financial  condition  and results of operations of the
Corporation.

Date  May 10, 2005                      by /s/ Mark K. Hardwick
    ---------------------------            -------------------------------------
                                           Mark K. Hardwick
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial and Chief
                                           Accounting Officer)

A  signed  copy of this  written  statement  required  by  Section  906 has been
provided to First Merchants  Corporation and will be retained by First Merchants
Corporation and furnished to the Securities and Exchange Commission or its staff
upon request.


                                                                         Page 37