UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  SCHEDULE 14A

                PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

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                           FIRST MERCHANTS CORPORATION

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<PAGE>

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<PAGE>
                           FIRST MERCHANTS CORPORATION
                             200 EAST JACKSON STREET
                              MUNCIE, INDIANA 47305


                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                            TO BE HELD APRIL 13, 2006



The annual  meeting of the  shareholders  of First  Merchants  Corporation  (the
"Corporation")  will be held at the Horizon  Convention  Center,  401 South High
Street, Muncie, Indiana 47305, on Thursday, April 13, 2006, at 3:30 p.m. for the
following purposes:

(1)      To elect three directors, to hold office for a term of three years and
         until their successors are duly elected and qualified.

(2)      To ratify the appointment of the firm of BKD, LLP as the independent
         public accountants for 2006.

(3)      To transact such other business as may properly come before the
         meeting.

Only those  shareholders of record at the close of business on February 10, 2006
shall be entitled to notice of and to vote at the meeting.


                                          By Order of the Board of Directors



                                          Cynthia G. Holaday
                                          Secretary

Muncie, Indiana
March 2, 2006




                             YOUR VOTE IS IMPORTANT!

        YOU ARE URGED TO SUBMIT YOUR PROXY VIA THE TELEPHONE OR INTERNET,
       OR TO SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED POSTAGE-PAID
        ENVELOPE, AS SOON AS POSSIBLE SO THAT YOUR SHARES CAN BE VOTED AT
               THE MEETING IN ACCORDANCE WITH YOUR INSTRUCTIONS.


<PAGE>

                                                                   March 2, 2006

                           FIRST MERCHANTS CORPORATION

                               PROXY STATEMENT FOR
                         ANNUAL MEETING OF SHAREHOLDERS
                            TO BE HELD APRIL 13, 2006

This proxy  statement is furnished in connection  with the  solicitation  of the
enclosed proxy by and on behalf of the Board of Directors (the "Board") of First
Merchants  Corporation  (the  "Corporation")  for use at the  annual  meeting of
shareholders of the  Corporation to be held April 13, 2006. The  distribution of
these proxy materials is expected to commence on March 2, 2006.

Please  sign,  date and  return  your  proxy  card or submit  your proxy via the
telephone or Internet as soon as  possible,  so that your shares can be voted at
the  meeting  in  accordance  with  your  instructions.  If you  plan to vote by
telephone or Internet,  you should have your control number,  which is imprinted
on your proxy card, available when you call or access the web page.

         o To vote by telephone, please call toll-free 1-800-PROXIES
         (1-800-776-9437) on a touch-tone telephone and follow the instructions.

         o To vote by Internet, please access the web page "www.voteproxy.com"
         and follow the on-screen instructions.

Similar instructions are included on the enclosed proxy card.

Any shareholder  giving a proxy has the right to revoke it any time before it is
exercised by giving written notice of revocation to the Secretary received prior
to the  annual  shareholders'  meeting,  by voting  again in  writing or via the
telephone  or  Internet,  or by  voting in person  at the  meeting.  The  shares
represented by proxies will be voted in accordance with the  instructions on the
proxies. In the absence of specific  instructions to the contrary,  proxies will
be voted for election to the Board of Directors of all nominees listed in Item 1
of the  proxy  and  for  ratification  of the  appointment  of  BKD,  LLP as the
Corporation's  independent  public accountants for 2006. If any director nominee
named in this proxy statement shall become unable or declines to serve (an event
which the Board does not  anticipate),  the persons  named as proxies  will have
discretionary  authority to vote for a substitute nominee named by the Board, if
the Board determines to fill such nominee's position.

                                VOTING SECURITIES

Only  shareholders  of record at the close of business on February 10, 2006 will
be entitled to notice of and to vote at the annual meeting. 18,422,622 shares of
common stock were outstanding and entitled to vote as of February 10, 2006.

Each share of the Corporation's  common stock is entitled to one vote. Directors
are elected by a plurality  of the votes cast by the shares  entitled to vote in
the election at a meeting at which a quorum is present. Shareholders do not have
a right to  cumulate  their  votes  for  directors.  The  affirmative  vote of a
majority  of the shares  present and voting at the meeting in person or by proxy
is required for approval of all items  submitted to the  shareholders  for their
consideration other than the election of directors. The Secretary will count the
votes and announce the results of the voting at the meeting. Abstentions will be
counted  for the purpose of  determining  whether a quorum is present but for no
other purpose. Broker non-votes will not be counted.

<PAGE>
                              ELECTION OF DIRECTORS

Three directors will be elected at the annual meeting.

The  persons  named  below  have been  nominated  for  election  to the Board of
Directors,  with terms expiring as of the 2009 annual  meeting of  shareholders.
All of the nominees are currently members of the Board.
<TABLE>
<CAPTION>
Those persons nominated as directors include:
<S>                                   <C>                                                       <C>
                                                                                                Director
Name and Age                          Present Occupation                                          Since

Class III (Terms expire 2009):

Richard A. Boehning                   Of counsel,  Bennett,  Boehning & Clary, since 2001. Prior   2002
          age 68 to 2001, Mr. Boehning was a partner in that law firm.

Barry J. Hudson                       Since 1982,  Chairman of the Board of  Directors  of First   1999
age 66                                National  Bank  of  Portland   ("FNB"),   a  wholly  owned
                                      subsidiary  of  the  Corporation.  Mr.  Hudson  was  Chief
                                      Executive Officer of FNB from 1982 to 2000, and he was its
                                      President from 1982 to 1998.

Michael C. Rechin                     Executive  Vice President and Chief  Operating  Officer of   2005
Age 47                                the  Corporation  since  November 21, 2005. Mr. Rechin was
                                      Executive Vice President of National City Bank of Indiana
                                      from 1995 to 2005 and was responsible for its commercial
                                      banking operations in Indiana.

Those persons named below continue to serve as directors:

Class I (Terms expire 2007):

Michael L. Cox                        President  of the  Corporation  since 1998,  and its Chief   1984
Age 61                                Executive  Officer since 1999.  Mr. Cox has also served as
                                      Chairman  of the  Board of  Directors  of First  Merchants
                                      Bank, National Association ("FMB"), a wholly owned
                                      subsidiary of the Corporation, since 2005.

                                      Chairman of the Board of  Directors,  President  and Chief
Thomas D. McAuliffe(1)                Executive  Officer,  Commerce  National  Bank  ("CNB"),  a   2003
age 56                                wholly owned subsidiary of the Corporation, since 1991.

                                       2
<PAGE>
                                                                                                Director
Name and Age                          Present Occupation                                          Since


Charles E. Schalliol                  Director, Indiana State Office of Management and Budget,     2004
Age 58                                since January 10, 2005.  Mr. Schalliol was President and
                                      Chief Executive Officer of BioCrossroads, an economic
                                      development organization focused on life sciences
                                      companies, from 2003 to 2005. He was Executive Director,
                                      Corporate Finance, Eli Lilly and Company, a pharmaceuticals
                                      company, from 1996 to 2003 and Founder and Managing
                                      Director of Lilly Venture Funds from 1999 to 2003.

Robert M. Smitson                     Retired Chairman of the Board of Directors,  President and   1982
Age 69                                Chief   Executive   Officer,    Maxon    Corporation,    a
                                      manufacturer  of  combustion  equipment.  Mr.  Smitson was
                                      Maxon's President from 1979 to 1997, CEO from 1985 to 1998,
                                      and Board Chairman from 1998 to 2004.

Class II (Terms expire 2008):

Thomas B. Clark                       Retired Chairman of the Board of Directors,  President and   1989
Age 60                                Chief Executive Officer,  Jarden  Corporation,  a provider
                                      of niche  consumer  products for the home.  Jarden changed
                                      its name from  Alltrista  Corporation  in 2002.  Mr. Clark
                                      was Alltrista's President and CEO from 1995 to 2001, and
                                      Board Chairman from 2000 to 2001.

Roderick English                      Senior   Vice    President   of   Human    Resources   and   2005
Age 54                                Communications,  Remy International,  Inc., a manufacturer
                                      of electrical and powertrain products for autos, trucks
                                      and other  vehicles,  since  1994.  Remy  changed its name
                                      from Delco Remy International, Inc. in 2004.

Jo Ann M. Gora                        President,  Ball State  University,  since 2004.  Dr. Gora   2004
Age 60                                served as  Chancellor of the  University of  Massachusetts
                                      at Boston  from  2001 to 2004.  She was  Provost  and Vice
                                      President for Academic Affairs at Old Dominion University
                                      from 1992 to 2001.

Jean L. Wojtowicz                     President and Chief Executive  Officer,  Cambridge Capital   2004
Age 48                                Management Corp., a manager of non-traditional  sources of
                                      financing,  since 1983.  Ms.  Wojtowicz is also a director
                                      of Vectren  Corporation and a trustee of Windrose  Medical
                                      Properties Trust, which are both listed on
                                      the New York Stock Exchange.
</TABLE>
                                       3
<PAGE>

(1)      Under an Agreement of Reorganization and Merger between the Corporation
         and CNBC Bancorp, the Board appointed Mr. McAuliffe as a member of the
         Board in 2003 and agreed to nominate him for election to a full 3-year
         term as a director at the 2004 annual meeting of shareholders.

                              MEETINGS OF THE BOARD

The Board of Directors of the  Corporation  held 6 meetings  during 2005. All of
the directors attended at least 75% of the total number of meetings of the Board
and the committees on which they served.

                            COMPENSATION OF DIRECTORS

The directors of the  Corporation who are employees of the Corporation or one of
its  subsidiaries  received  no  separate  compensation  for their  services  as
directors in 2005. The directors of the Corporation who are not employees of the
Corporation  or one of its  subsidiaries,  other than the Chairman of the Board,
were paid an annual retainer of $15,000, plus $3,000 for each Board Committee on
which the director served. The Committee Chairmen received an additional $2,000,
except that the Audit  Committee  Chairman,  James F. Ault, who is retiring as a
director as of the 2006 annual  shareholders'  meeting,  received an  additional
$5,000.  The  Chairman  of the  Board,  Robert M.  Smitson,  received  an annual
retainer of $50,000 in 2005, but no retainer for Committee service. In addition,
under the provisions of the Corporation's  1999 Long-term Equity Incentive Plan,
options  were granted to each of the  non-employee  directors on July 1, 2005 to
purchase  shares of the  Corporation's  common stock.  Each option was for 1,157
shares at an option  price of $25.00 per share,  the market price on the date of
the grants.

Some non-employee  directors received additional  compensation in 2005 for their
services as a director of a subsidiary of the Corporation. James F. Ault was the
Chairman of the Board of  Directors  of The  Madison  Community  Bank,  National
Association ("MCB"), a wholly owned subsidiary of the Corporation,  and was paid
$375 and  $75,  respectively,  for  each MCB  board  and  committee  meeting  he
attended.  Barry J. Hudson was Chairman of the Board of Directors of FNB and was
paid  $10,976 in 2005 for his  services in this  capacity,  of which  $4,356 was
deferred  compensation  under an  insurance-funded  deferred  compensation  plan
maintained by FNB.  Richard A. Boehning and Robert T. Jeffares were directors of
Lafayette Bank and Trust Company,  National  Association ("LBT"), a wholly owned
subsidiary of the  Corporation,  for which Mr.  Boehning  received a retainer of
$19,800 and Mr. Jeffares received a retainer of $13,200 in 2005. The full amount
of both  retainers was deferred  under an unfunded  deferred  compensation  plan
maintained by LBT. Mr.  Boehning and Mr.  Jeffares also received life  insurance
coverage from LBT in the amount of $6,000. Mr. Jeffares retired as a director of
LBT in August 2005 and is retiring  as a director of the  Corporation  as of the
2006 annual shareholders' meeting.

                               BOARD INDEPENDENCE

The  Board has  determined  that each of the  director-nominees  and  continuing
directors is an "independent  director," as defined in the listing  standards of
the Nasdaq Stock Market, Inc. ("NASDAQ"), except for the Corporation's President
and CEO,  Michael L. Cox, the  Corporation's  Executive  Vice President and COO,
Michael C.  Rechin,  FNB's  Board  Chairman,  Barry J.  Hudson,  and CNB's Board
Chairman,  President  and CEO,  Thomas D.  McAuliffe.  All of the members of the
Nominating  and  Governance  Committee,  the  Compensation  and Human  Resources
Committee,  and the Audit Committee are  "independent  directors," as defined in
the NASDAQ listing standards.

                                       4
<PAGE>

                             COMMITTEES OF THE BOARD

Nominating and Governance Committee

The  Corporation  has a Nominating and Governance  Committee whose purpose is to
seek to ensure  continuation of the  effectiveness and independence of the Board
of Directors.  The Committee is  responsible  for reviewing the  credentials  of
persons  suggested  as  prospective  directors,  nominating  persons to serve as
directors  and as officers  of the Board of  Directors,  including  the slate of
directors to be elected each year at the annual meeting of shareholders,  making
recommendations  concerning the size and  composition of the Board of Directors,
as well as criteria for Board membership,  making recommendations concerning the
Board's committee  structure and makeup,  providing for continuing  education of
the directors and self-assessment of the Board's  effectiveness,  and overseeing
the  Corporate-wide  Code of Business  Conduct and the Code of Ethics for senior
financial  officers of the Corporation.  As of the date of this proxy statement,
the Nominating and Governance Committee is composed of directors Thomas B. Clark
(Chairman),  James F. Ault, who is retiring as a director of the  Corporation as
of the 2006 annual meeting,  Richard A. Boehning,  Robert M. Smitson and Jean L.
Wojtowicz. The Nominating and Governance Committee met 4 times during 2005.

The  Board has  adopted a written  charter  for the  Nominating  and  Governance
Committee.  A copy of the  charter is  included  among the  documents  under the
"Corporate   Governance   Disclosures"  link  on  the   Corporation's   website,
www.firstmerchants.com.

In  nominating  persons to serve as directors,  the  Nominating  and  Governance
Committee  considers  the  person's  ethical  character,   reputation,  relevant
expertise  and  experience,  accomplishments,  leadership  skills,  demonstrated
business judgment,  contribution to Board diversity,  "independence" (as defined
in the NASDAQ listing  standards) if a non-employee  director,  residency in the
Corporation's  market area, ability and willingness to devote sufficient time to
director  responsibilities,  and willingness to maintain a meaningful  ownership
interest  in the  Corporation  and  assist the  Corporation  in  developing  new
business.

In addition to considering  the criteria  described in the preceding  paragraph,
the Committee's  process for identifying and evaluating  nominees involves,  for
incumbent  directors  whose terms are  expiring,  reviewing the quality of their
prior  service  to the  Corporation,  including  the  nature and extent of their
participation  in  the  Corporation's  governance  and  their  contributions  of
management  and  financial  expertise  and  experience  to  the  Board  and  the
Corporation.  For new director candidates,  the Committee also considers whether
their skills are  complementary  to those of existing  Board members and whether
they will fulfill the Board's needs for management, financial,  technological or
other expertise.  The Nominating and Governance  Committee considers  candidates
coming  to  its  attention   through   current  Board  members,   search  firms,
shareholders and other persons.

Article IV,  Section 9, of the  Corporation's  Bylaws,  describes the process by
which a shareholder may suggest a candidate for  consideration  by the Committee
as a director  nominee.  Under this process,  a suggestion by a shareholder of a
director  nominee  must  include:  (a)  the  name,  address  and  number  of the
Corporation's  shares owned by the shareholder;  (b) the name, address,  age and
principal  occupation of the suggested  nominee;  and (c) such other information
concerning the suggested  nominee as the  shareholder  may wish to submit or the
Committee may reasonably  request. A suggestion for a director nominee submitted
by a shareholder  must be in writing and  delivered or mailed to the  Secretary,
First Merchants  Corporation,  200 East Jackson Street,  Muncie,  Indiana 47305.
Suggestions for nominees from  shareholders  are evaluated in the same manner as
other nominees.

There are no nominees  for election to the  Corporation's  Board of Directors at
the  2006  annual  shareholders'  meeting  other  than  directors  standing  for
re-election.

                                       5
<PAGE>
Compensation and Human Resources Committee

The Corporation has a Compensation and Human Resources Committee whose functions
are: (a) to review and approve the  compensation  and benefits to be paid to the
executive  officers and senior  management  employees of the Corporation and the
chief executive officers of its subsidiaries,  and (b) to review and approve the
compensation  and  benefits  to be paid to the  executive  officers  and  senior
management employees and the compensation ranges and benefits for other officers
and employees of the Corporation's  subsidiaries.  The authority to periodically
adjust the compensation and benefits of employees, other than executive officers
and senior management of the Corporation and the chief executive officers of its
subsidiaries,  has  been  delegated  by the  Committee  to the  chief  executive
officers of the subsidiaries.  The Compensation and Human Resources Committee is
responsible for the administration of the Corporation's  incentive  compensation
and stock plans. As of the date of this proxy  statement,  the  Compensation and
Human Resources Committee is composed of directors Robert M. Smitson (Chairman),
Thomas B. Clark, Roderick English and Charles E. Schalliol.  The Committee met 5
times during 2005.

Compensation and Human Resources Committee Interlocks and Insider Participation

No member of the  Compensation  and Human Resources  Committee was an officer or
employee of the  Corporation  or any of its  subsidiaries  during 2005. No other
member of the Compensation and Human Resources Committee or executive officer of
the  Corporation  had a relationship  during 2005  requiring  disclosure in this
proxy statement under Securities and Exchange Commission ("SEC") regulations.

Audit Committee

The  Corporation  has an Audit  Committee  which  assists  the  Board (1) in its
oversight of the Corporation's accounting and financial reporting principles and
policies and internal accounting and disclosure controls and procedures,  (2) in
its oversight and supervision of the Corporation's  internal audit function, (3)
in its oversight of the certification of the Corporation's  quarterly and annual
financial  statements  and  disclosures  and  assessment of internal  disclosure
controls  by  the  Corporation's  CEO  and  CFO,  (4) in  its  oversight  of the
Corporation's  consolidated  financial  statements and the independent  external
audit thereof,  and (5) in evaluating the independence of the external auditors.
The Audit  Committee  recommends  the selection of the  independent  auditor for
approval by the Board and ratification by the shareholders,  and it approves the
independent auditor's compensation.  As of the date of this proxy statement, the
Audit  Committee is composed of directors  James F. Ault  (Chairman),  Thomas B.
Clark,  Jo Ann M.  Gora,  Robert  T.  Jeffares,  Robert M.  Smitson  and Jean L.
Wojtowicz.  Mr.  Ault  and  Mr.  Jeffares  are  retiring  as  directors  of  the
Corporation as of the 2006 annual meeting. In accordance with Section 407 of the
Sarbanes-Oxley  Act, the Corporation has identified Mr. Clark,  Mr. Jeffares and
Ms.  Wojtowicz  as  "Audit  Committee   financial  experts."  All  of  them  are
"independent"  as that term is used in the NASDAQ listing  standards.  The Audit
Committee met 5 times during 2005.

The Board has adopted a written charter for the Audit Committee. The charter was
amended by the Board in February 2006. A copy of the amended charter is attached
as Appendix A to this proxy statement and is also included among the documents
under the "Corporate Governance Disclosures" link on the Corporation's website,
www.firstmerchants.com.

The Audit Committee has reviewed and discussed the audited financial  statements
of the  Corporation  for 2005  with  the  Corporation's  management,  and it has
discussed with BKD, LLP, the  Corporation's  independent  auditors for 2005, the
matters  required to be  discussed  by SAS 61  (Codification  of  Statements  on
Auditing Standards,  AU ss.380), as modified or supplemented.  The Committee has
also received the written  disclosures  and the letter from BKD, LLP required by
Independence Standards Board Standard No. 1 (Independent  Discussions with Audit

                                       6
<PAGE>

Committees),  as modified or  supplemented,  and has discussed with BKD, LLP its
independence from the Corporation.  Based on these reviews and discussions,  the
Audit Committee  recommended to the Board, and the Board has approved,  that the
audited financial statements of the Corporation be included in the Corporation's
Annual Report on Form 10-K for the 2005 fiscal year for filing with the SEC.

The above report is submitted by:

FIRST MERCHANTS CORPORATION AUDIT COMMITTEE
James F. Ault, Chairman
Thomas B. Clark
Jo Ann M. Gora
Robert T. Jeffares
Robert M. Smitson
Jean L. Wojtowicz

                       COMPENSATION OF EXECUTIVE OFFICERS

The following  tables contain  information  concerning the  compensation  of the
"Named Executive Officers," including the Corporation's Chief Executive Officer,
its four most highly compensated  executive officers other than the CEO who were
serving as executive officers at the end of the Corporation's most recent fiscal
year-end,  December  31, 2005,  and Larry R. Helms,  who was among the four most
highly  compensated  executive  officers other than the CEO for 2005 but was not
serving as an executive  officer at the fiscal year-end due to his retirement on
October 28, 2005.
<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE
------------------------------------------------------------------------------------------------------------

                                            Annual Compensation     Long Term Compensation
                                          -------------------------------------------------
                                                                      Awards     Payouts
-----------------------------------------------------------------------------------------------------------
                                                                    Securities
            Name and                                                Underlying     LTIP      All Other
       Principal Position          Year      Salary     Bonus(1)    Options(2)  Payouts(1)Compensation(3)
-----------------------------------------------------------------------------------------------------------
<S>                                <C>      <C>          <C>          <C>         <C>          <C>
     Michael L. Cox                2005     $350,443    $44,247       20,000      $ 8,371      $3,547
     President and Chief           2004      326,855     32,640       15,000       23,333       2,563
     Executive Officer             2003      326,715     15,360       13,125       38,988       2,500

     Robert R. Connors             2005      180,104     24,264        8,000        3,171       5,169
     Senior Vice President,        2004      169,810     17,830        6,000        2,355       2,261
     Operations and Technology     2003      166,231      5,085        5,250            0       2,002

     Kimberly J. Ellington         2005       94,300     12,043        6,000        1,398       2,700
     Senior Vice President,        2004       85,096      7,429        3,600        2,531         821
     Director of Human Resources   2003       83,324      2,566        3,150        2,588       1,073

     Mark K. Hardwick              2005      173,407     23,918       10,000        3,669       5,023
     Executive Vice President      2004      158,112     17,786        6,000        4,713       2,123
     and Chief Financial Officer   2003      132,722      6,732        5,250        4,553       1,901

     Jeffrey B. Lorentson          2005      124,466      8,682        3,000        1,741       3,510
     First Vice President,         2004      114,268      6,653        2,400        8,751       1,518
     Corporate Controller          2003      108,656      3,195        2,100            0       1,385

     Larry R. Helms                2005      144,443     25,282        8,000        4,592       1,916
     Former Senior Vice            2004      138,722     16,226        6,000        8,426       2,018
     President, Administrative     2003      135,817      8,426        5,250       10,256       1,918
     Services, General Counsel
     and Corporate Secretary(4)
</TABLE>
                                       7
<PAGE>
--------------------------------------------------------------------------------

(1)  Under the Corporation's Senior Management Incentive Compensation Program ,
     the bonuses earned by each executive officer are paid 2/3 in cash following
     the end of the fiscal year and 1/3 in Deferred Stock Units that are payable
     in cash two years later, unless the Units are forfeited due to termination
     of the executive officer's employment for cause or because the executive
     officer voluntarily terminated employment (except on account of retirement,
     death or disability) prior to payment. The portion of each year's bonus
     paid in Deferred Stock Units is not reportable in the Summary Compensation
     Table, but is disclosed in the Long-term Incentive Plan Awards Table below.
     The LTIP Payouts column in the Summary Compensation Table sets forth the
     cash amounts paid in the year indicated for Deferred Stock Units earned by
     the executive officer two years earlier under the Senior Management
     Incentive Compensation Program.

(2)  The information concerning options for 2003 has been adjusted to give
     retroactive effect to the 5% common stock dividend that was distributed on
     September 12, 2003 to shareholders of record at the close of business on
     August 29, 2003.

(3)  Represents employer and matching contributions for fiscal year to First
     Merchants Corporation Retirement and Income Savings Plan (a ss.401(k)
     plan).

(4)  Mr. Helms retired as Senior Vice President, Administrative Services,
     General Counsel and Corporate Secretary on October 28, 2005. Because he
     retired, Mr. Helms' 2005 bonus under the Senior Management Incentive
     Compensation Program was paid entirely in cash and is reported in full in
     the Summary Compensation Table.

Long-term Incentive Plans

Stock Option Grants and Exercises

The 1999 Long-term Equity Incentive Plan, which became effective as of July 1,
1999, authorizes the Compensation Committee to grant stock-based incentive
awards, including stock options, to eligible employees of the Corporation or any
subsidiary. The following table contains information concerning individual
grants of stock options under the plan made during 2005 to the Named Executive
Officers. Each option was to purchase the Corporation's common stock at a price
not less than the market price of the stock on the date of grant.
<TABLE>
<CAPTION>
                        OPTION GRANTS IN LAST FISCAL YEAR
-----------------------------------------------------------------------------------------------------------
                                                                               Potential Realizable Value
                                                                               at Assumed Annual Rates of
                                                                                Stock Price Appreciation
                               Individual Grants                                     for Option Term
-----------------------------------------------------------------------------------------------------------
                     Number of      Percent of
                    Securities    Total Options
                    Underlying      Granted to     Exercise
                     Options       Employees in      Price
       Name          Granted        Fiscal Year   (per share)  Expiration Date        5%           10%
-----------------------------------------------------------------------------------------------------------
<S>                   <C>              <C>          <C>       <C>                  <C>          <C>
Michael L. Cox        20,000           8.91         $26.70    September 1, 2015    $336,420     $849,060

Robert R. Connors      8,000           3.57          26.70    September 1, 2015     134,568      339,624

Kimberly J. Ellington  6,000           2.67          26.70    September 1, 2015     100,926      254,718

Mark K. Hardwick      10,000           4.46          26.70    September 1, 2015     168,210      424,530

Jeffrey B. Lorentson   3,000           1.34          26.70    September 1, 2015      50,463      127,359

Larry R. Helms         8,000           3.57          26.70    September 1, 2015     134,568      339,624

-----------------------------------------------------------------------------------------------------------
</TABLE>
The following table contains  information  concerning exercises of stock options
by the Named Executive  Officers during 2005 under the 1994 Stock Option Plan or
the 1999 Long-term  Equity  Incentive  Plan, as well as the value as of December
31, 2005 of each of the Named  Executive  Officer's  unexercised  options  under
these plans on an aggregated basis.

                                       8
<PAGE>
<TABLE>
<CAPTION>
                   AGGREGATED OPTION EXERCISES IN LAST FISCAL
                     YEAR AND FISCAL YEAR-END OPTION VALUES
--------------------------------------------------------------------------------
                                                     Number of Securities
                                                    Underlying Unexercised      Value of Unexercised
                    Shares Acquired      Value            Options at           In-the-Money Options at
        Name          On Exercise      Realized       Fiscal Year-End(1)         Fiscal Year-End(1)
-----------------------------------------------------------------------------------------------------------
<S>                     <C>           <C>                 <C>                        <C>
Michael L. Cox          17,320        $233,232            113,652                    $393,009

Robert R. Connors         0               0                22,558                      17,981

Kimberly J. Ellington      914           5,731             16,059                       9,459

Mark K. Hardwick          0               0                28,670                      35,533

Jeffrey B. Lorentson      0               0                 9,705                       6,306

Larry R. Helms            0               0                52,661                     211,221
-----------------------------------------------------------------------------------------------------------
</TABLE>
(1)  The vesting of the stock options granted to employees under the 1999
     Long-term Equity Incentive Plan on July 1, 2004 and September 1, 2005 was
     accelerated so that these options became fully vested on November 30, 2005.
     As a result, all options granted to the named executive officers were
     exercisable at the fiscal year-end.

Long-term Cash Incentive

Under the Senior Management Incentive  Compensation  Program, the annual bonuses
earned by  participating  employees are payable 2/3 in cash following the end of
the fiscal year and 1/3 in Deferred  Stock  Units  ("DSUs")  two years after the
bonus is earned.  When  payable,  the DSUs are valued at an amount  equal to the
fair market  value of the  Corporation's  common stock as of the last day of the
calendar  year  preceding  the  date of  payment,  plus  accumulated  dividends.
Payments  for the  DSUs  are  made in  cash,  not  stock.  If the  participant's
employment  is  terminated  for  cause  or  is  voluntarily  terminated  by  the
participant (except on account of retirement,  death or disability) prior to the
date  of  payment,  the  DSUs  are  forfeited.   The  following  table  contains
information concerning DSU awards for 2005 under the Senior Management Incentive
Compensation  Program to each of the Named  Executive  Officers.  The section of
this proxy statement  entitled  "Report of the  Compensation and Human Resources
Committee on Executive  Compensation  --  Incentive  Compensation,"  on page 12,
contains   additional   information  about  the  Senior   Management   Incentive
Compensation Program.
<TABLE>
<CAPTION>
             LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
--------------------------------------------------------------------------------
                                          Number of Shares,         Performance or Other Period Until
                 Name                   Units or Other Rights              Maturation or Payout
-------------------------------------------------------------------------------------------------------------
<S>                                             <C>                         <C>
            Michael L. Cox                       851                        1/01/06 - 1/01/08

           Robert R. Connors                     467                        1/01/06 - 1/01/08

         Kimberly J. Ellington                   232                        1/01/06 - 1/01/08

           Mark K. Hardwick                      460                        1/01/06 - 1/01/08

         Jeffrey B. Lorentson                    167                        1/01/06 - 1/01/08

            Larry R. Helms                        0                                N/A

-------------------------------------------------------------------------------------------------------------
</TABLE>
                                       9
<PAGE>
Pension Plans

The following table shows the estimated  annual benefits payable upon retirement
at normal retirement age 65 to employees of the Corporation and its subsidiaries
who are covered by the First Merchants Corporation  Retirement Pension Plan (the
"Pension Plan"), a qualified defined benefit pension plan. For employees who are
also  covered  by  the  First  Merchants  Corporation   Supplemental   Executive
Retirement  Plan (the "SERP Plan"),  a  nonqualified  "excess  benefit" plan, it
includes the estimated annual benefits  payable under that plan.  Benefits under
the Pension and SERP plans are  computed on the basis of  straight-life  annuity
amounts under the following formula: 1.6% of average final compensation plus .5%
of average final compensation in excess of Social Security covered compensation,
both times years of service (to a maximum of 25 years).  Benefits are integrated
with Social Security but are not subject to any deduction for Social Security or
other offset amounts.
<TABLE>
<CAPTION>
                                            PENSION PLAN TABLE
-----------------------------------------------------------------------------------------------------------
   Compensation                                       Years of Service
-----------------------------------------------------------------------------------------------------------
<S>                     <C>            <C>             <C>              <C>                 <C>
                          15              20             25                30                  35
-----------------------------------------------------------------------------------------------------------
    $125,000           $35,052         $ 46,736        $58,421          $58,421             $58,421
     150,000            42,927           57,236         71,546           71,546              71,546
     175,000            50,802           67,736         84,671           84,671              84,671
     200,000            58,677           78,236         97,796           97,796              97,796
     250,000            74,427           99,236        124,046          124,046             124,046
     300,000            90,177          120,236        150,296          150,296             150,296
     350,000           105,927          141,236        176,546          176,546             176,546
     400,000           121,677          162,236        202,796          202,796             202,796
     450,000           137,427          183,236        229,046          229,046             229,046
     500,000           153,177          204,236        255,296          255,296             255,296
-----------------------------------------------------------------------------------------------------------
</TABLE>

The  benefits  shown in the above  table are based on  covered  compensation  of
$57,636,  the covered  compensation  set forth in the 2005 covered  compensation
table for persons born in 1944 (Mr.  Cox's birth year).  Mr. Cox is the only one
of the Named  Executive  Officers who is currently  accruing  benefits under the
Pension Plan, and he is the only Named Executive Officer who participates in the
SERP Plan.

Compensation  for purposes of the Pension  Plan  consists of the base salary and
service award  components of the amounts  reported in the "Salary" column in the
Summary  Compensation  Table  on page 7. For plan  years  beginning  on or after
January 1, 2005,  $210,000 is the  maximum  amount of  compensation  that can be
considered  for purposes of  calculating  pension  benefits  accruing  under the
Pension Plan.  This amount  increased to $220,000 for plan years beginning on or
after  January 1,  2006.  Compensation  for  purposes  of the SERP  Plan,  which
provides benefits to designated executives that would otherwise be payable under
the Pension Plan if Internal  Revenue Code Section  401(a)(17) did not limit the
amount of  compensation  that can be  considered  for  purposes  of  calculating
benefits  accruing  under the Pension  Plan and if incentive  compensation  were
included in  compensation,  also  includes  the amounts  reported in the "Bonus"
column in the Summary  Compensation  Table. Mr. Cox's 2005 compensation used for
purposes of  calculating  his pension  benefits under the Pension and SERP plans
was $409,426,  and he had 10.5 years of credited  years of service as of January
1, 2006.

Effective  March 1, 2005, the benefits  accruing to  participants in the Pension
Plan other than those who were at least age 55 with 10 or more credited years of
service,  including  four of the Named  Executive  Officers - Mr.  Connors,  Ms.
Ellington,  Mr. Hardwick and Mr. Lorentson,  were "frozen," and employees of the
Corporation and its subsidiaries who were not  participating in the plan on that
date could not become eligible to participate. The benefits payable at age 65 to
the  participants  whose benefits were frozen are  determined  under the formula
described in the paragraph  immediately  preceding the Pension Plan Table above,
based on their average final  compensation as of March 1, 2005 times a fraction,
the numerator of which is the  employee's  credited years of service as of March
1,  2005,  and the  denominator  of which is the  employee's  credited  years of
service  projected to age 65. The average final  compensation  and the fractions


                                       10
<PAGE>
used to  determine  the  benefits  payable  under the Pension  Plan to the Named
Executive  Officers  whose  benefits  were frozen  are:  Mr.  Connors,  $166,499
(2.50/12.00),  Ms.  Ellington,  $69,868  (8.24/27.99),  Mr.  Hardwick,  $106,541
(7.32/38.32), and Mr. Lorentson $105,565 (3.40/26.82).

The Pension Plan  participants who were at least age 55 with 10 or more credited
years of  service  on March 1,  2005,  including  Mr.  Cox and Mr.  Helms,  were
"grandfathered;"  that is, their benefits  continued to accrue under the Pension
Plan until their retirement, and the provisions of the Savings Plan that were in
effect prior to its amendment  continued to apply to them.  Mr. Helms retired on
October 28, 2005 with 33 credited  years of service  under the Pension  Plan and
receives a benefit under that plan based on the formula that was in effect prior
to 1990, equal to 2% of his average final  compensation times his credited years
of service (to a maximum of 25 years).  Mr. Helms'  average  final  compensation
used to determine his Pension Plan benefit was $130,042.

The First Merchants Corporation Retirement and Income Savings Plan (the "Savings
Plan"), a Section 401(k)  qualified  defined  contribution  plan, was amended on
March 1, 2005 to provide enhanced  retirement  benefits,  including employer and
matching  contributions,  for  eligible  employees  of the  Corporation  and its
subsidiaries  whose benefits under the Pension Plan were frozen and employees of
the Corporation and its subsidiaries  who were not  participating in the plan on
that date. Because a participant's  benefit under the Savings Plan is determined
by the amounts of the annual employer,  employee, and matching contributions and
by the actual investment returns of the underlying assets, it is not possible to
determine the amount of a participant's Savings Plan benefit at any future time.

Termination of Employment and Change of Control Arrangements

The  Corporation  has  change  of  control  agreements  with  each of the  Named
Executive   Officers  except  Mr.  Helms,  whose  change  of  control  agreement
terminated  when he retired on October  28,  2005.  These are  "double  trigger"
change of control agreements,  in that they provide for the payment of severance
benefits to the executives  only in the event of both a change of control of the
Corporation and a termination or  constructive  termination of the employment of
the executive  within 24 months after the change of control (but no payment will
be made if the  termination was for cause,  because of the executive's  death or
disability,   or  by  the  executive  other  than  on  account  of  constructive
termination).  In general,  a "change of control"  means an  acquisition  by any
person of 25% or more of the Corporation's voting shares, a change in the makeup
of a majority of the Corporation's  Board of Directors over a 24-month period, a
merger of the Corporation in which the shareholders before the merger own 50% or
less of the  Corporation's  voting  shares after the merger,  or approval by the
Corporation's  shareholders of a plan of complete liquidation of the Corporation
or an agreement  to sell or dispose of  substantially  all of the  Corporation's
assets. A "constructive  termination" means,  generally, a significant reduction
in duties,  compensation or benefits or a relocation of the  executive's  office
outside of area described in the  agreement,  unless agreed to by the executive.
The severance  benefits payable under each of the change of control  agreements,
in addition to base salary and incentive  compensation  accrued through the date
of termination, would be a lump sum amount, determined by multiplying the sum of
(1) the  executive's  annual base salary and (2) the  executive's  largest bonus
under the Corporation's Senior Management Incentive  Compensation Program during
the 2 years  preceding  termination,  by 299% in the  cases  of Mr.  Cox and Mr.
Hardwick,  200% in the cases of Mr.  Connors and Ms.  Ellington  and 100% in the
case of Mr.  Lorentson.  The Corporation also has a change of control  agreement
with Michael C. Rechin,  who became Executive Vice President and Chief Operating
Officer of the  Corporation  on November 21, 2005 and a director on December 13,
2005. The multiplier for Mr. Rechin's  change of control  agreement is 299%. The
Corporation would also pay any excise tax imposed on the executive under Section
4999 of the Internal Revenue Code on an "excess parachute payment;" and it would
provide  to the  executive  2  years'  life,  disability,  accident  and  health
insurance  coverage,  the bargain  element value of  outstanding  stock options,
outplacement  services,  and  reasonable  legal fees and expenses  incurred as a
result of the  termination.  The change of control  agreements  were not entered


                                       11
<PAGE>
into in response to any effort to acquire  control of the  Corporation,  and the
Board of Directors is not aware of any such effort.

Report  of  the  Compensation   and  Human  Resources   Committee  on  Executive
Compensation

General Compensation Policy

The  Compensation  and Human  Resources  Committee  establishes the salaries and
administers the executive  compensation  program applicable to the Corporation's
executive officers,  including the Named Executive  Officers.  The Corporation's
compensation  policy 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 Committee  believes that a  competitive  compensation  program,
combining salary, employee benefits,  incentive  compensation,  and equity-based
compensation,  is  necessary  to attract and retain  qualified  executives.  The
incentive  compensation  for executive  officers,  including the Chief Executive
Officer, is tied to the Corporation's  financial performance and the executive's
individual  contributions to that  performance.  The  equity-based  compensation
programs  encourage  ownership and retention of the  Corporation's  stock by key
employees,  assuring  that they  have a  meaningful  stake in the  Corporation's
continued  success and thereby  aligning  their  interests more closely with the
interests of shareholders.

Cash Compensation.

The annual  salaries  paid to the  Corporation's  executive  officers  for 2005,
including the Chief Executive  Officer,  were determined by the Compensation and
Human  Resources  Committee.  The salaries for 2005 paid to the Named  Executive
Officers are shown in the "Salary" column of the Summary  Compensation  Table on
page 7. These salaries were subjectively  determined after  consideration of the
executive officer's individual  responsibilities,  performance,  experience, the
CEO's  evaluation  of  the  other  executive  officers,   a  review  of  several
measurements of the  Corporation's  short-term and long-term  financial  results
compared with industry peers, various industry salary surveys, and other factors
such as budgetary considerations and inflation rates.

Incentive Compensation

The incentive  compensation  paid to the  Corporation's  executive  officers for
2005,  including the Chief Executive  Officer,  was determined  under the Senior
Management  Incentive  Compensation  Program.  This program  incorporates modern
incentive plan  techniques and executive  retention  features for the purpose of
closely aligning the interests of executives with those of  shareholders.  Under
the program,  at or near the  beginning of each  calendar  year,  the  Committee
assigns each of the program  participants  a target bonus for the year that is a
percentage of salary. The participant's  incentive  compensation for the year is
based on accomplishment of specific performance levels set forth in the program.
The Chief  Executive  Officer's and Chief Operating  Officer's  bonuses for 2005
depended on meeting targets with respect to the  Corporation's  return on equity
and improvements in the Corporation's  operating  earnings per share and diluted
GAAP  earnings per share  compared to the  previous  year.  The other  executive
officers' bonuses depended on meeting targets with respect to improvement in the
Corporation's  operating  earnings per share  compared to the previous  year and
accomplishing  personal objectives as determined at or near the beginning of the
year by the CEO. In order to avoid wide  swings in payouts  and to better  focus
the program  participants  on  long-term  results,  60% of any bonus paid to the
participants  is  based  on  current  year  performance  and 40% is based on the
previous year's payout.  To further the purpose of executive  retention,  2/3 of
each  participant's  bonus is payable in cash  following the end of the calendar
year,  and the other 1/3 is payable in Deferred  Stock Units  ("DSUs") two years
after the bonus is  earned  (unless  the  portion  payable  in DSUs is less than
$1,000,  in which case the entire bonus is payable in cash).  When payable,  the
DSUs are valued at an amount equal to the fair market value of the Corporation's
common  stock on the December 31  preceding  the payment  date plus  accumulated


                                       12
<PAGE>
dividends. Payment is made to the participant in cash. The DSUs are forfeited if
the  participant's   employment  is  terminated  for  cause  or  is  voluntarily
terminated  by the  participant  (except  on  account  of  retirement,  death or
disability)  prior to the date of payment.  The  participant  may elect to defer
payment of all or part of the cash portion of the bonus by filing an election to
do so in the manner described in the program.  Deferred amounts will be credited
with interest quarterly based on the current 5-year U.S. Treasury Bond rate.

The cash portion of the bonuses for 2005 for the Named Executive Officers is set
forth in the "Bonus" column of the Summary Compensation Table on page 7, and the
DSU portion of these bonuses is set forth in the Long-Term Incentive Plan Awards
Table on page 9. Cash amounts paid to these  executive  officers for DSUs earned
for 2003 are set forth in the "LTIP Payouts" column of the Summary  Compensation
Table on page 7. For 2005,  Mr. Cox's  target  bonus was 45% of salary,  and his
actual bonus,  based 60% on 2005 performance and 40% on 2004 payout,  was 19.35%
of salary. The target bonuses for Mr. Connors,  Ms. Ellington,  Mr. Hardwick and
Mr. Helms were each 30% of salary,  and their actual bonuses,  based 60% on 2005
performance and 40% on 2004 payout,  were 20.66%,  19.57%,  21.10% and 17.68% of
salary, respectively.  The target bonus for Mr. Lorentson was 15% of salary, and
his actual  bonus,  based 60% on 2005  performance  and 40% on 2004 payout,  was
10.67% of salary.

Equity-based Compensation.

In  addition  to the DSUs under the  Senior  Management  Incentive  Compensation
Program described above, the  Corporation's  executive  officers,  including the
Chief Executive Officer,  received equity-based  compensation for 2005 under the
Corporation's  Long-term  Equity  Incentive  Plan  and its 2004  Employee  Stock
Purchase Plan. The Long-term Equity  Incentive Plan is briefly  described in the
paragraph on page 8 immediately  preceding the Option Grants in Last Fiscal Year
Table.  The  number of shares  for which the  Compensation  and Human  Resources
Committee awarded options under that plan to the Named Executive Officers during
2005 is set forth in the  "Number  of  Securities  Underlying  Options  Granted"
column of the Option Grants in Last Fiscal Year Table on page 8.

The  2004  Employee  Stock  Purchase  Plan  generally  provides  that  full-time
employees of the  Corporation  or a  participating  subsidiary  with more than 6
months of service may elect,  prior to the offering  period (July 1 to June 30),
to  purchase  common  shares of the  Corporation  at a price equal to 85% of the
lesser of the market  price of the stock at the  beginning of the period and the
market price at the end of the period.  For the offering  period ending June 30,
2005, Mr. Cox, Mr. Conners, Ms. Ellington, Mr. Lorentson and Mr. Helms purchased
995, 248, 161, 62 and 124 shares,  respectively,  under the 2004 Employee  Stock
Purchase Plan. Mr. Hardwick did not participate in the Plan during this offering
period.

Other Compensation.

The Corporation's  executive  officers,  including the Named Executive Officers,
are also covered by medical and retirement  plans that are generally  applicable
to full-time  employees of the Corporation and its subsidiaries.  The retirement
plans  covering  each  of  the  executive   officers  are  the  First  Merchants
Corporation  Retirement  Pension Plan (the "Pension Plan"), a qualified  defined
benefit pension plan (described on page 10 under "Pension Plans"), and the First
Merchants Corporation Retirement and Income Savings Plan (the "Savings Plan"), a
qualified  Internal  Revenue Code ss.401(k)  defined  contribution  pension plan
(described on page 11 under  "Pension  Plans" and referred to in note (3) to the
Summary  Compensation  Table on pages 7 and 8). Mr.  Cox is also  covered by the
First  Merchants   Corporation   Supplemental   Executive   Retirement  Plan,  a
nonqualified "excess benefit" plan (described on page 10 under "Pension Plans").
As  explained on page 10, the Pension Plan was "frozen" on March 1, 2005 and the
Savings plan was amended to provide  enhanced  retirement  benefits for eligible
employees of the Corporation and its subsidiaries. The Pension Plan participants


                                       13
<PAGE>
who were at least age 55 with 10 or more  credited  years of service on March 1,
2005,  including Mr. Cox and Mr.  Helms,  were  "grandfathered;"  that is, their
benefits  continue to accrue under the Pension Plan until their  retirement  and
the  provisions  of the Savings Plan that were in effect prior to its  amendment
continue to apply to them.

The above report is submitted by:

FIRST MERCHANTS CORPORATION COMPENSATION
AND HUMAN RESOURCES COMMITTEE
Robert M. Smitson, Chairman
Thomas B. Clark
Roderick English
Charles E. Schalliol

                                PERFORMANCE GRAPH

The following graph compares the yearly change in the  Corporation's  cumulative
total  shareholder  return on its common stock with the cumulative total returns
of the Russell 2000 Index and the Russell 2000 Financial  Services  Sector Index
for the five-year period ending December 31, 2005.

                       Comparative Five-Year Total Returns
     First Merchants Corp., Russell 2000, Russell 2000 - Financial Services

[GRAPHIC OMITTED][GRAPHIC OMITTED]
<TABLE>
<CAPTION>
                             2000         2001          2002          2003         2004           2005
----------------------- ------------- ------------ -------------- ------------ ------------ ---------------
<S>                          <C>          <C>            <C>          <C>          <C>             <C>
FRME                         $100.00      $115.62        $119.50      $145.69      $167.61         $159.50
Russell 2000                 $100.00      $102.49         $81.49      $120.00      $142.00         $148.46
R2-Finl Svcs                 $100.00      $115.64        $118.08      $164.69      $200.02         $204.67
----------------------- ------------- ------------ -------------- ------------ ------------ ---------------
</TABLE>
Notes:   Assumes $100 invested on December 31, 2000.
         Total return assumes reinvestment of dividends.


                                       14
<PAGE>
 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

To the best of our  knowledge,  the  following  table shows the only  beneficial
owners  of more  than 5% of the  Corporation's  outstanding  common  stock as of
February 10, 2006.
<TABLE>
<CAPTION>
             Name and Address                    Amount and Nature                          Percent
         of Beneficial Owner                of Beneficial Ownership                         of Class
<S>                                                  <C>                                     <C>
         Dimensional Fund Advisors Inc.              935,378(1)..................................5.00%
         1299 Ocean Avenue, (11)th Floor
         Santa Monica, CA (90401)

         Merchants Trust Company, N. A.            1,440,001(2)..................................7.68%
         200 East Jackson Street
         Muncie, IN 47305
</TABLE>
         (1)      Based on a Schedule 13G filing with the SEC, Dimensional Fund
                  Advisors Inc. ("Dimensional"), an investment advisor
                  registered under Section 203 of the Investment Advisors Act of
                  1940, furnishes investment advice to four investment companies
                  registered under the Investment Advisors Act of 1940 and
                  serves as investment manager to certain other commingled group
                  trusts and separate accounts. These investment companies,
                  trusts and accounts are the "Funds." In its role as investment
                  advisor or manager, Dimensional possesses investment and/or
                  voting power over the shares of the Corporation's common stock
                  owned by the Funds and may be deemed to be the beneficial
                  owner of these shares under rules of the SEC. However, all of
                  these shares are owned by the Funds, and Dimensional disclaims
                  beneficial ownership of such shares for any other purpose.

         (2)      As of February 10, 2006, the Corporation's wholly owned
                  subsidiary, Merchants Trust Company, National Association
                  ("MTC"), held 1,440,001 shares of the Corporation's common
                  stock in various fiduciary capacities, in regular, nominee or
                  street name accounts, consisting of 7.68% of the Corporation's
                  outstanding shares. Beneficial ownership of shares so held is
                  disclaimed by the Corporation. It is MTC's practice, when
                  holding shares as sole trustee or sole executor, to vote the
                  shares; but, when it holds shares as co-trustee or
                  co-executor, MTC obtains approval from the co-fiduciary prior
                  to voting.

The  following  table lists the amount and percent of the  Corporation's  common
stock beneficially owned on February 10, 2006 by directors  (including directors
who are  retiring  as of the 2006  annual  meeting  of  shareholders),  director
nominees and the Named Executive  Officers,  and by the Corporation's  directors
and executive officers as a group.  Unless otherwise  indicated,  the beneficial
owner has sole voting and  investment  power.  The  information  provided in the
table is based on the  Corporation's  records and information filed with the SEC
and provided to the Corporation.

The number of shares beneficially owned by each person is determined under rules
of the SEC, and the  information  is not  necessarily  indicative  of beneficial
ownership  for any  other  purpose.  Under  those  rules,  beneficial  ownership
includes shares which a person has the right to acquire as of April 11, 2006 (60
days after February 10, 2006) by exercising stock options ("Vested Options").


                                       15
<PAGE>
<TABLE>
<CAPTION>
                                                 Amount and Nature                          Percent
         Beneficial Owner                   of Beneficial Ownership                         of Class
         -------------------------------------------------------------------------------------------
<S>                                                     <C>                                   <C>
         James F. Ault                                   27,291(1)...............................*
         Richard A. Boehning                             24,180(2)...............................*
         Thomas B. Clark                                 14,831(3)...............................*
         Michael L. Cox                                 162,348(4)...............................*
         Roderick English                                 1,157(5)...............................*
         Jo Ann M. Gora                                   1,157(6)...............................*
         Barry J. Hudson                                455,702(7)...............................2.43%
         Robert T. Jeffares                              14,734(8)...............................*
         Thomas D. McAuliffe                             56,353(9)...............................*
         Michael C. Rechin                                4,000..................................*
         Charles E. Schalliol                             2,157(10)..............................*
         Robert M. Smitson                               23,573(11)..............................*
         Jean L. Wojtowicz                                2,314(12)..............................*
         Robert R. Connors                               23,016(13)..............................*
         Kimberly J. Ellington                           16,782(14)..............................*
         Mark K. Hardwick                                29,390(15)..............................*
         Larry R. Helms                                  77,802(16) .............................*
         Jeffrey B. Lorentson                             9,913(17)..............................*

         Directors and Executive
         Officers as a Group (19 persons)               951,700(18)..............................5.08%
</TABLE>
         * Percentage beneficially owned is less than 1% of the outstanding
shares.

         (1)      Includes  12,718  shares  held by his  spouse,  Marilyn  Ault,
                  and 4,629  shares that he has the right to acquire by
                  exercising Vested Options.

         (2)      Includes 10,415 shares held jointly with his spouse, Phyllis
                  Boehning, 5,586 shares held in trust for family members for
                  which Mr. Boehning, as trustee, has voting and investment
                  power, and 4,629 shares that he has the right to acquire by
                  exercising Vested Options.

         (3)      Includes 11,227 shares that he has the right to acquire by
                  exercising Vested Options.

         (4)      Includes 40,298 shares held jointly with his spouse,  Sharon
                  Cox, and 113,652 shares that he has the right to acquire by
                  exercising Vested Options.

         (5)      Includes 1,157 shares that he has the right to acquire by
                  exercising Vested Options.

         (6)      Includes 1,157 shares that she has the right to acquire by
                  exercising Vested Options.

         (7)      Includes 327,756 shares owned by Mutual Security, Inc., 10,024
                  shares held jointly with his spouse, Elizabeth Hudson, 43,521
                  shares held by his spouse, 13,626 shares held by his spouse as
                  custodian for his children, and 13,007 shares that he has the
                  right to acquire by exercising Vested Options.


                                       16
<PAGE>
         (8)      Includes 3,595 shares held by his spouse, Olga Jeffares, 2,900
                  shares held jointly with his spouse, Olga Jeffares, 1,835
                  shares held in trust for family members for which Mr.
                  Jeffares, as trustee, has voting and investment power, and
                  4,629 shares that he has the right to acquire by exercising
                  Vested Options.

         (9)      Includes 31,255 shares held jointly with his spouse, Andrea
                  McAuliffe, 8,398 shares that he and his spouse hold as joint
                  custodians for his children, and 16,700 shares that he has the
                  right to acquire by exercising Vested Options.

         (10)     Includes 1,157 shares that he has the right to acquire by
                  exercising Vested Options.

         (11)     Includes  5,859 shares held by his spouse,  Marilyn  Smitson,
                  and 11,227  shares that he has the right to acquire by
                  exercising Vested Options.

         (12)     Includes 2,314 shares that she has the right to acquire by
                  exercising Vested Options.

         (13)     Includes 458 shares held jointly with his spouse, Ann Connors,
                  and 22,558 shares that he has the right to acquire by
                  exercising Vested Options.

         (14)     Includes 34 shares held  jointly  with her spouse,  William
                  Ellington,  and 16,059  shares that she has the right to
                  acquire by exercising Vested Options.

         (15)     Includes 28,670 shares that he has the right to acquire by
                  exercising Vested Options.

         (16)     Includes  25,140  shares held  jointly  with his spouse,
                  Sandra  Helms,  and 52,661  shares that he has the right to
                  acquire by exercising Vested Options.

         (17)     Includes 208 shares held jointly with his spouse, Susan
                  Lorentson,  and 9,705 shares that he has the right to acquire
                  by exercising Vested Options.

         (18)     Includes  320,139  shares  that the  Corporation's  directors
                  and  executive  officers  have the right to acquire by
                  exercising Vested Options.

                 INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

Certain directors and executive officers of the Corporation and its subsidiaries
and their  associates  are customers  of, and have had  transactions  with,  the
Corporation's  subsidiary  banks  from  time to time in the  ordinary  course of
business.  Additional transactions may be expected to take place in the ordinary
course of  business in the future.  All loans and  commitments  included in such
transactions were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons and did not involve more than the normal risk of collectibility or
present other unfavorable features.

Richard A. Boehning, a director of the Corporation and LBT, is of counsel to the
law  firm of  Bennett,  Boehning  & Clary,  Lafayette,  Indiana,  which  LBT has
retained  as legal  counsel  during  2005 and  proposes to retain as such during
2006.

                          COMMUNICATIONS WITH THE BOARD

Shareholders  may  communicate  with the  Corporation's  Board of  Directors  by
submitting  an e-mail to the Board at  bod@firstmerchants.com.  All such e-mails
will be automatically forwarded to the Chairman of the Nominating and Governance
Committee,  Thomas B.  Clark,  who will  arrange for such  communications  to be
relayed to the other directors.


                                       17
<PAGE>
              DIRECTORS' ATTENDANCE AT ANNUAL SHAREHOLDERS MEETING

The  Corporation's  directors  are  encouraged  to attend the annual  meeting of
shareholders. At the 2005 annual meeting, all 17 directors were in attendance.

             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Corporation's  directors and executive officers to file reports of ownership and
changes in  ownership  of the  Corporation's  stock  with the SEC.  Based on its
records and the written representations of its directors and executive officers,
the  Corporation  believes  that during  2005 these  persons  complied  with all
Section 16(a) filing requirements.

                         INDEPENDENT PUBLIC ACCOUNTANTS

Selection of Independent Public Accountants

The Board,  subject to ratification by the shareholders,  has appointed BKD, LLP
as  the  Corporation's   independent   public   accountants  for  2006.  If  the
shareholders  do not ratify the  appointment of BKD, the Audit Committee and the
Board will reconsider this appointment. Representatives of the firm are expected
to be present at the annual shareholders' meeting. They will have an opportunity
to make a  statement,  if they desire to do so, and are expected to be available
to respond to appropriate questions.

The Board of Directors  unanimously  recommends a vote "FOR" ratification of the
appointment of the firm of BKD, LLP as independent public accountants for 2006.

Fees for Professional Services Rendered by BKD, LLP

The following  table shows the  aggregate  fees billed by BKD, LLP for audit and
other services rendered to the Corporation for 2004 and 2005.

                                          2004                    2005
                                          ----                    ----
         Audit Fees                     $352,428                $383,400
         Audit-Related Fees               43,489                  76,292
         Tax Fees                         79,920                  93,320
         All Other Fees                    0                      14,230
                                     --------------          --------------
         Total Fees                     $475,837                $567,242
                                     ==============          ==============

The audit fees were for  professional  services  rendered  for the audits of the
Corporation's  consolidated  financial  statements  and  internal  control  over
financial  reporting,  reviews of condensed  consolidated  financial  statements
included  in the  Corporation's  Forms  10-Q,  and  assistance  with  regulatory
filings.

The audit-related fees were for professional services rendered for audits of the
Corporation's benefit plans.

The tax fees were for  professional  services  rendered for  preparation  of tax
returns and consultation on various tax matters.

The other fees were for professional investigatory services rendered by BKD, LLP
at the request of the Audit Committee.

All of these  audit-related,  tax and other fees were  pre-approved by the Audit
Committee in  accordance  with the  Committee's  pre-approval  policy  described
below.

                                       18
<PAGE>
The Audit Committee has considered  whether the provision by BKD, LLP of
the services  covered by the fees other than the audit fees is  compatible  with
maintaining BKD, LLP's independence and believes that it is compatible.

Pre-approval Policies and Procedures

The Audit  Committee has  established  a  pre-approval  policy,  under which the
Committee is required to pre-approve all audit and non-audit  services performed
by the Corporation's independent auditors, in order to assure that the provision
of such services does not impair the auditor's independence.  These services may
include audit services, audit-related services, tax services and other services.
Under this  policy,  pre-approval  is  provided  for 12 months  from the date of
pre-approval unless the Committee  specifically provides for a different period.
The policy is detailed as to the particular services or category of services and
fee  levels  that are  pre-approved.  Unless a service  or type of service to be
provided by the independent auditors has received general pre-approval,  it will
require specific  pre-approval by the Audit  Committee.  The Committee must also
approve any  proposed  services  exceeding  the  pre-approved  fee  levels.  The
independent auditors are required to provide detailed back-up documentation with
respect to each proposed pre-approved service at the time of approval. The Audit
Committee may delegate pre-approval authority to one or more of its members. The
member or members to whom such  authority  has been  delegated  must  report any
pre-approval decisions to the Audit Committee at its next scheduled meeting. The
Audit Committee does not delegate its  responsibilities to pre-approve  services
performed by the independent auditors to management.

                              SHAREHOLDER PROPOSALS

Proposals of shareholders intended to be presented at the 2007 annual meeting of
the  shareholders  must be received by the Secretary of the  Corporation  at the
Corporation's  principal  office by  November  2,  2006,  for  inclusion  in the
Corporation's 2007 proxy statement and form of proxy relating to that meeting.

Shareholder  proposals,  if any,  intended  to be  presented  at the 2006 annual
meeting that were not submitted for  inclusion in this proxy  statement  will be
considered   untimely  unless  they  were  received  by  the  Secretary  of  the
Corporation at the Corporation's principal office by January 17, 2006.

                                  OTHER MATTERS

The  Corporation is delivering only one set of proxy  materials,  including this
proxy  statement and the annual report,  to shareholders  who,  according to the
Corporation's  records, share an address and whom it believes are members of the
same family.  A separate proxy card is included for each of these  shareholders.
Any shareholder who received only one set of proxy materials,  and who wishes to
receive a separate set now or in the future, may write or call the Corporation's
Shareholder Services Department to request a separate copy of these materials at
First  Merchants  Corporation,  P. O.  Box  792,  Muncie  IN  47308-9915;  (800)
262-4261,  extension 7278. Similarly,  shareholders who share an address and are
members of the same family,  and who have received  multiple copies of the proxy
materials,  may write or call the Corporation's  Shareholder Services Department
at the same address and telephone number to request delivery of a single copy of
these materials in the future.

The cost of soliciting proxies will be borne by the Corporation.  In addition to
solicitations  by mail,  proxies may be solicited  personally or by telephone or
other electronic  means, but no solicitation  will be made by specially  engaged
employees or paid solicitors.

The Board and  management  are not aware of any matters to be  presented  at the
annual  meeting of the  shareholders  other than the election of the  directors.
However,  if  any  other  matters  properly  come  before  such  meeting  or any


                                       19
<PAGE>
adjournment  thereof,  the holders of the proxies are authorized to vote thereon
at their  discretion,  provided the  Corporation did not have notice of any such
matter on or before January 17, 2006.

                                              By Order of the Board of Directors

Muncie, Indiana                               Cynthia G. Holaday
March 2, 2006                                 Secretary

                                       20
<PAGE>


                                   APPENDIX A

               FIRST MERCHANTS CORPORATION AUDIT COMMITTEE CHARTER

Role
The Audit Committee (the "Committee") is appointed by the Board of Directors
(the "Board") of First Merchants Corporation (the "Corporation") to assist the
Board:
          1.  In its oversight of the Corporation's accounting and financial r
              eporting principles and policies and internal accounting and
              disclosure controls and procedures;
          2.  In its oversight and supervision of the Corporation's internal
              audit function;
          3.  In its oversight of the certification of the Corporation's
              quarterly and annual financial statements and disclosures and
              assessment of internal disclosure controls by the Corporation's
              Chief Executive Officer ("CEO") and Chief Financial Officer
              ("CFO");
          4.  In its oversight of the Corporation's consolidated financial
              statements and the independent external audit thereof, including
              the appointing, compensating, overseeing (including resolving any
              disagreements between management and the independent external
              auditor regarding financial reporting); and
          5.  In evaluating the independence of the external auditors.

Membership
The members of the Committee shall meet the independence and experience
requirements of the NASDAQ and any other applicable laws and regulations. These
requirements specifically include the rules of the Securities and Exchange
Commission ("SEC") regarding audit committee financial experts, as defined.
          1.  The number and names of person determined to be audit committee
              financial experts will be disclosed in the Corporation's annual
              report.
          2.  The Corporation will disclose in the annual report whether the
              audit committee financial experts are independent of management,
              and if not, why.
          3.  If it is determined that the Corporation does not have a financial
              expert on the Committee, it must disclose that fact and explain
              why it does not.
Members of the Committee shall be appointed annually by majority vote of the
Board and will serve until the next annual meeting of the Board.

Meetings
The Committee shall meet four times annually or more frequently as circumstances
require:
          1.  To discuss with the Senior Staff Auditor and/or the outsourced
              internal auditor the status of completion of the annual audit plan
              and audit reports arising therefrom.
          2.  To discuss with management the annual audited financial statements
              and quarterly financial results and the required certifications of
              the CEO and CFO.
          3.  At least annually, the Committee will meet separately with the
              internal auditor and the
              independent external auditor, without any members of management
              being present, to discuss matters that the Committee or any of
              these persons or firms believes should be discussed privately.
          4.  The Committee may request any officer or employee of the
              Corporation, or independent counsel, or independent external
              auditors to attend a meeting.

Responsibilities
Overseeing Financial Reporting and Disclosures
The Committee shall:
          1.  Review and approve, prior to filing, the Corporation's annual
              audited financial statements filed with the SEC and consider
              whether they accurately and appropriately reflect their knowledge
              of the financial condition of the Corporation and its results of
              operations. Specific consideration will be given to the accuracy


                                       A-1
<PAGE>
              of the financial statements, off-balance-sheet transactions,
              disclosure of pro forma financial information, and real time
              issuer disclosure matters.
          2.  Determine that management has put in place procedures to report to
              the SEC changes in
              Corporation stockholdings by directors, executive officers and
              more than 10% stockholders of the Corporation.
          3.  Ensure that the Corporation has established adequate procedures to
              ensure that quarterly and annual financial statements and
              disclosures are accurate and complete. This will include reviewing
              and approving the quarterly and annual CEO and CFO certifications.
          4.  Determine that the Corporation has complied with requirements of
              the SEC to disclose in periodic reports whether or not the
              Corporation has established a Code of Ethics.
          5.  Determine that the Corporation has complied with requirements of
              the SEC to disclose the approval by the Committee of all non-audit
              services to be performed by the Corporation's independent external
              auditor.

Internal Audit Supervision
The Committee shall:
          1.  Review the appointment of the Senior Staff Auditor and/or
              outsourced internal auditor; and
          2.  Evaluate the effectiveness of the internal audit function.

Independent External Auditor
The Committee shall:
          1.  Recommend the appointment and/or discharge of the independent
              external auditor;
          2.  Pre-approve the external auditor's fees;
          3.  Evaluate the external auditor's independence; and
          4.  Pre-approve all permissible non-audit services to be provided by
              the external auditors.

Internal and External Audit Plans and Results
The Committee shall:
          1.  Review and approve the annual audit plans of the internal audit
              function and the independent external auditor;
          2.  Approve any changes to the annual audit plans;
          3.  Meet with the Senior Staff Auditor and/or outsourced internal
              auditor to discuss the status of completion of the annual internal
              audit plans and the periodic internal audit reports;
          4.  Review with management the results of the independent external
              auditor's quarterly financial statements reviews;
          5.  Review with management and the independent external auditor the
              results of the annual financial statements audit;
          6.  Review with management and the independent external auditor their
              assessment of the quality of the Corporation's accounting
              principles, the adequacy of internal accounting and disclosure
              controls and resolution of identified significant deficiencies or
              material weaknesses and reportable conditions in internal
              accounting and disclosure controls;
          7.  Review compliance with laws and regulations and other audit
              reports deemed significant by the Committee:
          8.  Receive certain communications from the independent external
              auditors on an annual basis which include required
              communications under generally accepted auditing standards; and
          9.  Based on these reviews, the Committee shall make its
              recommendation to the Board as to the inclusion of the audited
              consolidated financial statements in the Corporation's annual
              report on Form 10-K.


                                       A-2
<PAGE>
Annual Proxy Statement Disclosure
The Committee should report activities to the Board and issue an annual report
to be included in the Corporation's proxy statement. In addition, the Committee
shall re-approve the Committee Charter annually, with a copy of the charter
filed with the SEC every three (3) years, and after any amendments.

Fraud Reporting and Handling of Complaints
The Committee shall have the responsibility for establishing procedures for:
          1.  Receipt, retention, and treatment of complaints received by the
              Corporation regarding accounting, internal controls, or auditing
              matters; and
          2.  The confidential, anonymous submission by employees of the
              Corporation of concerns regarding questionable accounting or
              auditing matters.

Regulatory Responsibilities
The Committee shall advise the Board with respect to any significant change in
the regulatory ratings of the Corporation and/or any subsidiary bank.

Resources and Authority
The Committee shall:
          1.  Meet with the counsel to the Corporation's Board when appropriate;
              and
          2.  Engage independent legal counsel, auditors, or other advisors as
              it determines necessary to carry out its duties.

Funding
The  Corporation  shall  provide the  Committee  with  appropriate  funding,  as
determined by the Committee, for payment of compensation:
          1.  To the registered independent external auditor employed by the
              Corporation for the  purpose of rendering or issuing an audit
              report, and
          2.  To any advisors employed by the Committee.

                                       A-3
<PAGE>

                        ANNUAL MEETING OF SHAREHOLDERS OF

                          FIRST MERCHANTS CORPORATION

                                 April 13, 2006

                           Please date, sign and mail
                             your proxy card in the
                            envelope provided as soon
                                  as possible.

   v Please detach along perforated line and mail in the envelope provided. v

--------------------------------------------------------------------------------
      THE BOARD OF DIRECTORS AND MANAGEMENT OF FIRST MERCHANTS CORPORATION
                  RECOMMEND A VOTE "FOR" THE PROPOSALS LISTED.
         PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
          PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
--------------------------------------------------------------------------------

1.    Election of Directors:

                                       NOMINEES:
|_| FOR ALL NOMINEES                   ( )   Richard A. Boehning
                                       ( )   Barry J. Hudson
|_| WITHHOLD AUTHORITY                 ( )   Michael C. Rechin
    FOR ALL NOMINEES

|_| FOR ALL EXCEPT
    (See instructions below)

INSTRUCTION: To withhold authority to vote for any individual nominee(s),
             mark "FOR ALL EXCEPT" and fill in the circle next to each
             nominee you wish to withhold, as shown here: (X)

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



--------------------------------------------------------------------------------
To change the address on your  account,  please check the box at right
and indicate your new address in the address space above.  Please note     |_|
that  changes  to the  registered  name(s) on the  account  may not be
submitted via this method.
--------------------------------------------------------------------------------

                                                           FOR  AGAINST  ABSTAIN

2.    Proposal to ratify  the appointment of the firm of   |_|    |_|      |_|
      BKD, LLP as the independent public accountants for
      2006.

3.    In their  discretion,  the  proxies are  authorized  to vote on such other
      matters as may properly come before the meeting,  provided the Corporation
      did not have notice of any such matter on or before January 17, 2006.

This proxy will be voted as directed,  but if not otherwise  directed this proxy
will be voted "FOR" items 1 and 2.

TO  VOTE  IN  ACCORDANCE   WITH  THE  BOARD  OF  DIRECTORS'   AND   MANAGEMENT'S
RECOMMENDATIONS, JUST SIGN BELOW; NO BOXES NEED TO BE CHECKED.

      MARK "X" HERE IF YOU PLAN TO ATTEND THE MEETING. |_|

                         _________________________________       _______________

Signature of Shareholder _________________________________ Date: _______________

                         _________________________________       _______________

Signature of Shareholder _________________________________ Date: _______________

      Note: Please sign exactly as your name or names appear on this Proxy. When
            shares are held jointly, each holder should sign. When signing as
            executor, administrator, attorney, trustee or guardian, please give
            full title as such. If the signer is a corporation, please sign full
            corporate name by duly authorized officer, giving full title as
            such. If signer is a partnership, please sign in partnership name by
            authorized person.

<PAGE>

                                      PROXY
                           FIRST MERCHANTS CORPORATION
                          PROXY SOLICITED ON BEHALF OF
              THE BOARD OF DIRECTORS OF FIRST MERCHANTS CORPORATION
                         ANNUAL MEETING OF SHAREHOLDERS

                                 APRIL 13, 2006

      The undersigned hereby appoints Clell W. Douglass and Hamer D. Shafer, and
each of them,  as proxies with power of  substitution,  to represent and to vote
all shares of common stock of First Merchants  Corporation which the undersigned
would  be  entitled  to vote at the  Annual  Meeting  of  Shareholders  of First
Merchants  Corporation to be held at the Horizon  Convention  Center,  401 South
High Street, Muncie, Indiana 47305, at 3:30 PM EST on April 13, 2006, and at any
adjournment  thereof,  with all of the powers the  undersigned  would possess if
personally  present.  If any of the nominees for election as Directors is unable
or declines to serve for any reason, the persons listed above have the authority
to vote for any  substitute  nominee  named by the Board of  Directors  of First
Merchants Corporation.

       (Continued, and to be marked, dated and signed on the reverse side)

<PAGE>

                        ANNUAL MEETING OF SHAREHOLDERS OF

                          FIRST MERCHANTS CORPORATION

                                 April 13, 2006

                           -------------------------
                           PROXY VOTING INSTRUCTIONS
                           -------------------------

MAIL - Date,  sign and mail your proxy card in the
envelope provided as soon as possible.

                      - OR -
                                                       -------------------------
                                                       COMPANY NUMBER
TELEPHONE - Call toll-free 1-800-PROXIES               -------------------------
(1-800-776-9437) from any touch-tone telephone and     ACCOUNT NUMBER
follow  the  instructions.  Have your  proxy  card     -------------------------
available when you call.
                                                       -------------------------
                      - OR -

INTERNET - Access  "www.voteproxy.com"  and follow
the on-screen  instructions.  Have your proxy card
available when you access the web page.

--------------------------------------------------------------------------------
You may enter your voting instructions at 1-800-PROXIES (1-800-776-9437) or
www.voteproxy.com up until 11:59 PM Eastern Time the day before the cut-off or
meeting date.
--------------------------------------------------------------------------------

v   Please detach along perforated line and mail in the envelope provided IF   v
                you are not voting via telephone or the Internet.

--------------------------------------------------------------------------------
      THE BOARD OF DIRECTORS AND MANAGEMENT OF FIRST MERCHANTS CORPORATION
                  RECOMMEND A VOTE "FOR" THE PROPOSALS LISTED.
         PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
          PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
--------------------------------------------------------------------------------

1.    Election of Directors:

                                       NOMINEES:
|_| FOR ALL NOMINEES                   ( )   Richard A. Boehning
                                       ( )   Barry J. Hudson
|_| WITHHOLD AUTHORITY                 ( )   Michael C. Rechin
    FOR ALL NOMINEES

|_| FOR ALL EXCEPT
    (See instructions below)

INSTRUCTION: To withhold authority to vote for any individual nominee(s),
             mark "FOR ALL EXCEPT" and fill in the circle next to each
             nominee you wish to withhold, as shown here: (X)
--------------------------------------------------------------------------------



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

To change the address on your  account,  please check the box at right
and indicate your new address in the address space above.  Please note       |_|
that  changes  to the  registered  name(s) on the  account  may not be
submitted via this method.

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

                                                           FOR  AGAINST  ABSTAIN

2.    Proposal to ratify the appointment of the firm of    |_|    |_|      |_|
      BKD, LLP as the independent public accountants for
      2006.

3.    In their  discretion,  the  proxies are  authorized  to vote on such other
      matters as may properly come before the meeting,  provided the Corporation
      did not have notice of any such matter on or before January 17, 2006.

This proxy will be voted as directed,  but if not otherwise  directed this proxy
will be voted "FOR" items 1 and 2.

TO  VOTE  IN  ACCORDANCE   WITH  THE  BOARD  OF  DIRECTORS'   AND   MANAGEMENT'S
RECOMMENDATIONS, JUST SIGN BELOW; NO BOXES NEED TO BE CHECKED.

      MARK "X" HERE IF YOU PLAN TO ATTEND THE MEETING. |_|

                         _________________________________       _______________

Signature of Shareholder _________________________________ Date: _______________

                         _________________________________       _______________

Signature of Shareholder _________________________________ Date: _______________

      Note: Please sign exactly as your name or names appear on this Proxy. When
            shares are held jointly, each holder should sign. When signing as
            executor, administrator, attorney, trustee or guardian, please give
            full title as such. If the signer is a corporation, please sign full
            corporate name by duly authorized officer, giving full title as
            such. If signer is a partnership, please sign in partnership name by
            authorized person.