UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

            QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) of THE

                         SECURITIES EXCHANGE ACT OF 1934


                    For Quarterly Period Ended March 31, 2002

                         Commission File Number 0-17071

                           First Merchants Corporation

             (Exact name of registrant as specified in its charter)

           Indiana                                               35-1544218

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

   200 East Jackson Street
         Muncie, IN                                                47305-2814

(Address of principal executive office)                            (Zip code)

                                 (765) 747-1500

              (Registrant's telephone number, including area code)

                                 Not Applicable

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



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

As of April 30, 2002 there were 15,569,585 outstanding  common shares,  without
par value, of the registrant.



<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                                      INDEX

                                                                        Page No.


PART I.  Financial information:

 Item 1.          Financial Statements:

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

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

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

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

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

                  Notes to Consolidated Condensed Financial Statements.........9

 Item 2.          Management's Discussion and Analysis of Financial
                  Condition and Results of Operations.........................15

 Item 3.          Quantitative and Qualitative Disclosures About
                  Market Risk.................................................23

PART II. Other Information:

 Item 1.          Legal Proceedings...........................................24

 Item 2.          Changes in Securities and Use of Proceeds...................24

 Item 3.          Defaults Upon Senior Securities.............................24

 Item 4.          Submission of Matters to a Vote of Security Holders.........24

 Item 5.          Other Information...........................................24

 Item 6.          Exhibits and Reports of Form 8-K............................24

Signatures        ............................................................25


                                                                          Page 2
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

                                                                     March 31,     December 31,
                                                                       2002            2001
                                                                    -----------    -----------
                                                                           (Unaudited)
  <S>                                                               <C>            <C>
  ASSETS:
  Cash and due from banks .......................................   $    44,059    $    68,743
  Federal funds sold ............................................        21,194         34,285
                                                                    -----------    -----------
    Cash and cash equivalents ...................................        65,253        103,028
  Interest-bearing deposits......................................         3,818          3,871
  Investment securities available for sale ......................       213,228        231,668
  Investment securities held to maturity ........................         7,133          8,654
  Mortgage loans held for sale...................................           163            307
  Loans, net of allowance for loan losses of $15,128 and $15,141.     1,348,923      1,344,445
  Premises and equipment ........................................        28,426         27,684
  Federal Reserve and Federal Home Loan Bank Stock...............         8,350          8,350
  Interest receivable ...........................................        11,356         12,024
  Goodwill ......................................................        27,681         26,081
  Core deposit intangibles ......................................         5,870          6,096
  Cash surrender value of life insurance.........................         6,557          6,470
  Other assets ..................................................         9,154          8,357
                                                                    -----------    -----------
      Total assets ..............................................   $ 1,735,912    $ 1,787,035
                                                                    ===========    ===========
  LIABILITIES:
  Deposits:
    Noninterest-bearing .........................................   $   171,825    $   186,987
    Interest-bearing ............................................     1,201,861      1,234,264
                                                                    -----------    -----------
      Total deposits ............................................     1,373,686      1,421,251
  Borrowings ....................................................       164,954        174,404
  Interest payable ..............................................         5,621          5,488
  Other liabilities..............................................         8,567          6,764
                                                                    -----------    -----------
      Total liabilities .........................................     1,552,828      1,607,907
  STOCKHOLDERS' EQUITY:
  Perferred stock, no-par value:
    Authorized and unissued - 500,000 shares ....................
  Common Stock, $.125 stated value:
    Authorized --- 50,000,000 shares ............................
    Issued and outstanding - 12,788,037 and 12,670,307 shares....         1,599          1,584
  Additional paid-in capital ....................................        53,338         50,642
  Retained earnings .............................................       126,842        124,304
  Accumulated other comprehensive income ........................         1,305          2,598
                                                                    -----------    -----------
      Total stockholders' equity ................................       183,084        179,128
                                                                    -----------    -----------
      Total liabilities and stockholders' equity .                  $ 1,735,912    $ 1,787,035
                                                                    ===========    ===========
</TABLE>

  See notes to consolidated condensed financial statements.




                                                                          Page 3
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

                                                                   Three Months Ended
                                                                        March 31,
<S>                                                               <C>          <C>
                                                                    2002        2001
Interest Income:
  Loans receivable
    Taxable ...................................................   $ 24,266    $ 25,190
    Tax exempt ................................................        108          92
  Investment securities:
    Taxable ...................................................      1,903       3,539
    Tax exempt ................................................        987       1,027
  Federal funds sold ..........................................        181          89
  Deposits with financial institutions ........................         22          10
  Federal Reserve and Federal Home Loan Bank stock ............        124         141
                                                                  --------    --------
      Total interest income ...................................     27,591      30,088
                                                                  --------    --------
Interest expense:
  Deposits ....................................................      8,228      12,701
  Borrowings ..................................................      1,985       2,698
                                                                  --------    --------
    Total interest expense ....................................     10,213      15,399
                                                                  --------    --------
Net Interest Income ...........................................     17,378      14,689
Provision for loan losses .....................................      1,192         653
                                                                  --------    --------
Net Interest Income After Provision for Loan Losses ...........     16,186      14,036
                                                                  --------    --------
Other Income:
  Net realized gains on sales of available-for-sale securities.        118
  Other income ................................................      5,046       4,394
                                                                  --------    --------
Total other income ............................................      5,164       4,394
Total other expenses ..........................................     13,000      10,473
                                                                  --------    --------
Income before income tax ......................................      8,350       7,957
Income tax expense ............................................      2,871       2,851
                                                                  --------    --------
Net Income ....................................................   $  5,479    $  5,106
                                                                  ========    ========


Per share:
<F1>
    Diluted Cash Earnings(1)...................................   $    .43    $    .44
    Basic .....................................................        .43         .42
    Diluted ...................................................        .43         .42
    Dividends .................................................        .23         .23
<FN>
    (1) Net income excluding core deposit and other intangible assets
        amortization.  Also, excludes goodwill amortization for the three months
        ended March 31, 2001.
</FN>
</TABLE>
See notes to consolidated condensed financial statements.

                                                                          Page 4
<PAGE>


                           FIRST MERCHANTS CORPORATION

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

<TABLE>


                                                                          Three Months Ended
                                                                               March 31,
                                                                            2002       2001
<S>                                                                       <C>        <C>

Net Income ............................................................   $ 5,479    $ 5,106
                                                                          -------    -------
Other comprehensive income, net of tax:
  Unrealized (losses) gains on securities available for sale:
    Unrealized holding (losses) gains arising during the period, net of
        income tax benefit (expense) of $815 and $(1,187)..............    (1,223)     1,781
    Less:  Reclassification adjustment for gains included
      in net income, net of income tax expense of $(46) and $0.........        72
                                                                          -------    -------
                                                                           (1,295)     1,781
                                                                          -------    -------
Comprehensive income ..................................................   $ 4,184    $ 6,887
                                                                          =======    =======

</TABLE>
See notes to consolidated condensed financial statements







                                                                          Page 5
<PAGE>



                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
            CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (Dollars in thousands)
                                   (Unaudited)
<TABLE>

                                                                      2002         2001
                                                                   ---------    ---------
<S>                                                                <C>          <C>
Balances, January 1 ............................................   $ 179,128    $ 156,063

Net income .....................................................       5,479        5,106

Cash dividends .................................................      (2,939)      (2,665)

Other comprehensive income (loss), net of tax...................      (1,295)       1,781

Stock issued under dividend reinvestment and stock purchase plan         234          210

Stock options exercised ........................................          87           20

Stock Redeemed .................................................         (54)      (1,415)

Issuance of stock in acquisition ...............................       2,444
                                                                   ---------    ---------

Balances, March 31 .............................................   $ 183,084    $ 159,100
                                                                   =========    =========
</TABLE>
   See notes to consolidated condensed financial statements


                                                                          Page 6
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

                                                                                             Three Months Ended
                                                                                                  March 31,
                                                                                      ------------------------------------
                                                                                           2002                2001
                                                                                      ----------------    ----------------
<S>                                                                                   <C>                 <C>
Cash Flows From Operating Activities:
  Net income........................................................................  $         5,479     $         5,106
  Adjustments to reconcile net income to net cash provided by operating activities
    Provision for loan losses.......................................................            1,192                 653
    Depreciation and amortization...................................................              775               1,207
    Securities amortization,  net...................................................               64                 (79)
    Securities gains, net...........................................................             (113)
    Gain on sale of premises and equipment..........................................               (3)
    Mortgage loans originated for sale..............................................           (4,988)             (5,206)
    Proceeds from sales of mortgage loans...........................................            5,132               4,746
    Change in interest receivable...................................................              668               1,183
    Change in interest payable......................................................              133                 233
    Other adjustments...............................................................              (78)               (712)
                                                                                      ----------------    ----------------
      Net cash provided by operating activities.....................................  $         8,261     $         7,131
                                                                                      ----------------    ----------------


Cash Flows From Investing Activities:
  Net change in interest-bearing deposits...........................................               53                (749)
  Purchases of
    Securities available for sale...................................................          (21,630)             (4,169)
  Proceeds from maturities of
    Securities available for sale...................................................           34,110              33,279
    Securities held to maturity.....................................................            1,527               2,244
  Proceeds from sales of
    Securities available for sale...................................................            5,547
    Securities held to maturity.....................................................
  Net change in loans...............................................................           (5,670)            (11,232)
  Net cash received in acquisition..................................................            1,228
  Purchases of premises and equipment...............................................           (1,522)               (324)
  Proceeds from sale of fixed assets................................................                8
                                                                                      ----------------    ----------------
    Net cash provided by investing activities.......................................           13,651              19,049
                                                                                      ----------------    ----------------


</TABLE>

(continued)
                                                                          Page 7
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

                                                                                         Three Months Ended
                                                                                              March 31
                                                                                ------------------------------------
                                                                                     2002                2001
                                                                                ----------------    ----------------
<S>                                                                             <C>                 <C>
Cash Flows From Financing Activities:
  Net change in
    Demand and savings deposits...........................................      $        (26,069)   $        (26,929)
    Certificates of deposit and other time deposits.......................               (21,496)            (30,553)
    Borrowings............................................................                (9,450)             (8,717)
  Cash dividends..........................................................                (2,939)             (2,665)
  Stock issued under dividend reinvestment and stock purchase plan........                   234                 210
  Stock options exercised.................................................                    87                  20
  Stock repurchased.......................................................                   (54)             (1,415)
                                                                                ----------------    ----------------
    Net cash used by financing activities.................................               (59,687)            (70,049)
                                                                                ----------------    ----------------
Net Change in Cash and Cash Equivalents...................................               (37,775)            (43,869)
Cash and Cash Equivalents, January 1......................................               103,028              67,463
                                                                                ----------------    ----------------
Cash and Cash Equivalents, March 31.......................................      $         65,253    $         23,594
                                                                                ================    ================
</TABLE>
See notes to consolidated condensed financial statements.

                                                                          Page 8
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

NOTE 1.  General

The significant  accounting  policies  followed by First  Merchants  Corporation
("Corporation")   and  its  wholly  owned  subsidiaries  for  interim  financial
reporting  are  consistent  with the  accounting  policies  followed  for annual
financial  reporting,  except for the change in method of accounting or adoption
of accounting  pronouncements  discussed  more fully in Note 2. All  adjustments
which are of a normal  recurring  nature and are in the  opinion  of  management
necessary for a fair statement of the results for the periods reported have been
included in the accompanying consolidated condensed financial statements.

The consolidated  condensed  balance sheet of the Corporation as of December 31,
2001 has  been  derived  from the  audited  consolidated  balance  sheet of the
Corporation as of that date. Certain  information and note disclosures  normally
included in the Corporation's annual financial statements prepared in accordance
with accounting  principles  generally  accepted in the United States of America
have  been  condensed  or  omitted.   These  consolidated   condensed  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and notes  thereto  included in the  Corporation's  Form 10-K annual
report filed with the Securities and Exchange Commission.

The results of operations for the period are not  necessarily  indicative of the
results to be expected for the year.

NOTE 2.  Accounting Matters

ACCOUNTING FOR A BUSINESS COMBINATION

     Statement  of  Financial  Accounting Standards  ("SFAS") No. 141 requires
that all business combinations should be accounted for using the purchase method
of accounting; use of the pooling method is prohibited.

     This Statement requires that goodwill be initially recognized as an asset
in the financial statement and measured as the excess of the cost of an acquired
entity over the net of the amounts assigned to identifiable  assets acquired and
liabilities  assumed. In addition,  SFAS No. 141 requires all other intangibles,
such as core deposit intangibles for a financial institution, to be identified.

     The  provisions of Statement No. 141 were effective for any business
combination that was initiated after June 30, 2001.

ACCOUNTING FOR GOODWILL

     Under the provisions of SFAS No. 142,  goodwill should not be  amortized
but should be tested for impairment at the reporting unit level. Impairment test
of goodwill  should be done on an annual  basis unless  events or  circumstances
indicate  impairment has occurred in the interim period.  The annual  impairment
test can be  performed  at any time  during the year as long as the  measurement
date is used consistently from year to year.

     Impairment testing is a two step process, as outlined within the statement.
If the fair value of goodwill is less than its carrying value, then the goodwill
is deemed  impaired and a loss  recognized.  Any impairment loss recognized as a
result of completing  the  transitional  impairment  test should be treated as a
change in  accounting  principle  and  recognized  in the first  interim  period
financial statements.

     The Corporation  adopted  these  new  accounting  rules on January 1, 2002.
As a result, the Corporation will not amortize the goodwill it has recorded, but
will make an annual  assessment of any impairment in goodwill and, if necessary,
recognize  an  impairment  loss at that time.  The  Corporation  had goodwill of
$27,681,000 at March 31, 2002 and identified no impairment loss.
                                                                          Page 9
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

NOTE 3.  Business Combinations

On April 1,  2002,  the  Corporation  completed  the  acquisition  of  Lafayette
Bancorporation  and its  wholly  owned  subsidiary,  Lafayette  Bank  and  Trust
Company, Lafayette, Indiana (collectively "Lafayette").  The acquisition will be
accounted for under the purchase method of accounting.  The total purchase price
paid was  approximately  $115,978,000.  Under  the terms of the  agreement,  the
Corporation will issue approximately  2,773,059 shares of its common stock, at a
value of $23.48 (as  determined by the average of the closing price of the stock
for the two days prior,  the day of and the two days after the  acquisition  was
announced)  and  approximately  $50,867,000  cash in exchange for all the common
stock  of  Lafayette.   The  Corporation  anticipates  amortizing  core  deposit
intangibles  over ten  years  utilizing  a 150%  declining  balance  method.  At
December  31,  2001,  Lafayette  had total  assets and  shareholders'  equity of
$762,318,000  and  $59,120,000.  The results of operations of Lafayette  will be
included in the Corporation's results beginning April 1, 2002.

Effective  January 1, 2002, the  Corporation  acquired  Delaware County Abstract
Company, Inc. ("DCA") and Beebe & Smith Title Insurance Company, Inc. ("B & S"),
which  were  merged  into  Indiana  Title  Insurance   Company,  a  wholly-owned
subsidiary of the Corporation.  The title insurance operations were subsequently
contributed to Indiana Title Insurance Company, LLC in which the Corporation has
a 52.12%  ownership  interest.  This  acquisition was deemed to be an immaterial
acquisition.

                                                                         Page 10
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

NOTE 4.  Investment Securities
                                                    Gross       Gross
                                       Amortized  Unrealized  Unrealized    Fair
                                          Cost       Gains      Losses     Value
<S>                                    <C>         <C>        <C>        <C>

Available for sale at March 31, 2002
  U.S. Treasury ....................   $    124                         $    124
  Federal agencies..................     33,633   $    473   $    138     33,968
  State and municipal ..............     81,972      1,441        538     82,875
  Mortgage-backed securities .......     80,541        881         54     81,368
  Other asset-backed securities.....      5,881         65          9      5,937
  Corporate obligations.............      3,496         76                 3,572
  Marketable equity securities......      5,507                   123      5,384
                                       --------   --------   --------   --------
      Total available for sale .....    211,154      2,936        862    213,228
                                       --------   --------   --------   --------


Held to maturity at March 31, 2002
  State and municipal...............      6,931        186         58      7,059
  Mortgage-backed securities........        202                              202
                                       --------   --------   --------   --------
      Total held to maturity .......      7,133        186         58      7,261
                                       --------   --------   --------   --------
      Total investment securities ..   $218,287   $  3,122   $    920   $220,489
                                       ========   ========   ========   ========


</TABLE>

                                                                         Page 11
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

<TABLE>
                                                       Gross       Gross
                                          Amortized  Unrealized  Unrealized    Fair
                                             Cost       Gains      Losses     Value
<S>                                       <C>         <C>        <C>         <C>


Available for sale at December 31, 2001
   U.S. Treasury ......................  $    124                            $    124
   Federal agencies ...................    30,808    $    767    $      2      31,573
   State and municipal ................    74,776       1,644         215      76,205
   Mortgage-backed securities .........   100,811       1,710           1     102,520
   Other asset-backed securities ......    10,116         167                  10,283
   Corporate obligations ..............     3,498         116                   3,614
   Marketable equity securities .......     7,472                     123       7,349
                                         --------    --------    --------    --------
      Total available for sale ........   227,605       4,404         341     231,668
                                         --------    --------    --------    --------

Held to maturity at December 31, 2001
   State and municipal ................     8,426         166          58       8,534
   Mortgage-backed securities .........       228                                 228
                                         --------    --------    --------    --------
      Total held to maturity ..........     8,654         166          58       8,762
                                         --------    --------    --------    --------
      Total investment securities .....  $236,259    $  4,570    $    399    $240,430
                                         ========    ========    ========    ========


</TABLE>

                                                                         Page 12
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

NOTE 5.  Loans and Allowance
<TABLE>
                                                                                      March 31,   December 31,
                                                                                        2002         2001
                                                                                        ----         ----
<S>                                                                                <C>            <C>
Loans:
  Commercial and industrial loans ..............................................   $   307,450    $   301,962
  Agricultural production financing and other loans to farmers .................        29,465         29,645
  Real estate loans:
    Construction ...............................................................        51,096         58,316
    Commercial and farmland ....................................................       255,232        230,233
    Residential ................................................................       526,955        544,028
  Individuals' loans for household and other personal expenditures .............       173,300        179,325
  Tax-exempt loans .............................................................         6,983          7,277
  Other loans ..................................................................        13,570          8,800
                                                                                   -----------    -----------
                                                                                     1,364,051      1,359,586
  Allowance for loan losses.....................................................       (15,128)       (15,141)
                                                                                   -----------    -----------
      Total Loans...............................................................   $ 1,348,923    $ 1,344,445
                                                                                   ===========    ===========

                                                                                        Three Months Ended
                                                                                             March 31

                                                                                       2002           2001
                                                                                   -----------    -----------
Allowance for loan losses:
  Balances, January 1 ..........................................................   $    15,141    $    12,454

  Provision for losses .........................................................         1,192            653

  Recoveries on loans ..........................................................           381            125

  Loans charged off ............................................................        (1,586)          (505)
                                                                                   -----------    -----------
  Balances, March 31 ...........................................................   $    15,128    $    12,727
                                                                                   ===========    ===========
</TABLE>
NOTE 6.  Net Income Per Share
<TABLE>
                                                                     Three Months Ended March 31,
                                                           2002                                           2001
                                        -------------------------------------------    -------------------------------------------
                                                        Weighted-                                      Weighted-
                                                         Average        Per Share                       Average        Per Share
                                         Income           Shares         Amount         Income           Shares         Amount
                                         ------           ------         ------         ------           ------         ------
<S>                                      <C>            <C>             <C>             <C>            <C>             <C>
Basic net income per share:
  Net income available to
    common stockholders................. $    5,479        12,778,366    $     .43      $    5,106        12,178,006    $     .42
                                                                         ==========                                     ==========
Effect of dilutive stock options........                      109,132                                         84,044
                                         ----------       ------------                  ----------       ------------
Diluted net income per share:
  Net income available to
    common stockholders
    and assumed conversions.............      5,479        12,887,498    $     .43           5,106        12,262,050    $     .42
                                         ==========       ============   ==========     ==========       ============   ==========

Options to purchase  76,909 and  112,413  shares at March 31, 2002 and 2001 were
not included in the earnings per share  calculation  because the exercise  price
exceeded the average market price.
</TABLE>
                                                                         Page 13
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

Note 7. Cumulative Trust Preferred Securities

On April 12, 2002,  the  Corporation  and First  Merchants  Capital Trust I (the
"Trust") entered into an Underwriting Agreement with Stifel, Nicolaus & Company,
Incorporated and RBC Dain Rauscher Inc. for themselves and as co-representatives
for several other  underwriters,  (the "Underwriting  Agreement").  On April 17,
2002 and pursuant to the  Underwriting  Agreement,  the Trust  issued  1,850,000
8.75%  Cumulative  Trust  Preferred  Securities   (liquidation  amount  $25  per
Preferred Security) (the "Preferred  Securities") with an aggregate  liquidation
value  of  $46,250,000.  On April  23,  2002 and  pursuant  to the  Underwriting
Agreement,  the Trust issued an additional 277,500 Preferred  Securities with an
aggregate liquidation value of $6,937,500 to cover over-allotments. The proceeds
from the sale of the  Preferred  Securities  were  invested  by the Trust in the
Corporation's  8.75%  Junior  Subordinated  Debentures  due June 30,  2032  (the
"Debentures"). The proceeds from the issuance of the Debentures were used by the
Corporation  to  fund  a  portion  of  the  cash  consideration  payable  to the
shareholders  of Lafayette  Bancorporation  in connection  with the  acquisition
referenced in Note 3. The Preferred Securities will be recorded as borrowings in
the Corporation's consolidated balance sheet.
                                                                         Page 14
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

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

Forward-Looking Statements

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

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

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

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

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

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

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

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

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

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

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

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

Results of Operations

     Net income for the three months ended March 31, 2002, was $5,479,000,
compared to $5,106,000 earned in the same period of 2001. Diluted earnings per
share were $.43 compared to the $.42 reported for the first quarter 2001.

     Cash basis earnings per share were $.43 down $.01 from $.44 in 2001.

     Annualized returns on average assets and average shareholder's equity for
quarter ended March 31, 2002 were 1.25 percent and 12.14 percent,  respectively,
compared with 1.28 percent and 13.03 percent for the same period of 2001.

                                                                         Page 15
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

Capital

     The Corporation's capital continues to exceed regulatory minimums and
management believes that its capital levels continue to be a distinct advantage
in the competitive environment in which the Corporation operates.

     The Corporation's Tier I capital to average assets ratio was 8.7 percent at
year-end  2001 and 8.6  percent  at March  31,  2002.  At March  31,  2002,  the
Corporation  had a Tier I  risk-based  capital  ratio of 11.4  percent and total
risk-based capital ratio of 12.5 percent.  Regulatory capital guidelines require
a Tier I risk-based  capital ratio of 4.0 percent and a total risk-based capital
ratio of 8.0 percent. Banks with Tier I risk-based capital ratios of 6.0 percent
and  total  risk-based  capital  ratios of 10.0  percent  are  considered  "well
capitalized."

Asset Quality/Provision for Loan Losses

     Asset quality has been a major factor in the Corporation's ability to
generate  consistent  profit  improvement.  The  allowance  for loan  losses  is
maintained  through the  provision  for loan losses,  which is a charge  against
earnings.  The amount  provided  for loan  losses and the  determination  of the
adequacy  of the  allowance  are  based  on a  continuous  review  of  the  loan
portfolio,  including  an  internally  administered  loan  "watch"  list  and an
independent  loan review provided by an outside  accounting firm. The evaluation
takes into consideration  identified credit problems, as well as the possibility
of losses inherent in the loan portfolio that cannot be specifically identified.

     The following table summarizes the non-accrual, contractually past due 90
days or more other than non-accruing and restructured loans for the Corporation.
<TABLE>

--------------------------------------------------------------------------------
(Dollars in Thousands)                         March 31,          December 31,
                                                 2002                 2001
--------------------------------------------------------------------------------
<S>                                             <C>                  <C>
Non-accrual loans ..................            $ 8,043              $ 6,327
Loans contractually past due 90 days
  Or more other than nonaccruing
                                                  4,292                4,828
Restructured loans .................              1,900                3,511
                                                -------              -------
              Total ................            $14,235              $14,666
                                                =======              =======

--------------------------------------------------------------------------------
</TABLE>

     At March 31, 2002, non-performing loans totaled $14,235,000, a decrease of
$431,000 from December 31, 2001.

     At March 31, 2002, impaired loans totaled $21,477,000.  In addition, an
allowance  for losses was not deemed  necessary for impaired loans totaling
$11,538,000,  but an allowance of $2,855,000 was  recorded  for  the  remaining
balance  of  impaired  loans  of $9,939,000 and is included in the Corporation's
allowance for loan losses. The average balance of impaired loans for the first
quarter ended March 31, 2002 was $21,172,000.

     At December 31, 2001, impaired loans totaled $21,161,000.  In addition,
an allowance for losses was not deemed necessary for impaired loans totaling
$10,780,000, but an allowance of $3,251,000 was recorded for the remaining
balance of impaired loans of $10,381,000 and is included in the Corporation's
allowance for loan losses.  The average balance of impaired loans for 2001 was
$22,327,000.

     At March 31, 2002, the allowance for loan losses decreased by $13,000,
to $15,128,000, down slightly from year end 2001. As a percent of loans, the
allowance was 1.11 percent, up from 1.07 percent at year end 2001.
                                                                         Page 16
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

     The first quarter 2002 provision of $1,192,000 was up $539,000 from
$653,000 for the same quarter in 2001.  Net charge offs  amounted to  $1,205,000
during the quarter,  an increase of $825,000  from $380,000 for the same quarter
in 2001.  The increase in net charge offs was  primarily  due to two  commercial
loans  charged  off during the first  quarter  of 2002,  totaling  approximately
$700,000, that had been reserved for and included in the Corporation's allowance
for loan losses at December 31, 2001. The increased provision has helped improve
the  allowance to total loans by 4 basis points over the first  quarter of 2001,
increasing the total to 1.11% at March 31, 2002.

<TABLE>

                                                               Three Months Ended
                                                                    March 31,
                                                               ------------------
                                                               ------------------
                                                              2002           2001
                                                              ----           ----
                                                            (Dollars in Thousands)
<S>                                                          <C>           <C>
  Balance at beginning of period .........................   $15,141       $12,454
                                                             -------       -------
  Chargeoffs .............................................     1,586           518
  Recoveries .............................................       381           138
                                                             -------       -------
  Net chargeoffs .........................................     1,205           380
  Provision for loan losses ..............................     1,192           653
                                                             -------       -------
  Balance at end of period ...............................   $15,128       $12,727
                                                             =======       =======

Ratio of net chargeoffs during the period to average loans
  outstanding during the period (1).......................       .35           .03


(1)    First three months annualized

</TABLE>

Liquidity, Interest Sensitivity, and Disclosures About Market Risk

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

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

         Management  believes  that  the  Corporation's liquidity  and interest
sensitivity   position  at  March  31,  2002,  remained  adequate  to  meet  the
Corporation's  primary goal of achieving optimum interest margins while avoiding
undue interest rate risk.

                                                                         Page 17
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

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

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

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

The  comparative  rising and falling  scenarios for the period ended  March 31,
2003 assume  further  interest  rate changes in addition to the base  simulation
discussed  above.  These changes are immediate and parallel  changes to the base
case senario.  In addition,  total rate movements  (beginning point minus ending
point) to each of the various  driver rates  utilized by  management in the base
simulation for the period ended March 31, 2003 are as follows:

Driver Rates                      RISING              FALLING
================================================================================
Prime                             200 Basis Points   (150)Basis Points
Federal Funds                     200                (100)
One-Year T-Bill                   200                (100)
Two-Year T-Bill                   200                (100)
Interest Checking                 100                 (25)
MMIA Savings                       75                 (25)
Money Market Index                200                (100)
CD's                              170                (130)
FHLB Advances                     200                (100)

Results for the base,  rising and falling  interest  rate  scenarios  are listed
below,  based upon the Corporation's rate sensitive assets at March 31, 2002.
The net interest income shown  represents  cumulative net interest income over a
12-month time horizon.  Balance sheet assumptions used for the base scenario are
the same for the rising and falling simulations.

                                                BASE        RISING     FALLING
================================================================================
Net Interest Income (dollars in thousands)    $ 71,938    $ 77,052    $ 69,054

Variance from base                                        $  5,114    $ (2,884)

Percent of change from base                                   7.11%      (4.01)%

                                                                         Page 18
<PAGE>
                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

The  comparative  rising and falling  scenarios for the year ended  December 31,
2002 assume  further  interest  rate changes in addition to the base  simulation
discussed  above.  These changes are immediate and parallel  changes to the base
case senario.  In addition,  total rate movements  (beginning point minus ending
point) to each of the various  driver rates  utilized by  management in the base
simulation for the year ended December 31, 2002 are as follows:

Driver Rates                      RISING              FALLING
================================================================================
Prime                             200 Basis Points   (150)Basis Points
Federal Funds                     200                (100)
One-Year T-Bill                   200                (100)
Two-Year T-Bill                   200                (100)
Interest Checking                 100                 (25)
MMIA Savings                       75                 (25)
Money Market Index                200                (100)
CD's                              170                (130)
FHLB Advances                     200                (100)

Results for the base,  rising and falling  interest  rate  scenarios  are listed
below,  based upon the Corporation's rate sensitive assets at December 31, 2001.
The net interest income shown  represents  cumulative net interest income over a
12-month time horizon.  Balance sheet assumptions used for the base scenario are
the same for the rising and falling simulations.

                                                BASE        RISING     FALLING
================================================================================
Net Interest Income (dollars in thousands)    $ 74,029    $ 74,356    $ 71,540

Variance from base                                        $    327    $ (2,489)

Percent of change from base                                    .44%      (3.36)%


                                                                         Page 19
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

Earning Assets

         The following table presents the earning asset mix as of March 31,
2002, and December 31, 2001.

         Loans grew by over $4.3 million from December 31, 2001, to March 31,
2002, while investment securities declined by $20.1 million during the same
period. Commercial and industrial and other loans increased by more than $10
million, while individuals' loans for household and personal expenditures
declined by nearly $6 million.
<TABLE>

---------------------------------------------------------------------------------------------------
EARNING ASSETS
(Dollars in Millions)                                           March 31,            December 31,
                                                                   2002                  2001
---------------------------------------------------------------------------------------------------
<S>                                                            <C>                   <C>
Federal funds sold and interest-bearing deposits               $    25.0             $     38.2

Securities available for sale ..................                   213.2                  231.7

Securities held to maturity ....................                     7.1                    8.7

Loans ..........................................                 1,364.2                1,359.9

Federal Reserve and Federal Home Loan Bank stock                     8.4                    8.4
                                                               ----------            ----------

                     Total .....................               $ 1,617.9             $  1,646.9
                                                               ==========            ==========


---------------------------------------------------------------------------------------------------
</TABLE>
Deposits and Borrowings

         The following table presents the level of deposits and borrowed funds
(Federal funds purchased, repurchase agreements, U.S. Treasury demand notes,
Federal Home Loan Bank advances and other borrowed funds)at December 31, 2001
and March 31, 2002.

--------------------------------------------------------------------------------
<TABLE>

(Dollars in Millions)                                March 31,         December 31,
                                                       2002                2001
                                                    ----------         ------------
<S>                                                 <C>                 <C>
Deposits ........................................   $  1,373.7          $  1,421.3
Securities sold under repurchase agreements......         43.1                45.6
Other short-term borrowings .....................          4.5                16.8
Federal Home Loan Bank advances .................        108.9               103.5
Other borrowed funds ............................          8.5                 8.5

</TABLE>

         The Corporation has continued to leverage its capital position with
Federal Home Loan Bank advances,  as well as,  repurchase  agreements which
are  pledged  against  acquired  investment  securities  as  collateral  for the
borrowings.  The  interest  rate risk is included  as part of the  Corporation's
interest simulation discussed in Management's  Discussion and Analysis under the
heading Liquidity,  Interest Sensitivity, and Disclosures about Market Risk.

                                                                         Page 20
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

Net Interest Income

         Net Interest Income is the primary source of the Corporation's
earnings. It is a function of net interest margin and the level of average
earning assets.  The table below presents the Corporation's asset yields,
interest expense, and net interest income as a percent of average earning assets
for the three months ended March 31, 2002 and 2001.

         Annualized net interest income (FTE) for the three months ended March
31, 2002 increased by $11,697,000, or 19.1 percent over the same period in 2001,
due to an increase in average earning assets of over $144 million.  For the same
period  interest  income and interest  expense,  as a percent of average earning
assets,  decreased 134  basis  points, 163  basis  points  respectively.
<TABLE>

--------------------------- ------------------- -------------------- -------------------- -------------- ---------------------
(Dollars in Thousands)
                             Interest Income                         Net Interest Income                     Annualized
                            (FTE) as a Percent   Interest Expense    (FTE) as a Percent                  Net Interest Income
                                of Average         as a Percent          of Average          Average             On a
                              Earning Assets        of Average         Earning Assets        Earning        Fully Taxable
                                                  Earning Assets                             Assets        Equivalent Basis
--------------------------- ------------------- -------------------- -------------------- -------------- ---------------------
For the three months
  Ended March 31,
<S>                               <C>                  <C>                  <C>            <C>                 <C>
           2002                   6.89%                2.50%                4.39%          $1,635,783          $72,870

           2001                   8.23%                4.13%                4.10%          $1,491,338          $61,173

Average earning assets include the average balance of securities classified as
available for sale, computed based on the average of the historical amortized
cost balances without the effects of the fair value adjustment.
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                         Page 21
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
Other Income

         The Corporation has placed emphasis on the growth of non-interest
income in recent years by offering a wide range of fee-based services. Fee
schedules are regularly reviewed by a pricing committee to ensure that the
products and services offered by the Corporation are priced to be competitive
and profitable.

         Other income in the first quarter of 2002 exceeded the same quarter in
the prior year by $770,000, or 17.5 percent.

Three major areas account for most of the increase:

1.       Service charges on deposit accounts increased $191,000 or 15.1 percent
         due to increased number of accounts and price adjustments.

2.       Net realized gains on sales of available-for-sale securities totaled
         $118,000 in the first quarter of 2002.  No sales occurred during the
         same quarter in the prior year.

3.       Gains on sale of mortgage loans included in other income increased by
         $107,000, or 60.1 percent, due to increased mortgage volume.  In
         addition, continued low mortgage loan interest rates caused an
         increase in refinancing volume during January and February of the
         current quarter, which facilitated an increase in loan sales activity.

Other Expenses

         Total other expenses represent non-interest operating expenses of the
Corporation. First quarter other expense in 2002 exceeded the same quarter of
the prior year by $2,527,000, or 24.1 percent.

Three major areas account for most of the increase:

1.       Salaries  and benefit  expense grew $1,409,000 or 24.0 percent,  due to
         normal salary increases, staff additions and additional salary cost
         related to the acquisition of Frances Slocum Bank and Trust Company.

2.       Data processing fees increased by $283,000, or 53.8 percent, primarily
         due to increases in processing expenses related to greater usage of
         debit/ATM cards by customers and increases in loans originated and
         processed during the quarter.

3.       Telephone expenses increased by $322,000 or 121.5%, primarily due to
         additional telephone costs related to the acquisition of Frances Slocum
         Bank and Trust Company and increased service contract charges related
         to greater usage of telephone lines.
                                                                         Page 22
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

Income Taxes

         Income tax expense, for the three months ended March 31, 2002,
increased by $20,000 over the same period in 2001.  The effective tax rate was
34.4 and 35.8 percent for the 2002 and 2001 periods.

Other

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


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

The information required under this item is included as part of Management's
Discussion and Analysis of Financial Condition and Results of Operations, under
the heading Liquidity, Interest Sensitivity, and Disclosures About Market Risk.


                                                                         Page 23
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                           PART II. OTHER INFORMATION

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

         None

Item 2.  Changes in Securities and Use of Proceeds
--------------------------------------------------

         a.  None

         b.  None

         c.  On January 1, 2002, the Corporation issued a total of 103,732
             unregistered shares of its common stock pursuant to Agreements
             of Merger dated December 28, 2001, between the Corporation and DCA
             and the Corporation and B & S, as previously discussed in Note 3.
             The Corporation issued the unregistered shares to the sole
             shareholder of DCA and sole shareholder of B & S, at a value of
             $23.50 per share, in exchange for all the common stock of both
             DCA and B & S.  The issuance by the Corporation of its shares of
             common stock were not registered under the Securities Act of 1933,
             as amended ("Securities Act").  The shares were issued pursuant
             to the exemption contemplated in Section 4(2) of the Securities
             Act, for transactions not involving a public offering.

         d.  None

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

         None

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

         At the March 18th, 2002, Special Meeting of Shareholders of the
         Corporation, the following matter was submitted to a vote of the
         shareholders.

         Approval of the Agreement of Reorganization and Merger between the
         Corporation and Lafayette Bancorporation.

                                   Vote Count
                                   ----------
                     Shares For............. 9,305,260.9553
                     Shares Against.........    94,614.3984
                     Shares Abstain.........    32,420.0291

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

         None

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

         a.  Exhibits

             None

         b.  Reports on Form 8-K

             None


                                                                         Page 24
<PAGE>



                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                                   SIGNATURES

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

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




Date  May 15, 2002                       by /s/ Michael L. Cox
    ---------------------------            -------------------------------------
                                           Michael L. Cox
                                           President and Chief Executive Officer



Date  May 15, 2002                       by /s/ Mark K. Hardwick
    ---------------------------            -------------------------------------
                                           Mark K. Hardwick
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial and Chief
                                           Accounting Officer)



                                                                         Page 25