FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



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

                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2008

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

                        SECURITIES EXCHANGE ACT OF 1934

               For the Transition Period from _______ to _______

                         Commission File Number 0-17071

                           First Merchants Corporation

             (Exact name of registrant as specified in its charter)

           Indiana                                               35-1544218

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

   200 East Jackson Street
         Muncie, IN                                                47305-2814

(Address of principal executive offices)                           (Zip code)

                                 (765) 747-1500

              (Registrant's telephone number, including area code)

                                 Not Applicable

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



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

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company. See
definition  of "large  accelerated  filer,"  "accelerated  filer"  and  "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ]   Accelerated filer [X]   Non-accelerated filer [ ]
Smaller reporting company [ ]

(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).  Yes [ ] No [X]

As of July 31, 2008, there were 18,113,836  outstanding  common shares,  without
par value, of the registrant.



<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                                      INDEX

                                                                        Page No.


PART I.  Financial Information:

 Item 1.          Financial Statements:

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

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

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

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

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

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

 Item 2.          Management's Discussion and Analysis of Financial
                  Condition and Results of Operations.........................17

 Item 3.          Quantitative and Qualitative Disclosures About
                  Market Risk.................................................27

 Item 4.          Controls and Procedures.....................................27

PART II. Other Information:

 Item 1.          Legal Proceedings...........................................28

 Item 1.A.        Risk Factors................................................28

 Item 2.          Unregistered Sales of Equity
                  Securities and Use of Proceeds..............................28

 Item 3.          Defaults Upon Senior Securities.............................28

 Item 4.          Submission of Matters to a Vote of Security Holders.........29

 Item 5.          Other Information...........................................29

 Item 6.          Exhibits....................................................30

 Signatures...................................................................31

 Index to Exhibits............................................................32


                                                                          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>

                                                                     June 30,     December 31,
                                                                       2008           2007
                                                                  ------------    ------------
                                                                   (Unaudited)
  <S>                                                              <C>             <C>
  ASSETS:
  Cash and due from banks .......................................  $    80,996     $   134,188
  Federal funds sold ............................................                          495
                                                                   -----------     -----------
  Cash and cash equivalents .....................................       80,996         134,683
  Interest-bearing deposits......................................        7,267          24,931
  Investment securities available for sale ......................      397,068         440,836
  Investment securities held to maturity ........................       11,256          10,331
  Mortgage loans held for sale...................................        3,234           3,735
  Loans, net of allowance for loan losses of $31,597 and $28,228.    2,986,999       2,848,615
  Premises and equipment ........................................       44,232          44,445
  Federal Reserve and Federal Home Loan Bank stock...............       25,455          25,250
  Interest receivable ...........................................       19,680          23,402
  Core deposit intangibles ......................................       11,562          12,412
  Goodwill ......................................................      124,668         123,444
  Cash surrender value of life insurance.........................       72,948          70,970
  Other real estate owned .......................................       17,243           2,569
  Other assets ..................................................       19,852          16,464
                                                                   -----------     -----------
      Total assets ..............................................  $ 3,822,460     $ 3,782,087
                                                                   ===========     ===========
  LIABILITIES:
  Deposits:
    Noninterest-bearing .........................................  $   403,152     $   370,397
    Interest-bearing ............................................    2,460,483       2,473,724
                                                                   -----------     -----------
      Total deposits ............................................    2,863,635       2,844,121
  Borrowings:
    Federal funds purchased .....................................      151,356          52,350
    Securities sold under repurchase agreements .................       90,872         106,497
    Federal Home Loan Bank Advances .............................      228,196         294,101
    Subordinated debentures, revolving credit lines
      and term loans ............................................      115,826         115,826
                                                                   -----------     -----------
      Total borrowings ..........................................      586,250         568,774
  Interest payable ..............................................        6,658           8,325
  Other liabilities..............................................       18,525          20,931
                                                                   -----------     -----------
      Total liabilities .........................................    3,475,068       3,442,151

  COMMITMENTS AND CONTINGENT LIABILITIES

  STOCKHOLDERS' EQUITY:
  Cumulative Preferred Stock, $1,000 par value:
    Authorized -- 600 shares
    Issued and outstanding - 125 shares..........................           125
  Preferred stock, no-par value:
    Authorized and unissued - 500,000 shares
  Common Stock, $.125 stated value:
    Authorized -- 50,000,000 shares
    Issued and outstanding - 18,062,701 and 18,002,787 shares....         2,258          2,250
  Additional paid-in capital ....................................       140,258        137,801
  Retained earnings .............................................       209,059        202,750
  Accumulated other comprehensive loss ..........................        (4,308)        (2,865)
                                                                    -----------    -----------
      Total stockholders' equity ................................       347,392        339,936
                                                                    -----------    -----------
      Total liabilities and stockholders' equity ................   $ 3,822,460    $ 3,782,087
                                                                    ===========    ===========
</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>
<CAPTION>
                                                                   Three Months Ended      Six Months Ended
                                                                        June 30,                June 30,
<S>                                                               <C>          <C>          <C>          <C>
                                                                    2008        2007        2008        2007
Interest Income:
  Loans receivable
    Taxable ...................................................   $49,023     $51,204    $100,124    $100,849
    Tax exempt ................................................       178         249         343         450
  Investment securities
    Taxable ...................................................     2,947       3,394       6,196       6,676
    Tax exempt ................................................     1,452       1,651       2,965       3,312
  Federal funds sold ..........................................         3          91          11          92
  Deposits with financial institutions ........................       133         120         415         243
  Federal Reserve and Federal Home Loan Bank stock ............       370         299         705         627
                                                                  -------     -------     -------     -------
    Total interest income .....................................    54,106      57,008     110,759     112,249
                                                                  -------     -------     -------     -------
Interest Expense:
  Deposits ....................................................    16,297      22,390      35,730      44,196
  Fed funds purchased .........................................       577       1,047       1,246       1,901
  Securities sold under repurchase agreements .................       632         910       1,448       1,479
  Federal Home Loan Bank advances .............................     2,825       3,009       5,861       5,945
  Subordinated debentures, revolving credit lines
    and term loans ............................................     1,602       2,037       3,492       4,038
                                                                  -------     -------     -------     -------
    Total interest expense ....................................    21,933      29,393      47,777      57,559
                                                                  -------     -------     -------     -------
Net Interest Income ...........................................    32,173      27,615      62,982      54,690
Provision for loan losses .....................................     7,070       1,648      10,893       3,247
                                                                  -------     -------     -------     -------
Net Interest Income After Provision for Loan Losses ...........    25,103      25,967      52,089      51,443
                                                                  -------     -------     -------     -------
Other Income:
  Service charges on deposit accounts .........................     3,157       3,091       6,088       5,974
  Fiduciary activities ........................................     2,126       2,257       4,268       4,293
  Other customer fees .........................................     1,767       1,535       3,446       3,026
  Commission income ............................................    1,427       1,269       3,096       2,907
  Earnings on cash surrender value of life insurance ..........       606         782       1,344       1,467
  Net gains and fees on sales of loans ........................       668         611       1,311       1,143
  Net realized gains/(losses) on sales of
    available-for-sale securities .............................        13                      86          (1)
  Other income ................................................       570         221       1,222         761
                                                                  -------     -------     -------     -------
Total other income ............................................    10,334       9,766      20,861      19,570
                                                                  -------     -------     -------     -------
Other expenses:
  Salaries and benefits .......................................    15,698      14,796      31,796      29,522
  Net occupancy ...............................................     1,750       1,612       3,555       3,210
  Equipment ...................................................     1,643       1,783       3,297       3,505
  Marketing ...................................................       612         653       1,096       1,140
  Outside data processing fees.................................     1,009       1,036       1,891       1,987
  Printing and office supplies.................................       291         388         572         687
  Core deposit amortization....................................       808         790       1,598       1,581
  Write-off of unamortized underwriting expense ...............                 1,771                   1,771
  Other expenses ..............................................     4,593       4,910       8,872       8,530
                                                                  -------     -------     -------     -------
Total other expenses ..........................................    26,404      27,739      52,677      51,933
                                                                  -------     -------     -------     -------
Income Before Income Tax ......................................     9,033       7,994      20,273      19,080
Income tax expense ............................................     2,491       1,786       5,605       5,101
                                                                  -------     -------     -------     -------
Net Income ....................................................   $ 6,542     $ 6,208    $ 14,668    $ 13,979
                                                                  =======     =======     =======     =======

Per share:

    Basic net income ..........................................   $   .37     $   .34     $   .82     $   .76
    Diluted  net income .......................................       .36         .34         .81         .76
    Cash dividends paid .......................................       .23         .23         .46         .46
    Average diluted shares outstanding (in thousands) .........    18,159      18,369      18,108      18,432

</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           Six Months Ended
                                                                                        June 30,                     June 30,
                                                                                 ----------------------     ----------------------
                                                                                    2008         2007          2008         2007
                                                                                 ---------    ---------     ---------    ---------
<S>                                                                              <C>          <C>           <C>          <C>
Net Income...................................................................... $  6,542     $  6,208      $ 14,668     $ 13,979

Other comprehensive losses net of tax:
  Unrealized losses on securities available for sale:
    Unrealized holding losses arising during the period, net of
      income tax benefit of $3,188, $1,493, $1,364 and $1,195...................   (5,920)      (2,773)       (2,532)      (2,220)

  Unrealized gains/(losses) on cash flow hedges:
    Unrealized gains/(losses) arising during the period, net of income tax of
      $243, $221, $(939) and $179...............................................     (365)        (331)        1,409         (269)

  Amortization of items previously recorded in accumulated other
    comprehensive income/(losses), net of income tax expense
    of $94, $(140), $179, and $(140)............................................     (141)         210          (268)         210

Reclassification adjustment for gains/(losses) included in net
  income, net of income tax expense of $5, $0, $34, and $0......................       (8)                       (52)           1
                                                                                 ---------    ---------     ---------   ---------
                                                                                   (6,434)      (2,894)       (1,443)      (2,278)
                                                                                 ---------    ---------     ---------   ---------
Comprehensive income ........................................................... $    108     $  3,314      $ 13,225     $ 11,701
                                                                                 =========    =========     =========   =========
</TABLE>
See notes to consolidated condensed financial statements.





                                                                          Page 5
<PAGE>



                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
            CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (Dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                      2008         2007
                                                                   ---------    ---------
<S>                                                                  <C>            <C>
Balances, January 1 ............................................   $ 339,936    $ 327,325

Net income .....................................................      14,668       13,979

Cash dividends on common stock .................................      (8,358)      (8,483)

Other comprehensive loss, net of tax ...........................      (1,443)      (2,278)

Stock issued under dividend reinvestment and stock purchase plan         547          593

Stock options exercised, net of tax ............................       1,595          370

Tax benefit from stock options exercised .......................         137           89

Stock redeemed .................................................      (2,180)      (4,956)

Issuance of stock related to acquisition .......................       1,463

Cumulative preferred stock issued ..............................         125

Share-based compensation .......................................         902          741
                                                                   ---------    ---------

Balances, June 30. .............................................   $ 347,392    $ 327,380
                                                                   =========    =========

</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>

                                                                      Six Months Ended
                                                                         June 30,
                                                            ----------------------------------
                                                                  2008              2007
                                                            ----------------  ----------------
<S>                                                                  <c>               <C>
Cash Flows From Operating Activities:
  Net income............................................    $       14,668    $       13,979
  Adjustments to reconcile net income to net
  cash provided by operating activities
    Provision for loan losses...........................            10,893             3,247
    Depreciation and amortization.......................             2,258             2,357
    Share-based compensation............................               902               741
    Tax benefits from stock options exercised...........              (137)              (89)
    Mortgage loans originated for sale..................           (58,050)          (58,085)
    Proceeds from sales of mortgage loans...............            58,551            60,656
    Change in interest receivable.......................             3,722             2,730
    Change in interest payable..........................            (1,667)            1,091
    Other adjustments...................................           (17,688)             (117)
                                                            ---------------   ---------------
      Net cash provided by operating activities.........    $       13,452    $       26,510
                                                            ---------------   ---------------


Cash Flows From Investing Activities:
  Net change in interest-bearing deposits...............    $       17,664    $        2,386
  Purchases of
    Securities available for sale.......................           (21,136)          (49,694)
    Securities held to maturity.........................            (1,840)
  Proceeds from maturities of
    Securities available for sale.......................            60,876            31,252
    Securities held to maturity.........................               913               390
  Purchase of Federal Reserve and
    Federal Home Loan Bank Stock........................              (205)             (131)
  Purchase of bank owned life insurance ................              (706)           (3,500)
  Net cash paid in acquisitions ........................              (237)
  Net change in loans...................................          (149,277)         (115,646)
  Other adjustments.....................................            (2,048)           (4,090)
                                                            ---------------   ---------------
      Net cash used by investing activities.............    $      (95,996)   $     (139,033)
                                                            ---------------   ---------------

Cash Flows From Financing Activities:
  Net change in
    Demand and savings deposits.........................    $       23,209    $      (40,530)
    Certificates of deposit and other time deposits.....            (3,695)            9,593
  Borrowings............................................           269,506           192,048
  Repayment of borrowings...............................          (252,029)          (45,237)
  Cash dividends on common stock........................            (8,358)           (8,483)
  Stock issued under dividend
    reinvestment and stock purchase plans...............               547               593
  Stock options exercised...............................             1,595               370
  Cumulative preferred stock issued.....................               125
  Tax benefit from stock options exercised..............               137                89
  Stock redeemed........................................            (2,180)           (4,956)
                                                           ---------------   ---------------
      Net cash provided by financing activities.........            28,857           103,487
                                                           ---------------   ---------------
Net Change in Cash and Cash Equivalents.................           (53,687)           (9,036)
Cash and Cash Equivalents, January 1....................           134,683            89,957
                                                           ---------------   ---------------
Cash and Cash Equivalents, June 30......................    $       80,996    $       80,921
                                                           ===============   ===============

Additional cash flows information:
  Interest paid ........................................    $       49,444    $       58,239
  Income tax paid ......................................            10,471             6,939

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

<PAGE>

                           FIRST MERCHANTS CORPORATION

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

NOTE 1.  General

Financial Statement Preparation

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

The consolidated  condensed  balance sheet of the Corporation as of December 31,
2007 has  been  derived  from  the  audited  consolidated  balance  sheet of the
Corporation as of that date. Certain  information and note disclosures  normally
included in the Corporation's annual financial statements prepared in accordance
with accounting  principles  generally  accepted in the United States of America
have  been  condensed  or  omitted.   These  consolidated   condensed  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and notes  thereto  included in the  Corporation's  Form 10-K annual
report  filed  with the  Securities  and  Exchange  Commission.  The  results of
operations for the three and six months ended June 30, 2008 are not  necessarily
indicative of the results to be expected for the year.

NOTE 2.  Share-Based Compensation

Stock  options  and  restricted  stock  awards  ("RSAs")  have  been  issued  to
directors,  officers and other management employees under the Corporation's 1994
Stock  Option  Plan and The 1999  Long-term  Equity  Incentive  Plan.  The stock
options,  which have a ten year life,  become 100 percent  vested  ranging  from
three months to two years and are fully exercisable when vested. Option exercise
prices equal the Corporation's  common stock closing price on NASDAQ on the date
of grant.  RSAs provide for the issuance of shares of the  Corporation's  common
stock at no cost to the holder and  generally  vest after three years.  The RSAs
vest only if the employee is actively employed by the Corporation on the vesting
date and,  therefore,  any unvested  shares are forfeited.  Deferred stock units
("DSUs") have been credited to non-employee  directors who have elected to defer
payment of compensation  under the Corporation's  2008 Equity  Compensation Plan
for  Non-employee  Directors.  DSUs credited are equal to the restricted  shares
that the non-employee director would have received under the plan.

The  Corporation's  2004 Employee Stock Purchase Plan ("ESPP") provides eligible
employees of the  Corporation  and its  subsidiaries  an opportunity to purchase
shares of common stock of the Corporation  through annual offerings  financed by
payroll  deductions.  The price of the stock to be paid by the employees may not
be  less  than  85  percent  of the  lesser  of the  fair  market  value  of the
Corporation's  common  stock  at the  beginning  or at the  end of the  offering
period.  Common stock  purchases are made annually and are paid through  advance
payroll deductions of up to 20 percent of eligible compensation.

SFAS 123(R) required the Corporation to begin recording  compensation expense in
2006 related to unvested share-based awards outstanding as of December 31, 2005,
by recognizing  the  unamortized  grant date fair value of these awards over the
remaining service periods of those awards, with no change in historical reported
fair values and earnings.  Awards  granted after December 31, 2005 are valued at
fair value in accordance  with provisions of SFAS 123(R) and are recognized on a
straight-line  basis over the  service  periods of each award.  To complete  the
exercise  of vested  stock  options,  RSA's and ESPP  options,  the  Corporation
generally  issues  new shares  from its  authorized  but  unissued  share  pool.
Share-based  compensation  for the  three and six  months  ended  June 30,  2008
totaled $464,000 and $902,000,  respectively,  compared to $490,000 and $741,000
for the three and six months ended June 30, 2007.  Share based  compensation has
been  recognized  as a  component  of  salaries  and  benefits  expense  in  the
accompanying Consolidated Condensed Statements of Income.

                                                                          Page 8
<PAGE>
                           FIRST MERCHANTS CORPORATION

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

NOTE 2.  Share-Based Compensation  continued

The estimated  fair value of the stock options  granted during 2008 and in prior
years was calculated  using a Black Scholes option pricing model.  The following
summarizes the assumptions used in the 2008 Black Scholes model:

      Risk-free interest rate                              2.69%
      Expected price volatility                           32.13%
      Dividend yield                                       3.68%
      Forfeiture rate                                      5.00%
      Weighted-average expected life, until exercise       6.53 years

The Black Scholes model  incorporates  assumptions to value share-based  awards.
The  risk-free  rate of interest,  for periods equal to the expected life of the
option,  is based on a zero-coupon  U.S.  government  instrument  over a similar
contractual term of the equity instrument. Expected price volatility is based on
historical  volatility  of the  Corporation's  common  stock.  In addition,  the
Corporation  generally  uses  historical  information  to determine the dividend
yield  and  weighted-average  expected  life  of the  options,  until  exercise.
Separate groups of employees that have similar historical exercise behavior with
regard to option exercise timing and forfeiture rates are considered  separately
for valuation and attribution purposes.

Share-based  compensation  expense  recognized  in  the  Consolidated  Condensed
Statements  of  Income  is based on awards  ultimately  expected  to vest and is
reduced for  estimated  forfeitures.  SFAS  123(R)  requires  forfeitures  to be
estimated at the time of grant and revised, if necessary, in subsequent periods,
if actual forfeitures differ from those estimates.  Pre-vesting forfeitures were
estimated to be  approximately 5 percent for the six months ended June 30, 2008,
based on historical experience.

The following table summarizes the components of the Corporation's share-based
compensation awards recorded as expense:

<TABLE>
<CAPTION>
                                                                                    Three Months Ended            Six Months Ended
                                                                                         June 30,                     June 30,
                                                                                    2008         2007           2008         2007
                                                                                -----------  -----------    -----------  -----------
<S>                                                                               <C>          <C>            <C>          <C>
      Stock and ESPP Options:
           Pre-tax compensation expense ........................................$      141   $      174     $      321   $      292

           Income tax benefit ..................................................        (6)          (9)           (22)         (15)
                                                                                ----------   ----------     ----------   ----------
      Stock and ESPP option expense, net of income taxes .......................$      135   $      165     $      299   $      277
                                                                                ==========   ==========     ==========   ==========

      Restricted Stock Awards:
           Pre-tax compensation expense ........................................$      323   $      316     $      581   $      449

           Income tax benefit ..................................................      (113)        (110)          (203)        (157)
                                                                                ----------   ----------     ----------   ----------
      Restricted stock awards expense, net of income taxes .....................$      210   $      206     $      378   $      292
                                                                                ==========   ==========     ==========   ==========

      Total Share-Based Compensation:
           Pre-tax compensation expense ........................................$      464   $      490     $      902   $      741

           Income tax benefit ..................................................      (119)        (119)          (225)        (172)
                                                                                ----------   ----------     ----------   ----------
      Total share-based compensation expense, net of income taxes ..............$      345   $      371     $      677   $      569
                                                                                ==========   ==========     ==========   ==========
</TABLE>

                                                                         Page 9
<PAGE>


                           FIRST MERCHANTS CORPORATION

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

NOTE 2.  Share-Based Compensation  continued

As of June 30, 2008, unrecognized  compensation expense related to stock options
and RSAs  totaling  $458,000  and  $2,215,000  respectively,  is  expected to be
recognized over weighted-average periods of 1.17 and 1.77 years, respectively.

Stock option activity under the Corporation's  stock option plans as of June 30,
2008 and changes during the six months ended June 30, 2008 were as follows:
<TABLE>
<CAPTION>
                                                                                      Weighted-
                                                                                       Average
                                                                       Weighted-      Remaining
                                                       Number           Average      Contractual      Aggregate
                                                         of            Exercise         Term          Intrinsic
                                                       Shares           Price        (in Years)        Value
                                                     ----------      ------------   -----------     ----------
<S>                                                  <C>            <C>             <C>             <C>
  Outstanding at January 1, 2008 ..................  1,054,430       $     24.30
  Granted .........................................     72,300             27.93
  Exercised .......................................   (123,045)            22.73
  Cancelled .......................................    (24,394)            22.73
                                                     ----------
  Outstanding at June 30, 2008 ....................    979,291       $     24.77           5.61       $ 0
                                                     ==========
  Vested and Expected to Vest at June 30, 2008 ....    971,682       $     24.75           5.52       $ 0
  Exercisable at June 30, 2008 ....................    847,441       $     24.39           5.05       $ 0

</TABLE>

The  weighted-average  grant date fair value was $6.54 for stock options granted
during the six months ended June 30, 2008.

The aggregate  intrinsic  value in the table above  represents the total pre-tax
intrinsic value (the difference between the Corporation's closing stock price on
the last  trading  day of the first six months of 2008 and the  exercise  price,
multiplied by the number of in-the-money  options) that would have been received
by the option  holders had all option holders  exercised  their stock options on
June 30, 2008. The amount of aggregate  intrinsic value will change based on the
fair market value of the  Corporation's  common  stock.  At June 30,  2008,  all
option exercise prices were above the closing price of $18.15.

The aggregate  intrinsic value of stock options exercised during the first six
months of 2008 was  $615,000.  Exercise  of  options  during  this  same  period
resulted in cash  receipts  of  $1,595,000.  The  Corporation  recognized  a tax
benefit of approximately $137,000 in the first six   months of 2008,  related to
the exercise of employee  stock  options and has been recorded as an increase to
additional paid-in capital.

The following table  summarizes  information on unvested RSAs  outstanding as of
June 30, 2008:

<TABLE>
<CAPTION>
                                                                Weighted-Average
                                                   Number of     Grant-Date Fair
                                                    Shares           Value
                                                  ----------      -----------
<S>                                               <C>            <C>
  Unvested RSAs at January 1, 2008 .............     98,027        $    27.12
  Granted ......................................     63,485             27.03
  Forfeited ....................................     (1,577)            25.67
  Vested .......................................       (988)            26.73
                                                  ----------
  Unvested RSAs at June 30, 2008 ...............    158,947        $    27.10
                                                  ==========

</TABLE>
                                                                         Page 10
<PAGE>
                           FIRST MERCHANTS CORPORATION

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

NOTE 2.  Share-Based Compensation  continued

On June 30,  2008,  620 DSUs were  credited  to  non-employee  directors  at the
closing price of $18.15.

The grant date fair value of ESPP options was  estimated at the beginning of the
July 1, 2007 offering period and approximates  $184,000. The ESPP options vested
during the twelve month  period  ending June 30,  2008.  At June 30,  2008,  all
compensation  expense  related  to ESPP  options  was  fully  recognized.  Total
unrecognized  compensation expense related to unvested ESPP options was $46,000,
which is expected to be recognized over a period of three months.

Note 3.  Disclosures About Fair Value of Assets and Liabilities

Effective  January 1, 2008,  the  Corporation  adopted  Statement  of  Financial
Accounting Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 defines
fair  value,  establishes  a  framework  for  measuring  fair value and  expands
disclosures   about  fair  value   measurements.   FAS  157  has  been   applied
prospectively as of the beginning of the year.

FAS 157 defines  fair value as the price that would be received to sell an asset
or  paid to  transfer  a  liability  in an  orderly  transaction between  market
participants  at the  measurement  date.  FAS 157 also  establishes a fair value
hierarchy which requires an entity to maximize the use of observable  inputs and
minimize the use of unobservable  inputs when measuring fair value. The standard
describes three levels of inputs that may be used to measure fair value:

Level 1  Quoted prices in active markets for identical assets or liabilites

Level 2  Observable inputs other than Level 1 prices,  such as quoted prices for
         similar assets or liabilites;  quoted prices in active markets that are
         not active; or other inputs that are observable  or can be corroborated
         by observable market data for substantially the full term of the assets
         or liabilities

Level 3  Unobservable inputs that are supported by little or no market  activity
         and that are significant to the fair value of the assets or liabilities

Following is a description of the valuation  methodologies  used for instruments
measured at fair value on a recurring  basis and recognized in the  accompanying
balance  sheet,  as  well as the  general  classification  of  such  instruments
pursuant to the valuation hierarchy.

Available-for-sale securities

Where quoted  market prices are available in an active  market,  securities  are
classified  within Level 1 of the valuation  hierarchy.  There are no securities
classified  within Level 1 of the  hierarchy.  If quoted  market  prices are not
available, then fair values are estimated by using pricing models, quoted prices
of securities with similar  characteristics  or discounted  cash flows.  Level 2
securities  include treasury  securities,  agencies,  mortgage backs,  state and
municipal,  corporate obligations,  and marketable equity securities. In certain
cases  where  Level  1 or  Level 2  inputs  are not  available,  securities  are
classified  within  Level  3  of  the  hierarchy  and  include   mortgage-backed
securities and corporate obligations.

Interest rate swap agreements

The fair value is  estimated  by a third party using  inputs that are  primarily
unobservable  and  cannot  be  corroborated  by  observable   market  data  and,
therefore, are classified within Level 3 of the valuation hierarchy.

                                                                         Page 11
<page>

                           FIRST MERCHANTS CORPORATION

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

The  following  table  presents  the  fair  value  measurements  of  assets  and
liabilities  recognized in the accompanying balance sheet measured at fair value
on a recurring  basis and the level  within the FAS 157 fair value  hierarchy in
which the fair value measurements fall at June 30, 2008.
<table>
<caption>
                                                                              Fair Value Measurements Using
                                                          -----------------------------------------------------------------
                                                                 Quoted Prices in     Significant
                                                                  Active Markets         Other             Significant
                                                                  for Identical       Observable           Unobservable
                                                                    Assets               Inputs               Inputs
                                             Fair Value            (Level 1)           (Level 2)             (Level 3)
                                           --------------------------------------------------------------------------------
<S>                                           <C>                     <C>                <C>                    <C>
Available for sale securities                $397,068                                  $387,568              $ 9,500
Interest rate swap agreements                      28                                                             28

</table>

The  following  is a  reconciliation  of the  beginning  and ending  balances of
recurring fair value measurements  recognized in the accompanying  balance sheet
using significant unobservable Level 3 inputs for the three and six months ended
June 30, 2008.
<table>
<caption>
                                                          Three Months Ended                            Six Months Ended
                                                            June 30, 2008                                 June 30, 2008
                                               ---------------------------------------      ----------------------------------------
                                                  Available for Sale      Interest            Available for Sale       Interest
                                                      Securities         Rate Swaps              Securities           Rate Swaps
                                               ---------------------------------------      ----------------------------------------
 
                                                      <C>                   <c>                 <C>                    <C>
Beginning balance                                      $ 11,161                                    $ 12,023

Total realized and unrealized gains and losses
  Included in net income                                                    $   28                                       $   28
  Included in other comprehensive income                  1,661                                      (3,391)

Purchases, issuances, and settlements

Transfers in/(out) of Level 3                                                                           975

Principal payments                                                                                     (107)
                                               ---------------------------------------      ----------------------------------------

Ending balance                                         $  9,500             $   28                 $  9,500              $   28
                                               =======================================      ========================================
</table>

Following is a  description  of  valuation  methodologies  used for  instruments
measured  at  fair  value  on  a  non-recurring  basis  and  recognized  in  the
accompanying  balance  sheet,  as well  as the  general  classification  of such
instruments pursuant to the valuation hierarchy.

Impaired Loans

Loan impairment is reported when scheduled  payments under contractual terms are
deemed  uncollectible.  Impaired  loans  are  carried  at the  present  value of
estimated future cash flows using the loan's existing rate, or the fair value of
collateral if the loan is collateral  dependent.  A portion of the allowance for
loan losses is allocated to impaired  loans if the value of such loans is deemed
to be less than the unpaid balance. If these allocations cause the allowance for
loan losses to  increase,  such  increase  is  reported  as a  component  of the
provision for loan losses.  Loan losses are charged  against the allowance  when
management believes the  uncollectability  of the loan is confirmed.  During the
first six months of 2008,  certain impaired loans were partially  charged-off or
re-evaluated,  resulting in a remaining balance for these loans, net of specific
reserve,  of $12,741,000 as of June 30, 2008. The valuation  would be considered
Level 3,  consisting of appraisals of underlying  collateral and discounted cash
flow analysis.

                                                                         Page 12
<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 June 30, 2008
  U.S. Treasury ........................     $  1,500    $    14              $  1,514
  U.S. Government-sponsored
    agency securities...................       45,873        334    $    33     46,174
  State and municipal ..................      135,195      2,314         34    137,475
  Mortgage-backed securities ...........      196,858      1,064      1,656    196,266
  Corporate obligations ................       13,658                 4,556      9,102
  Marketable equity securities..........        7,327                   790      6,537
                                             --------   --------   --------   --------
      Total available for sale .........      400,411      3,726      7,069    397,068
                                             --------   --------   --------   --------


Held to maturity at June 30, 2008
  State and municipal...................       11,244        315        172     11,387
  Mortgage-backed securities............           12                               12
                                             --------   --------   --------   --------
      Total held to maturity ...........       11,256        315        172     11,399
                                             --------   --------   --------   --------
      Total investment securities ......     $411,667   $  4,041   $  7,241   $408,467
                                             ========   ========   ========   ========
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross       Gross
                                              Amortized  Unrealized  Unrealized   Fair
                                                Cost       Gains       Losses    Value
<S>                                             <C>       <C>        <C>       <C>
Available for sale at December 31, 2007
  U.S. Treasury ........................       $  1,501  $     18             $  1,519
  U.S. Government-sponsored
    agency securities ..................         67,793       240    $    98    67,935
  State and municipal ..................        150,744     2,324        156   152,912
  Mortgage-backed securities ...........        199,591     1,654      1,444   199,801
  Corporate obligations ................         13,740                1,294    12,446
  Marketable equity securities .........          6,835                  612     6,223
                                               --------  --------   --------  --------
     Total available for sale ..........        440,204     4,236      3,604   440,836
                                               --------  --------   --------  --------

Held to maturity at December 31, 2007
  State and municipal ..................         10,317       237        298    10,256
  Mortgage-backed securities ...........             14                             14
                                               --------  --------   --------  --------
     Total held to maturity ............         10,331       237        298    10,270
                                               --------  --------   --------  --------
     Total investment securities .......       $450,535  $  4,473   $  3,902  $451,106
                                               ========  ========   ========  ========


</TABLE>

                                                                         Page 13
<page>
                           FIRST MERCHANTS CORPORATION

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

NOTE 5.  Loans and Allowance

<TABLE>
                                                                                    June 30,    December 31,
                                                                                     2008          2007
                                                                                 -----------    -----------
<S>                                                                              <C>            <C>
Loans:
  Commercial and industrial loans .............................................. $   815,137    $   662,701
  Agricultural production financing and other loans to farmers .................     125,125        114,324
  Real estate loans:
    Construction ...............................................................     181,598        165,425
    Commercial and farmland ....................................................     954,672        947,234
    Residential ................................................................     718,065        744,627
  Individuals' loans for household and other personal expenditures .............     161,387        187,880
  Tax-exempt loans .............................................................      22,553         16,423
  Lease financing receivables, net of unearned income...........................       9,158          8,351
  Other loans ..................................................................      30,901         29,878
                                                                                 -----------    -----------
                                                                                   3,018,596      2,876,843
  Allowance for loan losses.....................................................     (31,597)       (28,228)
                                                                                 -----------    -----------
      Total Loans............................................................... $ 2,986,999    $ 2,848,615
                                                                                 ===========    ===========

                                                                                        Six Months Ended
                                                                                           June 30,

                                                                                     2008          2007
                                                                                 -----------    -----------
Allowance for loan losses:
  Balances, January 1 .......................................................... $    28,228    $    26,540

  Provision for losses .........................................................      10,893          3,247

  Recoveries on loans ..........................................................       2,078            527

  Loans charged off ............................................................      (9,602)        (2,706)
                                                                                 -----------    -----------
  Balances, June 30 ............................................................ $    31,597    $    27,608
                                                                                 ===========    ===========
</TABLE>

                                                  June 30,    December 31,
                                                   2008           2007
                                                ----------    ------------
Non Performing Assets:

  Non-accrual loans.............................. $ 34,410     $ 29,031
  Renegotiated loans.............................      136          145
                                                  --------     --------
  Non performing loans (NPL).....................   34,546       29,176
  Real estate owned and repossessed assets.......   17,243        2,573
                                                  --------     --------
  Non performing assets (NPA)....................   51,789       31,749
  90+ days delinquent............................    3,538        3,578
                                                  --------     --------
  NPAS & 90+ days delinquent..................... $ 55,327     $ 35,327
                                                  ========     ========

                                                                         Page 14
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

NOTE 6.  Net Income Per Share

Basic net income per share is computed by dividing  net income by the  weighted-
average shares outstanding  during the reporting period.  Diluted net income per
share is computed  by dividing  net income by the  combination  of all  dilutive
common share  equivalents,  comprised of shares issuable under the Corporation's
share-based  compensation  plans, and the  weighted-average  shares  outstanding
during the reporting period.

Dilutive  common share  equivalents  include the dilutive effect of in-the-money
share-based  awards,  which are calculated  based on the average share price for
each period using the treasury  stock method.  Under the treasury  stock method,
the exercise price of share-based awards, the amount of compensation expense, if
any, for future service that the  Corporation  has not yet  recognized,  and the
amount  of  estimated   tax  benefits  that  would  be  recorded  in  additional
paid-in-captial when share-based awards are exercised, are assumed to be used to
repurchase common stock in the current period.

<TABLE>

                                                                          Three Months Ended June 30,
                                                               2008                                         2007
                                             -------------------------------------------  ------------------------------------------
                                                             Weighted-                                    Weighted-
                                              Net             Average       Per Share      Net             Average       Per Share
                                             Income           Shares         Amount       Income           Shares         Amount
                                             ------           ------         ------       ------           ------         ------
<S>                                          <C>            <C>             <C>           <C>            <C>             <C>
Basic net income per share:
  Net income available to
    common stockholders......................$    6,542        18,050,956    $     .37    $    6,208        18,290,918    $     .34
                                                                             ==========                                   ==========

Effect of dilutive stock options.............                     108,251                                       77,595
                                             ----------       ------------                ----------       ------------
Diluted net income per share:
  Net income available to
    common stockholders
    and assumed conversions..................$    6,542        18,159,207    $     .36    $    6,208        18,368,513    $     .34
                                             ==========       ============   ==========   ==========       ============   ==========

Stock options to purchase  671,394 and 714,716 shares for the three months ended
June 30, 2008 and 2007 were not included in the  earnings per share  calculation
because the exercise price exceeded the average market price.
<caption>
                                                                          Six Months Ended June 30,
                                                               2008                                         2007
                                             -------------------------------------------  ------------------------------------------
                                                             Weighted-                                    Weighted-
                                              Net             Average       Per Share      Net             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......................$   14,668        17,994,699    $     .82    $   13,979        18,350,606    $     .76
                                                                             ==========                                   ==========

Effect of dilutive stock options.............                     112,873                                       81,800
                                             ----------       ------------                ----------       ------------
Diluted net income per share:
  Net income available to
    common stockholders
    and assumed conversions..................$   14,668        18,107,572    $     .81    $   13,979        18,432,406    $     .76
                                             ==========       ============   ==========   ==========       ============   ==========

</TABLE>
Stock  options to purchase  628,599 and 692,836  shares for the six months ended
June 30, 2008 and 2007 were not included in the  earnings per share  calculation
because the exercise price exceeded the average market price.


                                                                         Page 15



<PAGE>
                           FIRST MERCHANTS CORPORATION
                                    FORM 10-Q
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                          (Table dollars in thousands)
                                   (Unaudited)

Note 7.  Impact of Accounting Changes

EFFECT OF NEWLY ISSUED ACCOUNTING STANDARDS

Statement of Financial  Accounting  Standards No. 159, The Fair Value Option for
Financial  Assets and Financial  Liabilities  (FAS 159) became effective for the
Corporation  on January 1, 2008.  FAS 159 allows  companies  an option to report
selected  financial  assets and  liabilities  at fair value.  Because we did not
elect  the fair value  measurement  provision for any of our financial assets or
liabilities,  the  adoption  of SFAS  159 did not have  any  impact  on our 2008
consolidated financial statements.  Presently, we have not determined whether we
will elect the fair value measurement provisions for future transactions.

Effective  January 1, 2008, the  Corporation  adopted EITF 06-4,  Accounting for
Deferred  Compensation  and  Postretirement   Benefit  Aspects  of   Endorsement
Split-Dollar Life Insurance Arrangements and EITF 06-10, Accounting for Deferred
Compensation  and  Postretirement   Benefit  Aspects  of  Collateral  Assignment
Split-Dollar  Life  Insurance  Arrangements.  The adoption of EITF 06-4 and EITF
06-10 did not have any impact on our 2008 consolidated financial statements.

Future Accounting Matters

Financial  Accounting  Standards Board Statement No. 141 (SFAS 141R),  "Business
Combinations  (Revised  2007)," was issued in December  2007 and is effective on
January 1, 2009.  It replaces  SFAS 141 which  applies to all  transactions  and
other  events  in which  one  entity  obtains  control  over  one or more  other
businesses.  SFAS 141R requires an acquirer, upon initially obtaining control of
another entity,  to recognize the assets,  liabilities  and any  non-controlling
interest in the acquiree at fair value as of the  acquisition  date.  Contingent
consideration  is required to be  recognized  and  measured at fair value on the
date of  acquisition  rather  than at a  later  date  when  the  amount  of that
consideration  may be determinable  beyond a reasonable  doubt.  This fair value
approach  replaces the cost allocation  process  required under SFAS 141 whereby
the cost of an acquisition  was allocated to the individual  assets acquired and
liabilities  assumed  based on their  estimated  fair value.  SFAS 141R requires
acquirers  to  expense   acquisition-related   costs  as  incurred  rather  than
allocating such costs to the assets acquired and liabilities assumed. Under SFAS
141R, the  requirements of SFAS 146,  "Accounting for Costs Associated with Exit
or  Disposal  Activities,"  would  have  to be  met in  order  to  accrue  for a
restructuring plan in purchase accounting.  Pre-acquisition contingencies are to
be recognized at fair value, unless it is a non-contractual  contingency that is
not likely to  materialize,  in which  case,  nothing  should be  recognized  in
purchase accounting.  Instead, that contingency would be subject to the probable
and estimable recognition criteria under SFAS 5, "Accounting for Contingencies."

Financial   Accounting   Standards   Board   Statement   No.  160  (SFAS   160),
"Noncontrolling  Interest in Consolidated Financial Statements,  an amendment of
ARB Statement No. 51," was issued in December  2007 and  establishes  accounting
and reporting standards for the non-controlling interest in a subsidiary and for
the  deconsolidation of a subsidiary.  SFAS 160 clarifies that a non-controlling
interest in a subsidiary, which is sometimes referred to as a minority interest,
is an ownership interest in the consolidated entity that should be reported as a
component  of equity  in the  consolidated  financial  statements.  Among  other
requirements,  SFAS 160  requires  consolidated  net  income to be  reported  at
amounts  that  are  attributable  to both  the  parent  and the  non-controlling
interest.  It also requires  disclosure,  on the face of the consolidated income
statement,  of the amounts of consolidated net income attributable to the parent
and to the non-controlling  interest.  SFAS 160 is effective for the Corporation
on  January  1, 2009 and is not  expected  to have a  significant  impact on the
Corporation's financial statements.

Financial Accounting Standards Board Statement No. 161 (SFAS 161),  "Disclosures
About  Derivative  Instruments  and Hedging  Activities,  an  Amendment  of FASB
Statement  No.  133," was  issued  in March  2008 and  amends  and  expands  the
disclosure  requirements of SFAS 133 to provide greater  transparency  about (i)
how  and  why  an  entity  uses  derivative  instruments,  (ii)  how  derivative
instruments  and related  hedge items are  accounted  for under SFAS 133 and its
related interpretations, and (iii) how derivative instruments and related hedged
items affect an entity's  financial  position,  results of  operations  and cash
flows. To meet those objectives, SFAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives,  quantitative disclosures about
fair value amounts of gains and losses on derivative instruments and disclosures
about credit-risk-related contingent features in derivative agreements. SFAS 161
is effective for the  Corporation on January 1, 2009 and is not expected to have
a significant impact on the Corporation's financial statements.

                                                                        Page 16
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

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

FORWARD-LOOKING STATEMENTS

From time to time, we include forward-looking statements in our oral and written
communication.  We 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.   We  intend   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 we are  including  this  statement  for purposes of these safe
harbor provisions. Forward-looking statements can often be identified by the use
of words like "believe", "continue", "pattern", "estimate", "project", "intend",
"anticipate",  "expect" and similar  expressions or future or conditional  verbs
such as "will", "would",  "should",  "could",  "might", "can", "may", or similar
expressions. These forward-looking statements include:

     *  statements of our goals, intentions and expectations;

     *  statements regarding our business plan and growth strategies;

     *  statements regarding the asset quality of our loan and investment
        portfolios; and

     *  estimates of our 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 our net interest margin, asset valuations
        and expense expectations;

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

     *  adverse developments in our loan and investment portfolios;

     *  competitive factors in the banking industry, such as the trend towards
        consolidation in our market;

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

     *  acquisitions  of other businesses by us and integration of such acquired
        businesses;

     *  changes in market, economic, operational, liquidity, credit and interest
        rate risks  associated  with our business; and

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

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

                                                                         Page 17
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

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

CRITICAL ACCOUNTING POLICIES

Generally  accepted  accounting  principles  are complex and require us to apply
significant  judgments to various accounting,  reporting and disclosure matters.
We must use  assumptions  and estimates to apply these  principles  where actual
measurement  is not  possible or  practical.  For a complete  discussion  of our
significant  accounting  policies,  see  "Notes  to the  Consolidated  Financial
Statements"  in our Annual  Report on Form 10-K for the year ended  December 31,
2007. Certain policies are considered critical because they are highly dependent
upon subjective or complex judgments, assumptions and estimates. Changes in such
estimates may have a significant  impact on the  financial  statements.  We have
reviewed the application of these policies with the Audit Committee of our Board
of Directors.

We believe there have been no  significant  changes  during the six months ended
June 30, 2008 to the items that we disclosed as our critical accounting policies
and estimates in Management's Discussion and Analysis of Financial Condition and
Results  of  Operations  in our  Annual  Report on Form 10-K for the year  ended
December 31, 2007.

BUSINESS SUMMARY

We are a diversified financial holding company headquartered in Muncie, Indiana.
Since its  organization in 1982, the Corporation has grown to include 65 banking
center  locations in 18 Indiana and 3 Ohio  counties.  In addition to its branch
network,  the  Corporation's   delivery  channels  include  ATMs,  check  cards,
interactive voice response systems and internet technology.

The Corporation's  business  activities are currently limited to one significant
business  segment,  which  is  community  banking.  As of  June  30,  2008,  the
Corporation's  financial service affiliates  included four nationally  chartered
banks:  First  Merchants  Bank,  National  Association,  First Merchants Bank of
Central  Indiana,  National  Association,  Lafayette  Bank  and  Trust  Company,
National  Association and Commerce  National Bank. The banks provide  commercial
and  retail  banking  services.  In  addition,  our  trust  company,  multi-line
insurance  company and a title company provide trust asset management  services,
retail  and   commercial   insurance   agency   services  and  title   services,
respectively.

Management believes that its vision, mission,  culture statement and core values
produce  profitable  growth for  stockholders.  Management  also  believes it is
important to maintain a strong  control  environment  as we continue to grow our
businesses.  Interest rate and market risks  inherent in our asset and liability
balances are managed within prudent ranges,  while ensuring  adequate  liquidity
and funding.  Sound credit  policies are maintained and interest rate and market
risks  inherent in our asset and liability  balances are managed  within prudent
ranges, while ensuring adequate liquidity and funding.


RESULTS OF OPERATIONS

Net  income  for the three  months  ended  June 30,  2008,  equaled  $6,542,000,
compared to  $6,208,000 in the same period of 2007.  Diluted  earnings per share
were $.36,  an  increase of 5.9 percent  from the $.34  reported  for the second
quarter 2007. Net income for the six months ended June 30, 2008 was  $14,668,000
compared to 13,979,000 for the same period in 2007.  Diluted  earnings per share
were $.81 in 2008 and $.76 in 2007.

Annualized  returns on average assets and average  stockholders'  equity for the
three  months  ended  June  30,  2008,   were  .69  percent  and  7.46  percent,
respectively,  compared with .69 percent and 7.53 percent for the same period of
2007.  Annualized returns on average assets and average stockholders' equity for
the six  months  ended  June 30,  2008,  were  .78  percent  and  8.44  percent,
respectively,  compared with .78 percent and 8.50 percent for the same period of
2007.

                                                                         Page 18
<PAGE>
                           FIRST MERCHANTS CORPORATION
                                    FORM 10-Q

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

CAPITAL

Our  regulatory  capital  continues  to  exceed  regulatory  "well  capitalized"
standards.  Tier I regulatory capital consists primarily of total  stockholders'
equity and  subordinated  debentures  issued to business  trusts  categorized as
qualifying borrowings,  less non-qualifying intangible assets and unrealized net
securities  gains. Our Tier I capital to average assets ratio was 7.4 percent at
June 30,  2008 and 7.2 percent at year end 2007. In addition, at June 30,  2008,
we had a Tier I  risk-based  capital  ratio of 8.5 percent and total  risk-based
capital ratio of 11.1 percent.  Regulatory  capital  guidelines require a Tier I
risk-based  capital ratio of at least 4.0 percent and a total risk-based capital
ratio of at least 8.0 percent.

Our GAAP capital ratio,  defined as total stockholders'  equity to total assets,
equaled 9.1 percent at June 30, 2008 and 9.0 percent at December 31, 2007.  When
we acquire  other  companies  for stock,  GAAP  capital  increases by the entire
amount of the purchase price.

Our  tangible  capital  ratio,   defined  as  total  stockholders'  equity  less
intangibles net of tax to total assets less  intangibles net of tax, equaled 5.9
percent as of June 30,  2008, and 5.7 percent at December 31, 2007.

We believe that all of the above capital ratios are meaningful  measurements for
evaluating  our safety and  soundness.  Additionally,  we believe the  following
table is also meaningful when  considering our performance  measures.  The table
details and reconciles  tangible earnings per share,  return on tangible capital
and tangible assets to traditional GAAP measures.
<table>
                                              June 30,      December 31,
(Dollars in thousands)                          2008            2007
                                            -----------     -----------
<S>                                               <C>           <C>
Average goodwill .......................... $   124,052     $   123,191
Average core deposit intangible (CDI) .....      11,949          13,868
Average deferred tax on CDI ...............      (3,074)         (3,659)
                                            -----------     -----------
  Intangible adjustment ................... $   132,927     $   133,400
                                            ===========     ===========

Average stockholders' equity (GAAP capital) $   347,788     $   330,786
Intangible adjustment .....................    (132,927)       (133,400)
                                            -----------     -----------
  Average tangible capital ................ $   214,861     $   197,386
                                            ===========     ===========

Average assets ............................ $ 3,764,351     $ 3,639,772
Intangible adjustment .....................    (132,927)       (133,400)
                                            -----------     -----------
  Average tangible assets ................. $ 3,631,424     $ 3,506,372
                                            ===========     ===========

Net income ................................ $    14,668     $    31,639
CDI amortization, net of tax ..............         959           1,919
                                            -----------     -----------
  Tangible net income ..................... $    15,627     $    33,558
                                            ===========     ===========

Diluted earnings per share ................ $       .81     $      1.73
Diluted tangible earnings per share ....... $       .86     $      1.83

Return on average GAAP capital ............        8.44%           9.56%
Return on average tangible capital ........       14.55%          17.00%

Return on average assets ..................         .78%            .87%
Return on average tangible assets .........         .86%            .96%
</table>
                                                                         Page 19
<PAGE>
                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q


ASSET QUALITY/PROVISION FOR LOAN LOSSES

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

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

At June 30,  2008,  non-performing  assets,  which  includes  nonaccrual  loans,
restructured loans, and other real estate owned totaled $51,789,000, an increase
of  $20,040,000  from December 31, 2007 as noted in Note 5 Loans and  Allowance,
included within the Notes to Consolidated Condensed Financial Statements of this
Form 10Q. Other real estate owned increased  $14,670,000 from December 31, 2007,
primarily due to two borrowers.  Non-performing  loans will increase or decrease
going forward due to portfolio  growth,  routine  problem loan  recognition  and
resolution  through  collections,  sales or charge-offs.  The performance of any
loan can be affected  by  external  factors,  such as  economic  conditions,  or
factors particular to a borrower, such as actions of a borrower's management.

At  June  30,  2008,  impaired  loans  totaled  $107,289,000,   an  increase  of
$20,340,000  from  December 31, 2007.  At June 30, 2008, an allowance for losses
was not deemed necessary for impaired loans totaling  $93,139,000,  as there was
no identified loss on these credits. An allowance of $5,742,000 was recorded for
the remaining  balance of impaired loans of  $14,150,000  and is included in our
allowance for loan losses. The increase of total impaired loans is primarily due
to the increase of performing,  substandard  classified loans,  which comprise a
portion of our total impaired  loans. A loan is deemed  impaired when,  based on
current  information or events,  it is probable all amounts due of principal and
interest  according to the  contractual  terms of the loan agreement will not be
collected. All of our criticized loans, including substandard, doubtful and loss
credits, are included in the impaired loan total.

At June 30, 2008, the allowance for loan losses was $31,597,000,  an increase of
$3,369,000  from year end 2007.  As a percent of loans,  the  allowance was 1.05
percent at June 30, 2008 and .98 percent at December 31, 2007.


The provision for loan losses for the first six months of 2008 was  $10,893,000,
an increase  of  $7,646,000  from  $3,247,000  for the same period in 2007.  The
increase  from the prior year was a result of an increase in net charge offs and
the  increase  in  non-performing  loans.  The  decline  in  the  value  of  the
residential  real estate in our market has  negatively  impacted the  underlying
collateral  value in our residential,  land development and construction  loans.
This downturn in the real estate  market is expected to continue and  management
is proactive in evaluating loans  collateralized by real estate.  The evaluation
by management includes consideration of specific borrower cash flow analysis and
estimated collateral values, types and amounts on non-performing loans, past and
anticipated  loan  loss  experience,  changes  in the  composition  of the  loan
portfolio,  and the  current  condition  and  amount of loans  outstanding.  The
determination of the provision in any period is based on management's continuing
review and evaluation of the loan  portfolio,  and its judgment as to the impact
of current economic conditions on the portfolio


                                                                         Page 20

<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
LIQUIDITY

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

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

The most stable source of liability-funded  liquidity for both the long-term and
short-term  is  deposit  growth  and  retention  in the core  deposit  base.  In
addition,  we utilize  advances  from the Federal Home Loan Bank  ("FHLB") and a
revolving line of credit with LaSalle Bank, N.A. as funding sources. At June 30,
2008, total borrowings from the FHLB were  $228,196,000.  Our bank  subsidiaries
have pledged  certain  mortgage  loans and  investments  to the FHLB.  The total
available  remaining  borrowing  capacity  from the FHLB at June 30,  2008,  was
$43,532,000. At June 30, 2008, our revolving line of credit had no balance and a
remaining borrowing capacity of $25,000,000.

The  principal  source  of  asset-funded   liquidity  is  investment  securities
classified   as   available for sale,   the  market   values  of  which  totaled
$397,068,000  at June 30, 2008, a decrease of  $43,768,000  or 9.9 percent below
December 31, 2007.  Securities  classified as held to maturity that are maturing
within a short  period  of time can also be a source  of  liquidity.  Securities
classified as held to maturity and that are maturing in one year or less totaled
$1,871,000 at June 30, 2008. In addition, other types of assets such as cash and
due from banks,  federal funds sold and securities purchased under agreements to
resell, and loans and interest-bearing deposits with other banks maturing within
one year are sources of liquidity.

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

We  provide  customers  with  off-balance  sheet  credit  support  through  loan
commitments and standby letters of credit.  Summarized  credit-related financial
instruments at June 30, 2008 are as follows:

                                                                  At June 30,
(Dollars in thousands)                                               2008
                                                                --------------
Amounts of commitments:
Loan commitments to extend credit ............................... $  740,862
Standby letters of credit .......................................     24,053
                                                                  ----------
                                                                  $  764,915
                                                                  ==========

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

In  addition  to owned  banking  facilities,  we have  entered  into a number of
long-term leasing  arrangements to support our ongoing activities.  The required
payments under such commitments and borrowings at June 30,  2008 are as follows:
<TABLE>
<CAPTION>
                                2008       2009       2010       2011       2012       2013       Total
(Dollars in thousands)       remaining                                              and after
                            ---------------------------------------------------------------------------
<S>                          <C>        <C>        <C>        <C>        <C>        <C>        <C>
Operating leases .........   $    869   $  1,519   $  1,256   $  1,071   $    699   $    366   $  5,780
Borrowings ...............    236,782     55,344     61,058     23,943     65,792    143,331    586,250
                             --------   --------   --------   --------   --------   --------   --------
Total ....................   $237,651   $ 56,863   $ 62,314   $ 25,014   $ 66,491   $143,697   $592,030
                             ========   ========   ========   ========   ========   ========   ========
</TABLE>
                                                                         Page 21
<PAGE>
                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK

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

It is our objective to monitor and manage risk  exposure to net interest  income
caused by changes  in  interest  rates.  It is the goal of our ALM  function  to
provide optimum and stable net interest  income.  To accomplish this, we use two
ALM  tools.  GAP/Interest  Rate  Sensitivity  Reports  and Net  Interest  Income
Simulation Modeling are both constructed, presented, and monitored quarterly.

We believe  that our  liquidity  and interest  sensitivity  position at June 30,
2008,  remained  adequate to meet our primary goal of achieving optimum interest
margins while avoiding undue interest rate risk.

Net interest  income  simulation  modeling,  or  earnings-at-risk,  measures the
sensitivity of net interest income to various interest rate movements. Our 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 on
the following page. The interest rate scenarios are used for analytical purposes
and do not necessarily  represent our view of future market  movements.  Rather,
these are  intended  to provide a measure of the degree of  volatility  interest
rate movements may introduce into our earnings.

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 our 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
our best estimate of expected future behavior.

                                                                         Page 22
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

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

Driver Rates            RISING             FALLING
-------------------------------------------------------------
Prime                   200 Basis Points   (200) Basis Points
Federal Funds           200                (200)
One-Year CMT            200                (200)
Three-Year CMT          200                (200)
Five-Year CMT           200                (200)
CD's                    200                (166)
FHLB Advances           200                (200)

Results for the base,  rising and falling  interest  rate  scenarios  are listed
below,  based upon our rate sensitive  assets and  liabilities at June 30, 2008.
The net interest income shown  represents  cumulative net interest income over a
12-month time horizon.  Balance sheet assumptions used for the base scenario are
the same for the rising and falling simulations.

                                              BASE     RISING    FALLING
                                                (Dollars in thousands)
-------------------------------------------------------------------------
Net Interest Income                         $129,680  $129,918   $124,004

Variance from base                                    $    238   $ (5,676)

Percent of change from base                               (0.2)%     (4.4)%

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

Driver Rates            RISING             FALLING
-------------------------------------------------------------
Prime                   200 Basis Points   (200) Basis Points
Federal Funds           200                (200)
One-Year CMT            200                (200)
Two-Year CMT            200                (200)
Three-Year CMT          200                (200)
Five-Year CMT           200                (200)
CD's                    200                (193)
FHLB Advances           200                (200)

Results for the base,  rising and falling  interest  rate  scenarios  are listed
below,  based upon our rate  sensitive  assets and  liabilities  at December 31,
2007. The net interest  income shown  represents  cumulative net interest income
over a  12-month  time  horizon.  Balance  sheet  assumptions  used for the base
scenario are the same for the rising and falling simulations.

                                              BASE     RISING    FALLING
                                                (Dollars in thousands)
-------------------------------------------------------------------------
Net Interest Income                         $117,693  $120,089   $116,063

Variance from base                                    $  2,396   $ (1,630)

Percent of change from base                                2.0 %     (1.4)%

                                                                         Page 23
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

EARNING ASSETS

The  following  table  presents the earning  asset mix as of June 30, 2008,  and
December 31, 2007.  Earning  assets  increased by  $80,950,000 in the six months
ended June 30, 2008.  Loans and loans held for sale  increased by  $141,252,000.
The three largest loan segments that increased were in commerical and industrial
at  $152,436,000,  agricultural  production at  $10,801,000,  and commercial and
farmland at $ 7,438,000.  Loan segments that  decreased  were  residential  real
estate of  $26,562,000  and loans to  individuals  of  $26,493,000.  Investments
decreased  by  $42,843,000  as  lower  yielding  investments  matured  and  were
reinvested in higher yielding loans.

<TABLE>

EARNING ASSETS
(Dollars in thousands)                                      June 30,        December 31,
                                                              2008              2007
----------------------------------------------------------------------------------------
<S>                                                       <C>              <C>
Interest-bearing time deposits ......................     $    7,267        $   24,931

Investment securities available for sale ............        397,068           440,836

Investment securities held to maturity ..............         11,256            10,331

Mortgage loans held for sale ........................          3,234             3,735

Loans ...............................................      3,018,596         2,876,843

Federal Reserve and Federal Home Loan Bank stock              25,455            25,250
                                                          ----------        ----------

                     Total ..........................     $3,462,876        $3,381,926
                                                          ==========        ==========


</table>
                                                                         Page 24
<PAGE>
                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

NET INTEREST INCOME

Net Interest  Income is the primary source of our earnings.  It is a function of
net interest  margin and the level of average  earning  assets.  The table below
presents  our asset  yields,  interest  expense,  and net  interest  income as a
percent of average  earning  assets for the three and six months  ended June 30,
2008 and 2007.

During the six months  ended June 30,  2008,  asset  yields  decreased  64 basis
points on a fully taxable equivalent basis (FTE) and interest costs decreased 99
basis  points  (FTE),  resulting  in an 35 basis  point  (FTE)  increase  in net
interest income as compared to the same period in 2007.
<TABLE>
<CAPTION>
                                                            Three Months Ended              Six Months Ended
                                                                 June 30,                       June 30,
<S>                                                     <C>           <C>             <C>           <C>
(Dollars in Thousands)                                      2008         2007             2008         2007
                                                        -----------  -----------      -----------  -----------
Annualized net interest income........................  $  125,964   $  110,459       $  128,691   $  109,380

Annualized FTE adjustment.............................  $    3,562   $    4,093       $    3,509   $    4,052

Annualized net interest income
  On a fully taxable equivalent basis.................  $  129,526   $  114,552       $  132,200   $  113,432

Average earning assets................................  $3,412,666   $3,275,760       $3,428,960   $3,242,966

Interest income (FTE) as a percent
  of average earning assets...........................        6.60%        7.09%            6.41%        7.05%

Interest expense as a percent
  of average earning assets...........................        2.80%        3.59%            2.56%        3.55%

Net interest income (FTE) as a percent
  of average earning assets...........................        3.80%        3.50%            3.85%        3.50%

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

HEDGING ACTIVITIES

On August 1, 2006, the  Corporation  purchased three  prime-based  interest rate
floor  agreements  with an aggregate  notional amount of $250 million and strike
rates  ranging  from 6% to 7%.  The  combined  purchase  price of  approximately
$550,000  was  to be  amortized  on an  allocated  fair  value  basis  over  the
three-year term of the agreements.  On March 19, 2008, the Corporation  received
$5,216,000 in connection  with the  termination of the three interest rate floor
agreements.  The contractual  maturity of the floors was August 1, 2009.  During
the life of the floors, pre-tax gains of approximately  $4,662,500 were deferred
in accumulated  other  comprehensive  income (AOCI) in accordance with cash flow
hedge  accounting rules  established by SFAS No. 133,  Accounting for Derivative
Instruments and Hedging  Activities (as amended).  The amounts  deferred in AOCI
will be  reclassified  out of equity into earnings  over the  remaining  sixteen
months of the original contract. SFAS 133 requires that amounts deferred in AOCI
be  reclassified  into earnings in the same periods  during which the originally
hedged  cash  flows  (prime-based  interest  payments  on loan  assets)  affects
earnings,  as long as the  originally  hedged  cash  flows  remain  probable  of
occurring (i.e. the principal  amount of designated  prime-based  loans match or
exceed the notional  amount of the terminated  floor through August 1, 2009). If
the  principal  amount of the  originally  hedged loans falls below the notional
amount of the terminate floors,  then amounts in AOCI could be accelerated.  The
Corporation  decided to terminate the interest rate floor  agreements only after
considering the impact of the transaction on its risk management  objectives and
after  alternative  strategies  were in place to mitigate the adverse  impact of
falling  interest  rates  on its net  interest  margin.  At June 30,  2008,  the
remaining pre-tax gains are approximately $3.6 million.

The Corporation has introduced a new derivative  product  offering to customers.
This  product  allows  the  customers  to  enter  into  an  agreement  with  the
Corporation  to swap a  variable  rate loan to a fixed  rate.  These  derivative
products are designed to reduce,  eliminate  or modify the  borrower's  interest
rate or market price risk. The extension of credit incurred  through the sale of
derivative products is subject to the same approval,  financial  information and
analysis  standards as traditional  credit products.  The Corporation limits its
risk  exposure  by  entering  into a similar  swap  agreement  with a  separate,
well-capitalized  and rated counterparty  previously  approved by the Credit and
Asset Liability Committee.  By using these interest rate swap arrangements,  the
Corporation  is also better  insulated  from market risk and  volatility.  These
derivative  contracts are not designated  against specific assets or liabilities
and, therefore, do not qualify for hedge accounting.  Therefore,  the adjustment
to fair value for both swap arrangements is recorded in non-interest income.

                                                                         Page 25
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

OTHER INCOME

Total  other  income in the second  quarter of 2008 was  $568,000 or 5.8 percent
higher than the same period of 2007.

Four items primarily account for the change:

1.   In the second  quarter  2008,  fees related to loan level hedge  agreements
     were $224,000. No such fees were collected in 2007 as this is a new product
     offerring in 2008.

2.   Earnings on  bank-owned  life  insurance  decreased  $176,000 from the same
     period in 2007 due to the  decline  in the market  value of the  underlying
     investments.

3.   Other customer and electronic card fees increased $159,000 due to increased
     fees to customers and increased customer electronic activity.

4.   Insurance  Commissions  increased $158,000 from the same period in 2007 due
     to the purchase of an insurance agency in April 2008.


Other  income for the first six  months of 2008 was  $1,291,000  or 6.6  percent
higher than the same period in 2007.

Five items primarily account for the change:

1.   In 2008, fees related to derivative hedge agreements were $316,000. No such
     fees were collected in 2007.

2.   Other customer and electronic card fees increased $319,000 due to increased
     fees to customers and increased customer electronic activity.

3.   Insurance  Commissions  increased $189,000 from the same period in 2007 due
     to the purchase of an insurance agency in April 2008.

4.   Net gains and fees on sales of mortgage  loans  increased  $168,000  due to
     additional loans sold in the secondary market.

5.   Earnings on  bank-owned  life  insurance  decreased  $123,000 from the same
     period in 2007 due to the  decline in the  subprime  and  commercial  paper
     markets.


OTHER EXPENSES

Total  other  expenses  in the  second  quarter of 2008 were  $1,335,000  or 4.8
percent lower than the same period in 2007.

Two items primarily account for the change:

1.   Salary and employee  benefit expenses were $902,000 higher than in the same
     period of 2007 due to  staffing  additions  and  normal  annual  increases.
     Approximately  $61,000 of the increase is due to  increases in  share-based
     compensation expense.

2.   In the second  quarter of 2007, the  Corporation  wrote off $1.8 million in
     unamortized underwriting fees associated with First Merchants Capital Trust
     I Subordinated debentures. No such charge existed in 2008.


Total  other  expenses  for the first six  months of 2008 were  $744,000  or 1.4
percent higher than the same period in 2007:

Two items primarily account for the change:

1.   Salary and employee  benefit  expenses were  $2,274,000  higher than in the
     same period of 2007 due to staffing  additions and normal annual increases.
     Approximately  $165,000 of the increase is due to increases in  share-based
     compensation  expense.

2.   In the second  quarter of 2007, the  Corporation  wrote off $1.8 million in
     unamortized underwriting fees associated with First Merchants Capital Trust
     I Subordinated debentures. No such charge existed in 2008.

                                                                         Page 26
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

INCOME TAXES

Income  tax  expense,  for the six  months  ended June 30,  2008,  increased  by
$504,000 from the same period in 2007.  The effective tax rate was 27.7 and 26.7
percent for the 2008 and 2007 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 us, and that
address is (http://www.sec.gov).


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

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

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

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

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

                                                                         Page 27
<PAGE>
                           FIRST MERCHANTS CORPORATION
                                    FORM 10-Q
                           PART II. OTHER INFORMATION

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

          None

Item 1.A. Risk Factors
----------------------

There have been no material changes from the risk factors  previously  disclosed
in the Corporation's December 31, 2007 Annual Report on Form 10-K.

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

          a.   On April 1, 2008,  the  Corporation  issued  51,302  unregistered
               shares of its common stock pursuant to a Merger  Agreement  dated
               April 1, 2008, between the Corporation, First Merchants Insurance
               Services,    Inc.   and   Patishall    Insurance   Agency,   Inc.
               ("Patishall").  The Corporation issued the unregistered shares to
               the  shareholders of Patishall,  at a value of $28.513 per share,
               in exchange for all the common stock of  Patishall.  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 under Section 4 (2) of the Securities Act,
               for transactions not involving a public offering.


          b.   None

          c.   Issuer Purchases of Equity Securities

The following  table  presents  information  relating to our purchases of equity
securities during the quarter ended June 30,  2008, as follows(1):
<TABLE>
<CAPTION>
                                                                                               MAXIMUM NUMBER (OR
                                                                    TOTAL NUMBER OF        APPROXIMATE DOLLAR VALUE)
                                                               SHARES PURCHASED AS PART     OF SHARES THAT MAY YET
                        TOTAL NUMBER OF     AVERAGE PRICE        OF PUBLICLY ANNOUNCED         BE PURCHASED UNDER
      PERIOD            SHARES PURCHASED    PAID PER SHARE        PLANS OR PROGRAMS(2)       THE PLANS OR PROGRAMS
      ------            ----------------    --------------    -------------------------    ------------------------
<S>                     <C>                 <C>               <C>                          <C>
04/01/08 - 04/30/08               0             $    0                    0                     390,000
05/01/08 - 05/31/08           2,928(1)           23.46                    0                     390,000
06/01/08 - 06/30/08               0                  0                    0                     390,000
</TABLE>


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

     (2) On December 4, 2007, the Corporation's  Board authorized  management to
     repurchase up to 500,000  shares of the  Corporation's  Common Stock.  This
     authorization  was publicly  announced and expires December 31, 2008. There
     were 390,000  remaining  shares that may yet be purchased  pursuant to such
     authorizations as of June 30, 2008.



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

         None

                                                                         Page 28
<page>
                           FIRST MERCHANTS CORPORATION
                                    FORM 10-Q
                           PART II. OTHER INFORMATION


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

     a.   The Annual  Meeting of  Shareholders  of the  Corporation  was held on
          April 29, 2008.

     b.   No response is required.

     c.   The following matters were voted on by shareholders:

               (i)  Election of Directors - The following directors were elected
                    for a term of three years.

                                                            Vote Count
                                                --------------------------------
                                                    Vote For        Vote Witheld
                                                --------------------------------

                    Thomas B. Clark               12,807,082          1,000,219
                    Roderick English              12,980,400            826,900
                    Jo Ann M. Gora                12,854,672            952,628
                    William L. Hoy                13,348,793            458,507
                    Jean L. Wojtowicz             12,896,129            911,171

              (ii)  Approval   of  the  First   Merchants   Corporation   Equity
                    Compensation  Plan for Non-Employee  Directors:  Votes For -
                    9,628,685,  Votes  Against -  1,055,525,  Votes  Abstained -
                    165,822.

              (iii) Ratification  of  the  appointment  of  Independent  Public
                    Accounting Firm - BKD, LLP, Indianapolis, Indiana: Votes For
                    -  13,678,456,  Votes Against - 103,259,  Votes  Abstained -
                    27,656.

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

         a.  None

         b.  None
                                                                        Page 29
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                           PART II. OTHER INFORMATION


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

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

                10a             First Merchants Corporation          33
                                Change of Control Agreement
                                with Michael J. Stewart
                                dated April 29, 2008.

                10b             First Amendment to the               41
                                First Merchants Corporation
                                2007 Directors' Deferred
                                Compensation Plan as
                                amended on April 29, 2008.

                10c             First Merchants Corporation          44
                                Equity Compensation Plan for
                                Non-Employee Directors,
                                effective April 29, 2008.

                14              First Merchants Corporation          50
                                Code of Conduct as amended
                                on April 29, 2008.


                31.1            Certification of Chief               65
                                Executive Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

                31.2            Certification of Chief               66
                                Financial Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

                32              Certifications Pursuant to           67
                                18 U.S.C. Section 1350, as
                                Adopted Pursuant to Section
                                906 of the Sarbanes-Oxley
                                Act of 2002


                                                                         Page 30


<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: August 11, 2008                   by /s/ Michael C. Rechin
     --------------------------            -------------------------------------
                                           Michael C. Rechin
                                           President and
                                           Chief Executive Officer
                                           (Principal Executive Officer)

Date: August 11, 2008                   by /s/ Mark K. Hardwick
     --------------------------            -------------------------------------
                                           Mark K. Hardwick
                                           Executive Vice President and
                                           Chief Financial Officer
                                           (Principal Financial Officer)


                                                                         Page 31

<PAGE>
                          FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                               INDEX TO EXHIBITS

INDEX TO EXHIBITS

      (a)3.  Exhibits:

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

                10a             First Merchants Corporation          33
                                Change of Control Agreement
                                with Michael J. Stewart
                                dated April 29, 2008.

                10b             First Amendment to the               41
                                First Merchants Corporation
                                2007 Directors' Deferred
                                Compensation Plan as
                                amended on April 29, 2008.

                10c             First Merchants Corporation          44
                                Equity Compensation Plan for
                                Non-Employee Directors,
                                effective April 29, 2008.

                14              First Merchants Corporation          50
                                Code of Conduct as amended
                                on April 29, 2008.


                31.1            Certification of Chief               65
                                Executive Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

                31.2            Certification of Chief               66
                                Financial Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

                32              Certifications Pursuant to           67
                                18 U.S.C. Section 1350, as
                                Adopted Pursuant to Section
                                906 of the Sarbanes-Oxley
                                Act of 2002


                                                                         Page 32

<PAGE>

                                   EXHIBIT-10a


                           CHANGE OF CONTROL AGREEMENT


     This  Agreement  is made and  entered  into as of April  29,  2008,  by and
between  First  Merchants  Corporation,   an  Indiana  corporation  (hereinafter
referred to as  "Corporation"),  with its principal  office  located at 200 East
Jackson Street, Muncie, Indiana, and Michael J. Stewart (hereinafter referred to
as "Executive"), of Indianapolis, Indiana.

     WHEREAS,  the  Corporation  considers the  continuance  of  proficient  and
experienced  management  to be essential to  protecting  and  enhancing the best
interests of the Corporation and its shareholders; and

     WHEREAS,  the Corporation  desires to assure the continued  services of the
Executive on behalf of the Corporation; and

     WHEREAS,  the  Corporation  recognizes  that if faced with a proposal for a
Change of Control, as hereinafter defined, the Executive will have a significant
role in helping the Board of Directors assess the options and advising the Board
of  Directors  on what  is in the  best  interests  of the  Corporation  and its
shareholders;  and it is necessary  for the Executive to be able to provide this
advice  and  counsel  without  being  influenced  by  the  uncertainties  of the
Executive's own situation; and

     WHEREAS, the Corporation desires to provide fair and reasonable benefits to
the  Executive  on the terms and  subject  to the  conditions  set forth in this
Agreement.

     NOW,  THEREFORE,  in consideration of the mutual covenants and undertakings
herein  contained  and  the  continued   employment  of  the  Executive  by  the
Corporation  as its Executive  Vice  President and Chief  Banking  Officer,  the
Corporation and the Executive,  each intending to be legally bound, covenant and
agree as follows:

     1.   Term of Agreement.

     This  Agreement  shall  continue  in  effect  through  December  31,  2008;
provided,  however,  that  commencing  on December 31, 2008 and each December 31
thereafter,  the term of this Agreement shall  automatically be extended for one
additional  year  unless,  not  later  than  October  31,  2008  or  October  31
immediately  preceding any December 31 thereafter,  the  Corporation  shall have
given the Executive  notice that it does not wish to extend this Agreement;  and
provided further, that if a Change of Control of the Corporation,  as defined in
Section 2, shall have  occurred  during the  original or  extended  term of this
Agreement, this Agreement shall continue in effect for a period of not less than
twenty-four  (24)  months  beyond  the month in which  such  Change  of  Control
occurred.

                                                                         Page 33
<page>
     2.   Definitions.

          For  purposes  of this  Agreement,  the  following  definitions  shall
               apply:

               (A)  Cause: "Cause" shall mean:

                    (1)  professional incompetence;

                    (2)  willful misconduct;

                    (3)  personal dishonesty;

                    (4)  breach of fiduciary duty involving personal profit;

                    (5)  intentional failure to perform stated duties;

                    (6)  willful violation of any law, rule or regulation (other
                         than traffic  violations or similar  offenses) or final
                         cease and desist orders; and

                    (7)  any intentional  material breach of any term, condition
                         or covenant of this Agreement.

               (B)  Change of Control: "Change of Control" shall mean:

                    (1)  any person (as such term is used in Sections  13(d) and
                         14(d) of the Securities Exchange Act of 1934 ["Exchange
                         Act"]),  other than the Corporation,  is or becomes the
                         Beneficial  Owner (as  defined in Rule 13d-3  under the
                         Exchange  Act)  directly or indirectly of securities of
                         the Corporation  representing twenty-five percent (25%)
                         or  more  of  the   combined   voting   power   of  the
                         Corporation's then outstanding securities;

                    (2)  persons   constituting  a  majority  of  the  Board  of
                         Directors of the Corporation  were not directors of the
                         Corporation for at least the twenty-four (24) preceding
                         months;

                    (3)  the stockholders of the Corporation approve a merger or
                         consolidation   of  the  Corporation   with  any  other
                         corporation,  other than (a) a merger or  consolidation
                         which  would  result in the  voting  securities  of the
                         Corporation   outstanding   immediately  prior  thereto
                         continuing   to   represent    (either   by   remaining
                         outstanding   or  by  being   converted   into   voting
                         securities  of the  surviving  entity)  more than fifty
                         percent  (50%)  of the  combined  voting  power  of the
                         voting  securities of the Corporation or such surviving
                         entity  outstanding  immediately after such a merger or
                         consolidation,   or  (b)  a  merger  or   consolidation
                         effected  to  implement  a   recapitalization   of  the
                         Corporation (or similar transaction) in which no person
                         acquires  fifty  percent  (50%) or more of the combined
                         voting  power  of the  Corporation's  then  outstanding
                         securities; or

                                                                         Page 34
<page>
                    (4)  the  stockholders of the Corporation  approve a plan of
                         complete liquidation of the Corporation or an agreement
                         for the sale or disposition  by the  Corporation of all
                         or substantially all of the Corporation's assets.

               (C)  Date of Termination:  "Date of  Termination"  shall mean the
                    date  stated in the Notice of  Termination  (as  hereinafter
                    defined)  or thirty  (30) days from the date of  delivery of
                    such notice, as hereinafter defined, whichever comes first.

               (D)  Disability:  "Disability"  shall mean the definition of such
                    term as used in the disability policy then in effect for the
                    Corporation,  and a determination  of full disability by the
                    Corporation;   provided  that  in  the  event  there  is  no
                    disability insurance then in force,  "disability" shall mean
                    incapacity due to physical or mental illness which will have
                    caused the  Executive  to have been  unable to  perform  his
                    duties  with the  Corporation  on a full time  basis for one
                    hundred eighty (180) consecutive calendar days.

               (E)  Notice of Termination:  "Notice of Termination" shall mean a
                    written  notice,  communicated  to the other parties hereto,
                    which shall indicate the specific termination  provisions of
                    this  Agreement  relied  upon and set  forth  in  reasonable
                    detail  the facts and  circumstances  claimed  to  provide a
                    basis for  termination of the Executive's  employment  under
                    the provisions so indicated.

               (F)  Retirement:   "Retirement"   shall   mean   termination   of
                    employment  by  the   Executive  in   accordance   with  the
                    Corporation's  normal retirement policy generally applicable
                    to its salaried  employees in effect at the time of a Change
                    of Control.

     3.   Termination.

               (A)  General.  If  any of  the  events  described  in  Section  2
                    constituting  a Change in Control of the  Corporation  shall
                    have  occurred,  the  Executive  shall  be  entitled  to the
                    benefits   described  in  Section  4  upon  the   subsequent
                    termination of the Executive's employment during the term of
                    this  Agreement,  unless such  termination is (a) because of
                    the  death  or  Disability  of  the  Executive,  (b)  by the
                    Corporation for Cause, or (c) by the Executive other than on
                    account  of   Constructive   Termination   (as   hereinafter
                    defined).

               (B)  If,   following  a  Change  of  Control,   the   Executive's
                    employment  shall be terminated for Cause,  the  Corporation
                    shall pay him his salary  through the Date of Termination at
                    the rate in effect on the date of the Notice of Termination,
                    and the Corporation shall have no further  obligations under
                    this  Agreement.  If,  following  a Change of  Control,  the
                    Executive's  employment  shall be  terminated as a result of
                    death or Disability,  compensation to the Executive shall be
                    made pursuant to the Corporation's then existing policies on
                    death  or  Disability,  and the  Corporation  shall  have no
                    further  obligations  under this Agreement.  If, following a
                    Change of Control, the Executive's  employment is terminated
                    by and at  the  request  of the  Executive  as a  result  of
                    Retirement,  compensation  to the  Executive  shall  be made
                    pursuant  to  the  Corporation's  normal  retirement  policy
                    generally  applicable to its salaried  employees at the time
                    of the Change of Control,  and the Corporation shall have no
                    further obligations under this Agreement.

               (C)  Constructive Termination. The Executive shall be entitled to
                    terminate his employment upon the occurrence of Constructive
                    Termination.  For purposes of this Agreement,  "Constructive
                    Termination"  shall mean,  without the  Executive's  express
                    written consent,  the occurrence,  after a Change of Control
                    of the Corporation, of any of the following circumstances:

                    (1)  the   assignment   to  the   Executive  of  any  duties
                         inconsistent (unless in the nature of a promotion) with
                         the position in the Corporation that the Executive held
                         immediately  prior  to the  Change  of  Control  of the
                         Corporation,  or a  significant  adverse  reduction  or
                         alteration  in the nature or status of the  Executive's
                         position,  duties or responsibilities or the conditions
                         of the  Executive's  employment  from  those in  effect
                         immediately prior to such Change of Control;

                                                                         Page 35
<page>
                    (2)  a reduction in the Executive's  annual base salary,  as
                         in effect immediately prior to the Change of Control of
                         the  Corporation  or as the same may be  adjusted  from
                         time  to  time,  except  for  across-the-board   salary
                         reductions similarly affecting all management personnel
                         of the Corporation;

                    (3)  the Corporation  requires the Executive to be relocated
                         anywhere other than its offices in Muncie, Indiana;

                    (4)  the taking of any action to deprive  the  Executive  of
                         any material  fringe benefit enjoyed by him at the time
                         of the Change of Control, or the failure to provide him
                         with the  number of paid  vacation  days to which he is
                         entitled  on the  basis of years  of  service  with the
                         Corporation  and in accordance  with the  Corporation's
                         normal  vacation  policy  in  effect at the time of the
                         Change of Control;

                    (5)  the failure to continue to provide the  Executive  with
                         benefits  substantially similar to those enjoyed by the
                         Executive   under   any  of  the   Corporation's   life
                         insurance,  medical, health and accident, or disability
                         plans in which the Executive was  participating  at the
                         time of the Change of Control  of the  Corporation,  or
                         the  taking  of any  action  which  would  directly  or
                         indirectly materially reduce any of such benefits; or

                    (6)  the  failure  of  the   Corporation  to  continue  this
                         Agreement  in  effect,  or  to  obtain  a  satisfactory
                         agreement  from any  successor  to assume  and agree to
                         perform this  Agreement,  as  contemplated in Section 5
                         hereof.

     4.   Compensation Upon Termination.

          Following a Change of Control,  if his  employment by the  Corporation
          shall be  terminated  by the  Executive  on  account  of  Constructive
          Termination  or by  the  Corporation  other  than  for  Cause,  death,
          Disability,  or Retirement  (by and at the request of the  Executive),
          then the Executive shall be entitled to the benefits provided below:

               (A)  No  later  than  the  fifth  day   following   the  Date  of
                    Termination,  the Corporation shall pay to the Executive his
                    full base  salary  through the Date of  Termination,  at the
                    rate in effect at the time Notice of  Termination  is given,
                    plus all other  amounts to which the  Executive  is entitled
                    under any incentive, bonus or other compensation plan of the
                    Corporation in effect at the time such payments are due;

               (B)  In lieu of any further salary  payments to the Executive for
                    periods subsequent to the Date of Termination, no later than
                    the  fifth  day  following  the  Date  of  Termination,  the
                    Corporation  shall pay to the Executive a lump sum severance
                    payment,  in cash,  equal to two and ninety-nine  hundredths
                    (2.99)  times  the sum of (a) the  Executive's  annual  base
                    salary  rate  as in  effect  on the  date of the  Notice  of
                    Termination,  and  (b) the  largest  bonus  received  by the
                    Executive during the two (2) years immediately preceding the
                    Date  of  Termination  under  the  Corporation's  Management
                    Incentive Plan covering the Executive;

                                                                         Page 36
<page>

               (C)  During the period  beginning  with the  Executive's  Date of
                    Termination  and  continuing  until the  earlier  of (a) the
                    second  anniversary  of  such  Date of  Termination,  or (b)
                    Executive's  sixty-fifth  (65th)  birthday,  the Corporation
                    shall   arrange  to  provide   the   Executive   with  life,
                    disability,   accident   and   health   insurance   benefits
                    substantially  similar  to those  which  the  Executive  was
                    receiving immediately prior to the Notice of Termination and
                    shall pay the same  percentage  of the cost of such benefits
                    as the Corporation  was paying on the Executive's  behalf on
                    the date of such Notice;

               (D)  In  lieu  of  shares  of  common  stock  of the  Corporation
                    ("Corporation   Shares")   issuable  upon  the  exercise  of
                    outstanding  options  ("Options"),  if any,  granted  to the
                    Executive  under any  Corporation  stock  option plan (which
                    Options  shall be  cancelled  upon the making of the payment
                    referred to below), the Executive shall receive an amount in
                    cash equal to the product of (a) the excess of the higher of
                    the closing price of  Corporation  Shares as reported on the
                    NASDAQ National  Market System,  the American Stock Exchange
                    or the New  York  Stock  Exchange,  wherever  listed,  on or
                    nearest  the Date of  Termination  or the  highest per share
                    price for  Corporation  Shares  actually  paid in connection
                    with any Change of Control of the Corporation,  over the per
                    share  exercise  price of each Option held by the  Executive
                    (whether  or not  then  fully  exercisable),  times  (b) the
                    number of Corporation Shares covered by each such Option;

               (E)  If the  payments  or  benefits,  if any,  received  or to be
                    received by the Executive  (whether  under this Agreement or
                    under any other plan, arrangement,  or agreement between the
                    Executive  and  the   Corporation),   in   connection   with
                    termination or  Constructive  Termination of the Executive's
                    employment  following  a Change of  Control,  constitute  an
                    "excess  parachute  payment"  within the  meaning of Section
                    280G of the Internal Revenue Code ("Code"),  the Corporation
                    shall  pay to the  Executive,  no later  than the  fifth day
                    following the Date of Termination,  an additional amount (as
                    determined   by   the   Corporation's   independent   public
                    accountants) equal to the excise tax, if any, imposed on the
                    "excess  parachute  payment" under Section 4999 of the Code;
                    provided,  however,  if the  amount  of such  excise  tax is
                    finally  determined  to be more or less than the amount paid
                    to  the  Executive   hereunder,   the  Corporation  (or  the
                    Executive if the finally  determined amount is less than the
                    original  amount paid) shall pay the difference  between the
                    amount originally paid and the finally  determined amount to
                    the other  party no later than the fifth day  following  the
                    date such final determination is made;

                                                                         Page 37
<page>

               (F)  The  Corporation  shall pay to the Executive all  reasonable
                    legal  fees and  expenses  incurred  by the  Executive  as a
                    result  of such  termination  (including  all such  fees and
                    expenses,  if any,  incurred in  contesting or disputing any
                    such  termination  or in seeking  to obtain or  enforce  any
                    right or benefit  provided  by this  Agreement),  unless the
                    decision-maker  in  any  proceeding,   contest,  or  dispute
                    arising  hereunder makes a formal finding that the Executive
                    did  not  have  a  reasonable  basis  for  instituting  such
                    proceeding, contest, or dispute;

               (G)  The Corporation  shall provide the Executive with individual
                    out-placement services in accordance with the general custom
                    and  practice  generally  accorded  to an  executive  of the
                    Executive's position.

     5.   Successors; Binding Agreement.

               (A)  The Corporation shall require any successor  (whether direct
                    or  indirect,   by  purchase,   merger,   consolidation   or
                    otherwise)  to all  or  substantially  all  of the  business
                    and/or  assets of the  Corporation  to expressly  assume and
                    agree to perform  this  Agreement  in the same manner and to
                    the same  extent that the  Corporation  would be required to
                    perform it if no such succession had taken place. Failure of
                    the  Corporation  to obtain such  assumption  and  agreement
                    prior to the effectiveness of any such succession shall be a
                    breach of this  Agreement and shall entitle the Executive to
                    compensation  from the Corporation in the same amount and on
                    the same  terms to which  the  Executive  would be  entitled
                    hereunder if the  Executive  terminates  his  employment  on
                    account of  Constructive  Termination  following a Change of
                    Control of the Corporation,  except that for the purposes of
                    implementing  the  foregoing,  the  date on  which  any such
                    succession  becomes  effective  shall be deemed  the Date of
                    Termination.  As used in this Agreement,  "the  Corporation"
                    shall mean the Corporation and any successor to its business
                    and/or  assets as  aforesaid  which  assumes  and  agrees to
                    perform this Agreement, by operation of law or otherwise.

               (B)  This  Agreement  shall  inure  to  the  benefit  of  and  be
                    enforceable  by the  Executive  and his  personal  or  legal
                    representatives,   executors,  administrators,   successors,
                    heirs, distributees, devisees and legatees. If the Executive
                    should  die while any amount  would  still be payable to the
                    Executive hereunder had the Executive continued to live, all
                    such amounts,  unless otherwise  provided  herein,  shall be
                    paid in accordance  with the terms of this  Agreement to the
                    devisee,  legatee or other  designee or, if there is no such
                    designee, to his estate.

                                                                         Page 38
<page>

     6.   Miscellaneous.

          No provision of this  Agreement may be modified,  waived or discharged
          unless such waiver,  modification or discharge is agreed to in writing
          and signed by the  Executive  and such officer as may be  specifically
          designated by the Corporation. No waiver by either party hereto at the
          time of any breach by the other party hereto of, or  compliance  with,
          any  condition or provision of this  Agreement to be performed by such
          other  party  shall be  deemed  a  waiver  of  similar  or  dissimilar
          provisions  or  conditions  at the same or at any prior or  subsequent
          time. No agreement or representations,  oral or otherwise,  express or
          implied,  with respect to the subject  matter hereof have been made by
          either party which are not expressly set forth in this Agreement.  The
          validity,   interpretation,   construction  and  performance  of  this
          Agreement  shall  be  governed  by the laws of the  State  of  Indiana
          without regard to its conflicts of law principles. All references to a
          section of the  Exchange Act or the Code shall be deemed also to refer
          to any successor provisions to such section. Any payments provided for
          hereunder  shall be paid net of any  applicable  withholding  required
          under federal,  state or local law. The obligations of the Corporation
          under  Section  4 shall  survive  the  expiration  of the term of this
          Agreement.

     7.   Validity.

          The invalidity or  unenforceability of any provision of this Agreement
          shall not affect the validity or enforceability of any other provision
          of this Agreement, which shall remain in full force and effect.

     8.   Counterparts.

          This Agreement may be executed in several counterparts,  each of which
          shall be deemed to be an  original,  but all of which  together  shall
          constitute one and the same instrument.

     9.   Arbitration.

          Any dispute or  controversy  arising under or in connection  with this
          Agreement  shall be  settled  exclusively  by  arbitration,  conducted
          before  a panel  of  three  (3)  arbitrators  in  Muncie,  Indiana  in
          accordance with the rules of the American Arbitration Association then
          in effect.  Judgment may be entered on the  arbitrator's  award in any
          court having jurisdiction; provided, however, that the Executive shall
          be entitled to seek specific performance of his right to be paid until
          the  Date  of  Termination  during  the  pendency  of any  dispute  or
          controversy arising under or in connection with this Agreement.

                                                                         Page 39
<page>
     10.  Entire Agreement.

          This Agreement  sets forth the entire  agreement of the parties hereto
          in respect of the subject matter  contained  herein and supersedes all
          prior agreements, promises, covenants,  arrangements,  communications,
          representations  or  warranties,  whether  oral  or  written,  by  any
          officer, employee or representative of any party hereto; and any prior
          agreement  of the  parties  hereto in  respect of the  subject  matter
          contained herein is hereby terminated and cancelled.

     IN WITNESS  WHEREOF,  the  Corporation  has  caused  this  Agreement  to be
executed by their duly  authorized  officers,  and the  Executive  has hereunder
subscribed his name, as of the day and year first above written.


"CORPORATION"                                        "EXECUTIVE"

FIRST MERCHANTS CORPORATION


By /s/ Michael C. Rechin                  By /s/ Michael J. Stewart
   ---------------------------_              ------------------------------
    Michael C. Rechin                            Michael J. Stewart
    President & Chief Executive Officer


                                                                         Page 40
<page>

                                   EXHIBIT-10b


                                FIRST AMENDMENT
                                     OF THE
                           FIRST MERCHANTS CORPORATION
                   2007 DIRECTORS' DEFERRED COMPENSATION PLAN


     WHEREAS,  First Merchants  Corporation (the "Company")  maintains the First
Merchants  Corporation 2007 Directors' Deferred  Compensation Plan (Effective as
August 1, 2007) (the "Plan"); and

     WHEREAS,  pursuant to the  authority  contained in Section 8.1 of the Plan,
the Company has reserved the right to amend the Plan;

     NOW, THEREFORE,  pursuant to the amending power reserved to the Company and
delegated to the undersigned individuals,  the Plan is hereby amended, effective
January 1, 2008, in the following particulars:

     1.   By replacing Section 3.1 in its entirety with the following:

          "Section 3.1 Participant Deferral Contributions.  Subject to the terms
     and limitations of this Article III, a Participant  may elect,  pursuant to
     Section  3.2, to have all or a portion of his Fees payable in any Plan Year
     withheld  by  the  Company  and   credited  as  a   "Participant   Deferral
     Contribution"  under the Plan. The term  "contribution" is used for ease of
     reference; however,  contributions are merely credits to each Participant's
     Account,  which is a bookkeeping  account. The term "Fees," for purposes of
     the Plan,  means the fees  payable by the  Company or an  Affiliate  to the
     Participant  for  the  Participant's  services  as  a  Director,  including
     retainer  fees for  attendance  at regularly  scheduled  meetings,  special
     meetings  called from time to time,  and fees for attendance at any and all
     meetings of committees of the  applicable  board of directors.  Fees may be
     paid  in the  form of cash  ("Cash  Fees")  and in the  form of  shares  of
     restricted stock ("Stock Fees")."

     2.   By replacing Section 3.4 in its entirety with the following:

          "Section  3.4  Investment  Credits.  A  Participant's  Account will be
     increased to reflect the  increase in the value of the Account  established
     for the Participant.  The amount of earnings credited on deferred Cash Fees
     will be  determined  as if the  deferred  Cash  Fees were  invested  in the
     greater  of the Fed Funds  Rate or the  Five-Year  Treasury  Interest  Rate
     determined  as of the first  business  day of each  quarter of the calendar
     year,  but not to exceed 120 percent of the  Applicable  Long Term  Federal
     rate for monthly  compounding.  The amount of earnings credited on deferred
     Stock  Fees  will be equal to  dividends  paid on an  equivalent  number of
     shares of common stock of the Company for the period of time that the Stock
     Fees  are  deferred.  In  the  event  any  Participant  is  entitled  to  a
     distribution  of the Account under Article IV, the increase in the value of
     the Account will be allocated as of the last day of the quarter immediately
     preceding  the  quarter  in which the  payment to the  Participant  will be
     made."

                                                                         Page 41
<page>
     3.   By replacing subsection 3.5(ii) in its entirety with the following:

          "(ii) Increased by the amount  determined  under Section 3.4 since the
     last accounting; and"

     4.   By replacing subsection 4.1(a) in its entirety with the following:

          "(a) Timing of Execution and Delivery of Election.  A Participant  may
     elect the date or dates his Account  balance  will be paid or will begin to
     be paid by completing and filing with the Committee a payment election form
     approved by the Committee. To be effective, the election under this Section
     must be filed with the  Committee  no later than the later of: (i) the time
     the  Participant is first  eligible to make a deferral  election under this
     Plan (or under any other  plan  required  to be  aggregated  with this Plan
     pursuant to the  requirements  of Code Section 409A);  or (ii) December 31,
     2007. If no date is specified,  payment will be made or commenced within 90
     days following the Participant's Separation from Service."

     5.   By replacing Section 4.2 in its entirety with the following:

          "Section  4.2 Method of Payment.  Except as  provided in Sections  4.5
     through 4.7, a Participant  may elect,  in accordance  with Section 4.3, to
     have the balance of his or deferred Cash Fees distributed in cash in:

          (a)  A single lump sum payment; or

          (b)  Annual installment payments over a period of 2 to 5 years.

          All deferred Stock Fees will be paid in a single lump sum."

     6.   By replacing subsection 4.3(c) in its entirety with the following:

          "(c) Installments.  If  installment  distributions  are  elected,  the
               initial annual  installment amount will be the deferred Cash Fees
               otherwise  payable in a single sum multiplied by a fraction,  the
               numerator  of  which is one and the  denominator  of which is the
               total  number of  installment  distributions.  Subsequent  annual
               installments  will also be a fraction of the unpaid deferred Cash
               Fees, the numerator of which is always one but the denominator of
               which  is  the  denominator  used  in  calculating  the  previous
               installment  minus one. For example,  if five annual  installment
               payments are elected,  the initial  installment will be one-fifth
               of the vested deferred Cash Fees, the second  installment will be
               one-fourth  of the  remaining  deferred  Cash  Fees and the third
               installment  will be one-third  of the  remaining  deferred  Cash
               Fees, and so on."

     7.   By replacing Section 4.4 in its entirety with the following:

          "Section  4.4 Vesting.  A  Participant  will be fully  "vested" in his
     deferred  Cash Fees at all times.  A  Participant  will be  "vested" in his
     Stock Fees in accordance with Sections 3.04 and 3.05 of the First Merchants
     Corporation Equity Compensation Plan for Non-Employee Directors."

                                                                         Page 42
<page>

          IN WITNESS WHEREOF, the Company, by its duly authorized officers,  has
     executed  this First  Amendment  of the First  Merchants  Corporation  2007
     Directors'  Deferred  Compensation  Plan this 29th day of April,  2008, but
     effective as of January 1, 2008.


                                                     FIRST MERCHANTS CORPORATION


                                              By: /s/ Michael C. Rechin
                                                  ------------------------------
                                                    Michael C. Rechin, President
                                                     and Chief Executive Officer


ATTEST:


By: /s/ Mark K. Hardwick
   ------------------------------------------
      Mark K. Hardwick, Senior Vice President
      and Chief Financial Officer






                                                                         Page 43
<page>
                                   EXIBIT-10c

                           FIRST MERCHANTS CORPORATION
               EQUITY COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS


                                    ARTICLE I

                            ESTABLISHMENT AND PURPOSE

     Section  1.01.  Establishment  of Plan.  First  Merchants  Corporation,  an
Indiana  corporation  (the  "Company"),  hereby  establishes the First Merchants
Corporation  Equity  Compensation Plan for Non-Employee  Directors (the "Plan"),
effective as of April 29, 2008 (the "Effective  Date"),  subject to the approval
of the Plan at the Company's 2008 annual meeting of  shareholders by the holders
of a majority of the shares of the Company's  common stock present and voting at
that meeting in person or by proxy.

     Section 1.02. Purpose.  The purpose of the Plan is to promote the interests
of the Company and its  shareholders  by more closely  aligning the interests of
the Company and its Non-Employee  Directors by requiring the payment of at least
one-half (1/2) of the Compensation  payable to Non-Employee  Directors for their
service in that capacity in Restricted  Shares of the Company's  common stock. A
"Non-Employee  Director"  means  any  member of the  board of  directors  of the
Company  (the  "Board")  who is not an  employee  of the  Company  or any of its
Subsidiaries.  A  "Subsidiary"  means a  corporation  or other form of  business
association of which shares (or other ownership  interests) having fifty percent
(50%)  or more of the  voting  power  are,  or in the  future  become,  owned or
controlled, directly or indirectly, by the Company.

                                   ARTICLE II

                                 ADMINISTRATION

     The Plan shall be  administered  by the  Compensation  and Human  Resources
Committee of the Board (the  "Committee"),  which shall serve at the pleasure of
the Board.  The  Committee  shall have full  authority to  administer  the Plan,
including  authority to interpret  and construe any provision of the Plan and to
adopt  such  rules and  regulations  for  administering  the Plan as it may deem
necessary to comply with the requirements of the Plan or any applicable law.

     All actions taken and interpretations  made in good faith by the Committee,
or taken or made by any  other  person  or  persons  to whom the  Committee  has
delegated  authority,  in the  administration  of the Plan  shall  be final  and
binding upon all  interested  persons.  All decisions by the Committee  shall be
made with the approval of not less than a majority of its members.  No member of
the Committee  shall be liable for anything done or omitted to be done by him or
her or by any other member of the Committee or the Board in connection  with the
Plan, except for his or her own willful  misconduct or as expressly  provided by
statute.

                                                                         Page 44
<page>
                                   ARTICLE III

                PARTICIPATION; NON-EMPLOYEE DIRECTOR COMPENSATION

     Section 3.01. Participation. All Non-Employee Directors shall automatically
become participants in the Plan with respect to all Compensation payable to them
for  calendar  quarters  ending  after  the  Effective  Date,  until the Plan is
terminated in  accordance  with the  provisions  of Article VII.  "Compensation"
means any  retainer,  fee or other  payment of any kind to which a  Non-Employee
Director is entitled for services performed in that capacity, including, without
limitation,  any  additional  amount  payable  to a  Non-Employee  Director  for
chairing a Board  committee,  but excluding any "Director  Option" granted under
the Company's 1999 Long-Term  Equity  Incentive Plan (the "1999 Equity Incentive
Plan").

     Section 3.02. Non-Employee Director Compensation. The Board shall annually,
or at other times as the Board shall deem  appropriate,  determine the amount of
Compensation to be payable for services performed by Non-Employee  Directors, in
accordance with applicable laws and regulations. Such Compensation shall be paid
quarterly, as of the last business day of each calendar quarter.

     Section  3.03.  Fraction  Payable in Restricted  Shares.  A fraction of all
Compensation  payable to  Non-Employee  Directors for calendar  quarters  ending
after the Effective  Date,  as determined by the Board from time to time,  which
fraction  shall not be less than  one-half  (1/2),  shall be paid in  Restricted
Shares, as defined in Section 3.04. In the absence of such  determination,  this
fraction shall be one-half (1/2).  The number of Restricted  Shares to be issued
to each  Non-Employee  Director  shall be  determined  on the  basis of the Fair
Market Value of such Shares as of the date (i.e.,  the last  business day of the
calendar quarter) for which the Compensation is payable. The "Fair Market Value"
of a  Restricted  Share  means the last  reported  sale  price of a share of the
Company's  common stock on the relevant date, or if no sale took place, the last
reported sale price of a share on the most recent day on which a sale of a share
of stock took place as reported by NASDAQ or a national  securities  exchange on
which the Company's  stock is listed on such date. The shares shall be issued as
of the last business day of the relevant  calendar quarter and shall be credited
to the  Non-Employee  Director's  stock  account  as  soon  as  administratively
feasible  thereafter,  but in no event shall any such payment be made later than
the March 15 of the calendar year next following the calendar year in which such
shares were earned. To the extent Compensation payable in Restricted Shares to a
Non-Employee Director under this Section 3.03 would result in a fractional share
of common stock being issuable to such Non-Employee Director, cash shall be paid
to the Non-Employee Director in lieu of such fractional share.

     Section 3.04. Restrictions on Shares. A "Restricted Share" means a share of
the Company's common stock that is nontransferable  and subject to a substantial
risk of  forfeiture,  to the extent  provided in this Section  3.04.  The shares
issued  to a  Non-Employee  Director  in  accordance  with  Section  3.03 may be
registered  in the  name  of a  nominee  or held in  such  other  manner  as the
Committee  determines  to be  appropriate.  A book entry stock  account  will be
established in the Non-Employee  Director's name. The Non-Employee Director will
be the  beneficial  owner of the shares  issued and credited to his or her stock
account and,  subject to the  restrictions set forth in this Section 3.04, he or
she will have all rights of  beneficial  ownership in such shares  including the
right to vote the shares and receive all dividends and other  distributions paid
or made with respect thereto.  The Company or its nominee will retain custody of
the shares issued under this Plan until (i) all of the restrictions  have lapsed
in accordance with Subsection 3.04(a), and (ii) the Non-Employee  Director makes
a  specific  request  in  writing  to the  Company  for such  shares to be sold,
transferred or delivered;  provided, however, at any time following the lapse of
such restrictions, a Non-Employee Director may request that a stock certificate,
representing  all or part of the shares  credited to his or her stock account on
which the restrictions  have lapsed, be issued and delivered to the Non-Employee
Director.  None of the shares  issued under this Plan may be sold,  transferred,
assigned, pledged, encumbered or otherwise alienated or hypothecated, unless and
until,  and then only to the extent  that,  these  restrictions  have  lapsed in
accordance with Subsection 3.04(a).

                                                                         Page 45
<page>
     (a)  Lapse  of  Restrictions.  The  restrictions  set  forth  in the  first
          paragraph of Section 3.04 shall lapse on the earliest of the following
          dates:  (i)  the  third  anniversary  of  the  date  as of  which  the
          Restricted  Shares were issued if, as of the date the restrictions are
          to lapse,  the  Non-Employee  Director has  continued to serve in that
          capacity from the date as of which the  Restricted  Shares were issued
          to the date of  lapse;  (ii) the date of the  Non-Employee  Director's
          retirement  as a member of the Board after he or she has  attained age
          fifty-five (55); (iii) the date of the Non-Employee  Director's death;
          (iv) the date the  Non-Employee  Director is  determined to be totally
          and  permanently  disabled,  as  defined in  Section  22(e)(3)  of the
          Internal  Revenue Code of 1986,  as amended (the  "Code"),  or (v) the
          date of a "Change of Control," as defined in the 1999 Equity Incentive
          Plan.

     (b)  Forfeiture  of  Restricted   Shares.   In  the  event  a  Non-Employee
          Director's  service as a member of the Board  terminates  prior to the
          date the  restrictions on all or part of the Restricted  Shares issued
          pursuant  to the  Plan  have  lapsed  in  accordance  with  Subsection
          3.04(a),  all  shares  still  subject  to the  restrictions  shall  be
          returned  to or  canceled  by the  Company and shall be deemed to have
          been forfeited by the Non-Employee Director.

     Section  3.05.  Deferral  of  Compensation  Paid in  Restricted  Shares.  A
Non-Employee  Director  may elect to defer  payment of all or part of his or her
Compensation  that  is  payable  in the  form of  Restricted  Shares  under  the
provisions  of  this  Article  III,  in  accordance  with  the  First  Merchants
Corporation 2007 Directors' Deferred Compensation Plan (the "Directors' Deferred
Compensation  Plan"),  modified as provided in the  following  sentences of this
Section  3.05.  A  Non-Employee  Director  who makes such an  election  shall be
credited with Deferred Stock Units (which may include  fractional  shares) equal
to the  number  of  Restricted  Shares  that  the  Non-Employee  Director  would
otherwise receive in accordance with Section 3.03 of this Plan. The Non-Employee
Director  shall not be deemed to be the  beneficial  owner of any  shares of the
Company's  stock that the  Non-Employee  Director  would have  received  had the
election not been made,  and he or she shall not have the right to vote any such
shares or to receive  any  dividends  or other  distributions  paid or made with
respect thereto.  However,  in lieu of the provision for crediting interest to a
Non-Employee  Director's  Account under Section 3.4 of the  Directors'  Deferred
Compensation Plan, the portion of the Non-Employee  Director's Account under the
Directors' Deferred Compensation Plan that is credited with Deferred Stock Units
shall be credited with  earnings each quarter equal to the dividends  that would
be payable on an  equivalent  number of shares of the  Company's  common  stock.
Notwithstanding  Section 4.2 of the Directors'  Deferred  Compensation Plan, the
only  permissible  form  of  payment  of  the  portion  of  the  balance  in the
Non-Employee  Director's Account under the Directors' Deferred Compensation Plan
credited with Deferred Stock Units shall be a distribution  of shares of Company
common stock in a single lump sum payment;  provided,  however, the Non-Employee
Director  shall receive cash in lieu of a fractional  share.  The  provisions of
Section 3.04 of this Plan shall supersede the vesting  provisions of Section 4.4
of the Directors' Deferred Compensation Plan to the extent they may conflict.

                                                                         Page 46
<page>
                                   ARTICLE IV

                           SHARES ISSUABLE UNDER PLAN

     Section 4.01. Number of Shares. The shares issuable under the Plan shall be
the Company's  authorized but unissued,  or reacquired,  common stock, or shares
purchased in the open market.  The maximum number of shares of common stock that
may be issued under the Plan shall be 500,000,  as adjusted  pursuant to Section
4.02.

     Section  4.02.  Adjustment.  If the Company  shall at any time  increase or
decrease the number of its  outstanding  shares of common stock or change in any
way the rights and  privileges  of such  shares by means of a payment of a stock
dividend or any other  distribution upon such shares payable in common stock, or
through  a  stock  split,  reverse  stock  split,  subdivision,   consolidation,
combination,  reclassification, or recapitalization involving common stock, then
the numbers,  rights and  privileges of the shares  issuable  under Section 4.01
shall be increased, decreased or changed in like manner.

                                    ARTICLE V

                            MISCELLANEOUS PROVISIONS

     Section 5.01. No Right to be Elected. Neither the Plan nor any action taken
hereunder shall be construed as giving any Non-Employee Director any right to be
elected or re-elected as a director of the Company.

     Section 5.02. Non-Assignment. A participant's rights and interest under the
Plan may not be assigned or transferred, hypothecated or encumbered, in whole or
in part,  either  directly or by operation of law or otherwise  (except,  in the
event  of  a   participant's   death,  by  will  or  the  laws  of  descent  and
distribution),  including,  without limitation,  execution,  levy,  garnishment,
attachment,  pledge,  bankruptcy,  or in any other manner;  and no such right or
interest of any  participant  in the Plan shall be subject to any  obligation or
liability of such participant.

     Section 5.03.  Compliance with Applicable  Laws. No shares of the Company's
common stock shall be issued  hereunder  unless counsel for the Company shall be
satisfied  that such  issuance will be in compliance  with  applicable  federal,
state, local and foreign securities,  securities exchange,  and other applicable
laws and regulations.

     Section 5.04. Withholding. It shall be a condition to the obligation of the
Company to issue shares of common stock  hereunder that the  participant  pay to
the Company,  to the extent required by law and upon its demand,  such amount as
may be requested by the Company for the purpose of  satisfying  any liability to
withhold federal,  state,  local or foreign income or other taxes. A participant
in the Plan may  satisfy the  withholding  obligation,  in whole or in part,  by
electing to have the Company withhold shares of common stock, otherwise issuable
under the Plan,  having a Fair Market  Value equal to the amount  required to be
withheld.  If the  amount  requested  is not paid,  the  Company  shall  have no
obligation to issue, and the participant shall have no right to receive,  shares
of common stock.

                                                                         Page 47
<page>
     Section 5.05. Unfunded Plan. The Plan shall be unfunded.  The Company shall
not be required to establish  any special or separate  fund or to make any other
segregation of assets to assure the issuance of shares hereunder.

     Section 5.06.  Ratification  of Actions Taken.  By accepting any payment of
Non-Employee  Director  Compensation  hereunder or other benefit under the Plan,
each participant, and each person claiming under or through him or her, shall be
conclusively deemed to have indicated his or her acceptance and ratification of,
and consent to, any action  taken under the Plan by the Company,  the Board,  or
the Committee.

     Section 5.07.  Registration.  The appropriate officers of the Company shall
cause to be filed any registration  statement  required by the Securities Act of
1933, as amended,  and any reports,  returns or other information  regarding any
shares of common stock issued pursuant to the Plan as may be required by Section
13 or 15(d) of the  Securities  Exchange Act of 1934, as amended (the  "Exchange
Act"), or any other applicable statute, rule or regulation.

     Section 5.08.  Governing Law. The interpretation,  validity and enforcement
of this Plan  shall,  to the extent not  otherwise  governed  by the Code or the
securities  laws of the United  States,  be governed by the laws of the State of
Indiana.

     Section  5.09.  Headings.  Headings  are given to the sections of this Plan
solely as a convenience to facilitate  reference.  Such headings,  numbering and
paragraphing  shall not in any case be deemed in any way material or relevant to
the construction of this Plan or any provisions  hereof. The use of the singular
shall also include within its meaning the plural,  where  appropriate,  and vice
versa.

                                   ARTICLE VI

                                    AMENDMENT

     The Board may amend the Plan at any time and from time to time, as it deems
advisable;  provided,  however, that no amendment shall become effective without
shareholder  approval if such shareholder approval is required by any applicable
federal  or state  law,  rule or  regulation,  or by the  rules of NASDAQ or any
national  exchange on which the Company's common stock is listed;  and provided,
further, that any such amendment shall comply with applicable provisions of Rule
16b-3 under Section 16 of the Exchange Act, as in effect from time to time,  the
Code and the rules thereunder as in effect from time to time, and, to the extent
applicable, the Employee Retirement Income Security Act of 1974, as amended, and
the rules  thereunder  as in effect from time to time.  No amendment of the Plan
shall  materially and adversely affect any right of any participant with respect
to any shares of common  stock of the Company  theretofore  issued  without such
participant's written consent.

                                   ARTICLE VII

                                   TERMINATION

     This Plan shall terminate upon the earlier of (a) the Board's adoption of a
resolution  terminating the Plan, or (b) April 29, 2018, which is ten (10) years
from the date the Plan was initially approved and adopted by the shareholders of
the Company in accordance  with Article VIII. No  termination  of the Plan shall
materially  and adversely  affect any of the rights or obligations of any person
without his or her written consent with respect to any shares of common stock of
the Company theretofore earned and issuable under the Plan.

                                                                         Page 48
<page>

                                  ARTICLE VIII

                              SHAREHOLDER APPROVAL

     The Plan shall be  effective  as of the  Effective  Date,  contingent  upon
shareholder approval and adoption at the 2008 annual meeting of the shareholders
of the Company.  The  shareholders  shall be deemed to have approved and adopted
the Plan only if it is  approved  and  adopted at a meeting of the  shareholders
duly held by vote taken in the manner  required  by the  securities  laws of the
United States, the Code, and the laws of the State of Indiana, as applicable.

                                                                         Page 49
<page>
                                   EXHIBIT-14















                           FIRST MERCHANTS CORPORATION

                                 CODE OF CONDUCT























                                                              Revised April 2008

                                                                         Page 50
<page>
                                TABLE OF CONTENTS
<TABLE>

          <c>                                                                                        <c>

A.       Introduction....................................................................................1

B.       Confidential Information........................................................................2
   1.    Customer and Supplier Information...............................................................2
   2.    Employee Information............................................................................3
   3.    Inside Information..............................................................................3

C.       Conflicts of Interest...........................................................................3
   1.    Dealing with Customers, Suppliers or Competitors in Business Ventures...........................4
   2.    Borrowing from Customers or Suppliers...........................................................4
   3.    Gifts to Employees, Officers or Directors.......................................................4

D.       Public Communications...........................................................................5
   1.    Regulatory Disclosures and Public Comments......................................................5
   2.    Media Inquiries.................................................................................5

E.       Lending Practices...............................................................................6
   1.    Granting of Preferential Rates..................................................................6
   2.    Prohibited Lending Practices....................................................................6

F.       Political Contributions.........................................................................6
   1.    Prohibitions....................................................................................6
   2.    Personal Political Contributions................................................................7

G.       Outside Activities..............................................................................7
   1.    Community Service...............................................................................7
   2.    Fiduciary Appointments..........................................................................7
   3.    Political Activities............................................................................7
   4.    Outside Employment and Board Service............................................................8

H.       Personal Financial Responsibility...............................................................8
   1.    General.........................................................................................8
   2.    Borrowing from other Financial Institutions.....................................................8
   3.    Borrowing from Customers or Suppliers...........................................................9
   4.    Taking Advantage of a Business Opportunity that Rightfully Belongs to the Company...............9
   5.    Corporate Property Services.....................................................................9
   6.    Employee Purchase of Company Assets.............................................................9
   7.    Purchase of Property Held by the Company as a Fiduciary.........................................10
   8.    Handling of Personal Accounts...................................................................10

I.       Personal Trading and Investments................................................................10
   1.    Investment in Securities of a Customer, Supplier, or Competitor.................................10
   2.    Securities Trading..............................................................................11
   3.    Non-public and/or Material Inside Information...................................................11
   4.    Preferential Treatment..........................................................................11
   5.    Securities Transactions by Trust and Investment Personnel.......................................11
   6.    Investment in First Merchants Corporation Securities............................................11

J.       Code of Ethics for First Merchants Corporation Financial Management.............................11

</TABLE>
                                       i
                                                                         Page 51
<page>



A.   Introduction

     The First Merchants  Corporation Code of Conduct consists of two parts: (1)
     a comprehensive  code of ethical and legal business conduct  (Sections A-I)
     that applies to all  directors,  officers and employees of First  Merchants
     Corporation and its affiliates  (collectively,  the  "Company");  and (2) a
     supplemental  Code of Ethics  for  First  Merchants  Corporation  Financial
     Management  (Section  J) that  applies to the chief  executive  officer and
     senior financial officers of First Merchants Corporation, in recognition of
     their unique  responsibilities  for assuring proper  accounting,  financial
     reporting and internal controls.

     The comprehensive  code of ethical and legal business conduct applicable to
     all of the  Company's  directors,  officers  and  employees  is  adopted in
     accordance with NASDAQ Marketplace Rule 4350(n);  and the supplemental code
     of ethics  applicable to the chief executive  officer and senior  financial
     officers is adopted in  accordance  with Section 406 of the  Sarbanes-Oxley
     Act of 2002 and Securities and Exchange  Commission ("SEC") Regulation S-K,
     Item 406. The text of the Code of Conduct has been posted on the  Company's
     Internet website. The text of the supplemental Code of Ethics for Financial
     Management has also been posted separately on the website.

     The Code of Conduct  provides  general  principles of personal and business
     conduct that are intended to promote ethical  behavior,  proper handling of
     actual or apparent  conflicts of interest,  full and fair  disclosure,  and
     compliance with applicable laws,  rules and regulations.  It does not cover
     all  conceivable  situations  but sets  forth  basic  responsibilities  for
     representatives  of the Company.  It sets forth basic standards of conduct,
     not necessarily ideal or maximum standards.

     The essence of the  financial  services  industry is trust and  confidence.
     Thus, it is imperative that  representatives of the Company display, and be
     perceived by the public as displaying,  the highest  principles of personal
     and  professional  integrity.  They  must  always  keep  in mind  that  the
     standards of behavior and  performance  the public expects of the Company's
     directors,  officers  and  employees,  and that the  Company has pledged to
     meet, are higher than the general norms for the business world. The Company
     assumes that its  employees,  officers and  directors  will comply with all
     laws,  rules  and  regulations  applicable  to the  Company  and  their own
     personal conduct.

     Compliance  with the Code of Conduct is a condition of  employment  and for
     service as a  director.  Anyone  who is aware of a  violation  or  apparent
     violation by an employee, officer or director should report the same to the
     appropriate  person  or  persons,  which,  depending  on the  nature of the
     alleged violation and/or the position held by the alleged violator,  may be
     a supervisor,  the Director of Human Resources,  the CEO or other executive
     officer of the Company or a Company affiliate, the Chairman of the Board or
     of the Audit  Committee of the Company or a Company  affiliate,  and/or the
     Company's Legal Counsel (which may be either in-house counsel or counsel to
     the Board of Directors).  Failure to report a serious violation of which an
     employee,  officer or  director  is aware to a proper  Company  official or
     representative may itself be a violation of the Code of Conduct,  depending
     on the circumstances. The Company will take such disciplinary or preventive
     action as is appropriate under the circumstances to address any existing or
     potential  violation  that  is  brought  to the  attention  of  the  proper
     authority.  No adverse  action  will be taken  against  anyone who, in good
     faith, reports a violation or potential violation of the Code of Conduct.

                                      -1-
                                                                         Page 52
<page>
     Any waiver of a provision of the Code of Conduct applicable to directors or
     executive  officers  of the  Company  must  be  approved  by the  Board  of
     Directors of First Merchants  Corporation.  The Company shall disclose such
     waiver, along with the reasons for the waiver, in a Form 8-K filed with the
     Securities and Exchange  Commission  ("SEC") within four (4) business days.
     With rare exceptions, the Company will not grant or permit such waivers.

     The First Merchants Corporation Audit Committee is responsible for ensuring
     the enforcement of the Code of Conduct and for interpreting its provisions.
     The Company's Chief Risk Officer is responsible  for ongoing  compliance by
     employees,  officers  and  directors  with  the  Code  of  Conduct  and for
     overseeing training and monitoring  compliance of such persons with respect
     to its  provisions;  and for  these  purposes  he or she  shall  report  to
     directly to the  Chairman of the Audit  Committee  as well as to the CEO of
     the Company.  A request for an  interpretation of any provision of the Code
     of Conduct may be directed to a supervisor, the Director of Human Resources
     or Legal  Counsel.  A written  request  for an  interpretation  may also be
     submitted  to the  Chairman  of the  Audit  Committee,  setting  forth  the
     relevant facts and circumstances.  The Audit Committee will respond to such
     a request,  after  consulting with the Company's Legal Counsel and/or other
     outside legal counsel if and to the extent it deems appropriate.

     The Code of Conduct shall be reviewed at least  annually by the  Nominating
     and Governance Committee.

B.   Confidential Information

     1.   Customer and Supplier Information

          Confidential  Information  received from or  concerning  customers and
          suppliers  is to be held in strictest  confidence.  The very nature of
          the Company's business is such that employees,  officers and directors
          may have access to a customer's business plans, financial information,
          forecasts,  decisions, problems and other data. This information is to
          be  used  solely  for  business  purposes,  as  an  aid  to  providing
          knowledgeable  service,  and must not be used for personal gain.  Such
          information should never be transmitted to anyone outside the Company,
          including family and associates, or to employees of the Company who do
          not need to know such information in performing their jobs.

          Exceptions to this policy include:  (a) routine credit inquiries;  (b)
          disclosures  required by legal process or upon advice of the Company's
          Legal Counsel;  and (c) information  authorized for release by written
          approval of a customer or supplier.

          Directors,  officers and employees should take appropriate measures to
          protect the security of  confidential  information  by ensuring,  when
          leaving  the  office,  that open areas and work  spaces are cleared of
          paperwork,  that  confidential  information is locked in desks or file
          cabinets,  and  that  access  to  all  files  containing  confidential
          information is properly controlled.  They should also avoid displaying
          documents  in an  indiscriminate  manner or engaging in  inappropriate
          business  conversations  in  public  places,  on or off the  Company's
          premises.

                                      -2-
                                                                         Page 53
<page>

     2.   Employee Information

          The  Company  will   safeguard   the   confidential   aspects  of  the
          relationships  between  the Company and its  employees.  Requests  for
          information  concerning  present or former employees relating to their
          employment  or to  matters  such  as  salary  verification  should  be
          referred to the Human Resources  Department.  The Credit Department or
          other  office(s)  designated  under  published  Company  policies  and
          procedures may answer routine credit inquiries about Company employees
          in response to proper requests for checking  account,  savings or loan
          information. This policy applies to both oral and written requests.

     3.   Inside Information

          The use or  disclosure  of  "material  inside  information"  about the
          Company,   defined  as  information  not  publicly   disseminated  but
          significant  enough to possibly  materially  affect the Company and/or
          its securities, is not only prohibited, but may be a serious violation
          of federal or state securities laws. Directors, officers and employees
          who  have  a  question   which  involves  the  use  or  disclosure  of
          information that has not yet been publicly disseminated should contact
          their  supervisor,  the Director of Human Resources,  or the Company's
          Legal Counsel, as appropriate, prior to such use or disclosure.

C.   Conflicts of Interest

     A conflict of interest occurs when a person's personal interests improperly
     interfere,  or appear to  interfere,  with the  interests of the Company or
     with the person's  judgment in performing  his or her  responsibilities  on
     behalf of the Company.  Employees,  officers  and  directors of the Company
     must  never  allow  their  personal   interests  to  interfere  with  their
     objectivity in performing their  responsibilities to the Company,  and they
     must never use or attempt to use their  position with the Company to obtain
     any  improper  financial  or other  benefit for  themselves,  their  family
     members, or any other person.

     The Company will conduct an appropriate  review,  in accordance with NASDAQ
     Marketplace Rule 4350(h),  of all related party  transactions for potential
     conflict of interest  situations on an ongoing basis. All such transactions
     must be approved by the First Merchants  Corporation  Audit Committee.  For
     this purpose,  "related party transactions" are transactions  involving the
     Company's  directors or executive  officers,  or members of their immediate
     family, which must be disclosed pursuant to SEC Regulation S-K, Item 404.

     Employees, officers and directors of the Company should always consider, in
     advance of taking any action,  whether  such action might pose an actual or
     apparent  conflict of interest and whether such conflict would prevent them
     from complying with the principles set forth in the first paragraph of this
     Section.  They should be familiar and strive to comply with both the letter
     and  spirit of  applicable  federal  and state  statutes  and  regulations,
     Company bylaws, and common law fiduciary  principles  relating to conflicts
     of interest.  Although it is  frequently  difficult  to  determine  when an
     actual or apparent  conflict of interest  exists,  the  following  sections
     contain  guidelines for proper  conduct in some of the situations  that may
     arise from time to time.

                                      -3-
                                                                         Page 54
<page>
     1.   Dealing with Customers, Suppliers or Competitors in Business Ventures

          Employees,  officers  and  directors  of the  Company  should not own,
          directly  or  indirectly,  a  significant  financial  interest  in any
          business  entity  that  does or seeks to do  business  with,  or is in
          competition  with,  the  Company  unless the  interest  has been fully
          disclosed in advance to the Board of Directors and has been determined
          to not  improperly  influence any decision that they might be required
          to make in performing their duties for the Company.

     2.   Borrowing from Customers or Suppliers

          See "Personal Financial Responsibility"

     3.   Gifts to Employees, Officers or Directors

          The  Company  expects  employees,  officers  and  directors  to render
          efficient and courteous  service to its customers at all times without
          expecting  reward other than  compensation or fees regularly  received
          for their  employment  or service to the  Company.  Accordingly,  they
          shall not solicit,  receive or participate in any arrangement  leading
          to the payment of money or anything of value to them,  their relatives
          or friends for past or future business conducted with the Company.  To
          avoid even the  appearance of  impropriety,  it is important that they
          decline any gifts from present or  prospective  customers or suppliers
          if acceptance would raise the slightest doubt of improper influence.

          The Federal Bank Bribery Act (18 U.S.C.  Section 215) generally  makes
          it a crime  for a  person  associated  with a bank  or a bank  holding
          company,  including  employees,   officers,   directors,   agents  and
          attorneys  of the  bank or bank  holding  company,  to seek or  accept
          anything  of value  from any person or entity in  connection  with any
          transaction or business of such bank or holding company with which the
          person  is  associated.  It is a crime  for the  giver  as well as the
          receiver.  The Act cannot be read in a vacuum and must be  interpreted
          and administered accordingly. The Act is intended to prevent a pay-off
          to bank or bank holding company  officials as a quid pro quo either to
          induce a particular  transaction  or as a  "gratuity"  on account of a
          particular transaction.  Thus, where a benefit is given or received as
          a result of a banking transaction,  the Act may be violated.  However,
          the Act is not  intended to  proscribe  the receipt of  gratuities  or
          favors of  reasonable  value where it is clear from the  circumstances
          that the  customer is not trying to exert  influence  over the bank or
          bank holding company  official in connection  with a transaction,  and
          the  gratuity  or favor  is,  in fact,  unsolicited.  The term  "gift"
          includes,  but is not limited to, substantial favors,  money,  credit,
          special discounts on goods or money, tickets to entertainment  events,
          trips, hotel expenses, excessive entertainment, and food or beverages.
          Gifts to immediate family are included in this prohibition.

          Employees  of the  Company  should  not  accept  gifts  of cash in any
          amount. However, the Company recognizes that situations may arise when
          it would be  appropriate  for an  employee  to accept  the  benefit of
          another's expenditure. Such situations include:

               a.   Gifts of  reasonable  value (not in excess of $100) given at
                    Christmas,   other  holidays  or  special  occasions,  which
                    represent expressions of friendship;

                                      -4-
                                                                         Page 55
<page>
               b.   Reasonable  entertainment  at  luncheon,  dinner or business
                    meetings with present or prospective customers and suppliers
                    when the return of the expenditure on a comparable  basis is
                    likely to occur  and the  expenditure  is a proper  business
                    expense;

               c.   Unsolicited advertising or promotional material (e.g., pens,
                    calendars, etc.) of a value not exceeding $100;

               d.   Awards given by charitable,  educational, civic or religious
                    organizations or meritorious contributions or service; and

               e.   Gifts or bequests based upon family relationships.

          Circumstances  surrounding a gift may be such that rejection or return
          of the gift would  cause  embarrassment  or would  potentially  damage
          friendly relationships between a customer or supplier and the Company.
          In that case,  the employee  should  report the gift and its estimated
          value to the Director of Human Resources.

          Employees  may not  accept a devise  of  property  or an  interest  in
          property  from a customer or  supplier  of the  Company  (other than a
          relative  or a person  who has  never  dealt  with the  employee  as a
          representative  of the Company) under a will,  trust,  or other estate
          planning  instrument  at any time.  The fact that the employee did not
          know of the bequest does not justify an exception.

D.   Public Communications

     1.   Regulatory Disclosures and Public Comments

          Employees,  officers  and  directors  of the Company  shall  strive to
          ensure that all  reports,  documents  and other  information  that the
          Company  files  with  or  submits  to  the  SEC  and in  other  public
          communications made by the Company are accurate,  complete, timely and
          fair, in accordance with applicable  disclosure  standards,  including
          standards of materiality where  appropriate.  Employees,  officers and
          directors  shall  not  knowingly  misrepresent,  or  cause  others  to
          misrepresent,  material facts about the Company to others,  including,
          without   limitation,   the   Company's   independent   auditors   and
          governmental regulators or other governmental officials.

          Employees,  officers and  directors who are requested to make a public
          statement or comment on a law,  regulation or other matter  related to
          or affecting  the Company  should first submit a copy of the statement
          to the CEO (or in the case of a director, to the Chairman of the Board
          of Directors) for approval.  Company  letterhead  shall not be used in
          commenting  on any law,  regulation  or matter that only relates to or
          affects  the  employee,  officer or  director  personally  and not the
          Company.

     2.   Media Inquiries

          Only the Director of Marketing, members of executive management or, in
          appropriate  cases,  the  Chairman of the Board of  Directors,  should
          initiate  or  respond  to  contacts  with the  media on  behalf of the
          Company.  Any media  inquiries  should be  directed  to the  Marketing
          Department and employees  should only respond to media inquiries after
          being  cleared by the  Marketing  Department  or a member of executive
          management.   In  the  event  of  a  robbery,   disturbance  or  other
          emergencies,  all communications should be referred to the appropriate
          bank  security  officer,  the  Director  of  Marketing  or a member of
          executive management.

                                      -5-
                                                                         Page 56
<page>
E.   Lending Practices

     1.   Granting of Preferential Rates

          The lending services of the Company's affiliate banks are available to
          equitably   serve  the  legitimate  and  deserving   credit  needs  of
          customers.  All loans should be based solely upon a borrower's  credit
          worthiness  and overall  relationship  with the Company.  Preferential
          rates  shall not be granted to any  employee,  officer or  director in
          violation of Company  policy.  If questions arise  concerning  lending
          services, consult the loan policy manual or a senior loan officer.

          2. Prohibited Lending Practices

          The  following  lending  practices  are  prohibited  either  by law or
          Company  policy.  For  purposes  of this  section,  the term  "lending
          officer" refers to any Company employee who has lending  authority.  A
          lending officer:

               a.   Shall not extend credit to a customer if any of the proceeds
                    are to be given or loaned to the lending officer,  or to pay
                    a debt owed to the lending  officer or members of his or her
                    immediate family.

               b.   Shall not extend credit to a customer to enable the customer
                    to  purchase  real  estate  or  personal  property  from the
                    lending  officer,  unless prior written approval is obtained
                    from a senior loan officer.

               c.   Shall  not  extend  credit  to a  relative  of  the  lending
                    officer,  whether by blood or marriage,  or to an individual
                    residing in the lending officer's household.

               d.   Shall not extend  credit to a company  in which the  lending
                    officer has an  interest as a director,  officer or partner,
                    or an ownership  interest exceeding five percent (5%), or in
                    which a relative of the lending officer, whether by blood or
                    marriage, has such an interest.

               e.   Shall not loan his or her  personal  funds,  or the personal
                    funds of other  employees,  to a customer or supplier of the
                    Company where the lending  officer or other employee has any
                    responsibility  for the  Company's  relationship  with  such
                    customer or supplier.

F.   Political Contributions

     1.   Prohibitions

          It is unlawful for the Company to make  contributions  or expenditures
          in connection  with any election.  Federal and state laws prohibit the
          Company from contributing  corporate funds or property in support of a
          political  party or candidate for public  office.  In addition to cash
          payments,  this prohibition applies to contributions of meeting rooms,
          food,  beverages,  and  reimbursement  of expenses to third parties or
          anything of value for the purpose of influencing any election.

                                      -6-
                                                                         Page 57
<page>
     2.   Personal Political Contributions

          The policy of the Company regarding corporate political  contributions
          is not intended to discourage  employees,  officers and directors from
          making personal  contributions  to candidates or political  parties of
          their choice. The Company does not and will not exert pressure, either
          direct or  indirect,  that  infringes on their right to decide to whom
          personal political contributions will be made.

G.   Outside Activities

     1.   Community Service

          The Company recognizes its responsibilities to the communities, states
          and nation in which it  operates  and whose  citizens  it serves.  The
          Company  considers  itself socially  responsible  and  responsive.  It
          recognizes  that it cannot thrive unless the  communities  in which it
          operates thrive, nor can it exist without public support.  The Company
          endeavors to strengthen these communities,  states and nation, and the
          free enterprise  system,  by encouraging  its employees,  officers and
          directors to become involved in charitable, civic and community causes
          and  organizations  and by  making  appropriate  financial  and  other
          contributions to these causes and organizations.

     2.   Fiduciary Appointments

          Employees of the Company shall not accept an appointment as a personal
          representative,  executor, trustee,  administrator,  guardian or other
          fiduciary  relationship,  whether  such  appointment  is as  the  sole
          fiduciary or as a  co-fiduciary.  Exceptions may be made for fiduciary
          appointments based upon close family or personal  relationships  where
          the  circumstances  warrant.  The First  Merchants  Corporation  Audit
          Committee must approve all  exceptions  prior to acceptance of such an
          appointment.

     3.   Political Activities

          Employees,  officers and  directors  are  encouraged to take an active
          part  in  supporting   their  political  party  and  their  individual
          candidates, such as by serving as a volunteer, an active party worker,
          an  appointed  official,  or  an  elected  official.  Employees  whose
          participation  will  require  time away from the  Company  must obtain
          prior approval from the Director of Human Resources.

          In  all  cases,   individuals  who  are  seeking  elective  office  or
          participating  in political  activities do so as an individual and not
          as a  representative  of the  Company.  To prevent any  impression  of
          sponsorship  or  endorsement  by the  Company,  they  must not use the
          Company's  name or its address in campaign  materials or in collecting
          funds.  The Company shall not be identified in any  advertisements  or
          literature except as may be appropriate in biographical information.

                                      -7-
                                                                         Page 58
<page>
     4.   Outside Employment and Board Service

          The Company  recognizes  that there may be times when  employees  will
          want to obtain outside employment or serve on boards of directors. Any
          such  employment  or service must be secondary to their  position with
          the Company and must not interfere with their work or responsibilities
          with the Company or involve improper diversion of Company resources.

          An employee who wishes to obtain outside employment must notify his or
          her  supervisor  in  advance  and  submit  a  statement  to the  Human
          Resources  Department  describing  the intended new employment and the
          anticipated  number of hours and location of the work. Should this job
          affect the employee's work  performance or attendance,  the supervisor
          in  consultation  with  the  Human  Resources   Department  will  take
          appropriate action.

          An employee  who wishes to serve on a  for-profit  board must have the
          prior  approval  of the CEO of the  Company  or Company  affiliate  as
          appropriate;  provided,  however,  if the employee wishing to serve is
          the CEO of the Company or a Company affiliate, such approval must come
          from the Company's or affiliate's Board Chairman instead. Service as a
          director of a family business or corporation must be reported but will
          generally be approved.

          An  employee  who  wishes  to serve on a  not-for-profit  board  shall
          disclose  his or her  intention  to do so to the CEO of the Company or
          Company affiliate as appropriate;  provided,  however, if the employee
          wishing  to serve is the CEO of the  Company  or a Company  affiliate,
          such  disclosure  shall be made to the Company's or affiliate's  Board
          Chairman instead.  Service on a not-for-profit  board does not require
          prior approval;  however,  the CEO or Board Chairman may affirmatively
          deny permission for an employee to do so under circumstances involving
          potential material harm to the interests of the Company.

H.   Personal Financial Responsibility

     1.   General

          It is important  that  employees,  officers and directors of financial
          services organizations properly manage their personal finances and use
          credit intelligently.  Imprudent personal financial management and its
          consequent  hardships  often affect job performance and may even tempt
          individuals   in  positions  of  trust  to  violate  their   fiduciary
          obligations  to the Company  and/or its  customers.  Employees who are
          having financial  problems should consult with their supervisor or the
          Director of Human Resources or his or her delegate. Directors and CEOs
          of the  Company  or an  affiliate  who are having  financial  problems
          should consult with the Company's or affiliate's Board Chairman or the
          Chairman of the Company's or affiliate's Audit Committee.

     2.   Borrowing from other Financial Institutions

          Borrowing from other financial  institutions,  including correspondent
          banks,  is permitted as long as the loan is obtained on  substantially
          the same rates,  terms and  conditions  as the  financial  institution
          offers to other customers of similar credit worthiness.

                                      -8-
                                                                         Page 59
<page>
     3.   Borrowing from Customers or Suppliers

          Employees  are not  permitted  to borrow from  customers  or suppliers
          except  those  that  engage in  lending  in the usual  course of their
          business. Even then, borrowing must only be on terms offered to others
          in similar  circumstances,  without  special  treatment as to interest
          rates, repayment terms, security or other provisions. This prohibition
          does not preclude borrowing from individuals related to an employee by
          blood or marriage.

     4.   Taking Advantage of a Business  Opportunity that Rightfully Belongs to
          the Company

          Employees,  officers and directors must not take personal advantage of
          an opportunity  that rightfully  belongs to the Company.  Whenever the
          Company has been  actively  soliciting a business  opportunity  or has
          been offered such an opportunity,  or whenever the funds,  facilities,
          personnel or other resources of the Company have been used in pursuing
          an opportunity,  that opportunity belongs to the Company and shall not
          be  diverted  to the  personal  benefit  of any  employee,  officer or
          director.  Examples  of  improperly  taking  advantage  of  a  Company
          opportunity may include, without limitation:

               a.   Selling  or  improperly  disclosing  information  to which a
                    person has access because of his or her position.

               b.   Acquiring a property  interest  when the Company is known to
                    be interested in purchasing or leasing the property interest
                    in question.

               c.   Receiving  a   commission,   fee  or  other   payment  on  a
                    transaction that would otherwise accrue to the Company.

               d.   Diverting business from the Company or encouraging employees
                    to leave their employment with the Company.

               e.   Otherwise   improperly   profiting,   either   directly   or
                    indirectly, to the detriment of the Company.

     5.   Corporate Property Services

          Employees  are  not  permitted  to  act  as  a  principal  for  either
          themselves  or their  close  family  members  in the  supply of goods,
          property  or  services  to the  Company.  Using the  services of other
          Company  employees or other Company resources during working hours for
          personal purposes is also prohibited.

     6.   Employee Purchase of Company Assets

          It is improper for employees to purchase,  directly or indirectly, any
          Company  assets other than at public  sale.  Any such  transaction  is
          likely to subject  the  Company to  criticism  and,  depending  on the
          circumstances,  may even  result in  liability,  even if entered  into
          innocently.  Company assets,  including  repossessed  loan collateral,
          will not be sold to  employees  or members of their  immediate  family
          except at public  sale.  This policy  also  extends to  "friends"  who
          purchase  an asset from the  Company and then resell it to an employee
          or  member  of his or  her  immediate  family.  Upon  approval  of the
          executive  officer  responsible  for the  Company's or an  affiliate's
          physical properties, items of Company equipment or other property that
          are of nominal  value may be sold to employees  when the return to the
          Company or affiliate  will equal or exceed that from other  methods of
          disposal.

                                      -9-
                                                                         Page 60
<page>
     7.   Purchase of Property Held by the Company as a Fiduciary

          Property  held by the  Company  as a  fiduciary  shall  not be sold or
          transferred,  by  loan  or  otherwise,  to the  Company  or any of its
          directors,  officers  or  employees,  or to any  other  individual  or
          organization  with whom there  exists a  connection  or interest  that
          might adversely affect the Company's exercise of sound judgment or the
          financial  interests  of the  Company or any  beneficial  owner of the
          property in selling or transferring such property;  provided, however,
          an  exception  may be  made  where  (a)  expressly  authorized  by the
          instrument  creating the fiduciary  relationship or by court order, or
          (b) such sale or transfer is made in accordance  with  applicable laws
          and with the prior  approval  of the  Company's  Legal  Counsel or the
          First Merchants Corporation Audit Committee.

          It is also  improper  for an  employee  to become a tenant of any real
          estate managed by First Merchants Trust Company.

     8.   Handling of Personal Accounts

          All  employees,  officers and  directors  shall handle their  personal
          checking accounts satisfactorily, avoiding overdrafts and avoiding the
          use  of  facilities  at  other  financial   institutions  to  disguise
          potential overdrafts. The use of two or more financial institutions to
          disguise  overdrafts,  sometimes  referred to as  "kiting",  is both a
          violation of this Code and a violation of the law.

I.   Personal Trading and Investments

     While it is not the  intent  of the  Company  to  unduly  limit  employees,
     officers  and  directors  in  their  personal   trading  and   investments,
     transactions  must be  avoided  that  would  involve or appear to involve a
     conflict of interest  between the individual and the Company or between the
     Company and any customer.  Trading on inside or confidential information is
     also prohibited.  This policy covers  transactions for the personal account
     of the  employee,  officer  or  director,  as well as members of his or her
     immediate family and close relatives, whether by blood or marriage.

     Investment  situations  that might involve a conflict of interest are many,
     varied and not subject to simple  listing.  Anyone who has any  uncertainty
     about a  situation  should  consult  the  Company's  Legal  Counsel  or the
     Director of Human Resources.

     1.   Investment in Securities of a Customer, Supplier, or Competitor

          Employees   should  generally  avoid  investing  in  securities  of  a
          customer,  supplier, borrower or competitor of the Company, except for
          publicly  held  companies  where the  securities  have a broad market.
          Participation  in a  business  venture  with  such  parties  should be
          considered  the  same as  investing  in  their  securities  for  these
          purposes.  Such  investment  may  affect  an  employee's  judgment  or
          decisions made on behalf of the Company.

                                      -10-
                                                                         Page 61
<page>
     2.   Securities Trading

          Employees are expressly  prohibited from buying or selling  investment
          securities through the Company unless they establish their own account
          or a fiduciary account,  following normal  procedures.  The commission
          charged shall be as stated in the published fee schedule for employees
          of the Company.  This section is not  applicable to the  securities of
          First Merchants  Corporation,  which may be purchased through employee
          benefit programs in which the employee is eligible to participate.

     3.   Non-public and/or Material Inside Information

          Non-public  or material  inside  information  provided  by  customers,
          suppliers and others in the normal course of business is  confidential
          and must be held inviolate.  Such  information must never be used as a
          basis for personal  investment  decisions.  Anyone who has uncertainty
          about the information should consult the Company's Legal Counsel.

     4.   Preferential Treatment

          Employees  must never use  commissions  paid in the sale of securities
          for  the  Company's  customers  to  obtain  special  concessions  from
          brokerage firms.  Employees shall not accept preferential treatment in
          the form of an allocation of "hot" new issues or any other  securities
          which become  available  prior to a public offering or that are or may
          become in such demand that the broker,  investment banker,  issuer, or
          other  seller of the  securities  might  expect to  receive  favorable
          treatment in return for making such allocation.

     5.   Securities Transactions by Trust and Investment Personnel

          Trust and investment personnel, because of their responsibilities with
          respect to fiduciary accounts, are subject to further restrictions and
          guidelines  relating  to  investments.  Specifically,  any  trust  and
          investment  personnel  involved in securing approval for trades and/or
          actually  trading on behalf of a fiduciary  account  must always place
          the  fiduciary  account  before his or her own  personal  investments.
          Other  restrictions  and  guidelines   concerning  securities  trading
          policies  and  procedures  are  covered in the First  Merchants  Trust
          Company Trust and Investment Policy Manual.

     6.   Investment in First Merchants Corporation Securities

          Directors,  officers and  employees  of the Company  shall not execute
          personal  transactions  in First Merchants  Corporation  securities if
          they possess  material inside  information that has not been disclosed
          to the public.

J.   Code of Ethics for First Merchants Corporation Financial Management

     This Code of Ethics for First Merchants Corporation Financial Management is
     adopted  pursuant  to  Section  406 of the  Sarbanes-Oxley  Act of 2002 and
     Securities and Exchange  Commission ("SEC") Regulation S-K, Item 406, which
     states that  issuers  shall  disclose  whether  they have adopted a code of
     ethics  that  applies  to  their  principal  executive  officer,  principal
     financial officer,  principal accounting officer or controller,  or persons
     performing similar functions. Although part of the Code of Conduct of First
     Merchants  Corporation  (the  "Company"),   this  Code  of  Ethics  applies
     specifically and separately to the following  officers of the Company:  the
     Chief Executive  Officer,  the Chief Financial  Officer,  the Chief Banking
     Officer,  the Chief Accounting Officer, the Corporate  Controller,  and the
     Corporate Treasurer (collectively, the "Senior Financial Officers").

                                      -11-
                                                                         Page 62
<page>
     The Senior Financial Officers shall always act with integrity and engage in
     honest and ethical conduct. In addition to the policies set forth elsewhere
     in the Code of Conduct,  the Senior  Financial  Officers have the following
     obligations:

     1.   The  Senior  Financial   Officers  must  never  allow  their  personal
          interests to interfere  with their  objectivity  in  performing  their
          responsibilities to the Company; and they must never use or attempt to
          use their  position  with the Company to obtain any improper  personal
          financial or other benefit for  themselves,  for their family members,
          or for any other  person.  They should  determine in advance of taking
          any action  whether  such  action  poses a conflict  of  interest  and
          whether such conflict would prevent them from complying with the above
          principles.  A "conflict of interest" occurs when a person's  personal
          interests improperly interferes with the interests of the Company. Any
          actual or apparent  conflict of interest  involving a Senior Financial
          Officer shall be reported  immediately to the Company's  Legal Counsel
          (which  may be either  in-house  counsel  or  counsel  to the Board of
          Directors),  who shall  promptly  report the matter to the Chairman of
          the Audit  Committee.  Legal  Counsel  and the  Chairman  of the Audit
          Committee shall ensure that  appropriate  actions are taken to provide
          for the  ethical  handling  of any  actual  or  apparent  conflict  of
          interest reported to them.

     2.   The Senior Financial  Officers shall strive to ensure that all reports
          and documents  that the Company files with, or submits to, the SEC and
          in other public communications made by the Company contain full, fair,
          accurate,  timely and understandable  disclosures,  in accordance with
          applicable disclosure  standards,  including standards of materiality,
          where appropriate. Accordingly, they shall not knowingly misrepresent,
          or cause others to  misrepresent,  material facts about the Company to
          others,  including,  without  limitation,  the  Company's  independent
          auditors and governmental  regulators or other governmental officials.
          Within their areas of  responsibility,  they shall properly review and
          critically analyze proposed disclosures for accuracy and completeness.
          In  addition,  they  shall  promptly  bring  to the  attention  of the
          Company's Legal Counsel any material  information of which they become
          aware that affects the  disclosures  made by the Company in its public
          filings or other public communications.  Legal Counsel shall, in turn,
          promptly report the situation to the Chairman of the Audit Committee.

     3.   It is the Company's policy to comply with all applicable  governmental
          laws,  rules and regulations;  and all Senior Financial  Officers must
          adhere to this policy.  Activity  which would be criminally or civilly
          actionable shall also be deemed to be a violation of this policy.  For
          example, the anti-fraud provisions of the federal securities laws make
          it unlawful for a person to trade securities on the basis of material,
          non-public  information.  Such  illegal  insider  trading  would  also
          constitute a violation of this policy.  Anyone who is uncertain  about
          the  interpretation  or  applicability  of a law,  rule or  regulation
          should consult with the Company's Legal Counsel before taking action.

                                      -12-
                                                                         Page 63
<page>
     4.   A  Senior  Financial  Officer  who  becomes  aware of an  existing  or
          potential  violation of this Code of Ethics shall promptly  notify the
          Company's Legal Counsel, who shall promptly inform the Chairman of the
          Audit Committee of the situation. A Senior Financial Officer's failure
          to report a  violation  of which he or she has  knowledge  is itself a
          violation  of the Code.  The Company  will take such  disciplinary  or
          preventive action as is appropriate under the circumstances to address
          any such  existing  or  potential  violation  that is  brought  to its
          attention.  No adverse  action shall be taken  against  anyone who, in
          good faith, reports a violation or potential violation of this Code of
          Ethics.

     5.   Compliance with this Code of Ethics is a condition of employment,  and
          any violations  thereof may result in disciplinary  action,  up to and
          including discharge.

          In any  circumstance  where the Company's Legal Counsel is involved in
          the matter  giving rise to a violation or potential  violation of this
          Code of Ethics,  the required internal reporting or notification shall
          instead be made directly to the Chairman of the Audit Committee.

          The Audit Committee is responsible for applying this Code of Ethics to
          specific  situations  and has the authority to interpret  this Code in
          any  particular  situation.  Anyone  desiring an  interpretation  of a
          provision of the Code of Ethics may consult with the  Company's  Legal
          Counsel and/or submit a written request for an  interpretation  to the
          Audit Committee,  setting forth the relevant facts and  circumstances.
          The Audit  Committee  shall respond to any such written  request as it
          deems  appropriate.  In so doing,  it may consult  with the  Company's
          Legal Counsel and/or other outside legal counsel.

          The SEC requires  public  disclosure  of any waiver from, or amendment
          to, a  provision  of this Code of Ethics.  The  Company  expects  full
          compliance with this Code and, with rare exceptions, will not grant or
          permit waivers from its requirements.  Anyone requesting a waiver from
          a  provision  of the Code of Ethics  shall  submit the  request to the
          Audit Committee, which shall, in consultation with the Company's Legal
          Counsel  and/or other outside  legal  counsel,  determine  whether the
          request should be granted.

          The  Chairman  of the  Audit  Committee  shall  inform  the  Board  of
          Directors of any  violation of this Code of Ethics that is reported to
          the  Committee  and of any waiver from the Code's  provisions  that is
          approved by the Committee.

                                      -13-
                                                                         Page 64



<page>
                                  EXHIBIT-31.1

                           FIRST MERCHANTS CORPORATION

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



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

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

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

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

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

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

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

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

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

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

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

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

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

Date: August 11, 2008                   by /s/ Michael C. Rechin
                                           -------------------------------------
                                           Michael C. Rechin
                                           President and
                                           Chief Executive Officer
                                           (Principal Executive Officer)

                                                                         Page 65

<page>


                                  EXHIBIT-31.2

                           FIRST MERCHANTS CORPORATION

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Date: August 11, 2008               by: /s/ Mark K. Hardwick
                                        ----------------------------------------
                                        Mark K. Hardwick
                                        Executive Vice President and
                                        Chief Financial Officer
                                        (Principal Financial Officer)

                                                                         Page 66
<PAGE>

                                  EXHIBIT-32

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

In connection  with the quarterly  report of First  Merchants  Corporation  (the
"Corporation")  on Form 10-Q for the period  ending  June 30, 2008 as filed with
the Securities  and Exchange  Commission on the date hereof (the  "Report"),  I,
Michael C. Rechin, President and Chief Executive Officer of the Corporation,  do
hereby certify,  in accordance with 18 U.S.C.  Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: August 11, 2008                   by /s/ Michael C. Rechin
    ---------------------------            -------------------------------------
                                           Michael C. Rechin
                                           President and
                                           Chief Executive Officer
                                           (Principal Executive Officer)

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



In connection  with the quarterly  report of First  Merchants  Corporation  (the
"Corporation")  on Form 10-Q for the period  ending  June 30, 2008 as filed with
the Securities  and Exchange  Commission on the date hereof (the  "Report"),  I,
Mark K. Hardwick,  Executive Vice President and Chief  Financial  Officer of the
Corporation,  do hereby certify,  in accordance with 18 U.S.C.  Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: August 11, 2008                   by /s/ Mark K. Hardwick
    ---------------------------            -------------------------------------
                                           Mark K. Hardwick
                                           Executive Vice President and
                                           Chief Financial Officer
                                           (Principal Financial Officer)

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

                                                                         Page 67