SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

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

                         SECURITIES EXCHANGE ACT OF 1934

                    For the quarterly period ended June 30, 2003

                                       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 office)                            (Zip code)

                                 (765) 747-1500

              (Registrant's telephone number, including area code)

                                 Not Applicable

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



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

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

As of July 31, 2003, there were 17,602,949 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.................................................28

 Item 4.          Controls and Procedures.....................................28

PART II. Other Information:

 Item 1.          Legal Proceedings...........................................29

 Item 2.          Changes in Securities and Use of Proceeds...................29

 Item 3.          Defaults Upon Senior Securities.............................29

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

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

 Item 6.          Exhibits and Reports of Form 8-K............................30

 Signatures...................................................................32

 Exhibit Index................................................................33


                                                                          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,
                                                                       2003            2002
                                                                    -----------    -----------
                                                                    (Unaudited)
  <S>                                                               <C>            <C>
  ASSETS:
  Cash and due from banks .......................................   $    89,126    $    87,638
  Federal funds sold ............................................        14,150         31,400
                                                                    -----------    -----------
    Cash and cash equivalents ...................................       103,276        119,038
  Interest-bearing deposits......................................         8,777          3,568
  Investment securities available for sale ......................       354,540        332,925
  Investment securities held to maturity ........................         8,563          9,137
  Mortgage loans held for sale...................................        15,151         21,545
  Loans, net of allowance for loan losses of $30,639 and $22,417.     2,293,937      1,981,960
  Premises and equipment ........................................        39,313         38,645
  Federal Reserve and Federal Home Loan Bank Stock...............        13,933         11,409
  Interest receivable ...........................................        16,592         17,346
  Goodwill ......................................................       118,735         87,640
  Core deposit intangibles ......................................        25,928         19,577
  Cash surrender value of life insurance.........................        34,575         14,309
  Other assets ..................................................        23,641         21,588
                                                                    -----------    -----------
      Total assets ..............................................   $ 3,056,961    $ 2,678,687
                                                                    ===========    ===========
  LIABILITIES:
  Deposits:
    Noninterest-bearing .........................................   $   324,735    $   272,128
    Interest-bearing ............................................     1,988,593      1,764,560
                                                                    -----------    -----------
      Total deposits ............................................     2,313,328      2,036,688
  Borrowings ....................................................       417,669        356,927
  Interest payable ..............................................         5,494          6,019
  Other liabilities..............................................        19,460         17,924
                                                                    -----------    -----------
      Total liabilities .........................................     2,755,951      2,417,558

  STOCKHOLDERS' EQUITY:
  Perferred stock, no-par value:
    Authorized and unissued - 500,000 shares ....................
  Common Stock, $.125 stated value:
    Authorized --- 50,000,000 shares ............................
    Issued and outstanding - 17,531,597 and 16,322,748 shares....         2,191          2,040
  Additional paid-in capital ....................................       148,406        116,503
  Retained earnings .............................................       144,457        138,110
  Accumulated other comprehensive income ........................         5,956          4,476
                                                                    -----------    -----------
      Total stockholders' equity ................................       301,010        261,129
                                                                    -----------    -----------
      Total liabilities and stockholders' equity .                  $ 3,056,961    $ 2,678,687
                                                                    ===========    ===========
</TABLE>

  See notes to consolidated condensed financial statements.




                                                                          Page 3
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

                                                                   Three Months Ended       Six Months Ended
                                                                         June 30,                June 30,
<S>                                                               <C>          <C>
                                                                    2003        2002         2003         2002
Interest Income:
  Loans receivable
    Taxable ...................................................   $35,759     $34,875     $ 70,932     $ 59,142
    Tax exempt ................................................       162         126          327          234
  Investment securities
    Taxable ...................................................     1,600       2,641        3,279        4,544
    Tax exempt ................................................     1,626       1,670        3,257        2,657
  Federal funds sold ..........................................       177          84          290          265
  Deposits with financial institutions ........................        19          84           41          106
  Federal Reserve and Federal Home Loan Bank stock ............       211         198          409          321
                                                                  -------     -------     --------     --------
      Total interest income ...................................    39,554      39,678       78,535       67,269
                                                                  -------     -------     --------     --------
Interest expense:
  Deposits ....................................................     9,048      10,842       17,932       19,070
  Borrowings ..................................................     4,551       3,754        8,638        5,739
                                                                  -------     -------      -------     --------
    Total interest expense ....................................    13,599      14,596       26,570       24,809
                                                                  -------     -------      -------     --------
Net Interest Income ...........................................    25,955      25,082       51,965       42,460
Provision for loan losses .....................................     2,123       1,284        6,724        2,476
                                                                  -------     -------      -------     --------
Net Interest Income After Provision for Loan Losses ...........    23,832      23,798       45,241       39,984
                                                                  -------     -------      -------     --------
Other Income:
  Net realized gains on sales of available-for-sale securities.        67         290          438          408
  Other income ................................................    11,086       6,761       19,001       11,807
                                                                  -------     -------      -------     --------
Total other income ............................................    11,153       7,051       19,439       12,215
Total other expenses ..........................................    22,935      18,938       44,376       31,942
                                                                  -------     -------      -------     --------
Income before income tax ......................................    12,050      11,911       20,304       20,257
Income tax expense ............................................     3,305       3,971        5,901        6,844
                                                                  -------     -------      -------     --------
Net Income ....................................................   $ 8,745     $ 7,940      $14,403     $ 13,413
                                                                  =======     =======      =======     ========

Per share:

    Basic .....................................................   $   .50     $   .49      $   .84    $     .90
    Diluted ...................................................       .50         .48          .84          .89
    Dividends .................................................       .23         .22          .46          .44

</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
                                                                                 ----------------------       ----------------------
                                                                                    2003         2002           2003         2002
                                                                                 ---------    ---------       ---------    ---------
<S>                                                                              <C>          <C>            <C>          <C>
Net Income...................................................................... $  8,745     $  7,940       $14,403      $13,413

Other comprehensive income, net of tax:
  Unrealized gains on securities available for sale:
    Unrealized holding gains arising during the period, net of
        income tax expense of $1,279, $1,991, $1,162, and $1,176................    1,918        2,987         1,743        1,764
    Less:  Reclassification adjustment for gains included
      in net income, net of income tax expense of $27, $116, $175 and $163......       40          174           263          245
                                                                                 ---------    ---------      ---------    ---------
                                                                                    1,878        2,813         1,480        1,519
                                                                                 ---------    ---------      ---------    ---------
Comprehensive income............................................................ $ 10,623     $ 10,753       $15,883      $14,932
                                                                                 =========    =========      =========    =========

</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>

                                                                      2003         2002
                                                                   ---------    ---------
<S>                                                                <C>          <C>
Balances, January 1 ............................................   $ 261,129    $ 179,128

Net income .....................................................      14,403       13,413

Cash dividends .................................................      (8,058)      (6,494)

Other comprehensive loss, net of tax............................       1,480        1,519

Stock issued under dividend reinvestment and stock purchase plan         570          449

Stock options exercised ........................................         277          160

Stock Redeemed .................................................        (125)      (4,296)

Issuance of stock in acquisitions...............................      31,218       67,551

Cash paid in lieu of fractional shares..........................         116
                                                                   ---------    ---------

Balances, June 30...............................................   $ 301,010    $ 251,430
                                                                   =========    =========
</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,
                                                                                     ----------------------------------
                                                                                          2003               2002
                                                                                     ----------------   ---------------
<S>                                                                                  <C>                <C>
Cash Flows From Operating Activities:
  Net income........................................................................ $       14,403     $       13,413
  Adjustments to reconcile net income to net cash provided by operating activities
    Provision for loan losses.......................................................          6,724              2,476
    Depreciation and amortization...................................................          2,254              2,996
    Mortgage loans originated for sale..............................................       (139,855)           (35,457)
    Proceeds from sales of mortgage loans...........................................        146,249             36,805
    Change in interest receivable...................................................          1,616                408
    Change in interest payable......................................................           (881)               (89)
    Other adjustments...............................................................         (3,376)            (2,625)
                                                                                     ---------------    ---------------
      Net cash provided by operating activities..................................... $       27,134     $       17,927
                                                                                     ---------------    ---------------


Cash Flows From Investing Activities:
  Net change in interest-bearing deposits........................................... $       (5,209)    $         (280)
  Purchases of
    Securities available for sale...................................................       (172,549)           (86,970)
  Proceeds from maturities of
    Securities available for sale...................................................        106,228             63,281
    Securities held to maturity.....................................................                             1,562
  Proceeds from sales of
    Securities available for sale...................................................         37,493              8,724
  Net change in loans...............................................................        (19,999)           (59,888)
  Net cash paid in acquisitions.....................................................         (7,793)           (12,532)
  Other adjustments.................................................................         (1,680)
                                                                                     ---------------    ---------------
      Net cash used by investing activities......................................... $      (63,509)    $      (89,207)
                                                                                     ---------------    ---------------


Cash Flows From Financing Activities:
  Net change in
    Demand and savings deposits..................................................... $       (2,210)    $          938
    Certificates of deposit and other time deposits.................................          7,313             27,071
    Borrowings......................................................................         22,732             87,431
  Cash dividends....................................................................         (8,183)            (6,494)
  Stock issued under dividend reinvestment and stock purchase plan..................            570                449
  Stock options exercised...........................................................            275                160
  Stock repurchased.................................................................                            (4,296)
  Cash paid in lieu of fractional shares............................................            116
                                                                                     ---------------    ---------------
    Net cash provided by financing activities.......................................         20,613            105,259
                                                                                     ---------------    ---------------
Net Change in Cash and Cash Equivalents.............................................        (15,762)            33,979
Cash and Cash Equivalents, January 1................................................        119,038            103,028
                                                                                     ---------------    ---------------
Cash and Cash Equivalents, June 30.................................................. $      103,276     $      137,007
                                                                                     ===============    ===============
</TABLE>
See notes to consolidated condensed financial statements.

                                                                          Page 7
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

NOTE 1.  General

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

The consolidated  condensed  balance sheet of the Corporation as of December 31,
2002 has  been  derived  from the  audited  consolidated  balance  sheet of the
Corporation as of that date. Certain  information and note disclosures  normally
included in the Corporation's annual financial statements prepared in accordance
with accounting  principles  generally  accepted in the United States of America
have  been  condensed  or  omitted.   These  consolidated   condensed  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and notes  thereto  included in the  Corporation's  Form 10-K annual
report filed with the Securities and Exchange Commission.

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

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

NOTE 2.  Accounting Matters

GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING
INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS

     In November 2002, the FASB issued Interpretation No. 45, Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of Others ("FIN 45").  FIN 45 will change  current
practice in the accounting for and disclosure of guarantees.  Guarantees meeting
the characteristics described in FIN 45 are required to be initially recorded at
fair value,  which is different from the general current practice of recording a
liability only when a loss is probable and reasonably estimable,  as those terms
are defined in FASB Statement No. 5, Accounting for  Contingencies.  FIN 45 also
requires a guarantor to make new  disclosures  for virtually all guarantees even
if the likelihood of the guarantor's having to make payments under the guarantee
is remote.

                                                                          Page 8

<PAGE>

                           FIRST MERCHANTS CORPORATION

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

NOTE 2.  Accounting Matters

GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING
INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS continued

     In general, FIN 45 applies to contracts or indemnification agreements that
contingently  require the  guarantor to make  payments to the  guaranteed  party
based on changes in an underlying asset,  liability or an equity security of the
guaranteed party such as financial standby letters of credit.

     Disclosure requirements of FIN 45 are effective for financial statements
of interim or annual  periods  ending  after  December  31,  2002.  The  initial
recognition and measurement  provisions are applicable on a prospective basis to
guarantees  issued or modified  after  December  31, 2002,  irrespective  of the
guarantor's fiscal year-end.  The guarantor's previous accounting for guarantees
issued prior to the date of FIN 45 initial applications should not be revised or
restated to reflect the provisions of FIN 45.

     The Corporation adopted FIN 45 on January 1, 2003.  The adoption of FIN 45
does not  currently  have a material  impact on the  Corporation's  consolidated
financial statements.

ACQUISITIONS OF CERTAIN FINANCIAL INSTITUTIONS

SFAS No.  147 became  effective  October 1, 2002.  This  standard  requires  any
intangible  assets  previously  recorded under SFAS No. 72 to be included in the
scope of SFAS No.s 141 and 142.  This  standard has no  immediate  impact on the
financial  position  and  results  of  operations  of  the  Corporation,  as the
Corporation did not have any recorded unidentified intangible assets or goodwill
that had continued to be amortized.

ACCOUNTING FOR STOCK-BASED COMPENSATION-TRANSITION AND DISCLOSURE-AN AMENDMENT
OF FASB STATEMENT NO. 123

In December 2002, the Financial  Accounting Standards Board issued SFAS No. 148.
SFAS No.  148  amends  FASB  Statement  No.  123,  "Accounting  for Stock  Based
Compensation" ("SFAS 123") and provides alternative methods for accounting for a
change by  registrants  to the fair value method of accounting  for  stock-based
compensation.  Additionally,  SFAS No. 148 amends the disclosure requirements of
SFAS 123 to require disclosure in the significant  accounting policy footnote of
both annual and interim  financial  statements of the method of  accounting  for
stock-based   compensation  and  the  related  pro-forma  disclosures  when  the
intrinsic  value method  continues to be used.  The  statement is effective  for
fiscal years ending after December 15, 2002.  Adoption of this statement did not
have a material  effect on the  Corporation's  financial  position or results of
operations.

                                                                          Page 9
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

NOTE 3.  Business Combinations

On March 1, 2003, the Corporation acquired 100% of the outstanding stock of CNBC
Bancorp,  the holding company of Commerce  National Bank ("Commerce  National"),
CNBC Retirement  Services,  Inc.  ("CRS,  Inc.") and CNBC Statutory Trust I (the
"Trust").  Commerce  National is a national  chartered bank located in Columbus,
Ohio.  CNBC  Bancorp  was merged into the  Corporation,  and  Commerce  National
maintained its national charter as a wholly-owned subsidiary of the Corporation.
CRS, Inc. and the Trust are also maintained as wholly-owned  subsidiaries of the
Corporation. The Corporation issued approximately 1,166,897 shares of its common
stock and  approximately  $24,562,000 in cash to complete the transaction.  As a
result of the acquisition,  the Corporation will have an opportunity to increase
its customer base and continue to increase its market share.  The purchase had a
recorded  acquisition  price of $55,729,000,  including  goodwill of $30,291,000
none of  which  is  deductible  for tax  purposes.  Additionally,  core  deposit
intangibles  totaling  $8,171,000  were recognized and will be amortized over 10
years using the 150% declining balance method.

The combination  was accounted for under the purchase method of accounting.  All
assets and  liabilities  were recorded at their fair values as of March 1, 2003.
The  purchase  accounting  adjustments  will be  amortized  over the life of the
respective  asset or liability.  Commerce  National's  results of operations are
included in the Corporation's  consolidated  income statement beginning March 1,
2003.  The following  table  summarizes  the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition.

        Investments.......................     $ 12,500
        Loans.............................      298,702
        Premises and equipment............        1,293
        Core deposit intangibles..........        8,171
        Goodwill..........................       30,291
        Other.............................       20,789
                                               --------
           Total assets acquired..........      371,746
                                               --------
        Deposits..........................      271,537
        Other.............................       44,480
                                               --------
           Total liabilities acquired.....      316,017
                                               --------
           Net assets acquired............     $ 55,729
                                               --------

The  following  proforma  disclosures,  including  the  effect  of the  purchase
accounting  adjustments,  depict the  results of  operations  as though the CNBC
Bancorp merger had taken place at the beginning of each period.
<TABLE>
<CAPTION>

                                                Three Months Ended       Six Months Ended
                                                     June 30,                June 30,
                                                2003          2002      2003          2002
                                               ------        ------    ------        ------
<S>                                           <C>           <C>       <C>           <C>

        Net Interest Income...........        $25,955       $27,402   $53,579       $47,161

        Net Income....................          8,745         8,376    10,522        14,361

        Per Share - combined:
           Basic Net Income...........            .50           .48       .60           .90
           Diluted Net Income.........            .50           .47       .60           .89

</TABLE>

Effective  January 1, 2003,  the  Corporation  formed  Merchants  Trust Company,
National  Association  ("MTC"),  a wholly-owned  subsidiary of the  Corporation,
through a capital contribution totaling approximately  $2,038,000. On January 1,
2003, MTC purchased the trust  operations of First  Merchants Bank, N.A.,  First
National Bank and Lafayette Bank and Trust Company for a fair value  acquisition
price of $20,687,000.  MTC unites the trust and asset management services of all
affiliate banks of the  Corporation.  All intercompany  transactions  related to
this  purchase  by  MTC  have  been  eliminated  in the  consolidated  condensed
financial statements of the Corporation.

                                                                         Page 10
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

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

Available for sale at June 30, 2003
  U.S. Treasury ....................   $  1,497   $      1              $  1,498
  Federal agencies..................     27,605        530   $    (23)    28,112
  State and municipal ..............    130,139      9,271         (5)   139,405
  Mortgage-backed securities .......    150,302      1,347               151,649
  Other asset-backed securities.....      3,327         17                 3,344
  Corporate obligations.............     10,323        177                10,500
  Marketable equity securities......     19,973         59                20,032
                                       --------   --------   --------   --------
      Total available for sale .....    343,166     11,402        (28)   354,540
                                       --------   --------   --------   --------


Held to maturity at June 30, 2003
  State and municipal...............      8,464        589                 9,053
  Mortgage-backed securities........         99                               99
                                       --------   --------   --------   --------
      Total held to maturity .......      8,563        589                 9,152
                                       --------   --------   --------   --------
      Total investment securities ..   $351,729   $ 11,991   $    (28)  $363,692
                                       ========   ========   ========   ========


</TABLE>

                                                                         Page 11
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

<TABLE>

                                                        Gross       Gross
                                           Amortized  Unrealized  Unrealized    Fair
                                              Cost       Gains      Losses     Value
<S>                                        <C>         <C>        <C>        <C>
Available for sale at December 31, 2002
   U.S. Treasury .......................   $    125                          $    125
   Federal agencies ....................     27,630    $    814   $      8     28,436
   State and municipal .................    135,715       5,787        178    141,324
   Mortgage-backed securities ..........    117,724       2,448         54    120,118
   Other asset-backed securities .......      1,000                             1,000
   Corporate obligations ...............     12,101         465                12,566
   Marketable equity securities ........     29,452          20        116     29,356
                                           --------    --------   --------   --------
      Total available for sale .........    323,747       9,534        356    332,925
                                           --------    --------   --------   --------

Held to maturity at December 31, 2002
   State and municipal .................      9,013         448                 9,461
   Mortgage-backed securities ..........        124                               124
                                           --------    --------   --------   --------
      Total held to maturity ...........      9,137         448                 9,585
                                           --------    --------   --------   --------
      Total investment securities ......   $332,884    $  9,982   $    356   $342,510
                                           ========    ========   ========   ========


</TABLE>

                                                                         Page 12
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

NOTE 5.  Loans and Allowance
<TABLE>
                                                                                      June 30,   December 31,
                                                                                        2003         2002
                                                                                        ----         ----
<S>                                                                                <C>            <C>
Loans:
  Commercial and industrial loans ..............................................   $   453,323    $   406,644
  Agricultural production financing and other loans to farmers .................        92,552         85,059
  Real estate loans:
    Construction ...............................................................       143,459        133,896
    Commercial and farmland ....................................................       547,134        401,561
    Residential ................................................................       837,756        746,349
  Individuals' loans for household and other personal expenditures .............       194,357        206,083
  Tax-exempt loans .............................................................        11,053         12,615
  Other loans ..................................................................        44,942         12,170
                                                                                   -----------    -----------
                                                                                     2,324,576      2,004,377
  Allowance for loan losses.....................................................       (30,639)       (22,417)
                                                                                   -----------    -----------
      Total Loans...............................................................   $ 2,293,937    $ 1,981,960
                                                                                   ===========    ===========

                                                                                        Six Months Ended
                                                                                             June 30

                                                                                       2003           2002
                                                                                   -----------    -----------
Allowance for loan losses:
  Balances, January 1 ..........................................................   $    22,417    $    15,141

  Allowance acquired in acquisition.............................................         3,727          6,902

  Provision for losses .........................................................         6,724          2,476

  Recoveries on loans ..........................................................         1,013            613

  Loans charged off ............................................................        (3,242)        (3,169)
                                                                                   -----------    -----------
  Balances, June 30.............................................................   $    30,639    $    21,963
                                                                                   ===========    ===========
</TABLE>

Information on nonaccruing, contractually
past due 90 days or more other than
nonaccruing and restructured loans is                June 30,      December 31,
summarized below:                                      2003            2002
================================================================================
As of:
Non-accrual loans................................    $ 22,532       $ 14,134

Loans contractually past due 90 days
  or more other than nonaccruing.................       5,295          6,676

Restructured loans...............................         899          2,508
                                                     --------       --------
    Total........................................    $ 28,726       $ 23,318
                                                     ========       ========

                                                                         Page 13
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

NOTE 6.  Net Income Per Share
<TABLE>
                                                                     Three Months Ended June 30,
                                                           2003                                           2002
                                        -------------------------------------------    -------------------------------------------
                                                        Weighted-                                      Weighted-
                                                         Average        Per Share                       Average        Per Share
                                         Income           Shares         Amount         Income           Shares         Amount
                                         ------           ------         ------         ------           ------         ------
<S>                                      <C>            <C>             <C>             <C>            <C>             <C>
Basic net income per share:
  Net income available to
    common stockholders................. $    8,745        17,517,071    $     .50      $    7,940        16,306,998    $     .49
                                                                         ==========                                     ==========
Effect of dilutive stock options........                      120,219                                        165,872
                                         ----------       ------------                  ----------       ------------
Diluted net income per share:
  Net income available to
    common stockholders
    and assumed conversions............. $    8,745        17,637,290    $     .50      $    7,940        16,472,869    $     .48
                                         ==========       ============   ==========     ==========       ============   ==========

</TABLE>
Options to purchase  225,628 and 12,285  shares for the three  months ended June
30,  2003 and 2002 were not  included  in the  earnings  per  share  calculation
because the exercise price exceeded the average market price.
<TABLE>
<CAPTION>

                                                                     Six Months Ended June 30,
                                                           2003                                           2002
                                        -------------------------------------------    -------------------------------------------
                                                        Weighted-                                      Weighted-
                                                         Average        Per Share                       Average        Per Share
                                         Income           Shares         Amount         Income           Shares         Amount
                                         ------           ------         ------         ------           ------         ------
<S>                                      <C>            <C>             <C>             <C>            <C>             <C>
Basic net income per share:
  Net income available to
    common stockholders................. $   14,403        17,125,191    $     .84      $   13,413        14,870,124    $     .90
                                                                         ==========                                     ==========
Effect of dilutive stock options........                      113,222                                        143,820
                                         ----------       ------------                  ----------       ------------
Diluted net income per share:
  Net income available to
    common stockholders
    and assumed conversions............. $   14,403        17,238,413    $     .84      $   13,413        15,013,944    $     .89
                                         ==========       ============   ==========     ==========       ============   ==========


</TABLE>
Options to purchase 226,469 and 75,598 shares for the six months ended June 30,
2003 and 2002 were not included in the earnings  per share  calculation  because
the exercise price exceeded the average market price.

                                                                         Page 14
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

Note 7. Borrowings

CUMULATIVE TRUST PREFERRED SECURITIES

In April 2002,  the  Corporation  and FMC Trust I (the "Trust")  entered into an
Underwriting  Agreement with Stifel,  Nicolaus & Company,  Incorporated  and RBC
Dain Rauscher, Inc. for themselves and as  co-representatives  for several other
underwriters (the "Underwriting Agreement").  In April 2002, and pursuant to the
Underwriting  Agreement,  the Trust  issued  2,127,500  8.75%  Cumulative  Trust
Preferred  Securities  (liquidation  amount  $25 per  Preferred  Security)  (the
"Preferred Securities") with an aggregate liquidation value of $53,187,500.  The
proceeds from the sale of the Preferred Securities were invested by the Trust in
the Corporation's  8.75% Junior  Subordinated  Debentures due June 30, 2032 (the
"Debentures").  The  Preferred  Securities  are  recorded as  borrowings  in the
Corporation's  consolidated  June 30, 2003, balance sheet and treated as Tier 1
Capital for regulatory  capital  purposes.  The  Debentures  will mature and the
Preferred Securities must be redeemed on June 30, 2032. The Trust has the option
of  shortening  the  maturity  date to a date not  earlier  than June 30,  2007,
requiring  prior  approval  of the Board of  Governors  of the  Federal  Reserve
System.

OBLIGATED MANDATORY REDEEMABLE CAPITAL SECURITIES

As part of the March 1, 2003,  acquisition of CNBC Bancorp ("CNBC"),  referenced
in Note 3 to the consolidated condensed financial  statements,  the Corporation
assumed $4.0 million of 10.20% fixed rate obligated mandatory redeemable capital
securities issued in February 2001 through a subsidiary trust of CNBC as part of
a pooled offering.  The Corporation may redeem them, in whole or in part, at its
option  commencing  February 22, 2011,  at a redemption  price of 105.10% of the
outstanding  principal  amount  and,  thereafter,  at a premium  which  declines
annually.  On or after February 22, 2021, the securities may be redeemed at face
value with prior  approval  of the Board of  Governors  of the  Federal  Reserve
System.   The  securities  are  recorded  as  borrowings  in  the  Corporation's
consolidated  June 30,  2003,  balance  sheet and treated as Tier 1 Capital for
regulatory capital purposes.

SUBORDINATED DEBENTURES, REVOLVING CREDIT LINES AND TERM LOANS

On June 30, 2003,  other borrowed funds included  $40,594,000  which represents
the  outstanding  balance of a Loan and  Subordinated  Debenture  Loan Agreement
entered into with LaSalle Bank,  N.A. on March 25, 2003. The Agreement  includes
three credit facilities:

        *  The Term Loan of $5,000,000 matures on March 25, 2010.  Interest is
           calculated at a floating rate equal to the lender's prime rate or
           LIBOR plus 1.50%.  The Term Loan is secured by 100% of the common
           stock of First Merchants Bank, National Association, Muncie, Indiana
           and 100% of the common stock of Lafayette Bank and Trust Company,
           Lafayette, Indiana.  The Agreement contains several restrictive
           covenants, including the maintenance of various capital adequacy
           levels, asset quality and profitability ratios, and certain
           restrictions on dividends and other indebtedness.
        *  The Revolving Loan had a balance of $10,594,000 at June 30, 2003.
           Interest is payable monthly based on LIBOR plus 1%.  Principal and
           interest are due on or before March 23, 2004.  The total principal
           amount outstanding at any one time may not exceed $20,000,000.
        *  The Subordinated Debt of $25,000,000 matures on March 25, 2010.
           Interest is calculated at a floating rate equal to, at the
           Corporation's option, either the lender's prime rate or LIBOR plus
           2.50%.  The Agreement is secured by 100% of the common stock of First
           Merchants Bank, National Association, Muncie, Indiana and 100% of the
           common stock of Lafayette Bank and Trust Company, Lafayette, Indiana.
           The Agreement contains several restrictive covenants, including the
           maintenance of various capital adequacy levels, asset quality and
           profitability ratios, and certain restrictions on dividends and other
           indebtedness.  The Subordinated Debentures are recorded as borrowings
           in the Corporation's consolidated balance sheet and treated as
           Tier 2 capital for regulatory capital purposes.

                                                                         Page 15

<PAGE>

                          FIRST MERCHANTS CORPORATION

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

NOTE 8.  Stock Based Compensation

Stock  options  are  granted  for a fixed  number of shares  to  employees.  The
Corporation's stock option plans are accounted for in accordance with Accounting
Principles  Board  Opinion  ("APB")  No.  25,  Accounting  for  Stock  Issued to
Employees, and related interpretations. APB No. 25 requires compensation expense
for stock  options to be recognized  only if the market price of the  underlying
stock  exceeds the  exercise  price on the date of the grant.  Accordingly,  the
Corporation recognized compensation expense of $4,000 for the three months ended
June 30,  2003 and $10,000 for the six months  ended June 30,  2003,  related to
specific grants in which the market price exceeded the exercise  price.  For all
remaining grants, no stock-based employee  compensation cost is reflected in net
income,  as options granted under those plans had an exercise price equal to the
market value of the underlying common stock on the grant date.

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

<TABLE>
<CAPTION>
                                                                    Three Months Ended            Six Months Ended
                                                                         June 30,                     June 30,
                                                                     2003         2002             2003         2002
                                                                -------------------------     -------------------------
<S>                                                             <C>           <C>             <C>           <C>
Net income, as reported .....................................   $    8,745    $    7,940      $   14,403    $   13,413
Add:  Total stock-based employee compensation
   cost included in reported net income, net
   of income taxes...........................................            4             6              10            12

Less:  Total stock-based employee compensation
   cost determined under the fair value based
   method, net of income taxes ..............................         (242)         (173)           (492)         (345)
                                                                ----------    ----------      ----------    ----------
Pro forma net income ........................................   $    8,507    $    7,773      $   13,921    $   13,080
                                                                ==========    ==========      ==========    ==========

Earnings per share:
   Basic - as reported ......................................   $      .50    $      .49      $      .84    $      .90
   Basic - pro forma ........................................          .49           .48             .81           .88
   Diluted - as reported ....................................          .50           .48             .84           .89
   Diluted - pro forma ......................................          .48           .47             .81           .87
</TABLE>

Options to purchase  225,628 and 12,285 shares for the three months ended March
31,  2003 and 2002 and options to purchase 226,469 and 75,598 shares for the
six months ended June 30, 2003 were not included in the earnings per share
calculation because the exercise price exceeded the average market price.

                                                                         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

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

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

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

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

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

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

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

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

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

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

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

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

                                                                         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

     Certain policies are important to the portrayal of the Corporation's
financial condition, since they require management to make difficult, complex or
subjective judgements, some of which relate to matters that are inherently
uncertain. Management believes that its critical accounting policies are those
that involve the determination of the allowance for loan losses ("ALL").

     The ALL is a significant estimate that can and does change based on
management's assumptions about specific borrowers and applicable economic and
environmental conditions, among other factors. The ALL is maintained to absorb
losses inherent in the loan portfolio and is based on ongoing, quarterly
assessments of the probable losses inherent in the loan portfolio. The ALL is
increased by the provision for loan losses, which is charged against current
operating results. Loan losses are charged against the allowance when management
believes the uncollectibility of a loan balance is confirmed. Subsequent
recoveries, if any, are credited to the allowance. The Corporation's methodology
for assessing the appropriateness of the ALL consists of three key elements -
the determination of the appropriate reserves for specifically identified loans,
historical losses, and environmental or qualitative factors.

     Specific allowances are established in those instances where management
has identified significant conditions or circumstances related to a credit that
management believes indicate the probability that a loss may be incurred. The
loans that are reviewed for specific allowances are generally those internally
classified as substandard, doubtful or loss, including nonaccrual loans, loans
in the process of foreclosure and certain loans past due 90 days or more and
still accruing interest. Additionally, management also specifically reviews any
other loan with a significant loss exposure.

     The Corporation's five-year average historical loss experience is used to
estimate an appropriate allowance for those loans not individually reviewed. The
historical loss experience is determined for each type of loan in the portfolio.

     There are certain inherent risks in the Corporation's loan portfolio;
accordingly, the Corporation includes certain environmental or qualitative
factors in its determination of the adequacy of the allowance for loan losses.
These factors include national and local economic conditions that could have an
impact of the credit quality of the loan portfolio, lending policies and
procedures, portfolio size and composition, delinquency and non-performing loan
trends, lending management and staff, loan review systems and procedures,
concentration of credit, among other factors. The evaluation of the inherent
loss with respect to these factors is subject to a higher degree of uncertainty
because they are not identified with specific credits.

RESULTS OF OPERATIONS

        Net income for the three months ended June 30, 2003, equaled
$8,745,000, compared to $7,940,000 in the same period of 2002. Diluted
earnings per share were $.50 an increase of $.02 over the $.48 reported for the
second quarter 2002.

        Net income for the six months ended June 30, 2003, equaled $14,403,000,
compared to $13,413,000 during the same period in 2002.  Diluted earnings per
share were $.84, a 5.6% decrease over $.89 in 2002.

        Annualized returns on average assets and average stockholders' equity
for six months ended June 30, 2003 were 1.00 percent and 10.10 percent,
respectively, compared with 1.24 percent and 12.49 percent for the same period
of 2002.

        The declines in diluted earnings per share, return on equity and return
on assets are primarily due to  increased  provision  for loan  losses,  which
is  discussed  in the  "ASSET QUALITY/PROVISION FOR LOAN LOSSES" section of
Management's Discussion & Analysis of Financial Condition and Results of
Operations.

                                                                         Page 18
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

CAPITAL

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

         The Corporation's  Tier I  capital  to average  assets ratio was 7.9
percent at year-end 2002 and 7.3 percent at June 30, 2003. At June 30, 2003, the
Corporation  had a Tier I risk-based  capital  ratio of 9.1  percent and total
risk-based capital ratio of 11.4 percent. Regulatory capital guidelines require
a Tier I risk-based  capital ratio of 4.0 percent and a total risk-based capital
ratio of 8.0 percent. Banks with Tier I risk-based capital ratios of 6.0 percent
and  total  risk-based  capital  ratios of 10.0  percent  are  considered  "well
capitalized."

ASSET QUALITY/PROVISION FOR LOAN LOSSES

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

      At   June  30,  2003,   non-performing   loans   totaled  $28,726,000,  an
increase during the period of $5,408,000 from December 31, 2002, as noted in the
table on the  following  page.  This  increase was  primarily due to three loans
totaling  $8,495,000,  related  to  declining  collateral  values  of  a  single
borrower, being placed on non-accrual status, while loans 90 days past due other
than non-accrual and restructured loans decreased by $2,990,000.

      At June 30, 2003, impaired loans  totaled   $58,144,000,  an  increase  of
$14,193,000  from December 31, 2002. The increase was primarily  attributable to
the  impairment  of  three  loans  totaling   $8,495,000  related  to  declining
collateral  values  of  a single  commercial  borrower.  At June 30,  2003,  an
allowance  for losses was not  deemed  necessary  for  impaired  loans  totaling
$37,325,000,  but an allowance  of  $9,704,000  was  recorded for the  remaining
balance of impaired  loans of $20,819,000  and is included in the  Corporation's
allowance for loan losses.  The average  balance of impaired loans for the first
six months of 2003 was $60,564,000.

      At December 31, 2002,  impaired loans  totaled $44,351,000.  An  allowance
for losses was not deemed necessary for impaired loans totaling $27,450,000, but
an allowance of $7,299,000  was recorded for the  remaining  balance of impaired
loans of  $16,901,000  and is included in the  Corporation's  allowance for loan
losses. The average balance of impaired loans for 2002 was $49,663,000.

      At June 30, 2003,  the  allowance for loan  losses  was  $30,639,000,  an
increase of $8,222,000 from year end 2002. As a percent of loans, the allowance
was 1.31 percent at June 30, 2003 compared with 1.11 percent at December 31,
2002.
                                                                         Page 19

<PAGE>
                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

      The  provision  for  loan  losses  for  the  first six  months of 2003 was
$6,724,000,  an increase of $4,248,000  from  $2,476,000  for the same period in
2002.  The  Corporation's  adequacy of the  allowance  for loan losses  reflects
increased  non-performing  loans,  increased  specific  reserves  and  increased
impaired loans,  resulting in increased  provision expense.  Of the $4.3 million
increase,  $2.8  million is  due to  declining   collateral  values  of a single
commercial borrower,  with the remaining based on the regular ongoing evaluation
of  the  loan  portfolios  of  the  Corporation's  bank  subsidiaries.   Current
non-performing  and impaired  loan  balances  indicate that some decline in loan
asset quality has  occurred,  which  management  believes is a result of current
economic conditions.

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

(dollars in thousands)                                  June 30,   December 31,
                                                          2003         2002
================================================================================

Non-accrual loans ..............................         $22,532     $14,134

Loans contractually
   past due 90 days or more
   other than non-accruing .....................           5,295       6,676

Restructured loans .............................             899       2,508
                                                         -------     -------

   Total non-performing loans ..................         $28,726     $23,318
                                                         =======     =======
<TABLE>

                                                                Six Months Ended
                                                                    June 30,
                                                               ------------------
                                                               2003          2002
                                                               ----          ----
                                                             (Dollars in Thousands)
<S>                                                          <C>           <C>
  Balance at beginning of period .........................   $22,417       $15,141
                                                             -------       -------
  Chargeoffs .............................................     3,242         3,169
  Recoveries .............................................     1,013           613
                                                             -------       -------
  Net chargeoffs .........................................     2,229         2,556
  Provision for loan losses ..............................     6,724         2,476
  Allowance acquired in acquisition.......................     3,727         6,902
                                                             -------       -------
  Balance at end of period ...............................   $30,639       $21,963
                                                             =======       =======

Ratio of net chargeoffs during the period to average loans
  outstanding during the period (1).......................       .20%          .31%


(1)    First six months annualized



</TABLE>
                                                                         Page 20
<PAGE>
                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
LIQUIDITY

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

      The liquidity of the Corporation is dependent upon the receipt of
dividends from its bank  subsidiaries,  which are subject to certain  regulatory
limitations and access to other funding sources.  Liquidity of the Corporation's
bank  subsidiaries  is derived  primarily  from core deposit  growth,  principal
payments received on loans, the sale and maturity of investment securities,  net
cash provided by operating activities,  and access to other funding sources. The
most stable  source of  liability-funded  liquidity  for both the  long-term and
short-term  is  deposit  growth  and  retention  in the core  deposit  base.  In
addition,  the  Corporation  utilizes  advances  from the Federal Home Loan Bank
("FHLB") and a revolving  line of credit with  LaSalle  Bank,  N.A. as a funding
source. At June 30, 2003, total borrowings from the FHLB were $216,444,000. The
Corporation's  bank subsidiaries have pledged certain mortgage loans and certain
investments to the FHLB. The total available  remaining  borrowing capacity from
the FHLB at June 30, 2003, was $218,630,000. At June 30, 2003, the Corporation's
revolving line of credit had a balance of $10,594,000 and a remaining  borrowing
capacity of  $9,406,000.  The  principal  source of  asset-funded  liquidity  is
investment  securities  classified as  available-for-sale,  the market values of
which totaled  $354,540,000  at June 30, 2003, a increase of $21,615,000 or 6.5%
over  December 31, 2002.  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  $1,806,000  at  June  30,  2003.  In  addition,  other  types  of
assets-such  as cash and due  from  banks,  federal  funds  sold and  securities
purchased under agreements to resell,  and loans and  interest-bearing  deposits
with other banks maturing within one year-are sources of liquidity.

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

     The Corporation provides customers with off-balance sheet credit support
through loan commitments and standby letters of credit. Summarized
credit-related financial instruments at June 30, 2003 are as follows:

                                                                  At June 30,
(Dollars in thousands)                                                2003
================================================================================
Amounts of commitments:
Loan commitments to extend credit ............................... $  437,494
Standby letters of credit .......................................     23,970
                                                                  ----------
                                                                  $  461,464
                                                                  ==========

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

     In addition to owned banking facilities, the Corporation has entered into a
number of long-term leasing arrangements to support the ongoing activities of
the Corporation. The required payments under such commitments and long-term debt
at June 30, 2003 are as follows:
<TABLE>
<CAPTION>
                                2003       2004       2005       2006       2007      2008       Total
(Dollars in thousands)       remaining                                              and after
=======================================================================================================
<S>                          <C>        <C>        <C>        <C>        <C>        <C>        <C>
Operating leases .........   $    484   $    795   $    533   $    567   $    345   $    324   $  3,048
Trust preferred securities                                                            57,188     57,188
Long-term debt ...........    108,152     42,594     23,000     22,403     11,495    152,837    360,481
                             --------   --------   --------   --------   --------   --------   --------
Total ....................   $108,636   $ 43,389   $ 23,533   $ 22,970   $ 11,840   $210,349   $420,717
                             ========   ========   ========   ========   ========   ========   ========
</TABLE>
                                                                         Page 21
<PAGE>
                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK

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

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

         Management believes that the Corporation's liquidity and interest
sensitivity   position  at  June  30,  2003,   remained  adequate  to  meet  the
Corporation's  primary goal of achieving optimum interest margins while avoiding
undue interest rate risk.

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

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

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

                                                                         Page 22
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

The comparative rising and falling  scenarios for the period ended June 30,
2004 assume  further  interest  rate changes in addition to the base  simulation
discussed  above.  These changes are immediate and parallel  changes to the base
case senario.  In addition,  total rate movements  (beginning point minus ending
point) to each of the various  driver rates  utilized by  management in the base
simulation for the period ended June 30, 2004 are as follows:

Driver Rates                      RISING              FALLING
================================================================================
Prime                              200 Basis Points    (50) Basis Points
Federal Funds                      200                 (50)
One-Year T-Bill                    200                 (25)
Two-Year T-Bill                    200                 (25)
Three-Year T-Bill                  200                 (50)
Interest Checking                  100
MMIA Savings                       100
First Flex                         100                 (25)
CD's                               200                 (50)
FHLB Advances                      200                 (50)

Results for the base,  rising and falling  interest  rate  scenarios  are listed
below, based upon the Corporation's rate sensitive assets at June 30, 2003. The
net  interest  income shown  represents  cumulative  net interest  income over a
12-month time horizon.  Balance sheet assumptions used for the base scenario are
the same for the rising and falling simulations.

                                                BASE        RISING     FALLING
================================================================================
Net Interest Income (dollars in thousands)    $113,620    $117,678    $112,362

Variance from base                                        $  4,058    $ (1,258)

Percent of change from base                                    3.57%     (1.11)%

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

Driver Rates                      RISING              FALLING
================================================================================
Prime                             200 Basis Points    (50) Basis Points
Federal Funds                     200                 (50)
One-Year T-Bill                   200                 (20)
Two-Year T-Bill                   200                 (59)
Interest Checking                 100                  --
MMIA Savings                      100                  --
First Flex                        100                 (25)
CD's                              200                 (53)
FHLB Advances                     200                 (66)

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

                                              BASE     RISING     FALLING
===============================================================================
Net Interest Income (dollars in thousands)  $105,138  $113,855   $ 98,793

Variance from base                                    $  8,717   $ (6,345)

Percent of change from base                               8.29%    (6.03)%

                                                                         Page 23
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

EARNING ASSETS

         The following table presents the earning asset mix as of June 30,
2003, and December 31, 2002.

         Loans grew by over $320 million from December 31, 2002 to June 30,
2003,  while  investment  securities  increased by $21.1 million during the same
period.  A  portion  of the  increase  is  attributable  to the  March  1,  2003
acquisition of CNBC Bancorp.  Excluding  increases  related to this acquisition,
loans  increased  by $10.5  million and  investments  increased  by $8.2 million
during the six month period.

<TABLE>

----------------------------------------------------------------------------------------------------
EARNING ASSETS
(Dollars in Millions)                                            June 30,              December 31,
                                                                   2003                   2002
---------------------------------------------------------------------------------------------------
<S>                                                            <C>                     <C>
Federal funds sold and interest-bearing deposits               $    23.0               $     35.0

Investment securities available for sale .......                   354.5                    332.9

Investment securities held to maturity .........                     8.6                      9.1

Mortgage loans held for sale ...................                    15.2                     21.5

Loans ..........................................                 2,324.6                  2,004.4

Federal Reserve and Federal Home Loan Bank stock                    13.9                     11.4
                                                               ----------              ----------

                     Total .....................               $ 2,739.8               $  2,414.3
                                                               ==========              ==========

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

         The following table presents the level of deposits and borrowed funds
(Federal funds purchased, repurchase agreements, U.S. Treasury demand notes,
Federal Home Loan Bank advances, trust preferred securities and other borrowed
funds)at June 30, 2003, and December 31, 2002.

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

(Dollars in Millions)                                June 30,          December 31,
                                                       2003                2002
                                                    ----------         ------------
<S>                                                 <C>                 <C>
Deposits ........................................   $  2,313.3          $  2,036.7
Securities sold under repurchase agreements......         75.4                89.6
FFP and U.S. Treasury demand notes...............
Federal Home Loan Bank advances .................        216.5               184.7
Trust preferred securities.......................         57.2                53.2
Subordinated debentures, revolving credit lines
   and term loans................................         40.6                19.3
Other borrowed funds ............................         28.0                10.2

</TABLE>

         The Corporation has continued to leverage its capital position with
Federal Home Loan Bank advances,  as well as,  repurchase  agreements  which are
pledged against acquired investment securities as collateral for the borrowings.
Trust preferred securities are classified as Tier I Capital and the Subordinated
Debenture of  $25,000,000  is classified as Tier II Capital when  computing risk
based capital ratios due to the long-term nature of the investment. The interest
rate risk is included as part of the Corporation's interest simulation discussed
in  Management's  Discussion  and Analysis  under the headings  "LIQUIDITY"  and
"INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK".

                                                                         Page 24
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

NET INTEREST INCOME

         Net Interest Income is the primary source of the Corporation's
earnings. It is a function of net interest margin and the level of average
earning assets.  The table below presents the Corporation's asset yields,
interest expense, and net interest income as a percent of average earning assets
for the three and six months ended June 30, 2003 and 2002.

         Annualized net interest income (FTE) for the six months ended June 30,
2003 increased by $19,733,000, or 22.4 percent over the same period in 2002,
due to an increase in average earning assets of over $608 million.  For the same
period  interest  income and interest  expense,  as a percent of average earning
assets,  decreased 73  basis  points and 45  basis  points  respectively.
<TABLE>

---------------------------- ------------------- -------------------- -------------------- -------------- ---------------------
(Dollars in Thousands)
                             Interest Income                         Net Interest Income                     Annualized
                            (FTE) as a Percent   Interest Expense    (FTE) as a Percent                  Net Interest Income
                                of Average         as a Percent          of Average          Average             On a
                              Earning Assets        of Average         Earning Assets        Earning        Fully Taxable
                                                  Earning Assets                             Assets        Equivalent Basis
---------------------------- ------------------- -------------------- -------------------- -------------- ---------------------
For the three months
  Ended June 30,
<S>                               <C>                  <C>                  <C>            <C>                 <C>
           2003                   5.99%                2.01%                3.98%          $2,705,844          $107,623

           2002                   7.02%                2.52%                4.50%          $2,315,288          $104,194

-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
---------------------------- ------------------- -------------------- -------------------- -------------- ---------------------
(Dollars in Thousands)
                             Interest Income                         Net Interest Income                     Annualized
                            (FTE) as a Percent   Interest Expense    (FTE) as a Percent                  Net Interest Income
                                of Average         as a Percent          of Average          Average             On a
                              Earning Assets        of Average         Earning Assets        Earning        Fully Taxable
                                                  Earning Assets                             Assets        Equivalent Basis
---------------------------- ------------------- -------------------- -------------------- -------------- ---------------------
For the six months
  Ended June 30,
<S>                               <C>                  <C>                  <C>            <C>                 <C>
           2003                   6.23%                2.06%                4.17%          $2,585,749          $107,765

           2002                   6.96%                2.51%                4.45%          $1,977,412          $88,032

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

</TABLE>

                                                                         Page 25
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
OTHER INCOME

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

         Other income in the second quarter of 2003 exceeded the same quarter in
the prior year by $4,102,000, or 58.2 percent.

Two major areas account for most of the increase:

1.       Gains on sales of mortgage loans included in other income increased by
         $3,101,000 due to increased mortgage volume.  In addition, decreasing
         mortgage loan rates caused an increase in refinancing volume, which
         facilitated an increase in loan sales activity.

2.       A gain on life insurance proceeds included in other income totaled
         $535,000 for the second quarter of 2003 compared to $0 for the same
         period last year. The gain represented the net life insurance proceeds
         received.

         Other income for the first six months of 2003 exceeded the same period
in the prior year by $7,224,000 or 59.1 percent.

Five major areas account for most of the increase:

1.       Gains on sales of mortgage loans included in other income increased by
         $3,752,000 due to increased mortgage volume.  In addition, decreasing
         mortgage loan rates caused an increase in refinancing volume, which
         facilitated an increase in loan sales activity.

2.       Service charges on deposit accounts increased $1,518,000 or 37.9
         percent due to increased number of accounts, price adjustments and
         approximately $948,000 of additional service charge income related to
         April 1, 2002 acquisition of Lafayette.

3.       A gain on life insurance proceeds included in other income was $535,000
         for the first six months of 2003 compared to $0 for the same period
         last year. The gain represented the net insurance proceeds received.

4.       Insurance Commissions increased by $401,000 or 37.8 percent primarily
         as a result of the September 6, 2002 acquisition of Stephenson
         Insurance Services, Inc.

5.       Revenues from fiduciary activities increased $465,000 or 14.9 percent
         due primarily to the additional fees related to the acquisition of
         Lafayette.


                                                                         Page 26
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

OTHER EXPENSES

         Total other expenses represent non-interest operating expenses of the
Corporation. Total other expense during the second quarter of 2003 exceeded the
same period of the prior year by $3,997,000, or 21.1 percent.

Two major areas account for most of the increase:

1.       Salaries and benefit expense grew $2,478,000 or 23.8 percent, due to
         normal salary increases, staff additions and additional salary cost
         related to the March 1, 2003 acquisition of Commerce National Bank.

2.       Net occupancy expenses increased by $233,000 or 24.1 percent primarily
         due to the acquisition of Commerce National Bank.

         Total other expenses during the first six months in 2003 exceeded the
same period of the prior year by $12,434,000, or 38.9 percent.

Six major areas account for most of the increase:

1.       Salaries and benefit expense grew $6,984,000 or 39.5 percent, due to
         normal salary increases, staff additions and additional salary cost
         related to the April 1, 2002 acquisition of Lafayette and the March 1,
         2003 acquisition of Commerce National Bank.

2.       Net occupancy expenses increased by $591,000 or 34.8 percent primarily
         due to the acquisitions of Lafayette and Commerce National Bank.

3.       Equipment expense increased by $892,000 or 30.1 percent primarily due
         to the acquisitions of Lafayette and Commerce National Bank.

4.       Core deposit intangible amortization increased by $766,000, due to
         utilization of the purchase method of accounting for the Corporation
         related to the acquisitions of Lafayette and Commerce National Bank.

5.       The Corporation accrued $460,000 in anticipation of a settlement from a
         claim made against First Merchants Corporation, which is presently
         being negotiated.

6.       Prepayment penalties for early prepayment of FHLB advances increased
         by $340,000 for the first six months of 2003 over the same period in
         2002.
                                                                         Page 27
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

INCOME TAXES

         Income  tax  expense, for  the  six  months  ended  June  30, 2003,
decreased by $943,000 from the same period in 2002.  The effective tax rate was
29.1 and 33.8 percent for the 2003 and 2002 periods.  Most of this decrease is a
result of increases in tax exempt interest income and reduced state taxes,
resulting from the effect of state income apportionment.

OTHER

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


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

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

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

Within the 90 days  prior to the filing  date of this  report,  the  Corporation
carried out an evaluation,  under the supervision and with the  participation of
the  Corporation's  management,  including  the  Corporation's  Chief  Executive
Officer and Chief  Financial  Officer,  of the  effectiveness  of the design and
operation  of  it's  disclosure   controls  and  procedures.   Based  upon  that
evaluation,  the  Corporation's  Chief  Executive  Officer  and Chief  Financial
Officer concluded that the Corporation's  disclosure controls and procedures are
effective.  Disclosure  controls and procedures are controls and procedures that
are designed to ensure that information  required to be disclosed in Corporation
reports  filed  or  submitted  under  the  Securities  Exchange  Act of  1934 is
recorded,  processed,  summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms.

There have been no significant changes in the Corporation's internal controls or
in other factors that could significantly affect internal controls subsequent to
the date the Corporation carried out this evaluation.

                                                                         Page 28
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                           PART II. OTHER INFORMATION

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

         None

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

         a.  None

         b.  None

         c.  None

         d.  None

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

         None

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

         At the April 10th, 2003, Annual Meeting of Shareholders of the
         Corporation, the following matters were submitted to a vote of the
         shareholders.

         Election of Directors - The following directors were elected for a term
         of three years.
<TABLE>
<CAPTION>

                                                              Vote Count
                                         ------------------------------------------------
                                             Vote For       Vote Against   Vote Abstained
                                         ----------------  --------------  --------------
                <S>                       <C>                   <C>         <C>

                Roger M. Arwood             13,063,381           0          103,596
                James F. Ault               13,060,888           0          106,058
                Richard A. Boehning         12,903,566           0          263,381
                Frank A. Bracken            13,058,493           0          108,454
                Barry J. Hudson             13,062,715           0          104,232
                Robert T. Jeffares          13,046,450           0          120,497
</TABLE>

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

         None
                                                                         Page 29

<PAGE>
                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                           PART II. OTHER INFORMATION


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

         a.  Exhibits

             Exhibit No.:       Description of Exhibit:      Form 10-Q Page No.:
             ------------       -------------------------    -------------------
                3(ii)           Bylaws of First Merchants
                                Corporation, as most
                                recently amended on
                                April 10, 2003                      34

                31.1            Certification of Chief
                                Executive Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002                                48

                31.2            Certification of Chief
                                Financial Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002                                49

                32              Certifications Pursuant to
                                18 U.S.C. Section 1350, as
                                Adopted Pursuant to Section
                                906 of the Sarbanes-Oxley
                                Act of 2002                         50


                                                                         Page 30
<PAGE>
                          FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                           PART II. OTHER INFORMATION


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

         b.  Reports on Form 8-K

             A report on Form 8-K, dated April 28, 2003, was filed on
             April 28, 2003 under report item number 9, concerning the
             Press Release announcing first quarter 2003 earnings.

             Under report item number 9, the following exhibit was included in
             this Form 8-K.

             (c) Exhibits.

                      (99)  Press Release, dated April 28, 2003, issued by
                            First Merchants Corporation


                                                                         Page 31

<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  8/14/03                           by /s/ Michael L. Cox
    ---------------------------            -------------------------------------
                                           Michael L. Cox
                                           President and Chief Executive Officer


Date  8/14/03                           by /s/ Mark K. Hardwick
    ---------------------------            -------------------------------------
                                           Mark K. Hardwick
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial and Chief
                                           Accounting Officer)


                                                                         Page 32

<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.:
             ------------       -------------------------    -------------------
                3(ii)           Bylaws of First Merchants
                                Corporation, as most
                                recently amended on
                                April 10, 2003                      34

                31.1            Certification of Chief
                                Executive Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002                                48

                31.2            Certification of Chief
                                Financial Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002                                49

                32              Certifications Pursuant to
                                18 U.S.C. Section 1350, as
                                Adopted Pursuant to Section
                                906 of the Sarbanes-Oxley
                                Act of 2002                         50


                                                                         Page 33
<PAGE>
                                 Exhibit 3(ii)

                                    BYLAWS OF
                           FIRST MERCHANTS CORPORATION


         Following are the Bylaws, as amended, of First Merchants Corporation
(hereinafter referred to as the "Corporation"), a corporation existing pursuant
to the provisions of the Indiana Business Corporation Law, as amended
(hereinafter referred to as the "Act"):

                                    ARTICLE I

         Section 1.        Name.  The name of the Corporation is First Merchants
         ---------         ----
Corporation.

         Section 2.        Principal  Office and Resident Agent. The post office
         ---------         ------------------------------------
address of the principal office of the Corporation is 200 East Jackson Street,
Muncie, Indiana 47305, and the name of its Resident Agent in charge of such
office is Larry R. Helms.

         Section 3. Seal. The seal of the Corporation shall be circular in form
and mounted upon a metal die, suitable for impressing the same upon paper. About
the upper periphery of the seal shall appear the words "First Merchants
Corporation" and about the lower periphery thereof the word "Muncie, Indiana".
In the center of the seal shall appear the word "Seal".

                                   ARTICLE II

         The fiscal year of the Corporation shall begin each year on the first
day of January and end on the last day of December of the same year.

                                   ARTICLE III

                                  Capital Stock

         Section 1. Number of Shares and Classes of Capital Stock. The total
number of shares of capital stock which the Corporation shall have authority to
issue shall be as stated in the Articles of Incorporation.

         Section 2. Consideration for No Par Value Shares. The shares of stock
of the Corporation without par value shall be issued or sold in such manner and
for such amount of consideration as may be fixed from time to time by the Board
of Directors. Upon payment of the consideration fixed by the Board of Directors,
such shares of stock shall be fully paid and nonassessable.

         Section 3. Consideration for Treasury Shares. Treasury shares may be
disposed of by the Corporation for such consideration as may be determined from
time to time by the Board of Directors.


                                                                         Page 34
<PAGE>



         Section 4. Payment for Shares. The consideration for the issuance of
shares of capital stock of the Corporation may be paid, in whole or in part, in
money, in other property, tangible or intangible, or in labor actually performed
for, or services actually rendered to the Corporation; provided, however, that
the part of the surplus of the Corporation which is transferred to stated
capital upon the issuance of shares as a share dividend shall be deemed to be
the consideration for the issuance of such shares. When payment of the
consideration for which a share was authorized to be issued shall have been
received by the Corporation, or when surplus shall have been transferred to
stated capital upon the issuance of a share dividend, such share shall be
declared and taken to be fully paid and not liable to any further call or
assessment, and the holder thereof shall not be liable for any further payments
thereon. In the absence of actual fraud in the transaction, the judgment of the
Board of Directors as to the value of such property, labor or services received
as consideration, or the value placed by the Board of Directors upon the
corporate assets in the event of a share dividend, shall be conclusive.
Promissory notes, uncertified checks, or future services shall not be accepted
in payment or part payment of the capital stock of the Corporation, except as
permitted by the Act.

         Section 5. Certificate for Shares. Each holder of capital stock of the
Corporation shall be entitled to a stock certificate, signed by the President or
a Vice President and the Secretary or any Assistant Secretary of the
Corporation, with the seal of the Corporation thereto affixed, stating the name
of the registered holder, the number of shares represented by such certificate,
the par value of each share of stock or that such shares of stock are without
par value, and that such shares are fully paid and nonassessable. If such shares
are not fully paid, the certificates shall be legibly stamped to indicate the
per cent which has been paid, and as further payments are made, the certificate
shall be stamped accordingly.

         If the Corporation is authorized to issue shares of more than one
class, every certificate shall state the kind and class of shares represented
thereby, and the relative rights, interests, preferences and restrictions of
such class, or a summary thereof; provided, that such statement may be omitted
from the certificate if it shall be set forth upon the face or back of the
certificate that such statement, in full, will be furnished by the Corporation
to any shareholder upon written request and without charge.

         Section 6. Facsimile Signatures. If a certificate is countersigned by
the written signature of a transfer agent other than the Corporation or its
employee, the signatures of the officers of the Corporation may be facsimiles.
If a certificate is countersigned by the written signature of a registrar other
than the Corporation or its employee, the signatures of the transfer agent and
the officers of the Corporation may be facsimiles. In case any officer, transfer
agent, or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer, transfer agent, or registrar at
the date of its issue.

         Section 7. Transfer of Shares. The shares of capital stock of the
Corporation shall be transferable only on the books of the Corporation upon
surrender of the certificate or certificates representing the same, properly
endorsed by the registered holder or by his duly authorized attorney or
accompanied by proper evidence of succession, assignment or authority to
transfer.

                                                                         Page 35
<PAGE>



         Section 8. Cancellation. Every certificate surrendered to the
Corporation for exchange or transfer shall be canceled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so canceled, except in cases provided
for in Section 10 of this Article III.

         Section 9. Transfer Agent and Registrar. The Board of Directors may
appoint a transfer agent and a registrar for each class of capital stock of the
Corporation and may require all certificates representing such shares to bear
the signature of such transfer agent and registrar. Shareholders shall be
responsible for notifying the Corporation or transfer agent and registrar for
the class of stock held by such shareholder in writing of any changes in their
addresses from time to time, and failure so to do shall relieve the Corporation,
its shareholders, Directors, officers, transfer agent and registrar of liability
for failure to direct notices, dividends, or other documents or property to an
address other than the one appearing upon the records of the transfer agent and
registrar of the Corporation.

         Section 10. Lost, Stolen or Destroyed Certificates. The Corporation may
cause a new certificate or certificates to be issued in place of any certificate
or certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Corporation
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or certificates,
or his legal representative, to give the Corporation a bond in such sum and in
such form as it may direct to indemnify against any claim that may be made
against the Corporation with respect to the certificates alleged to have been
lost, stolen or destroyed or the issuance of such new certificate. The
Corporation, in its discretion, may authorize the issuance of such new
certificates without any bond when in its judgment it is proper to do so.

         Section 11. Registered Shareholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of such shares to receive dividends, to vote as such owner, to hold liable
for calls and assessments, and to treat as owner in all other respects, and
shall not be bound to recognize any equitable or other claims to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Indiana.

         Section 12. Options to Officers and Employees. The issuance, including
the consideration, of rights or options to Directors, officers or employees of
the Corporation, and not to the shareholders generally, to purchase from the
Corporation shares of its capital stock shall be approved by the affirmative
vote of the holders of a majority of the shares entitled to vote thereon or
shall be authorized by and consistent with a plan approved by such a vote of the
shareholders.



                                                                         Page 36
<PAGE>

                                   ARTICLE IV

                            Meetings of Shareholders

         Section 1. Place of Meeting. Meetings of shareholders of the
Corporation shall be held at such place, within or without the State of Indiana,
as may from time to time be designated by the Board of Directors, or as may be
specified in the notices or waivers of notice of such meetings.

         Section 2. Annual Meeting. The annual meeting of shareholders for the
election of Directors, and for the transaction of such other business as may
properly come before the meeting, shall be held on the third Tuesday in April of
each year, if such day is not a holiday, and if a holiday, then on the first
following day that is not a holiday, or in lieu of such day may be held on such
other day as the Board of Directors may set by resolution, but not later than
the end of the fifth month following the close of the fiscal year of the
Corporation. Failure to hold the annual meeting at the designated time shall not
work any forfeiture or a dissolution of the Corporation, and shall not affect
otherwise valid corporate acts.

         Section 3. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by the Board of Directors or the
President and shall be called by the President or Secretary at the request in
writing of a majority of the Board of Directors, or at the request in writing of
shareholders holding of record not less than one-fourth (1/4) of all the shares
outstanding and entitled by the Articles of Incorporation to vote on the
business for which the meeting is being called.

         Section 4. Notice of Meetings. A written or printed notice, stating the
place, day and hour of the meeting, and in case of a special meeting, or when
required by any other provision of the Act, or of the Articles of Incorporation,
as now or hereafter amended, or these Bylaws, the purpose or purposes for which
the meeting is called, shall be delivered or mailed by the Secretary, or by the
officers or persons calling the meeting, to each shareholder of record entitled
by the Articles of Incorporation, as now or hereafter amended, and by the Act to
vote at such meeting, at such address as appears upon the records of the
Corporation, at least ten (10) days before the date of the meeting. Notice of
any such meeting may be waived in writing by any shareholder, if the waiver sets
forth in reasonable detail the purpose or purposes for which the meeting is
called, and the time and place thereof. Attendance at any meeting in person, or
by proxy, shall constitute a waiver of notice of such meeting. Each shareholder,
who has in the manner above provided waived notice of a shareholders' meeting,
or who personally attends a shareholders' meeting, or is represented thereat by
a proxy authorized to appear by an instrument of proxy, shall be conclusively
presumed to have been given due notice of such meeting. Notice of any adjourned
meeting of shareholders shall not be required to be given if the time and place
thereof are announced at the meeting at which the adjournment is taken except as
may be expressly required by law.

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<PAGE>



         Section 5. Addresses of Shareholders. The address of any shareholder
appearing upon the records of the Corporation shall be deemed to be the latest
address of such shareholder appearing on the records maintained by the
Corporation or its transfer agent for the class of stock held by such
shareholder.

         Section 6.        Voting at Meetings.

         (a) Quorum. The holders of record of a majority of the issued and
outstanding stock of the Corporation entitled to vote at such meeting, present
in person or by proxy, shall constitute a quorum at all meetings of shareholders
for the transaction of business, except where otherwise provided by law, the
Articles of Incorporation or these Bylaws. In the absence of a quorum, any
officer entitled to preside at, or act as secretary of, such meeting shall have
the power to adjourn the meeting from time to time until a quorum shall be
constituted. At any such adjourned meeting at which a quorum shall be present,
any business may be transacted which might have been transacted at the original
meeting, but only those shareholders entitled to vote at the original meeting
shall be entitled to vote at any adjournment or adjournments thereof unless a
new record date is fixed by the Board of Directors for the adjourned meeting.

         (b) Voting Rights. Except as otherwise provided by law or by the
provisions of the Articles of Incorporation, every shareholder shall have the
right at every shareholders= meeting to one vote for each share of stock having
voting power, registered in his name on the books of the Corporation on the date
for the determination of shareholders entitled to vote, on all matters coming
before the meeting including the election of directors. At any meeting of
shareholders, every shareholder having the right to vote shall be entitled to
vote in person, or by proxy executed in writing by the shareholder or a duly
authorized attorney in fact and bearing a date not more than eleven (11) months
prior to its execution, unless a longer time is expressly provided therein.

         (c) Required Vote. When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of the Act or of the
Articles of Incorporation or by these Bylaws, a greater vote is required, in
which case such express provision shall govern and control the decision of such
question.

         Section 7. Voting List. The Corporation or its transfer agent shall
make, at least five (5) days before each election of directors, a complete list
of the shareholders entitled by the Articles of Incorporation, as now or
hereafter amended, to vote at such election, arranged in alphabetical order,
with the address and number of shares so entitled to vote held by each, which
list shall be on file at the principal office of the Corporation and subject to
inspection by any shareholder. Such list shall be produced and kept open at the
time and place of election and subject to the inspection of any shareholder
during the holding of such election. The original stock register or transfer
book, or a duplicate thereof kept in the State of Indiana, shall be the only
evidence as to who are the shareholders entitled to examine such list or the
stock ledger or transfer book or to vote at any meeting of the shareholders.


                                                                         Page 38
<PAGE>



         Section 8. Fixing of Record Date to Determine Shareholders Entitled to
Vote. The Board of Directors may prescribe a period not exceeding fifty (50)
days prior to meetings of the shareholders, during which no transfer of stock on
the books of the Corporation may be made; or, in lieu of prohibiting the
transfer of stock may fix a day and hour not more than fifty (50) days prior to
the holding of any meeting of shareholders as the time as of which shareholders
entitled to notice of, and to vote at, such meeting shall be determined, and all
persons who are holders of record of voting stock at such time, and no others,
shall be entitled to notice of, and to vote at, such meeting. In the absence of
such a determination, such date shall be ten (10) days prior to the date of such
meeting.

         Section 9. Nominations for Director. Nominations for election to the
Board of Directors may be made by the Board of Directors or by an shareholder of
any outstanding class of capital stock of the Corporation entitled to vote for
the election of directors. Nominations, other than those made by or on behalf of
the existing management of the Corporation, shall be made in writing and shall
be delivered or mailed to the President of the Corporation not less than ten
(10) days nor more than fifty (50) days prior to any meeting of shareholders
called for the election of Directors. Such notification shall contain the
following information to the extent known to the notifying shareholder: (a) the
name and address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the total number of shares of capital stock of the
Corporation that will be voted for each proposed nominee; (d) the name and
residence address of the notifying shareholder; and (e) the number of shares of
capital stock of the Corporation owned by the notifying shareholder. Nominations
not made in accordance herewith may, in his discretion, be disregarded by the
chairman of the meeting, and upon his instructions, the vote tellers may
disregard all votes cast for each such nominee.

                                    ARTICLE V

                               Board of Directors

         Section 1. Election, Number and Term of Office. The number of Directors
of the Corporation to be elected by the holders of the shares of stock entitled
by the Articles of Incorporation to elect Directors shall be sixteen (16) unless
changed by amendment of this Section by a two-thirds (2/3) vote of the Board of
Directors.

         The Directors shall be divided into three (3) classes as nearly equal
in number as possible, all Directors to serve three (3) year terms except as
provided in the third paragraph of this Section. One class shall be elected at
each annual meeting of the shareholders, by the holders of the shares of stock
entitled by the Articles of Incorporation to elect Directors. Unless the number
of Directors is changed by amendment of this Section, Classes I and II shall
each have five (5) Directors, and Class III shall have six (6) Directors. No
decrease in the number of Directors shall have the effect of shortening the term
of any incumbent Director.

         No person shall serve as a Director subsequent to the annual meeting of
shareholders following the end of the calendar year in which such person attains
the age of seventy (70) years. The term of a Director shall expire as of the
annual meeting following which the Director is no longer eligible to serve under
the provisions of this paragraph, even if fewer than three (3) years have
elapsed since the commencement of the Director's term.


                                                                         Page 39
<PAGE>


         Except in the case of earlier resignation, removal or death, all
Directors shall hold office until their respective successors are chosen and
qualified.

         The provisions of this Section of the Bylaws may not be changed or
amended except by a two-thirds (2/3) vote of the Board of Directors.

         Section 2. Vacancies. Any vacancy occurring in the Board of Directors
caused by resignation, death or other incapacity, or an increase in the number
of Directors, shall be filled by a majority vote of the remaining members of the
Board of Directors, until the next annual meeting of the shareholders, or at the
discretion of the Board of Directors, such vacancy may be filled by a vote of
the shareholders at a special meeting called for that purpose.

         Section 3. Annual Meeting of Directors. The Board of Directors shall
meet each year immediately after the annual meeting of the shareholders, at the
place where such meeting of the shareholders has been held either within or
without the State of Indiana, for the purpose of organization, election of
officers, and consideration of any other business that may properly come before
the meeting. No notice of any kind to either old or new members of the Board of
Directors for such annual meeting shall be necessary.

         Section 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times and places, either within or without the State of
Indiana, as may be fixed by the Directors. Such regular meetings of the Board of
Directors may be held without notice or upon such notice as may be fixed by the
Directors.

         Section 5. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the President, or by not less than a
majority of the members of the Board of Directors. Notice of the time and place,
either within or without the State of Indiana, of a special meeting shall be
served upon or telephoned to each Director at least twenty-four (24) hours, or
mailed, telegraphed or cabled to each Director at his usual place of business or
residence at least forty-eight (48) hours, prior to the time of the meeting.
Directors, in lieu of such notice, may sign a written waiver of notice either
before the time of the meeting, at the meeting or after the meeting. Attendance
by a Director in person at any special meeting shall constitute a waiver of
notice.


                                                                         Page 40
<PAGE>



         Section 6. Quorum. A majority of the actual number of Directors elected
and qualified, from time to time, shall be necessary to constitute a quorum for
the transaction of any business except the filling of vacancies, and the act of
a majority of the Directors present at the meeting, at which a quorum is
present, shall be the act of the Board of Directors, unless the act of a greater
number is required by the Act, by the Articles of Incorporation, or by these
Bylaws. A Director, who is present at a meeting of the Board of Directors, at
which action on any corporate matter is taken, shall be conclusively presumed to
have assented to the action taken, unless (a) his dissent shall be affirmatively
stated by him at and before the adjournment of such meeting (in which event the
fact of such dissent shall be entered by the secretary of the meeting in the
minutes of the meeting), or (b) he shall forward such dissent by registered mail
to the Secretary of the Corporation immediately after the adjournment of the
meeting. The right of dissent provided for by either clause (a) or cause (b) of
the immediately preceding sentence shall not be available, in respect of any
matter acted upon at any meeting, to a Director who voted at the meeting in
favor of such matter and did not change his vote prior to the time that the
result of the vote on such matter was announced by the chairman of such meeting.

         A member of the Board of Directors may participate in a meeting of the
Board by means of a conference telephone or similar communications equipment by
which all Directors participating in the meeting can communicate with each
other, and participation by these means constitutes presence in person at the
meeting.

         Section 7. Consent Action by Directors. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if prior to such action a
written consent to such action is signed by all members of the Board of
Directors or such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board of Directors or committee.

         Section 8. Removal. Any or all members of the Board of Directors may be
removed, with or without cause, at a meeting of the shareholders called
expressly for that purpose by the affirmative vote of the holders of not less
than two-thirds (2/3) of the outstanding shares of capital stock then entitled
to vote on the election of Directors, except that if the Board of Directors, by
an affirmative vote of at least two-thirds (2/3) of the entire Board of
Directors, recommends removal of a Director to the shareholders, such removal
may be effected by the affirmative vote of the holders of not less than a
majority of the outstanding shares of capital stock then entitled to vote on the
election of Directors at a meeting of shareholders called expressly for that
purpose.

         The provisions in this Section of the Bylaws may not be changed or
amended except by a two-thirds (2/3) vote of the Board of Directors.

         Section 9. Dividends. The Board of Directors shall have power, subject
to any restrictions contained in the Act or in the Articles of Incorporation and
out of funds legally available therefor, to declare and pay dividends upon the
outstanding capital stock of the Corporation as and when they deem expedient.
Before declaring any dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time in their absolute discretion deem proper for working capital,
or as a reserve or reserves to meet contingencies or for such other purposes as
the Board of Directors may determine, and the Board of Directors may in their
absolute discretion modify or abolish any such reserve in the manner in which it
was created.


                                                                         Page 41
<PAGE>



         Section 10. Fixing of Record Date to Determine Shareholders Entitled to
Receive Corporate Benefits. The Board of Directors may fix a day and hour not
exceeding fifty (50) days preceding the date fixed for payment of any dividend
or for the delivery of evidence of rights, or for the distribution of other
corporate benefits, or for a determination of shareholders for any other
purpose, as a record time for the determination of the shareholders entitled to
receive any such dividend, rights or distribution, and in such case only
shareholders of record at the time so fixed shall be entitled to receive such
dividend, rights or distribution. If no record date is fixed for the
determination of shareholders entitled to receive payment of a dividend, the end
of the day on which the resolution of the Board of Directors declaring such
dividend is adopted shall be the record date for such determination.

         Section 11. Interest of Directors in Contracts. Any contract or other
transaction between the Corporation or any corporation in which this Corporation
owns a majority of the capital stock shall be valid and binding, notwithstanding
that the Directors or officers of this Corporation are identical or that some or
all of the Directors or officers, or both, are also directors or officers of
such other corporation.

         Any contract or other transaction between the Corporation and one or
more of its Directors or members or employees, or between the Corporation and
any firm of which one or more of its Directors are members or employees or in
which they are interested, or between the Corporation and any corporation or
association of which one or more of its Directors are stockholders, members,
directors, officers, or employees or in which they are interested, shall be
valid for all purposes, notwithstanding the presence of such Director or
Directors at the meeting of the Board of Directors of the Corporation which acts
upon, or in reference to, such contract or transaction and notwithstanding his
or their participation in such action, if the fact of such interest shall be
disclosed or known to the Board of Directors and the Board of Directors shall
authorize, approve and ratify such contract or transaction by a vote of a
majority of the Directors present, such interested Director or Directors to be
counted in determining whether a quorum is present, but not to be counted in
calculating the majority of such quorum necessary to carry such vote. This
Section shall not be construed to invalidate any contract or other transaction
which would otherwise be valid under the common and statutory law applicable
thereto.

         Section 12. Committees. The Board of Directors may, by resolution
adopted by a majority of the actual number of Directors elected and qualified,
from time to time, designate from among its members an executive committee and
one or more other committees.


                                                                         Page 42
<PAGE>



         During the intervals between meetings of the Board of Directors, any
executive committee so appointed, unless expressly provided otherwise by law or
these Bylaws, shall have and may exercise all the authority of the Board of
Directors, including, but not limited to, the authority to issue and sell or
approve any contract to issue or sell, securities or shares of the Corporation
or designate the terms of a series or class of securities or shares of the
Corporation. The terms which may be affixed by the executive committee include,
but are not limited to, the price, dividend rate, and provisions of redemption,
a sinking fund, conversion, voting, or preferential rights or other features of
securities or class or series of a class of shares. Such committee may have full
power to adopt a final resolution which sets forth these terms and to authorize
a statement of such terms to be filed with the Secretary of State. However, such
executive committee shall not have the authority to declare dividends or
distributions, amend the Articles of Incorporation or the Bylaws, approve a plan
of merger or consolidation, even if such plan does not require shareholder
approval, reduce earned or capital surplus, authorize or approve the
reacquisition of shares unless pursuant to a general formula or method specified
by the Board of Directors, or recommend to the shareholders a voluntary
dissolution of the Corporation or a revocation thereof.

         The Board of Directors may, in its discretion, constitute and appoint
other committees, in addition to an executive committee, to assist in the
management and control of the affairs of the Corporation, with responsibilities
and powers appropriate to the nature of the several committees and as provided
by the Board of Directors in the resolution of appointment or in subsequent
resolutions and directives. Such committees may include, but are not limited to,
an audit committee and a compensation and human resources committee.

         No member of any committee appointed by the Board of Directors shall
continue to be a member thereof after he ceases to be a Director of the
Corporation. However, where deemed in the best interests of the Corporation, to
facilitate communication and utilize special expertise, directors of the
Corporation's affiliated banks and corporations may be appointed to serve on
such committees, as "affiliate representatives." Such affiliate representatives
may attend and participate fully in meetings of such committees, but they shall
not be entitled to vote on any matter presented to the meeting nor shall they be
counted for the purpose of determining whether a quorum exists. The calling and
holding of meetings of any such committee and its method of procedure shall be
determined by the Board of Directors. To the extent permitted by law, a member
of the Board of Directors, and any affiliate representative, serving on any such
committee shall not be liable for any action taken by such committee if he has
acted in good faith and in a manner he reasonably believes is in the best
interests of the Corporation. A member of a committee may participate in a
meeting of the committee by means of a conference telephone or similar
communications equipment by which all members participating in the meeting can
communicate with each other, and participation by these means constitutes
presence in person at the meeting.

                                   ARTICLE VI

                                    Officers

         Section 1. Principal Officers. The principal officers of the
Corporation shall be a Chairman of the Board, Vice Chairman of the Board, a
President, one (1) or more Vice Presidents, a Treasurer and a Secretary. The
Corporation may also have, at the discretion of the Board of Directors, such
other subordinate officers as may be appointed in accordance with the provisions
of these Bylaws. Any two (2) or more offices may be held by the same person,
except the duties of President and Secretary shall not be performed by the same
person. No person shall be eligible for the office of Chairman of the Board,
Vice Chairman of the Board, or President who is not a Director of the
Corporation.

         Section 2. Election and Term of Office. The principal officers of the
Corporation shall be chosen annually by the Board of Directors at the annual
meeting thereof. Each such officer shall hold office until his successor shall
have been duly chosen and qualified, or until his death, or until he shall
resign, or shall have been removed in the manner hereinafter provided.


                                                                         Page 43
<PAGE>



         Section 3. Removal. Any principal officer may be removed, either with
or without cause, at any time, by resolution adopted at any meeting of the Board
of Directors by a majority of the actual number of Directors elected and
qualified from time to time.

         Section 4. Subordinate Officers. In addition to the principal officers
enumerated in Section 1 of this Article VI, the Corporation may have one or more
Assistant Treasurers, one or more Assistant Secretaries and such other officers,
agents and employees as the Board of Directors may deem necessary, each of whom
shall hold office for such period, may be removed with or without cause, have
such authority, and perform such duties as the President, or the Board of
Directors may from time to time determine. The Board of Directors may delegate
to any principal officer the power to appoint and to remove any such subordinate
officers, agents or employees.

         Section 5. Resignations. Any officer may resign at any time by giving
written notice to the Chairman of the Board of Directors, or to the President,
or to the Secretary. Any such resignation shall take effect upon receipt of such
notice or at any later time specified therein, and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.

         Section 6. Vacancies. Any vacancy in any office for any cause may be
filled for the unexpired portion of the term in the manner prescribed in these
Bylaws for election or appointment to such office for such term.

         Section 7. Chairman of the Board. The Chairman of the Board, who shall
be chosen from among the Directors, shall preside at all meetings of
shareholders and at all meetings of the Board of Directors. He shall perform
such other duties and have such other powers as, from time to time, may be
assigned to him by the Board of Directors.

         Section 8. Vice Chairman of the Board. The Vice Chairman of the Board,
who shall be chosen from among the Directors, shall act in the absence of the
Chairman of the Board. He shall perform such other duties and have such other
powers as, from time to time, may be assigned to him by the Board of Directors.

         Section 9. President. The President, who shall be chosen from among the
Directors, shall be the chief executive officer of the Corporation and as such
shall have general supervision of the affairs of the Corporation, subject to the
control of the Board of Directors. He shall be an ex officio member of all
standing committees. In the absence or disability of the Chairman of the Board
and Vice Chairman of the Board, the President shall preside at all meetings of
shareholders and at all meetings of the Board of Directors. Subject to the
control and direction of the Board of Directors, the President may enter into
any contract or execute and deliver any instrument in the name and on behalf of
the Corporation. In general, he shall perform all duties and have all powers
incident to the office of President, as herein defined, and all such other
duties and powers as, from time to time, may be assigned to him by the Board of
Directors.


                                                                         Page 44
<PAGE>



         Section 10. Vice Presidents. The Vice Presidents in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the President and Executive Vice President, perform the
duties and exercise the powers of the President. They shall perform such other
duties and have such other powers as the President or the Board of Directors may
from time to time assign.

         Section 11. Treasurer. The Treasurer shall have charge and custody of,
and be responsible for, all funds and securities of the Corporation and shall
deposit all such funds in the name of the Corporation in such banks or other
depositories as shall be selected by the Board of Directors. He shall upon
request exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation during business hours at the office of the
Corporation where such books and records shall be kept; shall render upon
request by the Board of Directors a statement of the condition of the finances
of the Corporation at any meeting of the Board of Directors or at the annual
meeting of the shareholders; shall receive, and give receipt for, moneys due and
payable to the Corporation from any source whatsoever; and in general, shall
perform all duties incident to the office of Treasurer and such other duties as
from time to time may be assigned to him by the President or the Board of
Directors. The Treasurer shall give such bond, if any, for the faithful
discharge of his duties as the Board of Directors may require.

         Section 12. Secretary. The Secretary shall keep or cause to be kept in
the books provided for that purpose the minutes of the meetings of the
shareholders and of the Board of Directors; shall duly give and serve all
notices required to be given in accordance with the provisions of these Bylaws
and by the Act; shall be custodian of the records and of the seal of the
Corporation and see that the seal is affixed to all documents, the execution of
which on behalf of the Corporation under its seal is duly authorized in
accordance with the provisions of these Bylaws; and, in general, shall perform
all duties incident to the office of Secretary and such other duties as may,
from time to time, be assigned to him by the President or the Board of
Directors.

         Section 13. Salaries. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors, and the salaries of any
subordinate officers may be fixed by the President.

         Section 14. Voting Corporation's Securities. Unless otherwise ordered
by the Board of Directors, the Chairman of the Board, the President and
Secretary, and each of them, are appointed attorneys and agents of the
Corporation, and shall have full power and authority in the name and on behalf
of the Corporation, to attend, to act, and to vote all stock or other securities
entitled to be voted at any meetings of security holders of corporations, or
associations in which the Corporation may hold securities, in person or by
proxy, as a stockholder or otherwise, and at such meetings shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities, and which as the owner thereof the Corporation might have possessed
and exercised, if present, or to consent in writing to any action by any such
other corporation or association. The Board of Directors by resolution from time
to time may confer like powers upon any other person or persons.


                                                                         Page 45
<PAGE>



                                   ARTICLE VII

                                 Indemnification

         Section 1. Indemnification of Directors, Officers, Employees and
Agents. Every person who is or was a Director, officer, employee or agent of
this Corporation or of any other corporation for which he is or was serving in
any capacity at the request of this Corporation shall be indemnified by this
Corporation against any and all liability and expense that may be incurred by
him in connection with or resulting from or arising out of any claim, action,
suit or proceeding, provided that such person is wholly successful with respect
thereto or acted in good faith in what he reasonably believed to be in or not
opposed to the best interest of this Corporation or such other corporation, as
the case may be, and, in addition, in any criminal action or proceeding in which
he had no reasonable cause to believe that his conduct was unlawful. As used
herein, "claim, action, suit or proceeding" shall include any claim, action,
suit or proceeding (whether brought by or in the right of this Corporation or
such other corporation or otherwise), civil, criminal, administrative or
investigative, whether actual or threatened or in connection with an appeal
relating thereto, in which a Director, officer, employee or agent of this
Corporation may become involved, as a party or otherwise,

         (i)      by reason of his being or having been a Director, officer,
                  employee, or agent of this Corporation or such other
                  corporation or arising out of his status as such or

         (ii)     by reason of any past or future action taken or not taken by
                  him in any such capacity, whether or not he continues to be
                  such at the time such liability or expense is incurred.

The terms "liability" and "expense" shall include, but shall not be limited to,
attorneys' fees and disbursements, amounts of judgments, fines or penalties, and
amounts paid in settlement by or on behalf of a Director, officer, employee, or
agent, but shall not in any event include any liability or expenses on account
of profits realized by him in the purchase or sale of securities of the
Corporation in violation of the law. The termination of any claim, action, suit
or proceeding, by judgment, settlement (whether with or without court approval)
or conviction or upon a plea of guilty or of nolo contendere, or its equivalent,
shall not create a presumption that a Director, officer, employee, or agent did
not meet the standards of conduct set forth in this paragraph.

         Any such Director, officer, employee, or agent who has been wholly
successful with respect to any such claim, action, suit or proceeding shall be
entitled to indemnification as a matter of right. Except as provided in the
preceding sentence, any indemnification hereunder shall be made only if


                                                                         Page 46
<PAGE>



         (i)      the Board of Directors acting by a quorum consisting of
                  Directors who are not parties to or who have been wholly
                  successful with respect to such claim, action, suit or
                  proceeding shall find that the Director, officer, employee, or
                  agent has met the standards of conduct set forth in the
                  preceding paragraph; or

         (ii)     independent legal counsel shall deliver to the Corporation
                  their written opinion that such Director, officer, employee,
                  or agent has met such standards of conduct.

         If several claims, issues or matters of action are involved, any such
person may be entitled to indemnification as to some matters even though he is
not entitled as to other matters.

         The Corporation may advance expenses to or, where appropriate, may at
its expense undertake the defense of any such Director, officer, employee, or
agent upon receipt of an undertaking by or on behalf of such person to repay
such expenses if it should ultimately be determined that he is not entitled to
indemnification hereunder.

         The provisions of this Section shall be applicable to claims, actions,
suits or proceedings made or commenced after the adoption hereof, whether
arising from acts or omissions to act during, before or after the adoption
hereof.

         The rights of indemnification provided hereunder shall be in addition
to any rights to which any person concerned may otherwise be entitled by
contract or as a matter of law and shall inure to the benefit of the heirs,
executors and administrators of any such person.

         The Corporation may purchase and maintain insurance on behalf of any
person who is or was a Director, officer, employee or agent of the Corporation
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation against any liability asserted against
him and incurred by him in any capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Section or otherwise.

                                  ARTICLE VIII

                                   Amendments

         Except as expressly provided herein or in the Articles of
Incorporation, the Board of Directors may make, alter, amend or repeal these
Bylaws by an affirmative vote of a majority of the actual number of Directors
elected and qualified.

                                                                         Page 47
<PAGE>
                                  Exhibit 31.1

                  CERTIFICATION PURSUANT TO SECTION 302 OF THE
                           SARBANES-OXLEY ACT OF 2002


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

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

2.     Based on my knowledge, this quarterly 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)) 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) 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

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

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

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

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

Date: August 14, 2003                   /s/Michael L. Cox
                                        ----------------------------------------
                                           Michael L. Cox
                                           President and Chief Executive Officer

                                                                         Page 48
<PAGE>
                                  Exhibit 31.2

                  CERTIFICATION PURSUANT TO SECTION 302 OF THE
                           SARBANES-OXLEY ACT OF 2002


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

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

2.     Based on my knowledge, this quarterly 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)) 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) 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

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

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

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

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

Date: August 14, 2003                   /s/Mark K. Hardwick
                                        ----------------------------------------
                                           Mark K. Hardwick
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial  and Chief
                                           Accounting Officer)


                                                                         Page 49
<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, 2003 as filed with
the  Securities  and Exchange  Commission on the date hereof (the  "Report"),  I
Michael L. Cox, President and Chief  Executive  Officer of the  Corporation,  do
hereby certify,  in accordance with 18 U.S.C.  Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date  8/14/03                           by /s/ Michael L. Cox
    ---------------------------            -------------------------------------
                                           Michael L. Cox
                                           President and Chief Executive Officer

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



In connection  with the quarterly  report of First  Merchants  Corporation  (the
"Corporation")  on Form 10-Q for the period  ending June 30, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I Mark
K.  Hardwick,   Senior  Vice  President  and  Chief  Financial  Officer  of  the
Corporation,  do hereby certify,  in accordance with 18 U.S.C.  Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date  8/14/03                           by /s/ Mark K. Hardwick
    ---------------------------            -------------------------------------
                                           Mark K. Hardwick
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial and Chief
                                           Accounting Officer)

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

                                                                         Page 50