FORM 10-Q

                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended March 31, 2004

                                       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 May 6, 2004, there were 18,537,346 outstanding common  shares, without par
value, of the registrant.



<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                                      INDEX

                                                                        Page No.


PART I.  Financial information:

 Item 1.          Financial Statements:

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

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

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

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

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

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

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

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

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

PART II. Other Information:

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

 Item 2.          Changes in Securities, Use of Proceeds and
                  Issuer Purchases of Equity Securities.......................25

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

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

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

 Item 6.          Exhibits and Reports of Form 8-K............................26

 Signatures...................................................................28

 Exhibit Index................................................................29


                                                                          Page 2
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

                                                                     March 31,    December 31,
                                                                       2004           2003
                                                                   ------------   ------------
                                                                    (Unaudited)
  <S>                                                               <C>            <C>
  ASSETS:
  Cash and due from banks .......................................   $    60,366    $    77,112
  Federal funds sold ............................................             0         32,415
                                                                    -----------    -----------
    Cash and cash equivalents ...................................        60,366        109,527
  Interest-bearing deposits......................................        10,674          8,141
  Investment securities available for sale ......................       370,469        348,860
  Investment securities held to maturity ........................         6,505          7,937
  Mortgage loans held for sale...................................         3,883          3,043
  Loans, net of allowance for loan losses of $26,459 and $25,493.     2,293,644      2,328,010
  Premises and equipment ........................................        38,972         39,639
  Federal Reserve and Federal Home Loan Bank Stock...............        21,956         15,502
  Interest receivable ...........................................        15,061         16,840
  Goodwill ......................................................       118,715        118,679
  Core deposit intangibles ......................................        23,152         24,044
  Cash surrender value of life insurance.........................        40,843         37,927
  Other assets ..................................................        20,901         18,663
                                                                    -----------    -----------
      Total assets ..............................................   $ 3,025,141    $ 3,076,812
                                                                    ===========    ===========
  LIABILITIES:
  Deposits:
    Noninterest-bearing .........................................   $   303,694    $   338,201
    Interest-bearing ............................................     2,009,726      2,023,900
                                                                    -----------    -----------
      Total deposits ............................................     2,313,420      2,362,101
  Borrowings ....................................................       372,356        383,170
  Interest payable ..............................................         4,542          4,680
  Other liabilities..............................................        25,676         22,896
                                                                    -----------    -----------
      Total liabilities .........................................     2,715,994      2,772,847

  STOCKHOLDERS' EQUITY:
  Perferred stock, no-par value:
    Authorized and unissued - 500,000 shares ....................
  Common Stock, $.125 stated value:
    Authorized --- 50,000,000 shares ............................
    Issued and outstanding - 18,532,769 and 18,512,834 shares....         2,317          2,314
  Additional paid-in capital ....................................       150,679        150,310
  Retained earnings .............................................       151,771        149,096
  Accumulated other comprehensive income ........................         4,380          2,245
                                                                    -----------    -----------
      Total stockholders' equity ................................       309,147        303,965
                                                                    -----------    -----------
      Total liabilities and stockholders' equity .                  $ 3,025,141    $ 3,076,812
                                                                    ===========    ===========
</TABLE>

  See notes to consolidated condensed financial statements.




                                                                          Page 3
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

                                                                   Three Months Ended
                                                                        March 31,
<S>                                                               <C>          <C>
                                                                    2004        2003
Interest Income:
  Loans receivable
    Taxable ...................................................   $ 34,227    $ 35,173
    Tax exempt ................................................        163         165
  Investment securities
    Taxable ...................................................      1,949       1,679
    Tax exempt ................................................      1,430       1,631
  Federal funds sold ..........................................         18         113
  Deposits with financial institutions ........................        109          22
  Federal Reserve and Federal Home Loan Bank stock ............        328         198
                                                                  --------    --------
    Total interest income .....................................     38,224      38,981
                                                                  --------    --------
Interest expense:
  Deposits ....................................................      8,190       8,884
  Borrowings ..................................................      4,402       4,087
                                                                  --------    --------
    Total interest expense ....................................     12,592      12,971
                                                                  --------    --------
Net Interest Income ...........................................     25,632      26,010
Provision for loan losses .....................................      1,372       4,601
                                                                  --------    --------
Net Interest Income After Provision for Loan Losses ...........     24,260      21,409
                                                                  --------    --------
Other Income:
  Net realized gains on sales of available-for-sale securities.         37         371
  Other income ................................................      8,179       7,915
                                                                  --------    --------
Total other income ............................................      8,216       8,286
Total other expenses ..........................................     22,564      21,441
                                                                  --------    --------
Income before income tax ......................................      9,912       8,254
Income tax expense ............................................      2,977       2,596
                                                                  --------    --------
Net Income ....................................................   $  6,935    $  5,658
                                                                  ========    ========


Per share:(1)

    Basic .....................................................        .37         .32
    Diluted ...................................................        .37         .32
    Dividends .................................................        .23         .22

(1) Prior period per share amounts have been restated for the 5% stock dividend
    paid in September 2003.

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


                           FIRST MERCHANTS CORPORATION

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

<TABLE>
                                                                                   Three Months Ended
                                                                                        March 31
                                                                                 ----------------------
                                                                                    2004         2003
                                                                                 ---------    ---------
<S>                                                                              <C>          <C>
Net Income...................................................................... $  6,735     $  5,658

Other comprehensive income (loss), net of tax:
  Unrealized gains (losses) on securities available for sale:
    Unrealized holding gains (losses) arising during the period, net of
      income tax (expense) benefit of $(1,438), and $117........................    2,157         (175)
    Less:  Reclassification adjustment for gains included
      in net income, net of income tax expense of $15 and $148..................       22          223
                                                                                 ---------    ---------
                                                                                    2,135         (398)
                                                                                 ---------    ---------
Comprehensive income ........................................................... $  8,870     $  5,260
                                                                                 =========    =========

</TABLE>
See notes to consolidated condensed financial statements







                                                                          Page 5
<PAGE>



                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
            CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (Dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                      2004         2003
                                                                   ---------    ---------
<S>                                                                <C>          <C>
Balances, January 1 ............................................   $ 303,965    $ 261,129

Net income .....................................................       6,935        5,658

Cash dividends .................................................      (4,260)      (4,024)

Other comprehensive income (loss), net of tax...................       2,135         (398)

Stock issued under dividend reinvestment and stock purchase plan         342          279

Stock options exercised ........................................          95           25

Stock Redeemed .................................................         (65)

Issuance of stock in acquisitions...............................                   26,839

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

Balances, March 31 .............................................   $ 309,147    $ 289,624
                                                                   =========    =========
</TABLE>
   See notes to consolidated condensed financial statements
                                                                          Page 6
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

                                                                                             Three Months Ended
                                                                                                  March 31,
                                                                                      ------------------------------------
                                                                                            2004                2003
                                                                                      ----------------    ----------------
<S>                                                                                   <C>                 <C>
Cash Flows From Operating Activities:
  Net income........................................................................  $         6,935     $         5,658
  Adjustments to reconcile net income to net cash provided by operating activities
    Provision for loan losses.......................................................            1,372               4,601
    Depreciation and amortization...................................................            1,288               1,084
    Mortgage loans originated for sale..............................................          (25,054)            (58,705)
    Proceeds from sales of mortgage loans...........................................           24,214              66,692
    Change in interest receivable...................................................            1,779               1,419
    Change in interest payable......................................................             (138)               (681)
    Other adjustments...............................................................             (141)              5,895
                                                                                      ----------------    ----------------
      Net cash provided by operating activities.....................................           10,255              25,963
                                                                                      ----------------    ----------------


Cash Flows From Investing Activities:
  Net change in interest-bearing deposits...........................................           (2,533)             (1,602)
  Purchases of
    Securities available for sale...................................................          (41,837)            (65,037)
  Proceeds from maturities of
    Securities available for sale...................................................           19,314              56,845
    Securities held to maturity.....................................................                                  425
  Proceeds from sales of
    Securities available for sale...................................................            4,728              25,779
  Purchase of Federal Reserve and
    Federal Home Loan Bank Stock....................................................           (6,454)
  Net change in loans...............................................................           32,994              14,616
  Other adjustments.................................................................             (624)                (69)
  Net cash paid in acquisition......................................................                               (7,793)
                                                                                      ----------------    ----------------
      Net cash provided by investing activities.....................................            5,588              23,164
                                                                                      ----------------    ----------------

Cash Flows From Financing Activities:
  Net change in
    Demand and savings deposits.....................................................          (37,002)            (20,515)
    Certificates of deposit and other time deposits.................................          (11,680)             (1,039)
    Borrowings......................................................................          (12,434)             (6,294)
  Cash dividends....................................................................           (4,260)             (4,024)
  Stock issued under dividend reinvestment and stock purchase plan..................              342                 280
  Stock options exercised...........................................................               95                  25
  Stock redeemed....................................................................              (65)
  Cash paid in lieu of fractional shares............................................                                  116
                                                                                      ----------------    ----------------
      Net cash used by financing activities.........................................          (65,004)            (31,451)
                                                                                      ----------------    ----------------
Net Change in Cash and Cash Equivalents.............................................          (49,161)             17,676
Cash and Cash Equivalents, January 1................................................          109,527             119,038
                                                                                      ----------------    ----------------
Cash and Cash Equivalents, March 31.................................................  $        60,366     $       136,714
                                                                                      ================    ================

</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,
2003 has  been  derived  from  the  audited  consolidated  balance  sheet of the
Corporation as of that date. Certain  information and note disclosures  normally
included in the Corporation's annual financial statements prepared in accordance
with accounting  principles  generally  accepted in the United States of America
have  been  condensed  or  omitted.   These  consolidated   condensed  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and notes  thereto  included in the  Corporation's  Form 10-K annual
report filed with the Securities and Exchange Commission.

The results of  operations  for the three month  period ended March 31, 2004 are
not necessarily indicative of the results to be expected for the year.

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

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

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                         March 31,
                                                                     2004         2003
                                                                -------------------------
<S>                                                             <C>           <C>
Net income, as reported .....................................   $    6,935    $    5,658
Add:  Total stock-based employee compensation
   cost included in reported net income, net
   of income taxes...........................................                          6

Less:  Total stock-based employee compensation
   cost determined under the fair value based
   method, net of income taxes ..............................         (230)         (246)
                                                                ----------    ----------
Pro forma net income ........................................   $    6,705    $    5,418
                                                                ==========    ==========

Earnings per share:
   Basic - as reported ......................................   $      .37    $      .32
   Basic - pro forma ........................................          .36           .31
   Diluted - as reported ....................................          .37           .32
   Diluted - pro forma ......................................          .36           .31
</TABLE>

                                                                          Page 8

<PAGE>

                           FIRST MERCHANTS CORPORATION

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

NOTE 1.  General (continued)

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

<TABLE>

NOTE 2.  Investment Securities
                                                    Gross       Gross
                                       Amortized  Unrealized  Unrealized    Fair
                                          Cost       Gains      Losses     Value
<S>                                    <C>         <C>        <C>        <C>

Available for sale at March 31, 2004
  U.S. Treasury ....................   $  1,498   $                     $  1,498
  Federal agencies..................     34,378        672   $     (3)    35,047
  State and municipal ..............    114,302      8,271        (40)   122,533
  Mortgage-backed securities .......    187,392      1,489       (772)   188,109
  Other asset-backed securities.....        643                              643
  Corporate obligations.............        500         10                   510
  Marketable equity securities......     22,124          5                22,129
                                       --------   --------   --------   --------
      Total available for sale .....    360,837     10,447       (815)   370,469
                                       --------   --------   --------   --------


Held to maturity at March 31, 2004
  State and municipal...............      6,436        418                 6,854
  Mortgage-backed securities........         69                               69
                                       --------   --------   --------   --------
      Total held to maturity .......      6,505        418                 6,923
                                       --------   --------   --------   --------
      Total investment securities ..   $367,342   $ 10,865   $   (815)  $377,392
                                       ========   ========   ========   ========


</TABLE>

                                                                         Page 9
<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, 2003
   U.S. Treasury .......................   $  1,498                          $  1,498
   Federal agencies ....................     38,290    $    523   $    (52)    38,761
   State and municipal .................    118,794       6,932        (86)   125,640
   Mortgage-backed securities ..........    174,208         813     (1,817)   173,204
   Corporate obligations ...............        500          16                   516
   Marketable equity securities ........      9,237           4                 9,241
                                           --------    --------   --------   --------
      Total available for sale .........    342,527       8,288     (1,955)   348,860
                                           --------    --------   --------   --------

Held to maturity at December 31, 2003
   State and municipal .................      7,860         389                 8,249
   Mortgage-backed securities ..........         77                                77
                                           --------    --------   --------   --------
      Total held to maturity ...........      7,937         389                 8,326
                                           --------    --------   --------   --------
      Total investment securities ......   $350,464    $  8,677   $ (1,955)  $357,186
                                           ========    ========   ========   ========


</TABLE>

                                                                         Page 10
<PAGE>



                           FIRST MERCHANTS CORPORATION

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

NOTE 3.  Loans and Allowance
<TABLE>
                                                                                      March 31,   December 31,
                                                                                        2004         2003
                                                                                        ----         ----
<S>                                                                                <C>            <C>
Loans:
  Commercial and industrial loans ..............................................   $   439,019    $   443,140
  Agricultural production financing and other loans to farmers .................        89,055         95,048
  Real estate loans:
    Construction ...............................................................       144,622        149,865
    Commercial and farmland ....................................................       574,504        564,578
    Residential ................................................................       847,554        866,477
  Individuals' loans for household and other personal expenditures .............       197,188        196,093
  Tax-exempt loans .............................................................         7,348         16,363
  Other loans ..................................................................        20,813         21,939
                                                                                   -----------    -----------
                                                                                     2,320,103      2,353,503
  Allowance for loan losses.....................................................       (26,459)       (25,493)
                                                                                   -----------    -----------
      Total Loans...............................................................   $ 2,293,644    $ 2,328,010
                                                                                   ===========    ===========

                                                                                      Three Months Ended
                                                                                            March 31,

                                                                                       2004           2003
                                                                                   -----------    -----------
Allowance for loan losses:
  Balances, January 1 ..........................................................   $    25,493    $    22,417

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

  Provision for losses .........................................................         1,372          4,601

  Recoveries on loans ..........................................................           297            496

  Loans charged off ............................................................          (703)        (1,508)
                                                                                   -----------    -----------
  Balances, March 31............................................................   $    26,459    $    29,733
                                                                                   ===========    ===========
</TABLE>

Information on nonaccruing, contractually
past due 90 days or more other than
nonaccruing and restructured loans is                March 31,     December 31,
summarized below:                                      2004            2003
================================================================================
As of:
Non-accrual loans................................    $ 19,914       $ 19,453

Loans contractually past due 90 days
  or more other than nonaccruing.................       4,770          6,530

Restructured loans...............................         957            641
                                                     --------       --------
    Total........................................    $ 25,641       $ 26,624
                                                     ========       ========

                                                                         Page 11
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

NOTE 4.  Net Income Per Share
<TABLE>

                                                                      Three Months Ended March 31,
                                                           2004                                           2003
                                        -------------------------------------------    --------------------------------------------
                                                        Weighted-                                      Weighted-
                                                         Average        Per Share                       Average        Per Share
                                         Income           Shares         Amount         Income           Shares         Amount
                                         ------           ------         ------         ------           ------         ------
<S>                                      <C>            <C>             <C>             <C>            <C>             <C>
Basic net income per share:
  Net income available to
    common stockholders................. $    6,935        18,518,282    $     .37      $    5,658        17,565,405    $     .32
                                                                         ==========                                     ==========
Effect of dilutive stock options........                      127,289                                        110,228
                                         ----------       ------------                  ----------       ------------
Diluted net income per share:
  Net income available to
    common stockholders
    and assumed conversions............. $    6,935        18,645,571    $     .37      $    5,658        17,675,633    $     .32
                                         ==========       ============   ==========     ==========       ============   ==========

</TABLE>
Options to purchase  234,285 and 239,235  share for the three months ended March
31,  2004 and 2003 were not  included  in the  earnings  per  share  calculation
because the exercise price exceded the average market price.


                                                                         Page 12
<PAGE>

                           FIRST MERCHANTS CORPORATION

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

Note 5.  Defined Benefit Pension Costs

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

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

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                    March 31,
                                                                2004         2003
                                                           -------------------------
Pension Cost
------------
<S>                                                        <C>           <C>
Service cost............................................   $      550    $      392

Interest cost ..........................................          698           654

Expected return on plan assets .........................         (660)         (630)

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

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

Amortization of the net loss............................           88            65
                                                           ----------    ----------
      Total Pension Cost................................   $      672    $      477
                                                           ==========    ==========

</TABLE>

                                                                        Page 13
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

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

FORWARD-LOOKING STATEMENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                                                         Page 14
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

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

CRITICAL ACCOUNTING POLICIES

      Generally  accepted   accounting   principles   are  complex  and  require
management to apply significant  judgments to various accounting,  reporting and
disclosure  matters.  Management of the  Corporation  must use  assumptions  and
estimates to apply these principles where actual  measurement is not possible or
practical. For a complete discussion of the Corporation's significant accounting
policies,   see  "Notes  to  the  Consolidated   Financial  Statements"  in  the
Corporation's  2003 Annual  Report.  Certain  policies are  considered  critical
because  they  are  highly  dependent  upon  subjective  or  complex  judgments,
assumptions  and  estimates.  Changes in such  estimates  may have a significant
impact on the financial  statements.  Management has reviewed the application of
these policies with the Audit Committee of the Corporation's Board of Directors.
For a  discussion  of  applying  critical  accounting  policies,  see  "Critical
Accounting  Policies"  beginning  on  page 4 in the  Corporation's  2003  Annual
Report.


RESULTS OF OPERATIONS

        Net  income  for  the  three   months   ended   March 31, 2004,  equaled
$6,935,000,  compared to $5,658,000 in the same period of 2003. Diluted earnings
per share were $.37,  an increase of 15.6 percent from the $.32 reported for the
first quarter 2003.

        Annualized  returns  on  average assets and average stockholders' equity
for the three  months  ended March 31,  2004 were .91 percent and 9.05  percent,
respectively,  compared with .83 percent and 8.29 percent for the same period of
2003.

        The increases in diluted earning per share, return on equity and return
on assets are primarily due to decreased  provision for loans losses and a first
quarter 2004 increase in net interest margin,  as compared to the fourth quarter
margin  of  2003.  For  further  analysis,   see  the  respective   sections  of
Management's  Discussion  and  Analysis of Financial  Conditions  and Results of
Operations.


                                                                         Page 15
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

CAPITAL

         The Corporation's  regulatory  capital continues  to exceed  regulatory
"well  capitalized"  standards.  Tier I regulatory capital consists primarily of
total stockholders' equity and trust-preferred  securities,  less non-qualifying
intangible assets and unrealized net securities gains. The Corporation's  Tier I
capital  to  average  assets  ratio was 7.5  percent  at March 31,  2004 and 7.4
percent at year end 2003. In addition,  at March 31, 2004, the Corporation had a
Tier I  risk-based  capital  ratio of 9.6 percent and total  risk-based  capital
ratio of 11.9 percent. Regulatory capital guidelines require a Tier I risk-based
capital  ratio  of 4.0  percent  and a total  risk-based  capital  ratio  of 8.0
percent.

         The  Corporation's  GAAP  capital ratio, defined as total stockholders'
equity  to  total  assets,  equaled  10.2 percent  as of March 31, 2004, up from
9.9  percent in  2003.  When  the Corporation  acquires  other  companies,  GAAP
capital increases by the entire amount  of  the purchase  price.

         The   Corporation's   tangible   capital   ratio,   defined   as  total
stockholders'  equity  less  intangibles   net  of  tax  to  total  assets  less
intangibles  net of  tax, equaled 6.1 percent as of March 31, 2004, up  from 5.8
percent in 2003.

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

                                               March 31,    December 31,
(Dollars in Thousands)                           2004           2003

Average Goodwill ..........................  $   112,281    $   107,232
Average Core Deposit Intangible (CDI) .....       23,423         24,393
Average Deferred Tax on CDI ...............       (8,562)        (8,951)
                                             -----------    -----------
  Intangible Adjustment ...................  $   127,142    $   122,674
                                             ===========    ===========

Average Stockholders' Equity (GAAP Capital)  $   306,592    $   293,603
Intangible Adjustment .....................     (127,142)      (122,674)
                                             -----------    -----------
  Average Tangible Capital ................  $   179,450    $   170,929
                                             ===========    ===========

Average Assets ............................  $ 3,041,837    $ 2,960,195
Intangible Adjustment .....................     (127,142)      (122,674)
                                             -----------    -----------
  Average Tangible Assets .................  $ 2,914,695    $ 2,837,521
                                             ===========    ===========

Net Income ................................  $     6,935    $    27,571
CDI Amortization, net of tax ..............          567          2,341
                                             -----------    -----------
  Tangible Net Income .....................  $     7,502    $    29,912
                                             ===========    ===========

Diluted Earnings per Share ................  $      0.37    $      1.50
Diluted Tangible Earnings per Share .......  $      0.40    $      1.63

Return on Average GAAP Capital ............         9.05%          9.39%
Return on Average Tangible Capital ........        16.72%         17.50%

Return on Average Assets ..................         0.91%          0.93%
Return on Average Tangible Assets .........         1.03%          1.05%


                                                                         Page 16
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q


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  primarily  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.

         At  March  31,  2004,  non-performing  loans   totaled  $25,641,000,  a
decrease  during the period of $983,000  from December 31, 2003, as noted in the
table on the following page.

         At March 31, 2004, impaired loans totaled $46,230,000,  an increase  of
$1,458,000  from  December 31, 2003.  At March 31, 2004, an allowance for losses
was not  deemed  necessary  for  impaired  loans  totaling  $33,084,000,  but an
allowance of $6,442,000 was recorded for the remaining balance of impaired loans
of $13,146,000 and is included in the  Corporation's  allowance for loan losses.
The average  balance  of impaired  loans for  the first three months of 2004 was
$41,191,000.

         At December 31, 2003, impaired loans totaled $44,772,000.  An allowance
for losses was not deemed necessary for impaired loans totaling $32,047,000, but
an allowance of $5,728,000  was recorded for the  remaining  balance of impaired
loans of  $12,725,000  and is included in the  Corporation's  allowance for loan
losses. The average balance of impaired loans for 2003 was $50,245,000.

         At March 31, 2004, the allowance for loan losses  was  $26,459,000,  an
increase of $966,000  from year end 2003.  As a percent of loans,  the allowance
was 1.14  percent at March 31, 2004  compared  with 1.08 percent at December 31,
2003.

      The  provision for  loan  losses  for  the  first three months of 2004 was
$1,372,000,  a decrease of  $3,229,000  from  $4,601,000  for the same period in
2003.  The  Corporation's   provision  for  loan  losses  reflects  reduced  net
chargeoffs and non-performing  loans,  resulting in decreased provision expense.
Current declines in the amount of non-performing loans and average impaired loan
balances  indicate that loan asset quality has improved during the first quarter
of 2004.
                                                                         Page 17

<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
LIQUIDITY

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

      The  liquidity  of  the  Corporation  is  dependent  upon  the  receipt of
dividends from its bank  subsidiaries,  which are subject to certain  regulatory
limitations and access to other funding sources.  Liquidity of the Corporation's
bank  subsidiaries  is derived  primarily  from core deposit  growth,  principal
payments received on loans, the sale and maturity of investment securities,  net
cash provided by operating activities,  and access to other funding sources. The
most stable  source of  liability-funded  liquidity  for both the  long-term and
short-term  is  deposit  growth  and  retention  in the core  deposit  base.  In
addition,  the  Corporation  utilizes  advances  from the Federal Home Loan Bank
("FHLB")  and a revolving  line of credit with LaSalle  Bank,  N.A. as a funding
source. At March 31, 2004, total borrowings from the FHLB were $226,132,000. The
Corporation's  bank subsidiaries have pledged certain mortgage loans and certain
investments to the FHLB. The total available  remaining  borrowing capacity from
the  FHLB  at  March  31,  2004,  was  $182,716,000.  At  March  31,  2004,  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  $370,469,000  at  March  31,  2004,  an  increase  of
$21,609,000   or  6.2%  over  December  31,  2003.   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  $860,000 at March 31,  2004.  In addition,
other types of assets such as cash and due from  banks,  federal  funds sold and
securities  purchased under agreements to resell, and loans and interest-bearing
deposits with other banks maturing within one year are sources of liquidity.

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

     The  Corporation  provides  customers with off-balance sheet credit support
through   loan   commitments   and   standby   letters  of  credit.   Summarized
credit-related financial instruments at March 31, 2004 are as follows:

                                                                  At March 31,
(Dollars in thousands)                                                2004
================================================================================
Amounts of commitments:
Loan commitments to extend credit ............................... $  537,001
Standby letters of credit .......................................     27,736
                                                                  ----------
                                                                  $  564,737
                                                                  ==========

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

     In addition to owned banking facilities, the Corporation has entered into a
number of long-term  leasing  arrangements to support the ongoing  activities of
the Corporation. The required payments under such commitments and long-term debt
at March 31, 2004 are as follows:
<TABLE>
<CAPTION>
                                2004       2005       2006       2007       2008      2009       Total
(Dollars in thousands)       remaining                                              and after
=======================================================================================================
<S>                          <C>        <C>        <C>        <C>        <C>        <C>        <C>
Operating leases .........   $  1,153   $  1,443   $  1,327   $  1,112   $    916   $  3,255   $  9,206
Long-term debt ...........     76,662     24,500     25,882     18,995     51,464    173,497    371,000
                             --------   --------   --------   --------   --------   --------   --------
Total ....................   $ 77,815   $ 25,943   $ 27,209   $ 20,107   $ 52,380   $176,752   $380,206
                             ========   ========   ========   ========   ========   ========   ========
</TABLE>
                                                                         Page 18
<PAGE>
                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK

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

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

         Management  believes  that  the  Corporation's  liquidity  and interest
sensitivity  position  at  March  31 ,  2004,  remained  adequate  to  meet  the
Corporation's  primary goal of achieving optimum interest margins while avoiding
undue interest rate risk.

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

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

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

                                                                         Page 19
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

The comparative  rising and falling  scenarios for the period ended December 31,
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 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, 2004 are as follows:

Driver Rates                      RISING              FALLING
================================================================================
Prime                             200 Basis Points    (200) Basis Points
Federal Funds                     200                 (100)
One-Year T-Bill                   200                 (138)
Two-Year T-Bill                   200                 (194)
Interest Checking                 100                 (14)
MMIA Savings                      100                 (24)
First Flex                        100                 (24)
CD's                              200                 (59)
FHLB Advances                     200                 (117)

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

                                              BASE     RISING     FALLING
===============================================================================
Net Interest Income (dollars in thousands)  $100,873  $102,792   $ 87,217

Variance from base                                    $  1,919   $(13,655)

Percent of change from base                               1.90%    (13.54)%

                                                                         Page 20
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

EARNING ASSETS

         The  following  table presents  the earning  asset mix  as of March 31,
2004, and December 31, 2003.

         Loans decreased approximately $32.7 million from  December 31, 2003  to
March 31, 2004,  while investment  securities  increased by $20.2 million during
the same period.

<TABLE>

----------------------------------------------------------------------------------------------------
EARNING ASSETS
(Dollars in Millions)                                            March 31,            December 31,
                                                                   2004                   2003
---------------------------------------------------------------------------------------------------
<S>                                                            <C>                     <C>
Federal funds sold and interest-bearing deposits               $    10.7               $     40.6

Investment securities available for sale .......                   370.5                    348.9

Investment securities held to maturity .........                     6.5                      7.9

Mortgage loans held for sale ...................                     3.8                      3.0

Loans ..........................................                 2,320.1                  2,353.6

Federal Reserve and Federal Home Loan Bank stock                    22.0                     15.5
                                                               ----------              ----------

                     Total .....................               $ 2,733.6               $  2,769.5
                                                               ==========              ==========

</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,  subordinated  debentures  and other  borrowed
funds)at March 31, 2004, and December 31, 2003.

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

(Dollars in Millions)                                March 31,         December 31,
                                                       2003                2003
                                                    ----------         ------------
<S>                                                 <C>                 <C>
Deposits ........................................   $  2,313.4          $  2,362.1
Securities sold under repurchase agreements......         42.0                71.1
Federal funds purchased
   and U.S. Treasury demand notes................          3.3
Federal Home Loan Bank advances .................        226.1               212.8
Subordinated debentures, revolving credit lines
   and term loans................................         99.6                97.8
Other borrowed funds ............................          1.4                 1.5

</TABLE>

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

                                                                         Page 21
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

NET INTEREST INCOME

         Net  Interest  Income  is  the  primary  source  of  the  Corporation's
earnings.  It is a  function  of net  interest  margin  and the level of average
earning  assets.  The table  below  presents  the  Corporation's  asset  yields,
interest expense, and net interest income as a percent of average earning assets
for the three months ended March 31, 2004 and 2003.

         Annualized  net interest income (FTE) for the  three months ended March
31, 2004 decreased by $2.2 million, or 2.0 percent over the same period in 2003.
For the same  period  interest  income  and  interest  expense,  as a percent of
average  earning  assets,   decreased  78  basis  points  and  27  basis  points
respectively.  This resulted in a 51 basis point decline in net interest income,
as a percent of average  earning  assets,  from the first quarter 2003 margin of
4.38 percent.  Federal  Reserve Bank rate reductions  during 2003  significantly
contributed  to  this  margin  compression;  however,  management's  ability  to
favorably  reprice  deposit  interest costs caused the first quarter of 2004 net
interest  margin of 3.87 percent to increase 9 basis points,  as compared to the
fourth quarter 2003 net interest margin of 3.78 percent.

<TABLE>
                                                            Three Months Ended
                                                                 March 31,
<S>                                                     <C>           <C>
(Dollars in Thousands)                                      2004          2003

Annualized Net Interest Income........................  $  102,528    $  104,040

Annualized FTE Adjustment.............................  $    3,433    $    4,096

Annualized Net Interest Income
  On a Fully Taxable Equivalent Basis.................  $  105,961    $  108,136

Average Earning Assets................................  $2,739,297    $2,464,319

Interest Income (FTE) as a Percent
  of Average Earning Assets...........................        5.71%         6.49%

Interest Expense as a Percent
  of Average Earning Assets...........................        1.84%         2.11%

Net Interest Income (FTE) as a Percent
  of Average Earning Assets...........................        3.87%         4.38%


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

</TABLE>

                                                                         Page 22
<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q
OTHER INCOME

         Other income in  the first  quarter of 2004  was $70,000  or .8 percent
lower than the same quarter of 2003.  There were no significant  fluctuations of
specific  income areas in comparing the first quarter of 2004 to the same period
in 2003.

OTHER EXPENSES

         Total other expenses represent  non-interest operating  expenses of the
Corporation.  Total other expenses during the first quarter of 2004 exceeded the
same period of the prior year by $1,123,000, or 5.2 percent.

Two areas account for most of the increase:

1.       Salaries and benefit expense grew $1,247,000 or 10.6 percent, due to
         normal salary increases, staff additions and additional salary cost
         related to the March 1, 2003 acquisition of Commerce National Bank.

2.       Prepayment penalties for early prepayment of FHLB advances were
         $340,000 for the first quarter of 2003.  There were no such penalties
         incurred during the first quarter of 2004.
                                                                         Page 23
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

INCOME TAXES

         Income  tax  expense,  for  the  three  months  ended  March  31, 2004,
increased by $381,000 from the same period in 2003. The  effective  tax rate was
30.0 and 31.5 percent for the 2004 and 2003 periods.

OTHER

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


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

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

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

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

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

                                                                         Page 24
<PAGE>


                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                           PART II. OTHER INFORMATION

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

         None

Item 2.  Changes in Securities, Use of Proceeds and
         Issuer Purchases of Equity Securities
---------------------------------------------------

         a.  None

         b.  None

         c.  None

         d.  None

         e.  Issuer Purchases of Equity Securities

The following table presents information related to repurchases of common stock
the Corporation made during the three months ended March 31, 2004.
<TABLE>
<CAPTION>

Issuer Purchases of Equity Securities
-------------------------------------

                                                                                              Maximum Number of Shares
                                                                         Total Number of           that May Yet
                               Total Number of    Average Price Paid     Shares Purchased       Be Purchased Under
Period                        Shares Purchased        per share         Under the Program           the Programs
----------------------------------------------------------------------------------------------------------------------
<S>                           <C>                 <C>                   <C>                   <C>

January 1-31, 2004 (1)               -                    -                     -                       -
February 1-10, 2004 (1)              -                    -                     -                       -
February 11-29, 2004 (2)             -                    -                     -                    250,000
March 1-31, 2004 (2)                 -                    -                     -                    250,000
----------------------------------------------------------------------------------------------------------------------
Total                                -                    -                     -                    250,000
</TABLE>

(1)  In February 2003, the Board of Directors of the Corporation authorized
     management to repurchase up to 250,000 shares of its common stock on the
     open market through February 10, 2004.  The price and timing of the common
     stock repurchases were to be within the discretion of management.  There
     were no shares repurchased under this program.

(2)  In February 2004, the Board of Directors of the Corporation authorized
     management to repurchase up to 250,000 shares of its common stock on the
     open market through February 8, 2005.  The price and timing of the common
     stock repurchases shall be within the discretion of management.  As of
     March 31, 2004, there have been no shares repurchased under this program.

In March 2004, the  Corporation  redeemed common shares from employees or former
employees to  facilitate  the exercise of stock  options  outstanding  under the
Corporation's stock option plans.  The number of shares purchased  totaled 2,511
shares, and the average price paid per share was $25.79.

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

         None

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

         None

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

         a.  None

         b.  None
                                                                         Page 25

<PAGE>

                           FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                           PART II. OTHER INFORMATION


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

         a.  Exhibits

             Exhibit No.:       Description of Exhibit:      Form 10-Q Page No.:
             ------------       -------------------------    -------------------
                31.1            Certification of Chief               30
                                Executive Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

                31.2            Certification of Chief               31
                                Financial Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

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


                                                                         Page 26
<PAGE>
                          FIRST MERCHANTS CORPORATION

                                    FORM 10-Q

                           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 January 21, 2004, was filed on
             January 21, 2004 under report items number 9 and 7, concerning the
             Press Release announcing fourth quarter 2003 earnings.

             Under report item number 7, the following exhibit was included in
             this Form 8-K.

             (c) Exhibit

                      (99)  Press Release, dated January 21, 2004, issued by
                            First Merchants Corporation

             A report on Form 8-K, dated February 13, 2004, was filed on
             February 13, 2004 under report item number 5, concerning the
             Corporation's declaration of a cash dividend on its shares of
             common stock to be paid on March 19, 2004.  The dividend was
             payable to shareholders of record on March 5, 2004.

             Under report item number 7, the following exhibit was included in
             the Form 8-K.

             (c) Exhibit

                      (99)  Press release dated February 13, 2004.

             A report on Form 8-K, dated March 5, 2004 was filed on March 5,
             2004 under report item 9, concerning the Corporation's mailing of
             its 2003 Annual Report to Shareholders to its shareholders of
             record on February 13, 2004.

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

             (c) Exhibit

                      (99)  2003 Annual Report to Shareholders (Furnished
                            pursuant to Regulation FD)


                                                                         Page 27

<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    5/10/04                         by /s/ Michael L. Cox
    ---------------------------            -------------------------------------
                                           Michael L. Cox
                                           President and Chief Executive Officer


Date    5/10/04                         by /s/ Mark K. Hardwick
    ---------------------------            -------------------------------------
                                           Mark K. Hardwick
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial and Chief
                                           Accounting Officer)


                                                                         Page 28

<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.:
             ------------       -------------------------    -------------------
                31.1            Certification of Chief               30
                                Executive Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

                31.2            Certification of Chief               31
                                Financial Officer Pursuant
                                to Section 302 of the
                                Sarbanes - Oxley Act of
                                2002

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


                                                                         Page 29
<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:  May 10, 2004                     /s/Michael L. Cox
                                        ----------------------------------------
                                           Michael L. Cox
                                           President and Chief Executive Officer

                                                                         Page 30
<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:  May 10, 2004                     /s/Mark K. Hardwick
                                        ----------------------------------------
                                           Mark K. Hardwick
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial  and Chief
                                           Accounting Officer)


                                                                         Page 31
<PAGE>

                                   Exhibit 32

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

In connection  with the quarterly  report of First  Merchants  Corporation  (the
"Corporation")  on Form 10-Q for the period  ending March 31, 2004 as filed with
the  Securities  and Exchange  Commission on the date hereof (the  "Report"),  I
Michael L. Cox,  President and Chief Executive  Officer of the  Corporation,  do
hereby certify,  in accordance with 18 U.S.C.  Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date  May 10, 2004                      by /s/ Michael L. Cox
    ---------------------------            -------------------------------------
                                           Michael L. Cox
                                           President and Chief Executive Officer

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



In connection  with the quarterly  report of First  Merchants  Corporation  (the
"Corporation")  on Form 10-Q for the period  ending March 31, 2004 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I Mark
K.  Hardwick,   Senior  Vice  President  and  Chief  Financial  Officer  of  the
Corporation,  do hereby certify,  in accordance with 18 U.S.C.  Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date  May 10, 2004                      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 32