****Exhibit 10.1**

Named Executive Officer Salary and Bonus Arrangements for
2005**

*Base Salaries*

The base salaries for 2005 for the executive officers (the "named executive
officers") of *MutualFirst* Financial, Inc. (the "Company") and Mutual
Federal Savings Bank who will be named in the compensation table that will
appear in the Company's upcoming 2005 annual meeting proxy statement are as
follows:

|Name and Title                                                                                                | Base Salary
|------------------------------------------------------------------------------------------------------------- | -----------
|David W. HeeterPresident and Chief Executive
President and Chief Executive
Officer of the Company             | $210,000   
|                                                                                                             
|Patrick C. Botts
Executive Vice President of
the Company and President andChief Operating Officer of the Bank | $170,000   
|                                                                                                             
|Timothy J. McArdle
Chief Financial Officer of 
the Company and the Bank                                       | $160,000   
|                                                                                                             
|Steven R. Campbell
Senior Vice President of the Bank                                                          | $149,000   
|                                                                                                             
|Steven C. Selby 
Senior Vice President of the Bank                                                            | $138,500   

*Description of 2005 Bonus Plan*

On February 9, 2005, the Company's Board of Directors approved a cash
incentive bonus plan for 2005 (the "2005 Bonus Plan") for all officers and
employees of the Company and the Bank. Bonuses will be paid under the 2005 Bonus
Plan in early 2006 if and to the extent the Company's performance in 2005 meets
or exceeds minimum levels on certain key performance indicators, including loan
and deposit growth, net interest margin improvement and growth in fee income,
customer retention and number of customer relationships per household, the
ratios of non-performing loans to total assets and net charge-offs to total
assets, and efficiency ratio improvement.

The key performance indicators used to determine whether any bonuses will be
paid under the 2005 Bonus Plan will be the same for all employees. The amounts
of the bonuses under the 2005 Bonus Plan, if earned, will be determined by
multiplying the employee's salary by the employee's payout percentage. While the
payout percentages will vary from employee to employee, they will increase
proportionately for all employees if and to the extent the Company attains a
performance level above the minimum threshold. For the named executive officers,
at the Company's expected performance level under the 2005 Bonus Plan, their
payout percentages will be as follows:

|Name and Title                                                                                                  | Payout Percentageat Expected Performance Level
|--------------------------------------------------------------------------------------------------------------- | ----------------------------------------------
|David W. Heeter
President and Chief Executive
Officer of the Company                                            | 18.0%                                         
|                                                                                                               
|Patrick C. BottsExecutive Vice President of 
the Company and President and 
Chief Operating Officer of the Bank | 16.5%                                         
|                                                                                                               
|Timothy J. McArdleChief Financial Officer of 
the Company and the Bank                                          | 15.0%                                         
|                                                                                                               
|Steven R. Campbell
Senior Vice President of the Bank                                                            | 15.0%                                         
|                                                                                                               
|Steven C. Selby
Senior Vice President of the Bank                                                               | 15.0%                                         

Depending on whether the Company's actual performance is above or below the
expected performance level, these percentages may increase or decrease from the
stated amounts.