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**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.  20549**

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****FORM 10-K/A****
| [X]            | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934     |
|----------------|------------------------------------------------------------------------------------------|
|                | For the fiscal year ended December 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 000-27905****
*****MutualFirst* Financial, Inc.**(Exact Name of Registrant as Specified in its Charter)**
| **Maryland**(State or other jurisdiction of incorporation or organization)         | **35-2085640**(I.R.S. Employer Identification No.) |
|------------------------------------------------------------------------------------|----------------------------------------------------|
|                                                                               |
| **110 E. Charles Street, Muncie, Indiana**(Address of principal executive offices) | **47305-2419**(Zip Code)                           |

**Registrant's telephone number, including area code: **(765) 747-2800****
**Securities Registered Pursuant to Section 12(b) of the Act:**
**None**
**Securities Registered Pursuant to Section 12(g) of the Act:**
**Common Stock, par value $.01 per share(Title of Class)**

             Indicate by check mark whether the registrant (1) has filed all reports required to be filed bySection 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 subjectto such filing requirements for the past 90 days. YES [X] NO [ ]

             Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference inPart III of this Form 10-K or any amendment to this Form 10-K.   [X]

             Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of theAct).            YES [X] NO [ ]

             The aggregate market value of the voting and non-voting common equityheld by non-affiliates, computed by reference to the last sale price of such stock on the Nasdaq National Market as of June 30, 2004, the last business day of the registrant's most recently completedsecond fiscal quarter, was approximately $86.7 million. (The exclusion from such amount of the market value of the shares owned by any person shall not be deemed an admission by the registrant thatsuch person is an affiliate of the registrant.)

             As of March 3, 2005, there were issued and outstanding 4,686,564shares of the registrant's common stock.

****DOCUMENTS INCORPORATED BY REFERENCE****

PART III of Form 10-K--Portions of registrant's Proxy Statement for its 2005 Annual Meeting of Stockholders.

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            The purpose of this amendment to the Annual Report on Form 10-K for the year ended December 31, 2004, is to correct a typographical error in the previous amendment filed on June 2, 2005.  Footnote 22 to the financial statements was not included in that June 2 amendment.

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**Item 8. Financial Statements and Supplementary Data**

***MutualFirst* Financial, Inc.**

Accountants' Report and Consolidated Financial Statements

December 31, 2004, 2003 and 2002

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**Report of Independent Registered Public Accounting Firm**

Audit Committee, Board of Directors and Stockholders*MutualFirst* Financial, Inc.Muncie, Indiana

We have audited the accompanying consolidated balance sheets of *MutualFirst* Financial, Inc. as of December 31, 2004 and 2003, and the related consolidated statements of income,stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2004. These financial statements are the responsibility of the Company's management. Ourresponsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of *MutualFirst* Financial, Inc. as of December 31,2004 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally acceptedin the United States of America.

/s/ BKD, LLP

Indianapolis, IndianaFebruary 4, 2005, except for Note 22     as to which the date is March 3, 2005

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***MutualFirst* Financial, Inc.Consolidated Balance SheetsDecember 31, 2004 and 2003**

|                                                                                                                                                   | **2004**           | **2003**     |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------|
| **Assets**                                                                                                                                        |                    |              |
|                                                                                                                                                   |                    |              |
|      Cash and due from banks                                                                                             | $19,275,332        | $21,073,754  |
|      Interest-bearing demand deposits                                                                                    | 468,044            | 1,994,032    |
|           Cash and cash equivalents                                                             | 19,743,376         | 23,067,786   |
|      Investment securities available for sale                                                                            | 39,408,978         | 33,471,986   |
|      Loans held for sale                                                                                                 | 2,913,150          | 1,975,277    |
|      Loans, net of allowance for loan losses of $6,866,910 and $6,779,218                                                | 713,021,688        | 703,980,796  |
|      Premises and equipment                                                                                              | 12,191,117         | 10,070,804   |
|      Federal Home Loan Bank stock                                                                                        | 7,957,700          | 7,264,200    |
|      Investment in limited partnerships                                                                                  | 5,025,378          | 5,087,752    |
|      Deferred income tax benefit                                                                                         | 4,003,199          | 3,846,184    |
|      Cash value of life insurance                                                                                        | 27,090,357         | 26,140,357   |
|      Other assets                                                                                                        | 8,032,314          | 8,885,696    |
|                                                                                                                                                   |                    |              |
|           Total assets                                                                          | $839,387,257       | $823,790,838 |
|                                                                                                                                    |                    |              |
| **Liabilities and Stockholders' Equity**                                                                                                          |     |              |
|                                                                                                                                                   |                    |              |
|      **Liabilities**                                                                                                     |                    |              |
|           Deposits                                                                              |                    |              |
|                Noninterest-bearing                                     | $39,999,427        | $32,137,746  |
|                Interest-bearing                                        | 560,407,685        | 547,224,644  |
|                     Total deposits            | 600,407,112        | 579,362,390  |
|           Federal Home Loan Bank advances                                                       | 139,426,777        | 134,592,151  |
|           Notes payable                                                                         | 2,145,432          | 2,510,568    |
|           Other liabilities                                                                     | 9,547,793          | 9,805,597    |
|                     Total liabilities         | 751,527,114        | 726,270,706  |
|                                                                                                                                         |                    |              |
|      **Commitments and Contingencies**                                                                                   |                    |              |
|                                                                                                                                              |                    |              |
|      **Stockholders' Equity**                                                                                            |                    |              |
|           Preferred stock, $.01 par value                                                       |               |              |
|                Authorized and unissued - 5,000,000 shares              |                    |              |
|           Common stock, $.01 par value                                                          |                    |              |
|                Authorized - 20,000,000 shares                          |                    |              |
|                Issued and outstanding - 4,708,318 and 5,293,155 shares | 47,084             | 52,932       |
|           Additional paid-in capital                                                            | 34,385,254         | 38,052,080   |
|           Retained earnings                                                                     | 56,826,053         | 63,409,374   |
|           Accumulated other comprehensive income (loss)                                         | (88,646)           | 233,738      |
|           Unearned benefit plan shares                                                          | (3,309,602)        | (4,227,992)  |
|                Total stockholders' equity                              | 87,860,143         | 97,520,132   |
|                Total liabilities and stockholders' equity              | $839,387,257       | $823,790,838 |

*See Notes to Consolidated Financial Statements*

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***MutualFirst* Financial, Inc.****Consolidated Statements of IncomeYears Ended December 31, 2004, 2003 and 2002**

|                                                                                                                                                                 | **2004**      | **2003**    | **2002**      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|-------------|---------------|
| **Interest and Dividend Income**                                                                                                                                |               |             |               |
|      Loans receivable                                                                                                                  | $42,839,649   | $44,880,960 | $48,246,747   |
|      Investment securities                                                                                                             | 1,196,295     | 1,130,134   | 1,593,708     |
|      Federal Home Loan Bank stock                                                                                                      | 334,544       | 360,153     | 423,963       |
|      Deposits with financial institutions                                                                                              | 29,460        | 70,820      | 175,042       |
|           Total interest and dividend income                                                                  | 44,399,948    | 46,442,067  | 50,439,460    |
|                                                                                                                                                            |               |             |               |
| **Interest Expense**                                                                                                                                            |               |             |               |
|      Deposits                                                                                                                          | 12,317,820    | 13,671,004  | 17,394,703    |
|      Federal Home Loan Bank advances                                                                                                   | 5,080,991     | 5,365,496   | 5,652,344     |
|      Other interest expense                                                                                                            | 76,849        | 62,424      | 71,528        |
|           Total interest expense                                                                              | 17,475,660    | 19,098,924  | 23,118,575    |
|                                                                                                                                                            |               |             |               |
| **Net Interest Income**                                                                                                                                         | 26,924,288    | 27,343,143  | 27,320,885    |
|      Provision for loan losses                                                                                                         | 1,556,500     | 1,450,000   | 1,712,483     |
| **Net Interest Income After Provision for Loan Losses**                                                                                                         | 25,367,788    | 25,893,143  | 25,608,402    |
|                                                                                                                                                                 |          |             |               |
| **Other Income**                                                                                                                                                |               |             |               |
|      Service fee income                                                                                                                | 3,193,229     | 2,926,705   | 2,784,744     |
|      Net realized gains (losses) on sales of available-for-sale           securities |  (2,817) |  6,979 |  (2,763) |
|      Commissions                                                                                                                       | 853,842       | 745,427     | 790,086       |
|      Equity in income (losses) of limited partnerships                                                                                 | 52,322        | (323,450)   | (516,509)     |
|      Net gains on sales of loans                                                                                                       | 729,897       | 1,356,593   | 1,368,033     |
|      Net servicing fees (expense)                                                                                                      | 122,596       | (382,620)   | 65,470        |
|      Increase in cash value of life insurance                                                                                          | 950,000       | 1,343,542   | 1,208,217     |
|      Other income                                                                                                                      | 324,340       | 301,843     | 250,658       |
|           Total other income                                                                                  | 6,223,409     | 5,975,019   | 5,947,936     |
|                                                                                                                                                                 |          |             |               |
| **Other Expenses**                                                                                                                                              |               |             |               |
|      Salaries and employee benefits                                                                                                    | 16,167,177    | 13,097,034  | 12,453,962    |
|      Net occupancy expenses                                                                                                            | 1,149,931     | 1,170,121   | 1,104,617     |
|      Equipment expenses                                                                                                                | 1,124,185     | 1,024,196   | 891,202       |
|      Data processing fees                                                                                                              | 630,312       | 606,531     | 760,475       |
|      Advertising and promotion                                                                                                         | 721,957       | 639,859     | 455,143       |
|      Automated teller machine expense                                                                                                  | 587,076       | 492,176     | 492,766       |
|      Professional fees                                                                                                                 | 750,144       | 605,095     | 489,412       |
|      Other expenses                                                                                                                    | 3,184,942     | 2,831,223   | 3,052,731     |
|           Total other expenses                                                                                | 24,315,724    | 20,466,235  | 19,700,308    |
|                                                                                                                                                                 |               |             |               |
| **Income Before Income Tax**                                                                                                                                    | 7,275,473     | 11,401,927  | 11,856,030    |
|      Income tax expense                                                                                                                | 1,753,450     | 3,340,415   | 3,376,500     |
|                                                                                                                                                                 |               |             |               |
| **Net Income**                                                                                                                                                  | $5,522,023    | $8,061,512  | $8,479,530    |
|                                                                                                                                                                 |               |             |               |
| **Earnings Per Share**                                                                                                                                          |               |             |               |
|      Basic                                                                                                                             | $1.19         | $1.64       | $1.55         |
|      Diluted                                                                                                                           | 1.16          | 1.59        | 1.51          |

*See Notes to Consolidated Financial Statements*

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***MutualFirst* Financial, Inc.****Consolidated Statements of Stockholders' EquityYears Ended December 31, 2004, 2003 and 2002**

|                                                                                                                                                                                                                               |            |              | **Accumulated** |                   |              |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------|-----------------|-------------------|--------------|
|                                                                                                                                                                                                                               |            |              | **Other**       | **Unearned**      |              |
|                                                                                                                                                                                                                               |            |              |                 | **Comprehensive** | **Benefit**  |  |
|                                                                                                                                                                                                                               | **Common** | **Paid-in**  | **Retained**    | **Income**        | **Plan**     |  |
|                                                                                                                                                                                                                               | **Stock**  | **Capital**  | **Earnings**    | **(Loss)**        | **Shares**   | **Total** |
|                                                                                                                                                                                                                               |            |              |                 |                   |              |  |
| Balances, January 1, 2002                                                                                                                                                                                                     | $66,938    | $59,575,884  | $55,195,694     | $356,009          | $(5,450,347) | $109,744,178 |
|      Comprehensive income                                                                                                                                                                            |            |              |                 |                   |              |  |
|           Net income                                                                                                                                                        |            |              | 8,479,530       |                   |              | 8,479,530 |
|           Other comprehensive income, net of               tax - unrealized gains on securities  |            |              |                 | 108,443           |              | 108,443 |
|      Comprehensive income                                                                                                                                                                            |            |              |                 |                   |              | 8,587,973 |
|      Cash dividends ($.37 per share)                                                                                                                                                                 |            |              | (1,895,529)     |                   |              | (1,895,529) |
|      Exercise of stock options                                                                                                                                                                       | 33         | 39,767       |                 |                   |              | 39,800 |
|      Stock repurchased                                                                                                                                                                               | (11,740)   | (21,172,202) |                 |                   |              | (21,183,942) |
|      RRP shares earned                                                                                                                                                                               |            |              |                 |                   | 767,500      | 767,500 |
|      Tax benefit on RRP shares                                                                                                                                                                       |            | 72,120       |                 |                   |              | 72,120 |
|      ESOP shares earned                                                                                                                                                                              |            | 267,186      |                 |                   | 317,840      | 585,026 |
|                                                                                                                                                                                                                               |            |              |                 |                   |              |  |
| Balances, December 31, 2002                                                                                                                                                                                                   | 55,231     | 38,782,755   | 61,779,695      | 464,452           | (4,365,007)  | 96,717,126 |
|      Comprehensive income                                                                                                                                                                            |            |              |                 |                   |              |  |
|           Net income                                                                                                                                                        |            |              | 8,061,512       |                   |              | 8,061,512 |
|           Other comprehensive income, net of               tax - unrealized losses on securities |            |              |                 | (230,714)         |              | (230,714) |
|      Comprehensive income                                                                                                                                                                            |            |              |                 |                   |              | 7,830,798 |
|      Cash dividends ($.42 per share)                                                                                                                                                                 |            |              | (2,021,410)     |                   |              | (2,021,410) |
|      Exercise of stock options                                                                                                                                                                       | 719        | 973,638      |                 |                   |              | 974,357 |
|      Stock repurchased                                                                                                                                                                               | (3,264)    | (2,768,683)  | (4,410,423)     |                   |              | (7,182,370) |
|      RRP shares granted                                                                                                                                                                              | 246        | 630,579      |                 |                   | (630,825)    |  |
|      RRP shares earned                                                                                                                                                                               |            |              |                 |                   | 450,000      | 450,000 |
|      ESOP shares earned                                                                                                                                                                              |            | 433,791      |                 |                   | 317,840      | 751,631 |
|                                                                                                                                                                                                                               |            |              |                 |                   |              |  |
| Balances, December 31, 2003                                                                                                                                                                                                   | 52,932     | 38,052,080   | 63,409,374      | 233,738           | (4,227,992)  | 97,520,132 |
|      Comprehensive income                                                                                                                                                                            |            |              |                 |                   |              |  |
|           Net income                                                                                                                                                        |            |              | 5,522,023       |                   |              | 5,522,023 |
|           Other comprehensive income, net of               tax - unrealized losses on securities |            |              |                 | (322,384)         |              | (322,384) |
|      Comprehensive income                                                                                                                                                                            |            |              |                 |                   |              | 5,199,639 |
|      Cash dividends ($.47 per share)                                                                                                                                                                 |            |              | (2,149,714)     |                   |              | (2,149,714) |
|      Exercise of stock options                                                                                                                                                                       | 382        | 553,156      |                 |                   |              | 553,538 |
|      Stock repurchased                                                                                                                                                                               | (6,230)    | (4,744,626)  | (9,955,630)     |                   |              | (14,706,486) |
|      RRP shares earned                                                                                                                                                                               |            |              |                 |                   | 600,550      | 600,550 |
|      Tax benefit on RRP shares                                                                                                                                                                       |            | 90,436       |                 |                   |              | 90,436 |
|      ESOP shares earned                                                                                                                                                                              |            | 434,208      |                 |                   | 317,840      | 752,048 |
|                                                                                                                                                                                                                               |            |              |                 |                   |              |  |
| Balances, December 31, 2004                                                                                                                                                                                                   | $47,084    | $34,385,254  | $56,826,053     | $(88,646)         | $(3,309,602) | $87,860,143 |

*See Notes to Consolidated Financial Statements*

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***MutualFirst* Financial, Inc.****Consolidated Statements of Cash FlowsYears Ended December 31, 2004, 2003 and 2002**

|                                                                                                                               | **2004**      | **2003**     | **2002**     |
|-------------------------------------------------------------------------------------------------------------------------------|---------------|--------------|--------------|
|                                                                                                                               |               |
| **Operating Activities**                                                                                                      |               |              |              |
|      Net income                                                                                      | $5,522,023    | $8,061,512   | $8,479,530   |
|      Items not requiring (providing) cash                                                            |               |              |              |
|           Provision for loan losses                                         | 1,556,500     | 1,450,000    | 1,712,483    |
|           ESOP shares earned                                                | 752,048       | 751,631      | 585,026      |
|           RRP shares earned                                                 | 600,550       | 450,000      | 767,500      |
|           Depreciation and amortization                                     | 2,786,288     | 2,476,012    | 2,790,952    |
|           Deferred income tax                                               | 117,298       | 417,241      | 363,338      |
|           Loans originated for sale                                         | (25,613,232)  | (45,647,544) | (55,029,628) |
|           Proceeds from sales of loans held for sale                        | 40,820,936    | 52,364,678   | 63,481,603   |
|           Gains on sales of loans held for sale                             | (729,897)     | (1,356,593)  | (1,368,033)  |
|      Change in                                                                                       |               |              |              |
|           Interest receivable                                               | 155,291       | 7,153        | 495,559      |
|           Other assets                                                      | (193,052)     | 243,754      | (175,615)    |
|           Interest payable                                                  | 173,530       | 164,490      | (343,963)    |
|           Other liabilities                                                 | (561,368)     | (902,369)    | 940,074      |
|           Cash value of life insurance                                      | (950,000)     | (701,049)    | (1,208,217)  |
|      Other adjustments                                                                               | 650,509       | 1,265,262    | 642,353      |
|           Net cash provided by operating activities                         | 25,087,424    | 19,044,178   | 22,132,962   |
| **Investing Activities**                                                                                                      |               |              |              |
|      Purchases of securities available for sale                                                      | (20,897,969)  | (15,603,309) | (30,441,236) |
|      Proceeds from maturities and paydowns of securities available for sale                          | 10,676,145    | 11,451,638   | 14,800,015   |
|      Proceeds from sales of securities available for sale                                            | 3,472,490     | 12,172,309   | 5,000,000    |
|      Net change in loans                                                                             | (28,416,263)  | (67,000,877) | (13,717,276) |
|      Purchases of premises and equipment                                                             | (3,182,626)   | (1,894,557)  | (1,394,578)  |
|      Proceeds from real estate owned sales                                                           | 967,264       | 1,733,353    | 1,081,651    |
|      Other investing activities                                                                      | (252,429)     | (21,979)     | (129,524)    |
|           Net cash used in investing activities                             | (37,633,388)  | (59,163,422) | (24,800,948) |
| **Financing Activities**                                                                                                      |               |              |              |
|      Net change in                                                                                   |               |              |              |
|           Noninterest-bearing, interest-bearing demand and savings deposits | 18,489,158    | 7,062,223    | 1,325,377    |
|           Certificates of deposits                                          | 2,555,564     | 21,936,224   | 10,160,395   |
|      Repayment of note payable                                                                       | (427,560)     | (435,487)    | (437,470)    |
|      Proceeds from FHLB advances                                                                     | 253,700,000   | 105,000,000  | 46,280,000   |
|      Repayment of FHLB advances                                                                      | (248,922,980) | (85,880,184) | (38,429,745) |
|      Net change in advances by borrowers for taxes and insurance                                     | 130,034       | 113,720      | (128,616)    |
|      Stock repurchased                                                                               | (14,706,486)  | (7,182,370)  | (21,183,942) |
|      Proceeds from stock options exercised                                                           | 553,538       | 974,357      | 39,800       |
|      Cash dividends                                                                                  | (2,149,714)   | (2,021,410)  | (1,895,529)  |
|           Net cash provided by (used in) financing activities               | 9,221,554     | 39,567,073   | (4,269,730)  |
|                                                                                                                               |               |              |              |
| **Net Change in Cash and Cash Equivalents**                                                                                   | (3,324,410)   | (552,171)    | (6,937,716)  |
|                                                                                                                               |               |              |              |
| **Cash and Cash Equivalents, Beginning of Year**                                                                              | 23,067,786    | 23,619,957   | 30,557,673   |
|                                                                                                                               |               |              |              |
| **Cash and Cash Equivalents, End of Year**                                                                                    | $19,743,376   | $23,067,786  | $23,619,957  |
|                                                                                                                               |               |              |              |
| **Additional Cash Flows Information**                                                                                         |               |              |              |
|      Interest paid                                                                                   | $17,302,130   | $19,263,414  | $23,462,538  |
|      Income tax paid                                                                                 | 1,672,000     | 3,191,271    | 3,089,069    |
|      Transfers from loans to foreclosed real estate                                                  | 895,599       | 1,220,234    | 1,715,157    |
|      Loans transferred to held for sale                                                              | 15,293,086    | --           | 15,459,187   |
|      Loans transferred from held for sale                                                            | --            | --           | 11,559,158   |
|      Mortgage servicing rights capitalized                                                           | 408,208       | 514,893      | 524,534      |

*See Notes to Consolidated Financial Statements*

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***MutualFirst* Financial, Inc.****Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

**Note 1:    Nature of Operations and Summary of Significant Accounting Policies**

         The accounting and reporting policies of *MutualFirst* Financial, Inc. (Company) and its wholly owned subsidiary, Mutual FederalSavings Bank (Bank) and the Bank's wholly owned subsidiary, First MFSB Corporation, conform to accounting principles generally accepted in the United States of America and reporting practicesfollowed by the thrift industry. The more significant of the policies are described below.

         The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

         The Company is a thrift holding company whose principal activity is the ownership of the Bank. The Bank operates under a federal thriftcharter and provides full banking services. As a federally chartered thrift, the Bank is subject to regulation by the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation.

         The Bank generates mortgage, consumer and commercial loans and receives deposits from customers located primarily in central Indiana. TheBank's loans are generally secured by specific items of collateral including real property, consumer assets and business assets. First MFSB Corporation sells various insurance products.

         **Consolidation** - The consolidated financial statements include the accounts of the Company, the Bank, and the Bank'ssubsidiary, after elimination of all material intercompany transactions.

         **Cash Equivalents -** The Company considers all liquid investments with original maturities of three months or less to be cashequivalents.

         **Investment Securities** - Securities available for sale are carried at fair value with unrealized gains and losses reportedseparately in accumulated other comprehensive income, net of tax.

         Amortization of premiums and accretion of discounts are recorded using the interest method as interest income from securities. Realized gainsand losses are recorded as net security gains (losses). Gains and losses on sales of securities are determined on the specific-identification method.

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***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

         **Loans held for sale** are carried at the lower of aggregate cost or market. Market is determined using the aggregate method.Net unrealized losses, if any, are recognized through a valuation allowance by charges to income based on the difference between estimated sales proceeds and aggregate cost.

         **Loans** are carried at the principal amount outstanding. A loan is impaired when, based on current information or events, it isprobable that the Company will be unable to collect all amounts due (principal and interest) according to the contractual terms of the loan agreement. Payments with insignificant delays not exceeding90 days are not considered impaired. Certain nonaccrual and substantially delinquent loans may be considered to be impaired. The Company considers its investment in one-to-four familyresidential loans and consumer loans to be homogeneous and therefore excluded from separate identification for evaluation of impairment. Interest income is accrued on the principal balances of loans.The accrual of interest on impaired and nonaccrual loans is discontinued when, in management's opinion, the borrower may be unable to meet payments as they become due. When interest accrual isdiscontinued, all unpaid accrued interest is reversed when considered uncollectible. Interest income is subsequently recognized only to the extent cash payments are received. Certain loan fees anddirect costs are being deferred and amortized as an adjustment of yield on the loans over the contractual maturity of the loans.

         **Allowance for loan losses** is maintained to absorb loan losses based on management's continuing review and evaluation of theloan portfolio and its judgment as to the impact of economic conditions on the portfolio. The evaluation by management includes consideration of past loss experience, changes in the composition ofthe portfolio, the current condition and amount of loans outstanding, and the probability of collecting all amounts due. Impaired loans are measured by the present value of expected future cashflows, or the fair value of the collateral of the loan, if collateral dependent. The allowance is increased by the provision for loan losses, which is charged against current period operatingresults. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

         The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significantchanges in the economic environment and market conditions. Management believes that as of December 31, 2004, the allowance for loan losses is adequate based on information currently available. Aworsening or protracted economic decline in the areas within which the Bank operates would increase the likelihood of additional losses due to credit and market risks and could create the need foradditional loss reserves.

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***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

         **Premises and equipment** are carried at cost net of accumulated depreciation. Depreciation is computed using the straight-linemethod based principally on the estimated useful lives of the assets which range from 3 to 50 years. Maintenance and repairs are expensed as incurred while major additions and improvements arecapitalized. Gains and losses on dispositions are included in current operations.

         **Federal Home Loan Bank stock** is a required investment for institutions that are members of the Federal Home Loan Bank system.The required investment in the common stock is based on a predetermined formula and is carried at cost.

         **Mortgage servicing rights** on originated loans that have been sold are capitalized by allocating the total cost of themortgage loans between the mortgage servicing rights and the loans based on their relative fair values. Capitalized servicing rights are amortized in proportion to and over the period of estimatedservicing revenues. Impairment of mortgage servicing rights is based on the fair value of those rights. Fair values are estimated using discounted cash flows based on a current market interest rate.For purposes of measuring impairment, the rights are stratified based on the predominant risk characteristics of the underlying loans. The predominant characteristic currently used for stratificationis type of loan. The amount of impairment recognized is the amount by which the capitalized mortgage servicing rights for a stratum exceed their fair values.

         **Investment in limited partnerships** is recorded primarily on the equity method of accounting. Losses due to impairment arerecorded when it is determined that the investment no longer has the ability to recover its carrying amount. The benefits of low income housing tax credits associated with the investment are accruedwhen earned.

         **Income tax** in the consolidated statements of income includes deferred income tax provisions or benefits for all significanttemporary differences in recognizing income and expenses for financial reporting and income tax purposes. The Company files consolidated income tax returns with the Bank.

         **Earnings per share** is computed based upon the weighted-average common and common equivalent shares outstanding during eachyear. Unearned ESOP shares and RRP shares which have not vested have been excluded from the computation of average shares outstanding.

         **Reclassifications** of certain amounts in the 2003 and 2002 consolidated financial statements have been made to conform to the2004 presentation.

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***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

         **Stock Options** are accounted for under the recognition and measurement principals of APB Opinion No. 25, *Accounting forStock Issued to Employees*, and related interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under the plan had an exercise price equal tothe 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 Company had applied the fair value provisionsof Statement of Financial Accounting Standards No. 123, *Accounting for Stock-Based Compensation*, to stock-based employee compensation.

|                                                                                                                                       | **2004** | **2003** | **2002** |
|---------------------------------------------------------------------------------------------------------------------------------------|----------|----------|----------|
| Net income, as reported                                                                                                               | $5,522   | $8,062   | $8,480   |
| Less: Stock-based employee compensation cost determined     under the fair value method, net of income taxes | (104)    | (226)    | (605)    |
| Pro forma net income                                                                                                                  | $5,418   | $7,836   | $7,875   |
| Earnings per share                                                                                                                    |          |          |          |
|      Basic - as reported                                                                                     | $1.19    | $1.64    | $1.55    |
|      Basic - pro forma                                                                                       | 1.17     | 1.59     | 1.44     |
|      Diluted - as reported                                                                                   | 1.16     | 1.59     | 1.51     |
|      Diluted - pro forma                                                                                     | 1.14     | 1.54     | 1.41     |

         In December 2004, the Financial Accounting Standards Board (FASB) issued an amendment to SFAS 123 (SFAS 123R), which eliminates the ability toaccount for share-based compensation transactions using Accounting Principles Board Opinion No. 25 and generally requires that such transactions be accounted for using a fair value-based method. SFAS123R will be effective for the Company beginning July 1, 2005. SFAS 123R applies to all awards granted after the required effective date and to awards modified, repurchased, or cancelled after thatdate. The cumulative effect of initially applying this Statement, if any, is recognized as of the required effective date.

         As of the required effective date, the Company will apply SFAS 123R using either the modified version of prospective application or themodified version of retrospective application. Under prospective transition method, compensation cost is recognized on or after the required effective date for the portion of outstanding awards forwhich the requisite service has not yet been rendered, based on the grant-date fair value of those awards calculated under SFAS 123 for either recognition or proforma disclosures. For periods beforethe required effective date, a company may elect to apply a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent withthe pro forma disclosures required for those periods by SFAS 123.

         The Company is currently evaluating the effect of the recognition and measurement provisions of SFAS 123R but believes the adoption of SFAS123R will not result in a material impact on the Company's results of operations or financial condition.

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***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

**Note 2: Restriction on Cash**

         The Bank is required to maintain reserve funds in cash and/or on deposit with the Federal Reserve Bank. The reserve required atDecember 31, 2004 was $7,662,000.

**Note 3: Investment Securities Available for Sale**

|                                                                                         | **2004**           |
|-----------------------------------------------------------------------------------------|--------------------|
|                                                                                         | **Amortized Cost** | **GrossUnrealizedGains** | **GrossUnrealizedLosses** | **FairValue** |
| Mortgage-backed securities                                                              | $2,661             | $80 | $(16) | $2,725 |
| Collateralized mortgage obligations                                                     | 8,614              | 16 | (31) | 8,599 |
| Federal agencies                                                                        | 2,002              | -- | (23) | 1,979 |
| Small Business Administration                                                           | 178                | -- | (2) | 176 |
| Corporate obligations                                                                   | 11,103             | 57 | (34) | 11,126 |
| Marketable equity securities                                                            | 14,999             | -- | (195) | 14,804 |
|           Total investment securities | $39,557            | $153 | $(301) | $39,409 |

|                                                                                         | **2003**           |
|-----------------------------------------------------------------------------------------|--------------------|
|                                                                                         | **Amortized Cost** | **GrossUnrealized Gains** | **GrossUnrealized Losses** | **FairValue** |
| Mortgage-backed securities                                                              | $3,900             | $149 | $(5) | $4,044 |
| Collateralized mortgage obligations                                                     | 8,374              | 83 | -- | 8,457 |
| Federal agencies                                                                        | 3,044              | 41 | -- | 3,085 |
| Small Business Administration                                                           | 214                | 1 | -- | 215 |
| Corporate obligations                                                                   | 9,756              | 206 | -- | 9,962 |
| Marketable equity securities                                                            | 7,645              | -- | (86) | 7,559 |
| Municipal obligation                                                                    | 150                | -- | -- | 150 |
|           Total investment securities | $33,083            | $480 | $(91) | $33,472 |

 

         Marketable equity securities consist of shares in mutual funds which invest in government obligations and mortgage-backed securities.

         Certain investments in debt and marketable equity securities are reported in the financial statements at an amount less than their historicalcost. Total fair value of these investments at December 31, 2004 and 2003, was $28,166,000 and $8,247,000, which is approximately 71 and 25 percent of the Company's available-for-sale investmentportfolio at those dates. These declines primarily resulted from recent increases in market interest rates.

         Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and informationobtained from regulatory filings, management believes the declines in fair value for these securities are temporary.

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***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

         Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and theresulting loss recognized in net income in the period the other-than-temporary impairment is identified.

         The following table shows our investments' gross unrealized losses and fair value, aggregated by investment category and length of time thatindividual securities have been in a continuous unrealized loss position at December 31, 2004 and 2003:

|                                                                    | **2004**                |
|--------------------------------------------------------------------|-------------------------|
|                                                                    | **Less than 12 Months** | **12 Months or More** | **Total** |
| **Description ofSecurities**                                       | **FairValue**           | **UnrealizedLosses** | **FairValue** | **UnrealizedLosses** | **FairValue** | **UnrealizedLosses** |
| Mortgage-backed securities                                         | $127                    | $(3) | $341 | $(13) | $468 | $(16) |
| Collateralized mortgage obligations                                | 3,998                   | (31) | -- | -- | 3,998 | (31) |
| Federal agencies                                                   | 1,979                   | (23) | -- | -- | 1,979 | (23) |
| Small Business Administration                                      | 176                     | (2) | -- | -- | 176 | (2) |
| Corporate obligations                                              | 7,648                   | (34) | -- | -- | 7,648 | (34) |
| Marketable equity securities                                       | 6,926                   | (76) | 6,971 | (119) | 13,897 | (195) |
| Total temporarily     impaired securities |  $20,854           |  $(169) |  $7,312 |  $(132) |  $28,166 |  $(301) |

|                                       | **2003**                |
|---------------------------------------|-------------------------|
|                                       | **Less than 12 Months** | **12 Months or More** | **Total** |
| **Description ofSecurities**          | **FairValue**           | **UnrealizedLosses** | **FairValue** | **UnrealizedLosses** | **FairValue** | **UnrealizedLosses** |
| Mortgage-backed securities            | $732                    | $(5) | $-- | $-- | $732 | $(5) |
| Marketable equity securities          | 6,200                   | (38) | 1,315 | (48) | 7,515 | (86) |
| Total temporarily impaired securities | $6,932                  | $(43) | $1,315 | $(48) | $8,247 | $(91) |

         The amortized cost and fair value of securities available for sale at December 31, 2004, by contractual maturity, are shown below.Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

|                                     | **2004**          |
|-------------------------------------|-------------------|
|                                     | **AmortizedCost** | **FairValue** |
| Within one year                     | $3,561            | $3,554 |
| One to five years                   | 5,533             | 5,540 |
| After ten years                     | 4,011             | 4,011 |
|                                     | 13,105            | 13,105 |
| Mortgage-backed securities          | 2,661             | 2,725 |
| Collateralized mortgage obligations | 8,614             | 8,599 |
| Small Business Administration       | 178               | 176 |
| Marketable equity securities        | 14,999            | 14,804 |
| Totals                              | $39,557           | $39,409 |

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***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

         The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $14,389,000 at December 31, 2004and $7,504,000 at December 31, 2003.

         Proceeds from sales of securities available for sale during 2004, 2003 and 2002 were $3,472,000, $12,172,000 and $5,000,000. Gross gains of$30,000 and $3,000 in 2003 and 2002, and gross losses of $3,000, $23,000 and $6,000 in 2004, 2003 and 2002 were recognized on those sales.

**Note 4: Loans and Allowance**

|                                                                                          | **2004** | **2003** |
|------------------------------------------------------------------------------------------|----------|----------|
| Loans                                                                                    |          |          |
|      Real estate loans                                          |          |          |
|           One-to-four family           | $382,764 | $391,476 |
|           Multi family                 | 4,657    | 5,353    |
|           Commercial                   | 68,067   | 65,430   |
|           Construction and development | 20,745   | 17,860   |
|                                                                                          | 476,233  | 480,119  |
|      Consumer loans                                             |          |          |
|           Auto                         | 39,475   | 40,497   |
|           Home equity                  | 29,464   | 25,401   |
|           Home improvement             | 23,289   | 20,924   |
|           Mobile home                  | 2,879    | 4,108    |
|           Recreational vehicles        | 58,643   | 58,222   |
|           Boats                        | 38,382   | 38,096   |
|           Other                        | 3,327    | 3,443    |
|                                                                                          | 195,459  | 190,691  |
|      Commercial business loans                                  | 53,620   | 44,362   |
|           Total loans                  | 725,312  | 715,172  |
|      Undisbursed loans in process                               | (9,237)  | (8,160)  |
|      Unamortized deferred loan costs, net                       | 3,814    | 3,748    |
|      Allowance for loan losses                                  | (6,867)  | (6,779)  |
|           Net loans                    | $713,022 | $703,981 |

|                                                     | **2004** | **2003** | **2002** |
|-----------------------------------------------------|----------|----------|----------|
| Allowance for loan losses                           |          |          |          |
|      Balances, January 1   | $6,779   | $6,286   | $5,449   |
|      Provision for losses  | 1,557    | 1,450    | 1,713    |
|      Recoveries on loans   | 523      | 404      | 939      |
|      Loans charged off     | (1,992)  | (1,361)  | (1,815)  |
|      Balances, December 31 | $6,867   | $6,779   | $6,286   |

          At December 31, 2004 and 2003, accruing loans delinquent 90 days or more totaled $119,000 and $10,000. Non-accruing loans at December31, 2004 and 2003 were $3,985,000 and $3,270,000.

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***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

         Information on impaired loans is summarized below.

|                                                                                                                                            | **2004** | **2003** |
|--------------------------------------------------------------------------------------------------------------------------------------------|----------|----------|
| Impaired loans with an allowance                                                                                                           | $4,064   | $2,089   |
| Impaired loans for which the discounted cash flows or     collateral value exceeds the carrying value of the loan | ---      | ---      |
| Total impaired loans                                                                                                                       | $4,064   | $2,089   |
| Allowance for impaired loans included in the Company's     allowance for loan losses                              | $828     | $151     |

 

|                                                                                   | **2004** | **2003** | **2002** |
|-----------------------------------------------------------------------------------|----------|----------|----------|
| Average balance of impaired loans                                                 | $4,205   | $2,942   | $3,821   |
| Interest income recognized on impaired loans                                      | 131      | 62       | 24       |
| Interest income recognized on impaired loans -     cash basis | 47       | 22       | 8        |

**Note 5: Premises and Equipment**

|                                                                         | **2004** | **2003** |
|-------------------------------------------------------------------------|----------|----------|
| Cost                                                                    |          |          |
|      Land                                      | $3,334   | $3,066   |
|      Buildings and land improvements           | 11,119   | 9,396    |
|      Equipment                                 | 9,763    | 8,571    |
|           Total cost  | 24,216   | 21,033   |
|      Accumulated depreciation and amortization | (12,025) | (10,962) |
|           Net         | $12,191  | $10,071  |

**Note 6: Investment In Limited Partnerships**
|                                                          | **2004** | **2003** |
|----------------------------------------------------------|----------|----------|
| Pedcor Investments 1988-V (98.97 percent ownership)      | $323     | $364     |
| Pedcor Investments 1990-XI (19.79 percent ownership)     | 28       | 40       |
| Pedcor Investments 1990-XIII (99.00 percent ownership)   | 765      | 725      |
| Pedcor Investments 1997-XXVIII (99.00 percent ownership) | 2,758    | 2,800    |
| Pedcor Investments 1997-XXIX (99.00 percent ownership)   | 696      | 659      |
| Pedcor Investments 2001-LI (9.94 percent ownership)      | 455      | 500      |
|                                                          | $5,025   | $5,088   |

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***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

         The limited partnerships build, own and operate apartment complexes. The Company records its equity in the net income or loss of the limitedpartnerships based on the Company's interest in the partnerships. The Company recorded income from these limited partnerships of $52,000 in 2004 and losses of $323,000 and $517,000 for 2003 and 2002.In addition, the Company has recorded the benefit of low income housing credits of $800,000, $753,000 and $843,000 for 2004, 2003 and 2002. Combined financial statements for the limited partnershipsrecorded under the equity method of accounting are as follows:

|                                                                                                                                  | **2004** | **2003** |
|----------------------------------------------------------------------------------------------------------------------------------|----------|----------|
| Combined condensed balance sheets                                                                                                |          |          |
|      Assets                                                                                             |          |          |
|           Cash                                                                 | $150     | $154     |
|           Land and property                                                    | 35,129   | 36,128   |
|           Other assets                                                         | 1,174    | 1,231    |
|                Total assets                           | $36,453  | $37,513  |
|      Liabilities                                                                                        |          |          |
|           Notes payable                                                        | $33,875  | $34,711  |
|           Other liabilities                                                    | 1,347    | 1,240    |
|                Total liabilities                      | 35,222   | 35,951   |
|      Partners' equity (deficit)                                                                         |          |          |
|           General partners                                                     | (2,931)  | (2,487)  |
|           Limited partners                                                     | 4,162    | 4,049    |
|                Total partners' equity                 | 1,231    | 1,562    |
|                Total liabilities and partners' equity | $36,453  | $37,513  |

|                                             | **2004** | **2003** | **2002** |
|---------------------------------------------|----------|----------|----------|
| Combined condensed statements of operations |          |          |          |
| Total revenue                               | $4,349   | $3,695   | $4,369   |
| Total expenses                              | (5,014)  | (4,129)  | (4,882)  |
| Net loss                                    | $(665)   | $(434)   | $(513)   |

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***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

**Note 7: Deposits**

|                                                          | **2004** | **2003** |
|----------------------------------------------------------|----------|----------|
| Noninterest-bearing demand                               | $39,999  | $32,138  |
| Interest-bearing demand                                  | 58,440   | 59,809   |
| Savings                                                  | 61,629   | 57,785   |
| Money market savings                                     | 54,704   | 48,750   |
| Certificates and other time deposits of $100,000 or more | 121,871  | 109,008  |
| Other certificates                                       | 263,764  | 271,872  |
| Total deposits                                           | $600,407 | $579,362 |

Certificates including other time deposits of $100,000 or more maturing in years ending December 31:

|      2005 | $239,040 |
|------------------------------------|----------|
|      2006 | 69,224   |
|      2007 | 54,944   |
|      2008 | 10,092   |
|      2009 | 12,335   |
|                                    | $385,635 |

**Note 8: Federal Home Loan Bank Advances**

| **Maturities Years Ending December 31** |
|-----------------------------------------|
| 2005                                    | $63,252 |
| 2006                                    | 28,932 |
| 2007                                    | 12,665 |
| 2008                                    | 13,112 |
| 2009                                    | 1,655 |
| Thereafter                              | 19,811 |
|                                         | $139,427 |

         At December 31, 2004, the Company has pledged $389,517,000 in qualifying first mortgage loans and investment securities as collateral foradvances and outstanding letters of credit. Advances, at interest rates from 1.38 to 7.33 percent at December 31, 2004, are subject to restrictions or penalties in the event of prepayment.

**Note 9: Notes Payable**

         The Bank has a noninterest-bearing, unsecured term note payable to Pedcor Investments 1997-XXVIII, L.P. of $1,461,000 and $1,523,000 atDecember 31, 2004 and 2003 payable in semiannual installments through January 1, 2010. At December 31, 2004 and 2003, the Bank was obligated under an irrevocable direct pay letter ofcredit for the benefit of a third party in the amount of $1,254,000 relating to this note and the financing for an apartment project by Pedcor Investments 1997-XXVIII L.P.

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***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

         The Bank also has a noninterest-bearing, unsecured term note payable to Pedcor Investments 1997-XXIX, LP. The note, which is payable in annualinstallments through August 15, 2008, had a balance of $684,000 and $988,000 at December 31, 2004 and 2003.

| **Maturities Years Ending December 31** |        |
|-----------------------------------------|--------|
| 2005                                    | $362   |
| 2006                                    | 357    |
| 2007                                    | 371    |
| 2008                                    | 413    |
| 2009                                    | 416    |
| Thereafter                              | 226    |
|                                         | $2,145 |

**Note 10: Loan Servicing**

         Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of these loansconsist of the following:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **2004** | **2003** | **2002** |
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| Loans serviced for                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |          |          |          |
| Freddie Mac$104,733$90,616$89,432Fannie Mae5,5307,71212,343Federal Home Loan Bank23,85217,30712,081Other investors7,61112,32714,680$141,726$127,962$128,536 
         The aggregate fair value of capitalized mortgage servicing rights is based on comparable market values and expected cash flows, withimpairment assessed based on portfolio characteristics including product type, investor type, and interest rates.
**2004****2003****2002**Mortgage Servicing RightsBalances, January 1$1,333$1,193$879Servicing rights capitalized408515524Amortization of servicing rights(366)(375)(210)1,3751,3331,193Valuation allowance(180)(320)--Balances, December 31$1,195$1,013$1,193 18NEXT PAGE
***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

Activity in the valuation allowance for mortgage servicing right was as follows:
**2004****2003**Balance, beginning of year$320$--Additions--320Reductions(140)--Balances, end of year$180$320 
*No valuation allowance was necessary at December 31, 2002.

**Note 11: Income Tax**
**2004****2003****2002**Income tax expenseCurrently payableFederal$1,148$2,090$2,124State488833889DeferredFederal87439411State30(22)(48)Total income tax expense$1,753$3,340$3,376Reconciliation of federal statutory to actual tax expenseFederal statutory income tax at 34%$2,474$3,877$4,031Effect of state income taxes342535555Low income housing credits(800)(753)(843)Tax-exempt income(363)(492)(439)Other10017372Actual tax expense$1,753$3,340$3,376Effective tax rate24.1%29.3%28.5% 19NEXT PAGE
***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

The components of the deferred asset included on the balance sheets are as follows:
**2004****2003****Assets**       Unrealized loss on securities available for sale$59$--       Allowance for loan losses2,8582,707       Deferred compensation2,3892,264       Charitable contribution carryover--188       Depreciation and amortization--136       Business tax and AMT credit carryovers885515       Other613143              Total assets6,8045,953**Liabilities**       FHLB stock(463)(322)       State income tax(219)(232)       Loan fees(378)(697)       Investments in limited partnerships(1,229)(279)       Unrealized gain on securities available for sale--(155)       Mortgage servicing rights(497)(422)              Total liabilities(2,786)(2,107)$4,018$3,846 
          The Company has unused business income tax credits of $712,000 that expire in 2017. In addition, the Company has an AMT credit carryoverof $173,000 with an unlimited carryover period.
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***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

          Retained earnings include approximately $14,743,000 for which no deferred income tax liability has been recognized. This amountrepresents an allocation of income to bad debt deductions as of December 31, 1987 for tax purposes only. Reduction of amounts so allocated for purposes other than tax bad debt losses oradjustments arising from carryback of net operating losses would create income for tax purposes only, which income would be subject to the then-current corporate income tax rate. The unrecordeddeferred income tax liability on the above amounts was approximately $5,013,000.

**Note 12: Other Comprehensive Income**
**Before-Tax Amount****2004TaxCredit****Net-of-Tax Amount**Unrealized losses on securities       Unrealized holding losses arising during the year$(537)$213$(324)       Less: reclassification adjustment for losses            realized in net income (3) 1 (2)       Net unrealized losses$(534)$212$(322) **Before-Tax Amount****2003TaxCredit****Net-of-Tax Amount**Unrealized losses on securities       Unrealized holding losses arising during the year$(343)$117$(226)       Less: reclassification adjustment for gains                realized in net income7(2)5       Net unrealized losses$(350)$119$(231) **Before-Tax Amount****2002TaxCredit****Net-of-Tax Amount**Unrealized losses on securities       Unrealized gains on securities       Unrealized holding gains arising during the year$176$(70)$106       Less: reclassification adjustment for losses               realized in net income(3)1(2)       Net unrealized gains$179$(71)$108 21NEXT PAGE
***MutualFirst* Financial, Inc.****Notes to Consolidated Financial Statements****December 31, 2004, 2003 and 2002**

(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

**Note 13: Commitments and Contingent Liabilities**

         In the normal course of business there are outstanding commitments and contingent liabilities, such as commitments to extend credit andstandby letters of credit, which are not included in the accompanying financial statements. The Company's exposure to credit loss in the event of nonperformance by the other party to the financialinstruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Bank uses the same credit policies in makingsuch commitments as it does for instruments that are included in the consolidated statements of financial condition.

         Financial instruments whose contract amount represents credit risk as of December 31 were as follows:
**2004****2003**Loan commitments$78,641$72,419Standby letters of credit7,2117,165
         Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in thecontract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawnupon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateralobtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation. Collateral held varies, but may include residential real estate, income-producingcommercial properties, or other assets of the borrower.

         Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.

         The Company and Bank are also subject to claims and lawsuits which arise primarily in the ordinary course of business. It is the opinion ofmanagement that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company.

**Note 14: Stockholders' Equity**

         The Company is not subject to any regulatory restrictions on the payment of dividends to its stockholders.
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***MutualFirst* Financial, Inc.****Notes to Consolidated Financial Statements****December 31, 2004, 2003 and 2002**

(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

         Without prior approval, current regulations allow the Bank to pay dividends to the Company not exceeding retained net income for the currentyear plus the previous two calendar years. At December 31, 2004, the Bank had regulatory approval to pay dividends to the Company of an amount not to exceed $15,000,000.

**Note 15: Regulatory Capital**

         The Bank is subject to various regulatory capital requirements administered by the federal banking agencies and is assigned to a capitalcategory. The assigned capital category is largely determined by three ratios that are calculated according to the regulations: total risk adjusted capital, Tier 1 risk-based capital, and coreleverage ratios. The ratios are intended to measure capital relative to assets and credit risk associated with those assets and off-balance sheet exposures of the entity. The capital categoryassigned to an entity can also be affected by qualitative judgments made by regulatory agencies about the risk inherent in the entity's activities that are not part of the calculated ratios.

         There are five capital categories defined in the regulations, ranging from well capitalized to critically undercapitalized. Classification ofa bank in any of the undercapitalized categories can result in actions by regulators that could have a material effect on a bank's operations. At December 31, 2004 and 2003, the Bank wascategorized as well capitalized and met all subject capital adequacy requirements. There are no conditions or events since December 31, 2004 that management believes have changed the Bank'sclassification.

         The Bank's actual and required capital amounts and ratios are as follows:
** Actual****Required forAdequate Capital****To Be WellCapitalized****Amount****Ratio****Amount****Ratio****Amount****Ratio****As of December 31, 2004**Total risk-based capital (to risk-weighted      assets)$90,59515.0%$48,4368.0%$60,54510.0%Tier 1 risk-based capital (to risk-weighted      assets)84,15313.9%24,2184.0%36,3276.0%Core capital (to adjusted total assets)84,15310.0%25,1213.0%41,8685.0%Core capital (to adjusted tangible assets)84,15310.0%16,7472.0%N/AN/ATangible capital (to adjusted total assets)84,15310.0%12,5601.5%N/AN/A**As of December 31, 2003**Total risk-based capital (to risk-weighted      assets)$99,63617.0%$46,9758.0%$58,71910.0%Tier 1 risk-based capital (to risk-weighted      assets)92,97915.8%23,4874.0%35,2316.0%Core capital (to adjusted total assets)92,97911.3%24,6383.0%41,0635.0%Core capital (to adjusted tangible assets)92,97911.3%16,4252.0%N/AN/ATangible capital (to adjusted total assets)92,97911.3%12,3191.5%N/AN/A 23NEXT PAGE
***MutualFirst* Financial, Inc.****Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

**Note 16: Employee Benefits**

          The Company has a retirement savings 401(k) plan in which substantially all employees may participate. The contributions arediscretionary and determined annually. In 2004, 2003 and 2002, the Company matched employees' contributions at the rate of 50 percent for the first $600 of participant contributions to the 401(k) andmade a contribution to the profit-sharing plan of 3 percent of qualified compensation. The Company's expense for the plan was $370,000, $225,000 and $297,000 for 2004, 2003 and 2002.

          The Company has a supplemental retirement plan and deferred compensation arrangements for the benefit of certain officers. The Companyalso has deferred compensation arrangements with certain directors whereby, in lieu of currently receiving fees, the directors or their beneficiaries will be paid benefits for an established periodfollowing the director's retirement or death. These arrangements are informally funded by life insurance contracts which have been purchased by the Company. The Company records a liability for thesevested benefits based on the present value of future payments. The Company's expense for the plan was $753,000, $776,000 and $695,000 for 2004, 2003 and 2002.

          The Company has an ESOP covering substantially all of its employees. At December 31, 2004, 2003 and 2002, the Company had 286,060,317,843 and 349,626 unearned ESOP shares with a fair value of $6,963,000, $7,981,000 and $6,916,000. Shares are released to participants proportionately as ESOP debt is repaid. Dividends on allocatedshares are recorded as dividends and charged to retained earnings. Dividends on unallocated shares are used to repay the loan. Compensation expense is recorded equal to the fair market value of thestock when contributions, which are determined annually by the Board of Directors of the Company and Bank, are made to the ESOP. Expense under the ESOP for 2004, 2003 and 2002 was $752,000, $752,000and $585,000. The following table provides information on ESOP shares at December 31.
**2004****2003****2002**Allocated shares147,725115,94280,857Suspense shares286,060317,843349,626Committed-to-be released shares31,78331,78331,783           The Company has a Recognition and Retention Plan (RRP) for the award of up to 232,784 shares of the common stock of the Company todirectors and executive officers. Common stock awarded under the RRP vests ratably over a three or five-year period commencing with the date of the grants. Expense recognized on the vested sharestotaled approximately $601,000, $450,000 and $768,000 in 2004, 2003 and 2002. The unearned portion of these stock awards is presented as a reduction of stockholders' equity. 24NEXT PAGE
***MutualFirst* Financial, Inc.**

**Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**

**Note 17: Stock Option Plan**

          Under the Company's stock option plan, which is accounted for in accordance with Accounting Principles Board Opinion (APB) No. 25, *Accounting for Stock Issued to Employees*, and related interpretations, the Company grants selected executives and other key employees and directors incentive and non-qualified stock optionawards which vest and become fully exercisable at the discretion of the stock option committee as the options are granted. The Company is authorized to grant options for up to 581,961 shares of theCompany's common stock. Under certain provisions of the plan, the number of shares available for grant may be increased without shareholder approval by the amount of shares surrendered as payment ofthe exercise price of the stock option and by the number of shares of common stock of the Company that could be repurchased by the Company using proceeds from the exercise of stock options. Theexercise price of the options, which have a 10 to 15 year life, may not be less than the market price of the Company's stock on the date of grant; therefore, no compensation expense will berecognized when the options are granted.

          The following is a summary of the status of the Company's stock option plan and changes in that plan for 2004, 2003 and 2002.
**2004****2003****2002****Options****Shares****Weighted-AverageExercisePrice****Shares****Weighted-AverageExercisePrice****Shares****Weighted-AverageExercisePrice**Outstanding, beginning of year528,389$16.03530,086$14.32535,714$14.30Granted----75,00025.66----Exercised(38,175)14.50(71,897)13.55(3,331)11.95Forfeited/expired(2,400)14.50(4,800)14.50(2,297)13.32Outstanding, end of year487,81416.15528,38916.03530,08614.32Options exercisable at year end354,414337,389286,619Weighted-average fair value of options granted during the year2.76 25NEXT PAGE
***MutualFirst* Financial, Inc.****Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

At December 31, 2004, certain information by exercise price for options outstanding and exercisable is as follows:
**ExercisePrice****NumberofShares****Weighted-AverageRemainingContractualLife****Number ofSharesExercisable**$12.3513,9122.6 years13,91214.50398,902   8.6 years340,502   25.6675,00011.4 years  -- 
          Although the Company has elected to follow APB No. 25, SFAS No. 123 requires pro forma disclosures of net income and earnings per shareas if the Company had accounted for its employee stock options under that statement (see Note 1). The fair value of each 2003 option grant was estimated on the grant date using an option-pricingmodel with the following assumptions:
Risk-free interest rates2.29%Dividend yields1.76%Volatility factors of expected market price of common stock9.30%Weighted-average expected life of the options8 years26NEXT PAGE
***MutualFirst*****Financial, Inc.****Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

**Note 18. Earnings Per Share**

         Earnings per share were computed as follows:
**Income****2004Weighted-Average Shares****Per-ShareAmount****Basic Earnings Per Share**     Income available to common shareholders$5,5224,625,437$1.19**Effect of Dilutive Securities**     Stock options--146,599--**Diluted Earnings Per Share**     Income available to common stockholders and assumed            conversions $5,522 4,772,036 $1.16
 
**Income****2003Weighted-Average Shares****Per-ShareAmount****Basic Earnings Per Share**     Income available to common shareholders$8,0624,904,007$1.64**Effect of Dilutive Securities**     Stock options--180,507--**Diluted Earnings Per Share**     Income available to common stockholders and assumed            conversions $8,062 5,084,514 $1.59
 
**Income****2002Weighted-Average Shares****Per-ShareAmount****Basic Earnings Per Share**     Income available to common shareholders$8,4805,484,792$1.55**Effect of Dilutive Securities**     Stock options--113,378--**Diluted Earnings Per Share**     Income available to common stockholders and assumed            conversions $8,4805,598,170$1.51
          Options to purchase 75,000 shares of common stock at $25.66 per share were outstanding at December 31, 2004, but were not included inthe computation of diluted EPS because the options' exercise price was greater than the average market price of the common shares. Additionally, 24,584 shares not vested under the Recognition andRetention Plan have been excluded for similar reasons.
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***MutualFirst*****Financial, Inc.****Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

         **Note 19: Fair Values of Financial Instruments**

         The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

         **Cash and Cash Equivalents** - The fair value of cash and cash equivalents approximates carrying value.

         **Investment and Mortgage-Backed Securities** - Fair values are based on quoted market prices.

         **Loans Held For Sale -** Fair values are based on quoted market prices.

         **Loans** - The fair value for loans are estimated using discounted cash flow analyses using interest rates currently beingoffered for loans with similar terms to borrowers of similar credit quality.

         **FHLB Stock** - Fair value of FHLB stock is based on the price at which it may be resold to the FHLB.

         **Cash Value of Life Insurance** - The fair value of life insurance values approximate carrying value.

         **Interest Receivable/Payable** - The fair values of interest receivable/payable approximate carrying values.

         **Deposits** - The fair values of noninterest-bearing, interest-bearing demand and savings accounts are equal to the amountpayable on demand at the balance sheet date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently beingoffered on certificates to a schedule of aggregated expected monthly maturities on such time deposits.

         **Federal Home Loan Bank Advances** - The fair value of these borrowings are estimated using a discounted cash flow calculation,based on current rates for similar debt for periods comparable to the remaining terms to maturity of these advances.

         **Notes Payable** - The fair value of this note is estimated using a discount calculation based on current rates.
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         **Advances by Borrowers for Taxes and Insurance** - The fair value approximates carrying value.

         **Off-Balance Sheet Commitments** - Commitments include commitments to purchase and originate mortgage loans, commitments to sellmortgage loans, and standby letters of credit and are generally of a short-term nature. The fair values of such commitments are based on fees currently charged to enter into similar agreements,taking into account the remaining terms of the agreements and the counterparties' credit standing. The carrying amounts of these investments are reasonable estimates of the fair value of thesefinancial statements.

         The estimated fair values of the Company's financial instruments are as follows:
**2004****2003****CarryingAmount****FairValue****CarryingAmount****FairValue****Assets**     Cash and cash equivalents$19,743$19,743$23,068$23,068     Securities available for sale39,40939,40933,47233,472     Loans held for sale2,9132,9131,9752,001     Loans713,022719,318703,981712,277     Stock in FHLB7,9587,9587,2647,264     Cash value of life insurance27,09027,09026,14026,140     Interest receivable3,0393,0393,1943,194**Liabilities**     Deposits600,407584,928579,362580,378     FHLB advances139,427141,255134,592142,127     Notes payable2,1451,8532,5112,188     Interest payable1,0251,025851851     Advances by borrowers for taxes and insurance1,5791,5791,4481,448    29NEXT PAGE
***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

**Note 20: Condensed Financial Information (Parent Company Only)**

         Presented below is condensed financial information as to financial position, results of operations and cash flows of the Company:
**Condensed Balance Sheets****2004****2003****Assets**     Cash on deposit with Bank$832$1,623     Cash on deposit with others7124           Total cash and cash equivalents9031,647     Investment in common stock of Bank84,95894,121     Investment in affiliate982956     Deferred and current income tax1,031810     Other assets66           Total assets$87,880$97,540**Liabilities** - other$20$20**Stockholders' Equity**87,86097,520           Total liabilities and stockholders' equity$87,880$97,540
**Condensed Statements of Income**
****2004******2003****2002****Income**     Interest income from Bank$10$20$29    Interest income from investments----8    Interest income from loans--116324    Dividends from Bank15,0005,00021,500    Other income25130137         Total income15,0355,26621,998**Expenses**359331230**Income before income tax and equity in undistributed    **income of subsidiary****14,6764,93521,768**Income tax expense (benefit)**(128)(18)105**Income before equity in undistributed income of subsidiary**14,8044,95321,663**Equity in undistributed income of subsidiary**(9,282)3,109(13,183)**Net Income**$5,522$8,062$8,48030NEXT PAGE
***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)
**Condensed Statements of Cash Flows****2004****2003****2002****Operating Activities**          Net income$5,522$8,062$8,480     Item not requiring (providing) cash           ESOP shares earned752752585           Deferred income tax benefit186426236           Distributions in excess of (equity in undistributed income)                 income of Bank9,282(3,109)13,183     Other(184)123(266)           Net cash provided by operating activities15,5586,25422,218**Investing Activities**     Net change in loans--1,2501,250     Proceeds from maturities of securities available for sale----1,001          Net cash provided by investing activities--1,2502,251**Financing Activities**     Stock repurchased(14,706)(7,182)(21,184)     Cash dividends(2,150)(2,021)(1,896)     Proceeds from stock options exercised55497440           Net cash used in financing activities(16,302)(8,229)(23,040)**Net Change in Cash on Deposit With Bank**(744)(725)1,429**Cash on Deposit With Bank, Beginning of Year**1,6472,372943**Cash on Deposit With Bank, End of Year**$903$1,647$2,37231NEXT PAGE
***MutualFirst* Financial, Inc.Notes to Consolidated Financial StatementsDecember 31, 2004, 2003 and 2002**(Table Dollar Amounts in Thousands, Except Share and Per Share Data)

**Note 21: Quarterly Results of Operations (Unaudited)**
**QuarterEnded****InterestIncome****InterestExpense****NetInterestIncome****ProvisionforLoanLosses****NetIncome****BasicEarningsPerCommonShare****DilutedEarningsPerCommonShare**2004      March$11,197$4,367$6,830$227$1,968$0.41$0.40     June11,0484,2116,8375301,8140.380.37     September10,9794,3686,6113501,7240.380.37     December11,1764,5306,646450160.000.00           Total$44,400$17,476$26,924$1,557$5,5221.191.162003     March$11,791$4,964$6,827$375$2,068$0.42$0.40     June11,7374,8286,9093752,3900.490.47     September11,5324,6966,8363251,9830.410.39     December11,3824,6116,7713751,6210.330.32           Total$46,442$19,099$27,343$1,450$8,0621.641.59 In the fourth quarter of 2004, the Company incurred an expense of approximately $1,700,000, net of tax ($.38 per diluted share) associated with a separation agreement entered into in November 2004with a former officer of the Bank.
**Note 22:  Subsequent Event**

         On March 3, 2005, the Bank entered into a definitive agreement to purchase certain assets and assume certain liabilities representing the operations of Fidelity Federal Savings Bank of Marion, Indiana.  The Bank will pay $20 million in cash for these net assets, subject to adjustments.  The purchase which requires the approval of the Office of Thrift Supervision, is scheduled to close in the third quarter of 2005.
**PART IV**

**Item 15.  Exhibits and Financial Statement Schedules**

         **(a)(1) List of Financial Statements**

         The following are contained in Item 8 of this Form 10-K:
Annual Report SectionReport of Independent Registered Public Accounting FirmConsolidated Balance Sheets at December 31, 2004 and 2003Consolidated Statements of Income for the Years Ended December 31, 2004, 2003 and 2002Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2004,     2003 and 2002Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and     2002Notes to Consolidated Financial Statements
         **(a)(2) List of Financial Statement Schedules**:

         All financial statement schedules have been omitted as the information is not required under the related instructions or is notapplicable.
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         **(a)(3) List of Exhibits**:
**Regulation S-KExhibitNumber****Document****Reference toPrior Filing orExhibitNumberAttachedHereto**23Consents of Experts and Counsel2331.1Rule 13(a)-14(a) Certification (Chief Executive Officer)31.131.2Rule 13(a)-14(a) Certification (Chief Financial Officer)31.232Section 1350 Certification32
**             (b)  Exhibits** - Included, see list in (a)(3).

             **(c)  Financial Statements Schedules** - None
33NEXT PAGE**SIGNATURES**
         Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.
 *MutualFirst* Financial, Inc.   Date:   June 7, 2005By:/s/ David W. HeeterDavid W. Heeter, President and Chief Executive Officer*(Duly Authorized Representative)*34NEXT PAGE****INDEX TO EXHIBITS****NumberDescription  23Consent of Accountants  31.1Rule 13(a)-14(a) Certification (Chief Executive Officer)  31.2Rule 13(a)-14(a) Certification (Chief Financial Officer)  32Section 1350 CertificationEND |