**EXHIBIT 10.1**

**NAMED EXECUTIVE OFFICER SALARY AND BONUS ARRANGEMENTS FOR 2007**

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**Exhibit 10.1**

**Named Executive Officer Salary and Bonus Arrangements for 2007**

*Base Salaries*

          The base salaries for 2007 for the executive officers (the “named executive officers”) of *MutualFirst* Financial, Inc. (the “Company”) and Mutual Federal Savings Bank who will be named in the compensation table that will appear in the Company’s upcoming 2007 annual meeting proxy statement are as follows:

| **Name and Title**                                                                                                           |   | **Base Salary** |
|------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|
|                                                                                                                              |   |                 |
| David W. Heeter    President and Chief Executive    Officer of the Company                                                   |   | $233,500        |
|                                                                                                                         |   |            |
| Patrick C. Botts   Executive Vice President of    the Company  and President and    Chief Operating Officer of the Bank |   | $189,000        |
|                                                                                                                         |   |            |
| Timothy J. McArdle    Chief Financial Officer of    the Company and the Bank                                                 |   | $172,500        |
|                                                                                                                         |   |            |
| Steven R. Campbell    Senior Vice President of the Bank                                                                      |   | $160,000        |
|                                                                                                                         |   |            |
| Steven C. Selby    Senior Vice President of the Bank                                                                         |   | $149,000        |

*Description of 2007 Bonus Plan*

          The Company has established a new cash incentive bonus plan for 2007 for all officers and employees of the Company and Mutual Federal (the “2007 Bonus Plan”).  The quarterly payments will be made if and to the extent the Company’s performance in 2007 exceeds baseline levels on certain key performance indicators (which will be the same for all officers and employees), including loan and deposit growth, net interest margin improvement, growth in non-interest income, the ratios of non-performing assets to total assets and net charge-offs to total assets, and management of general and administrative expenses.  The key performance indicators for the potential additional annual incentive payments to officers will be 2007 net interest income after provision for loan losses, non-interest income and non-interest expense.

          The amountsof the quarterly and annual bonuses under the 2007 Bonus Plan, if earned, willbe determined by multiplying the employee’s salary by the employee’spayout percentage.  While the payout percentages will vary from employee toemployee, they will increase proportionately for all officers and employees ifand to the extent the Company attains a performance level above the baselineperformance threshold. Annual incentive payouts to officers will only be made ifactual performance exceeds baseline performance levels. Depending on the extentto which (if at all) actual performance exceeds baseline performance levels, theaggregate amount payable pursuant to the quarterly bonus component and theannual bonus component will range from 35% to 48% of the amount by which actualpre-tax net income from operations for the quarter or year, as applicable,exceeds the baseline level.

          Additional information about the 2007 Bonus Plan is incorporated herein byreference from the Company’s definitive proxy statement for its Annual Meetingof Stockholders to be held in April 2007, except for information contained underthe headings “Compensation Committee Report,” and “Report of theAudit/Compliance Committee,” a copy of which will be filed not later than 120days after the close of the fiscal year.

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