SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

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Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
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Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
// Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

FIRST MERCHANTS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

MERRILL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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FIRST MERCHANTS CORPORATION
200 EAST JACKSON STREET
MUNCIE, INDIANA 47305

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 30, 1995

The annual meeting of the shareholders of First Merchants Corporation
will be held at the Horizon Convention Center, 401 South High Street, Muncie,
Indiana 47305, on Thursday, March 30, 1995, at 3:30 p.m. for the following
purposes:

(1) To elect five directors, four to hold office for a term
of three years and one to hold office for a term of two
years and, in each case, until their successors are duly
elected and qualified.

(2) To ratify the appointment of the firm of Geo. S. Olive &
Co., LLC, as independent public accountants for 1995.

(3) To transact such other business as may properly come
before the meeting.

Only those shareholders of record at the close of business on
February 10, 1995 shall be entitled to notice of and to vote at the meeting.

By Order of the Board of Directors

Rodney A. Medler
CORPORATE SECRETARY

Muncie, Indiana
February 17, 1995

IMPORTANT - PLEASE MAIL YOUR PROXY PROMPTLY

IN ORDER THAT THERE MAY BE PROPER REPRESENTATION AT THE
MEETING, YOU ARE URGED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.

February 17, 1995

FIRST MERCHANTS CORPORATION

PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MARCH 30, 1995

This Proxy Statement is furnished in connection with the solicitation
of the enclosed proxy by and on behalf of the Board of Directors of First
Merchants Corporation (the "Corporation") for use at the annual meeting of
shareholders of the Corporation to be held March 30, 1995. The distribution of
these proxy materials is expected to commence on February 17, 1995.

Any shareholder giving a proxy has the right to revoke it any time
before it is exercised by written notice to the Secretary received prior to the
meeting or in person at the meeting. The shares represented by proxies will be
voted in accordance with the instructions on the proxies. In the absence of
specific instructions to the contrary, proxies will be voted in favor of
Items 1 and 2.

VOTING SECURITIES

Only shareholders of record at the close of business on February 10,
1995 will be entitled to notice of and to vote at the annual meeting. As of
February 10, 1995, the number of shares of common stock outstanding and entitled
to vote was 3,367,050. Each share is entitled to one vote. The affirmative
vote of a majority of the Corporation's common shares present and voting at the
meeting in person or by proxy is required for approval of all items being sub-
mitted to the shareholders for their consideration. The Secretary will count
the votes and announce at the meeting the number voting for and against each
item and the number abstaining. Abstentions will be counted for the purpose of
determining whether a quorum is present but for no other purpose. Broker non-
votes will not be counted.

ELECTION OF DIRECTORS

Five directors will be elected at the annual meeting.

The persons named below have been nominated for election to the Board
of Directors (the "Board"), with terms expiring for the Class I directors as of
the 1998 annual meeting of shareholders and for the Class III director as of the
1997 annual meeting of shareholders. All of the nominees are currently members
of the Board.

Those persons nominated as directors include:

Name and Age Present Occupation Director Since(1)
- ------------- ------------------ -----------------
Class I (Terms expire 1998):
- ----------------------------

Michael L. Cox, age 50 Executive Vice President, 1984 (1984)
First Merchants Corporation and
First Merchants Bank, N.A.

John W. Hartmeyer; age 56 President, Al Pete Meats, Inc. 1982 (1971)
(Al Pete Meats, Inc. is a
producer of frozen breaded
retail and institutional meat
and vegetable products.)

Jon H. Moll; age 52 Partner, DeFur, Voran, Hanley, 1985 (1985)
Radcliff & Reed, Attorneys

Robert M. Smitson; age 58 President, Maxon Corporation 1982 (1979)
(Maxon Corporation designs and
manufactures specialty industrial
combustion systems and valves.)

CLASS III (TERM EXPIRES 1997):

Frank A. Bracken, Age 60 Of Counsel, Bingham, Summers, 1994 (1994)
Welsh & Spilman, Attorneys

Those persons named below continue to serve as directors:

CLASS II (TERMS EXPIRE 1996):

STEFAN S. Anderson; age 60 Chairman of the Board and 1982 (1975)
President, First Merchants
Corporation and First
Merchants Bank, N.A.

Thomas B. Clark; age 49 President, Alltrista 1989 (1989)
Corporation (Alltrista
Corporation manufactures
metal, plastics and
consumer products and
industrial equipment.)

David A. Galliher, age 62 President and Treasurer, 1982 (1969)
Wm. A. Didier & Sons, Inc.
(Wm. A. Didier & Sons, Inc.
manufactures credit cards.)

Thomas K. Gardiner; age 47 Physician, Medical 1989 (1989)
Consultants, P.C.

Name and Age Present Occupation Director Since(1)
- ------------- ------------------ -----------------

Hurley C. Goodall; age 67 Retired City of Muncie 1992 (1992)
Firefighter and former
Indiana State Represent-
ative, District 34

John E. Worthen; age 61 President, Ball State 1987 (1987)
University

CLASS III (TERMS EXPIRE 1997):

Nelson W. Heinrichs; age 55 President, Source One Corp., 1987 (1987)
Inc., formerly known as
Jordan Paper Products, Inc.
(Source One Corp., Inc. is a
wholesaler and distributor
of diversified paper products.)

Joseph E. Wilson; age 53 President, Muncie Power 1988 (1988)
Products, Inc. (Muncie Power
Products, Inc. manufactures
and distributes power trans-
mission components to the
truck equipment industry.)

Robert F. Wisehart; age 68 Attorney; Chairman of the 1991 (1955)
Board, First United Bank

(1) Years in parenthesis relate to service as a director of the
Corporation's wholly-owned subsidiary, First Merchants Bank, N.A.
("First Merchants"), or, in the case of Mr. Wisehart, the
Corporation's wholly-owned subsidiary, First United Bank ("First
United"). Prior to December 16, 1991, First Merchants' name was
The Merchants National Bank of Muncie. All of the Corporation's
directors except Mr. Wisehart are also directors of First
Merchants. Mr. Wisehart is the only director who is also a
director of First United. Mr. Bracken was previously a director
of the Corporation and First Merchants from 1980-1989 but left to
join the Bush Administration as the Deputy Secretary to the
Department of the Interior.

The occupations set forth above have been the principal occupations of
the director-nominees and continuing directors during the past 5 years except as
follows: Mr. Bracken was the Deputy Secretary to the Department of the Interior
in the Bush Administration from 1989 to 1993. He joined Bingham, Summers, Welsh
& Spilman in July 1994. Mr. Clark was Vice President, Communications, Planning
and Development of Ball Corporation from 1989 until he joined Alltrista
Corporation as Senior Vice President and Chief Financial Officer in 1992
(Alltrista Corporation was a wholly-owned subsidiary of Ball Corporation until
it was spun off as an independent public corporation on April 2, 1993). Mr.
Clark became the President and Chief Operating Officer of Alltrista Corporation
on March 1, 1994 and the President and Chief Executive Officer on January 1,
1995. Mr. Clark is a director of Alltrista Corporation. Mr. Cox was Group
President of Ontario Corporation from 1989 until May 9, 1994, when he joined
First Merchants Corporation as Executive Vice President and Chief Operating
Officer and First Merchants Bank, N.A., as Executive Vice President. Mr.
Galliher was President of A. E. Boyce Company, Inc. until he retired from that
position in 1991 (A. E. Boyce Company, Inc. designs and manufactures business
forms and systems). Mr. Galliher has been President and Treasurer of Wm. A.
Didier & Sons, Inc. since 1978. Mr. Goodall retired from the Indiana House of
Representatives in 1992.

CERTAIN COMMITTEES OF THE BOARD

The Corporation's Executive Committee functions as a nominating
committee. It recommends to the Board: (a) candidates to fill any vacancies on
the Board, and (b) a slate of directors to be elected each year at the annual
meeting of shareholders. The Committee will consider nominees recommended by
shareholders. Any such recommendation should be in writing and addressed to the
Secretary, First Merchants Corporation, 200 East Jackson Street, Muncie, Indiana
47305. The members of the Executive Committee are Messrs. Anderson, Bracken,
Clark, Cox, Galliher, Hartmeyer, Moll, and Smitson. The Executive Committee met
4 times during 1994.

The Corporation has an Audit Committee whose functions are: (a) to
assist the Board in fulfilling its responsibilities relating to accounting,
auditing and financial reporting functions; (b) to review or cause to be
reviewed all reports of examination made by banking authorities; (c) to meet
with the internal auditors and to make or cause to be made internal examinations
and audits of the affairs of the Corporation and its subsidiaries; (d) to meet
with the external auditors and to review the scope and results of external
audits; and (e) to consult with management on the selection of the independent
public accountants to serve as external auditors for the ensuing year. The
members of the Audit Committee are Messrs. Clark, Galliher, Gardiner, Goodall,
Heinrichs, Wilson, Wisehart, and George Likens, who is a director of the
Corporation's wholly-owned subsidiary, Pendleton Banking Company ("Pendleton"),
but not of the Corporation. The Audit Committee met 5 times during 1994.

The Corporation has a Compensation Committee whose functions are: (a)
to review and approve the compensation and benefits to be paid to the executive
officers and senior management employees of the Corporation and the chief
executive officers of its subsidiaries, and (b) to review and approve the
compensation and benefits to be paid to the executive officers and senior
management employees and the compensation ranges and benefits for other officers
and

employees of the Corporation's subsidiaries. The authority to periodically
adjust the compensation and benefits of employees, other than executive officers
and senior management of the Corporation and the chief executive officers of its
subsidiaries, has been delegated by the Compensation Committee to the chief
executive officers of the subsidiaries. The Compensation Committee is
responsible for the administration of the Corporation's incentive compensation
and stock plans. The members of the Compensation Committee are Messrs. Clark,
Hartmeyer and Smitson. The Compensation Committee met 4 times during 1994.

MEETINGS OF THE BOARD

The Board of Directors held 4 meetings during 1994. The directors of
the Corporation who attended fewer than 75% of the total number of meetings of
the Board and the committees on which they served were Messrs. Clark and
Hartmeyer.

COMPENSATION OF DIRECTORS

Directors of the Corporation who were employees of the Corporation or
one of its subsidiaries received no separate compensation for their services as
directors in 1994. Other than Mr. Wisehart, directors of the Corporation who
were not employees received no compensation for attending meetings of the
Corporation's Board; however, they were paid an annual retainer of $2,200 and
$200 for each meeting of First Merchants' Board of Directors that they attended
in 1994. In addition, they were paid $200 per meeting for attending meetings of
the Executive Committee and the other committees of the Corporation's or First
Merchants' Board of Directors. The chairman of the Executive Committee was paid
an additional $200 and the chairmen of the other committees were paid an
additional $100 for each meeting over which they presided. Mr. Wisehart was
paid $300 for each meeting of the Corporation's Board of Directors and $200 for
each meeting of the Audit Committee he attended. He received $4,500 for serving
as the Chairman of First United's Board of Directors, and First United paid him
$200 per month for serving on its Board of Directors, $400 per month for serving
on its Executive Committee and $400 per month for serving on its Loan Workout
Committee. Mr. Wisehart was also covered by First United's health insurance
plan.

Under the provisions of the 1994 Stock Option Plan, on July 1, 1994
options to purchase 400 shares of the Corporation's common stock were granted to
the non-employee directors of the Corporation other than Mr. Bracken, who was
not a director on July 1, 1994. The option price with respect to the options
granted was $29.125 per share, the market price on the date of the grants.

First Merchants maintains an unfunded deferred compensation plan which
gives each director an annual election to defer the receipt of director's fees.
Any amounts reflected in a director's account under the plan are credited with
interest at a rate equal to First Merchants' 18-month variable rate IRA account
rate. Payments are made or begun when the individual ceases to be a director,
or upon retirement or death. During 1994, 3 directors participated in the plan,
deferring fees of $28,300 as a group.

COMPENSATION OF EXECUTIVE OFFICERS

The tables in this section of the Proxy Statement contain information
concerning the compensation of certain named executive officers as of the
Corporation's most recent fiscal year-end, December 31, 1994.

SUMMARY COMPENSATION TABLE

The following table contains information concerning the compensation
paid by the Corporation and its subsidiaries for the years 1992, 1993 and 1994
to the Corporation's Chief Executive Officer and its 4 most highly compensated
executive officers other than the Chief Executive Officer.

SUMMARY COMPENSATION TABLE

- -----------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards
----------------------
Name and Securities
Principal Underlying All Other
Position Year Salary Bonus Options(1) Compensation(2)
($) ($) (#) ($)
- -----------------------------------------------------------------------------------------------------------

Stefan S. Anderson, 1994 168,148 49,197 2,800 2,044
Chairman of the Board 1993 161,519 41,801 1,950 1,969
and President, Corporation 1992 153,870 59,190 1,950 1,875
and First Merchants

Roger W. Gilcrest, 1994 124,563 22,914 1,900 1,516
Executive Vice President, 1993 119,764 19,017 1,350 1,458
First Merchants 1992 113,300 27,252 1,350 1,383

Paul R. Hoover, 1994 102,126 18,814 1,900 1,245
Senior Vice President- 1993 98,042 15,592 1,350 1,195
Operations, First 1992 92,941 22,324 1,350 1,133
Merchants

Larry R. Helms, 1994 89,364 16,434 1,900 1,088
Senior Vice President 1993 86,095 13,668 1,350 1,048
and General Counsel, 1992 82,829 19,860 1,350 1,008
Corporation, and
Senior Vice President,
First Merchants

Lowell E. Williams, 1994 88,544 16,113 1,900 1,066
Senior Vice President, 1993 85,479 13,423 1,350 1,029
First Merchants 1992 81,397 19,293 1,350 979
- -----------------------------------------------------------------------------------------------------------
<FN>
(1) Adjusted for 3-for-2 common stock split which was effective at the close of
business on January 25, 1993 for shareholders of record at the close of
business on January 18, 1993.

(2) Employer contributions for fiscal year to retirement savings plan (Internal
Revenue Code Section 401(k) plan).

OPTION GRANTS TABLE

The 1994 Stock Option Plan, which became effective as of July 1, 1994,
provides for the issuance of options to key employees of the Corporation or any
subsidiary to purchase the Corporation's common stock at prices not less than

the market price of the stock on the dates of grant. The following table con-
tains information concerning individual grants of stock options under the plan
made during 1994 to each of the executive officers named in the Summary
Compensation Table above.

OPTION GRANTS IN LAST FISCAL YEAR(1)

- -----------------------------------------------------------------------------------------------------

Individual Grants
- ----------------------------------------------------------------------------- Potential Realizable
Value at Assumed
Number of Percent Annual Rates
Securities of Total of Stock Price
Underlying Options Appreciation for
Options Granted to Exercise Option Term
Granted Employees in Price Expiration -----------------------
Name (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
- -----------------------------------------------------------------------------------------------------

Stefan S. Anderson 2,800 7.90 30.50 July 29, 2004 53,802 135,786

Roger W. Gilcrest 1,900 5.36 30.50 July 29, 2004 36,509 92,141

Paul R. Hoover 1,900 5.36 30.50 July 29, 2004 36,509 92,141

Larry R. Helms 1,900 5.36 30.50 July 29, 2004 36,509 92,141

Lowell E. Williams 1,900 5.36 30.50 July 29, 2004 36,509 92,141
- -----------------------------------------------------------------------------------------------------
<FN>
(1) Options were granted on July 29, 1994 and are exercisable on or after
January 29, 1995, but not after July 29, 2004.

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE

The following table contains information concerning (1) each exercise
of stock options during 1994 under the 1989 Stock Option Plan or the 1994 Stock
Option Plan by each of the executive officers named in the Summary Compensation
Table above, and (2) the value as of December 31, 1994 of each of the named
executive officer's unexercised options on an aggregated basis.

AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES

- --------------------------------------------------------------------------------------------------

Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Options at Fiscal In-the-Money Options
on Value Year-End at Fiscal Year-End
Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------------------------------------------------------------------------------------

Stefan S. Anderson 0 0 13,350 / 2,800 174,007 / 3,850

Roger W. Gilcrest 0 0 8,250 / 1,900 104,370 / 2,613

Paul R. Hoover 0 0 8,250 / 1,900 104,370 / 2,613

Larry R. Helms 0 0 8,250 / 1,900 104,370 / 2,613

Lowell E. Williams 0 0 6,450 / 1,900 71,595 / 2,613
- --------------------------------------------------------------------------------------------------

PENSION PLAN TABLES

The Corporation has a defined benefit pension plan covering, in
general, all full-time employees of the Corporation and its subsidiaries. The
following table shows the estimated annual benefits payable upon retirement at
age 65 to persons born in 1936 (the average of the birth years of the executive
officers named in the Summary Compensation Table above) in specified compensa-
tion and years of service classifications under the plan.

PENSION PLAN TABLE(1)

- ---------------------------------------------------------------------------------
REMUNERATION YEARS OF SERVICE
- ---------------------------------------------------------------------------------

15 20 25 30 35
----------------------------------------------------------------
$ 125,000 $ 36,719 $ 48,959 $ 61,199 $ 61,199 $ 61,199
150,000 44,594 59,459 74,324 74,324 74,324
175,000 44,594 59,459 74,324 74,324 74,324
200,000 44,594 59,459 74,324 74,324 74,324

- ---------------------------------------------------------------------------------
<FN>
(1) Under the Revenue Reconciliation Act of 1993, $150,000 is the maximum
amount of compensation that can be considered for purposes of calculating
pension benefits accruing under the plan for 1994.

Benefits under the plan are determined primarily by average final
compensation and years of service and are computed on the basis of straight-life
annuity amounts. They are not subject to any deduction for Social Security or
other offset amounts.

Remuneration for purposes of the Pension Plan Table above consists of
the base salary and service award components of the salary amounts reported in
the Summary Compensation Table above. As of January 1, 1995, Messrs. Anderson,
Gilcrest, Hoover, Helms and Williams, the executive officers named in the
Summary Compensation Table, have 20.2, 6.6, 7.7, 23.4 and 40.5 credited years of
service, respectively, and their 1994 remuneration for purposes of calculating
their pension benefits under the plan was $150,000, $121,329, $99,635, $87,114
and $85,500, respectively.

Participants in the plan who had at least 15 credited years of service
and whose combined age and years of service totaled at least 65 as of January 1,
1991, including Messrs. Anderson, Helms and Williams, are entitled to a pension
benefit calculated under the formula that was in effect prior to 1990 if that
will produce a greater benefit. The following table shows the estimated annual
benefits payable upon retirement at age 65 in specified compensation and years
of service classifications under the formula that was in effect prior to 1990.

PENSION PLAN TABLE (Pre-1990 Formula)(1)

- ---------------------------------------------------------------------------------
Remuneration Years of Service
- ---------------------------------------------------------------------------------
15 20 25 30 35
----------------------------------------------------------------

$ 125,000 $ 37,500 $ 50,000 $ 62,500 $ 62,500 $ 62,500
150,000 45,000 60,000 75,000 75,000 75,000
175,000 45,000 60,000 75,000 75,000 75,000
200,000 45,000 60,000 75,000 75,000 75,000

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Corporation is comprised of the
following non-employee directors: Thomas B. Clark, John W. Hartmeyer and Robert
M. Smitson (Chairman). Mr. Smitson is the President of Maxon Corporation.
Stefan S. Anderson, the Chairman of the Board and President of the Corporation
and First Merchants, serves as a director of Maxon Corporation.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors is responsible for
establishing the salary of the Corporation's chief executive officer and
approving the salaries of the other executive officers after receiving
recommendations from the chief executive officer. The Committee is also
responsible for administering the Corporation's incentive compensation and stock
plans.

GENERAL POLICY ON EXECUTIVE COMPENSATION. The Board of Directors of
the Corporation has established an executive compensation program which is
designed to provide incentives to executive officers to achieve short-term and
long-term corporate strategic management goals, with the ultimate objective of
obtaining a superior return on the shareholders' investment. To this end, the
compensation program for executive officers is comprised of cash and equitybased
components which consider: the executive officer's individual performance; the
Corporation's performance as measured against previously-established
annual and long-term goals; the Corporation's performance compared to industry
peers; and the compensation paid by competitors to individuals holding similar
management positions.

The compensation paid to the executive officers for 1994 was greater
than the compensation for 1993, due in part to increased bonuses earned under
the Corporation's Management Incentive Plans. The increased compensation
reflected the Corporation's superior performance during 1994 and over the long
term, compared to industry peers. In 1994 the Corporation and its subsidiary
banks again received national recognition for their financial strength, and the
Corporation's and First Merchants' earnings grew for the 19th consecutive year
under Mr. Anderson's leadership.

SALARIES. The salaries paid to the executive officers, including the
executive officers named in the Summary Compensation Table, were subjectively
determined after consideration of the executive officer's individual perform-
ance, the evaluation of the chief executive officer for executive officers other
than the chief executive officer, the Corporation's financial results compared
with industry peers, various industry salary surveys, and other factors such as
budgetary considerations and inflation rates.

The Compensation Committee believes that the executive officers'
salaries should be at or above the average of the salaries paid to executive
officers with similar responsibilities at Indiana and Midwestern banks and bank
holding companies of similar size. The salaries paid executive officers at peer
financial institutions were determined by consulting several surveys, most
importantly: the Indiana Bankers Association survey of Indiana banks; the Crowe
Chizek MidWest Bank survey; salary surveys prepared by the American Compensation
Association and several benefits consultants; and an informal survey of the
Financial Associates banks (11 Indiana banks with assets between $200,000,000
and $1,300,000,000).

INCENTIVE COMPENSATION. The bonuses paid to the executive officers,
other than the chief executive officer, were determined under the Corporation's
Management Incentive Plan for Administrative Officers. The plan provides for
bonuses of up to 25% of annual base salary for the executive officers if First
Merchants meets specific targets established in advance of the fiscal year for
return on assets, return on equity, and net income growth. These are commonly
used criteria for measuring institutional performance in the banking industry.
30% of the bonus is tied to the return on assets target, 25% is tied to the
return on equity target, and 45% is tied to the net income growth target for the
fiscal year. The executive officers, other than the chief executive officer,
received bonuses of 18.89% of base salary for 1994. The minimum ("threshold")
performance levels which would qualify the executive officers for bonuses under
the plan were exceeded for all criteria: First Merchants' return on assets,
return on equity, and net income growth. The maximum level was exceeded for
return on assets, but not for return on equity or net income growth.

The bonus paid to the chief executive officer was determined under the
Corporation's Management Incentive Plan for Chief Executive Officer. The plan
provides for a bonus of up to 40% of annual base salary for the chief executive
officer, if the same targets are met as are established for the other executive
officers. However, the chief executive officer's bonus depends on the
performance for the fiscal year of both the Corporation and First Merchants.
30% of the bonus is tied to the Corporation's and First Merchants' performance
(15% each) relative to the return on assets target, 30% is tied to the
Corporation's and First Merchants' performance (15% each) relative to the return
on equity target, and 40% is tied to the Corporation's and First Merchants'
performance (20% each) relative to the net income growth target for the fiscal
year. The chief executive officer received a bonus of 30.09% of base salary for
1994. The minimum ("threshold") performance levels which would qualify the
chief executive officer for a bonus under the plan were exceeded for all
criteria: the Corporation's and First Merchants' return on assets, return on
equity, and net income growth. The maximum level was exceeded for First
Merchants' return on assets, but not for the Corporation's return on assets or
for any of the other criteria.

10.

STOCK PLANS. Equity-based compensation, including compensation under
the Corporation's Stock Option Plan and Employee Stock Purchase Plan, is
intended to encourage ownership and retention of the Corporation's common stock
by key employees, thereby giving them a meaningful stake in the Corporation's
continued success and aligning their interests with those of other shareholders.

The Stock Option Plan is briefly described in the paragraph above the
Option Grants Table. During 1994 the Compensation Committee awarded options for
2,800 shares to the chief executive officer and 1,900 shares to each of the
other executive officers under the plan.

The Employee Stock Purchase Plan generally provides that full-time
employees of the Corporation or a participating subsidiary with more than 6
months of service may elect, prior to the offering period (July 1 to June 30),
to purchase common shares of the Corporation at a price equal to 85% of the
lesser of the market price of the stock at the beginning of the period and the
market price at the end of the period. For the offering period ending June 30,
1994, Messrs. Anderson, Gilcrest, Hoover, Helms and Williams, the executive
officers named in the Summary Compensation Table, purchased 616, 359, 462, 102,
and 704 shares, respectively, under the 1989 Employee Stock Purchase Plan. The
1989 Employee Stock Purchase Plan expired on June 30, 1994; however, at the 1994
annual meeting the shareholders approved the 1994 Employee Stock Purchase Plan
and reserved 112,500 shares of the Corporation's common stock for issuance under
that plan. The 1994 Employee Stock Purchase Plan covers 5 offering periods,
expiring on June 30, 1999.

OTHER COMPENSATION. The executive officers are also covered by medical
and retirement plans which are generally applicable to full-time employees of
the Corporation and its subsidiaries. The retirement plans covering each of the
executive officers are the defined benefit pension plan described in the
"Pension Plan Tables" section and the retirement savings plan (Internal Revenue
Code Section 401(k) plan) referred to in the Summary Compensation Table.

CHIEF EXECUTIVE OFFICER'S COMPENSATION. The chief executive offi-
cer's salary is determined in the manner described above in this section.
Mr. Anderson's total compensation for 1994, including salary and bonus, was near
the average for comparable financial institutions but below average if the com-
parison is limited to chief executive officers who also serve as chairman of the
financial institution's board of directors. Mr. Anderson's 1994 salary
increased over his 1993 salary by 4.1%. His total compensation increased by
6.9% over 1993 because he earned a larger bonus under the terms of the Manage-
ment Incentive Plan.

FIRST MERCHANTS CORPORATION COMPENSATION
COMMITTEE

Robert M. Smitson, Chairman
Thomas B. Clark
John W. Hartmeyer

11.

PERFORMANCE GRAPH

The following graph compares the yearly change in the Corporation's
cumulative total shareholder return on its common stock during the last 5 years
with (1) the cumulative total return of the CRSP Index for NASDAQ Stock Market
(U.S. Companies), and (2) the cumulative total return of the CRSP Index for
NASDAQ Bank Stocks. The graph assumes $100 was invested on January 1, 1990 in
the Corporation's common stock, and in each of the two indexes shown, and all
dividends were reinvested.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG FIRST
MERCHANTS CORPORATION, NASDAQ STOCK MARKET (U.S. COMPANIES)
AND NASDAQ BANK STOCKS

12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94

FMC 100 93.8 132.6 205.7 205.4 238.2
NASDAQ Stock Market 100 84.9 136.3 158.6 180.9 176.9
NASDAQ Bank Stocks 100 73.2 120.2 174.9 199.3 198.7

12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following is a summary of the amount and percent of the
Corporation's common stock beneficially owned on February 10, 1995 by each
beneficial owner of more than 5% of the Corporation's common stock, by each
continuing director and director nominee, by each executive officer named in the
Summary Compensation Table above, and by all directors and executive officers as
a group. Unless otherwise noted, the beneficial owner has sole voting and
investment power.

Amount and Nature Percent
Beneficial Owner of Beneficial Ownership(1) of Class
---------------- --------------------------- --------

George and Frances Ball 206,413 (2) 6.13
Foundation
P.O.Box 1408
Muncie, Indiana 47308

Stefan S. Anderson 58,684 (3) 1.73
Frank A. Bracken 128,319 (4) 3.81
Thomas B. Clark 550 *
Michael L. Cox 8,658 *
David A. Galliher 1,949 *
Thomas K. Gardiner 1,170 *
Hurley C. Goodall 445 *
John W. Hartmeyer 26,110 (5) *
Nelson W. Heinrichs 1,891 *
Jon H. Moll 3,192 (6) *
Robert M. Smitson 4,450 (7) *
Joseph E. Wilson 1,229 *
Robert F. Wisehart 25,826 (8) *
John E. Worthen 700 (9) *

Roger W. Gilcrest 23,829 (10) *
Paul R. Hoover 15,489 (11) *
Larry R. Helms 12,067 (12) *
Lowell E. Williams 20,638 (13) *

Directors and Executive
Officers as a Group (20) 351,154 10.20
<FN>

(1) The information contained in this column is based upon informa-
tion furnished to the Corporation by the persons and entities
named above and shareholder records of the Corporation. The
shares shown include the following shares which may be acquired
during the next 60 days under a stock option plan:
Mr. Anderson, 16,150 shares; Mr. Cox, 5,900 shares;
Mr. Gilcrest, 10,150 shares; Mr. Hoover, 10,150 shares;
Mr. Helms, 10,150 shares; Mr. Williams, 8,350 shares; and
Messrs. Clark, Galliher, Gardiner, Goodall, Hartmeyer,
Heinrichs, Moll, Smitson, Wilson, Wisehart and Worthen, 400
shares which they may each acquire as non-employee directors

13.

under the 1994 Stock Option Plan. The shares shown for direc-
tors and executive officers as a group include 76,400 shares
which may be acquired during the next 60 days under a stock
option plan.

(2) Messrs. Anderson, Bracken and Smitson serve as directors of the
George and Frances Ball Foundation. The Foundation's Board of
Directors, which has 6 members, has the voting and investment power
over the shares held by the Foundation. The Foundation's shares are
not included in the totals of the shares beneficially owned by
Messrs. Anderson, Bracken and Smitson.

(3) Includes 2,250 shares held by his spouse, Joan Anderson, in
which he disclaims any beneficial interest.

(4) Includes 1,077 shares held by his spouse, Judy Bracken, in which
he disclaims any beneficial interest; and 100,627 shares held in
the R. B. Bracken Revocable Trust.

(5) Includes 17,250 shares and 2,700 shares owned by Al Pete Meats, Inc.
and Al Pete Enterprises, Inc., respectively; 1,200 shares owned by
Hartmeyer, Inc.; 1,500 shares held by his spouse, Carol A. Hartmeyer,
in which he disclaims any beneficial interest; and 1,800 shares held
by Mr. Hartmeyer as custodian for other relatives, in which he dis-
claims any beneficial interest.

(6) Includes 663 shares held by his spouse, Barbara E. Moll, in which he
disclaims any beneficial interest.

(7) Includes 2,250 shares held by his spouse, Marilyn S. Smitson, in
which he disclaims any beneficial interest.

(8) Includes 11,804 shares held by his spouse, Jean Wisehart, in which he
disclaims any beneficial interest; and 468 shares held by Wisehart
Farms, Inc.

(9) Includes 300 shares held jointly with his spouse, Sandra D. Worthen.

(10) Includes 2,000 shares held by his spouse, Linda Gilcrest, in which he
disclaims any beneficial interest.

(11) Includes 4,474 shares held jointly with his spouse, Judy Hoover.
Also includes 78 shares held by his spouse, Judy Hoover, in which he
disclaims any beneficial interest.

(12) Includes 1,917 shares held jointly with his spouse, Sandra Helms.

(13) Includes 9,404 shares held jointly with his spouse, Marilyn Williams.
Also includes 1,806 shares held by his spouse, Marilyn Williams, in
which he disclaims any beneficial interest.

* Percentage beneficially owned is less than 1% of the outstanding
shares.

14.

INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

Certain directors and executive officers of the Corporation and its
subsidiaries and their associates are customers of, and have had transactions
with, First Merchants, Pendleton and First United from time to time in the ordi-
nary course of business. Additional transactions may be expected to take place
in the ordinary course of business in the future. All loans and commitments
included in such transactions were made on substantially the same terms, includ-
ing interest rates and collateral, as those prevailing at the time for compara-
ble transactions with other persons and did not involve more than the normal
risk of collectibility or present other unfavorable features.

Jon H. Moll, a director of the Corporation and First Merchants, is a
partner in the firm of DeFur, Voran, Hanley, Radcliff & Reed, Muncie, Indiana,
which serves as legal counsel to the Corporation and First Merchants and
provides legal services to the Corporation's other subsidiaries on a transac-
tional basis.

Frank A. Bracken, a director of the Corporation and First Merchants, is
of counsel with the firm of Bingham, Summers, Welsh & Spilman, Indianapolis,
Indiana, which provides legal services to the Corporation and its subsidiaries
on a transactional basis.

Robert F. Wisehart, a director of the Corporation and Chairman of the
Board of Directors of First United, owns the firm of Wisehart & Wisehart,
Middletown, Indiana, which serves as legal counsel to First United.
Mr. Wisehart's firm was paid $15,750 in fees and expenses for legal services in
1994 to First United. A portion of the legal fees represent loan fees which are
passed through to customers in financing transactions.

SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board, subject to the approval of the shareholders, has selected
Geo. S. Olive & Co., LLC, Certified Public Accountants, as its independent
public accountants for 1995. Representatives of the firm are expected to be
present at the annual shareholder's meeting. They will have an opportunity to
make a statement, if they desire, and are expected to be available to respond to
appropriate questions.

SHAREHOLDER PROPOSALS

Proposals of shareholders intended to be presented at the 1996 annual
meeting of the shareholders must be received by the Secretary of the Corporation
at the Corporation's principal office by October 20, 1995, for inclusion in the
Corporation's 1996 proxy statement and form of proxy relating to that meeting.

OTHER MATTERS

The cost of soliciting proxies will be borne by the Corporation. In
addition to solicitations by mail, proxies may be solicited personally or by
telephone or telegraph, but no solicitation will be made by specially engaged
employees or paid solicitors.

15.

The Board and management are not aware of any other matters to be pre-
sented at the annual meeting other than the election of the directors and the
ratification of the appointment of the independent public accountants. However,
if any other matters properly come before such meeting or any adjournment
thereof, the holders of the proxies are authorized to vote thereon at their
discretion.

By Order of the Board of Directors

Rodney A. Medler
CORPORATE SECRETARY

Muncie, Indiana
February 17, 1995

16.

PROXY SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF FIRST MERCHANTS CORPORATION
MUNCIE, INDIANA

The undersigned hereby appoints Clell W. Douglass and Hamer D. Shafer,
and each of them, as proxies with power of substitution, to represent and to
vote all shares of common stock of First Merchants Corporation which the
undersigned would be entitled to vote at the Annual Meeting of Shareholders of
First Merchants Corporation to be held on March 30, 1995, and at any adjournment
thereof, with all of the powers the undersigned would possess if personally
present. If any of the nominees for election as directors are unable to serve
for any reason, the persons listed above have the authority to vote as directed
for any substitute nominee.

Dated: ___________________, 1995.

(Please sign exactly as your name appears
hereon)

__________________________________________
(Signature of Shareholder)

(Joint owners should each sign personally.
Trustees and others signing in a
representative capacity should indicate
the capacity in which they sign.)

PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE.

(SEE REVERSE SIDE FOR INPORTANT INFORMATION)

(CONTINUED FROM OTHER SIDE)

I do / / do not / / plan to attend the Annual Meeting. Number attending: __

THE BOARD OF DIRECTORS AND MANAGEMENT OF FIRST MERCHANTS CORPORATION RECOMMEND A
VOTE "FOR" THE PROPOSALS LISTED.

TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' AND MANAGEMENT'S RECOMMENDA-
TIONS, JUST SIGN THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED.

1. Election of Directors: / / FOR all nominees listed / / WITHHOLD VOTE
below (except as withheld (do not vote for
in the space below) any of the nominees
listed below)

Frank A. Bracken, Michael L. Cox, John W. Hartmeyer, Jon H. Moll,
Robert M. Smitson

(Instruction: To withhold authority to vote for any individual nominee
write that nominee's name in the space provided below.)

_______________________________________________________________

2. Ratification of the appointment of the firm of Geo. S. Olive & Co., LLC, as
independent public accountants for 1995.

FOR / / AGAINST / / ABSTAIN / /

3. In their discretion, the proxies are authorized to vote on such other
matters as may properly come before the meeting.

THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED THIS PROXY
WILL BE VOTED "FOR" APPROVAL OF THE MATTERS DESCRIBED IN ITEMS 1 AND 2 ABOVE.