PRESS RELEASE

Date:	October 23, 2008
From:	MutualFirst Financial, Inc.
For Publication:	Immediately
Contact:	Tim McArdle, Senior Vice President and Treasurer of
	MutualFirst Financial, Inc. (765) 747-2818

MutualFirst Announces Third Quarter 2008 Earnings

Muncie, Indiana - MutualFirst Financial, Inc. (NASDAQ: MFSF), the holding company of MutualBank (the “Bank”), announced today that net income for the third quarter ended September 30, 2008 was $359,000, or $.06 for basic and diluted earnings per share. This compared to net income for the comparable period in 2007 of $1.2 million, or $.28 for basic and diluted earnings per share. Annualized return on assets was .11% and return on average tangible equity was 1.77% for the third quarter of 2008 compared to .49% and 6.45%, respectively, for the same period last year.

Net income for the nine months ended September 30, 2008 was $2.7 million, or $.58 for both basic and diluted earnings per share. This compared to net income for the comparable period in 2007 of $3.3 million, or $.81 for basic and $.80 for diluted earnings per share. Annualized return on average assets was .34% and return on average tangible equity was 4.91% for the first nine months of 2008 compared to .47% and 6.16% respectively, for the same period last year.

Net income for the three months ended September 30, 2008 decreased primarily due to several one-time charges totaling approximately $2.1 million, net of tax, or $.35 per share, including the previously announced loss on the sale of the AMF Ultra Funds, expenses related to the acquisition of MFB Corp. and a write-down on a Lehman senior corporate bond in the investment portfolio during the third quarter. These losses were partially offset by a one-time gain of approximately $660,000, net of tax, or $.11 per share in a bulk sale of fixed rate residential mortgage loans. Earnings, without the one-time quarterly adjustments, would have been $.30 per share. “The current operating environment continues to challenge the banking industry. We are pleased that we continue to see strong core earnings throughout this difficult time in our industry,” Dave Heeter, President and CEO of MutualFirst said.

On July 18, 2008, MutualFirst Financial completed the purchase of MFB Corp. The assets purchased primarily included residential mortgage loans of $167.9 million, consumer loans of $48.5 million, commercial real estate loans of $91.6 million and commercial business loans of $75.5 million. The liabilities assumed included $331.1 million in deposits and $96.4 million in borrowings. Heeter commented, “Despite the one-time events during this quarter, our core earnings reflect the successful integration of MFB Corp that will allow our organization to be stronger as we move forward.”

With the addition of MFB Corp, assets totaled $1.4 billion at September 30, 2008, an increase from December 31, 2007 of $436.4 million, or 45.3%. Loans, excluding loans held for sale, increased $319.4 million, or 39.8%, due primarily to the acquisition of $383.1 million of net loans from MFB Corp. Consumer loans increased $44.6 million, or 19.8%, residential mortgage loans held in the portfolio increased $91.8 million, or 20.7%, and commercial loans increased $183.0 million, or 128.2%. Mortgage loans held for sale increased $1.1 million and mortgage loans sold during the first nine months of 2008 totaled $86.6 million. The increased loan balances are due primarily to the purchase of MFB Corp in the third quarter of 2008. Total net loans, excluding the amount of acquired loans, declined $63.7 million primarily due to the sale of $58.4 million of fixed rate mortgage loans in the third quarter of 2008. Investment securities available for sale increased $20.1 million, or 45.9%, compared to December 31, 2007 due primarily to $23.9 million acquired with MFB Corp. Investment securities held to maturity increased $9.9 million due to the redemption in kind securities received in the previously announced sale of the AMF Ultra Funds.

Allowance for loan losses increased $3.9 million, including $3.0 million acquired with MFB Corp, to $12.2 million at September 30, 2008 when compared to December 31, 2007. Net charge offs for the first nine months of 2008 were $1.3 million, or .20% of average loans on an annualized basis, compared to $1.4 million, or .23% of average loans for the comparable period in 2007. The decrease was primarily due to larger recoveries during the 2008 period. As of September 30, 2008 the allowance for loan losses as a percentage of loans receivable and non-performing loans was 1.08% and 66.06%, respectively, compared to 1.00% and 78.62%, respectively, at December 31, 2007.

Total deposits were $978.9 million at September 30, 2008, an increase of $312.5 million at December 31, 2007. This increase was due primarily to the assumption of $331.1 million in deposits from MFB Corp. Total borrowings increased $80.0 million to $276.7 million at September 30, 2008 from $196.6 million at December 31, 2007 due primarily to the assumption of $96.4 million in borrowings from MFB Corp.

Stockholders’ equity increased $37.0 million, or 42.5%, from $87.0 million at December 31, 2007, to $124.0 million at September 30, 2008. The increase was due primarily to stock issued to acquire MFB Corp of $39.8 million, net income of $2.7 million, and Employee Stock Ownership Plan (ESOP) and RRP shares earned of $295,000. This increase was partially offset by the repurchase of 144,000 shares of common stock for $1.7 million and dividend payments of $2.4 million. Also, the market value of securities available for sale compared to their book value decreased $1.7 million from a loss of $414,000 at December 31, 2007 to a loss of $2.1 million at September 30, 2008. The Bank continues to maintain capital ratios which exceed “well-capitalized” levels as defined pursuant to all regulatory standards as of September 30, 2008.

Net interest income before the provision for loan losses increased $4.0 million from $5.9 million for the three months ended September 30, 2007 to $9.8 million for the three months ended September 30, 2008. The reasons for the increase were a $320.9 million, or 36.9%, increase in average interest earning assets and a 62 basis point increase in the net interest margin from 3.13% for the three months ended September 30, 2007 to 3.31% for the same period in 2008. The increase in average interest earning assets was due primarily to the acquisition of MFB Corp in the third quarter of 2008.

Net interest income before the provision for loan losses increased $5.0 million for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. The reasons for the increase were similar to those stated above. Average interest earning assets increased $111.3 million, or 12.9% and the net interest margin increased by 38 basis points from 2.77% for the nine months ended September 30, 2007 to 3.15% for the same period in 2008.

The provision for loan losses for the third quarter of 2008 was $912,000, compared to $532,000 for last year’s comparable period. Non-performing loans to total loans at September 30, 2008 were 1.63% compared to 1.27% at September 30, 2007. Non-performing assets to total assets were 1.64% at September 30, 2008 compared to 1.37% at September 30, 2007.

The provision for loan losses for the nine months ended September 30, 2008 was $2.3 million, compared to $1.4 million for last year’s comparable period. The reason for the increase is higher loan balances and more non-performing loans.

Non-interest income decreased $900,000 to $1.1 million, or 44.5%, for the three months ended September 30, 2008 compared to the same period in 2007. The decrease was due primarily to losses related to the sale of the AMF Ultra Funds of $2.6 million and a write-down of a Lehman’s corporate bond of $200,000. These decreases were partially offset by a $1.0 million gain from a $51.6 million bulk loan sale. Core non-interest income increased $878,000, or 43.8%, after removing the one-time items mentioned above. This increase was due primarily to increases in fees and service charges on deposit accounts of $549,000, increases in commission income of $274,000, and increases in earnings on cash surrender value of life insurance of $59,000. All of these increases were due primarily to the MFB acquisition.

For the nine month period ended September 30, 2008 non-interest income decreased $350,000, or 6.2%, to $5.3 million compared to $5.7 million for the same period in 2007. The reasons are similar to those mentioned above. Core non-interest income for the nine month period ended September 30, 2008 increased $1.3 million, or 22.5%, after removing one-time items. This increase was primarily due to increases in fees and service charges on deposit accounts of $765,000, increases in commission income of $432,000, and increases in earnings on cash surrender value of life insurance of $202,000.

Non-interest expense increased $3.9 million for the three months ended September 30, 2008 compared to the same period in 2007. Increases in current quarter non-interest expense compared to the same period in 2007 include increases in salaries and employee benefits of $1.6 million, increases in occupancy expense of $357,000, increases in data processing expense of $100,000, increases in professional fees of $205,000, increases in marketing of $271,000 and increases in other expenses of $1.4 million. These increases were primarily due to the acquisition of MFB Corp. Non-interest expense of approximately $470,000 was a one-time merger-related expense in this quarter.

Non-interest expense increased $4.9 million to $23.5 million for the nine months ended September 30, 2008 compared to $18.6 million for the same period in 2007 primarily due to the same reasons mentioned above.

MutualFirst Financial, Inc. and MutualBank are headquartered in Muncie, Indiana with thirty-three full service retail financial centers offices in Delaware, Elkhart, Grant, Kosciusko, Randolph, St. Joseph and Wabash counties. MutualBank also has trust offices in Carmel and Crawfordsville, Indiana and a loan origination office in New Buffalo, Michigan.

Statements contained in this release, which are not historical facts, are forward-looking statements, as that term is defined in the Private Securities Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those currently anticipated due to a number of factors, which include, but are not limited to changes in interest rates; the loss of deposits and loan demand to competitors; substantial changes in financial markets; changes in real estate values and the real estate market; or regulatory changes.

MUTUALFIRST FINANCIAL INC.

	30-Sep		31-Dec
Selected Financial Condition Data(Unaudited):	2008		2007
	(000)		(000)
Total Assets	$	1,398,891	$	962,517
Cash and cash equivalents		31,584		23,648
Loans held for sale		2,766		1,645
Loans receivable, net		1,121,878		802,436
Investment securities held to maturity		9,864		-
Investment securities available for sale, at fair value		73,622		43,692
Total deposits		978,894		666,407
Total borrowings		276,663		196,638
Total stockholders' equity		123,974		87,014

	Three Months			Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended			Ended
	30-Sep			30-Jun			30-Sep			30-Sep			30-Sep
Selected Operations Data (Unaudited):	2008			2008			2007			2008			2007
	(000)			(000)			(000)			(000)			(000)
Total interest income	$	18,825		$	13,489		$	14,128		$	46,071		$	41,993
Total interest expense		8,989			6,689			8,277			23,075			24,032
Net interest income		9,836			6,800			5,851			22,996			17,961
Provision for loan losses		912			733			532			2,257			1,397
Net interest income after provision
for loan losses		8,924			6,067			5,319			20,739			16,564
Non-interest income
Fees and service charges		1,815			1,365			1,266			4,340			3,575
Net loss on sale of securities		(2,770	)								(2,633	)
Equity in losses of limited partnerships		(45	)		(24	)		(23	)		(92	)		(76	)
Commissions		591			308			317			1,190			758
Net gain on loan sales and servicing		1,112			157			90			1,479			277
Increase in cash surrender value of life insurance		357			276			298			909			953
Other income		52			27			56			148			204
Total non-interest income		1,112			2,109			2,004			5,341			5,691
Non-interest expense
Salaries and benefits		5,278			3,892			3,633			12,988			10,926
Occupancy and equipment		1,253			999			896			3,250			2,668
Data processing fees		359			243			259			869			814
Professional fees		381			231			176			821			532
Marketing		444			317			173			991			610
Other expenses		2,420			1,189			1,061			4,589			3,072
Total non-interest expense		10,135			6,871			6,198			23,508			18,622
Income before taxes		(99	)		1,305			1,125			2,572			3,633
Income tax provision (benefit)		(458	)		131			(36	)		(176	)		300
Net income	$	359		$	1,174		$	1,161		$	2,748		$	3,333

Average Balances, Net Interest Income, Yield Earned and Rates Paid

	Three							Three
	mos ended							mos ended
	9/30/2008							9/30/2007
	Average		Interest		Average			Average		Interest		Average
	Outstanding		Earned/		Yield/			Outstanding		Earned/		Yield/
	Balance		Paid		Rate			Balance		Paid		Rate
	(000)		(000)					(000)		(000)
Interest-Earning Assets:
Interest -bearing deposits	$	13,985	$	44		1.26	%	$	2,063	$	20		3.88	%
Mortgage-backed securities:
Available-for-sale		36,964		512		5.54			8,449		128		6.06
Held-to-maturity		3,643		127		13.94
Investment securities:
Available-for-sale		29,535		295		4.00			30,629		416		5.43
Loans receivable		1,089,002		17,603		6.47			817,878		13,453		6.58
Stock in FHLB of Indianapolis		16,723		244		5.84			9,938		112		4.51
Total interest-earning assets (3)		1,189,852		18,825		6.33			868,957		14,129		6.50
Non-interest earning assets, net of allowance
for loan losses and unrealized gain/loss		140,950							88,519
Total assets	$	1,330,802						$	957,476
Interest-Bearing Liabilities:
Demand and NOW accounts	$	159,891		433		1.08		$	129,503		752		2.32
Savings deposits		75,793		71		0.37			54,338		71		0.52
Money market accounts		43,906		226		2.06			24,279		166		2.73
Certificate accounts		547,817		5,159		3.77			441,917		5,270		4.77
Total deposits		827,407		5,889		2.85			650,037		6,259		3.85
Borrowings		280,693		3,101		4.42			155,649		2,018		5.19
Total interest-bearing accounts		1,108,100		8,990		3.25			805,686		8,277		4.11
Non-interest bearing deposit accounts		89,338							48,616
Other liabilities		21,887							15,911
Total liabilities		1,219,325							870,213
Stockholders' equity		111,477							87,263
Total liabilities and stockholders' equity	$	1,330,802						$	957,476
Net earning assets	$	81,752						$	63,271
Net interest income			$	9,835						$	5,852
Net interest rate spread						3.08	%						2.39	%
Net yield on average interest-earning assets						3.31	%						2.69	%
Average interest-earning assets to
average interest-bearing liabilities						107.38	%						107.85	%

	Three Months			Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended			Ended
Selected Financial Ratios and	30-Sep			30-Jun			30-Sep			30-Sep			30-Sep
Other Financial Data (Unaudited):	2008			2008			2007			2008			2007
Share and per share data:
Average common shares outstanding
Basic		6,188,036			3,970,982			4,102,302			4,723,430			4,117,685
Diluted		6,204,883			3,970,982			4,144,979			4,729,045			4,172,017
Per share:
Basic earnings	$	0.06		$	0.30		$	0.28		$	0.58		$	0.81
Diluted earnings	$	0.06		$	0.30		$	0.28		$	0.58		$	0.80
Dividends	$	0.16		$	0.16		$	0.15		$	0.48		$	0.45
Dividend payout ratio		266.67	%		53.33	%		53.57	%		82.76	%		56.25	%
Performance Ratios:
Return on average assets (ratio of net
income to average total assets)(1)		0.11	%		0.49	%		0.49	%		0.34	%		0.47	%
Return on average tangible equity (ratio of net
income to average tangible equity)(1)		1.77	%		6.58	%		6.45	%		4.91	%		6.16	%
Interest rate spread information:
Average during the period(1)		3.08	%		2.90	%		2.39	%		2.91	%		2.48	%
Net interest margin(1)(2)		3.31	%		3.13	%		2.69	%		3.15	%		2.77	%
Efficiency Ratio		92.57	%		77.12	%		78.91	%		82.96	%		78.73	%
Ratio of average interest-earning
assets to average interest-bearing
liabilities		107.38	%		107.68	%		107.85	%		107.53	%		108.07	%
Allowance for loan losses:
Balance beginning of period	$	8,604		$	8,440		$	8,277		$	8,352		$	8,156
Charge offs:
One- to four- family		226			113			360			341			544
Multi-family		0			0			0			0			0
Commercial real estate		140			153			26			324			26
Construction or development		0			0			0			0			0
Consumer loans		462			541			332			1,551			1,059
Commercial business loans		0			0			36			30			303
Sub-total		828			807			754			2,246			1,932
Recoveries:
One- to four- family		5			35			9			42			57
Multi-family		0			0			0			0			0
Commercial real estate		314			0			0			314			0
Construction or development		0			0			0			0			0
Consumer loans		256			203			117			487			302
Commercial business loans		0			0			1			57			201
Sub-total		575			238			126			900			560
Net charge offs		253			569			628			1,346			1,372
Acquired with MFB Financial acquisition		2,954									2,954
Additions charged to operations		912			733			532			2,257			1,397
Balance end of period	$	12,217		$	8,604		$	8,181		$	12,217		$	8,181
Net loan charge-offs to average loans (1)		0.09	%		0.28	%		0.31	%		0.20	%		0.23	%

	September 30,			June 30,			September 30,
	2008			2008			2007
Total shares outstanding		6,994,754			4,118,079			4,299,138
Tangible book value per share	$	12.47		$	16.60		$	16.87
Nonperforming assets (000's)
Loans: Non-accrual	$	17,252		$	10,526		$	8,603
Accruing loans past due 90 days or more		1,138			350			1,695
Restructured loans		103			105			108
Total nonperforming loans		18,493			10,981			10,406
Real estate owned		2,818			2,302			1,599
Other repossessed assets		1,671			1,483			1,282
Total nonperforming assets	$	22,982		$	14,766		$	13,287
Asset Quality Ratios:
Non-performing assets to total assets		1.64	%		1.51	%		1.37	%
Non-performing loans to total loans		1.63	%		1.37	%		1.27	%
Allowance for loan losses to non-performing loans		66.06	%		78.35	%		78.62	%
Allowance for loan losses to loans receivable		1.08	%		1.07	%		1.00	%

(1) Ratios for the three and nine month period have been annualized.

(2) Net interest income divided by average interest earning assets.

(3) Calculated net of deferred loan fees, loan discounts, loans in process and loss reserves.