PRESS RELEASE

Date:	February 11, 2009
From:	MutualFirst Financial, Inc.
For Publication:	Immediately
Contact:	Tim McArdle, Senior Vice President and Treasurer of
	MutualFirst Financial, Inc. (765) 747-2818

MutualFirst Announces 2008 Earnings

Muncie, Indiana - MutualFirst Financial, Inc. (NASDAQ: MFSF), the holding company of MutualBank (the “Bank”), announced today net income for the year ended December 31, 2008 of $835,000, or $.15 for both basic and diluted earnings per common share. This compared to net income in 2007 of $4.2 million, or $1.03 for basic and $1.02 for diluted earnings per common share.  Annualized return on average assets was .07% and return on average tangible equity was 1.06% for year end 2008 compared to .44% and 5.86% respectively, for the same period last year.

Assets totaled $1.4 billion at December 31, 2008, an increase from December 31, 2007 of $447.2 million, or 46.5%. Gross loans, excluding loans held for sale, increased $317.5 million, or 39.2%, due primarily to the acquisition of $383.1 million of net loans from MFB Corp in the third quarter of 2008.  Consumer loans increased $42.9 million, or 19.0%, residential mortgage loans held in the portfolio increased $88.7 million, or 20.0%, and commercial loans increased $185.9 million, or 130.2%.  Mortgage loans held for sale decreased $104,000 and mortgage loans sold during the year 2008 totaled $92.9 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 $65.6 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 $33.7 million, or 77.1%, compared to December 31, 2007 due primarily to $23.9 million acquired with MFB Corp.  Investment securities held to maturity increased $9.7 million due to the redemption in kind securities received in the third quarter of 2008.

The net loss for the fourth quarter ended December 31, 2008 of $1.9 million, or $.29 for basic and diluted earnings per common share was due primarily to provision for loan losses of $4.8 million, or $.46 per common share, net of tax.  This compared to net income for the comparable period in 2007 of $893,000, or $.22 for basic and diluted earnings per common share.  Annualized return on assets was a negative .55% and return on average tangible equity was a negative 8.39% for the fourth quarter of 2008 compared to .37% and 4.96%, respectively, for the same period last year.

Other contributors to the loss for the quarter were an other than temporary charge on certain trust preferred securities of $1.2 million, a mortgage servicing rights impairment charge of $500,000 and a loss on the sale of a subsidiary of $329,000, or a total of $.19 per share, net of tax.  Operating income before provision for loan losses and the additional items discussed above for the three months ended December 31, 2008 was $2.5 million, net of tax, or $.36 per share.  “MutualBank is not immune to the economic environment,” said David W. Heeter, President and CEO, “We feel that we took prudent actions in the fourth quarter to strengthen our reserves to reflect the markets we serve.”

Allowance for loan losses increased $6.8 million, including $3.0 million acquired with MFB Corp, to $15.1 million at December 31, 2008 when compared to December 31, 2007.  Specific loan loss reserves have increased $658,000, while general loan loss reserves have increased $6.1 million since December 31, 2007.  Net charge offs for the year 2008 were $3.2 million, or .34% of average loans on an annualized basis, compared to $2.0 million, or .25% of average loans for the comparable period in 2007. The increase was primarily due to increased charge offs on commercial real estate during 2008.  As of December 31, 2008 the allowance for loan losses as a percentage of loans receivable and non-performing loans was 1.34% and 69.41%, respectively, compared to 1.03% and 79.72%, respectively, at December 31, 2007.  “The current credit environment continues to challenge the banking industry and we continue to prudently manage the asset quality in our loan portfolio,” added Heeter.

Total deposits were $962.5 million at December 31, 2008, an increase of $296.1 million at December 31, 2007.  This increase was due primarily to the assumption of $331.1 million in deposits from MFB Corp in the third quarter of 2008.  Total borrowings increased $82.5 million to $279.1 million at December 31, 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 $66.7 million, or 76.6%, from $87.0 million at December 31, 2007, to $153.6 million at December 31, 2008.  The increase was due primarily to stock issued to acquire MFB Corp of $39.8 million, preferred stock issued to the United States Treasury Department of $32.4 million, net income of $835,000, and Employee Stock Ownership Plan (ESOP) and RRP shares earned of $364,000. This increase was partially offset by the repurchase of 154,000 shares of common stock for $1.8 million and dividend payments of $3.5 million.  Also, the market value of securities available for sale compared to their book value decreased $1.5 million from a loss of $414,000 at December 31, 2007 to a loss of $1.9 million at December 31, 2008.  As of December 31, 2008, the Bank’s risk-based capital ratio was 13.31%, well in excess of “well-capitalized” levels as defined by all regulatory standards. The Company’s tangible equity to tangible asset ratio was 6.38%.

Net interest income before the provision for loan losses increased $4.4 million from $6.2 million for the three months ended December 31, 2007 to $10.5 million for the three months ended December 31, 2008. The reasons for the increase were a $367.3 million, or 42.2%, increase in average interest earning assets and a 57 basis point increase in the net interest margin from 2.84% for the three months ended December 31, 2007 to 3.41% 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 $9.4 million for the year ended December 31, 2008 compared to the year ended December 31, 2007. The reasons for the increase were similar to those stated above. Average interest earning assets increased $175.5 million, or 20.3% and the net interest margin increased by 43 basis points from 2.79% for the year ended December 31, 2007 to 3.22% for the same period in 2008.

The provision for loan losses for the fourth quarter of 2008 was $4.8 million, compared to $843,000 for last year’s comparable period. Non-performing loans to total loans at December 31, 2008 were 1.93% compared to 1.29% at December 31, 2007.   Non-performing assets to total assets were 1.89% at December 31, 2008 compared to 1.35% at December 31, 2007.

The provision for loan losses for the year ended December 31, 2008 was $7.0 million, compared to $2.2 million for last year’s comparable period.  The reason for the increase is higher loan balances and more non-performing loans during 2008.

Non-interest income decreased $899,000 to $1.2 million, or 43.2%, for the three months ended December 31, 2008 compared to the same period in 2007.  The decrease was due primarily to $1.2 million write down on two trust preferred securities, a $329,000 loss on the sale of a title insurance subsidiary, and a $500,000 impairment charge on mortgage servicing rights.  Without the extraordinary decreases mentioned above, operating non-interest income increased $1.1 million for the three months ended December 31, 2008 compared to the same period in 2007.  The increase was due primarily to increases in fees and service charges on deposit accounts of $661,000, increases in commission income of $364,000, and increases in earnings on cash surrender value of life insurance of $135,000.  All of these increases were due primarily to the acquisition of MFB in the third quarter of 2008.

For the year ended December 31, 2008 non-interest income decreased $1.2 million, or 16.1%, to $6.5 million compared to $7.8 million for the same period in 2007. The reasons for the decrease are similar to those mentioned above along with 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 in the third quarter of 2008.  These decreases were offset by increases in fees and service charges on deposit accounts of $1.4 million and commission income of $795,000 due primarily to the acquisition of MFB in the third quarter of 2008.

Non-interest expense increased $4.1 million for the three months ended December 31, 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 $1.8 million, increases in occupancy expense of $337,000, increases in data processing expense of $77,000, increases in professional fees of $80,000, increases in marketing of $193,000 and increases in other expenses of $1.6 million, due primarily to increased intangible amortization and software expense relating to trust services.  These increases were primarily due to the acquisition of MFB Corp.

Non-interest expense increased $9.0 million to $34.1 million for the year ended December 31, 2008 compared to $25.2 million for the same period in 2007 primarily due to the acquisition of MFB Corp.

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.
	31-Dec		31-Dec
Selected Financial Condition Data(Unaudited):	2008		2007
		(000)		(000)
Total Assets	$	1,409,686	$	962,517
Cash and cash equivalents		39,703		23,648
Loans held for sale		1,541		1,645
Loans receivable, net		1,113,132		802,436
Investment securities held to maturity		9,676		-
Investment securities available for sale, at fair value		77,255		43,692
Total  deposits		962,514		666,407
Total borrowings		279,104		196,638
Total stockholders' equity		153,558		87,014

	Three Months			Three Months			Three Months			Twelve Months			Twelve Months
	Ended			Ended			Ended			Ended			Ended
	31-Dec			30-Sep			31-Dec			31-Dec			31-Dec
Selected Operations Data (Unaudited):	2008			2008			2007			2008			2007
		(000)			(000)			(000)			(000)			(000)
Total interest income	$	19,108		$	18,825		$	14,380		$	65,179		$	56,374
Total interest expense		8,563			8,989			8,195			31,639			32,227
Net interest income		10,545			9,836			6,185			33,540			24,147
Provision for loan losses		4,763			912			843			7,020			2,240
Net interest income after provision
for loan losses		5,782			8,924			5,342			26,520			21,907
Non-interest income
Fees and service charges		1,917			1,815			1,256			6,257			4,831
Net loss on sale of investments		(1,412	)		(2,770	)					(4,045	)
Equity in losses of limited partnerships		(65	)		(45	)		(24	)		(158	)		(100	)
Commissions		606			591			242			1,796			1,001
Net gain (loss) on loan sales and servicing		(339	)		1,112			195			1,141			472
Increase in cash surrender value of life insurance		413			357			278			1,323			1,230
Other income		61			52			133			209			337
Total non-interest income		1,181			1,112			2,080			6,523			7,771
Non-interest expense
Salaries and benefits		5,595			5,278			3,832			18,584			14,759
Occupancy and equipment		1,260			1,253			923			4,509			3,591
Data processing fees		322			359			245			1,192			1,058
Professional fees		312			381			232			1,133			764
Marketing		470			444			277			1,461			887
Other  expenses		2,656			2,420			1,024			7,244			4,097
Total non-interest expense		10,615			10,135			6,533			34,123			25,156
Income  before taxes		(3,652	)		(99	)		889			(1,080	)		4,522
Income tax provision (benefit)		(1,739	)		(458	)		(4	)		(1,915	)		296
Net income	$	(1,913	)	$	359		$	893		$	835		$	4,226

Average Balances,  Net Interest Income, Yield Earned and Rates Paid
			Three							Three
			mos ended							mos ended
			12/31/2008							12/31/2007
	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	$	8,855	$	22		0.99	%	$	3,717	$	37		3.98	%
Mortgage-backed securities:
Available-for-sale		49,950		707		5.66			8,316		112		5.39
Held-to-maturity		9,796		187		7.64
Investment securities:
Available-for-sale		20,475		241		4.71			33,023		441		5.34
Loans receivable		1,130,529		17,729		6.27			815,964		13,677		6.70
Stock in FHLB of Indianapolis		18,632		222		4.77			9,943		113		4.55
Total interest-earning assets (3)		1,238,237		19,108		6.17			870,963		14,380		6.60
Non-interest earning assets, net of allowance
for loan losses and unrealized gain/loss		155,839							89,130
Total assets	$	1,394,076						$	960,093
Interest-Bearing Liabilities:
Demand and NOW accounts	$	169,002		328		0.78		$	130,409		689		2.11
Savings deposits		81,372		105		0.52			51,952		68		0.52
Money market accounts		47,161		203		1.72			22,569		138		2.45
Certificate accounts		573,707		5,005		3.49			441,622		5,190		4.70
Total deposits		871,242		5,641		2.59			646,552		6,085		3.76
Borrowings		280,390		2,923		4.17			164,089		2,110		5.14
Total interest-bearing accounts		1,151,632		8,564		2.97			810,641		8,195		4.04
Non-interest bearing deposit accounts		94,006							47,071
Other liabilities		20,612							15,173
Total liabilities		1,266,250							872,885
Stockholders' equity		127,826							87,208
Total liabilities and stockholders' equity	$	1,394,076						$	960,093
Net earning assets	$	86,605						$	60,322
Net interest income			$	10,544						$	6,185
Net interest rate spread						3.20	%						2.56	%
Net yield on average interest-earning assets						3.41	%						2.84	%
Average interest-earning assets to
average interest-bearing liabilities						107.52	%						107.44	%

	Three Months			Three Months			Three Months			Twelve Months			Twelve Months
	Ended			Ended			Ended			Ended			Ended
Selected Financial Ratios and Other Financial Data	31-Dec			30-Sep			31-Dec			31-Dec			31-Dec
(Unaudited):	2008			2008			2007			2008			2007
Share and per share data:
Average common shares outstanding
Basic		6,820,638			6,188,036			4,063,357			5,249,135			4,103,940
Diluted		6,821,158			6,204,883			4,089,234			5,253,477			4,151,173
Per share:
Basic earnings	$	(0.29	)	$	0.06		$	0.22		$	0.15		$	1.02
Diluted earnings	$	(0.29	)	$	0.06		$	0.22		$	0.15		$	1.03
Dividends	$	0.16		$	0.16		$	0.15		$	0.64		$	0.60
Dividend payout ratio		-55.17	%		266.67	%		68.18	%		426.67	%		58.25	%
Performance Ratios:
Return on average assets (ratio of net
income to average total assets)(1)		-0.55	%		0.11	%		0.37	%		0.07	%		0.44	%
Return on average tangible equity (ratio of net
income to average tangible equity)(1)		-8.39	%		1.77	%		4.96	%		1.06	%		5.86	%
Interest rate spread information:
Average during the period(1)		3.20	%		3.08	%		2.56	%		3.01	%		2.50	%
Net interest margin(1)(2)		3.41	%		3.31	%		2.84	%		3.22	%		2.79	%
Efficiency Ratio		90.53	%		92.57	%		79.04	%		85.17	%		78.81	%
Ratio of average interest-earning
assets to average interest-bearing
liabilities		107.52	%		107.38	%		107.44	%		107.14	%		107.92	%
Allowance for loan losses:
Balance beginning of period	$	12,217		$	8,604		$	8,181		$	8,352		$	8,156
Charge offs:
One- to four- family		139			226			101			480			645
Multi-family		0			0			0			0			0
Commercial real estate		1,224			140			18			1,548			44
Construction or development		0			0			0			0			0
Consumer loans		623			462			672			2,174			1,731
Commercial business loans		200			0			0			230			303
Sub-total		2,186			828			791			4,432			2,723
Recoveries:
One- to four- family		0			5			64			42			121
Multi-family		0			0			0			0			0
Commercial real estate		244			314			0			558			0
Construction or development		0			0			0			0			0
Consumer loans		69			256			55			556			357
Commercial business loans		0			0			0			57			201
Sub-total		313			575			119			1,213			679
Net charge offs		1,873			253			672			3,219			2,044
Acquired with MFB Financial acquisition		0			2,954						2,954
Additions charged to operations		4,763			912			843			7,020			2,240
Balance end of period	$	15,107		$	12,217		$	8,352		$	15,107		$	8,352
Net loan charge-offs to average loans (1)		0.66	%		0.09	%		0.33	%		0.34	%		0.25	%

	December 31,			September 30,			December 31,
	2008			2008			2007
Total shares outstanding		6,984,754			6,994,754			4,226,638
Tangible book value per share	$	12.14		$	12.47		$	16.99
Nonperforming assets (000's)
Loans:  Non-accrual	$	19,998		$	17,252		$	8,949
Accruing loans past due 90 days or more		1,473			1,138			1,421
Restructured loans		293			103			107
Total nonperforming loans		21,764			18,493			10,477
Real estate owned		2,979			2,818			1,364
Other repossessed assets		1,861			1,671			1,137
Total nonperforming assets	$	26,604		$	22,982		$	12,978
Asset Quality Ratios:
Non-performing assets to total assets		1.89	%		1.64	%		1.35	%
Non-performing loans to total loans		1.93	%		1.63	%		1.29	%
Allowance for loan losses to non-performing loans		69.41	%		66.06	%		79.72	%
Allowance for loan losses to loans receivable		1.34	%		1.08	%		1.03	%

(1)    Ratios for the three 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.