10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number:   000-27905

MutualFirstFinancial, Inc.

(Exact name of registrant specified in its charter)

Maryland	35-2085640
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

110 East Charles Street
Muncie, Indiana	47305
(Address of principal executive offices)	(Zip Code)

(765) 747-2800

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 subject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes ¨  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨  No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of the Registrant’s common stock, with $.01 par value, outstanding as of May 10, 2009 was 6,984,754.

PART 1     FINANCIAL INFORMATION

ITEM 1.     Financial Statements

MUTUALFIRST FINANCIAL, INC. AND SUBSIDIARY

Consolidated Condensed Balance Sheets

	March 31,			December 31,
	2009			2008
	(Unaudited)
Assets
Cash	$	15,435,325		$	21,654,283
Interest-bearing demand deposits		33,294,052			18,049,169
Cash and cash equivalents		48,729,377			39,703,452
Interest-bearing deposits		14,000,000			0
Investment securities available for sale		94,302,547			77,254,925
Investment securities held to maturity		9,849,597			9,675,891
Total investment securities		104,152,144			86,930,816
Loans held for sale		15,320,254			1,541,110
Loans		1,106,714,876			1,128,239,260
Allowance for loan losses		(15,590,402	)		(15,106,780	)
Net loans		1,091,124,474			1,113,132,480
Premises and equipment		35,268,389			36,500,979
Federal Home Loan Bank of Indianapolis stock, at cost		18,631,500			18,631,500
Investment in limited partnerships		4,454,272			4,560,690
Cash surrender value of life insurance		43,023,719			42,637,240
Core deposit and other intangibles		7,009,215			7,406,572
Deferred income tax benefit		21,194,588			21,237,513
Other assets		16,298,196			16,545,134
Total assets	$	1,419,206,128		$	1,388,827,486
Liabilities
Deposits
Non-interest-bearing	$	92,863,954		$	93,393,362
Interest bearing		921,510,088			869,120,808
Total deposits		1,014,374,042			962,514,170
Federal Home Loan Bank advances		242,274,598			263,112,728
Other borrowings		15,586,797			15,991,690
Other liabilities		17,458,822			16,693,959
Total liabilities		1,289,694,259			1,258,312,547
Commitments and Contingent Liabilities
Stockholders' Equity
Preferred stock, $.01 par value
Authorized and unissued — 5,000,000 shares Issued and outstanding — 32,382 and 32,382 shares; liquidation preference $1,000 per share		324			324
Common stock, $.01 par value
Authorized — 20,000,000 shares Issued and outstanding —6,984,754 and 6,984,754 shares		69,847			69,847
Additional paid-in capital - preferred stock		31,507,839			31,461,848
Additional paid-in capital - common stock		72,577,725			72,610,939
Retained earnings		30,667,632			29,989,003
Accumulated other comprehensive loss		(3,801,892	)		(2,027,956	)
Unearned employee stock ownership plan (ESOP) shares		(1,509,606	)		(1,589,066	)
Total stockholders' equity		129,511,869			130,514,939
Total liabilities and stockholders' equity	$	1,419,206,128		$	1,388,827,486

See notes to consolidated condensed financial statements.

MUTUALFIRST FINANCIAL, INC. AND SUBSIDIARY

Consolidated Condensed Statements of Income

(Unaudited)

	Three Months Ended
	March 31
	2009			2008
Interest Income
Loans receivable, including fees	$	17,128,494		$	13,048,954
Investment securities:
Mortgage-backed securities		942,357			158,424
Federal Home Loan Bank stock		119,000			119,027
Other investments		455,777			405,439
Deposits with financial institutions		10,304			25,256
Total interest income		18,655,932			13,757,100
Interest Expense
Passbook savings		65,474			68,812
Certificates of deposit		5,204,620			4,614,867
Daily Money Market accounts		129,203			110,485
Demand and NOW acounts		200,447			513,486
Federal Home Loan Bank advances		2,430,999			2,063,042
Other interest expense		233,651			26,088
Total interest expense		8,264,394			7,396,780
Net Interest Income		10,391,538			6,360,320
Provision for losses on loans		1,450,000			612,500
Net Interest Income After Provision for Loan Losses		8,941,538			5,747,820
Other Income
Service fee income		1,689,590			1,159,332
Net realized gain on redemption of Visa stock		0			137,434
Net realized gain (loss) on sale of securities		(199,348	)		0
Equity in losses of limited partnerships		(77,744	)		(23,644	)
Commissions		628,221			292,096
Net gains on sales of loans		1,025,995			183,359
Net servicing fees		77,037			26,839
Increase in cash surrender value of life insurance		386,479			276,500
Other income		50,355			68,180
Total other income		3,580,585			2,120,096
Other Expenses
Salaries and employee benefits		5,460,003			3,818,341
Net occupancy expenses		809,974			451,311
Equipment expenses		337,203			343,362
Data processing fees		353,815			266,813
Automated teller machine		280,137			202,572
Deposit insurance		387,984			35,390
Professional fees		334,608			209,152
Advertising and promotion		362,500			230,421
Software subscriptions and maintenance		332,751			178,022
Supplies		137,572			73,551
Intangible amortization		397,357			57,080
Other expenses		1,178,148			635,640
Total other expenses		10,372,052			6,501,655
Income Before Income Tax		2,150,071			1,366,261
Income tax expense		354,000			151,000
Net Income		1,796,071			1,215,261
Preferred stock dividends and accretion		450,766
Net Income Available to Common Shareholders	$	1,345,305		$	1,215,261
Basic earnings per common share	$	0.20		$	0.30
Diluted earnings per common share	$	0.20		$	0.30
Dividends per common share	$	0.12		$	0.16

See notes to consolidated condensed financial statements.

MUTUALFIRST FINANCIAL, INC. AND SUBSIDIARY

Consolidated Condensed Statement of Stockholders' Equity

For the Three Months Ended March 31, 2009

(Unaudited)

	Common Stock							Preferred Stock												Accumulated
					Additional							Additional								Other			Unearned
	Shares				paid-in			Shares				paid-in		Comprehensive			Retained			Comprehensive			ESOP
	Outstanding		Amount		capital			Outstanding		Amount		capital		Income			Earnings			Income (Loss)			shares			Total
Balances,  December  31, 2008, as reported		6,984,754	$	69,847	$	72,610,939			32,382	$	324	$	31,461,848				$	29,989,003		$	(2,027,956	)	$	(1,589,066	)	$	130,514,939
Comprehensive income
Net income for the period														$	1,796,071			1,796,071									1,796,071
Other comprehensive income, net of tax
Net unrealized losses on securities															(1,773,936	)					(1,773,936	)					(1,773,936	)
Comprehensive income														$	22,135
ESOP shares earned						(33,214	)																	79,460			46,246
Amortization of preferred stock													45,991					(45,991	)								0
Cash dividends ($.12 per common share)																		(837,581	)								(837,581	)
Cash dividends - preferred stock																		(233,870	)								(233,870	)
Balances,  March 31, 2009		6,984,754	$	69,847	$	72,577,725			32,382	$	324	$	31,507,839				$	30,667,632		$	(3,801,892	)	$	(1,509,606	)	$	129,511,869

See notes to consolidated condensed financial statements.

MutualFirst Financial, Inc.

Consolidated Condensed Statements of Cash Flows

(Unaudited)

	Three Months Ended
	March 31,
	2009			2008
Operating Activities
Net income	$	1,796,071		$	1,215,261
Items not requiring (providing) cash
Provision for loan losses		1,450,000			612,500
Depreciation and amortization		1,070,119			637,836
Deferred income tax		858,655			(17,000	)
Loans originated for sale		(56,081,338	)		(14,544,092	)
Proceeds from sales of loans held for sale		42,442,457			14,012,948
Gains on sales of loans held for sale		(1,025,995	)		(183,359	)
Gain on sale of premises and equipment		(187,651	)		-
Loss on available for sale securities		199,348			-
Other equity adjustments		46,246			-
Change in
Interest receivable and other assets		812,114			360,351
Interest payable and other liabilities		(538,691	)		(697,326	)
Cash value of life insurance		(386,479	)		(276,500	)
Other adjustments		(380,630	)		303,200
Net cash provided by (used in) operating activities		(9,925,774	)		1,423,819
Investing Activities
Net change in interest earning deposits		(14,000,000	)		-
Purchases of securities available for sale		(24,701,997	)		(3,705,055	)
Proceeds from maturities and paydowns of securities:
Available for sale		4,155,426			1,936,951
Held to maturity		380,040			-
Proceeds from sale of available-for-sale securities		500,000			-
Net change in loans		19,815,913			9,244,021
Purchases of premises and equipment		(186,590	)		(952,212	)
Proceeds from sale of premises and equipment		1,033,151			-
Proceeds from real estate owned sales		560,081			147,756
Other investing activities		268,381			25,168
Net cash provided by (used in) investing activities		(12,175,595	)		6,696,629
Financing Activities
Net change in
Noninterest-bearing, interest-bearing demand and savings deposits		(7,661,417	)		11,175,376
Certificates of deposits		59,521,288			514,538
Proceeds from FHLB advances		7,000,000			126,300,000
Repayment of FHLB advances		(27,549,026	)		(136,417,620	)
Repayment of other borrowings		(415,655	)		(4,317,770	)
Stock repurchased		-			(628,785	)
Cash dividends paid		(1,071,450	)		(667,488	)
Other financing activities		1,303,554			1,347,772
Net cash provided by (used in) financing activities		31,127,294			(2,693,977	)
Net Change in Cash and Cash Equivalents		9,025,925			5,426,471
Cash and Cash Equivalents, Beginning of Year		39,703,452			23,648,171
Cash and Cash Equivalents, End of Year	$	48,729,377		$	29,074,642
Additional Cash Flows Information
Interest paid	$	7,973,004		$	7,898,078
Income tax paid		-			700,000
Transfers from loans to foreclosed real estate		482,737			321,612
Mortgage servicing rights capitalized		885,732			139,693

See Notes to Consolidated Condensed Financial Statements

MutualFirst Financial, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note 1:  Basis of Presentation

The consolidated condensed financial statements include the accounts of MutualFirst Financial, Inc. (the “Company”), its wholly owned subsidiary MutualBank, a federally chartered savings bank (“Mutual”), Mutual’s wholly owned subsidiaries, First MFSB Corporation, Mishawaka Financial Services, and Mutual Federal Investment Company (“MFIC”), and MFIC majority owned subsidiary, Mutual Federal REIT, Inc. All significant inter-company accounts and transactions have been eliminated in consolidation.

Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report for 2008 filed with the Securities and Exchange Commission.

The interim consolidated financial statements at March 31, 2009 have not been audited by independent accountants, but in the opinion of management, reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for such periods. The results of operations for the period are not necessarily indicative of the results to be expected for the full year.

The Consolidated Condensed Balance Sheet of the Company as of December 31, 2008 has been derived from the Audited Consolidated Balance Sheet of the Company as of that date.

Note 2: Earnings per share

Earnings per share were computed as follows: (Dollars in thousands except per share data)

	Three Months Ended Ended March 31,
	2009							2008
				Weighted-						Weighted-
				Average		Per-Share				Average		Per-Share
	Income			Shares		Amount		Income		Shares		Amount
	(000's)							(000's)
Basic Earnings Per Share
Net income	$	1,796			6,825,544			$	1,215		4,003,509
Dividends and accretion on preferred stock		(451	)						-
Income available to common shareholders	$	1,345			6,825,544	$	0.20	$	1,215		4,003,509	$	0.30
Effect of Dilutive securities
Stock options and RRP grants					-						-
Diluted Earnings Per Share
Income available to common stockholders and assumed conversions	$	1,345			6,825,544	$	0.20	$	1,215		4,003,509	$	0.30

Options of 596,603 and 380,613 shares were not included in the calculation above due to being anti-dilutive to earnings per share as of March 31, 2009 and March 31, 2008.

Note 3: Future Accounting Pronouncements

On January 1, 2009, the Company adopted SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51 (SFAS 160).  SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.  SFAS 160 clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements and requires retroactive adoption of the presentation and disclosure requirements for existing minority interests.  All other requirements of SFAS 160 shall be applied prospectively.  The adoption of SFAS 160 did not have an effect on the Company’s consolidated financial results.

In February 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) No. 157-2, Effective Date of FASB Statement No. 157 (FSP 157-2) which delayed the effective date of SFAS No. 157, Fair Value Measurements, for non-financial assets and liabilities that are measured at fair value on a non-recurring basis, until the fiscal year beginning after November 15, 2008.  The Company adopted FSP 157-2 on January 1, 2009 which required additional disclosures related to the fair value of the Company’s non-financial assets.  The adoption did not have a significant effect on the Company’s consolidated financial results.

In March 2009, the FASB issued FSP Financial Accounting Standards (FAS) 107-b and Accounting Principles Board (APB) 28-a, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS 107-b and APB 28-a).  FSP FAS 107-b and APB 28-a amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements.  This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require the related disclosures in all interim financial statements.  FSP FAS 107-b and APB 28-a is effective for interim and annual periods ending after June 15, 2009.  Since FSP FAS 107-b and APB 28-a only requires additional disclosures, the adoption of the FSP is not expected to have an effect on the Company’s consolidated financial results.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, and Emerging Issues Task Force (EIFT) 99-20-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP FAS 115-2/124-2 and EITF 99-20-2).  FSP FAS 115-2/124-2 and EITF 99-20-2 requires entities to separate an other-than-temporary impairment of a debt security into two components when there are credit related losses associated with the impaired debt security for which management asserts that it does not have the intent to sell the security, and it is more likely than not that it will not be required to sell the security before recovery of its cost basis.  The amount of the other-than-temporary impairment related to a credit loss is recognized in earnings, and the amount of the other-than-temporary impairment related to other factors is recorded in other comprehensive loss.  FSP FAS 115-2/124-2 is effective for periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009.  The Company did not early adopt this FSP and is currently evaluating the impact that it will have on its consolidated financial results.

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In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions that are Not Orderly (FSP FAS 157-4).  The FSP provides additional guidance for estimating fair value in accordance with SFAS No. 157, Fair Value Measurements.  Under FSP FASB 157-4, if an entity determines that there has been a significant decrease in the volume and level of activity for the asset or the liability in relation to the normal market activity for the asset or liability (or similar assets or liabilities), then transactions or quoted prices may not accurately reflect fair value.  In addition, if there is evidence that the transaction for the asset or liability is not orderly, the entity shall place little, if any weight on that transaction price as an indicator of fair value.  FSP FAS 157-4 is effective for periods ending after June 15, 2009.  Adoption of this FSP is not expected to have a significant impact on the Company’s consolidated financial results.

The FASB issued FSP FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.  This FSP amends and clarifies FAS 141(R), Business Combinations, regarding the initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities arising from contingencies in a business combination.  This FSP eliminates the distinction between contractual and non-contractual contingencies discussed in FAS 141(R), specifies whether contingencies should be measured at fair value or in accordance with FAS 5, provides application guidance on subsequent accounting for assets acquired and liabilities assumed in a business combination that arise from contingencies and establishes new disclosure requirements.  This FSP is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  This Position did not have a material impact on the Company’s consolidated financial condition or results of operations.

In March 2008, FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—An Amendment FASB Statement No. 133. This Statement amends and expands the disclosure requirements of SFAS No. 133 to provide greater transparency about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedge items are accounted for under SFAS No. 133 and its related interpretations and (iii) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows.  To meet those objectives, SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements.  This SFAS is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.  This Statement did not have a material impact on the Company’s consolidated financial condition or results of operations.

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Note 4: Disclosures About Fair Value of Assets and Liabilities

Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157 (FAS 157), Fair Value Measurements.  FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.  FAS 157 has been applied prospectively as of the beginning of the year.

FAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  FAS 157 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The standard describes three levels of inputs that may be used to measure fair value:

Level 1  Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Items Measured at Fair Value on a Recurring Basis

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying balance sheet, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Available-for-Sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy.  The Company uses a third-party provider to provide market prices on its securities and no securities are priced as Level 1 securities.  If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows.  Level 2 securities include mortgage-backed, collateralized mortgage, federal agency and certain corporate obligation securities.  In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include certain corporate obligation securities.

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			Fair Value Measurements Using
	Fair Value		Level 1		Level 2		Level 3
March 31, 2009
Available-for-sale securities	$	94,303	$	—	$	91,096	$	3,207
December 31, 2008
Available-for-sale securities	$	77,255	$	—	$	70,938	$	6,317

The following is a reconciliation of the beginning and ending balances for the three months ended March 31, 2009 of recurring fair value measurements recognized in the accompanying balance sheet using significant unobservable (Level 3) inputs:

	Available-for-Sale Securities
Beginning balance	$	6,317
Total realized and unrealized gains and losses
Included in net income		(200	)
Included in other comprehensive income		(2,903	)
Purchases, issuances and settlements		(7	)
Transfers in and/or out of Level 3		—
Ending balance	$	3,207
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	200

Items Measured at Fair Value on a Non-Recurring Basis

From time to time, certain assets may be recorded at fair value on a non-recurring basis.  These non-recurring fair value adjustments typically are a result of the application of lower of cost or fair value accounting or a write-down occurring during the period.  The following is a description of the valuation methodologies used for certain assets that are recorded at fair value.

Impaired Loans

Loans for which it is probable that the Bank will not collect all principal and interest due according to contractual terms are measured for impairment in accordance with the provisions of Financial Accounting Standard No. 114 (FAS 114), Accounting by Creditors for Impairment of a Loan.  Allowable methods for estimating fair value include using the fair value of the collateral for collateral dependent loans or, where a loan is determined not to be collateral dependent, using the discounted cash flow method.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized.  This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value.

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If the impaired loan is determined not to be collateral dependent, then the discounted cash flow method is used.  This method requires the impaired loan to be recorded at the present value of expected future cash flows discounted at the loan’s effective interest rate.  The effective interest rate of a loan is the contractual interest rate adjusted for any net deferred loan fees or costs, premiums or discount existing at origination or acquisition of the loan.

Impaired loans are classified within Level 3 of the fair value hierarchy.

Mortgage Servicing Rights

Mortgage servicing rights do not trade in an active, open market with readily observable prices.  Accordingly, fair value is estimated using discounted cash flow models.  Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy.

			Fair Value Measurements Using
	Fair Value		Level 1		Level 2		Level 3
March 31, 2009
Impaired loans	$	497	$	—	$	—	$	497
Mortgage servicing rights		423		—		—		423
December 31, 2008
Impaired loans	$	5,997	$	—	$	—	$	5,997
Mortgage servicing rights		2,776		—		—		2,776

General

MutualFirst Financial, Inc., a Maryland corporation (the “Company”), was organized in September 1999.  On December 29, 1999, it acquired the common stock of MutualBank (“Mutual”) upon the conversion of Mutual from a federal mutual savings bank to a federal stock savings bank.

Mutual was originally organized in 1889 and currently conducts its business from thirty-three full service financial centers located in Delaware, Elkhart, Grant, Kosciusko, Randolph, St. Joseph and Wabash counties, Indiana, with its main office located in Muncie.   Mutual also has trust offices in Carmel and Crawfordsville, Indiana and a loan origination office in New Buffalo, Michigan.  Mutual’s principal business consists of attracting deposits from the general public and originating fixed and variable rate loans secured primarily by first mortgage liens on residential and commercial real estate, consumer goods, and business assets.  Mutual’s deposit accounts are insured by the Federal Deposit Insurance Corporation up to applicable limits.

Mutual subsidiaries include, First MFSB Corporation, Mutual Federal Investment Company (“MFIC”) and Mishawaka Financial Services.  The assets of First MFSB Corporation consist of an investment in Family Financial Holdings Incorporated.  Family Financial is an ordinary Indiana corporation that provides debt cancellation products to financial institutions. MFIC is a Nevada corporation holding approximately $88 million in investments.  MFIC currently owns one subsidiary, Mutual Federal REIT.  The assets of Mutual Federal REIT consist of approximately $109 million in one-to four-family mortgage loans.  Mishawaka Financial Services was acquired with MFB Corp. and is engaged in the sale of life and health insurance to customers of the bank.

6

The following should be read in conjunction with the Management’s Discussion and Analysis in the Company’s December 31, 2008 Annual Report on Form 10-K.

Critical Accounting Policies

The notes to the consolidated financial statements contain a summary of the Company’s significant accounting policies presented on pages 77 to 81 of the Annual Report on Form 10-K for the year ended December 31, 2008.  Certain of these policies are important to the portrayal of the Company’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain.  Management believes that its critical accounting policies include determining the allowance for loan losses, the valuation of foreclosed assets, mortgage servicing rights and intangible assets.

Allowance for Loan Losses

The allowance for loan losses is a significant estimate that can and does change based on management’s assumptions about specific borrowers and current general economic and business conditions, among other factors.  Management reviews the adequacy of the allowance for loan losses on at least a quarterly basis.  The evaluation by management includes consideration of past loss experience, changes in the composition of the loan portfolio, the current condition and amount of loans outstanding, identified problem loans and the probability of collecting all amounts due.

The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions.  A worsening or protracted economic decline would increase the likelihood of additional losses due to credit and market risk and could create the need for additional loss reserves.

Foreclosed Assets

Foreclosed assets are carried at the lower of cost or fair value less estimated selling costs.  Management estimates the fair value of the properties based on current appraisal information.  Fair value estimates are particularly susceptible to significant changes in the economic environment, market conditions, and real estate market.  A worsening or protracted economic decline would increase the likelihood of a decline in property values and could create the need to write down the properties through current operations.

7

Mortgage Servicing Rights

Mortgage servicing rights (“MSRs”) associated with loans originated and sold, where servicing is retained, are capitalized and included in other intangible assets in the consolidated balance sheet.  The value of the capitalized servicing rights represents the fair value of the right to service loans in the portfolio.  Critical accounting policies for MSRs relate to the initial valuation and subsequent impairment tests.  The methodology used to determine the valuation of MSRs requires the development and use of a number of estimates, including anticipated principal amortization and prepayments of that principal balance.  Events that may significantly affect the estimates used are changes in interest rates, mortgage loan prepayment speeds and the payment performance of the underlying loans.  The carrying value of the MSRs is periodically reviewed for impairment based on a determination of fair value.  For purposes of measuring impairment, the servicing rights are compared to a valuation prepared based on a discounted cash flow methodology, utilizing current prepayment speeds and discount rates.  Impairment, if any, is recognized through a valuation allowance and is recorded as a reduction in loan servicing fee income.

Intangible Assets

The Company periodically assesses the potential impairment of its core deposit intangible.  If actual external conditions and future operating results differ from the Company’s judgments, impairment and/or increased amortization charges may be necessary to reduce the carrying value of these assets to the appropriate value. 

Securities

Under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, investment securities must be classified as held-to-maturity, available-for-sale or trading.  Management determines the appropriate classification at the time of purchase. The classification of securities is significant since it directly impacts the accounting for unrealized gains and losses on securities. Debt securities are classified as held-to-maturity and carried at amortized cost when management has the positive intent and the Company has the ability to hold the securities to maturity. Securities not classified as held-to-maturity are classified as available-for-sale and are carried at fair value, with the unrealized holding gains and losses, net of tax, reported in other comprehensive income and do not effect earnings until realized.

The fair values of the Company’s securities are generally determined by reference to quoted prices from reliable independent sources utilizing observable inputs. Certain of the Company’s fair values of securities are determined using models whose significant value drivers or assumptions are unobservable and are significant to the fair value of the securities. These models are utilized when quoted prices are not available for certain securities or in markets where trading activity has slowed or ceased. When quoted prices are not available and are not provided by third party pricing services, management judgment is necessary to determine fair value. As such, fair value is determined using discounted cash flow analysis models, incorporating default rates, estimation of prepayment characteristics and implied volatilities.

8

The Company evaluates all securities on a quarterly basis, and more frequently when economic conditions warrant additional evaluations, for determining if an other-than-temporary impairment (OTTI) exists pursuant to guidelines established in Financial Accounting Standards Board (FASB) Staff Position (FSP) 115-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. In evaluating the possible impairment of securities, consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial conditions and near-term prospects of the issuer, and the ability and intent of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal government or its agencies or government sponsored agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. The Company may also evaluate securities for OTTI more frequently when economic or market concerns warrant additional evaluations. If management determines that an investment experienced an OTTI, the loss is recognized in the income statement as a realized loss. Any recoveries related to the value of these securities are recorded as an unrealized gain (as other comprehensive income (loss) in stockholders’ equity) and not recognized in income until the security is ultimately sold.

The Company from time to time may dispose of an impaired security in response to asset/liability management decisions, future market movements, business plan changes, or if the net proceeds can be reinvested at a rate of return that is expected to recover the loss within a reasonable period of time.

Forward Looking Statements

This quarterly report on Form 10-Q contains statements which constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements may appear in a number of places in this Form 10-Q and include statements regarding the intent, belief, outlook, estimate or expectations of the company, its directors or its officers primarily with respect to future events and the future financial performance of the company.  Readers of this Form 10-Q are cautioned that any such forward looking statements are not guarantees of future events or performance and involve risk and uncertainties, and that actual results may differ materially from those in the forward looking statements as a result of various factors.  The accompanying information contained in this Form 10-Q identifies important factors that could cause such differences.  These factors include 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.

The Company does not undertake – and specifically disclaims any obligation – to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

9

Overview

The Company’s results of operations depend primarily on the level of net interest income, which is the difference between the interest income earned on interest-earning assets, such as loans and investments, and costs incurred with respect to interest-bearing liabilities, primarily deposits and borrowings. The structure of our interest-earning assets versus the structure of interest-bearing liabilities along with the shape of the yield curve has a direct impact on our net interest income.

Historically, our interest-earning assets have been longer term in nature (i.e., fixed-rate mortgage loans) and interest-bearing liabilities have been shorter term (i.e., certificates of deposit, regular savings accounts, etc). This structure would impact net interest income favorably in a decreasing rate environment, assuming a normally shaped yield curve, as the rates on interest-bearing liabilities would decrease more rapidly than rates on the interest-earning assets.  Conversely, in an increasing rate environment, assuming a normally shaped yield curve, net interest income would be impacted unfavorably as rates on interest-earning assets would increase at a slower rate than rates on interest-bearing liabilities.  The acquisition of MFB Corp. helped reduce the interest rate risk exposure of the Bank primarily due to changes in the loan composition which increased the percentage of loans with adjustable rates.  This decline in the Bank’s liability sensitive exposure should provide for less net portfolio value volatility with future rate movements.

It has been the Company’s strategic objective to change the repricing structure of its interest-earning assets from longer term to shorter term to better match the structure of our interest-bearing liabilities and therefore reduce the impact interest rate changes have on our net interest income. Strategies employed to accomplish this objective have been to increase the originations of variable rate commercial loans and shorter term consumer loans and to sell longer term mortgage loans. The percentage of consumer and commercial loans to total loans has increased from 44% at the end of 2004 to 54% currently. As we continue to increase our investment in business-related loans, which are considered to entail greater risks than one-to four- family residential loans, in order to help offset the pressure on our net interest margin, our provision for loan losses may increase to reflect this increased risk.  On the liability side of the balance sheet, the Company is employing strategies to increase the balance of core deposit accounts such as low cost checking and money market accounts. The percentage of core deposits to total deposits has remained constant at 36% when comparing the end of 2004 to March 31, 2009. These are ongoing strategies that are dependent on current market conditions and competition.

During the first three months of 2009, in keeping with its strategic objective to reduce interest rate risk exposure, the Company also sold $42.3 million of long term fixed rate loans that had been held for sale, which reduced potential earning assets and therefore had a negative impact on net interest income. This was offset, in the short term, by recognizing a gain on the sale of these loans of $1.0 million.

10

On July 18, 2008, the Company 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.

Results of operations also depend upon the level of the Company’s non-interest income, including fee income and service charges, and the level of its non-interest expense, including general and administrative expenses. The acquisition of MFB Corp. added trust services to the Bank, which are being leveraged through the Bank’s existing footprint.  The Company also opened two new branches in Elkhart County in 2008.  The intent of these initiatives has been to increase income over the long term. However, on a short term basis, expenses relating to expanding trust services and new branches will have the affect of increasing non-interest expense with limited immediate offsetting income. The FDIC has proposed a special assessment of 20 basis points of its assessment base as of June 30, 2009.  If this assessment is approved, it will negatively impact the second quarter 2009 net income.

Financial Condition

Assets totaled $1.4 billion at March 31, 2009, an increase from December 31, 2008 of $30.4 million, or 2.2%. Gross loans, excluding loans held for sale, decreased $21.5 million, or 1.9%.  Consumer loans decreased $4.2 million or 1.5%, and commercial loans increased $4.6 million, or 1.4%, while residential mortgage loans held in the portfolio decreased $20.8 million, or 3.9%. Residential mortgage loans held for sale increased $13.8 million and mortgage loans sold during the quarter totaled $42.3 million compared to $14.0 million sold in the first quarter of last year. First quarter seasonality on consumer lending and mortgage loan sales are the primary reasons for the decreased loan balances.  Mortgage loan sales increased primarily due to increased mortgage production in the first quarter 2009 as mortgage rates declined.  These loan sales maintain the Bank’s strategic objective to reduce interest rate risk exposure.  Interest-bearing deposits increased $14.0 million primarily due to the investment of excess liquidity.  Investment securities available for sale increased $31.0 million, or 40.2% primarily due to investments in highly rated municipal, corporate and mortgage-backed securities.

Allowance for loan losses was $15.6 million at March 31, 2009, an increase of $484,000 from December 31, 2008. Net charge offs for the quarter ended March 31, 2009 were $967,000 or .34% of average loans on an annualized basis compared to $524,000, or .26% of average loans for the comparable period in 2008.  On a linked quarter basis net charge offs decreased from an annualized .66% of average loans for the quarter ended December 31, 2008 compared to .34% for the current quarter.  The allowance for loan losses as a percentage of non-performing loans and total loans was 69.38% and 1.41%, respectively at March 31, 2009 compared to 69.41% and 1.34%, respectively at December 31, 2008.

11

Total deposits were $1.0 billion at March 31, 2009 an increase of $51.9 million, or 5.4% from December 31, 2008. This increase was due primarily to increases in certificates of deposit and savings deposits of $63.9 million primarily due to promotion of the product line, partially offset by declines in demand and money market deposits of $12.0 million. Total borrowings decreased $21.2 million to $257.9 million at March 31, 2009 from $279.1 million at December 31, 2008 primarily due to the payment of several maturing and variable rate FHLB advances.

Stockholders’ equity was $129.5 million at March 31, 2009, a decrease of $1.0 million, or 0.8% from December 31, 2008. The decline was due primarily to a decrease in   accumulated other comprehensive income of $1.8 million from a loss of $2.0 million at December 31, 2008 to a loss of $3.8 million at March 31, 2009 due to increased discount rates used to price trust preferred securities in an inactive market.  Other reasons for the decline include dividend payments of $838,000 to common shareholders and $234,000 to preferred shareholders.  These were partially offset by net income of $1.8 million and Employee Stock Ownership Plan (ESOP) shares earned of $46,000.

Comparison of the Operating Results for the Three Months Ended March 31, 2009 and 2008

Net income for the first quarter ended March 31, 2009 was $1.8 million, or $.20 for basic and diluted earnings per common share.  This compared to net income for the same period in 2008 of $1.2 million, or $.30 for basic and diluted earnings per common share. Annualized return on assets was .38% and return on average tangible common equity was 5.86% for the first quarter of 2009 compared to .51% and 6.80% respectively, for the same period of last year.

Net interest income before the provision for loan losses increased $4.0 million from $6.4 million for the three months ended March 31, 2008 to $10.4 million for the three months ended March 31, 2009. The primary reason for the increase was an increase in average earning assets of $422.3 million due to the acquisition of MFB Corp in the third quarter of 2008.   In addition, net interest margin increased 29 basis points to 3.23% in the first quarter 2009 compared to 2.94% for the first quarter 2008.

The provision for loan losses for the first quarter of 2009 was $1.5 million, an increase from $838,000 for last year’s comparable period.  The increase was due primarily to an increased loan portfolio, increased net charge offs and increased delinquencies over the comparable period in 2008.  Non-performing loans to total loans at March 31, 2009 were 2.03% compared to 1.93% at December 31, 2008.  This increase in non-performing loans was primarily due to an increased level of non-performing residential property loans.  Non-performing assets to total assets were 1.90% at March 31, 2009 compared to 1.92% at December 31, 2008.

12

Non-interest income increased $1.5 million to $3.6 million, or 68.9% for the three months ended March 31, 2009 compared to the same period in 2008. The increase was primarily due to increases in gains on sales and servicing of loans sold of $893,000, or 425.2%, as a result of increases in mortgage loan production and commitments to sell loans as of March 31, 2009.  Other increases included increases in service fees on transaction accounts of $531,000, or 45.8%, increases in commission income of $336,000, or 115.1%, and increases in cash surrender value of life insurance of $109,000, or 39.4%, all primarily due to the acquisition of MFB Corp in the third quarter of 2008.  These increases were partially offset by a net loss on investments due to an other-than-temporary impairment of $200,000, increases in losses on limited partnerships of $54,000 and a decrease in other income of $155,000 primarily due to a one-time VISA redemption in the first quarter of 2008.  On a linked quarter basis, non-interest income increased $421,000 mainly due to increases in gains on sales and servicing of loans after excluding in the fourth quarter an other-than-temporary impairment charge of $1.2 million on two trust preferred securities, a $500,000 mortgage servicing rights impairment reserve and a $329,000 loss on the sale of a subsidiary.

Non-interest expense increased to $10.4 million for the three months ended March 31, 2009 compared to $6.5 million for the same period in 2008.  Increases in current quarter non-interest expense compared to the same period in 2008 include increases in salaries and employee benefits of $1.6 million, increases in occupancy and equipment expense of $429,000, increases in professional fees of $126,000, increases in marketing expense of $133,000, increases in FDIC insurance premiums of $353,000, increases in software subscriptions and maintenance of $155,000 and increases in intangible amortization of $340,000. All of these increases were primarily due to the acquisition of MFB Corp in the third quarter of 2008.  On a linked quarter basis, non-interest expense decreased by $243,000 compared to the three months ended December 31, 2008, excluding a $29.0 million goodwill impairment charge and a $534,000 post-retirement benefit expense adjustment recorded in the fourth quarter of 2008.

Income tax expense increased $203,000 for the three months ended March 31, 2009 compared to the same period in 2008 due primarily to increased taxable income.  The effective tax rate also increased from 11.1% to 16.5% due to a lower percentage of non-taxable income to total income before income tax and a decreased percentage of low income housing tax credits to taxable income when comparing the first quarter of 2009 to the first quarter of 2008.

Liquidity and Capital Resources

The standard measure of liquidity for savings associations is the ratio of cash and eligible investments to a certain percentage of the net-withdrawable savings accounts and borrowings due within one year.  As of March 31, 2009, Mutual had liquid assets of $164.2 million and a liquidity ratio of 13.08%. It is anticipated that this level of liquidity will be adequate for the remainder of 2009.

Mutual continues to maintain capital ratios which exceed “well-capitalized” levels as defined pursuant to all regulatory standards as of March 31, 2009.  Mutual’s current total risk-based capital ratio is 13.49% and tier 1 risk-based capital ratio is 12.24%.

13

ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk

Presented below as of March 31, 2009 and 2008 is an analysis of Mutual’s interest rate risk as measured by changes in Mutual’s net portfolio value (“NPV”) assuming an instantaneous and sustained parallel shift in the yield curve, in 100 basis point increments.

Profitstar	March 31, 2009
	Net Portfolio Value

Changes										NPV as % of PV of Assets
In Rates	$ Amount			$ Change			% Change			NPV Ratio			Change
+300 bp		177,931			-17,795			-9	%		12.99	%		-51	bp
+200 bp		188,198			-7,528			-4	%		13.46	%		-4	bp
+100 bp		195,727			1			0	%		13.73	%		22	bp
0 bp		195,726									13.50	%
-100 bp		n/m	(1)		n/m	(1)		n/m	(1)		n/m	(1)		n/m	(1)
-200 bp		n/m	(1)		n/m	(1)		n/m	(1)		n/m	(1)		n/m	(1)
-300 bp		n/m	(1)		n/m	(1)		n/m	(1)		n/m	(1)		n/m	(1)

Profitstar	March 31, 2008
	Net Portfolio Value

Changes										NPV as % of PV of Assets
In Rates	$ Amount			$ Change			% Change			NPV Ratio			Change
+300 bp		62,311			-36,565			-37	%		6.99	%		-335	bp
+200 bp		76,308			-22,568			-23	%		8.35	%		-198	bp
+100 bp		87,643			-11,233			-11	%		9.38	%		-96	bp
0 bp		98,876									10.34	%
-100 bp		102,800			3,924			4	%		10.56	%		23	bp
-200 bp		100,139			1,263			1	%		10.45	%		11	bp
-300 bp		n/m	(1)		n/m	(1)		n/m	(1)		n/m	(1)		n/m	(1)

n/m(1) - not meaningful because certain market interest rates would be below zero at that level of rate shock.

The analysis at March 31, 2009 indicates that there have been no material changes in market interest rates for Mutual’s interest rate sensitivity instruments which would cause a material change in the market risk exposures that effect the quantitative and qualitative risk disclosures as presented in item 7A of the Company’s annual report on Form 10-K for the period ended December 31, 2008.  A reduction in the interest rate risk exposure of Mutual was primarily due to the acquisition of MFB Corp.

ITEM - 4 Controls and Procedures.

(a) An evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a -15(c) under the Securities Exchange Act of 1934 (the “Act”) was carried out under the supervision and with the participation of the Company’s Chief Executive Officer, Chief Financial Officer and several other members of the Company’s senior management. The Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as currently in effect are effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the act is (i) accumulated and communicated to the Company’s management (including the Chief Executive Officer and the Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. There have been no changes in our internal control over financial reporting (as defined in Rule 13a – 15(f) under the Act) that occurred during the quarter ended March 31, 2009 that has materially affected, or is likely to materially affect our internal control over financial reporting.

The Company intends to continually review and evaluate the design and effectiveness of its disclosure controls and procedures and to improve its controls and procedures over time and to correct any deficiencies that it may discover in the future.  The goal is to ensure that senior management has timely access to all material financial and non-financial information concerning the Company’s business.  While the Company believes the present design of its disclosure controls and procedures is effective to achieve its goal, future events affecting its business may cause the Company to modify its disclosure controls and procedures.

14

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings
	None.
Item 1A.	Risk Factors
	There are no material changes to the risk factors disclosed in the Company’s Form 10-K for the year ended December 31, 2008.
Item 2.	Registered sales of Equity Securities and use of Proceeds
	On August 13, 2008 the Company’s Board of Directors authorized management to repurchase an additional 5% of the Company’s outstanding stock, or approximately 350,000 shares.  Information on the shares purchased during the first quarter of 2009 is as follows.

					Total Number of		Maximum Number of
					Shares Purchased		Shares that May Yet
	Total Number of		Average Price		As Part of Publicly		Be Purchased
	Shares Purchased		Per Share		Announced Plan		Under the Plan
								330,000	(1)
January 1, 2009 - January 31, 2009		-	$	0.00		-		330,000
February 1, 2009 - February 28, 2009		-		0.00		-		330,000
March 1, 2009 - March 31, 2009		-		0.00		-		330,000
		-	$	0.00		-

(1) Amount represents the number of shares available to be repurchased under the plan as of December 31, 2008

Item 3.	Defaults Upon Senior Securities.
	None.
Item 4.	Submission of Matters to Vote of Security Holders.
	None.
Item 5.	Other Information.
	None.
Item 6.	Exhibits.

Index to Exhibits

Number	Description
31.1	Rule 13a – 14(a) Certification – Chief Executive Officer
31.2	Rule 13a – 14(a) Certification – Chief Financial Officer
32	Certificate of the Chief Executive Officer and Chief Financial Officer pursuant to U. S. C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2003.

15

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MutualFirstFinancial, Inc.
Date: May 15, 2009	By:  /s/  David W. Heeter
	David W. Heeter
	President and Chief Executive Officer
Date: May 15, 2009	By:  /s/  Timothy J. McArdle
	Timothy J. McArdle
	Senior Vice President and Treasurer

16

EX-31.1

 CERTIFICATIONS                                                                           Exhibit 31.1

I, David W. Heeter certify that:

1. I have reviewed this report on Form 10-Q of MutualFirst Financial, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the consolidated financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) ) for the registrant and we have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

e)  disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2009

/s/ David W. Heeter

David W. Heeter,

President and Chief Executive Officer

EX-31.2

CERTIFICATIONS                                                                           Exhibit 31.2

I, Timothy J. McArdle, certify that:

1. I have reviewed this report on Form 10-Q of MutualFirst Financial, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the consolidated financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

e)  disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2009

/s/ Timothy J. McArdle

Timothy J. McArdle,

Senior Vice President, Treasurer, and Chief Financial Officer

EX-32

EXHIBIT 32

SECTION 1350 CERTIFICATION

Each of the undersigned hereby certifies in his capacity as an officer of MutualFirst Financial, Inc. (the “Registrant”) that the quarterly report of the Registrant on Form 10-Q for the period ended March 31, 2009 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the consolidated financial condition of the Registrant at the end of such period and the results of operations of the Registrant for such period.

Date:  May 15, 2009	By: /s/ David W. Heeter
	David W. Heeter
	President and Chief Executive Officer
Date:  May 15, 2009	By: /s/ Timothy J. McArdle
	Timothy J. McArdle
	Treasurer and Chief Financial Officer
	(Principal Financial and Accounting Officer)