PRESS RELEASE

Date:	July 17, 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 Second Quarter 2009 Earnings

Muncie, Indiana - MutualFirst Financial, Inc. (NASDAQ: MFSF), the holding company of MutualBank (the “Bank”), announced today that net income available to common shareholders for the second quarter ended June 30, 2009 was $864,000, or $.13 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 .25% and return on average tangible common equity was 3.82% for the second quarter of 2009 compared to .49% and 6.58% respectively, for the same period last year.

Net income available to common shareholders for the six months ended June 30, 2009 was $2.2 million or $.33 for basic and diluted earnings per common share. This compared to net income for the comparable period in 2008 of $2.4 million or $.60 for basic and diluted earnings per share.  Annualized return on average assets was .31% and return on average tangible common equity was 4.85% for the first half of 2009 compared to .50% and 6.69% respectively, for the same period last year.

“We are pleased with our performance as we manage through this very challenging economic environment,” said David W. Heeter, President and CEO, “and we will continue to work diligently to increase value for our shareholders.”

Assets totaled $1.4 billion at June 30, 2009, a decrease from December 31, 2008 of $4.3 million, or 0.3%. Gross loans, excluding loans held for sale, decreased $27.8 million, or 2.5%.  Consumer loans decreased $3.7 million, or 1.4%, and commercial loans increased $6.4 million, or 2.0%, while residential mortgage loans held in the portfolio decreased $30.5 million, or 5.8%. Residential mortgage loans held for sale increased $15.5 million and mortgage loans sold during the first half of 2009 totaled $94.9 million compared to $28.2 million sold in the first half of last year. Mortgage loan sales are the primary reasons for the decreased loan balances. Investment securities available for sale increased $30.3 million, or 39.2% primarily due to investments in highly rated municipal, corporate and mortgage-backed securities.

Allowance for loan losses was $16.3 million at June 30, 2009, an increase of $1.2 million from December 31, 2008. Net charge offs for the quarter ended June 30, 2009 were $992,000, or .36% of average loans on an annualized basis compared to $569,000, or .28% of average loans for the comparable period in 2008.  Net charge offs for the first half of 2009 were $2.0 million, or .35% of average loans on an annualized basis compared to $1.1 million, or .27% of average loans for the comparable period in 2008.  On a linked quarter basis net charge offs increased from an annualized .34% of average loans for the quarter ended March 31, 2009 to .36% for the current quarter.  The allowance for loan losses as a percentage of non-performing loans and total loans was 57.05% and 1.49%, respectively at June 30, 2009 compared to 69.38% and 1.41%, respectively at March 31, 2009.  Heeter commented, “We continue to actively monitor the credit risk in our loan portfolio and believe we have increased the allowance properly as current information dictates.”

Total deposits were $1.0 billion at June 30, 2009 an increase of $37.7 million, or 3.9% from December 31, 2008. This increase was due primarily to increases in certificates of deposit and savings deposits of $45.7 million, partially offset by declines in demand and money market deposits of $8.0 million. Total borrowings decreased $43.1 million to $236.0 million at June 30, 2009 from $279.1 million at December 31, 2008 primarily due to the payment of maturing and variable rate FHLB advances.

Stockholders’ equity was $129.5 million at June 30, 2009, a decrease of $1.0 million, or 0.7% from December 31, 2008. The decline was due primarily to a decrease in   accumulated other comprehensive income of $1.9 million from a loss of $2.0 million at December 31, 2008 to a loss of $3.9 million at June 30, 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 $1.7 million to common shareholders and $639,000 to preferred shareholders.  These were partially offset by net income of $3.1 million and Employee Stock Ownership Plan (ESOP) shares earned of $102,000.  The Bank’s risk-based capital ratio is well in excess of “well-capitalized” levels as defined by all regulatory standards.

Net interest income before the provision for loan losses increased $3.5 million from $6.8 million for the three months ended June 30, 2008 to $10.3 million for the three months ended June 30, 2009. The primary reason for the increase was an increase in average earning assets of $418.6 million due to the acquisition of MFB Corp in the third quarter of 2008.   In addition, net interest margin increased 8 basis points to 3.21% in the second quarter 2009 compared to 3.13% for the second quarter 2008.

Net interest income before the provision for loan losses increased $7.5 million from $13.2 million for the six months ended June 30, 2008 to $20.7 million for the six months ended June 30, 2009. As mentioned above, the primary reason for the increase was an increase in average earning assets of $420.5 million due to the acquisition of MFB Corp in the third quarter of 2008.   In addition, net interest margin increased 18 basis points to 3.22% in for the six months ended June 30, 2009 compared to 3.04% for the comparable period in 2008.

The provision for loan losses for the second quarter of 2009 was $1.8 million, an increase from $733,000 for last year’s comparable period.  The increase was due primarily to an increased loan portfolio, increased net charge offs, increased non-performing loans and increased delinquency over the comparable period in 2008.  Non-performing loans to total loans at June 30, 2009 were 2.60% compared to 2.03% at March 31, 2009.  This increase in non-performing loans was primarily due to an increased level of non-performing residential property loans and non-performing commercial business loans.  Non-performing assets to total assets were 2.41% at June 30, 2009 compared to 1.90% at March 31, 2009.

The provision for loan losses for the first half of 2009 was $3.2 million, an increase from $1.3 million for last year’s comparable period.  This increase was due primarily to the above mentioned reasons.

Non-interest income increased $2.0 million to $4.1 million, or 96.5% for the three months ended June 30, 2009 compared to the same period in 2008. The increase was primarily due to an increase in gains on sales and servicing of loans sold of $521,000, or 331.8%, as a result of increases in mortgage loan production and commitments to sell loans as of June 30, 2009.  Another reason for the increase was due to the increase in gain on sale of investments of $358,000 as a result of a gain on the strategic sale of investments and a gain on the sale of a bank subsidiary.  Other increases included increases in service fees on transaction accounts of $511,000, or 37.5%, increases in commission income of $552,000, or 179.4%, and increases in cash surrender value of life insurance of $136,000, or 49.4%, all primarily due to the acquisition of MFB Corp in the third quarter of 2008.  On a linked quarter basis, non-interest income increased $565,000 mainly due to increases in gains on sales of investments of $557,000, increases in service fees on transaction accounts of $187,000, and increases in commission income of $232,000.  These increases were partially offset by a decrease in gains on sales and servicing of loans sold of $425,000.

For the six month period ended June 30, 2009 non-interest income increased $3.5 million, or 82.7%, to $7.7 million compared to $4.2 million for the same period in 2008. The reasons are similar to those mentioned above.

Non-interest expense increased $4.4 million to $11.3 million for the three months ended June 30, 2009 compared to $6.9 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 $1.8 million, increases in occupancy and equipment expense of $345,000, increases in professional fees of $96,000 and increases in marketing expense of $45,000.  An increase in other expenses of $2.0 million was partially due to increases in FDIC insurance premiums of $969,000, of which $630,000 was related to the FDIC special assessment, increases in software subscriptions and maintenance of $187,000 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 increased by $937,000 compared to the three months ended March 31, 2009, primarily due to the FDIC special assessment of $630,000 and increases in salaries and benefits of $228,000 primarily due to the increased mortgage production.

For the six month period ended June 30, 2009 non-interest expense increased $8.3 million, or 62.1%, to $21.7 million compared to $13.4 million for the same period in 2008.  The reasons for the increase are similar to those mentioned above.

MutualFirst Financial, Inc. and MutualBank, an Indiana-based financial institution, has thirty-three full-service retail financial centers in Delaware, Elkhart, Grant, Kosciusko, Randolph, St. Joseph and Wabash Counties in Indiana.  MutualBank also has two Wealth Management and Trust offices located in Carmel and Crawfordsville, Indiana and a loan origination office in New Buffalo, Michigan.  MutualBank is a leading residential lender in each of the market areas it serves, and provides a full range of financial services including wealth management and trust services and Internet banking services.  The Company’s stock is traded on the NASDAQ National Market under the symbol “MFSF” and can be found on the internet at www.bankwithmutual.com.

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, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time.

MUTUALFIRSTFINANCIAL INC.
	June 30,		December 31,
Selected Financial Condition Data(Unaudited):	2009		2008
		(000)		(000)
Total Assets	$	1,384,329	$	1,388,827
Cash and cash equivalents		21,012		39,703
Loans held for sale		17,047		1,541
Loans receivable, net		1,084,080		1,113,132
Investment securities held to maturity		9,422		9,676
Investment securities available for sale, at fair value		107,201		77,255
Total  deposits		1,000,197		962,514
Total borrowings		235,992		279,104
Total stockholders' equity		129,547		130,515

	Three Months			Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended			Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
Selected Operations Data (Unaudited):	2009			2009			2008			2009			2008
	(000)			(000)			(000)			(000)			(000)
Total interest income	$	18,136		$	18,656		$	13,489		$	36,792		$	27,246
Total interest expense		7,824			8,264			6,689			16,088			14,086
Net interest income		10,312			10,392			6,800			20,704			13,160
Provision for loan losses		1,750			1,450			733			3,200			1,345
Net interest income after provision
for loan losses		8,562			8,942			6,067			17,504			11,815
Non-interest income
Fees and service charges		1,877			1,690			1,365			3,566			2,525
Net gain (loss) on sale of investments		358			(199	)		0			159			137
Equity in losses of limited partnerships		(78	)		(78	)		(24	)		(155	)		(47	)
Commissions		860			628			308			1,488			600
Net gain (loss) on loan sales		678			1,103			157			1,781			367
Increase in cash surrender value of life insurance		413			386			276			799			553
Other income		38			51			27			88			95
Total non-interest income		4,146			3,581			2,109			7,726			4,230
Non-interest expense
Salaries and benefits		5,688			5,460			3,892			11,148			7,711
Occupancy and equipment		1,344			1,427			999			2,770			1,997
Data processing fees		361			354			243			715			510
Professional fees		327			335			231			662			440
Marketing		362			363			317			725			547
Other  expenses		3,228			2,434			1,189			5,662			2,168
Total non-interest expense		11,310			10,373			6,871			21,682			13,373
Income  before taxes		1,398			2,150			1,305			3,548			2,672
Income tax provision		83			354			131			437			282
Net income		1,315			1,796			1,174			3,111			2,390
Preferred stock dividends and amortization		451			451						902
Net income available to common shareholders	$	864		$	1,345		$	1,174		$	2,209		$	2,390

Average Balances,  Net Interest Income, Yield Earned and Rates Paid
			Three							Three
			mos ended							mos ended
			6/30/2009							6/30/2008
	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	$	43,102	$	17		0.16	%	$	6,951	$	27		1.55	%
Mortgage-backed securities:
Available-for-sale		71,921		953		5.30			16,141		219		5.43
Held-to-maturity		9,684		147		6.07
Investment securities:
Available-for-sale		29,619		299		4.04			33,205		362		4.36
Loans receivable		1,113,404		16,670		5.99			801,027		12,747		6.37
Stock in FHLB of Indianapolis		18,632		50		1.07			10,395		134		5.16
Total interest-earning assets (3)		1,286,362		18,136		5.64			867,719		13,489		6.22
Non-interest earning assets, net of allowance
for loan losses and unrealized gain/loss		123,385							89,475
Total assets	$	1,409,747						$	957,194
Interest-Bearing Liabilities:
Demand and NOW accounts	$	161,270		194		0.48		$	123,177		290		0.94
Savings deposits		86,417		67		0.31			55,487		73		0.53
Money market accounts		42,446		121		1.14			22,229		75		1.35
Certificate accounts		631,478		4,905		3.11			419,724		4,142		3.95
Total deposits		921,611		5,287		2.29			620,617		4,580		2.95
Borrowings		245,273		2,537		4.14			185,197		2,109		4.56
Total interest-bearing accounts		1,166,884		7,824		2.68			805,814		6,689		3.32
Non-interest bearing deposit accounts		94,243							49,274
Other liabilities		18,971							15,626
Total liabilities		1,280,098							870,714
Stockholders' equity		129,649							86,480
Total liabilities and stockholders' equity	$	1,409,747						$	957,194
Net earning assets	$	119,478						$	61,905
Net interest income			$	10,312						$	6,800
Net interest rate spread						2.96	%						2.90	%
Net yield on average interest-earning assets						3.21	%						3.13	%
Average interest-earning assets to
average interest-bearing liabilities						110.24	%						107.68	%

	Three Months			Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended			Ended
Selected Financial Ratios and Other Financial	June 30,			March 31,			June 30,			June 30,			June 30,
Data (Unaudited):	2009			2009			2008			2009			2008
Share and per share data:
Average common shares outstanding
Basic		6,837,751			6,825,544			3,970,982			6,831,647			3,987,123
Diluted		6,837,751			6,825,544			3,970,982			6,831,647			3,987,123
Per common share:
Basic earnings	$	0.13		$	0.20		$	0.30		$	0.33		$	0.60
Diluted earnings	$	0.13		$	0.20		$	0.30		$	0.33		$	0.60
Dividends	$	0.12		$	0.12		$	0.16		$	0.24		$	0.32
Dividend payout ratio		92.31	%		60.00	%		53.33	%		72.73	%		53.33	%
Performance Ratios:
Return on average assets (ratio of net
income to average total assets)(1)		0.25	%		0.38	%		0.49	%		0.31	%		0.50	%
Return on average tangible common equity (ratio of net
income to average tangible common equity)(1)		3.82	%		5.86	%		6.58	%		4.85	%		6.69	%
Interest rate spread information:
Average during the period(1)		2.96	%		2.98	%		2.90	%		2.97	%		2.79	%
Net interest margin(1)(2)		3.21	%		3.23	%		3.13	%		3.22	%		3.04	%
Efficiency Ratio		78.23	%		74.24	%		77.12	%		76.26	%		76.90	%
Ratio of average interest-earning
assets to average interest-bearing
liabilities		110.24	%		109.75	%		107.68	%		110.00	%		107.59	%
Allowance for loan losses:
Balance beginning of period	$	15,590		$	15,107		$	8,440		$	15,107		$	8,352
Charge offs:
One- to four- family		431			100			113			531			115
Commercial real estate		172			365			153			537			184
Consumer loans		721			660			541			1,381			1,089
Commercial business loans		26			57			0			83			30
Sub-total		1,350			1,182			807			2,532			1,418
Recoveries:
One- to four- family		17			77			35			94			37
Commercial real estate		143			0			0			143			0
Consumer loans		198			136			203			334			231
Commercial business loans		0			2			0			2			57
Sub-total		358			215			238			573			325
Net charge offs		992			967			569			1,959			1,093
Additions charged to operations		1,750			1,450			733			3,200			1,345
Balance end of period	$	16,348		$	15,590		$	8,604		$	16,348		$	8,604
Net loan charge-offs to average loans (1)		0.36	%		0.34	%		0.28	%		0.35	%		0.27	%

	June 30,			March 31,			June 30,
	2009			2009			2008
Total shares outstanding		6,984,754			6,984,754			4,118,079
Tangible book value per share	$	12.96		$	12.90		$	16.60
Tangible common equity to tangible assets		6.79	%		6.59	%		7.20	%
Nonperforming assets (000's)
Non-accrual loans
One- to four- family	$	13,186		$	10,253		$	5,748
Commercial real estate		8,692			7,934			2,272
Consumer loans		2,788			2,203			1,167
Commercial business loans		2,852			1,075			1,339
Total non-accrual loans		27,518			21,465			10,526
Accruing loans past due 90 days or more		1,039			715			350
Restructured loans		100			292			105
Total nonperforming loans		28,657			22,472			10,981
Real estate owned		3,176			2,659			2,302
Other repossessed assets		1,499			1,865			1,483
Total nonperforming assets	$	33,332		$	26,996		$	14,766
Asset Quality Ratios:
Non-performing assets to total assets		2.41	%		1.90	%		1.51	%
Non-performing loans to total loans		2.60	%		2.03	%		1.37	%
Allowance for loan losses to non-performing loans		57.05	%		69.38	%		78.35	%
Allowance for loan losses to loans receivable		1.49	%		1.41	%		1.07	%
(1)    Ratios for the three month and six month periods 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.