MutualFirst Announces First Quarter 2009 Earnings

MUNCIE, Ind., April 20 /PRNewswire-FirstCall/ -- MutualFirst Financial, Inc.
(Nasdaq: MFSF), the holding company of MutualBank (the "Bank"), announced
today that 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 .51% and return on average tangible common equity was 7.82% for the first
quarter of 2009 compared to .51% and 6.80% respectively, for the same period
of last year.

"We are very pleased with the first quarter 2009 results," said David W.
Heeter, President and CEO, "and will continue to prudently navigate our
Company through this difficult economic environment."

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. 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. Heeter commented, "We continue to actively monitor our loan portfolio
to take prudent action when necessary. We believe our allowance is
appropriate for the current risk in our loan portfolio."

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,
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. 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 $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 delinquency 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 an
increased level in 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.

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 $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 and increases in marketing expense of $133,000. An increase in
other expenses of $1.5 million was partially due to 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.
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 $534,000 post-retirement benefit
expense adjustment recorded in the fourth quarter of 2008.

Heeter added, "We were pleased with the increase in non-interest income and
the decrease in non-interest expense on a linked quarter basis after removing
one-time items in the fourth quarter of 2008. Our employees continue to work
diligently to manage costs and provide outstanding services to our clients."

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.

MUTUALFIRST FINANCIAL INC.

Selected Financial 31-Mar 31-Dec
Condition Data(Unaudited): 2009 2008
--------------------------- ---- ----
(000) (000)

Total Assets $1,419,206 $1,388,827

Cash and cash equivalents 48,729 39,703

Loans held for sale 15,320 1,541

Loans receivable, net 1,091,124 1,113,132

Investment securities
held to maturity 9,850 9,676

Investment securities available
for sale, at fair value 108,303 77,255

Total deposits 1,014,374 962,514

Total borrowings 257,861 279,104

Total stockholders' equity 129,512 130,515

Three Months Three Months Three Months
Ended Ended Ended
31-Mar 31-Dec 31-Mar
Selected Operations 2009 2008 2008
Data (Unaudited): ---- ---- ----
------------------- (000) (000) (000)

Total interest income $18,656 $19,108 $13,757
Total interest expense 8,264 8,563 7,397
----- ----- -----

Net interest income 10,392 10,545 6,360
Provision for loan losses 1,450 4,763 612
----- ----- ---
Net interest income
after provision
for loan losses 8,942 5,782 5,748
----- ----- -----

Non-interest income
---------------------
Fees and service charges 1,690 1,917 1,159
Net loss on sale of investments (199) (1,412)
Equity in losses of
limited partnerships (78) (65) (24)
Commissions 628 606 292
Net gain (loss) on loan sales 1,103 (339) 210
Increase in cash surrender
value of life insurance 386 413 277
Other income 51 61 206
-- -- ---
Total non-interest income 3,581 1,181 2,120
----- ----- -----

Non-interest expense
----------------------
Salaries and benefits 5,460 6,130 3,818
Occupancy and equipment 1,427 1,260 998
Data processing fees 354 322 267
Professional fees 335 312 209
Marketing 363 470 230
Other expenses 2,434 31,625 980
----- ------ ---
Total non-interest expense 10,373 40,119 6,502
------ ------ -----

Income before taxes 2,150 (33,156) 1,366
Income tax provision (benefit) 354 (8,309) 151
--- ------ ---
Net income $1,796 ($24,847) $1,215
====== ======== ======

Average Balances, Net Interest Income,
Yield Earned and Rates Paid
-------------------------------
Three
mos ended
3/31/2009
------- --------- -------
Average Interest Average
Outstanding Earned/ Yield/
Balance Paid Rate
------- ---- ----
(000) (000)
Interest-Earning Assets:
Interest-bearing deposits $39,498 $10 0.10%
Mortgage-backed securities:
Available-for-sale 66,559 942 5.66
Held-to-maturity 9,917 187 7.54
Investment securities:
Available-for-sale 24,830 270 4.35
Loans receivable 1,129,098 17,128 6.07
Stock in FHLB of Indianapolis 18,632 119 2.55
------ --- ----
Total interest-earning
assets(3) 1,288,534 18,656 5.79
Non-interest earning assets,
net of allowance for loan losses
and unrealized gain/loss 127,302
-------
Total Assets $1,415,836
==========

Interest-Bearing Liabilities:
Demand and NOW accounts $161,606 200 0.50
Savings deposits 81,414 66 0.32
Money market accounts 43,113 129 1.20
Certificate accounts 625,195 5,205 3.33
------- ----- ----
Total deposits 911,328 5,600 2.46
Borrowings 262,766 2,664 4.06
------- ----- ----
Total interest-bearing
accounts 1,174,094 8,264 2.82
Non-interest bearing deposit
accounts 93,129
Other liabilities 17,177
------
Total Liabilities 1,284,400
Stockholders' equity 131,436
-------
Total liabilities and
stockholders' equity $1,415,836
==========

Net earning assets $114,440
========

Net interest income $10,392
=======

Net interest rate spread 2.98%
====

Net yield on average interest-
earning assets 3.23%
====

Average interest-earning assets
to average interest-bearing
liabilities 109.75%
======

Three
mos ended
3/31/2008
------- --------- -------
Average Interest Average
Outstanding Earned/ Yield/
Balance Paid Rate
------- ---- ----
(000) (000)
Interest-Earning Assets:
Interest-bearing deposits $5,053 $25 1.98%
Mortgage-backed securities:
Available-for-sale 11,539 158 5.48
Held-to-maturity
Investment securities:
Available-for-sale 32,732 406 4.96
Loans receivable 806,593 13,049 6.47
Stock in FHLB of Indianapolis 10,289 119 4.63
------ --- ----
Total interest-earning
assets(3) 866,206 13,757 6.35
Non-interest earning assets,
net of allowance for loan losses
and unrealized gain/loss 88,429
------
Total Assets $954,635
========

Interest-Bearing Liabilities:
Demand and NOW accounts 128,790 514 1.60
Savings deposits 52,608 69 0.52
Money market accounts 22,704 110 1.94
Certificate accounts 428,373 4,615 4.31
------- ----- ----
Total deposits 632,475 5,308 3.36
Borrowings 172,793 2,089 4.84
------- ----- ----
Total interest-bearing
accounts 805,268 7,397 3.67
Non-interest bearing deposit
accounts 48,320
Other liabilities 14,421
------
Total Liabilities 868,009

Stockholders' equity 86,626
------
Total liabilities and
stockholders' equity $954,635
=======

Net earning assets $60,938
=======

Net interest income $6,360
======

Net interest rate spread 2.68%
====

Net yield on average interest-
earning assets 2.94%
====

Average interest-earning assets
to average interest-bearing
liabilities 107.57%
======

Three Months Three Months Three Months
Ended Ended Ended
31-Dec 31-Mar 31-Mar
2008 2008 2008
---- ---- ----

Share and per share data:
Average common shares
outstanding
Basic 6,825,544 6,820,638 4,003,509
Diluted 6,825,544 6,821,158 4,003,509
Per common share:
Basic earnings $0.20 ($3.65) $0.30
Diluted earnings $0.20 ($3.65) $0.30
Dividends $0.12 $0.16 $0.16

Dividend payout ratio 60.00% -4.38% 53.33%

Performance Ratios:
Return on average assets (ratio of
net income to average total
assets)(1) 0.51% -7.13% 0.51%
Return on average tangible common
equity (ratio of net income to
average tangible common equity)(1) 7.82% -108.92% 6.80%
Interest rate spread information:
Average during the period(1) 2.98% 3.20% 2.68%

Net interest margin(1)(2) 3.23% 3.41% 2.94%

Efficiency Ratio 74.24% 342.14% 76.67%

Ratio of average interest-earning
assets to average interest-
bearing liabilities 109.75% 107.52% 107.57%

Allowance for loan losses:
Balance beginning of period $15,107 $12,217 $8,352
Charge offs:
One- to four-family 100 139 2
Multi-family 0 0 0
Commercial real estate 365 1,224 31
Construction or development 0 0 0
Consumer loans 660 623 548
Commercial business loans 57 200 30
-- --- --
Sub-total 1,182 2,186 611

Recoveries:
One- to four- family 77 0 2
Multi-family 0 0 0
Commercial real estate 0 244 0
Construction or development 0 0 0
Consumer loans 136 69 28
Commercial business loans 2 0 57
- - --
Sub-total 215 313 87

Net charge offs 967 1,873 524
Additions charged to operations 1,450 4,763 612
----- ----- ---
Balance end of period $15,590 $15,107 $8,440
======= ======= ======

Net loan charge-offs to average
loans (1) 0.34% 0.66% 0.26%

March 31, December 31, March 31,
2009 2008 2008
---- ---- ----

Total shares outstanding 6,984,754 6,984,754 4,179,879
Tangible book value per share $12.90 $12.99 $17.13

Nonperforming assets (000's)
Loans: Non-accrual $21,465 $19,998 $10,625
Accruing loans past due
90 days or more 715 1,473 809
Restructured loans 292 293 106
--- --- ---
Total nonperforming
loans 22,472 21,764 11,540
Real estate owned 2,659 2,979 1,478
Other repossessed assets 1,865 1,861 1,120
----- ----- -----
Total nonperforming
assets $26,996 $26,604 $14,138

Asset Quality
Ratios:
Non-performing assets to
total assets 1.90% 1.92% 1.47%
Non-performing loans to
total loans 2.03% 1.93% 1.44%
Allowance for loan losses to
non-performing loans 69.38% 69.41% 73.14%
Allowance for loan losses to
loans receivable 1.41% 1.34% 1.05%

(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.

SOURCE MutualFirst Financial, Inc.

Tim McArdle, Senior Vice President and Treasurer of MutualFirst Financial,
Inc., +1-765-747-2818