SecProbe.io

Mail Stop 4561

April 27, 2007

By U.S. Mail and facsimile to (765) 751-1897.

Mark K. Hardwick
Chief Financial Officer
First Merchants Corporation
200 East Jackson Street
Muncie, IN 47305

Re: First Merchants Corporation
Form 10-K for Fiscal Year Ended December 31, 2006
 Filed March 16, 2007
 File No. 000-17071

Dear Mr. Hardwick:

We have reviewed your filing and have the following comments.  Where
indicated, we think you should revise your doc ument in response to this comment in
future filings.  If you disagree, we will consider your explanation as to why our comment
is inapplicable or a revision is unnecessary.  Please be as detailed as necessary in your
explanation and provide us w ith drafts of your proposed revisions.  In some of our
comments, we may ask you to provide us w ith supplemental information so we may
better understand your disclosure.  After review ing this information, we may or may not
raise additional comments.

 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our comments or any other aspect of our
review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Form 10-K

Financial Statements

Note 1 Nature of Operations and Summary of Significant Accounting Policies, page 25

1. We note your disclosures on page 4 and here in Note 1 regarding First Merchants Reinsurance Company, your wholly-owned s ubsidiary incorporated in the country

Mark K. Hardwick
First Merchants Corporation
Page 2
of Turks and Caicos Islands, as well as  your other various insurance-related
subsidiaries.  For purposes of greater transparency for the reader, please address the following regarding your insurance activities in your future filings:

• Revise your future filings to clearly describe the nature and extent of business
transacted by First Merchants Reinsurance Company, as well as your other
insurance-related subsidiari es.  Specifically clarify the extent to which your
subsidiaries activities are limited to agency and broker activities or if you
engage in writing, ceding, or assuming insurance paper.

• You state on page 4 that through various nonbank subsidiaries you “offer
personal and commercial lines of insura nce and engages in the title agency
business and the reinsurance of credit lif e, accident, and health insurance.”
This seems to conflict with your disclo sures in the third paragraph on page 4
where you characterize First Merchants Reinsurance Co. Ltd. as a “reinsurance agency”.   Please revise to more clearly discuss the extent of your activities and clearly define for the reader the nature of activities of a
reinsurance agency entity.

• Tell us and briefly disclose the business purpose for domiciling First
Merchants Reinsurance Company in the c ountry of Turks and Caicos Islands.

• Please revise your future filings to clearly identify the type of insurance
products and contracts written by First Merchants Reinsurance Company, and
quantify the amount such business trans acted during the periods presented.
Specify whether the entity enters into short-duration or long-duration
contracts.

• Please revise your future filings to provide the disclosures required by SFAS 60 and SFAS 113, or tell us specifically why you believe this guidance is not
applicable to your situation.  Refe r to paragraph 27 of SFAS 113 which
requires quantification of insurance assu med and ceded.  To the extent certain
of your insurance subsidiaries do not abso rb insurance risk or write insurance
paper, clearly disclose that fact.

• Revise your future filings to clearly id entify any related party nature to the
transactions entered into by your insuran ce subsidiaries.  Disc uss the extent to
which insurance risk you assume is re lated to loans you have originated.

• To the extent that First Merchants Reinsurance Company is providing “self-
insurance” to its parent or other related entities, clearl y disclose that fact in
future filings and quantify the extent of such activities.  Clearly disclose how
you accounted for such intercompany transactions in your consolidated financial statements.

Mark K. Hardwick
First Merchants Corporation
Page 3
• Please provide us with a copy of your proposed disclosures.

Note 4 Investment Securities, page 30

2. In future filings, for securities that ar e underwater as of the balance sheet date,
please revise to clearly assert whether you have both the intent and ability to hold them to the earlier of recovery or matu rity.  Tell us whether you were able to
make this assertion as of the balance sheet  dates presented in your Form 10-K for
the investment securities th at were underwater at t hose dates.  Refer to the
guidance of Staff Accounting Bulletin No. 59.

Note 22 Derivative Instruments and Hedging Activities, page 52

3. In future filings, please revise to disclo se the following rela ted to your interest
rate floor agreements:

• Include a more comprehensive disclosure  of the hedged item and the hedging
strategy.  For example, we noted in your Form 10-Q for the period ended September 30, 2006 that the interest rate  floors were used to hedge prime
based variable rate loans but could not locate simila r disclosure in your annual
financial statements;

• Disclose the methods and assumptions  used to estimate fair value;

• Disclose the methods used to assess hedge  effectiveness, both at inception and
on an ongoing basis;

• Disclose the amounts of the hedged item(s);

• Disclose whether you are hedging indivi dual loans, or if you are hedging a
pool of loans;

• If you are hedging each loan individuall y, please disclose how you considered
paragraph 29(h) of SFAS 133, which specifically disallows use of a prime rate as a benchmark interest rate;

• If you are hedging a pool of loans, disclo se what the actual hedged item is for
the pool of loans, i.e. the first interest  payments within a given period, or the
overall changes in cash flows and disclose how each loan met the requirements of paragraphs 28 and 29 of SFAS 133 to receive hedge
accounting; and,

• Disclose how you account for your hedging relationships upon prepayment of
the loans, if allowed.

Mark K. Hardwick
First Merchants Corporation
Page 4
* * * * *

Please respond to these comments within  10 business days or tell us when you
will provide us with a response.   Please furnish a cover letter that keys your response to
our comments, indicates your inte nt to include the requested revisions in future filings
and provides any requested supplemental inform ation.  Please provide us drafts of your
proposed revisions and file your response on EDGAR.  Please understand that we may
have additional comments after review ing your responses to our comments.

 We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing review ed by the staff to be certain that they have provided all
information investors require for an info rmed decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.

 In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:

‚ the company is responsible for the adequacy  and accuracy of the disclosure in the
filing;

‚ staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and

‚ the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.

You may contact Rebekah M oore, Staff Accountant, at  (202) 551-3463 or me at
(202) 551-3494 if you have questions.

Sincerely,

Kevin W. Vaughn
Branch Chief