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SEC Response Letter

 [FIRST MERCHANTS LETTERHEAD]

 November 25, 2008

 VIA EDGAR AND OVERNIGHT DELIVERY

 Securities and Exchange Commission Division of Corporation Finance

 Attention: Jessica Livingston and Kevin Vaughn

 Mail Stop-4561

 450 Fifth Street, N.W.

 Washington, D.C. 20549

 Re: First Merchants Corporation Form S-4 filed
September 24, 2008 (File No. 333-153656), Form 10-K for Fiscal Year Ended December 31, 2007 and Forms 10-Q for Fiscal Quarters Ended March 31, 2008, June 30, 2008 and September 30, 2008, respectively (File No.
000-17071)

 Ladies and Gentlemen:

 This correspondence is
First Merchants Corporation’s (“First Merchants”) response to comments received from the Securities and Exchange Commission (“SEC”) on November 21, 2008 for future filings of First Merchants’ Forms 10-K and 10-Q.
The responses contained in this cover letter are keyed to your comments for your convenience.

 Form S-4

 Recent Developments, page 104

 1. Please refer to the response to
prior comment 2 of our November 7, 2008 letter and provide us a copy of the impairment analysis you performed under SFAS 142 and SFAS144 on your intangible assets as referenced in your response.

 The attached impairment test of the core deposit intangible (CDI) was performed in conjunction with the goodwill impairment test as of September, 2008.
The analysis was performed on accounts that existed at 9/30/08 with an open date prior to the respective acquisition dates. The analysis was conducted by estimating the present value of the cash flows expected to be received from the core deposits
over the remaining original amortization period. This analysis was performed to determine the estimated cash flows to be received by Lincoln up to the merger date and to allocate the sales proceeds received from First Merchants to the core deposit
intangible related to these specific core deposits. By utilizing discounted instead of undiscounted cash flows and only the remaining portion of the original estimated lives of the core deposits, Lincoln acknowledges the conservative nature of
determining any level of impairment as the value of these deposits to First Merchants is anticipated to have a longer life. Based upon this cash flow analysis, Lincoln determined the value of the CDI was not impaired at 9/30/08.

 Additionally, as a further validation that the CDI was not impaired at 9/30/08, Lincoln, utilized the
estimated value of the core deposit intangible to be recorded by First Merchants of $12,000,000 and assigned the proportionate value of the $12,000,000 to these core deposits. That ratio resulted in an estimated allocation of $2,300,000 of the sales
proceeds, (exclusive of the net cash flows to be realized by Lincoln up to the merger date) providing further indication that the CDI was not impaired at 9/30/08.

 Lincoln Bancorp and Subsidiary Financial Statements, beginning on page F-1

 Note 2. Investment Securities, page F-35

 2. We note your response to prior comment 5 of our November 7, 2008 letter. In order to help us understand the basis for your determinations, please provide us a
detailed analysis of how you determined your corporate obligations were not other-than-temporarily impaired. In your response, please identify the issuer(s) and describe how you considered the severity and the duration of the unrecognized loss and
illiquid markets in your analysis. It may be helpful to provide us the cash flow analysis and trustee reports you relied on in performing your analysis.

 The Trust preferred securities are made up of two types of securities. The first type of securities are single issuer variable rate securities. The following is a list of those securities:

 Issuer

9/30/08 BV

9/30/08 FMV

 KeyCorp Capital I

$
999,260

$
666,560

 Chase Capital VI

2,986,172

2,256,330

 Bankboston Capital Trust IV

3,950,023

3,292,960

 Huntington Capital

2,987,027

1,186,350

 Total

$
10,922,482

$
7,402,200

 These securities were purchased in late 1999 and carried spreads over LIBOR in the 60-75 bps
range. As previously noted the spread for newly issued securities widened over time, negatively impacting the market values of these securities. No impairment was recognized on the securities for this negative market impact as the ultimate
timely collection of contractual principal and interest payments was not considered to be affected.

 Each of these securities has
experienced varying levels of market pricing impairment over the last several years but only in recent history have those levels become severe. As recently as June of 2007 these securities were impaired less than 2% with two of them being
impaired less than 1%.

 The current, more severe, level of impairment has been precipitated in large part as a result of the financial
crisis sweeping our nation. Relatively severe fluctuations are occurring in the financial markets almost daily. These fluctuations have a direct impact

on individual banking institutions and the outlook for their ability to meet their financial obligations. As recently reiterated in the Press Release:
SEC Office of the Chief Accountant and FASB Staff Clarifications on Fair Value Accounting; 2008-234; Sept. 30, 2008 the near term prospects of the issuer need to be evaluated in any judgment made about the potential that other-than-temporary
impairment exists. Although new news is released on almost a daily basis about individual financial institutions the four institutions listed above have not had the severity of bad news that certain others have. All of these institutions
have received or been approved to receive capital infusions under the government sponsored Troubled Assets Relief Program (TARP) and we view these infusions as a substantial positive as we evaluate the near term prospects of each of these issuers.
In addition, we view these TARP infusions as an indication that it would be unlikely that the government would allow any of these institutions to fail. We also note that in those transactions where an institution was acquired by another
institution (as opposed to failing) the acquiring institutions have generally honored previously issued trust preferred debt of the acquired institution. As a result we have concluded that the near term prospects of these issuers are
positive. We readily acknowledge that in the current economic environment this conclusion could change in the future and any such change will result in further evaluation for the existence of other-than-temporary impairment.

 As a result of this conclusion, when we performed our cash flow analysis of each of these issuers we made the assumption that all payments of interest and
principal would be made on a contractually agreed upon basis, that there would be no deferral’s of interest and that principal would be paid at maturity as agreed. Given our ability and intent to hold these securities until maturity the results
of the cash flow analysis indicated no other-than-temporary impairment existed

 The remaining two trust preferred securities are
“pooled” trust preferred securities.

 Issuer

9/30/08 BV

9/30/08 FMV

 PreTSL XIX class C

$
990,375

$
187,280

 PreTSL XVII class C

1,473,780

292,454

 Total

$
2,464,155

$
479,734

 Each of these securities contain over 50 underlying issuer banks and insurance companies. A
cash flow analysis was performed by the servicer and reviewed by management that included current actual issuer deferments as well as actual issuer defaults. It also assumed certain forecast events for other issuers and used those assumptions in its
analysis. In addition, the availability of issuer excess servicing that is contractually required to be contributed back to interest payments and retirement of the underlying issuer securities, along with the effect of over-collateralization in
the pool was taken into account in the analysis. The results of this analysis, as of September 30, 2008, revealed that additional defaults and deferments would have to take place for the net present value analysis to indicate
other-than-temporary impairment was required.

 We are attaching the cash flow analysis and stress analysis for your review.

 As part of our review regarding the near term prospects of these securities we considered the number of
institutions included in each pool, the geographic diversity of each pool and certain metrics of the institutions that made up each pool. As a result of this review, and the cash flow projections noted above, as well as our intent and ability to
hold these securities to maturity, no other-than-temporary impairment was indicated at this time.

 Note 4. Disclosures About Fair Values of Assets and
Liabilities, page F-37

 3. Please refer to the response to prior comment 6 of our November 7, 2008 letter. We note that you use third party
vendors to compile prices for your investment securities and that you determine the securities levelization under SFAS 157 based on such pricing information. Paragraph 22 of SFAS 157 indicates that the level in the fair value hierarchy within which
the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety, and thus it is unrelated to whether a third party vendor is used to price the financial
instrument. Thus, classification is based upon the assumptions and inputs used to value the instrument and whether they are based on market observable inputs, or unobservable inputs. Please address the following:

•

 Please tell us how you concluded that there was not a significant input into the valuation methodology used by third party vendors that was based on unobservable
data.

•

 Please tell us and revise future filings to disclose the specific procedures management uses to validate the pricing received from third party vendors, including
the material assumptions used to arrive at the prices.

•

 Please revise your future filings to ensure that your disclosure does not imply that the classification in the fair value hierarchy is based upon whether the
value is determined based on a third party vendor. Instead, please provide disclosure discussing the techniques used, the data used for the inputs/assumptions, and whether the inputs/assumptions are based on unobservable inputs, and how this
information drove the classification in the fair value hierarchy.

 The following is the response to both comment 3
and comment 4.

•

 Both First Merchants and Lincoln utilize FTN Financial for portfolio accounting services, including market value input. FTN utilizes IDC, a market leader, for
its market value inputs. Through our discussions with FTN, we have obtained an understanding of what inputs were being used by our vendors in pricing our portfolio and how the vendor was classifying these securities based upon these
inputs. From this discussion, we are comfortable the classifications were proper. The attached document will provide greater insight into their work.

•

 Both corporations have utilized FTN for an extended period of time and FTN has utilized IDC during our relationship with FTN. First Merchants has gained trust
in the data for two reasons: (a) independent spot testing of FTN data is conducted by First Merchants through obtaining market quotes from various brokers on a periodic basis and (b) actual gains or loss resulting from the sale of certain
securities has proven FTN’s data to be accurate over the years.

•

 First Merchants and Lincoln will revise future filings to disclose the techniques used to assess the inputs/assumptions and whether the inputs/assumptions are based
on unobservable inputs, and how this information drove the classification in the fair value hierarchy.

 First Merchants Corporation

 Form 10-Q for the Period Ended September 30, 2008

 Note 3. Disclosures About Fair Values of Assets and Liabilities, page 11

 4. Please refer to the response to prior comment 7 of our
November 7, 2008 letter. We note that you use third party vendors to compile prices for your investment securities and that you determine the securities levelization under SFAS 157 based on such pricing information. Paragraph 22 of SFAS 157
indicates that the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety, and thus it is
unrelated to whether a third party vendor is used to price the financial instrument. Thus, classification is based upon the assumptions and inputs used to value the instrument and whether they are based on market observable inputs, or unobservable
inputs. Please address the following:

•

 Please tell us how you concluded that there was not a significant input into the valuation methodology used by third party vendors that was based on unobservable
data.

•

 Please tell us and revise future filings to disclose the specific procedures management uses to validate the pricing received from third party vendors, including
the material assumptions used to arrive at the prices.

•

 Please revise your future filings to ensure that your disclosure does not imply that the classification in the fair value hierarchy is based upon whether the
value is determined based on a third party vendor. Instead, please provide disclosure discussing the techniques used, the data used for the inputs/assumptions, and whether the inputs/assumptions are based on unobservable inputs, and how this
information drove the classification in the fair value hierarchy.

 See response to Comment 3 above.

 Note 4. Investment Securities, page 13

 5. We note your response to prior comment 9 of our November 7, 2004. In order to help us understand the basis for your determinations, please provide us a detailed analysis of how you determined your
marketable equity securities were not other-than-temporarily impaired. In your response, please identify the investee(s) and describe how you considered the severity and the duration of the unrecognized loss, illiquid markets and future cash flows
in your analysis.

 The following is the detailed analysis on the only marketable equity security held by First Merchants’ which has
impairment:

 Security

CUSIP

Unrealized Gain

Unrealized Loss

Market Value

 FHLMC Preferred Stock

313400798

$
—

$
15,000

$
45,000

 The amortized cost of this security, absent OTTI impairment, would have been $1,518,000 as of
9/30/2008. First Merchants wrote off $1,458,000 during the quarter ending 9/30/2008. Following the closing of First Merchants’ books for the third quarter, pricing reports revealed the fair market value of the security had diminished an
additional $15,000. Because of the immaterial nature and amount of the item, First Merchants determined not to recognize the additional $15,000 as an other than temporary loss with respect to this security in the third quarter.

 In closing, First Merchants acknowledges that:

•

 First Merchants 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

•

 First Merchants may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the
United States.

Sincerely,

 /s/    Mark Hardwick

Mark Hardwick,

Executive Vice President Chief Financial Officer

First Merchants Corporation

 Current interest rate (LNCB)

0.79
%

1.17
%

3.15
%

Demand

Savings

CD’s < 100,000

Total

 Deposit base 9/30/08

3,850,484

1,898,318.00

1,263,621.00

7,012,423

 Less: Public funds

(509,351.00
)

(509,351
)

 Funds for reserve requirement

(57,757
)

(56,950
)

—

(114,707
)

 Net investable funds

3,283,376

1,841,368

1,263,621

6,388,365

Yield on earning

 Net Income ge