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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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 report), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No[ ]

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ X ] No [ ].

The number of shares of the Registrant's common stock, with $.01 par value, outstanding as of March 31, 2005, was 4,673,444.

FORM 10 - Q

MutualFirst Financial, Inc.

INDEX

Signature Page

PART I   FINANCIAL INFORMATION

ITEM 1.   Financial Statements

MUTUALFIRST FINANCIAL, INC. AND SUBSIDIARY
Consolidated Condensed Balance Sheets

See notes to consolidated condensed financial statements.

MUTUALFIRST FINANCIAL, INC. AND SUBSIDIARY
Consolidated Condensed Statements of Income

(Unaudited)

	Three Months Ended
	March 31
	2005	2004
Interest Income
Loans receivable, including fees	$10,786,684	$10,788,709
Investment seurities:
Mortgage-backed securities	130,310	122,155
Federal Home Loan Bank stock	84,798	91,277
Other investments	228,483	181,560
Deposits with financial institutions	6,570	12,953
Total interest income	11,236,845	11,196,654
Interest Expense
Passbook savings	39,746	37,486
Certificates of deposit	3,019,905	2,844,825
Daily Money Market accounts	165,507	120,091
Demand and NOW acounts	33,318	33,493
Federal Home Loan Bank advances	1,288,447	1,315,098
Other interest expense	15,606	15,606
Total interest expense	4,562,529	4,366,599
Net Interest Income	6,674,316	6,830,055
Provision for losses on loans	443,750	226,500
Net Interest Income After Provision for Loan Losses	6,230,566	6,603,555
Other Income
Service fee income	885,772	701,761
Net realized loss on sale of available-for-sale securities	(762)	0
Equity in gains (losses) of limited partnerships	(16,869)	2,831
Commissions	213,588	142,709
Net gains on loan sales and servicing	149,168	395,195
Increase in cash surrender value of life insurance	265,000	258,000
Other income	40,469	39,962
Total other income	1,536,366	1,540,458
Other Expenses
Salaries and employee benefits	3,406,037	3,439,743
Net occupancy expenses	348,784	292,738
Equipment expenses	313,129	261,347
Data processing fees	194,120	197,062
Automated teller machine	160,304	143,521
Deposit insurance expense	20,840	22,010
Advertising and promotion	138,757	95,006
Other expenses	967,019	890,105
Total other expenses	5,548,990	5,341,532
Income Before Income Tax	2,217,942	2,802,480
Income tax expense	610,000	834,550
Net Income	$1,607,942	$1,967,930
Basic earnings per share	$0.37	$0.41
Diluted earnings per share	$0.36	$0.40
Dividends per share	$0.13	$0.11

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, 2005
(Unaudited)

						Accumulated
	Common Stock		Additional			Other	Unearned	Unearned
	Shares		paid-in	Comprehensive	Retained	Comprehensive	ESOP	RRP
	Outstanding	Amount	capital	Income	Earnings	Loss	shares	shares	Total
Balances, December 31, 2004	4,708,318	$47,084	$34,385,254		$56,826,053	($88,646)	($2,860,426)	($449,176)	$87,860,143
Comprehensive income
Net income for the period				$1,607,942	$1,607,942				1,607,942
Other comprehensive income, net of tax
Net unrealized losses on securities				(157,868)		(157,868)			(157,868)
Comprehensive income				$1,450,074
ESOP shares earned			111,478				79,460		190,938
Cash dividends ($.13 per share)					(611,674)				(611,674)
RRP shares earned								64,125	64,125
Stock repurchased and retired	(64,574)	(647)	(585,129)		(967,019)				(1,552,794)
Stock options exercised	29,700	297	430,353						430,650
Balances, March 31, 2005	4,673,444	$46,734	$34,341,957		$56,855,302	($246,514)	($2,780,966)	($385,051)	$87,831,462

See notes to consolidated condensed financial statements.

MUTUALFIRST FINANCIAL, INC. AND SUBSIDIARY
Consolidated Condensed Statements of Cash Flows
(Unaudited)

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 financial statements include the accounts of MutualFirst Financial, Inc. (the "Company"), its wholly owned subsidiary, Mutual Federal Savings Bank, a federally chartered savings bank ("Mutual Federal"), and Mutual Federal's wholly owned subsidiary, First MFSB Corporation. 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 2004 filed with the Securities and Exchange Commission.

The interim consolidated financial statements at March 31, 2005 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, 2004 has been derived from the Audited Consolidated Balance Sheet of the Company as of that date.

The Company has a stock-based employee compensation plan that is described more fully in Notes to Financial Statements included in the December 31, 2004 Annual Report to stockholders. The Company accounts for this plan under the recognition and measurement principles of APB No. 25, Accounting for Stock Issued to Employees, and related interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under the plan had an exercise price equal to the market value of the underlying common stock on the grant date. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value provisions of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation. (Dollars in thousands except for per share data)

Note 2: Earnings per share

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

Note 3:  Effect of Recent Accounting Pronouncements

On April 14, 2005 the SEC issued an amendment to SFAS No. 123(R), which allows companies to implement SFAS 123(R) at the beginning of their next fiscal year, instead of the next reporting period, that begins after June 15, 2005. The new rule does not change the dates for compliance with the standard. Early adoption is permitted in periods in which financial statements have not yet been issued. The company expects to adopt SFAS No. 123(R) on January 1, 2006.

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations.

General

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

Mutual Federal was originally organized in 1889 and currently conducts its business from eighteen full service offices located in Delaware, Randolph, Grant, and Kosciusko counties, Indiana, with its main office located in Muncie. Mutual Federal's principal business consists of attracting deposits from the general public and originating fixed rate and adjustable rate loans secured primarily by first mortgage liens on one- to four- family residential real estate as well as commercial real estate and loans on consumer goods. The Savings Association Insurance Fund of the Federal Deposit Insurance Corporation insures Mutual Federal's deposit accounts up to applicable limits.

Mutual Federal currently owns one subsidiary, First MFSB Corporation. 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.

The following should be read in conjunction with the Management's Discussion and Analysis in the Company's December 31, 2004 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 62 to 65 of the Annual Report to Shareholders for the year ended December 31, 2004. 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.

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 present value of the future servicing fees arising from 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 amortization of intangible assets.

Intangible Assets

The Company periodically assesses the impairment of its goodwill and the recoverability of its core deposit intangible. Impairment is the condition that exists when the carrying amount of goodwill exceeds it implied fair value. 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.

Forward Looking Statements

This quarterly report on Form 10-Q ("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.

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.

Since 2000 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 35% at the end of 2000 to 44% currently. 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 increased from 33% to 36% over this time period. These are ongoing strategies that are dependent on current market conditions and competition.

During the first three months of 2005, in keeping with its strategic objective to reduce interest rate risk exposure, the Company also sold $4.3 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 $69,000 in the first three months of this year.

Recent increases in short-term interest rates, as a result of increases in the Federal Funds rate by the Board of Governors of the Federal Reserve System, without a corresponding increase in long-term interest rates will result in an increase in interest expense and a reduction in net interest income in 2005. The effect of the flattening yield curve is to increase our cost of funds at a faster rate than our yield on loans and investments, due to the longer-term nature of our interest earning assets. In 2005, as we 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.

The Company converted to a public company at the end of 1999, and at the end of 2000 bought a $200 million thrift for stock. Since that time the Company has been buying back the Company's stock to manage capital levels and enhance earnings per share. During the first three months of 2005, the Company used $1.6 million for this purpose, thereby reducing earning assets from where they otherwise would have been and correspondingly reducing net interest income.

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 Company is in the process of expanding through the addition of a new branch office in Syracuse, Indiana in Kosciusko County and the recent purchase of land in Elkhart County, located in northern Indiana, for the purpose of building a new branch office in that vibrant market. The Company is also in the process of developing a new Investment Management and Private Banking Division in order to better service clients with more specialized financial needs. In addition, Mutual Federal Savings Bank, the banking subsidiary of the Company, announced in March of this year that it had entered into a definitive agreement to purchase assets and assume liabilities representing the operations of Fidelity Federal Savings Bank of Marion ("Fidelity"). The intent of all these initiatives is to increase income over the long term. However, on a short term basis, expenses relating to the new branches and new division will have the affect of increasing non interest expense with no immediate offsetting income. The purchase of Fidelity (assumed to close in the third quarter of this year) should be accretive to income in the quarter immediately following closing due to substantial cost saves.

Financial Condition

Assets totaled $841.6 million at March 31, 2005, an increase from December 31, 2004 of $2.2 million, or .3%. Gross loans, excluding loans held for sale, increased $324,000, or ..1%. Consumer loans decreased $285,000, or .2%, and commercial business loans increased $680,000, or 1.3%, while residential and commercial mortgage loans held in the portfolio decreased $1.1 million, or .2%. Mortgage loans held for sale increased $193,000 and mortgage loans sold during the quarter totaled $4.3 million compared to $19.6 million sold in the first quarter of last year. The decrease in consumer loans (primarily auto loan related) can be attributed to the increasing interest rate environment, cyclical slowdown in activity and a very competitive market place, while the increase in commercial business loans is primarily due to increased line of credit usage. The primary reason for the decrease in mortgage loans was the sale of fixed rate mortgage loans during the first three months of the year, totaling $4.3 million, in order to reduce our interest rate risk exposure. Investment securities available for sale increased $1.1 million or 2.7% in order to maintain liquidity targets.

Premises and equipment increased $1.2 million or 8.9% due to the purchase of land for the purpose of building a new branch office in Elkhart county and current construction costs of the new Syracuse, Indiana office expected to be completed in June of this year.

Allowance for loan losses was $6.7 million at March 31, 2005, down $130,000 from December 31, 2004. Net charge offs for the quarter ended March 31, 2005 were $574,000 or .32% of average loans on an annualized basis compared to $207,000, or .13% of average loans for the comparable period in 2004. The increase in net charge offs was due primarily to the charge off of one non-performing commercial loan totaling $240,000. As of March 31, 2005, the allowance for loan losses as a percentage of non-performing loans and total loans was 149.74% and .94%, respectively, compared to 172.30% and .95%, respectively at December 31, 2004.

Total deposits were $599.3 million at March 31, 2005, a decrease of $1.0 million, or .2% from December 31, 2004. This decrease was due primarily to a reduction of volatile short term public deposits of $12.1 million. These public deposits are continuously bid out by the various public entities in our markets and the loss of deposits in the first quarter is more cyclical in nature and does not represent a loss of accounts. This decrease was partially offset by growth in core demand and savings deposits of $2.1 million and growth in retail certificates of deposit of $8.9 million due to more aggressive pricing in order to maintain existing large balances of maturing IRA deposits. Many of these deposits carried substantially higher rates than current market rates and therefore this strategy reduced our cost of these funds going forward and also attracted new deposits. Total borrowings increased $1.4 million to $143.0 million at March 31, 2005 from $141.6 million at December 31, 2004 due to several new FHLB advances.

Stockholders' equity decreased slightly from $87.9 million at December 31, 2004, to $87.8 million at March 31, 2005. The decrease was due primarily to the repurchase of 65,000 shares of common stock for $1.6 million and dividend payments of $612,000. Also, unrealized loss on securities available for sale increased $158,000 from $89,000 at December 31, 2004 to $247,000 at March 31, 2005. These decreases were partially offset by net income of $1.6 million, Employee Stock Ownership Plan (ESOP) shares earned of $191,000, RRP shares earned of $64,000 and options exercised netting $431,000.

Comparison of the Operating Results for the Three Months Ended March 31, 2005 and 2004

Net income for the first quarter ended March 31, 2005 was $1.6 million, or $.37 for basic and $.36 for diluted earnings per share. This compared to net income for the same period in 2004 of $2.0 million, or $.41 for basic and $.40 for diluted earnings per share. Annualized return on assets was .77% and return on equity was 7.39% for the first quarter of 2005 compared to .96% and 8.08% respectively, for the same period of last year.

Net interest income before provision for loan losses decreased 1.5% from $6.8 million for the three months ended March 31, 2004 to $6.7 million for the three months ended March 31, 2005. The interest rate spread decreased from 3.50% for the three-month period ended March 31, 2004, to 3.37% for the comparable period in 2005 as yields on interest-earning assets decreased more than the decrease in the cost of interest-bearing liabilities. This lower spread was partially offset by an $18.4 million increase in average interest-earning assets when comparing the first quarter of 2005 to that of 2004.

The provision for loan losses for the first quarter of 2005 was $444,000, up from $227,000 for last year's comparable period. The increase was due to increased charge offs and an increase in non-performing loans. Non-performing loans to total loans at March 31, 2005 were .62% compared to .56% at March 31, 2004. Non-performing assets to total assets were .69% at March 31, 2005 compared to .62% at March 31, 2004.

Non-interest income was unchanged at $1.5 million for the three months ended March 31, 2005 compared to the same period in 2004. Increases in service fee and commission income due to a new overdraft privilege program and an increase in annuity and mutual fund sales were offset by a decrease in gain on sale of loans as mortgage activity slowed due to an increase in market rates of interest. The gain on sale of loans included an $80,000 reduction of reserves on mortgage servicing rights due to a slight increase in mortgage rates and a corresponding slowdown in mortgage prepayments. As a result, the reserves on mortgage servicing rights were $100,000 at March 31, 2005.

Non-interest expense increased $207,000 or 3.9% to $5.5 million for the three months ended March 31, 2005 compared to $5.3 million for the same period in 2004. The increase was due primarily to increased occupancy and equipment expenses which were up $108,000 due to costs related to a new office opened in May 2004 and the relocation of our corporate and investment management and private banking staffs to a recently purchased office building located next to our main office in Muncie. Other expenses increased $77,000 due to increases in legal and consulting services of $48,000 primarily related to Sarbanes-Oxley regulatory compliance requirements and other general and administrative expense increases.

Income tax expense decreased $225,000 for the three months ended March 31, 2005 compared to the same period in 2004 due to less taxable income. The effective tax rate decreased from 29.8% to 27.5% due to increased low income housing tax credits when comparing the first quarter of 2004 and the first quarter of 2005, respectively.

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, 2005, Mutual Federal had liquid assets of $59.4 million and a liquidity ratio of 8.05 %. It is anticipated that this level of liquidity will be adequate for the remainder of 2005.

ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk

Presented below as of March 31, 2005 and 2004 is an analysis of Mutual Federal's interest rate risk as measured by changes in Mutual Federal's net portfolio value ("NPV") assuming an instantaneous and sustained parallel shift in the yield curve, in 100 basis point increments.

(1)  Not meaningful because some market rates would compute to a rate less than zero.

The analysis at March 31, 2005 indicates that there have been no material changes in market interest rates for Mutual Federal'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, 2004.

ITEM - 4 Controls and Procedures.

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.

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.