SUMMARY

This summary highlights selected information from this proxy statement-prospectus. Because this is a summary, it does not contain all of the information that is important to you. You should carefully read this entire document, its appendices and the documents we have referred you to before you decide how to vote. See “WHERE YOU CAN FIND ADDITIONAL INFORMATION” on page 145 for a description of documents that we incorporate by reference into this document. Each item in this summary includes a page reference that directs you to a more complete description in this document of the topic discussed.

The Companies (pages 77 and 79)

First Merchants Corporation

200 East Jackson Street

Muncie, Indiana 47305

(765) 747-1500

First Merchants is a multi-bank holding company and a financial holding company, incorporated under Indiana law and headquartered in Muncie, Indiana. First Merchants has four banking subsidiaries: First Merchants Bank, National Association; First Merchants Bank of Central Indiana, National Association; Lafayette Bank & Trust Company, National Association; and Commerce National Bank. Through these subsidiaries, First Merchants operates a general banking business. First Merchants also owns various non-bank subsidiaries that engage in the trust and asset management service business, title insurance and settlement services business, the reinsurance business and the full-service property casualty, personal and healthcare insurance business.

At September 30, 2008, on a consolidated basis, First Merchants had assets of approximately $3.9 billion, deposits of approximately $2.9 billion, and stockholders’ equity of approximately $352 million. First Merchants common stock is quoted and traded on the NASDAQ Global Select Market System under the symbol “FRME.” See “DESCRIPTION OF FIRST MERCHANTS” on page 77.

Lincoln Bancorp

905 Southfield Drive

Plainfield, Indiana 46168

(317) 839-6539

Lincoln is a single bank holding company incorporated under Indiana law and headquartered in Plainfield, Indiana. Lincoln is the sole owner of Lincoln Bank, an Indiana state bank currently conducting its general banking business from 17 full-service offices located in Hendricks, Johnson, Morgan, Clinton, Montgomery, and Brown Counties, Indiana, with its main office located in Plainfield, Indiana.

At September 30, 2008, on a consolidated basis, Lincoln had assets of approximately $831 million, deposits of approximately $594 million, and shareholders’ equity of approximately $71 million. Lincoln common stock is quoted and traded on the NASDAQ Global Market System under the symbol “LNCB.” See “DESCRIPTION OF LINCOLN” on page 79.

The Merger (page 33)

We have attached the Agreement of Reorganization and Merger (as amended by the First Amendment dated October 29, 2008) (Merger Agreement) to this document as Appendix A. Please read the Merger Agreement. It is the legal document that governs the merger.

Lincoln will merge with First Merchants and, thereafter, Lincoln will cease to exist. We hope to complete the merger during the fourth quarter of 2008. Subsequent to the merger and subject to prior regulatory approvals, Lincoln Bank will merge with and into First Merchants Bank of Central Indiana, National Association.

Reasons for the Merger (page 35)

First Merchants. First Merchants’ Board of Directors considered a number of financial and nonfinancial factors in making its decision to merge with Lincoln, including its respect for the ability and integrity of the Lincoln Board of Directors, management and staff. The Board believes that expanding First Merchants’ operations in the markets in which Lincoln operates offers long-term strategic benefits to First Merchants. First Merchants also believes that several synergies exist between the banking businesses of the parties, making the transaction even more attractive.

Lincoln. In considering the merger with First Merchants, Lincoln’s Board of Directors collected and evaluated a variety of economic, financial and market information regarding First Merchants and its subsidiaries, their respective businesses and First Merchants’ reputation and future prospects. In the opinion of Lincoln’s Board of Directors, favorable factors included:

Opinion of Lincoln’s Financial Advisor (page 38)

The Board of Directors of Lincoln received the written opinion of Sandler dated September 2, 2008, stating that the merger consideration to be received by Lincoln shareholders is fair from a financial point of view. We have attached a copy of the fairness opinion to this document as Appendix B. Lincoln shareholders should read the fairness opinion in its entirety.

What Lincoln Shareholders Will Receive (page 48)

As a Lincoln shareholder, each of your Lincoln common shares will be converted into the right to receive, at your election, either (i) 0.7004 shares of First Merchants common stock, subject to possible upward or downward adjustment of the conversion ratio as provided in the Merger Agreement, or (ii) $15.76 in cash. You may elect to receive a combination of First Merchants common stock for some of your Lincoln shares and cash for some of your Lincoln shares. The number of shares of First Merchants common stock and the amount of cash payable in connection with the merger is subject to various limitations and prorations. Under certain circumstances, an election to receive stock or cash may be converted into an election to receive the other type of consideration. If you fail to make an election, you will be considered to have elected to receive First Merchants common stock for your Lincoln shares, but if it is necessary to convert some stock elections to cash elections under the proration provisions of the Merger Agreement, Lincoln shares for which no election was made will be the first to be changed from receiving stock to receiving cash. Cash will be paid in lieu of issuing any fractional shares of First Merchants common stock.

Because the conversion ratio is fixed within certain parameters and because the market price of common stock of First Merchants will fluctuate, the market value of the stock of First Merchants you will receive in the merger is not fixed. See “SUMMARY—Comparative Market Price Information” on page 15.

Conversion Ratio Adjustment (page 50)

As mentioned above, the 0.7004 conversion ratio is subject to possible upward or downward adjustment, if a chain of certain events occurs. The first of those events is that the average of the closing price of First Merchants common stock as reported in Bloomberg, L.P. for the 20 NASDAQ trading days preceding the 5^th calendar day prior to the effective date of the merger must be either less than $16.50 or greater than $30.00. This calculation is defined in the Merger Agreement as the First Merchants Average Price. Since this calculation will be made just prior to the effective date of the merger, it is not possible to determine the First Merchants Average Price as of the date of this proxy statement-prospectus. The Merger Agreement may be terminated by Lincoln if the First Merchants Average Price falls below $16.50 or by First Merchants if the First Merchants Average Price increases above $30.00. The second event that must occur in order for the conversion ratio to be adjusted is either Lincoln or First Merchants must exercise its right to terminate the Merger Agreement based on the First Merchants Average Price. Finally, if either party exercises its right to terminate the Merger Agreement based on the First Merchants Average Price, then the other party has the right to adjust the conversion ratio according to a formula to avoid termination of the Merger Agreement. For a more detailed discussion of how the conversion ratio can be adjusted, see “THE MERGER—Conversion Ratio Adjustment.”

Recommendation to Shareholders (page 37)

The Board of Directors of Lincoln believes that the merger is in your best interests and unanimously recommends that you vote “FOR” the proposal to adopt the Merger Agreement. In reaching its decision, the Lincoln Board of Directors considered a number of factors, which are described in the section titled “THE MERGER—Lincoln’s Reasons for the Merger”. Because of the wide variety of factors considered, the Lincoln Board of Directors did not believe it practicable, nor did it attempt, to quantify or otherwise assign relative weight to the specific factors it considered in reaching its decision.

The Shareholders Meeting (page 28)

The special meeting of Lincoln shareholders will be held on                     ,                     , 2008, at _:            .m. local time, at Guilford Township Community Center, Hummel Park, 1500 S. Center Street, Plainfield, Indiana. You will be asked at the special meeting to consider and vote upon the adoption of the

Merger Agreement and to act upon any other items of business that may be properly submitted to vote at the special meeting. In the event that an insufficient number of shares is present in person or by proxy at the special meeting to approve the merger, you may also be asked to vote to approve a proposal to adjourn or postpone the meeting to allow time for the solicitation of additional proxies.

Record Date; Votes Required (page 28)

You may vote at the Lincoln special meeting of shareholders if you owned common shares of Lincoln at the close of business on                     , 2008. You are entitled to cast one vote for each common share you owned on that date. The holders of at least a majority of the outstanding Lincoln common shares must vote in favor of adoption of the Merger Agreement. No approval by First Merchants shareholders is required to complete the merger. Approval of the proposal to adjourn or postpone the special meeting, if necessary, requires only that more votes be cast in favor of the proposal than are cast against it. Broker non-votes and abstentions from voting will not be treated as “NO” votes on this proposal (as they are with the approval of the Merger Agreement) and, therefore, will have no effect on the outcome. You can vote your shares by attending the special meeting or you can mark the enclosed proxy card with your vote, sign it and mail it in the enclosed return envelope.

As of September 18, 2008, Lincoln’s executive officers, directors and their affiliates owned 319,718 shares or approximately 6.01% of the Lincoln common shares outstanding. Each member of the Board of Directors of Lincoln and certain executive officers of Lincoln and Lincoln Bank signed a voting agreement as of September 2, 2008, the date the Merger Agreement was executed, in which they agreed to cause all Lincoln common shares owned by them of record or beneficially to be voted in favor of the merger. As of                     , 2008, Lincoln’s executive officers, directors and their affiliates owned                      shares or approximately             % of the Lincoln common shares outstanding.

No Dissenters’ Rights (page 51)

Under Indiana Code § 23-1-44, dissenters’ rights are not available to holders of shares quoted and traded on the NASDAQ Global Market System or a similar market. Because Lincoln’s common shares are presently quoted and traded on the NASDAQ Global Market System, shareholders of Lincoln presently have no dissenters’ rights in respect of their shares. See “THE MERGER—Rights of Dissenting Shareholders” on page 51.

What We Need to Do to Complete the Merger (page 52)

Completion of the merger depends on a number of conditions being met. In addition to our compliance with the Merger Agreement, these conditions include among others:

Regulatory Approvals (page 56)

The merger has been approved by the Board of Governors of the Federal Reserve System (Federal Reserve) and the Indiana Department of Financial Institutions (DFI).

Conduct of Business Pending Merger (page 55)

Under the Merger Agreement, Lincoln must carry on its business in the ordinary course and may not take certain extraordinary actions without first obtaining First Merchants’ approval.

We have agreed that Lincoln will continue to pay quarterly dividends at no more than the current rate of $0.14 per share until the merger closes. We will each cooperate to insure that Lincoln shareholders will receive only one quarterly dividend for the quarter in which the merger closes, and not one from both First Merchants and Lincoln.

Agreements of First Merchants (pages 56, 57, 58, and 59)

In the Merger Agreement, First Merchants has agreed to:

Management and Operations After the Merger (page 57)

Lincoln’s corporate existence will cease after the merger. Accordingly, directors and officers of Lincoln will not serve in such capacities after the effective date of the merger. Upon completion of the merger, the current officers and directors of First Merchants will continue to serve in such capacities. In addition, Jerry R. Engle, who currently serves as Chairman of the Board and President and Chief Executive Officer of Lincoln, and another director of Lincoln chosen by First Merchants will be nominated for election to the Board of Directors of First Merchants to each serve for a three-year term following the merger. A condition of the completion of the merger is the effectiveness of new employment agreements between First Merchants and Jerry R. Engle and John B. Ditmars. In addition, First Merchants has agreed to allow current members of the Lincoln Bank Board of Directors to remain as directors of the merged bank if they choose to do so.

Interests of Directors and Officers in the Merger That Are Different From Your Interests (page 60)

You should be aware that some of Lincoln’s and Lincoln Bank’s directors and executive officers may have interests in the merger that are different from, or in addition to, their interests as shareholders. Both Lincoln’s Board of Directors and First Merchants’ Board of Directors were aware of these interests and took them into account in approving the merger. These interests are as follows:

For additional information regarding these interests in the proposed merger, see “THE MERGER—Interests of Certain Persons in the Merger” beginning on page 60.

Termination of the Merger (page 54)

We can mutually agree to terminate the Merger Agreement before we complete the merger. In addition, either Lincoln or First Merchants acting alone can terminate the Merger Agreement under the circumstances described on page 54.

Lincoln has agreed to pay First Merchants the amount of $3,200,000 in liquidated damages if:

First Merchants has agreed to pay Lincoln the amount of $2,000,000 in liquidated damages if First Merchants terminates the Merger Agreement because the merger has not been consummated before January 1, 2009.

First Merchants has agreed to pay Lincoln the amount of $3,200,000 in liquidated damages if Lincoln terminates the Merger Agreement because First Merchants enters into a definitive agreement in which it is the target company or the company to be acquired which would result in a change of control of First Merchants or require approval pursuant to the Bank Holding Company Act of 1956, as amended.

Material U.S. Federal Income Tax Consequences (page 63)

It is a condition to the closing of the merger that Bose, McKinney & Evans LLP and Bingham McHale LLP deliver opinions, effective as of the date of the merger, to Lincoln and First Merchants, respectively, substantially to the effect that:

These opinions will not, however, bind the Internal Revenue Service which could take a different view.

Determining the actual tax consequences of the merger to you can be complicated. We suggest you consult with your own tax advisors with respect to the tax consequences of the merger to you.

For a more detailed description of certain federal income tax consequences of the merger to Lincoln shareholders, see “MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES” on page 60.

Accounting Treatment (page 62)

The merger will be accounted for as a purchase transaction for accounting and financial reporting purposes. As a result, Lincoln’s assets, including identified intangible assets, and liabilities will be recorded by First Merchants on its books at their fair market values and added to those of First Merchants. Any excess payment by First Merchants over the fair market value of the net assets and identifiable intangibles of Lincoln will be recorded as goodwill on the financial statements of First Merchants. Conversely, any excess of the fair value of the net assets acquired over the payment made by First Merchants will be reflected as a reduction of certain long-lived assets.

Comparative Rights of First Merchants Shareholders and Lincoln Shareholders (page 134)

The rights of shareholders of First Merchants and Lincoln differ in some respects. The rights of holders of First Merchants common stock are governed by First Merchants’ Articles of Incorporation and By-Laws. Your rights as holders of Lincoln common shares are governed by Lincoln’s Articles of Incorporation and By-Laws. Upon completion of the merger, Lincoln shareholders who receive First Merchants common stock will take such stock subject to First Merchants Articles of Incorporation and By-Laws.

The following are material differences in shareholder rights:

See “COMPARISON OF COMMON STOCK” on page 134 to learn more about the differences between the rights of holders of First Merchants common stock and holders of Lincoln common shares.

Recent Developments (page 104)

On September 3, 2008, the date Lincoln and First Merchants announced the signing of the Merger Agreement, Lincoln determined that goodwill with a carrying amount of $23.9 million would need to be evaluated for impairment in accordance with Statement of Financial Accounting Standards No. 142 (SFAS 142). This evaluation required an extensive fair value determination of Lincoln’s assets and liabilities to determine an estimate of the implied fair value of goodwill. Upon conclusion of the evaluation, Lincoln determined that the full $23.9 million of goodwill should be eliminated from its books. This elimination will be recognized as a noncash expense as part of Lincoln’s results of operations for the three month and nine month periods ending September 30, 2008.

This charge has no effect on Lincoln’s cash flow or the regulatory capital or regulatory capital ratios of Lincoln or Lincoln Bank. Regulatory capital measurements used to assess the strength of individual banks, as well as the safety and soundness of the entire banking system, exclude goodwill as a component of capital.

Comparative Market Price Information

Shares of First Merchants common stock are quoted and traded on the NASDAQ Global Select Market System under the symbol “FRME.” Lincoln common shares are quoted and traded on the NASDAQ Global Market System under the symbol “LNCB.” The following table presents quotation information for First Merchants common stock on the NASDAQ Global Select Market System and for Lincoln common stock on the NASDAQ Global Market System on September 2, 2008, the business day before the merger was publicly announced, and                     , 2008, the last practicable trading day for which information was available prior to the date of this proxy statement-prospectus.

The market value of the aggregate consideration that Lincoln shareholders will receive in the merger is approximately $75 million (or $14.01 per Lincoln common share) based on 5,319,731 Lincoln common shares outstanding, First Merchants’ closing stock price of $19.89 on September 2, 2008, the business day before the merger was publicly announced, and the maximum number of Lincoln common shares being exchanged for shares of First Merchants common stock (subject to the 3,576,417 limitation) and the balance for cash. The assumption of 5,319,731 Lincoln common shares outstanding was calculated under the assumption all outstanding stock options are exchanged for cash. Using this same First Merchants’ closing stock price and number of outstanding Lincoln common shares, but assuming that 80% of Lincoln’s common shares are

exchanged for First Merchants common stock and 20% of Lincoln’s common shares are exchanged for cash in the merger, the market value of the aggregate consideration that Lincoln shareholders will receive in the merger is approximately $76 million (or $14.30 per Lincoln common share).

The market value of the aggregate consideration that Lincoln shareholders will receive in the merger is approximately $             million (or $             per Lincoln common share) based on                      Lincoln common shares outstanding, First Merchants’ closing stock price of $             on                     , 2008, the last practicable trading day for which information was available prior to the date of this proxy statement-prospectus, and the maximum number of Lincoln common shares being exchanged for shares of First Merchants common stock (subject to the 3,576,417 limitation) and the balance for cash. The assumption of                      Lincoln common shares outstanding was calculated by adding the outstanding stock options and the outstanding common shares as of                     , 2008. Using this same First Merchants’ closing stock price and number of outstanding Lincoln common shares, but assuming that 80% of Lincoln’s common shares are exchanged for First Merchants common stock and 20% of Lincoln’s common shares are exchanged for cash in the merger, the market value of the aggregate consideration that Lincoln shareholders will receive in the merger is approximately $             million (or $             per Lincoln common share).

Also set forth below for each of the closing prices of First Merchants common stock on September 2, 2008, and                     , 2008, is the equivalent pro forma price of Lincoln common shares, which we determined by multiplying the applicable price of First Merchants common stock by the number of shares of First Merchants common stock we are issuing for a Lincoln common share in the merger, which is the conversion ratio of 0.7004. The equivalent pro forma price of Lincoln common shares shows the implied value to be received in the merger by Lincoln shareholders who receive First Merchants common stock in exchange for a Lincoln common share on these dates.

We urge you to obtain current market quotations for First Merchants common stock and Lincoln common shares. We expect that the market price of First Merchants common stock will fluctuate between the date of this document and the date on which the merger is completed and thereafter. Because the market price of First Merchants common stock is subject to fluctuation, the value of the shares of First Merchants common stock that Lincoln shareholders will receive in the merger may increase or decrease prior to and after the merger, while the conversion ratio is fixed within certain parameters. Lincoln shareholders who receive cash will receive a fixed amount of $15.76 per share.

Comparative Per Share Data

The following table shows historical information about our companies’ earnings per share, dividends per share and book value per share, and similar information reflecting the merger, which we refer to as “pro forma” information. In presenting the comparative pro forma information, we have assumed that we were merged through the periods shown in the table. The pro forma information reflects the “purchase” method of accounting. The information is presented under two separate assumptions relating to the level of Lincoln common shares which are exchanged for First Merchants common stock in the merger. The financial information presented under “Alternative A” was compiled assuming the maximum number of Lincoln common shares are exchanged for shares of First Merchants common stock (subject to the 3,576,417 limitation) and the balance for cash. The financial information presented under “Alternative B” was compiled assuming 80% of the outstanding Lincoln common shares are exchanged for shares of First Merchants common stock and 20% of the outstanding Lincoln

common shares are exchanged for cash in the merger. For a more detailed description of these assumptions and how we derived the First Merchants and Lincoln pro forma data, see “Notes to Unaudited Pro Forma Summary of Selected Consolidated Financial Data” on page 23 and “UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION” on page 67.

The information listed as “equivalent pro forma” was obtained by multiplying the pro forma amounts by the conversion ratio of 0.7004. This information is presented to reflect the value of shares of First Merchants common stock that Lincoln shareholders will receive in the merger for each share of Lincoln common stock exchanged.

We expect that we will incur reorganization and restructuring expenses as a result of combining our companies. We also anticipate that the merger will provide the combined company with financial benefits that include reduced operating expenses and the opportunity to earn more revenue. The pro forma information, while helpful in illustrating the financial characteristics of the new company under two sets of assumptions, does not take into account these expected expenses or these anticipated financial benefits, and does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the merged company would have been had our companies been merged during the periods presented.

The information in the following table is based on historical financial information of Lincoln and of First Merchants which are included in each company’s respective prior Securities and Exchange Commission filings. The historical financial information of First Merchants has been incorporated into this document by reference. Certain historical financial information for Lincoln is included in this document. Additional historical financial information of Lincoln has been incorporated into this document by reference. See “WHERE YOU CAN FIND ADDITIONAL INFORMATION” on page 145 for a description of documents that we incorporate by reference into this document and how to obtain copies of them.

FIRST MERCHANTS AND LINCOLN

HISTORICAL AND PRO FORMA PER SHARE DATA

SELECTED HISTORICAL AND UNAUDITED PRO FORMA

CONSOLIDATED FINANCIAL DATA

The following tables set forth certain summary historical consolidated financial data for First Merchants and Lincoln. First Merchants’ and Lincoln’s balance sheet data and income statement data as of and for the five years ended December 31, 2007 are taken from each of their respective audited consolidated financial statements. First Merchants’ and Lincoln’s balance sheet data and income statement data as of and for the nine months ended September 30, 2008 and 2007 are taken from their respective unaudited consolidated financial statements. Results for the nine months ended September 30, 2008 do not necessarily indicate results for the entire year.

The following tables also set forth certain summary unaudited pro forma consolidated financial information for First Merchants and Lincoln reflecting the merger. The income statement information presented gives effect to the merger as if it occurred on the first day of each period presented. The balance sheet information presented gives effect to the merger as if it occurred on September 30, 2008. The information is presented under two separate assumptions relating to the level of Lincoln common shares which are exchanged for First Merchants common stock in the merger. The financial information presented under “Alternative A” was compiled assuming the maximum number of Lincoln common shares are exchanged for shares of First Merchants common stock (subject to the 3,576,417 limitation) and the balance for cash. The financial information presented under “Alternative B” was compiled assuming 80% of the outstanding Lincoln common shares are exchanged for shares of First Merchants common stock and 20% of the outstanding Lincoln common shares are exchanged for cash in the merger. For a more detailed description of these assumptions, see “Notes to Unaudited Pro Forma Summary of Selected Consolidated Financial Data” on page 23.

The pro forma information reflects the “purchase” method of accounting, with Lincoln’s assets and liabilities recorded at their estimated fair values as of September 30, 2008. The actual fair value adjustments to the assets and the liabilities of Lincoln will be made on the basis of appraisals and evaluations that will be made as of the date the merger is completed. Thus, the actual fair value adjustments may differ significantly from those reflected in these pro forma financial statements. In the opinion of First Merchants’ management, the estimates used in the preparation of these pro forma financial statements are reasonable under the circumstances.

We expect that we will incur reorganization and restructuring expenses as a result of combining our companies. We also anticipate that the merger will provide the combined company with financial benefits that include reduced operating expenses and the opportunity to earn more revenue. The pro forma information, while helpful in illustrating the financial characteristics of the new company under two sets of assumptions, does not take into account these expected expenses or these anticipated financial benefits, and does not attempt to predict or suggest future results.

This selected financial data is only a summary and you should read it in conjunction with First Merchants’ consolidated financial statements and related notes incorporated into this document by reference and Lincoln’s consolidated financial statements and related notes included in this document, and in conjunction with the Unaudited Pro Forma Combined Consolidated Financial Information appearing on page 20 in this document. See “WHERE YOU CAN FIND ADDITIONAL INFORMATION” on page 145 for a description of documents that we incorporate by reference into this document and how to obtain copies of such documents.

FIRST MERCHANTS

FIVE YEAR SUMMARY OF SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

(Dollars In Thousands, Except Per Share Amounts)

LINCOLN

FIVE YEAR SUMMARY OF SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

(Dollars In Thousands, Except Per Share Amounts)