UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 11-K


[X]  ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934

                  For the fiscal year ended December 31, 2006

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

                         Commission file number 0-17071

A.  Full title of the plan and the address of the plan, if different from that
    of the Issuer named below:

                          First Merchants Corporation
                            Retirement Savings Plan

B.  Name of issuer of the securities held pursuant to the plan and the address
    of its principal office:

                          First Merchants Corporation
                            200 East Jackson Street
                             Muncie, Indiana 47305




                           First Merchants Corporation
                       Retirement Income and Savings Plan
                              EIN 35-1544218 PN 002
                  Accountants' Report and Financial Statements
                           December 31, 2006 and 2005



                           First Merchants Corporation
                       Retirement Income and Savings Plan
                           December 31, 2006 and 2005



Contents
                                                                                               
    Report of Independent Registered Public Accounting Firm........................................1

    Financial Statements

        Statements of Net Assets Available for Benefits............................................2

        Statements of Changes in Net Assets Available for Benefits.................................3

        Notes to Financial Statements..............................................................4

    Supplemental Schedule

        Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes at End of Year......11

    Exhibit

        Exhibit 23, Consent of Independent Registered Public Accounting Firm......................12

    Signature.....................................................................................13





                             [LETTERHEAD OF BKD LLP]

             Report of Independent Registered Public Accounting Firm

Audit and Administrative Committee
First Merchants Corporation Retirement and Savings Plan
Muncie, Indiana

We have audited the accompanying statements of net assets available for benefits
of First Merchants Corporation Retirement and Savings Plan as of December 31,
2006, and 2005, and the related statements of changes in net assets available
for benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

The Plan has adopted FSP Nos. AAG INV-1 and SOP 94-4-1 as discussed in Note 2 to
the financial statements.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the plan as of
December 31, 2006, and 2005, and the changes in its net assets available for
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

The accompanying supplemental schedule is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.


/s/ BKD, LLP

Indianapolis, Indiana
June 25, 2007

Federal Employer Identification Number:  44-0160260



                           First Merchants Corporation
                       Retirement Income and Savings Plan
                 Statements of Net Assets Available for Benefits
                           December 31, 2006 and 2005



                                                                                            2005
Assets                                                                        2006        (Note 2)
                                                                          -------------------------
                                                                                  
  Investments, at fair market value
      Common stock                                                        $ 1,180,998   $ 1,073,188
      Mutual funds                                                         38,478,653    32,548,714
      Collective investment fund                                            1,971,563     2,101,945
      Money market funds                                                    1,897,754     1,179,757
      Participant loans                                                       139,879       254,981
                                                                          -----------   -----------
            Total investments                                              43,668,847    37,158,585
                                                                          -----------   -----------
  Receivables
      Accrued income                                                           14,311            --
      Employer contributions                                                1,399,525     1,108,481
      Participant contributions                                                    --       108,047
                                                                          -----------   -----------
            Total receivables                                               1,413,836     1,216,528
                                                                          -----------   -----------

  Cash                                                                         17,355           324
                                                                          -----------   -----------

            Total assets                                                   45,100,038    38,375,437
                                                                          -----------   -----------
Liabilities
      Excess contributions refundable                                           5,468         6,224
                                                                          -----------   -----------

Net Assets Available at Fair Market Value                                  45,094,570    38,369,213
                                                                          -----------   -----------
      Adjustment from fair value to contract value for
       interest in collective trust relating to fully benefit-responsive
       investment contracts                                                    19,716        23,996
                                                                          -----------   -----------

Net Assets Available for Benefits                                         $45,114,286   $38,393,209
                                                                          ===========   ===========


See Notes to Financial Statements                                              2



                           First Merchants Corporation
                       Retirement Income and Savings Plan
           Statements of Changes in Net Assets Available for Benefits
                     Years Ended December 31, 2006 and 2005



                                                                                          2005
                                                                             2006        (Note 2)
                                                                         -------------------------
                                                                                 
Investment Income
    Net appreciation in fair value of investments                        $ 2,478,543   $   605,869
    Interest and dividends                                                 2,298,773     1,650,407
                                                                         -----------   -----------
          Net investment income                                            4,777,316     2,256,276
                                                                         -----------   -----------
Contributions
    Participants                                                           2,828,581     2,458,499
    Employer                                                               2,312,050     1,846,810
    Rollovers                                                                650,796     1,111,492
    Transfer from other plans                                                     --    10,502,523
                                                                         -----------   -----------
                                                                           5,791,427    15,919,324
                                                                         -----------   -----------
          Total additions
                                                                          10,568,743    18,175,600

Deductions - benefits paid to participants                                 3,847,666     1,935,392
                                                                         -----------   -----------

Net Increase                                                               6,721,077    16,240,208

Net Assets Available for Benefits, Beginning of Year                      38,393,209    22,153,001
                                                                         -----------   -----------

Net Assets Available for Benefits, End of Year                           $45,114,286   $38,393,209
                                                                         ===========   ===========


See Notes to Financial Statements                                              3


                           First Merchants Corporation
                       Retirement Income and Savings Plan
                          Notes to Financial Statements
                           December 31, 2006 and 2005

Note 1: Description of Plan

      The following description of First Merchants Corporation Retirement Income
      and Savings Plan (Plan) provides only general information. Participants
      should refer to the Plan Document and Summary Plan Description for a more
      complete description of the Plan's provisions, which are available from
      the plan administrator.

    General

      The Plan is a defined-contribution plan sponsored by First Merchants
      Corporation (Corporation) for the benefit of all employees who are age 18
      or older. It is subject to the provisions of the Employee Retirement
      Income Security Act of 1974 (ERISA). First Merchants Trust Company is the
      trustee and recordkeeper of the Plan. Prime Vest Financial Services was
      the custodian for a majority of the Plan's assets during 2005. In November
      2005, the assets were transferred to Mid Atlantic Capital Corporation. In
      October 2006, the assets were transferred from Mid Atlantic Capital
      Corporation to Fidelity. Fidelity is now the custodian for a majority of
      the Plan's assets.

    Contributions

      The Plan permits eligible employees through a salary deferral election to
      have the Corporation make annual contributions of up to 75% of eligible
      compensation up to the maximum allowed by law. Employee rollover
      contributions are also permitted.

      Prior to March 1, 2005, the Corporation made matching contributions of its
      employees' salary deferral amounts of 25% of the first 5% of employees'
      eligible compensation for all participating employees. After March 1,
      2005, the matching contribution described above is the only type of
      employer contribution granted to grandfathered participants who are at
      least age 55 and credited with at least ten years of service at February
      28, 2005. The remaining participants receive the following three different
      types of employer contributions. The Corporation's contributions are as
      follows:

            o     Retirement security contributions: range from 2% of pay to 7%
                  of pay based on years of service. The participant must have
                  1,000 hours of service and be employed at the end of the plan
                  year.

            o     Matching contributions: 50% of the first 6% of employees'
                  eligible compensation for all participating employees.

            o     Transition contributions: 3% of eligible compensation for all
                  participants who are at least age 45, credited with at least
                  ten years of service at February 28, 2005 and were
                  participating in the Corporation's defined-benefit plan at
                  February 28, 2005. The participant must have 1,000 hours of
                  service and be employed at the end of the plan year. This
                  contribution will only be applicable through the 2009 Plan
                  year.


                                                                               4


                           First Merchants Corporation
                       Retirement Income and Savings Plan
                          Notes to Financial Statements
                           December 31, 2006 and 2005

      The entry date for retirement security and transition contributions is
      March 1, 2005, and each subsequent January 1. Catch-up contributions are
      also available for participants after they reach 50 years of age before
      the end of the applicable year. Prior to March 1, 2005, the Corporation's
      profit-sharing contributions were discretionary as determined by the
      Corporation's Board of Directors.

      The Plan document also includes an automatic deferral feature whereby a
      participant is treated as electing to defer 3% of eligible compensation
      unless the participant made an affirmative election otherwise.
      Contributions are subject to certain limitations.

    Participant Investment Account Options

      Investment account options available include various funds including a
      Corporation common stock fund. Each participant has the option of
      directing his contributions into any of the separate investment accounts
      and may change the allocation daily. Allocations to the Corporation common
      stock fund are generally limited to 25% of the applicable account balance.

    Participant Accounts

      Each participant's account is credited with the participant's
      contribution, the Corporation's contribution and plan earnings.
      Allocations of Plan earnings are based on participant account balances, as
      defined. The benefits to which a participant is entitled is the benefit
      that can be provided from the participant's vested account.

    Vesting

      Participants are immediately vested in their voluntary contributions and
      rollover contribution accounts plus earnings thereon. Vesting in the
      Corporation's matching contribution portion of their accounts plus
      earnings thereon is based on years of continuous service. A participant is
      fully vested in the matching contribution portion of their account after
      five years of credited service. Effective March 1, 2005, vesting in the
      retirement security contribution portion of their account plus earnings is
      100% after five years of service. Effective March 1, 2005, vesting in the
      transition contribution portion of their account plus earnings is
      immediate since all eligible participants have at least ten years of
      service. The nonvested balance is forfeited upon termination of service.
      Forefeitures are used to reduce the Corporation's contribution or to pay
      reasonable administrative expenses of the Plan.

    Payment of Benefits

      Upon termination of service, participants may elect to receive a lump-sum
      amount or installments equal to the value of their accounts. Withdrawals
      other than for termination are permitted under circumstances provided by
      the Plan. At December 31, 2006, plan assets include approximately $39,600
      allocated to accounts of terminated or retired participants who have
      elected to withdraw from the Plan but have not yet been paid.


                                                                               5


                           First Merchants Corporation
                       Retirement Income and Savings Plan
                          Notes to Financial Statements
                           December 31, 2006 and 2005

    Plan Termination

      Although it has not expressed any intent to do so, the Corporation has the
      right under the Plan to discontinue its contributions at any time and to
      terminate the Plan subject to the provisions of ERISA. In the event of
      Plan termination, participants will become 100% vested in their accounts.

Note 2:  Summary of Significant Accounting Policies

    Method of Accounting

      The accompanying financial statements are prepared on the accrual method
      of accounting.

    Use of Estimates

      The preparation of financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported
      amounts of net assets and changes in net assets available for benefits.
      Actual results could differ from those estimates.

      As described in Financial Accounting Standards Board Staff Position, FSP
      AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment
      Contracts Held by Certain Investment Companies Subject to the AICPA
      Investment Company Guide and Defined-Contribution Health and Welfare and
      Pension Plans (the FSP), investment contracts held by a
      defined-contribution plan are required to be reported at fair value.
      However, contract value is the relevant measurement attribute for that
      portion of the net assets available for benefits of a defined-contribution
      plan attributable to fully benefit-responsive investment contracts because
      contract value is the amount participants would receive if they were to
      initiate permitted transactions under the terms of the plan. As required
      by the FSP, the Statement of Net Assets Available for Benefits presents
      the fair value of the investment contracts as well as the adjustment of
      the fully-benefit responsive investment contracts from fair value to
      contract value. The Statement of Changes in Net Assets Available for
      Benefits is prepared on a contract value basis. The FSP is effective for
      financial statements for the years ending after December 15, 2006 and the
      financial statements for 2005 have been restated to reflect the
      implementation of the new standard.

    Valuation of Investments and Income Recognition

      Quoted market prices, if available, are used to value investments.
      Participant loans and money market funds are valued at cost, which
      approximates market. Investment in the Corporation's unrestricted common
      stock is valued at the quoted market price. The Plan's interest in the
      collective trust is valued based on information reported by the investment
      advisor using the audited financial statements of the collective trust at
      year-end.


                                                                               6


                          First Merchants Corporation
                       Retirement Income and Savings Plan
                          Notes to Financial Statements
                           December 31, 2006 and 2005


      Purchases and sales of securities are recorded on a trade-date basis.
      Interest income is recorded on the accrual basis.

    Plan Tax Status

      The Plan obtained its latest determination letter in September 2001, in
      which the Internal Revenue Service stated that the Plan and related trust,
      as then designed, were in compliance with the applicable requirements of
      the Internal Revenue Code and therefore not subject to tax. The Plan has
      been amended and restated since receiving the determination letter.
      However, the Plan administrator believes that the Plan and related trust
      are currently designed and being operated in compliance with the
      applicable requirements of the Internal Revenue Code.

    Payment of Benefits

      Benefit payments to participants are recorded upon distribution.

    Participant Loans

      Effective March 1, 2005, participant loans were acquired from merged
      plans. Participant loans have never been allowed in the Plan. Effective
      March 1, 2005, no new loans will be granted under the Plan with respect to
      any merged plan that had an active loan program. Any outstanding loan will
      continue to be repaid based on the term of the loan from the merged plan.

    Administrative Expenses

      Administrative expenses may be paid by the Corporation or the Plan, at the
      Corporation's discretion.

Note 3:  Investments

      At December 31, 2006, the Plan's investments are held by Fidelity and the
      Corporation. The Federated Capital Preservation Fund included in Plan
      assets may be subject to withdrawal charges upon contract termination.
      Crediting interest rates on the guaranteed interest portion of the
      investment contract are determined by the issuer. The Plan's investments
      (including investments bought, sold, and held during the year) appreciated
      in fair value as follows:


                                                                               7


                           First Merchants Corporation
                       Retirement Income and Savings Plan
                          Notes to Financial Statements
                           December 31, 2006 and 2005


                                                               2006
                                                      Net
                                                  Appreciation      Fair Value
                                                 in Fair Value        at End
                                                  During Year        of Year
                                                 -------------------------------
Investments at fair value
 Common stock                                    $       56,851   $    1,180,998
 Mutual funds                                         2,421,692       38,478,653
 Federated Capital Preservation Fund                         --        1,971,563
Investments at cost, which approximates market
 Money market funds                                          --        1,897,754
 Participant loans                                           --          139,879
                                                 --------------   --------------

                                                 $    2,478,543   $   43,668,847
                                                 ==============   ==============



                                                               2005
                                                      Net
                                                  Appreciation
                                                 (Depreciation)     Fair Value
                                                 in Fair Value        at End
                                                  During Year        of Year
                                                 -------------------------------
Investments at fair value
 Common stock                                    $      (65,023)  $    1,073,188
 Mutual funds                                           670,892       32,548,714
 Federated Capital Preservation Fund                         --        2,101,945
Investments at cost, which approximates market
 Money market funds                                          --        1,179,757
 Participant loans                                           --          254,981
                                                 --------------   --------------

                                                 $      605,869   $   37,158,585
                                                 ==============   ==============

Interest and dividends realized on the Plan's investments for the years ended
2006 and 2005 were $2,298,773 and $1,650,407, respectively.


                                                                               8


                           First Merchants Corporation
                       Retirement Income and Savings Plan
                          Notes to Financial Statements
                           December 31, 2006 and 2005

The fair values of individual investments that represented 5% or more of the
Plan's assets were as follows:

                                                    2006         2005
                                                 -----------------------

        American Funds Amcap Fund                $5,531,041   $5,265,001
        Goldman Sachs Mid Cap Equity Fund         4,500,401    3,786,673
        MFS Value Fund                            5,068,479    4,431,452
        Oppenheimer Main Street Fund              2,770,000    2,538,016
        PIMCO Total Return Fund                   2,432,313    2,358,389
        Oppenheimer Small & Mid Cap Value Fund    3,646,415    3,180,749
        Federated Capital Preservation Fund       1,971,563    2,101,945

Note 4: Party-in-Interest Transactions

      Party-in-interest transactions include those with fiduciaries or employees
      of the Plan, any person who provides services to the Plan, an employer
      whose employees are covered by the Plan, an employee organization whose
      members are covered by the Plan, a person who owns 50 percent or more of
      such an employer or employee association, or relatives of such persons.

      The Plan invests in First Merchants Corporation common stock. Activity at
      fair value was as follows:

                                                                  First
                                                                Merchants
                                                               Corporation
                                                                 Common
                                                                  Stock
                                                               -----------

       Balance, January 1, 2005                                $ 1,030,460
         Changes                                                    42,728
                                                               -----------

       Balance, December 31, 2005                                1,073,188
         Changes                                                   107,810
                                                               -----------

       Balance, December 31, 2006                              $ 1,180,998
                                                               ===========

      The Corporation provides certain administrative services at no cost to the
      Plan.


                                                                               9


                           First Merchants Corporation
                       Retirement Income and Savings Plan
                          Notes to Financial Statements
                           December 31, 2006 and 2005

Note 5: Plan Amendments

      Effective March 1, 2005, the Plan was amended and restated to allow the
      employees of Lafayette Bank and Trust Company, Commerce National Bank,
      First Merchants Insurance Services and Indiana Title Insurance Company to
      become participants in the Plan. Approximately $10,500,000 was transferred
      into the Plan from these 401(k) plans and approximately 400 new
      participants were added to the Plan. The Plan's name was also changed to
      First Merchants Corporation Retirement Income and Savings Plan and the
      employer matching contribution changed as described in Note 1.

Note 6:  Subsequent Event

      Effective January 1, 2007, the Plan was amended to change the vesting of
      the Corporation's retirement security contribution portion of
      participant's accounts to 100% after three years of service from five
      years of service.


                                                                              10


                              Supplemental Schedule



                           First Merchants Corporation
                       Retirement Income and Savings Plan
      Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes
                                 at End of Year
                                December 31, 2006
           Employer Identification Number: 35-1544218   Plan Number: 002




                  (a)(b)                                    (c)              (e)
                                                       Description of
             Identity of Issue,                          Investment
            Borrower, Lessor, or                      Including Par or     Current
                Similar Party                          Maturity Value       Value
------------------------------------------------------------------------------------
                                                                   
Common Stock
    *First Merchants Corporation                       43,435 shares     $ 1,180,998
                                                                         -----------
Mutual Funds
    AIM Small Cap Equity Fund                          81,031 shares         991,817
    AIM Real Estate Fund                               19,776 shares         665,051
    American Funds Amcap Fund                          279,064 shares      5,531,041
    American Funds Europacific                            3 shares               136
    American Funds High Income Trust Fund              78,541 shares         990,396
    Federated Max-Cap Index Fund                       80,766 shares       2,096,698
    Fidelity Advisor Diversified International Fund    42,001 shares         947,553
    Fidelity Advisor Freedom 2010 Fund                 28,033 shares         336,679
    Fidelity Advisor Freedom 2015 Fund                 13,090 shares         158,914
    Fidelity Advisor Freedom 2020 Fund                 29,246 shares         386,051
    Fidelity Advisor Freedom 2025 Fund                 18,507 shares         236,144
    Fidelity Advisor Freedom 2030 Fund                  7,038 shares          98,043
    Fidelity Advisor Freedom 2035 Fund                  6,016 shares          78,876
    Fidelity Advisor Freedom 2040 Fund                  3,031 shares          43,439
    First American Mid Cap Growth Opportunity Fund     32,733 shares       1,255,311
    Franklin Limited Maturity U. S. Government Fund    167,093 shares      1,652,545
    Goldman Sachs Mid Cap Equity Fund                  117,443 shares      4,500,401
    ING Index Plus Mid Cap Fund                        64,219 shares       1,089,149
    MFS Value Fund                                     189,689 shares      5,068,479
    MFS International New Discovery Fund               33,482 shares         902,339
    Oppenheimer Main Street Fund                       69,008 shares       2,770,000
    Oppenheimer Small & Mid Cap Value Fund             100,813 shares      3,646,415
    PIMCO Foreign Bond Fund                            23,522 shares         239,449
    PIMCO Total Return Fund                            234,327 shares      2,432,313
    Putnam Small Cap Growth Fund                       53,230 shares       1,166,276
    Templeton Foreign Fund                             88,267 shares       1,195,138
                                                                         -----------
                                                                          38,478,653
                                                                         -----------
Collective Investment Fund
    Federated Capital Preservation Fund                199,128 shares      1,971,563
                                                                         -----------
Money Market Fund
    Federated Prime Cash Obligations Fund             1,897,754 shares     1,897,754
                                                                         -----------

*Participant Loans                                     7.25% - 9.00%         139,879
                                                                         -----------
                                                                         $43,668,847
                                                                         ===========


*Party-in-interest


                                                                              11


                                   Exhibit 23

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We consent to the  incorporation by reference in the  Registration  Statement of
First  Merchants  Corporation on Form S-8 (File Number  333-50484) of our report
dated June 25, 2007, of our audit on the financial statements of First Merchants
Corporation  Retirement  Income and Savings Plan for the year ended December 31,
2006, which report is included in its Annual Report on Form 11-K.


BKD, LLP

Indianapolis, Indiana
June 25, 2007

                                                                              12



Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the Plan
Administrator  has duly caused this annual  report to be signed on its behalf by
the undersigned hereunto duly authorized.

        Date: 06/29/07    By: /s/ Kimberly J. Ellington
              --------        -------------------------
                                  Kimberly J. Ellington
                                  First Merchants Corporation
                                  Retirement Savings Plan

                                                                              13