##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number 0-13585
  INTEGRA BANK
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
  Indiana

35-1632155(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification number)21 S.E. Third Street, P.O.
    Box 868, 
    Evansville, IN

47705-0868(Zip Code)(Address of principal executive
    offices)   Registrants telephone number, including area code:
 812-464-9677
  Securities registered pursuant to Section 12(b) of the
    Act:
 COMMON STOCK, $1.00 STATED VALUE
 (Title of Class)
  Securities registered pursuant to Section 12(g) of the
    Act:
 NONE
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 



INTEGRA
    BANK CORPORATION
  2006
    FORM 10-K
    ANNUAL REPORT
  Table of
    Contents
  
  PageNumberPART IItem 1.

Business


3Item 1A.

Risk
    Factors


9Item 1B.

Unresolved Staff
    Comments


13Item 2.

Properties


13Item 3.

Legal
    Proceedings


13Item 4.

Submission of
    Matters to a Vote of Security Holders


13PART IIItem 5.

Market for
    Registrants Common Equity and Related Stockholder
    Matters


14Item 6.

Selected Financial
    Data


16Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation


17Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


41Item 8.

Financial
    Statements and Supplementary Data


43Item 9.

Changes in and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


87Item 9A.

Controls and
    Procedures


87Item 9B.

Other
    Information


87PART IIIItem 10.

Directors and
    Executive Officers and Corporate Governance


87Item 11.

Executive
    Compensation


87Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


87Item 13.

Certain
    Relationships and Related Transactions and Director
    Independence


87Item 14.

Principal
    Accountant Fees and Services


87PART IVItem 15.

Exhibits and
    Financial Statement Schedules


88Signatures


89Employees' 401(k) PlanFirst Amendment to Employees' 401(k) PlanSecond Amendment to Employees' 401(k) PlanThird Amendment to Employees' 401(k) PlanSummary Sheet of 2007 CompensationEmployment Agreement - Roger M. DuncanSubsidiaries of the RegistrantConsent of PricewaterhouseCoopers LLPConsent of Crowe Chizek and Company LLCCertification Pursuant to Section 302 of CEOCertification Pursuant to Section 302 of CFOCertification Pursuant to Section 906   2




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##### Table of Contents



FORM 10-K
  INTEGRA
    BANK CORPORATION
 December 31,
    2006
 PART I  ITEM 1.
    BUSINESS  General
  and/or
        COMPETITION
      FOREIGN
    OPERATIONS
    REGULATION AND
    SUPERVISION
  General
   3




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Acquisitions
    and Changes in Control
      Dividends
    and Other Relationships with Affiliates
     4




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Regulatory
    Capital Requirements
      Deposit
    Insurance
      Community
    Reinvestment Act
    Gramm-Leach-Bliley
    Act
     5




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USA
    Patriot Act of 2001
    non-U.S. persons;
  Additional
    Regulation, Government Policies, and Legislation
  Truth-in-Lending Truth-in-Savings
     6




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##### Table of Contents



STATISTICAL
    DISCLOSURE
    AVAILABLE
    INFORMATION
  Form 10-K, Form 10-Q, Form 8-K Form 10-K.
 7




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47705-0868:
  EXECUTIVE
    OFFICERS OF THE COMPANY
    Name

Age

Office and Business ExperienceMichael T. Vea


48


Chairman of the Board, President,
    and Chief Executive Officer of the Company (January 2000 to
    present); Chairman of the Board and Chief Executive Officer of
    the Company (September 1999 to January 2000); President and
    Chief Executive Officer, Bank One, Cincinnati, OH (1995-1999).Archie M. Brown


46


Executive Vice President,
    Commercial and Consumer Banking of the Company (October 2003 to
    present); Executive Vice President, Retail Manager and Community
    Markets Manager of the Company (March 2001 to October 2003);
    Senior Vice President, Firstar Bank, N.A. (1997 to 2001).Martin M. Zorn


50


Executive Vice President Finance
    and Risk, Chief Financial Officer (April 2006 to present);
    Executive Vice President, Chief Risk Officer (March 2002 to
    April, 2006); Executive Vice President, Commercial and Metro
    Markets Manager (March 2001 to March 2002); Regional Vice
    President and Region Executive, Wachovia Corporation (1999 to
    2001).Roger M. Duncan


54


Executive Vice President, Integra
    Bank, President of Evansville Region and Community Banking
    Division, (October 2006 to present); Market Executive, Community
    Banking Division (January 2000 to October, 2006); Chairman and
    Chief Executive Officer, National City Bank (April, 1998 to
    January, 2000).Roger D. Watson


53


Executive Vice President of
    Commercial and Corporate Real Estate, Integra Bank (April 2003
    to present); Executive Vice President, responsible for the
    Eastern Commercial Real Estate line of business, US Bank
    (February 2001 to November 2002); Executive Vice President and
    Division Manager for Commercial Real Estate, Firstar Bank,
    formerly Star Bank (January 1991 to February 2001). 8




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##### Table of Contents



Name

Age

Office and Business ExperienceRaymond D. Beck


51


Executive Vice President and Chief
    Credit Officer, Integra Bank (September 2006 to present); Senior
    Vice President, Commercial Loan Workout Group, National City
    Corporation (August 2004 to September 2006); Senior Vice
    President and Senior Credit Officer, Provident Bank (May 2002 to
    August 2004); Special Assets Manager, Provident Bank (December
    2001 to May 2002); Executive Vice President, US Bank, (August
    1996 to May 2001).Michael B. Carroll


45


Senior Vice President and
    Controller of the Company (December 2005 to present); Senior
    Vice President and Risk Manager of the Company (May 2002 to
    December 2005); Vice President  Risk Manager, United
    Fidelity Bank (2001 to 2002), Certified Public Accountant, Olive
    LLP, (1988 to 2001).     ITEM 1A.
    RISK
    FACTORS      RISKS
    RELATED TO OUR BUSINESS
  We Are
    Subject to Interest Rate Risk.
     9




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We Are
    Subject to Lending Risk.
  and/or
    Our
    Allowance for Possible Loan Losses May be
    Insufficient.
    Our
    Profitability Depends Significantly on Local Economic
    Conditions.
   10




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We
    Operate in a Highly Competitive Industry and Market
    Area.
      
    The ability to develop, maintain and build upon long-term
    customer relationships;
    The ability to expand our market position;
    The scope, relevance and pricing of products and services;
    Our reputation with consumers who reside in the markets we serve;
    The rate at which we introduce new products and services;
    Customer satisfaction; and
    Industry and general economic trends.    We Are
    Subject to Extensive Government Regulation and Supervision and
    Face Legal Risks.
  and/or and/or
   11




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Our
    Controls and Procedures May Fail or be
    Circumvented.
    The
    Parent Company Relies On Dividends From Integra Bank For Most Of
    Its Revenue.
  and/or
  Potential
    Acquisitions may Disrupt Our Business and Dilute Shareholder
    Value.
    
    Potential exposure to unknown or contingent liabilities of the
    target company;
    Exposure to potential asset quality issues of the target company;
    Difficulty and expense of integrating the operations and
    personnel of the target company;
    Potential disruption to our business;
    Potential diversion of our managements time and attention;
    The possible loss of key employees and customers of the target
    company; and
    Difficulty in estimating the value of the target company.  and/or
  We May
    Not Be Able to Attract and Retain Skilled People.
   12




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Our
    Information Systems May Experience an Interruption or Breach in
    Security.
    We
    Continually Encounter Technological Change.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    ITEM 3.
    LEGAL
    PROCEEDINGS      ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   13




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
    MATTERS      Range of Stock Price


DividendsQuarter

High


Low


Declared20061st

$
22.86


$
19.81


$
0.1602nd


23.10



20.80



0.1703rd


26.50



21.10



0.1704th


28.30



24.75



0.17020051st

$
23.46


$
20.42


$
0.1602nd


23.15



19.77



0.1603rd


23.60



20.70



0.1604th


22.48



19.47



0.160            14




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##### Table of Contents



TOTAL
    RETURN PERFORMANCE
  
  Period EndingIndex

12/31/01

12/31/02

12/31/03

12/31/04

12/30/05

12/31/06Integra Bank Corporation


100.00



89.58



116.30



126.12



119.91



158.93NASDAQ Composite


100.00



68.76



103.67



113.16



115.57



127.58SNL Midwest Bank Index


100.00



96.47



123.48



139.34



134.26



155.19  15




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA  Integra
    Bank Corporation and Subsidiaries
  Year Ended December 31,

2006


2005


2004


2003


2002(In thousands, except per share data and ratios)Net interest income

$
82,306


$
82,621


$
84,467


$
72,242


$
73,845Provision for loan losses


20,294



5,764



1,305



4,945



3,143Non-interest income


35,827



35,878



33,607



32,793



36,281Non-interest expense


75,877



77,557



138,180



82,267



82,877Income (Loss) before income taxes


21,962



35,178



(21,411
)


17,823



24,106Income taxes (benefit)


2,415



7,879



(14,791
)


58



3,778Net income (loss)

$
19,547


$
27,299


$
(6,620
)

$
17,765


$
20,328PER COMMON SHARENet income (loss):Basic

$
1.11


$
1.57


$
(0.38
)

$
1.03


$
1.18Diluted


1.11



1.56



(0.38
)


1.03



1.18Cash dividends declared


0.67



0.64



0.72



0.94



0.94Book value


13.23



12.60



12.05



13.46



13.45Weighted average shares:Basic


17,546



17,382



17,318



17,285



17,276Diluted


17,658



17,468



17,318



17,300



17,283AT YEAR-ENDTotal assets

$
2,684,479


$
2,708,142


$
2,757,165


$
2,958,294


$
2,857,738Securities


614,718



681,030



801,059



974,111



949,500Loans, net of unearned income


1,790,976



1,750,192



1,665,324



1,699,688



1,606,155Deposits


1,953,852



1,808,503



1,896,541



1,812,630



1,781,948Shareholders equity


235,474



220,098



209,291



232,992



232,600Shares outstanding


17,794



17,465



17,375



17,311



17,291AVERAGE BALANCESTotal assets

$
2,719,056


$
2,746,425


$
2,758,924


$
2,949,016


$
2,906,846Securities, at amortized cost


659,142



757,694



810,716



967,327



934,586Loans, net of unearned income


1,782,918



1,688,547



1,644,471



1,670,938



1,596,462Interest-bearing deposits


1,725,655



1,618,027



1,613,000



1,606,116



1,614,167Shareholders equity


230,017



216,278



210,280



234,948



230,298FINANCIAL RATIOSReturn on average assets


0.72
%


0.99
%


(0.24
) %


0.60
%


0.70
%Return on average equity


8.50



12.62



(3.15
)


7.56



8.83Net interest margin


3.43



3.44



3.52



2.87



2.96Cash dividends payout


59.26



40.82



N/M*



91.26



79.66Average shareholders equity
    to average assets


8.46



7.87



7.62



7.97



7.92     *
    
    Number is not meaningful. 16




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATION  INTRODUCTION
      OVERVIEW
    
    Accelerate revenue growth;
    Improve operating efficiency;
    Provide quality service, develop employees and continue to
    increase our managerial depth; and
    Lower our risk profile by reducing non-performing loans.        
    Diluted earnings per share for 2006 were $1.11 compared to $1.56
    in 2005;
    Return on assets decreased to 0.72% from 0.99%;
    Return on equity decreased to 8.50% from 12.62%;
    Efficiency ratio was 62.3% compared to 65.7%;
    Net interest margin was 3.43%, a decrease of 1 basis point; 17




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##### Table of Contents




    The provision for loan losses was $20,294 and included the
    $17,749 charge-off;;
    The number of checking accounts grew by 6.0% in 2006;
    Service charge income grew by 23.0% in 2006 after growing 23.7%
    in 2005;
    Debit card fee income and trust fees increased by 35.4% and
    19.3%; and
    Non-interest expense declined by $1,680 or 2.2%.    Form 10-K,
  15-year-old
      
    Acquire new customers and do more with them as we continue our
    growth initiatives;
    Improve our net interest income/spread income by increasing loan
    yields by replacing residential mortgage and indirect marine and
    recreational vehicle loans with commercial loans and by growing
    total loans and lower cost deposits;
    Increase our presence in faster growing metro markets by
    executing selective acquisitions like Prairie and by continuing
    to recruit successful and experienced lending and product teams;
    Improve operating leverage (grow revenue faster than expenses)
    by reducing expenses in lower growth and profitability lines of
    business and by investing in higher growth and higher return
    lines of business; and
    Allocate capital to increase total shareholder returns by
    achieving organic growth, executing acquisitions and providing
    returns to shareholders through dividends and stock buybacks. 18




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##### Table of Contents



CRITICAL
    ACCOUNTING POLICIES
    Allowance for Loan Losses:
      Estimation of Market Value:
     19




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##### Table of Contents



Income Taxes:
  NET
    INCOME (LOSS)
   20




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##### Table of Contents



NET
    INTEREST INCOME
    AVERAGE
    BALANCE SHEET AND ANALYSIS OF NET INTEREST INCOME
  2006


2005


2004Average


Interest


Yield/


Average


Interest


Yield/


Average


Interest


Yield/Year Ended December 31,

Balances


& Fees


Cost


Balances


& Fees


Cost


Balances


& Fees


CostEARNING ASSETS:Interest-bearing deposits in banks

$
1,718


$
81



4.71
%

$
99


$
6



6.06
%

$
268


$
2



0.75
%Federal funds sold & other
    short-term investments


5,437



252



4.63
%


3,423



118



3.45
%


6,070



83



1.37
%Loans held for sale


1,950



140



7.18
%


5,698



355



6.23
%


2,760



179



6.49
%Securities:Taxable


567,452



26,525



4.67
%


641,755



27,519



4.29
%


696,549



29,221



4.20
%Tax-exempt


91,690



6,853



7.47
%


115,939



9,170



7.91
%


114,167



9,134



8.00
%Total securities


659,142



33,378



5.06
%


757,694



36,689



4.84
%


810,716



38,355



4.73
%Regulatory Stock


29,368



1,479



5.04
%


33,052



1,528



4.62
%


32,981



1,518



4.60
%Loans


1,782,918



125,728



7.05
%


1,688,547



104,455



6.19
%


1,644,471



95,565



5.81
%Total earning assets


2,480,533


$
161,058



6.49
%


2,488,513


$
143,151



5.75
%


2,497,266


$
135,702



5.44
%Fair value adjustment on securities
    available for sale


(13,767
)










(2,838
)










4,671Allowance for loan loss


(21,990
)










(24,123
)










(25,154
)Other non-earning assets


274,280











284,873











282,141TOTAL ASSETS

$
2,719,056










$
2,746,425










$
2,758,924INTEREST-BEARING LIABILITIES:DepositsSavings and interest-bearing demand

$
497,237


$
4,197



0.84
%

$
547,148


$
3,768



0.69
%

$
561,117


$
2,650



0.47
%Money market accounts


281,480



10,589



3.76
%


234,798



5,687



2.42
%


220,465



3,207



1.45
%Certificates of deposit and other
    time


946,938



39,635



4.19
%


836,081



25,569



3.06
%


831,418



19,895



2.39
%Total interest-bearing deposits


1,725,655



54,421



3.15
%


1,618,027



35,024



2.16
%


1,613,000



25,752



1.60
%Short-term borrowings


178,976



8,574



4.79
%


167,443



5,877



3.51
%


165,913



1,938



1.17
%Long-term borrowings


305,881



13,092



4.28
%


470,040



16,657



3.54
%


505,055



20,214



4.00
%Total interest-bearing liabilities


2,210,512


$
76,087



3.44
%


2,255,510


$
57,558



2.55
%


2,283,968


$
47,904



2.10
%Non-interest bearing deposits


257,625











252,358











245,538Other noninterest-bearing
    liabilities and shareholders equity


250,919











238,557











229,418TOTAL LIABILITIES AND
    SHAREHOLDERS EQUITY

$
2,719,056










$
2,746,425










$
2,758,924Interest income/earning assets





$
161,058



6.49
%





$
143,151



5.75
%





$
135,702



5.44
%Interest expense/earning assets






76,087



3.06
%






57,558



2.31
%






47,904



1.92
%Net interest income/earning assets





$
84,971



3.43
%





$
85,593



3.44
%





$
87,798



3.52
%   Note:
    Tax-exempt income presented on a tax-equivalent basis based on a
    35% federal tax rate.  Interest and fees on loans include loan fees of $1,881, $1,192,
    and $2,590 for 2006, 2005, and 2004, respectively. 21




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Loans include nonaccrual loans.Securities yields are calculated on an amortized cost basis.Federal tax equivalent adjustments on securities are $2,441,
    $2,743, and $3,089 for 2006, 2005, and 2004, respectively.Federal tax equivalent adjustments on loans are $224, $229, and
    $242 for 2006, 2005, and 2004, respectively.  CHANGES
    IN NET INTEREST INCOME (INTEREST ON A FEDERAL-TAX-EQUIVALENT
    BASIS)
  2006 Compared to 2005


2005 Compared to 2004Change Due to





Change Due toa Change in


Total


a Change in


TotalIncrease (Decrease)

Volume


Rate


Change


Volume


Rate


ChangeInterest incomeLoans

$
6,103


$
15,170


$
21,273


$
2,584


$
6,306


$
8,890Securities


(4,924
)


1,613



(3,311
)


(2,545
)


879



(1,666
)Regulatory Stock


(180
)


131



(49
)


3



7



10Loans held for sale


(262
)


47



(215
)


183



(7
)


176Other short-term investments


159



50



209



(51
)


90



39Total interest income


896



17,011



17,907



174



7,275



7,449Interest expenseDeposits


2,459



16,938



19,397



81



9,191



9,272Short-term borrowings


429



2,268



2,697



18



3,921



3,939Long-term borrowings


(6,582
)


3,017



(3,565
)


(1,338
)


(2,219
)


(3,557
)Total interest expense


(3,694
)


22,223



18,529



(1,239
)


10,893



9,654Net interest income

$
4,590


$
(5,212
)

$
(622
)

$
1,413


$
(3,618
)

$
(2,205
)         
    Average earning assets decreased $7,980 or 0.3%, driven by
    decreases in average securities balances of $98,552 and
    residential mortgage loans of $26,786. These decreases were
    largely offset by increases in average commercial loan balances
    of $108,681 and direct consumer loans of $9,315. This change in
    the composition of earning assets was in line with our strategy
    of improving our mix of earning assets by reducing lower
    yielding securities, residential mortgage loan and indirect
    consumer loan balances and offsetting those declines with
    increases in higher yielding commercial loans. The increase in
    average commercial loan balances for 2006 was driven by
    increases in commercial real estate loans of $99,278, and also
    from the commercial lending team added during the second and
    third quarters in the Cincinnati, Ohio area. This group ended
    the year with outstanding balances of $42,637.
    The average rate of commercial loans increased 109 basis
    points, as loans repriced throughout 2006 to higher rates
    brought about by 2005 market rate increases and new originations
    were priced at higher rates than during 2005. 22




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##### Table of Contents




    Non-interest bearing deposit average balances increased $5,267,
    while the average balances of savings and interest-bearing
    demand deposits, which have an average cost of 84 basis
    points, declined $49,911. These core deposits were largely
    offset by increases in the average balances of money market
    accounts, which had an average cost of 3.76%, of $46,682. The
    shift from low and very low cost deposits to higher yielding
    money market accounts occurred throughout the first three
    quarters of 2006 for us and throughout the banking industry, as
    consumers opted for higher rate investment alternatives and
    deposit products. During the fourth quarter, this migration
    abated.
    A shift in funding sources occurred in 2006. The average balance
    of brokered certificates of deposit increased $102,836, while
    long-term borrowing average balances declined $164,159, helping
    result in an lower overall balance of interest-bearing
    liabilities of $44,998. This shift took place during 2006 in
    part due to the maturity and refinancing of $177,500 of
    fixed-term debt that carried a weighted average rate of 3.06%
    and matured in March, 2006. This shift in funding removed bullet
    risk by layering maturities over a one to three year period. It
    also helped us improve our overall liquidity position and
    demonstrated a lower level of reliance on FHLB funding.
    Fourth quarter 2006 net interest income was negatively
    impacted by the reversal of accrued interest of $484 from the
    $17,749 loan that was charged off during the quarter. The impact
    to the net interest margin for the fourth quarter of 2006 was
    approximately 5 basis points.
    Daily overdraft fees increased $274 or 18.9% as a result of a
    higher number of accounts and a higher level of activity within
    those accounts.      
    Average earning assets decreased $8,753 or 0.35%, driven by
    decreases in average securities balances of $53,022, partially
    offset by increases in average loan balances of $44,076. This
    change was in line with our strategy of reducing the size of our
    securities portfolio and improving the mix of our earning
    assets. The increase in average loan balances was driven by
    increases in commercial loans of $40,228, the majority of which
    came in the area of commercial real estate, increases in
    consumer loans of $28,536 and declines in residential mortgages
    of $24,688.
    The reduction in the securities portfolio also reduced the
    wholesale borrowings funding that portfolio.
    A change in the timing of assessing daily overdraft fees on
    overdraft loans reduced these fees by $590. This change was by
    design and was a component of our High Performance Checking
    initiative. This initiative included the simplification of our
    transaction accounts, and changes in several of the fees
    associated with those accounts, including the daily overdraft
    fee.
    During the second quarter of 2005, we sold three branches that
    included $13,772 in loans and $68,448 in deposits, including
    $30,000 in valuable core deposits.
    Average loan yields increased 0.38%, contributing $6,306 of
    additional income over 2004.
    Higher deposit rates increased interest expense by $9,191, while
    the average cost of borrowings increased 1.91% adding $4,548 in
    interest expense. The majority of the securities portfolio was
    comprised of fixed rate instruments, while wholesale funding
    included a considerable volume of short term public certificates
    of deposit, repurchase agreements and other floating rate debt.
    As rates increased, the spread between the investments and the
    liabilities funding them decreased. While this spread declined
    during 2005, it remained positive. 23




---



##### Table of Contents




    During the second quarter of 2005, a write-down of $383 of
    premiums for acquired loans was recorded in connection with an
    evaluation of the remaining period of amortization. Prepayments
    of the related loans were occurring more frequently than
    originally estimated.  NON-INTEREST
    INCOME
      
    The increase in deposit service charges is a result of the
    success of our High Performance Checking initiative. This
    program resulted in a net increase of approximately 15,000
    checking accounts since the beginning of 2005, and, coupled with
    higher levels of customer activity, resulted in the higher level
    of fee income. The increase in number of accounts, coupled with
    a higher usage of debit cards as a method of payment by our
    customers, resulted in higher interchange fees.
    The increase in trust revenue was a result of an increase in
    assets managed by our trust department at December 31, 2006
    of 18.0% from December 31, 2005. This occurred as a result
    of both a greater number of customers and assets managed, as
    well as an increase in the market value of equity securities
    within customer accounts, which increased as the market improved
    throughout 2006.
    Securities gains of $589 occurred during the fourth quarter of
    2006, as issuers of bonds exercised call options to redeem them
    at premiums ranging from 103% to 104% of their current
    outstanding balance.
    Life insurance income declined $182 or 7.8% from 2005. This was
    primarily the result of bank owned life insurance death benefits
    that we received in 2006 of $448, as compared to $754 in 2005.      
    We sold three branches in Southern Illinois during the second
    quarter of 2005 for a gain of $6,218. The sale included $13,772
    in loans and $68,448 in deposits.
    We rolled out our High Performance Checking products in 2005,
    which included the redesign of transaction accounts, a reduction
    of several of the fees associated with those accounts, and a
    sales and marketing approach designed to emphasize new account
    openings. As a result of this initiative, we almost doubled the
    number of new checking account openings in 2005 as compared to
    2004, and increased overall product usage. This resulted in an
    increase in service charges of $2,941, or 23.7%. The increased
    number of accounts and greater debit card usage also contributed
    to an $805 increase in debit card interchange income.
    We received death benefits from two bank owned life insurance
    policies in 2005. The first of these, totaling $338, was
    received during the third quarter with the second, totaling
    $416, being received in the fourth quarter.
    During the first quarter of 2005, we sold our merchant credit
    card portfolio for a gain of $417. The sale of this portfolio,
    and elimination of related expense, has been and continues to be
    expected to improve net income. We continue to receive fee
    income for the merchant portfolio. 24




---



##### Table of Contents




    The securities gains we recognized in 2004 resulted largely from
    the first quarter 2004 balance sheet restructuring and offset a
    portion of the costs associated with the restructuring. In 2005,
    securities losses of $1,532 included an other-than- temporary
    impairment charge of $455 on $13,168 of agency perpetual
    preferred securities that do not have a maturity date or
    contractual cash flows that come back to us. These securities
    are not actively traded, resulting in impairment. Additionally,
    two agency-backed collateralized mortgage obligations with a
    book value of $21,411 were determined to be other than
    temporarily impaired, when we decided to sell them, resulting in
    a first quarter loss of $742. These securities were sold during
    the second quarter and an additional loss of $340 was incurred.
    Credit card fees in 2005 declined due to the sale of that
    portfolio in 2004. Fees for 2005 include fees received from
    revenue sharing agreements with the purchaser of the portfolio.
    We also benefit from a reduced loan loss provision and reduced
    processing expenses.
    The decline in mortgage banking revenue and gains on sale of
    mortgage loans in 2005 resulted from a continued increase in
    interest rates, resulting in lower demand, including less
    refinance activity. The flattening of the yield curve narrowed
    the rate differential between fixed and adjustable rate
    products, contributing to a 20% reduction in adjustable rate
    mortgage originations which we typically retain on our balance
    sheet.  NON-INTEREST
    EXPENSE
      
    Professional fees declined largely as a result of our changing
    audit firms for 2006. Total audit fees were reduced by $612 or
    58.6% from 2005. Legal fees declined $466 or 51.6% largely due
    to 2005 expenses related to the ongoing audit of our tax
    returns, by having our in-house counsel we hired in 2004 deal
    with issues we previously outsourced, and a reduced level of
    litigation. Other professional fees declined due to lower
    expenses in the area of branch mystery shopping and facilities
    design.
    The reduction in salaries expense was a result of a further
    reduction to our workforce, from 840 average FTEs during 2005 to
    804 average FTEs in 2006. Continued ongoing initiatives to find
    and execute efficiencies were successful, allowing us to
    reallocate resources to higher yielding businesses, such as the
    commercial lending team added during the second and third
    quarters of 2006. At December 31, 2006, we had
    802 full-time equivalent employees compared to 843 in 2005
    and 839 in 2004.
    Incentives declined from 2005 largely due to a reduction in
    executive incentive compensation expense that resulted because
    of the fourth quarter 2006 loan charge-off.
    Processing expense declined from 2005 largely due to successful
    execution of expense reduction initiatives that resulted in new
    contracts and lower costs, particularly in the area of ATM and
    debit card transaction processing.
    Franchise, sales, state and local tax expense declined because
    of the filing of a franchise tax refund claim for a prior year,
    a sales tax liability paid in 2005 that did not reoccur in 2006
    and resulted from a 2005 audit, and lower franchise tax
    liabilities, as well as lower state and local deposit taxes.
    The increase in medical expense was primarily the result of two
    items. First, we began to offer and pay for health insurance
    benefits to part-time employees in 2006. Second, in 2006, we had
    a higher level of individually significant claims that
    approached or exceeded the stop loss amounts included in our
    self-insured health plan. We continue to focus on several
    initiatives in the area of preventive care in an effort to have
    a healthier workforce and lower overall health insurance costs. 25




---



##### Table of Contents




    During 2006, we adopted Statement of Financial Accounting
    Standards No. 123, which resulted in the recognition of
    $245 of stock option expense for options issued during 2006.
    Prior to 2006, this expense was not recognized in the statement
    of income, but rather recognized on a pro-forma basis in the
    footnotes to the financial statements. Total expense recognized
    for all stock-based compensation for employees and directors,
    including restricted stock, was $810 in 2006 compared to $385 in
    2005.
    The increase in occupancy expense was caused by the lease of
    additional space in an existing facility during the fourth
    quarter of the year, a switch in facilities management companies
    and related transition expenses, higher real property taxes and
    higher utilities expense.
    The increase in low income housing partnership investment
    expenses was due to higher than expected operating losses from
    the partnerships we have investments in. The returns we receive
    on these investments consist of the tax benefits we receive from
    the tax deductible losses the partnerships generate, plus low
    income housing tax credits we receive, less the actual losses.      
    The 2004 balance sheet restructuring resulted in debt prepayment
    penalties of $56,998; there were no such costs incurred in 2005.
    The salaries and employee benefits reduction was primarily due
    to three items. First, we reduced our workforce from 863 average
    FTEs during 2004 to 840 average FTEs in 2005. A continued
    emphasis on finding and executing efficiencies, along with
    changes in our business, such as the sale of the three Illinois
    banking centers and the sale of the merchant credit card
    portfolio were largely responsible for these reductions. At
    December 31, 2005, we had 843 full-time equivalent
    employees compared to 839 in 2004. Second, medical costs under
    our self-insured health plan were lower than anticipated.
    Average claims were positively impacted by a focus on preventive
    care, as well as a relatively low level of individually
    significant claims that reached our stop loss insurance policy
    minimums. Third, we implemented a new retail incentive plan that
    more closely matched incentive pay with performance.
    The increase in occupancy expense is due primarily to new
    banking centers opened in late 2004 and early 2005, partially
    offset by a reduction resulting from the second quarter 2005
    branch sale. Banking centers opened in late 2004 and early 2005
    include Evansville, Indiana (July 2004), Henderson, Kentucky
    (December 2004), and Florence, Kentucky (May 2005).
    Communication and transportation expenses include an increase in
    postage of $1,331, as compared to 2004. The postage increase is
    largely the result of a higher number of mailings to promote
    deposit products and the High Performance Checking initiative.
    The decline in processing costs is largely attributable to sale
    of the merchant credit card portfolio during the first quarter
    of 2005 and the elimination of related processing costs of
    $1,066.
    The decline in amortization of intangible assets occurred
    because the amortization period for a portion of our core
    deposit intangibles ended in December 2004. This resulted in
    elimination of amortization expense of $660 in 2005, as compared
    to 2004. Goodwill and certain other intangible assets are
    regularly tested for impairment. We completed this testing in
    2005 and found no impairment.
    The decline in other expense was in large part due to a third
    quarter 2004 $410 write-down of a property held in other real
    estate owned. 26




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##### Table of Contents



INCOME
    TAXES
        INTERIM
    FINANCIAL DATA
    2006Three Months Ended

December 31


September 30


June 30


March 31Interest income

$
40,802


$
41,035


$
39,442


$
37,114Interest expense


20,174



20,218



18,699



16,996Net interest income


20,628



20,817



20,743



20,118Provision for loan losses


18,091



950



859



394Non-interest income


9,443



9,206



9,117



8,061Non-interest expense


18,860



18,599



19,260



19,158Income (loss) before income taxes


(6,880
)


10,474



9,741



8,627Income taxes (benefits)


(4,280
)


2,274



2,351



2,070NET INCOME (LOSS)

$
(2,600
)

$
8,200


$
7,390


$
6,557Earnings per share:Basic

$
(0.15
)

$
0.47


$
0.42


$
0.38Diluted


(0.15
)


0.46



0.42



0.37Average shares:Basic


17,697



17,589



17,466



17,434Diluted


17,864



17,752



17,562



17,521   27




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##### Table of Contents



2005Three Months Ended

December 31


September 30


June 30


March 31Interest income

$
36,566


$
35,417


$
34,700


$
33,496Interest expense


16,130



15,089



13,904



12,435Net interest income


20,436



20,328



20,796



21,061Provision for loan losses


515



558



4,316



375Non-interest income


8,278



7,945



13,111



6,544Non-interest expense


18,729



19,524



20,075



19,229Income before income taxes


9,470



8,191



9,516



8,001Income taxes


2,616



1,585



2,066



1,612NET INCOME

$
6,854


$
6,606


$
7,450


$
6,389Earnings per share:Basic

$
0.39


$
0.38


$
0.43


$
0.37Diluted


0.39



0.38



0.43



0.37Average shares:Basic


17,418



17,400



17,365



17,343Diluted


17,480



17,504



17,440



17,414   FINANCIAL
    CONDITION
    CASH AND
    CASH EQUIVALENTS
    SECURITIES
    AVAILABLE FOR SALE
   28




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##### Table of Contents



SECURITIES
    PORTFOLIO
  December 31,(At Fair Value)

2006


2005


2004U.S. Government agencies

$
16,165


$
1,119


$
1,095Mortgage-backed securities


133,630



166,504



230,685Collateralized Mortgage Obligations


313,417



362,313



407,126State & political
    subdivisions


76,143



85,254



97,813Other securities


75,363



65,840



64,340Total

$
614,718


$
681,030


$
801,059       Less Than 1 Year


1  5 Years


5  10 Years


Over 10 YearsMaturity


Maturity


Maturity


Maturity


TotalAmount


Yield


Amount


Yield


Amount


Yield


Amount


Yield


Amount


YieldU.S. government agencies

$







$
16,000



5.38
%

$
175



5.77
%

$







$
16,175



5.38
%Mortgage-backed securities


10,687



4.64
%


123,188



4.33
%


1,379



3.90
%


631



5.61
%


135,885



4.35
%Collateralized mortgage obligations










90,956



4.59
%


221,321



4.35
%


10,389



4.20
%


322,666



4.41
%States & political
    subdivisions


3,162



7.30
%


17,463



7.44
%


44,308



7.65
%


8,647



8.41
%


73,580



7.67
%Other securities










51



5.90
%










74,873



7.25
%


74,924



7.25
%Amortized Cost

$
13,849



5.25
%

$
247,658



4.71
%

$
267,183



4.89
%

$
94,540



7.01
%

$
623,230



5.15
%Fair Value

$
13,969






$
244,108






$
261,749






$
94,892






$
614,718       REGULATORY
    STOCK
    LOANS
   29




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##### Table of Contents



30




---



##### Table of Contents



LOAN
    PORTFOLIO AT YEAR END
  2006


2005


2004


2003


2002Commercial, industrial and
    agricultural loans

$
568,841


$
572,936


$
563,382


$
586,159


$
644,084Economic development loans and
    other obligations of state and political subdivisions


7,179



8,422



13,195



20,951



18,360Lease financing


5,495



5,740



5,731



6,796



7,366Commercial mortgages


180,249



180,907



224,066



238,261



172,640Construction and development


260,314



186,177



72,517



53,108



36,981Residential mortgages


436,309



447,250



456,007



477,895



451,920Home equity lines of credit


132,704



135,685



143,037



132,101



126,257Consumer loans


199,887



213,079



187,395



184,426



148,580Total loans


1,790,978



1,750,196



1,665,330



1,699,697



1,606,188Less: unearned income


2



4



6



9



33Loans, net of unearned income

$
1,790,976


$
1,750,192


$
1,665,324


$
1,699,688


$
1,606,155       LOAN
    MATURITIES AND RATE SENSITIVITIES AT DECEMBER 31,
    2006
    After 1 YearWithin


But Within


OverRate Sensitivities:

1 Year


5 Years


5 Years


TotalFixed rate loans

$
68,630


$
355,034


$
299,051


$
722,715Variable rate loans


762,040



247,150



50,446



1,059,636Subtotal

$
830,670


$
602,184


$
349,497



1,782,351Percent of total


46.60
%


33.79
%


19.61
%Nonaccrual loans














8,625Total loans













$
1,790,976  31




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##### Table of Contents



LOAN
    MATURITIES AND RATE SENSITIVITIES AT DECEMBER 31,
    2006
   After 1 YearWithin


But Within


Over1 Year


5 Years


5 Years


TotalCommercial, industrial and
    agriculture loans

$
294,149


$
220,188


$
52,238


$
566,575Economic development loans and
    other obligations of state and political subdivisions


5,013



1,841



325



7,179Construction and development


251,477



8,266



565



260,308Total

$
550,639


$
230,295


$
53,128


$
834,062Fixed rate

$
49,485


$
198,527


$
50,404


$
298,416Variable rate


501,154



31,768



2,724



535,646Subtotal

$
550,639


$
230,295


$
53,128



834,062Percent of total


66.02
%


27.61
%


6.37
%Nonaccrual loans














2,272Total













$
836,334   NON-PERFORMING
    ASSETS
    NON-PERFORMING
    ASSETS AT YEAR END
  2006


2005


2004


2003


2002Non-performing loans:(1)Nonaccrual

$
8,625


$
25,013


$
17,971


$
15,725


$
20,01090 days past due and still
    accruing interest


228



40



576



2,566



2,367Total non-performing loans


8,853



25,053



18,547



18,291



22,377Defaulted municipal securities














2,692



2,536Other real estate owned


936



440



243



1,341



2,286Total non-performing assets

$
9,789


$
25,493


$
18,790


$
22,324


$
27,199  32




---



##### Table of Contents



(1)
    
    Includes non-performing loans classified as loans held for sale.        CREDIT
    MANAGEMENT
  loan-to-value
         33




---



##### Table of Contents



Accounting by
    Creditors for Impairment of a Loan.
      Accounting for Contingencies
    Accounting by Creditors for Impairment of a Loan.
   34




---



##### Table of Contents




    The impact of the charge-off of the $17,749 lending relationship
    during the fourth quarter of 2006. This relationship is
    described further below.
    Additionally, we experienced a higher level of charge-offs in
    our consumer portfolio, particularly in the areas of indirect
    marine and recreational vehicle loans, which had net charge-offs
    of $1,227 compared to $784 in 2005.
    Partially offsetting these items were net recoveries in 2006 of
    $108 for commercial mortgage and commercial construction and
    development real estate credits, as opposed to net charge-offs
    of $588 for 2005. These loans make up 24.6% of our portfolio at
    December 31, 2006.          
    The establishment of a specific reserve against the loan to a
    regional grocery store chain. When this loan was paid off in
    2006, we charged off $1,671.
    We reclassified approximately $9,788 of under performing loans
    to loans held for sale and recorded $1,461 in charge-offs and
    related provision expense during the second quarter of
    2005; and
    Consumer bankruptcies increased during the fourth quarter
    largely attributed to the October 2005 passage of new bankruptcy
    laws, coupled with rising fuel prices, increased minimum credit
    card payments by many issuers, and other economic factors
    contributed to an increase in consumer net charge-offs of $682
    from 2004. The increase came primarily from the indirect
    recreational vehicle portfolio.   35




---



##### Table of Contents



SUMMARY
    OF LOAN LOSS EXPERIENCE (ANALYSIS OF THE ALLOWANCE FOR LOAN
    LOSSES)
  2006


2005


2004


2003


2002Allowance for loan losses, January
    1

$
24,392


$
23,794


$
25,403


$
24,632


$
23,868Loans charged off:Commercial, industrial and
    agriculture


21,509



3,461



1,550



2,330



1,235Lease financing














59



Commercial mortgages


66



620



859



840



492Construction and development










13







Residential mortgages


704



589



1,321



1,734



2,236Home Equity


397



130



154



180



266Consumer


2,665



1,818



961



1,367



1,480Total


25,341



6,618



4,858



6,510



5,709Recoveries on charged off loans:Commercial, industrial and
    agriculture


633



621



1,386



1,105



1,192Lease financing














119



4Commercial mortgages


174



32



242



86



138Construction and development










24







Residential mortgages


171



166



249



405



1,266Home Equity


41



64



24



1



33Consumer


791



569



394



620



697Total


1,810



1,452



2,319



2,336



3,330Net charge-offs


23,531



5,166



2,539



4,174



2,379Provision for loan losses


20,294



5,764



1,305



4,945



3,143Allowance related to loans sold










(299
)






Transfer to reserve for unfunded
    commitments










(76
)






Allowance for loan losses,
    December 31

$
21,155


$
24,392


$
23,794


$
25,403


$
24,632Total loans at year-end, net of
    unearned income

$
1,790,976


$
1,750,192


$
1,665,324


$
1,699,688


$
1,606,155Average loans


1,782,918



1,688,547



1,644,471



1,670,938



1,596,462Total non-performing loans


8,853



25,053



18,547



18,291



22,377Net charge-offs to average loans


1.32
%


0.31
%


0.15
%


0.25
%


0.15
%Provision for loan losses to
    average loans


1.14



0.34



0.08



0.30



0.20Allowance for loan losses to loans


1.18



1.39



1.43



1.50



1.53Allowance for loan losses to
    non-performing loans


238.96



97.36



128.29



138.88



110.08  36




---



##### Table of Contents



ALLOCATION
    OF THE ALLOWANCE FOR LOAN LOSSES AT DECEMBER 31
  Allowance Applicable to


Percent of Loans to Total Gross LoansLoan Type

2006


2005


2004


2003


2002


2006


2005


2004


2003


2002Commercial, industrial and
    agriculture

$
7,337


$
11,713


$
10,326


$
12,789


$
13,421



32
%


33
%


34
%


35
%


40
%Economic development loans and
    other obligations of state and political subdivisions










86



135



117











1
%


1
%


1
%Lease financing


1



56



63



105



129



















1
%Commercial mortgages


1,804



2,173



3,127



3,130



2,198



10
%


10
%


14
%


14
%


11
%Construction and development


2,537



1,904



763



344



280



15
%


11
%


4
%


3
%


2
%Residential mortgages


3,688



4,105



3,622



1,845



2,347



24
%


26
%


27
%


28
%


28
%Home equity


1,172



885



1,059



778



529



8
%


8
%


9
%


8
%


8
%Consumer


3,434



3,246



2,291



3,095



3,046



11
%


12
%


11
%


11
%


9
%Allocated


19,973



24,082



21,337



22,221



22,067



100
%


100
%


100
%


100
%


100
%Unallocated


1,182



310



2,457



3,182



2,565Total

$
21,155


$
24,392


$
23,794


$
25,403


$
24,632   DEPOSITS
        TIME
    DEPOSITS OF $100 OR MORE AT DECEMBER 31, 2006
  Maturing:3 months or less

$
103,919Over 3 to 6 months


115,706Over 6 to 12 months


78,707Over 12 months


74,024Total

$
372,356  37




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##### Table of Contents



SHORT-TERM
    BORROWINGS
      LONG-TERM
    BORROWINGS
              OFF-BALANCE
    SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL
    OBLIGATIONS
     38




---



##### Table of Contents



Less Than


1 to 3


3 to 5


After 5As of December 31, 2006

Total


One Year


Years


Years


YearsContractual On Balance Sheet
    ObligationsLong-term debt

$
254,521


$
113,957


$
69,330


$
2,568


$
68,666Operating leases


14,910



2,003



3,183



2,090



7,634Total contractual cash obligations

$
269,431


$
115,960


$
72,513


$
4,658


$
76,300Off Balance Sheet ObligationsLines of credit

$
358,683


$
165,944


$
33,277


$
21,480


$
137,982Standby letters of credit


19,915



11,687



8,228







Other commitments


214,697



93,662



77,858



20,759



22,418Total other commitments

$
593,295


$
271,293


$
119,363


$
42,239


$
160,400   CAPITAL
    RESOURCES
             39




---



##### Table of Contents



LIQUIDITY
            ACCOUNTING
    CHANGES
   40




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK        Earnings at Risk (EAR). 12-month
    Estimated Change in EAR from the BaseInterest Rate Scenario−200 basis points


+200 basis pointsDecember 31, 2006


0.28
%


(1.78
)%December 31, 2005


(3.76
)%


(0.99
)%   Economic Value of Equity (EVE).
 41




---



##### Table of Contents



Estimated Change in EVE from the BaseInterest Rate Scenario−200 basis points


+200 basis pointsDecember 31, 2006


0.97
%


(6.58
)%December 31, 2005


(0.51
)%


(6.35
)%    42




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Rule 13a-15(f)
  
    Pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of our assets;
    Provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with U.S. generally accepted accounting
    principles, and that our receipts and expenditures are being
    made only in accordance with authorizations of our management
    and directors; and
    Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of our
    assets that could have a material effect on the financial
    statements.        Form 10-K.
  /s/  Michael
    T. Vea

/s/  Martin
    M. ZornChairman of the Board, Chief
    Executive

Chief Financial Officer;Officer and President

Executive Vice President-Finance
    and Risk  43




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
 FINANCIAL STATEMENTS
              
    44




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING
    FIRM ON INTERNAL CONTROL
                  
    45




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
       
    46




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Consolidated
    Balance Sheets
  December 31,2006


2005(In thousands, except share data)ASSETSCash and due from banks

$
65,400


$
62,643Federal funds sold and other
    short-term investments


3,998



112Total cash and cash equivalents


69,398



62,755Loans held for sale (at lower of
    cost or fair value)


1,764



522Securities available for sale


614,718



681,030Regulatory stock


24,410



33,102Loans, net of unearned income


1,790,976



1,750,192Less: Allowance for loan losses


(21,155
)


(24,392
)Net loans


1,769,821



1,725,800Premises and equipment


46,157



50,106Goodwill


44,491



44,491Other intangible assets


6,832



7,765Other assets


106,888



102,571TOTAL ASSETS

$
2,684,479


$
2,708,142LIABILITIESDeposits:Non-interest-bearing demand

$
252,851


$
263,095Interest-bearing:Savings, interest checking and
    money market accounts


794,280



760,883Time deposits of $100 or more


372,356



285,429Other interest-bearing


534,365



499,096Total deposits


1,953,852



1,808,503Short-term borrowings


217,518



201,663Long-term borrowings


254,521



454,787Other liabilities


23,114



23,091TOTAL LIABILITIES


2,449,005



2,488,044Commitments and contingent
    liabilities (Note 19)






SHAREHOLDERS
    EQUITYPreferred stock 
    1,000,000 shares authorizedNone outstandingCommon stock 
    $1.00 stated value:Shares authorized: 29,000,000Shares outstanding: 17,794,289 and
    17,464,948 respectively


17,794



17,465Additional paid-in capital


135,054



127,980Retained earnings


88,355



80,622Accumulated other comprehensive
    income (loss)


(5,729
)


(5,969
)TOTAL SHAREHOLDERS EQUITY


235,474



220,098TOTAL LIABILITIES AND
    SHAREHOLDERS EQUITY

$
2,684,479


$
2,708,142    47




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Consolidated
    Statements of Income
  Year Ended December 31,2006


2005


2004(In thousands, except pershare data)INTEREST INCOMEInterest and fees on loans:Taxable

$
125,088


$
103,801


$
94,874Tax-exempt


416



425



449Interest and dividends on
    securities:Taxable


26,525



28,591



29,221Tax-exempt


4,412



5,355



6,045Dividends on regulatory stock


1,479



1,528



1,518Interest on loans held for sale


140



355



179Interest on federal funds sold and
    other short-term investments


333



124



85Total interest income


158,393



140,179



132,371INTEREST EXPENSEInterest on deposits


54,421



35,024



25,752Interest on short-term borrowings


8,574



5,877



1,938Interest on long-term borrowings


13,092



16,657



20,214Total interest expense


76,087



57,558



47,904NET INTEREST INCOME


82,306



82,621



84,467Provision for loan losses


20,294



5,764



1,305Net interest income after provision
    for loan losses


62,012



76,857



83,162NON-INTEREST INCOMEService charges on deposit accounts


18,879



15,355



12,414Other service charges and fees


3,807



3,962



4,434Debit card income-interchange


3,301



2,438



1,633Credit card fee income


348



742



2,060Trust income


2,361



1,979



2,025Net securities gains (losses)


577



(1,532
)


4,477Gain on sale of other assets


93



6,786



1,360Bank-owned life insurance income


2,166



2,348



1,547Other


4,295



3,800



3,657Total non-interest income


35,827



35,878



33,607NON-INTEREST EXPENSESalaries and employee benefits


39,990



39,870



42,907Occupancy


8,182



7,830



6,846Equipment


3,412



3,584



4,052Professional fees


2,955



4,362



4,264Communication and transportation


4,933



4,742



3,427Processing


2,083



2,616



3,496Software


1,684



1,609



1,841Marketing


1,941



2,075



2,179Debt prepayment fees










56,998Low income housing project losses


2,526



2,210



2,193Amortization of intangible assets


933



933



1,612Other


7,238



7,726



8,365Total non-interest expense


75,877



77,557



138,180Income (loss) before income taxes


21,962



35,178



(21,411
)Income taxes (benefit)


2,415



7,879



(14,791
)NET INCOME (LOSS)

$
19,547


$
27,299


$
(6,620
)Earnings (loss) per share:Basic

$
1.11


$
1.57


$
(0.38
)Diluted

$
1.11


$
1.56


$
(0.38
)Weighted average shares outstanding:Basic


17,546



17,382



17,318Diluted


17,658



17,468



17,318    48




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Consolidated
    Statements of Comprehensive Income
  Year Ended December 31,2006


2005


2004(In thousands)Net income (loss)

$
19,547


$
27,299


$
(6,620
)Other comprehensive income, net of
    tax:Unrealized gain (loss) on
    securities:Unrealized gain (loss) arising in
    period (net of tax of $955, $(5,482) and $(2,181) respectively)


1,433



(7,916
)


(3,202
)Reclassification of realized
    amounts (net of tax of $(234), $621 and $(1,814) respectively)


(343
)


911



(2,663
)Net unrealized gain (loss) on
    securities


1,090



(7,005
)


(5,865
)Unrealized gain (loss) on hedged
    derivatives arising in period (net of tax of $13 and $155 for
    2006 and 2004 respectively)


19







227Net unrealized gain (loss),
    recognized in other comprehensive income


1,109



(7,005
)


(5,638
)Comprehensive income (loss)

$
20,656


$
20,294


$
(12,258
)    49




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Consolidated
    Statements of Changes In Shareholders Equity
  AccumulatedShares of





Additional





Other


TotalCommon


Common


Paid-In


Retained


Comprehensive


ShareholdersStock


Stock


Capital


Earnings


Income (Loss)


Equity(In thousands, except share and per share data)BALANCE AT JANUARY 1, 2004


17,310,782


$
17,311


$
125,497


$
83,510


$
6,674


$
232,992Net income














(6,620
)






(6,620
)Cash dividend declared
    (0.715 per share)














(12,409
)






(12,409
)Change, net of tax, in unrealized
    gain/loss on:Securities


















(5,865
)


(5,865
)Interest rate swaps


















227



227Exercise of stock options


38,648



39



688











727Grant of restricted stock


25,574



25



(25
)










Stock-based compensation expense










239











239BALANCE AT DECEMBER 31, 2004

$
17,375,004


$
17,375


$
126,399


$
64,481


$
1,036


$
209,291Net income














27,299







27,299Cash dividend declared
    ($0.64 per share)














(11,158
)






(11,158
)Change, net of tax, in unrealized
    gain/loss on:Securities


















(7,005
)


(7,005
)Interest rate swaps






















Exercise of stock options


71,723



72



1,227











1,299Grant of restricted stock, net of
    forfeitures


18,221



18



(18
)










Acceleration of stock option vesting










20











20Stock-based compensation expense










352











352BALANCE AT DECEMBER 31, 2005


17,464,948


$
17,465


$
127,980


$
80,622


$
(5,969
)

$
220,098Net income














19,547







19,547Cash dividend declared
    ($0.67 per share)














(11,814
)






(11,814
)Change, net of tax, in unrealized
    gain/loss on:Securities


















1,090



1,090Interest rate swaps


















19



19Adjustment to initially apply SFAS
    No. 158, net of tax


















(869
)


(869
)Exercise of stock options


289,862



290



6,075











6,365Grant of restricted stock, net of
    forfeitures


39,479



39



(39
)










Stock-based compensation expense










1,038











1,038BALANCE AT DECEMBER 31, 2006


17,794,289


$
17,794


$
135,054


$
88,355


$
(5,729
)

$
235,474    50




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Consolidated
    Statements of Cash Flows
  Year Ended December 31,2006


2005


2004(In thousands)CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)

$
19,547


$
27,299


$
(6,620
)Adjustments to reconcile net income
    (loss) to net cash provided by operating activities:Amortization and depreciation


5,950



7,030



8,991Provision for loan losses


20,294



5,764



1,305Net securities (gains) losses


(577
)


1,532



(4,477
)(Gain) loss on sale of premises and
    equipment


(65
)


202



24Gain on sale of other real estate
    owned


(28
)


(109
)


(145
)Gain on sale of loans










(1,158
)Gain on sale of merchant processing
    program






(411
)


Gain on sale of branches






(6,204
)


Loss on low-income housing
    investments


2,526



2,210



2,193Increase (decrease) in deferred
    taxes


(3,461
)


5,892



(13,192
)Net gain on sale of loans held for
    sale


(640
)


(681
)


(618
)Proceeds from sale of loans held
    for sale


58,683



66,956



81,352Origination of loans held for sale


(59,285
)


(65,624
)


(81,665
)Change in other operating


5,283



8,028



1,063Net cash flows provided by (used
    in) operating activities


48,227



51,884



(12,947
)CASH FLOWS FROM INVESTING ACTIVITIESProceeds from maturities of
    securities available for sale


126,535



179,152



209,824Proceeds from sales of securities
    available for sale


7,904



30,595



373,630Purchase of securities available
    for sale


(66,132
)


(104,210
)


(417,778
)(Increase) decrease in loans made
    to customers


(65,389
)


(103,806
)


24,892Decrease in loans from sale of
    branches






13,772



Proceeds from sale of loans










7,043Proceeds from sale of merchant
    processing program






585



Purchase of premises and equipment


(292
)


(4,869
)


(5,439
)Proceeds from sale of premises and
    equipment from sale of branches






608



Proceeds from sale of premises and
    equipment


125



211



5,512Proceeds from sale of other real
    estate owned


516



724



1,598Net cash flows provided by (used
    in) investing activities


3,267



12,762



199,282CASH FLOWS FROM FINANCING ACTIVITIESNet increase (decrease) in deposits


145,349



(19,590
)


83,911Decrease in deposits from sale of
    branches






(68,448
)


Excess income tax benefit from
    employee stock-based awards


416







Net increase (decrease) in
    short-term borrowed funds


15,284



26,641



(124,118
)Proceeds from long-term borrowings


10,000







334,003Repayment of long-term borrowings


(210,266
)


(2,483
)


(470,269
)Dividends paid


(11,583
)


(11,144
)


(13,698
)Proceeds from exercise of stock
    options


5,949



1,299



727Net cash flows provided by (used
    in) financing activities


(44,851
)


(73,725
)


(189,444
)Net increase (decrease) in cash and
    cash equivalents


6,643



(9,079
)


(3,109
)Cash and cash equivalents at
    beginning of year


62,755



71,834



74,943Cash and cash equivalents at end of
    year

$
69,398


$
62,755


$
71,834    51




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Consolidated
    Statements of Cash Flows  (Continued)
  Year Ended December 31,2006


2005


2004(In thousands)SUPPLEMENTAL DISCLOSURE OF CASH
    FLOW INFORMATIONCash paid during the year:Interest

$
73,722


$
55,239


$
48,702Income taxes (benefit)


7,920



(288
)


(681
)SUPPLEMENTAL DISCLOSURE OF NONCASH
    TRANSACTIONSChange in allowance for unrealized
    (gain)/loss on securities available for sale

$
(1,757
)

$
12,013


$
9,860Change in deferred taxes
    attributable to securities available for sale


721



(4,861
)


(3,995
)Change in fair value of derivative
    hedging instruments


19







Other real estate acquired in
    settlement of loans


1,074



836



843Dividends declared and not paid


3,025



2,794



2,780   See Accompanying Notes to
    Consolidated Financial Statements.
 52




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial Statements
 (In
    Thousands, Except Share and Per Share Data)
  NOTE 1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  DESCRIPTION
    OF BUSINESS
  and/or
          BASIS
    OF CONSOLIDATION
       53




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    CASH
    AND CASH EQUIVALENTS
    TRUST ASSETS
    SECURITIES
        REGULATORY
    STOCK
    LOANS
     54




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Bulletin 2000-20).
  ALLOWANCE
    FOR LOAN LOSSES
        Accounting by
    Creditors for Impairment of a Loan.
   55




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     OTHER
    REAL ESTATE OWNED
    PREMISES
    AND EQUIPMENT
    INTANGIBLE
    ASSETS
      BANK
    OWNED LIFE INSURANCE
    SECURITIES
    SOLD UNDER AGREEMENTS TO REPURCHASE
    MORTGAGE
    SERVICING RIGHTS
   56




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
       DERIVATIVE
    FINANCIAL INSTRUMENTS
         57




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      INCOME
    TAXES
    COMPREHENSIVE
    INCOME
    LOSS
    CONTINGENCIES
    STOCK-BASED
    COMPENSATION
  Accounting for Stock
    Issued to Employees Accounting for Stock-Based
    Compensation
  58




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  For the Year Ended December 31,2005


2004Net income (loss):As reported

$
27,299


$
(6,620
)Add: Stock-based compensation
    expense included in reported net income (loss), net of tax


221



142Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of tax


2,505



1,021Proforma

$
25,015


$
(7,499
)Earnings (loss) per share:BasicAs reported

$
1.57


$
(0.38
)Proforma


1.44



(0.43
)DilutedAs reported

$
1.56


$
(0.38
)Proforma


1.43



(0.43
)     2006


2005


2004Number of options granted


259,106



300,154



304,772Stock price

$
23.17


$
21.67


$
20.45Risk-free interest rate


4.99
%


4.04
%


3.97
%Expected life, in years


6



7



7Expected volatility


24.49
%


33.20
%


33.16
%Expected dividend yield


2.80
%


3.00
%


3.13
%Estimated fair value per option

$
5.65


$
6.43


$
5.89     RECENT
    ACCOUNTING PRONOUNCEMENTS
   59




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Before





AfterApplication of





Application ofSFAS No. 158


Adjustments


SFAS No. 158Deferred income taxes

$
18,568


$
512


$
19,080Total assets


2,683,967



512



2,684,479Liability for postretirement plan


866



1,381



2,247Total liabilities


2,447,624



1,381



2,449,005Accumulated other comprehensive
    income


(4,860
)


(869
)


(5,729
)Total stockholders equity


236,343



(869
)


235,474    60




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
              06-4,
 61




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  06-4
  06-5, Bulletin No. 85-4, Bulletin No. 85-4 06-5 06-5
  NOTE 2 
    DEFINITIVE
    AGREEMENT TO ACQUIRE PRAIRIE FINANCIAL CORPORATION  15-year-old
    NOTE 3.
    EARNINGS
    PER SHARE   62




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     For the Year Ended December 31,2006


2005


2004Net income (loss)

$
19,547


$
27,299


$
(6,620
)Weighted average shares
    outstanding  Basic


17,546,260



17,381,682



17,318,299Stock option adjustment


99,820



54,759



Restricted stock adjustment


12,381



31,102



Average shares
    outstanding  Diluted


17,658,461



17,467,543



17,318,299Earnings per share-Basic

$
1.11


$
1.57


$
(0.38
)Effect of stock options and
    restricted shares






(0.01
)


Earnings per share 
    Diluted

$
1.11


$
1.56


$
(0.38
)      63




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  NOTE 4.
    SECURITIES    Gross Unrealized


Gross UnrealizedAmortized Cost


Gains


Losses


Fair ValueDecember 31, 2006:U.S. Government agencies

$
16,175


$
24


$
34


$
16,165Mortgage-backed securities


135,885



265



2,520



133,630Collateralized Mortgage Obligations


322,666



68



9,317



313,417States & political
    subdivisions


73,580



2,566



3



76,143Other securities


74,924



560



121



75,363Total

$
623,230


$
3,483


$
11,995


$
614,718December 31, 2005:U.S. Government agencies

$
1,149


$



$
30


$
1,119Mortgage -backed securities


169,942



292



3,730



166,504Collateralized Mortgage Obligations


373,198







10,885



362,313States & political
    subdivisions


82,415



2,935



96



85,254Other securities


64,595



1,605



360



65,840Total

$
691,299


$
4,832


$
15,101


$
681,030     Available for Sale Securities

Fair ValueDue in one year or less

$
13,969Due from one to five years


244,108Due from five to ten years


261,749Due after ten years


94,892Total

$
614,718     2006


2005


2004Gross realized gains

$
597


$
89


$
5,635Gross realized losses


(20
)


(1,621
)


(1,158
)Total

$
577


$
(1,532
)

$
4,477  64




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Less Than 12 Months


12 Months or More


TotalUnrealized





Unrealized





UnrealizedDecember 31, 2006

Fair Value


Losses


Fair Value


Losses


Fair Value


LossesU.S. government agencies

$
10,106


$
19


$
835


$
15


$
10,941


$
34Mortgage-backed securities


1,365



4



116,439



2,516



117,804



2,520Collateralized mortgage obligations


13,793



105



293,903



9,212



307,696



9,317State & political
    subdivisions


99



1



143



2



242



3Other securities


5,038



6



21,212



115



26,250



121Total

$
30,401


$
135


$
432,532


$
11,860


$
462,933


$
11,995   Less Than 12 Months


12 Month s or More


TotalUnrealized





Unrealized





UnrealizedDecember 31, 2005

Fair Value


Losses


Fair Value


Losses


Fair Value


LossesU.S. government agencies

$
830


$
19


$
289


$
11


$
1,119


$
30Mortgage-backed securities


69,997



1,267



84,899



2,463



154,896



3,730Collateralized mortgage obligations


83,213



1,381



279,100



9,504



362,313



10,885State & political
    subdivisions


605



94



150



2



755



96Other securities


26,917



331



8,080



29



34,997



360Total

$
181,562


$
3,092


$
372,518


$
12,009


$
554,080


$
15,101   other-than-temporary
    other-than-temporarily other-than-temporary
  other-than-temporary
   65




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   NOTE 5.
    LOANS    2006


2005CommercialCommercial, industrial and
    agricultural loans

$
568,841


$
572,936Economic development loans and
    other obligations of state and political subdivisions


7,179



8,422Lease financing


5,495



5,740Total commercial


581,515



587,098Commercial real estateCommercial mortgages


180,249



180,907Construction and development


260,314



186,177Total commercial real estate


440,563



367,084Residential mortgages


436,309



447,250Home equity


132,704



135,685Consumer loans


199,887



213,079Total loans


1,790,978



1,750,196Less: unearned income


2



4Loans, net of unearned income

$
1,790,976


$
1,750,192     2006


2005


2004Nonaccrual

$
8,625


$
25,013


$
17,97190 days past due


228



40



576Total non-performing loans

$
8,853


$
25,053


$
18,547     2006


2005


2004Impaired loans for which there is
    a related allowance for loan losses

$
338


$
17,010


$
4,241Impaired loans for which there is
    no related allowance for loan losses


2,316



8,109



13,730Total impaired loans

$
2,654


$
25,119


$
17,971Allowance for loan losses for
    impaired loans included in the allowance for loan losses

$
233


$
4,380


$
2,482Average recorded investment in
    impaired loans


6,083



24,378



19,224Interest income recognized from
    impaired loans


87



338



58Cash basis interest income
    recognized from impaired loans


13



134



109    66




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     NOTE 6.
    RELATED
    PARTY TRANSACTIONS    2006


2005Balance as of January 1

$
1,233


$
3,225New loans


1,852



1,710Repayments


(1,108
)


(2,209
)Director and officer changes


1,405



(1,493
)Balance as of December 31

$
3,382


$
1,233The balance of related party
    deposits as of December 31

$
9,822


$
6,797   NOTE 7.
    ALLOWANCE
    FOR LOAN LOSSES    2006


2005


2004Balance at beginning of year

$
24,392


$
23,794


$
25,403Loans charged to allowance


(25,341
)


(6,618
)


(4,858
)Recoveries credited to allowance


1,810



1,452



2,319Net charge-offs


(23,531
)


(5,166
)


(2,539
)Provision for loan losses


20,294



5,764



1,305Allowance related to loans sold










(299
)Reclassification of allowance
    related to unfunded commitments to other liabilities










(76
)Balance at end of year

$
21,155


$
24,392


$
23,794     NOTE 8.
    PREMISES
    AND EQUIPMENT    2006


2005Land

$
7,232


$
7,232Buildings and lease improvements


62,876



63,218Equipment


21,928



23,009Construction in progress


998



1,790Total cost


93,034



95,249Less accumulated depreciation


46,877



45,143Net premises and equipment

$
46,157


$
50,106  67




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    NOTE 9.
    INTANGIBLE
    ASSETS  December 31, 2006


December 31, 2005Gross





Net


Gross





NetCarrying


Accumulated


Carrying


Carrying


Accumulated


CarryingAmount


Amortization


Amount


Amount


Amortization


AmountGoodwill
    (Non-amortizing)

$
44,491


$



$
44,491


$
44,491


$



$
44,491Core deposits (Amortizing)


17,080



(10,248
)


6,832



17,080



(9,315
)


7,765Total intangible assets

$
61,571


$
(10,248
)

$
51,323


$
61,571


$
(9,315
)

$
52,256       Year Ending December 31,2007

$
9332008


9332009


9332010


9332011


933Thereafter


2,167   NOTE 10.
    MORTGAGE
    SERVICING RIGHTS    2006


2005


2004Balance at beginning of year

$
2,588


$
2,806


$
2,744Amount capitalized


230



573



751Amount amortized


(813
)


(791
)


(689
)Change in valuation allowance










Balance at end of year

$
2,005


$
2,588


$
2,806Fair Market Value

$
3,213


$
3,590


$
3,154    68




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   NOTE 11.
    DEPOSITS    2007

$
674,7552008


165,5392009


40,0102010


11,9032011 and thereafter


14,514Total

$
906,721     NOTE 12.
    INCOME
    TAXES    2006


2005


2004Federal:Current

$
5,874


$
1,205


$
(2,988
)Deferred


(3,227
)


6,261



(9,879
)Total


2,647



7,466



(12,867
)State:Current

$



$
781


$
1,389Deferred


(232
)


(368
)


(3,313
)Total


(232
)


413



(1,924
)Total income taxes (benefit)

$
2,415


$
7,879


$
(14,791
)       2006


2005


2004Federal income tax computed at the
    statutory rates

$
7,687


$
12,313


$
(7,494
)Adjusted for effects of:Tax exempt interest


(1,475
)


(1,761
)


(1,939
)Nondeductible expenses


241



221



321Low income housing credit


(2,389
)


(2,510
)


(2,625
)Cash surrender value of life
    insurance policies


(758
)


(822
)


(542
)Dividend received deduction


(215
)


(215
)


(253
)State taxes, net of Federal benefit


(151
)


807



(1,251
)Other differences


(525
)


(154
)


(1,008
)Total income taxes

$
2,415


$
7,879


$
(14,791
)  69




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    December 31,2006


2005Adjustment to initially apply
    SFAS No. 158

$
512


$
Allowance for loan losses


14,012



9,004Alternative minimum tax credit
    carryforward


2,994



3,545Low income housing tax credit
    carryforward


9,544



9,473Net operating loss carryforward


2,141



2,387Unrealized loss on securities
    available for sale


3,433



4,154Other, net


1,109



1,919Total deferred tax assets


33,745



30,482Direct financing and leveraged
    leases


(4,661
)


(5,228
)Fair value adjustments from
    acquisitions


(552
)


(648
)FHLB dividend


(1,518
)


(1,582
)Goodwill and core deposit
    intangibles


(1,025
)


(455
)Mortgage servicing rights


(743
)


(959
)Partnership income


(1,609
)


(1,148
)Premises and equipment


(4,557
)


(4,634
)Total deferred tax liabilities


(14,665
)


(14,654
)Net deferred tax asset

$
19,080


$
15,828       NOTE 13.
    SHORT-TERM
    BORROWINGS    2006


2005Federal funds purchased

$
45,700


$
44,400Securities sold under agreements
    to repurchase


131,818



117,263Short-term Federal Home
    Loan Bank advances


40,000



40,000Total short-term borrowed funds

$
217,518


$
201,66A summary of selected data related
    to short-term borrowed funds follows:Average amount outstanding

$
178,976


$
167,443Maximum amount at any month-end


217,518



227,889Weighted average interest rate:During year


4.79
%


3.51
%End of year


5.03
%


3.78
%    70




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    NOTE 14.
    LONG-TERM
    BORROWINGS    2006


2005Federal Home Loan Bank (FHLB)
    AdvancesFixed maturity advances (weighted
    average rate of 2.64% and 2.26% as of December 31, 2006 and
    2005, respectively)

$
102,500


$
215,000Amortizing and other advances
    (weighted average rate of 5.55% and 5.74% as of
    December 31, 2006 and 2005, respectively)


3,079



4,931Total FHLB Advances


105,579



219,931Securities sold under repurchase
    agreements with maturities at various dates through 2008
    (weighted average fixed rate of 2.78% and 3.85% as of
    December 31, 2006 and 2005, respectively)


75,000



160,000Notes payable, secured by
    equipment, with a fixed interest rate of 7.26%, due at various
    dates through 2012


5,817



6,731Subordinated debt, unsecured, with
    a floating interest rate equal to three-month LIBOR plus 3.20%,
    with a maturity date of April 24, 2013


10,000



10,000Subordinated debt, unsecured, with
    a floating interest rate equal to three-month LIBOR plus 2.85%,
    with a maturity date of April 7, 2014


4,000



4,000Floating Rate Capital Securities,
    with an interest rate equal to six-month LIBOR plus 3.75%, with
    a maturity date of July 25, 2031, and callable effective
    July 25, 2011


18,557



18,557Floating Rate Capital Securities,
    with an interest rate equal to three-month LIBOR plus 3.10%,
    with a maturity date of June 26, 2033 and callable
    effective June 26, 2008


35,568



35,568Total long-term borrowings

$
254,521


$
454,787     2007

$
113,9572008


67,3012009


2,0292010


1,2462011


1,322Thereafter


68,666Total principal payments

$
254,521    71




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      3-month
          NOTE 15.
    SHAREHOLDERS
    EQUITY       72




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    NOTE 16.
    REGULATORY
    MATTERS           73




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     MinimumMinimum Ratios for Capital


Capital RatiosActual


Adequacy Purposes


to be Well CapitalizedAmount


Ratio


Amount


Ratio


Amount


RatioAs of December 31, 2006Total Capital (to Risk Weighted
    Assets)Consolidated

$
258,313



12.51
%

$
165,171



8.00
%


N/A



N/AIntegra Bank


245,337



11.91
%


164,755



8.00
%


205,944



10.00
%Tier 1 Capital (to Risk
    Weighted Assets)Consolidated

$
223,053



10.80
%

$
82,586



4.00
%


N/A



N/AIntegra Bank


224,077



10.88
%


82,378



4.00
%


123,567



6.00
%Tier 1 Capital (to Average
    Assets)Consolidated

$
223,053



8.42
%

$
105,901



4.00
%


N/A



N/AIntegra Bank


224,077



8.49
%


105,610



4.00
%


132,012



5.00
%As of December 31, 2005Total Capital (to Risk Weighted
    Assets)Consolidated

$
261,831



13.15
%

$
159,334



8.00
%


N/A



N/AIntegra Bank


251,636



12.66
%


158,992



8.00
%


198,740



10.00
%Tier 1 Capital (to Risk
    Weighted Assets)Consolidated

$
223,343



11.21
%

$
79,667



4.00
%


N/A



N/AIntegra Bank


227,148



11.43
%


79,496



4.00
%


119,244



6.00
%Tier 1 Capital (to Average
    Assets)Consolidated

$
223,343



8.33
%

$
107,191



4.00
%


N/A



N/AIntegra Bank


227,148



8.56
%


106,104



4.00
%


132,630



5.00
%   NOTE 17.
    STOCK
    OPTION PLAN AND AWARDS     74




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2006


2005


2004Weighted





Weighted





WeightedAverage





Average





AverageShares


Exercise Price


Shares


Exercise Price


Shares


Exercise PriceOptions outstanding, beginning of
    year


1,320,553


$
21.44



1,227,652


$
21.10



1,086,377


$
21.20Options granted


259,106



23.17



300,154



21.67



304,772



20.45Options exercised


(291,999
)


20.57



(71,723
)


18.10



(38,648
)


18.82Options forfeited or expired


(21,149
)


26.34



(135,530
)


20.70



(124,849
)


21.07Options outstanding, end of year


1,266,511


$
21.91



1,320,553


$
21.44



1,227,652


$
21.10Options exercisable


1,016,322







1,320,553







584,038               Weighted Average





WeightedWeighted Average


Aggregate


Remaining





Average


AggregateNumber


Exercise


Intrinsic


Contractual Life


Number


Exercise


IntrinsicRange of Exercise Price

Outstanding


Price


Value


(In years)


Exercisable


Price


Value$17.00 - 20.00


283,232


$
18.28


$
2,616



6.1



283,232


$
18.28


$
2,61620.01 - 23.50


824,383



21.92



4,621



7.4



598,194



21.56



3,56323.51 - 26.50


117,200



25.72



211



4.2



93,200



25.56



18326.51 - 38.00


41,696



35.79



N/A



1.3



41,696



35.79



N/A1,266,511


$
21.91


$
7,448



6.6



1,016,322


$
21.60


$
6,362  75




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2006


2005


2004Shares


Shares


SharesRestricted shares outstanding,
    beginning of year


42,061



38,100



23,748Shares granted


42,162



25,387



27,326Shares vested


(18,675
)


(14,260
)


(11,222
)Shares forfeited


(2,683
)


(7,166
)


(1,752
)Restricted shares outstanding, end
    of year


62,865



42,061



38,100Weighted-average fair value per
    share at date of grant

$
23.18


$
21.39


$
20.35Compensation expense (in thousands)


377



352



239    76




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   NOTE 18.  DISCLOSURES
    ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
    2006


2005Carrying


Fair


Carrying


FairAmount


Value


Amount


ValueFinancial Assets:Cash and short-term investments

$
69,398


$
69,398


$
62,755


$
62,755Loans held for sale


1,764



1,764



522



522Securities available for sale


614,718



614,718



681,030



681,030Regulatory stock


24,410



24,410



33,102



33,102Loans-net
    of allowance


1,769,821



1,853,425



1,725,800



1,790,512Accrued interest receivable


15,295



15,295



13,376



13,376Interest rate swap agreements

$
747


$
747


$
147


$
147Financial Liabilities:Deposits

$
1,953,852


$
1,956,879


$
1,808,503


$
1,805,446Short-term borrowings


217,518



217,702



201,663



201,469Long-term borrowings


254,521



262,280



454,787



459,498Accrued interest payable


10,176



10,176



7,811



7,811Interest rate swap agreements

$
396


$
396


$
(571
)

$
(571
)     CASH
    AND SHORT-TERM INVESTMENTS
    LOANS
    HELD FOR SALE
    SECURITIES
    LOANS
   77




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   DEPOSITS
    SHORT-TERM
    BORROWINGS
    LONG-TERM
    BORROWINGS
    DERIVATIVE
    INSTRUMENTS
    COMMITMENTS
    TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT
    NOTE 19.
    COMMITMENTS,
    CONTINGENCIES, AND CREDIT RISK    Year Ending December 31,2007

$
2,0032008


1,6682009


1,5152010


1,0922011


998Thereafter


7,634Total

$
14,910      78




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Ranges of RatesVariable Rate


Fixed Rate


Total


on Fixed RateCommitment


Commitment


Commitment


CommitmentsCommitments to extend credit

$
533,688


$
36,733


$
570,421


3.75% - 21.00%Standby letters of credit


15,259



2,276



17,535


0.00% - 9.00%            79




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   NOTE 20.
    INTEREST
    RATE CONTRACTS            NOTE 21.
    EMPLOYEE
    RETIREMENT PLANS         80




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Postretirement Benefits2006


2005Change in Fair Value of Plan
    Assets:Balance at beginning of year

$



$
Actual return on plan assets






Employer contributions


160



133Benefits paid, net of retiree
    contributions


(160
)


(133
)Balance at end of year

$



$
Change in Accumulated Projected
    Benefit Obligation:Balance at beginning of year

$
1,874


$
1,972Service cost


99



113Interest costs


99



112Actuarial (gains) losses


335



(190
)Benefits paid, net of retiree
    contributions


(160
)


(133
)Balance at end of year

$
2,247


$
1,874Funded status

$
(2,247
)

$
(1,874
)Unrecognized prior service cost






233Unrecognized net actuarial loss






895(Accrued) prepaid benefit cost

$
(2,247
)

$
(746
)       Postretirement Benefits2006


2005


2004Service cost  benefits
    earned during the period

$
99


$
113


$
103Interest cost on projected benefit
    obligation


99



113



113Amortization of prior service costs


34



34



34Amortization of net (gain) loss


47



63



67Net periodic cost

$
279


$
323


$
317    81




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     Year Ending December 31,2007

$
1772008


1582009


1762010


1842011


199Thereafter


1,051   NOTE 22.
    SEGMENT
    INFORMATION      For the Year EndedDecember 31, 2006

Banking


Other


TotalInterest income

$
158,194


$
199


$
158,393Interest expense


70,326



5,761



76,087Net interest income


87,868



(5,562
)


82,306Provision for loan losses


20,294







20,294Other income


35,553



274



35,827Other expense


74,662



1,215



75,877Earnings before income taxes


28,465



(6,503
)


21,962Income taxes (benefit)


4,878



(2,463
)


2,415Net income (loss)

$
23,587


$
(4,040
)

$
19,547Segment assets

$
2,672,217


$
12,262


$
2,684,479   82




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  For the Year EndedDecember 31, 2005

Banking


Other


TotalInterest income

$
139,997


$
182


$
140,179Interest expense


53,016



4,542



57,558Net interest income


86,981



(4,360
)


82,621Provision for loan losses


5,764







5,764Other income


35,521



357



35,878Other expense


75,685



1,872



77,557Earnings before income taxes


41,053



(5,875
)


35,178Income taxes (benefit)


10,030



(2,151
)


7,879Net income (loss)

$
31,023


$
(3,724
)

$
27,299Segment assets

$
2,685,870


$
22,272


$
2,708,142   For the Year EndedDecember 31, 2004

Banking


Other


TotalInterest income

$
132,157


$
214


$
132,371Interest expense


44,630



3,274



47,904Net interest income


87,527



(3,060
)


84,467Provision for loan losses


1,305







1,305Other income


33,309



298



33,607Other expense


136,923



1,257



138,180Earnings before income taxes


(17,392
)


(4,019
)


(21,411
)Income taxes (benefit)


(13,120
)


(1,671
)


(14,791
)Net loss

$
(4,272
)

$
(2,348
)

$
(6,620
)Segment assets

$
2,732,901


$
24,264


$
2,757,165  83




---



##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  NOTE 23.
    FINANCIAL
    INFORMATION OF PARENT COMPANY    CONDENSED
    BALANCE SHEETS
  December 31,2006


2005ASSETSCash and cash equivalents

$
8,036


$
6,581Investment in banking subsidiaries


288,334



275,888Investment in other subsidiaries


798



570Securities available for sale


1,625



1,625Other assets


9,198



7,944TOTAL ASSETS

$
307,991


$
292,608LIABILITIESLong-term borrowings

$
68,125


$
68,125Dividends payable


3,025



2,794Other liabilities


1,367



1,591Total liabilities


72,517



72,510SHAREHOLDERS
    EQUITYCommon stock


17,794



17,465Additional paid-in capital


135,054



127,980Retained earnings


88,355



80,622Accumulated other comprehensive
    income (loss)


(5,729
)


(5,969
)Total shareholders equity


235,474



220,098TOTAL LIABILITIES AND
    SHAREHOLDERS EQUITY

$
307,991


$
292,608  84




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##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  CONDENSED
    STATEMENTS OF INCOME
  Year Ended December 31,2006


2005


2004Dividends from banking subsidiaries

$
12,000


$
12,000


$
14,000Other income


161



155



182Total income


12,161



12,155



14,182Interest expense


5,783



4,558



3,283Other expenses


1,138



1,736



1,098Total expenses


6,921



6,294



4,381Income before income taxes and
    equity in undistributed earnings of subsidiaries


5,240



5,861



9,801Income tax benefit


2,506



2,195



1,701Income before equity in
    undistributed earnings of subsidiaries


7,746



8,056



11,502Equity in undistributed earnings
    of subsidiaries


11,801



19,243



(18,122
)Net income (loss)

$
19,547


$
27,299


$
(6,620
)  85




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##### Table of Contents



INTEGRA
    BANK CORPORATION and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  CONDENSED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2006


2005


2004CASH FLOWS FROM OPERATING
    ACTIVITIESNet income (loss)

$
19,547


$
27,299


$
(6,620
)Adjustments to reconcile net
    income (loss) to net cash provided by operating activities:Amortization and depreciation


154



160



113Employee benefit expenses


817



373



239Excess distributions
    (undistributed) earnings of subsidiaries


(11,801
)


(19,243
)


18,122Decrease in deferred taxes


(101
)


(84
)


(79
)(Increase) decrease in other assets


(1,303
)


928



1,304(Decrease) increase in other
    liabilities


(224
)


424



470Net cash flows provided by
    operating activities


7,089



9,857



13,549CASH FLOWS FROM INVESTING
    ACTIVITIESProceeds from call of securities






1,000



Net cash flows provided by
    investing activities






1,000



CASH FLOWS FROM FINANCING
    ACTIVITIESDividends paid


(11,583
)


(11,144
)


(13,698
)Net decrease in short-term
    borrowed funds










(4,000
)Proceeds from long-term borrowings










4,000Proceeds from exercise of stock
    options


5,949



1,298



727Net cash flows used in financing
    activities


(5,634
)


(9,846
)


(12,971
)Net increase in cash and cash
    equivalents


1,455



1,011



578Cash and cash equivalents at
    beginning of year


6,581



5,570



4,992Cash and cash equivalents at end
    of year

$
8,036


$
6,581


$
5,570  86




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Rules 13a-15(e) 15d-15c) Form 10-K
      ITEM 9B.
    OTHER
    INFORMATION    ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   87




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##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Form 10-K
                          88




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##### Table of Contents



SIGNATURES      /s/  MICHAEL
    T. VEA      3/8/2007
  /s/  MARTIN
    M. ZORN      3/8/2007
   /s/  MICHAEL
    B. CARROLL     3/8/2007
   Date/s/  SANDRA
    CLARK BERRYSandra
    Clark Berry

Director

3/8/2007/s/  ROXY
    M. BAASRoxy
    M. Baas

Director

3/8/2007/s/  H.
    RAY HOOPSH.
    Ray Hoops

Director

3/8/2007/s/  GEORGE
    D. MARTINGeorge
    D. Martin

Director

3/8/2007/s/  THOMAS
    W. MILLERThomas
    W. Miller

Director

3/8/2007 89




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##### Table of Contents



Date/s/  RICHARD
    M. STIVERSRichard
    M. Stivers

Director

3/8/2007/s/  ROBERT
    W. SWANRobert
    W. Swan

Director

3/8/2007/s/  ROBERT
    D. VANCERobert
    D. Vance

Director

3/8/2007/s/  WILLIAM
    E. VIETHWilliam
    E. Vieth

Director

3/8/2007/s/  DANIEL
    T. WOLFEDaniel
    T. Wolfe

Director

3/8/2007  90




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##### Table of Contents



EXHIBIT INDEX  ExhibitNumber

Description of Exhibit3(a)(i)

Restated Articles of Incorporation
    (incorporated by reference to Exhibit 3.1 to
    Form 8-A/A
    dated June 12, 1998)3(a)(ii)

Articles of Amendment dated
    May 17, 2000 (incorporated by reference to
    Exhibit 3(a) to Quarterly Report on
    Form 10-Q
    for the period ending September 30, 2000)3(a)(iii)

Articles of Amendment dated
    July 18, 2001 (incorporated by reference to
    Exhibit 4(a))3(b)

By-Laws (incorporated by reference
    to Exhibit 3(b) to Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2003 as amended
    through February 18, 2004)4(a)

Rights Agreement, dated
    July 18, 2001, between Integra Bank Corporation and Integra
    Bank N.A., as Rights Agent. The Rights Agreement includes the
    form of Articles of Amendment setting forth terms of
    Series A Junior Participating Preferred Stock as
    Exhibit A, the form of Right Certificate as Exhibit B
    and the Summary of Rights to Purchase Preferred Shares as
    Exhibit C (incorporated by reference to Exhibit 1 to
    the Current Report on
    Form 8-K
    dated July 18, 2001)4(b)

Amendment to Rights Agreement
    dated September 15, 2004, between Integra Bank Corporation
    and Integra Bank N.A., as Rights Agent (incorporated by
    reference to Exhibit 4.2 to the Current Report on
    Form 8-A/A
    dated September 16, 2004)10(a)*

Integra Bank Corporation
    Employees 401(K) Plan (2003 Restatement)10(b)*

1999 Stock Option and Incentive
    Plan (incorporated by reference to Exhibit A to Proxy
    Statement on Schedule 14A filed April 24, 1999)10(c)*

Contract of Employment dated
    August 23, 1999, between National City Bancshares, Inc. and
    Michael T. Vea (incorporated by reference to Exhibit 10.1
    to Quarterly Report on
    Form 10-Q
    for the period ending September 30, 1999)10(d)*

Amendment to Contract of
    Employment dated September 20, 2000 between Integra Bank
    Corporation and Michael T. Vea (incorporated by reference to
    Exhibit 10(h) to Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2000)10(e)*

Nonqualified Stock Option
    Agreement (Non Plan) dated September 7, 1999, between
    National City Bancshares, Inc. and Michael T. Vea (incorporated
    by reference to Exhibit 10.3 to Quarterly Report on
    Form 10-Q
    for the period ending September 30, 1999)10(f)*

Employment Agreement dated
    July 28, 2003, between Integra Bank Corporation and Archie
    M. Brown, Jr. (incorporated by reference to
    Exhibit 10(a) to Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2003)10(g)*

Employment Agreement dated
    July 28, 2003, between Integra Bank Corporation and Martin
    M. Zorn (incorporated by reference to Exhibit 10(c) to
    Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2003)10(h)*

First Amendment to Integra Bank
    Corporation Employees 401(K) Plan dated January 1,
    200310(i)*

Second Amendment to Integra Bank
    Corporation Employees 401(K) Plan dated March 28, 200510(j)*

Third Amendment to Integra Bank
    Corporation Employees 401(K) Plan dated January 1,
    200610(k)*

2003 Stock Option and Incentive
    Plan (incorporated by reference to Exhibit B to Proxy
    Statement on Schedule 14A filed March 20, 2003)10(l)*

Executive Annual and Long-Term
    Incentive Plan (incorporated by reference to Exhibit 10.1
    to Quarterly Report on
    Form 10-Q
    for the period ended June 30, 2003)10(m)*

Form of Award Agreement for
    Nonqualified Stock Option Grant under 2003 Stock Option and
    Incentive Plan (incorporated by reference to Exhibit 10(m)
    to Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005)10(n)*

Form of Award Agreement for
    Incentive Stock Option Grant under 2003 Stock Option and
    Incentive Plan (incorporated by reference to Exhibit 10(n)
    to Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005) 91




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##### Table of Contents



ExhibitNumber

Description of Exhibit10(o)*

Form of Award Agreement for
    Restricted Stock Grant under 2003 Stock Option and Incentive
    Plan (incorporated by reference to Exhibit 10(o) to Annual
    Report on
    Form 10-K
    for the fiscal year ended December 31, 2005)10(p)*

Summary Sheet of 2007 Compensation10(q)*

Employment Agreement dated
    March 17, 2004, between Integra Bank Corporation and
    Michael B. Carroll (incorporated by reference to
    Exhibit 10(q) to Annual Report on
    Form 10-K
    for the year ended December 31, 2005)10(r)*

Employment Agreement dated
    March 17, 2004, between Integra Bank Corporation and Roger
    M. Duncan10(s)

Agreement and Plan of Merger by
    and among Integra Bank Corporation, PFC Merger Corp and Prairie
    Financial Corporation dated as of October 5, 2006, as
    amended (incorporated by reference to Annex A to the Proxy
    Statement/Prospectus included in the Registration Statement on
    Form S-4
    (Reg. No. 333-140044)
    filed January 17, 2007)10(t)

Voting agreement dated as of
    October 5, 2006 (incorporated by reference to
    Exhibit 10.1 to Current Report on
    Form 8-K
    filed October 5, 2006)21

Subsidiaries of the Registrant23(a)

Consent of PricewaterhouseCoopers
    LLP23(b)

Consent of Crowe Chizek and
    Company LLC31(a)

Certification pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 of Chief
    Executive Officer31(b)

Certification pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 of Chief
    Financial Officer32

Certification pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     *
    
    The indicated exhibit is a management contract, compensatory
    plan or arrangement required to be filed by Item 601 of
    Regulation S-K. 92