##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2005.
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition
period
from
to.
 Commission file number: 0-13585
 INTEGRA BANK CORPORATION
  INDIANA
    
    35-1632155(State or other jurisdiction of incorporation or organization)
    
    (IRS Employee Identification No.)PO BOX 868, EVANSVILLE, INDIANA
    
    47705-0868(Address of principal executive offices)
    
    (Zip Code)
  þ o
 þ o
  CLASS
    
    OUTSTANDING AT JULY 29, 2005(Common stock, $1.00 Stated Value)
    
    17,446,447




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INTEGRA BANK CORPORATION
 INDEX
 PAGE NO.PART I  FINANCIAL INFORMATIONItem 1. Unaudited Financial StatementsConsolidated
balance sheets  June 30, 2005 and December 31, 2004
    
    
    3Consolidated statements of income  Three months and six months ended June 30, 2005 and 2004
    
    
    4Consolidated statements of comprehensive income  Three months and six months ended June 30, 2005 and 2004
    
    
    5Consolidated statements of changes in shareholders equity  Six months ended June 30, 2005
    
    
    6Consolidated statements of cash flow-
Six months ended June 30, 2005 and 2004
    
    
    7Notes to unaudited consolidated financial statements
    
    
    9Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    27PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 3. Defaults Upon Senior Securities
    
    
    28Item 4. Submissions of Matters to a Vote of Security Holders
    
    
    28Item 5. Other Information
    
    
    28Item 6. Exhibits
    
    
    28Signatures
    
    
    29Credit AgreementCertification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of Chief Executive Officer and Chief Financial Officer
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. Unaudited Financial Statements
 INTEGRA BANK CORPORATION and Subsidiaries
 
 Unaudited Consolidated Balance Sheets
 June 30,
    
    December 31,2005
    
    2004ASSETSCash and due from banks
    
    $
    72,673
    
    
    $
    71,770Federal funds sold and other short-term investments
    
    
    94
    
    
    
    64Total cash and cash equivalents
    
    
    72,767
    
    
    
    71,834Loans held for sale (at lower of cost or market value)
    
    
    9,997
    
    
    
    1,173Securities available for sale
    
    
    761,018
    
    
    
    801,059Regulatory stock
    
    
    33,033
    
    
    
    32,975Loans, net of unearned income
    
    
    1,696,600
    
    
    
    1,665,324Less: Allowance for loan losses
    
    
    (25,247
    )
    
    
    (23,794
    )Net loans
    
    
    1,671,353
    
    
    
    1,641,530Premises and equipment
    
    
    51,207
    
    
    
    50,233Goodwill, net
    
    
    44,491
    
    
    
    44,839Other intangibles, net
    
    
    8,231
    
    
    
    8,697Other assets
    
    
    104,200
    
    
    
    104,825TOTAL ASSETS
    
    $
    2,756,297
    
    
    $
    2,757,165LIABILITIESDeposits:Non-interest-bearing demand
    
    $
    242,402
    
    
    $
    257,963Interest-bearing:Savings, interest checking and money market accounts
    
    
    796,275
    
    
    
    820,104Time deposits of $100 or more
    
    
    323,390
    
    
    
    304,495Other interest-bearing
    
    
    482,943
    
    
    
    513,979Total deposits
    
    
    1,845,010
    
    
    
    1,896,541Short-term borrowings
    
    
    410,640
    
    
    
    174,933Long-term borrowings
    
    
    258,579
    
    
    
    457,359Other liabilities
    
    
    24,331
    
    
    
    19,041TOTAL LIABILITIES
    
    
    2,538,560
    
    
    
    2,547,874SHAREHOLDERS EQUITYPreferred stock  1,000 shares authorized  None outstandingCommon stock  $1.00 stated value  29,000 shares authorized
    
    
    17,428
    
    
    
    17,375Additional paid-in capital
    
    
    127,941
    
    
    
    126,977Retained earnings
    
    
    72,749
    
    
    
    64,481Unvested restricted stock
    
    
    (919
    )
    
    
    (578
    )Accumulated other comprehensive income
    
    
    538
    
    
    
    1,036TOTAL SHAREHOLDERS EQUITY
    
    
    217,737
    
    
    
    209,291TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    2,756,297
    
    
    $
    2,757,165
  3




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##### Table of Contents



INTEGRA BANK CORPORATION and Subsidiaries
 
 Unaudited Consolidated Statements of Income
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004INTEREST INCOMEInterest and fees on loans:Taxable
    
    $
    25,332
    
    

    $
    23,420
    
    
    $
    49,277
    
    
    $
    46,770Tax-exempt
    
    
    106
    
    
    
    112
    
    
    
    222
    
    
    
    249Interest and dividends on securities:Taxable
    
    
    7,310
    
    
    
    6,344
    
    
    
    14,839
    
    
    
    14,858Tax-exempt
    
    
    1,410
    
    
    
    1,427
    
    
    
    2,826
    
    
    
    3,150Dividends on regulatory stock
    
    
    371
    
    
    
    352
    
    
    
    745
    
    
    
    773Interest on loans held for sale
    
    
    136
    
    
    
    53
    
    
    
    241
    
    
    
    87Interest on federal funds sold and other
short-term investments
    
    
    35
    
    
    
    19
    
    
    
    46
    
    
    
    31Total interest income
    
    
    34,700
    
    
    
    31,727
    
    
    
    68,196
    
    
    
    65,918INTEREST EXPENSEInterest on deposits
    
    
    8,445
    
    
    
    6,133
    
    
    
    16,121
    
    
    
    12,385Interest on short-term borrowings
    
    
    2,610
    
    
    
    504
    
    
    
    3,424
    
    
    
    960Interest on long-term borrowings
    
    
    2,849
    
    
    
    3,521
    
    
    
    6,794
    
    
    
    12,387Total interest expense
    
    
    13,904
    
    
    
    10,158
    
    
    
    26,339
    
    
    
    25,732NET INTEREST INCOME
    
    
    20,796
    
    
    
    21,569
    
    
    
    41,857
    
    
    
    40,186Provision for loan losses
    
    
    4,316
    
    
    
    155
    
    
    
    4,691
    
    
    
    805Net interest income after provision for loan losses
    
    
    16,480
    
    
    
    21,414
    
    
    
    37,166
    
    
    
    39,381NON-INTEREST INCOMEService charges on deposit accounts
    
    
    3,945
    
    
    
    3,199
    
    
    
    6,967
    
    
    
    5,987Other service charges and fees
    
    
    1,708
    
    
    
    2,159
    
    
    
    3,734
    
    
    
    4,153Trust income
    
    
    518
    
    
    
    525
    
    
    
    995
    
    
    
    1,021Net securities gains (losses)
    
    
    (340
    )
    
    
    (703
    )
    
    
    (1,073
    )
    
    
    4,497Gain on sale of other assets
    
    
    6,037
    
    
    
    1,184
    
    
    
    6,459
    
    
    
    1,360Other
    
    
    1,243
    
    
    
    1,152
    
    
    
    2,573
    
    
    
    2,515Total non-interest income
    
    
    13,111
    
    
    
    7,516
    
    
    
    19,655
    
    
    
    19,533NON-INTEREST EXPENSESalaries
    
    
    7,662
    
    
    
    7,903
    
    
    
    14,978
    
    
    
    15,771Commissions and incentives
    
    
    1,321
    
    
    
    1,016
    
    
    
    2,184
    
    
    
    2,375Other benefits
    
    
    1,727
    
    
    
    1,860
    
    
    
    3,363
    
    
    
    3,880Occupancy
    
    
    1,901
    
    
    
    1,579
    
    
    
    3,782
    
    
    
    3,169Equipment
    
    
    923
    
    
    
    1,020
    
    
    
    1,846
    
    
    
    2,097Professional fees
    
    
    1,168
    
    
    
    1,133
    
    
    
    2,150
    
    
    
    2,331Communication and transportation
    
    
    1,128
    
    
    
    841
    
    
    
    2,250
    
    
    
    1,736Processing
    
    
    608
    
    
    
    724
    
    
    
    1,542
    
    
    
    1,588Software
    
    
    379
    
    
    
    511
    
    
    
    815
    
    
    
    927Marketing
    
    
    577
    
    
    
    521
    
    
    
    1,087
    
    
    
    987Debt prepayment fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,998Low income housing project losses
    
    
    568
    
    
    
    551
    
    
    
    1,114
    
    
    
    1,103Other
    
    
    2,113
    
    
    
    2,911
    
    
    
    4,193
    
    
    
    5,173Total non-interest expense
    
    
    20,075
    
    
    
    20,570
    
    
    
    39,304
    
    
    
    98,135Income (loss) before income taxes
    
    
    9,516
    
    
    
    8,360
    
    
    
    17,517
    
    
    
    (39,221
    )Income tax expense (benefit)
    
    
    2,066
    
    
    
    1,705
    
    
    
    3,678
    
    
    
    (18,638
    )NET INCOME (LOSS)
    
    $
    7,450
    
    
    $
    6,655
    
    
    $
    13,839
    
    
    $
    (20,583
    )Earnings (loss) per share:Basic
    
    $
    0.43
    
    
    $
    0.38
    
    
    $
    0.80
    
    
    $
    (1.19
    )Diluted
    
    
    0.43
    
    
    
    0.38
    
    
    
    0.79
    
    
    
    (1.19
    )Weighted average shares outstanding:Basic
    
    
    17,365
    
    
    
    17,312
    
    
    
    17,354
    
    
    
    17,304Diluted
    
    
    17,440
    
    
    
    17,368
    
    
    
    17,434
    
    
    
    17,304Dividends per share
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.32
    
    
    $
    0.395
  4




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##### Table of Contents



INTEGRA BANK CORPORATION and Subsidiaries
 
 Unaudited Consolidated Statements of Comprehensive Income (Loss)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net income (loss)
    
    $
    7,450
    
    
    $
    6,655
    
    
    $
    13,839
    
    
    $
    (20,583
    )Other comprehensive income, net of tax:Unrealized gain (loss) on securities:Unrealized gain (loss) arising in period
(net of tax $2,741, $(9,531), $(775) and $(6,294), respectively)
    
    
    4,028
    
    
    
    (14,002
    )
    
    
    (1,136
    )
    
    
    (9,246
    )Reclassification of realized amounts
(net of tax $138, $285, $435 and $(1,822), respectively)
    
    
    202
    
    
    
    418
    
    
    
    638
    
    
    
    (2,675
    )Net unrealized gain (loss) on securities
    
    
    4,230
    
    
    
    (13,584
    )
    
    
    (498
    )
    
    
    (11,921
    )Unrealized gain on derivative hedging instruments arising in period
(net of tax of $63 and $127, respectively for 2004)
    
    
    
    
    
    
    93
    
    
    
    
    
    
    
    186Net unrealized gain (loss), recognized in other comprehensive income
    
    
    4,230
    
    
    
    (13,491
    )
    
    
    (498
    )
    
    
    (11,735
    )Comprehensive income (loss)
    
    $
    11,680
    
    
    $
    (6,836
    )
    
    $
    13,341
    
    
    $
    (32,318
    )
  5




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##### Table of Contents



INTEGRA BANK CORPORATION and Subsidiaries
 
 Unaudited Consolidated Statements of Changes In Shareholders Equity
 AccumulatedAdditional
    
    
    
    
    
    Unvested
    
    OtherCommon
    
    Common
    
    Paid-in
    
    Retained
    
    Restricted
    
    ComprehensiveShares
    
    Stock
    
    Capital
    
    Earnings
    
    Stock
    
    Income (Loss)
    
    TotalBalance at December 31, 2004
    
    
    17,375,004
    
    
    $
    17,375
    
    
    $
    126,977
    
    
    $
    64,481
    
    
    $
    (578
    )
    
    $
    1,036
    
    
    $
    209,291Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,839
    
    
    
    
    
    
    
    
    
    
    
    13,839Cash dividend declared ($0.32 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,571
    )
    
    
    
    
    
    
    
    
    
    
    (5,571
    )Change, net of tax, in unrealized loss onsecurities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (498
    )
    
    
    (498
    )Exercise of stock options
    
    
    30,429
    
    
    
    31
    
    
    
    504
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    535Grant of restricted stock, net of forfeitures
    
    
    22,220
    
    
    
    22
    
    
    
    460
    
    
    
    
    
    
    
    (482
    )
    
    
    
    
    
    
    Unearned compensation amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141
    
    
    
    
    
    
    
    141Balance at June 30, 2005
    
    
    17,427,653
    
    
    $
    17,428
    
    
    $
    127,941
    
    
    $
    72,749
    
    
    $
    (919
    )
    
    $
    538
    
    
    $
    217,737
  6




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##### Table of Contents



INTEGRA BANK CORPORATION and Subsidiaries
 
 Unaudited Consolidated Statements of Cash Flow
 Six Months EndedJune 30,2005
    
    2004CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    13,839
    
    
    $
    (20,583
    )Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:Federal Home Loan Bank stock dividends
    
    
    (58
    )
    
    
    (48
    )Amortization and depreciation
    
    
    3,694
    
    
    
    4,543Amortization of unearned compensation
    
    
    141
    
    
    
    98Provision for loan losses
    
    
    4,691
    
    
    
    805Net securities (gains) losses
    
    
    1,073
    
    
    
    (4,497
    )(Gain) loss on sale of premises and equipment
    
    
    196
    
    
    
    (104
    )(Gain) on sale of other real estate owned
    
    
    (25
    )
    
    
    (51
    )Gain on sale of merchant processing program
    
    
    (411
    )
    
    
    Gain on sale of branches
    
    
    (6,218
    )
    
    
    Loss on low-income housing investments
    
    
    1,114
    
    
    
    158Decrease in deferred taxes
    
    
    (504
    )
    
    
    (77
    )Net gain on sale of loans held for sale
    
    
    (210
    )
    
    
    (1,465
    )Proceeds from sale of loans held for sale
    
    
    29,994
    
    
    
    43,662Origination of loans held for sale
    
    
    (39,265
    )
    
    
    (44,375
    )(Increase) decrease in other assets
    
    
    6,155
    
    
    
    (20,992
    )Increase in other liabilities
    
    
    5,275
    
    
    
    245Net cash flows (provided by) used in operating activities
    
    
    19,481
    
    
    
    (42,681
    )CASH FLOWS FROM INVESTING ACTIVITIESProceeds from maturities of securities available for sale
    
    
    82,230
    
    
    
    115,213Proceeds from sales of securities available for sale
    
    
    30,109
    
    
    
    361,563Purchase of securities available for sale
    
    
    (74,666
    )
    
    
    (223,387
    )(Increase) decrease in loans made to customers
    
    
    (20,732
    )
    
    
    26,876Proceeds from sale of loans
    
    
    (13,772
    )
    
    
    7,043Proceeds from sale of merchant processing program
    
    
    585
    
    
    
    Purchase of premises and equipment
    
    
    (3,761
    )
    
    
    (3,277
    )Proceeds from sale of premises and equipment from sale of branches
    
    
    608
    
    
    
    Proceeds from sale of premises and equipment
    
    
    162
    
    
    
    2,287Proceeds from sale of other real estate owned
    
    
    320
    
    
    
    695Net cash flows provided by investing activities
    
    
    1,083
    
    
    
    287,013CASH FLOWS FROM FINANCING ACTIVITIESNet increase in deposits
    
    
    16,917
    
    
    
    11,627Decrease in deposits from sale of branches
    
    
    (68,448
    )
    
    
    Net increase (decrease) in short-term borrowed funds
    
    
    38,189
    
    
    
    (91,103
    )Proceeds from long-term borrowings
    
    
    
    
    
    
    334,003Repayment of long-term borrowings
    
    
    (1,262
    )
    
    
    (468,615
    )Dividends paid
    
    
    (5,562
    )
    
    
    (8,140
    )Proceeds from exercise of stock options
    
    
    535
    
    
    
    393Net cash flows used in financing activities
    
    
    (19,631
    )
    
    
    (221,835
    )Net decrease in cash and cash equivalents
    
    
    933
    
    
    
    22,497Cash and cash equivalents at beginning of period
    
    
    71,834
    
    
    
    74,943Cash and cash equivalents at end of period
    
    $
    72,767
    
    
    $
    97,440
  7




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##### Table of Contents



INTEGRA
BANK CORPORATION and Subsidiaries
 Unaudited Consolidated Statements of Cash Flow (Continued)
 Six Months EndedJune 30,2005
    
    2004SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONSChange in allowance for unrealized loss on securities available for sale
    
    $
    860
    
    
    $
    20,037Change in deferred taxes attributable to securities available for sale
    
    
    (340
    )
    
    
    (8,116
    )Other real estate acquired in settlement of loans
    
    
    282
    
    
    
    536Dividends declared and not paid
    
    
    2,788
    
    
    
    2,777
  8




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##### Table of Contents



INTEGRA BANK CORPORATION and Subsidiaries
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 BASIS OF PRESENTATION:
    RECENT ACCOUNTING PRONOUNCEMENTS:
  STOCK-BASED COMPENSATION:
 Accounting for Stock Issued to Employees
 9




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##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net income (loss):As reported
    
    $
    7,450
    
    
    $
    6,655
    
    
    $
    13,839
    
    
    $
    (20,583
    )Add: Stock-based compensation expense
included in reported net income (loss), net of tax
    
    
    44
    
    
    
    31
    
    
    
    71
    
    
    
    74Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of tax
    
    
    1,146
    
    
    
    1,427
    
    
    
    1,197
    
    
    
    1,489Proforma
    
    $
    6,348
    
    
    $
    5,259
    
    
    $
    12,713
    
    
    $
    (21,998
    )Earnings (loss) per share:BasicAs reported
    
    $
    0.43
    
    
    $
    0.38
    
    
    $
    0.80
    
    
    $
    (1.19
    )Proforma
    
    
    0.37
    
    
    
    0.30
    
    
    
    0.73
    
    
    
    (1.27
    )DilutedAs reported
    
    $
    0.43
    
    
    $
    0.38
    
    
    $
    0.79
    
    
    $
    (1.19
    )Proforma
    
    
    0.36
    
    
    
    0.30
    
    
    
    0.73
    
    
    
    (1.27
    )
 NOTE 2. EARNINGS PER SHARE
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net income (loss)
    
    $
    7,450
    
    
    $
    6,655
    
    
    $
    13,839
    
    
    $
    (20,583
    )Weighted average shares outstanding  Basic
    
    
    17,365
    
    
    
    17,312
    
    
    
    17,354
    
    
    
    17,304Incremental shares related to stock compensation
    
    
    75
    
    
    
    56
    
    
    
    80
    
    
    
    Average shares outstanding  Diluted
    
    
    17,440
    
    
    
    17,368
    
    
    
    17,434
    
    
    
    17,304Earnings per share  Basic
    
    $
    0.43
    
    
    $
    0.38
    
    
    $
    0.80
    
    
    $
    (1.19
    )Effect of incremental shares related to stock
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Earnings per share  Diluted
    
    $
    0.43
    
    
    $
    0.38
    
    
    $
    0.79
    
    
    $
    (1.19
    )
  10




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##### Table of Contents



NOTE 3. SECURITIES
  Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueJune 30, 2005:U.S. Government agencies
    
    $
    1,150
    
    
    $
    3
    
    
    $
    7
    
    
    $
    1,146Mortgage-backed securities
    
    
    203,825
    
    
    
    609
    
    
    
    1,241
    
    
    
    203,193Collateralized Mortgage Obligations
    
    
    398,152
    
    
    
    161
    
    
    
    4,968
    
    
    
    393,345States & political subdivisions
    
    
    87,946
    
    
    
    4,541
    
    
    
    1
    
    
    
    92,486Other securities
    
    
    69,038
    
    
    
    2,373
    
    
    
    563
    
    
    
    70,848Total
    
    $
    760,111
    
    
    $
    7,687
    
    
    $
    6,780
    
    
    $
    761,018
 Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueDecember 31, 2004:U.S. Government agencies
    
    $
    1,100
    
    
    $
    3
    
    
    $
    8
    
    
    $
    1,095Mortgage-backed securities
    
    
    230,843
    
    
    
    916
    
    
    
    1,074
    
    
    
    230,685Collateralized Mortgage Obligations
    
    
    411,925
    
    
    
    130
    
    
    
    4,929
    
    
    
    407,126States & political subdivisions
    
    
    93,520
    
    
    
    4,298
    
    
    
    5
    
    
    
    97,813Other securities
    
    
    61,926
    
    
    
    2,841
    
    
    
    427
    
    
    
    64,340Total
    
    $
    799,314
    
    
    $
    8,188
    
    
    $
    6,443
    
    
    $
    801,059
   Less than 1 Year
    
    1 - 5 Years
    
    5 - 10 Years
    
    Over 10 Years(In thousands)
    
    Maturity
    
    Maturity
    
    Maturity
    
    Maturity
    
    TotalAmount
    
    Yield
    
    Amount
    
    Yield
    
    Amount
    
    Yield
    
    Amount
    
    Yield
    
    Amount
    
    YieldU. S. Government agencies
    
    $
    
    
    
    
    
    
    
    $
    649
    
    
    
    3.94
    %
    
    $
    501
    
    
    
    2.54
    %
    
    $
    
    
    
    
    
    
    
    $
    1,150
    
    
    
    3.33
    %Mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    105,692
    
    
    
    4.19
    %
    
    
    98,133
    
    
    
    4.31
    %
    
    
    
    
    
    
    
    
    
    
    203,825
    
    
    
    4.25
    %Collateralized Mortgage
Obligations
    
    
    814
    
    
    
    4.31
    %
    
    
    204,078
    
    
    
    4.06
    %
    
    
    193,260
    
    
    
    4.40
    %
    
    
    
    
    
    
    
    
    
    
    398,152
    
    
    
    4.23
    %States & subdivisions
    
    
    3,948
    
    
    
    7.62
    %
    
    
    17,109
    
    
    
    7.60
    %
    
    
    41,405
    
    
    
    7.71
    %
    
    
    25,484
    
    
    
    11.80
    %
    
    
    87,946
    
    
    
    8.87
    %Other securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,038
    
    
    
    4.36
    %
    
    
    69,038
    
    
    
    4.36
    %Amortized Cost
    
    $
    4,762
    
    
    
    7.05
    %
    
    $
    327,528
    
    
    
    4.29
    %
    
    $
    333,299
    
    
    
    4.78
    %
    
    $
    94,522
    
    
    
    6.37
    %
    
    $
    760,111
    
    
    
    4.78
    %Fair Value
    
    $
    4,702
    
    
    
    
    
    
    $
    324,911
    
    
    
    
    
    
    $
    333,287
    
    
    
    
    
    
    $
    98,118
    
    
    
    
    
    
    $
    761,018
    11




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##### Table of Contents



Less Than 12 Months
    
    12 Months or More
    
    TotalUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedJune 30, 2005
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    LossesU.S. Government agencies
    
    $
    448
    
    
    $
    4
    
    
    $
    297
    
    
    $
    3
    
    
    $
    745
    
    
    $
    7Mortgage-backed securities
    
    
    63,555
    
    
    
    239
    
    
    
    88,880
    
    
    
    1,002
    
    
    
    152,435
    
    
    
    1,241Collateralized Mortgage Obligations
    
    
    197,953
    
    
    
    2,757
    
    
    
    162,544
    
    
    
    2,211
    
    
    
    360,497
    
    
    
    4,968State & political subdivisions
    
    
    24
    
    
    
    
    
    
    
    155
    
    
    
    1
    
    
    
    179
    
    
    
    1Other securities
    
    
    32,841
    
    
    
    563
    
    
    
    
    
    
    
    
    
    
    
    32,841
    
    
    
    563Total
    
    $
    294,821
    
    
    $
    3,563
    
    
    $
    251,876
    
    
    $
    3,217
    
    
    $
    546,697
    
    
    $
    6,780
  NOTE 4. INTANGIBLE ASSETS
 June 30, 2005
    
    December 31, 2004Gross
    
    
    
    
    
    Net
    
    Gross
    
    
    
    
    
    NetCarrying
    
    Accumulated
    
    Carrying
    
    Carrying
    
    Accumulated
    
    CarryingAmount
    
    Amortization
    
    Amount
    
    Amount
    
    Amortization
    
    AmountGoodwill (Non-amortizing)
    
    $
    44,491
    
    
    $
    
    
    
    $
    44,491
    
    
    $
    44,839
    
    
    $
    
    
    
    $
    44,839Core deposits (Amortizing)
    
    
    17,080
    
    
    
    (8,849
    )
    
    
    8,231
    
    
    
    17,080
    
    
    
    (8,383
    )
    
    
    8,697Total intangible assets
    
    $
    61,571
    
    
    $
    (8,849
    )
    
    $
    52,722
    
    
    $
    61,919
    
    
    $
    (8,383
    )
    
    $
    53,536
  NOTE 5. INCOME TAXES
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Federal income tax computed at the statutory rates
    
    $
    3,331
    
    
    $
    2,926
    
    
    $
    6,131
    
    
    $
    (13,727
    )Adjusted for effects of:Tax exempt interest
    
    
    (466
    )
    
    
    (469
    )
    
    
    (941
    )
    
    
    (996
    )Nondeductible expenses
    
    
    57
    
    
    
    62
    
    
    
    112
    
    
    
    198Low income housing credit
    
    
    (691
    )
    
    
    (651
    )
    
    
    (1,320
    )
    
    
    (1,302
    )Cash surrender value of life insurance policies
    
    
    (132
    )
    
    
    (135
    )
    
    
    (265
    )
    
    
    (277
    )Dividend received deduction
    
    
    (54
    )
    
    
    (92
    )
    
    
    (222
    )
    
    
    (145
    )State taxes, net of federal tax benefit
    
    
    38
    
    
    
    150
    
    
    
    89
    
    
    
    (1,652
    )Other differences
    
    
    (17
    )
    
    
    (86
    )
    
    
    94
    
    
    
    (737
    )Total income taxes (benefit)
    
    $
    2,066
    
    
    $
    1,705
    
    
    $
    3,678
    
    
    $
    (18,638
    )
  12




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##### Table of Contents



NOTE 6. SHORTTERM BORROWINGS
  June 30,
    
    December 31,2005
    
    2004Federal funds purchased
    
    $
    26,000
    
    
    $
    55,700Securities sold under agreements to repurchase
    
    
    230,621
    
    
    
    74,194Short-term Federal Home Loan Bank advances
    
    
    154,019
    
    
    
    45,039Total short-term borrowed funds
    
    $
    410,640
    
    
    $
    174,933
 NOTE 7. LONGTERM BORROWINGS
  June 30,
    
    December 31,2005
    
    2004FHLB AdvancesFixed maturity advances (weighted average rate
of 2.64% and 2.26% as of June 30,
2005 and December 31, 2004 ,
respectively)
    
    $
    102,500
    
    
    $
    215,000Amortizing and other advances (weighted average rate
of 5.82% and 5.85% as of June 30,
2005 and December 31, 2004,
respectively)
    
    
    5,791
    
    
    
    6,653Total FHLB Advances
    
    
    108,291
    
    
    
    221,653Securities sold under repurchase agreements with maturities
at various dates through 2008 (weighted average fixed rate of 2.78%
and 3.85% as of June 30, 2005 and December 31, 2004, respectively)
    
    
    75,000
    
    
    
    160,000Notes payable, secured by equipment, with a fixed interest rate of 7.26%,
due at various dates through 2012
    
    
    7,163
    
    
    
    7,581Subordinated debt, unsecured, with a floating interest rate equal to three-
month LIBOR plus 3.25%, 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 16, 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 25, 2008
    
    
    35,568
    
    
    
    35,568Total long-term borrowings
    
    $
    258,579
    
    
    $
    457,359
 13




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##### Table of Contents



NOTE 8. COMMITMENTS AND CONTINGENCIES
     June 30,
    
    December 31,2005
    
    2004Commitments to extend credit
    
    $
    478,979
    
    
    $
    399,289Standby letters of credit
    
    
    14,368
    
    
    
    7,886
 NOTE 9. INTEREST RATE CONTRACTS
    NOTE 10. SEGMENT INFORMATION
   14




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##### Table of Contents



For three months ended June 30, 2005
    
    Banking
    
    Other
    
    Eliminations
    
    TotalInterest income
    
    $
    34,662
    
    
    $
    43
    
    
    $
    (5
    )
    
    $
    34,700Interest expense
    
    
    12,817
    
    
    
    1,092
    
    
    
    (5
    )
    
    
    13,904Net interest income (loss)
    
    
    21,845
    
    
    
    (1,049
    )
    
    
    
    
    
    
    20,796Provision for loan losses
    
    
    4,316
    
    
    
    
    
    
    
    
    
    
    
    4,316Other income (1)
    
    
    13,032
    
    
    
    8,532
    
    
    
    (8,453
    )
    
    
    13,111Other expense
    
    
    19,552
    
    
    
    542
    
    
    
    (19
    )
    
    
    20,075Earnings before income taxes
    
    
    11,009
    
    
    
    6,941
    
    
    
    (8,434
    )
    
    
    9,516Income tax expense (benefit)
    
    
    2,623
    
    
    
    (557
    )
    
    
    
    
    
    
    2,066Net income
    
    $
    8,386
    
    
    $
    7,498
    
    
    $
    (8,434
    )
    
    $
    7,450
 For six months ended June 30, 2005
    
    Banking
    
    Other
    
    Eliminations
    
    TotalInterest income
    
    $
    68,098
    
    
    $
    105
    
    
    $
    (7
    )
    
    $
    68,196Interest expense
    
    
    24,248
    
    
    
    2,098
    
    
    
    (7
    )
    
    
    26,339Net interest income (loss)
    
    
    43,850
    
    
    
    (1,993
    )
    
    
    
    
    
    
    41,857Provision for loan losses
    
    
    4,691
    
    
    
    
    
    
    
    
    
    
    
    4,691Other income (loss) (1)
    
    
    19,475
    
    
    
    15,985
    
    
    
    (15,805
    )
    
    
    19,655Other expense
    
    
    38,354
    
    
    
    989
    
    
    
    (39
    )
    
    
    39,304Earnings before income taxes
    
    
    20,280
    
    
    
    13,003
    
    
    
    (15,766
    )
    
    
    17,517Income tax benefit
    
    
    4,657
    
    
    
    (979
    )
    
    
    
    
    
    
    3,678Net income
    
    $
    15,623
    
    
    $
    13,982
    
    
    $
    (15,766
    )
    
    $
    13,839Segment assets
    
    $
    2,732,263
    
    
    $
    285,236
    
    
    $
    (261,202
    )
    
    $
    2,756,297
 
 (1)
    
    Includes income (loss) on subsidiaries. For three months ended June 30, 2004
    
    Banking
    
    Other
    
    Eliminations
    
    TotalInterest income
    
    $
    31,677
    
    
    $
    51
    
    
    $
    (1
    )
    
    $
    31,727Interest expense
    
    
    9,398
    
    
    
    761
    
    
    
    (1
    )
    
    
    10,158Net interest income (loss)
    
    
    22,279
    
    
    
    (710
    )
    
    
    
    
    
    
    21,569Provision for loan losses
    
    
    155
    
    
    
    
    
    
    
    
    
    
    
    155Other income (1)
    
    
    7,426
    
    
    
    7,417
    
    
    
    (7,327
    )
    
    
    7,516Other expense
    
    
    20,156
    
    
    
    438
    
    
    
    (24
    )
    
    
    20,570Earnings before income taxes
    
    
    9,394
    
    
    
    6,269
    
    
    
    (7,303
    )
    
    
    8,360Income tax expense (benefit)
    
    
    2,133
    
    
    
    (428
    )
    
    
    
    
    
    
    1,705Net income
    
    $
    7,261
    
    
    $
    6,697
    
    
    $
    (7,303
    )
    
    $
    6,655
 For six months ended June 30, 2004
    
    Banking
    
    Other
    
    Eliminations
    
    TotalInterest income
    
    $
    65,818
    
    
    $
    105
    
    
    $
    (5
    )
    
    $
    65,918Interest expense
    
    
    24,226
    
    
    
    1,511
    
    
    
    (5
    )
    
    
    25,732Net interest income (loss)
    
    
    41,592
    
    
    
    (1,406
    )
    
    
    
    
    
    
    40,186Provision for loan losses
    
    
    805
    
    
    
    
    
    
    
    
    
    
    
    805Other income (loss) (1)
    
    
    19,393
    
    
    
    (19,148
    )
    
    
    19,288
    
    
    
    19,533Other expense
    
    
    97,416
    
    
    
    766
    
    
    
    (47
    )
    
    
    98,135Loss before income taxes
    
    
    (37,236
    )
    
    
    (21,320
    )
    
    
    19,335
    
    
    
    (39,221
    )Income tax benefit
    
    
    (17,814
    )
    
    
    (824
    )
    
    
    
    
    
    
    (18,638
    )Net loss
    
    $
    (19,422
    )
    
    $
    (20,496
    )
    
    $
    19,335
    
    
    $
    (20,583
    )Segment assets
    
    $
    2,670,217
    
    
    $
    259,830
    
    
    $
    (226,649
    )
    
    $
    2,703,398
 
 (1)
    
    Includes income (loss) on subsidiaries. 15




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 INTRODUCTION
   OVERVIEW
     
    
    In May 2005, Integra sold three branches in Southern Illinois for a gain of $6,218. The sale reduced loans by $13,772
and deposits by $68,448. The sale also reduced average loan balances by $6,886 and average deposit
balances by $34,224.
 
    
    The Company approved a plan to sell certain loans that did not meet its current portfolio guidelines. As of June 30,
2005, the Company transferred $9,788 in identified loans to held-for-sale and recorded $1,461 in charge-offs to reflect
the estimated market value of the loans.
 
    
    The provision for loan losses increased to $4,316 for the
quarter. This included a specific reserve for one $14,256
secured loan that was placed on non-accrual, the re-provisioning for the proposed loan sale and a routine amount
required by other changes to the loan portfolio. Without the loan sale or the specific reserve, the provision would
have been similar to recent quarters.
 
    
    Integra incurred a $383 writedown of premiums related to
acquired loans.
 
    
    The Company incurred a loss on the sale of securities of $340.
 
    
    The Company sold an insurance affiliate for a loss of $185.
   16




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
  FINANCIAL OVERVIEW
   NET INTEREST INCOME
  17




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##### Table of Contents



1 2
    18




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##### Table of Contents



For Three Months Ended June 30,
    
    2005
    
    2004Average
    
    Interest &Balances
    
    Fees
    
    Yield/Cost
    
    Average Balances
    
    Interest & Fees
    
    Yield/CostEARNING ASSETS:Short-term investments
    
    $
    4,658
    
    
    $
    35
    
    
    
    3.05
    %
    
    $
    7,356
    
    
    $
    19
    
    
    
    1.05
    %Loans held for sale
    
    
    8,644
    
    
    
    136
    
    
    
    6.28
    %
    
    
    3,434
    
    
    
    53
    
    
    
    6.12
    %Securities
    
    
    776,570
    
    
    
    9,603
    
    
    
    4.95
    %
    
    
    726,390
    
    
    
    8,505
    
    
    
    4.68
    %Regulatory Stock
    
    
    33,068
    
    
    
    371
    
    
    
    4.49
    %
    
    
    32,965
    
    
    
    352
    
    
    
    4.28
    %Loans
    
    
    1,685,080
    
    
    
    25,495
    
    
    
    6.02
    %
    
    
    1,664,421
    
    
    
    23,592
    
    
    
    5.64
    %Total earning assets
    
    
    2,508,020
    
    
    $
    35,640
    
    
    
    5.66
    %
    
    
    2,434,566
    
    
    $
    32,521
    
    
    
    5.32
    %Fair value adjustment on securities
available for sale
    
    
    (3,496
    )
    
    
    
    
    
    
    
    
    
    
    3,270Allowance for loan loss
    
    
    (23,160
    )
    
    
    
    
    
    
    
    
    
    
    (25,545
    )Other non-earning assets
    
    
    287,418
    
    
    
    
    
    
    
    
    
    
    
    292,789TOTAL ASSETS
    
    $
    2,768,782
    
    
    
    
    
    
    
    
    
    
    $
    2,705,080INTERESTBEARING LIABILITIES:DepositsSavings and interest-bearing demand
    
    $
    571,946
    
    
    $
    1,026
    
    
    
    0.72
    %
    
    $
    547,059
    
    
    $
    576
    
    
    
    0.42
    %Money market accounts
    
    
    228,912
    
    
    
    1,255
    
    
    
    2.20
    %
    
    
    225,631
    
    
    
    820
    
    
    
    1.46
    %Certificates of deposit and other time
    
    
    848,730
    
    
    
    6,164
    
    
    
    2.91
    %
    
    
    830,598
    
    
    
    4,737
    
    
    
    2.29
    %Total interest-bearing deposits
    
    
    1,649,588
    
    
    
    8,445
    
    
    
    2.05

    %
    
    
    1,603,288
    
    
    
    6,133
    
    
    
    1.53
    %Short-term borrowings
    
    
    345,873
    
    
    
    2,610
    
    
    
    2.91
    %
    
    
    179,494
    
    
    
    504
    
    
    
    1.11
    %Long-term borrowings
    
    
    286,322
    
    
    
    2,849
    
    
    
    4.03
    %
    
    
    461,376
    
    
    
    3,521
    
    
    
    3.01
    %Total interest-bearing liabilities
    
    
    2,281,783
    
    
    $
    13,904
    
    
    
    2.43
    %
    
    
    2,244,158
    
    
    $
    10,158
    
    
    
    1.81
    %Non-interest-bearing deposits
    
    
    251,258
    
    
    
    
    
    
    
    
    
    
    
    243,383Other noninterest-bearing liabilities and
shareholders equity
    
    
    235,741
    
    
    
    
    
    
    
    
    
    
    
    217,539TOTAL LIABILITIES AND SHAREHOLDERS
EQUITY
    
    $
    2,768,782
    
    
    
    
    
    
    
    
    
    
    $
    2,705,080Interest income/earning assets
    
    
    
    
    
    $
    35,640
    
    
    
    5.66
    %
    
    
    
    
    
    $
    32,521
    
    
    
    5.32
    %Interest expense/earning assets
    
    
    
    
    
    
    13,904
    
    
    
    2.21
    %
    
    
    
    
    
    
    10,158
    
    
    
    1.66
    %Net interest income/earning assets
    
    
    
    
    
    $
    21,736
    
    
    
    3.45
    %
    
    
    
    
    
    $
    22,363
    
    
    
    3.66
    %
    19




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##### Table of Contents



For Six Months Ended June 30,
    
    2005
    
    2004Average
    
    Interest &Balances
    
    Fees
    
    Yield/Cost
    
    Average Balances
    
    Interest & Fees
    Yield/CostEARNING ASSETSShort-term investments
    
    $
    3,211
    
    
    $
    46
    
    
    
    2.90
    %
    
    $
    6,399
    
    
    $
    31
    
    
    
    0.97
    %Loans held for sale
    
    
    7,669
    
    
    
    241
    
    
    
    6.36
    %
    
    
    2,739
    
    
    
    87
    
    
    
    6.33
    %Securities
    
    
    790,921
    
    
    
    19,275
    
    
    
    4.87
    %
    
    
    838,219
    
    
    
    19,609
    
    
    
    4.68
    %Regulatory Stock
    
    
    33,055
    
    
    
    745
    
    
    
    4.51
    %
    
    
    32,957
    
    
    
    773
    
    
    
    4.69
    %Loans
    
    
    1,667,223
    
    
    
    49,618
    
    
    
    5.95
    %
    
    
    1,662,723
    
    
    
    47,153
    
    
    
    5.65
    %Total earning assets
    
    
    2,502,079
    
    
    $
    69,925
    
    
    
    5.58
    %
    
    
    2,543,037
    
    
    $
    67,653
    
    
    
    5.30
    %Fair value adjustment on securities
available for sale
    
    
    (1,131
    )
    
    
    
    
    
    
    
    
    
    
    9,198Allowance for loan loss
    
    
    (23,354
    )
    
    
    
    
    
    
    
    
    
    
    (25,561
    )Other non-earning assets
    
    
    282,434
    
    
    
    
    
    
    
    
    
    
    
    281,775TOTAL ASSETS
    
    $
    2,760,028
    
    
    
    
    
    
    
    
    
    
    $
    2,808,449INTERESTBEARING LIABILITIES:DepositsSavings and interest-bearing demand
    
    $
    578,541
    
    
    $
    1,993
    
    
    
    0.69
    %
    
    $
    545,812
    
    
    $
    1,158
    
    
    
    0.43
    %Money market accounts
    
    
    226,900
    
    
    
    2,262
    
    
    
    2.01
    %
    
    
    225,979
    
    
    
    1,637
    
    
    
    1.45
    %Certificates of deposit and other time
    
    
    847,160
    
    
    
    11,866
    
    
    
    2.82
    %
    
    
    844,326
    
    
    
    9,590
    
    
    
    2.28
    %Total interest-bearing deposits
    
    
    1,652,601
    
    
    
    16,121
    
    
    
    1.97
    %
    
    
    1,616,117
    
    
    
    12,385
    
    
    
    1.54
    %Short-term borrowings
    
    
    253,915
    
    
    
    3,424
    
    
    
    2.63
    %
    
    
    171,800
    
    
    
    960
    
    
    
    1.08
    %Long-term borrowings
    
    
    369,114
    
    
    
    6,794
    
    
    
    3.70
    %
    
    
    543,001
    
    
    
    12,387
    
    
    
    4.52
    %Total interest-bearing liabilities
    
    
    2,275,630
    
    
    $
    26,339
    
    
    
    2.32
    %
    
    
    2,330,918
    
    
    $
    25,732
    
    
    
    2.20
    %Non-interest-bearing deposits
    
    
    251,819
    
    
    
    
    
    
    
    
    
    
    
    240,215Other non-interest bearing liabilities and
shareholders equity
    
    
    232,579
    
    
    
    
    
    
    
    
    
    
    
    237,316TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    2,760,028
    
    
    
    
    
    
    
    
    
    
    $
    2,808,449Interest income/earning assets
    
    
    
    
    
    $
    69,925
    
    
    
    5.58
    %
    
    
    
    
    
    $
    67,653
    
    
    
    5.30
    %Interest expense/earning assets
    
    
    
    
    
    
    26,339
    
    
    
    2.11
    %
    
    
    
    
    
    
    25,732
    
    
    
    2.02
    %Net interest income/earning assets
    
    
    
    
    
    $
    43,586
    
    
    
    3.47
    %
    
    
    
    
    
    $
    41,921
    
    
    
    3.28
    %
    NON-INTEREST INCOME
  20




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##### Table of Contents



Three Months Ended
    
    
    
    
    
    Six Months EndedJune 30,
    
    Increase
    
    June 30,
    
    IncreaseNon-Interest Income
    
    2005
    
    2004
    
    (Decrease)
    
    2005
    
    2004
    
    (Decrease)Service charges on deposit accounts
    
    $
    3,945
    
    
    $
    3,199
    
    
    $
    746
    
    
    $
    6,967
    
    
    $
    5,987
    
    
    $
    980Other service charges and fees
    
    
    1,057
    
    
    
    1,219
    
    
    
    (162
    )
    
    
    2,026
    
    
    
    2,407
    
    
    
    (381
    )Credit card fee income
    
    
    72
    
    
    
    530
    
    
    
    (458
    )
    
    
    587
    
    
    
    1,023
    
    
    
    (436
    )Debit card income
    
    
    579
    
    
    
    410
    
    
    
    169
    
    
    
    1,121
    
    
    
    723
    
    
    
    398Trust income
    
    
    518
    
    
    
    525
    
    
    
    (7
    )
    
    
    995
    
    
    
    1,021
    
    
    
    (26
    )Securities gains (losses)
    
    
    (340
    )
    
    
    (703
    )
    
    
    363
    
    
    
    (1,073
    )
    
    
    4,497
    
    
    
    (5,570
    )Gain on sale of other assets
    
    
    6,037
    
    
    
    1,184
    
    
    
    4,853
    
    
    
    6,459
    
    
    
    1,360
    
    
    
    5,099Other
    
    
    1,243
    
    
    
    1,152
    
    
    
    91
    
    
    
    2,573
    
    
    
    2,515
    
    
    
    58Total non-interest income
    
    $
    13,111
    
    
    $
    7,516
    

    
    $
    5,595
    
    
    $
    19,655
    
    
    $
    19,533
    
    
    $
    122
     NON-INTEREST EXPENSE
    21




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##### Table of Contents



Three Months Ended
    
    
    
    
    
    Six Months EndedJune 30,
    
    Increase
    
    June 30,
    
    IncreaseNon-Interest Expense
    
    2005
    
    2004
    
    (Decrease)
    
    2005
    
    2004
    
    (Decrease)Salaries
    
    $
    7,662
    
    
    $
    7,903
    
    
    $
    (241
    )
    
    $
    14,978
    
    
    $
    15,771
    
    
    $
    (793
    )Commissions and incentives
    
    
    1,321
    
    
    
    1,016
    
    
    
    305
    
    
    
    2,184
    
    
    
    2,375
    
    
    
    (191
    )Other benefits
    
    
    1,727
    
    
    
    1,860
    
    
    
    (133
    )
    
    
    3,363
    
    
    
    3,880
    
    
    
    (517
    )Occupancy
    
    
    1,901
    
    
    
    1,579
    
    
    
    322
    
    
    
    3,782
    
    
    
    3,169
    
    
    
    613Equipment
    
    
    923
    
    
    
    1,020
    
    
    
    (97
    )
    
    
    1,846
    
    
    
    2,097
    
    
    
    (251
    )Professional fees
    
    
    1,168
    
    
    
    1,133
    
    
    
    35
    
    
    
    2,150
    
    
    
    2,331
    
    
    
    (181
    )Communication and transportation
    
    
    1,128
    
    
    
    841
    
    
    
    287
    
    
    
    2,250
    
    
    
    1,736
    
    
    
    514Processing
    
    
    608
    
    
    
    724
    
    
    
    (116
    )
    
    
    1,542
    
    
    
    1,588
    
    
    
    (46
    )Software
    
    
    379
    
    
    
    511
    
    
    
    (132
    )
    
    
    815
    
    
    
    927
    
    
    
    (112
    )Marketing
    
    
    577
    
    
    
    521
    
    
    
    56
    
    
    
    1,087
    
    
    
    987
    
    
    
    100Debt prepayment fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,998
    
    
    
    (56,998
    )Low income housing project losses
    
    
    568
    
    
    
    551
    
    
    
    17
    
    
    
    1,114
    
    
    
    1,103
    
    
    
    11Other
    
    
    2,113
    
    
    
    2,911
    
    
    
    (798
    )
    
    
    4,193
    
    
    
    5,173
    
    
    
    (980
    )Total non-interest expense
    
    $
    20,075
    
    
    $
    20,570
    
    
    $
    (495
    )
    
    $
    39,304
    
    
    $
    98,135
    
    
    $
    (58,831
    )
 INCOME TAX EXPENSE
  FINANCIAL POSITION
  SECURITIES
  22




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##### Table of Contents



LOANS
   June 30,
    
    December 31,(In thousands)
    
    2005
    
    2004CommercialCommercial, industrial and
agricultural loans
    
    $
    565,586
    
    
    $
    563,382Economic development loans and
other obligations of state and
political subdivisions
    
    
    9,739
    
    
    
    13,195Lease financing
    
    
    5,731
    
    
    
    5,731Total commercial
    
    
    581,056
    
    
    
    582,308Commercial real estateCommercial mortgages
    
    
    189,787
    
    
    
    224,066Construction and development
    
    
    126,382
    
    
    
    72,517Total commercial real estate
    
    
    316,169
    
    
    
    296,583Residential mortgages
    
    
    454,102
    
    
    
    456,007Home equity
    
    
    136,229
    
    
    
    143,037Consumer loans
    
    
    209,049
    
    
    
    187,395Total loans
    
    
    1,696,605
    
    
    
    1,665,330Less: unearned income
    
    
    5
    
    
    
    6Loans, net of unearned income
    
    $
    1,696,600
    
    
    $
    1,665,324
 ASSET QUALITY
    23




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##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30
    
    June 302005
    
    2004
    
    2005
    
    2004Beginning Balance
    
    $
    23,259
    
    
    $
    25,494
    
    
    $
    23,794
    
    
    $
    25,403Loans charged off
    
    
    (2,737
    )
    
    
    (1,247
    )
    
    
    (3,870
    )
    
    
    (2,452
    )Recoveries
    
    
    409
    
    
    
    904
    
    
    
    632
    
    
    
    1,550Provision for loan losses
    
    
    4,316
    
    
    
    155
    
    
    
    4,691
    
    
    
    805Decrease due to sale of loans
    
    
    
    
    
    
    (299
    )
    
    
    
    
    
    
    (299
    )Ending Balance
    
    $
    25,247
    
    
    $
    25,007
    
    
    $
    25,247
    
    
    $
    25,007Percent of total loans
    
    
    1.49
    %
    
    
    1.50
    %
    
    
    1.49
    %
    
    
    1.50
    %Annualized % of average loans:Net charge-offs
    
    
    0.55
    %
    
    
    0.08
    %
    
    
    0.39
    %
    
    
    0.11
    %Provision for loan losses
    
    
    1.03
    %
    
    
    0.04
    %
    
    
    0.57
    %
    
    
    0.10
    %
    June 30,
    
    December 31,2005
    
    2004Nonaccrual loans
    
    $
    29,590
    
    
    $
    17,97190 days or more past due loans
    
    
    382
    
    
    
    576Total non-performing loans (1)
    
    
    29,972
    
    
    
    18,547Other real estate owned
    
    
    228
    
    
    
    243Total non-performing assets
    
    $
    30,200
    
    
    $
    18,790Ratios:Non-performing Loans to Loans
    
    
    1.77
    %
    
    
    1.11
    %Non-performing Assets to Loans and Other Real Estate Owned
    
    
    1.78
    %
    
    
    1.13
    %Allowance for Loan Losses to Non-performing Loans
    
    
    84.24
    %
    
    
    128.29
    %
 
 (1)
    
    Includes non-performing loans classified as loans held for sale DEPOSITS
  24




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##### Table of Contents



SHORTTERM BORROWINGS
  LONGTERM BORROWINGS
   CAPITAL EXPENDITURES
  OFFBALANCE SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL OBLIGATIONS
  CAPITAL RESOURCES AND LIQUIDITY
  Regulatory Guidelines
    
    ActualMinimum
    
    Well-
    
    June 30,
    
    December 31,Requirements
    
    Capitalized
    
    2005
    
    2004Integra Bank Corporation:Total Capital (to Risk-Weighted Assets)
    
    
    8.00
    %
    
    
    N/A
    
    
    
    12.84
    %
    
    
    12.56
    %Tier 1 Capital (to Risk-Weighted Assets)
    
    
    4.00
    %
    
    
    N/A
    
    
    
    10.88
    %
    
    
    10.52
    %Tier 1 Capital (to Average Assets)
    
    
    4.00
    %
    
    
    N/A
    
    
    
    7.87
    %
    
    
    7.64
    %Integra Bank N.A.:Total Capital (to Risk-Weighted Assets)
    
    
    8.00
    %
    
    
    10.00
    %
    
    
    12.32
    %
    
    
    12.01
    %Tier 1 Capital (to Risk-Weighted Assets)
    
    
    4.00
    %
    
    
    6.00
    %
    
    
    11.07
    %
    
    
    10.77
    %Tier 1 Capital (to Average Assets)
    
    
    4.00
    %
    
    
    5.00
    %
    
    
    8.07
    %
    
    
    7.86
    %
   25




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
    Earnings at Risk (EAR).
 26




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##### Table of Contents



Estimated Change in EAR from the Base Interest Rate Scenario-200 basis points
    
    +200 basis pointsJune 30, 2005
    
    
    (5.14
    )%
    
    
    (1.52
    )%March 31, 2005
    
    
    (4.21
    )%
    
    
    (0.89
    )%December 31, 2004
    
    
    (5.77
    )%
    
    
    (0.59
    )%
 Economic Value of Equity (EVE).
    Estimated Change in EVE from the Base Interest Rate Scenario-200 basis points
    
    +200 basis pointsJune 30, 2005
    
    
    0.08
    %
    
    
    (6.89
    )%March 31, 2005
    
    
    3.18
    %
    
    
    (8.25
    )%December 31, 2004
    
    
    1.37
    %
    
    
    (7.77
    )%
  
 Item 4: Controls and Procedures
   27




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##### Table of Contents



PART II   OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
   
 Item 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
  
 Item 3. DEFAULTS UPON SENIOR SECURITIES
  
 Item 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Affirmative
    
    Negative
    
    Abstain &Broker Non-VotesGeorge D. Martin
    
    
    11,811,418
    
    
    
    433,931
    
    
    
    105,125William E. Vieth
    
    
    11,729,444
    
    
    
    513,106
    
    
    
    105,125Daniel T. Wolfe
    
    
    11,576,330
    
    
    
    668,820
    
    
    
    105,125
  2006
    
    2007Sandra Clark Berry
    
    Dr. H. Ray HoopsThomas W. Miller
    
    Ronald G. RehermanRichard M. Stivers
    
    Robert W. SwanMichael T. Vea
    
    Robert D. Vance
  Affirmative
    
    Negative
    
    Abstain11,853,479
    
    397,581
    
    
    99,654
 
 Item 5. OTHER INFORMATION
 a)
    
    On August 5, 2005, the Company entered into an unsecured credit agreement with SunTrust Bank
for a $15,000,000 unsecured revolving line of credit. This facility replaces the line of
credit the Company had with another financial institution. The term of the credit agreement
is for a period ending August 4, 2006. The credit agreement contains events of default and
financial covenants customary for credit facilities of this type. A copy of the credit
agreement is filed as an exhibit to this report and is incorporated by reference herein.
 b)
    
    During the period covered by this report, the Audit Committee of the Board of Directors did
not engage the Companys independent registered public accounting firm, to perform any
non-audit services. This disclosure is made pursuant to Section 10A(i)(2) of the Securities
Exchange Act of 1934, as added by Section 202 of the Sarbanes-Oxley Act of 2002.
 
 Item 6. EXHIBITS
  10.1
    
    Credit Agreement dated August 5, 2005 between Integra Bank Corporation and SunTrust Bank31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer32
    
    Certification of Chief Executive Officer and Chief Financial Officer
 28




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##### Table of Contents



SIGNATURES
  INTEGRA BANK CORPORATIONBy
    
    /s/ Michael T. VeaChairman of the Board, ChiefExecutive Officer and PresidentAugust 9, 2005/s/ Sheila A. StokeChief Accounting Officer andSenior Vice President 
August 9, 2005
 29