<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended June 30, 2006.

                                       or

[ ]  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
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
            INDIANA                                        35-1632155
(State or other jurisdiction of                (IRS Employee Identification No.)
 incorporation or organization)
</TABLE>

<TABLE>
<S>                                                                   <C>
     PO BOX 868, EVANSVILLE, INDIANA                                  47705-0868
(Address of principal executive offices)                              (Zip Code)
</TABLE>

Registrant's telephone number, including area code: (812) 464-9677

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]   Accelerated filer [X]   Non-accelerated filer [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act of 1934). Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
               CLASS                 OUTSTANDING AT JULY 31, 2006
----------------------------------   ----------------------------
<S>                                  <C>
(Common stock, $1.00 Stated Value)                     17,616,650
</TABLE>

<PAGE>

                            INTEGRA BANK CORPORATION

                                      INDEX

<TABLE>
<CAPTION>
                                                                        PAGE NO.
                                                                        --------
<S>                                                                     <C>
                         PART I - FINANCIAL INFORMATION

Item 1.  Unaudited Financial Statements

            Consolidated balance sheets-

            June 30, 2006 and December 31, 2005                            3
            Consolidated statements of income-
            Three months and six months ended June 30, 2006 and 2005       4

            Consolidated statements of comprehensive income-
            Three months and six months ended June 30, 2006 and 2005       5

            Consolidated statements of changes in shareholders'
            equity- Six months ended June 30, 2006                         6

            Consolidated statements of cash flow-
            Six months ended June 30, 2006 and 2005                        7

            Notes to unaudited consolidated financial statements           9

Item 2.  Management's Discussion and Analysis of Financial

            Condition and Results of Operations                            17

Item 3.  Quantitative and Qualitative Disclosures about Market Risk        27

Item 4.  Controls and Procedures                                           28

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                 29

Item 1A. Risk Factors                                                      29

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds       29

Item 3.  Defaults Upon Senior Securities                                   29

Item 4.  Submissions of Matters to a Vote of Security Holders              29

Item 5.  Other Information                                                 29

Item 6.  Exhibits                                                          30

Signatures                                                                 31
</TABLE>


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. UNAUDITED FINANCIAL STATEMENTS

                    INTEGRA BANK CORPORATION AND SUBSIDIARIES
                      UNAUDITED CONSOLIDATED BALANCE SHEETS
                    (In thousands, except for per share data)

<TABLE>
<CAPTION>
                                                                  June 30,    December 31,
                                                                    2006          2005
                                                                 ----------   ------------
<S>                                                              <C>          <C>
ASSETS
Cash and due from banks                                          $   78,700    $   62,643
Federal funds sold and other short-term investments                   2,598           112
                                                                 ----------    ----------
   Total cash and cash equivalents                                   81,298        62,755
Loans held for sale (at lower of cost or market value)                  667           522
Securities available for sale                                       652,821       681,030
Regulatory stock                                                     30,659        33,102
Loans, net of unearned income                                     1,792,775     1,750,192
Less: Allowance for loan losses                                     (21,043)      (24,392)
                                                                 ----------    ----------
   Net loans                                                      1,771,732     1,725,800
Premises and equipment                                               48,298        50,106
Goodwill                                                             44,491        44,491
Other intangibles                                                     7,298         7,765
Other assets                                                        106,244       102,571
                                                                 ----------    ----------
TOTAL ASSETS                                                     $2,743,508    $2,708,142
                                                                 ==========    ==========
LIABILITIES
Deposits:
   Non-interest-bearing demand                                   $  265,036    $  263,095
   Interest-bearing:
      Savings, interest checking and money market accounts          816,789       760,883
      Time deposits of $100 or more                                 436,496       285,429
      Other interest-bearing                                        527,030       499,096
                                                                 ----------    ----------
   Total deposits                                                 2,045,351     1,808,503
Short-term borrowings                                               311,663       399,588
Long-term borrowings                                                143,129       256,862
Other liabilities                                                    19,892        23,091
                                                                 ----------    ----------
   TOTAL LIABILITIES                                              2,520,035     2,488,044
                                                                 ==========    ==========
SHAREHOLDERS' EQUITY
Preferred stock - 1,000,000 shares authorized
   None outstanding
Common stock - $1.00 stated value:
   Shares authorized: 29,000,000
   Shares outstanding: 17,539,094 and 17,464,948, respectively       17,539        17,465
Additional paid-in capital                                          129,061       127,980
Retained earnings                                                    88,790        80,622
Accumulated other comprehensive income                              (11,917)       (5,969)
                                                                 ----------    ----------
   TOTAL SHAREHOLDERS' EQUITY                                       223,473       220,098
                                                                 ----------    ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $2,743,508    $2,708,142
                                                                 ==========    ==========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                       3

<PAGE>

                    INTEGRA BANK CORPORATION AND SUBSIDIARIES
                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except for per share data)

<TABLE>
<CAPTION>
                                                                     Three Months         Six Months
                                                                    Ended June 30,      Ended June 30,
                                                                  -----------------   -----------------
                                                                    2006      2005      2006      2005
                                                                  -------   -------   -------   -------
<S>                                                               <C>       <C>       <C>       <C>
INTEREST INCOME
Interest and fees on loans:
   Taxable                                                        $30,972   $25,332   $59,602   $49,277
   Tax-exempt                                                         105       106       206       222
Interest and dividends on securities:
   Taxable                                                          6,656     7,310    13,198    14,839
   Tax-exempt                                                       1,205     1,410     2,401     2,826
Dividends on regulatory stock                                         447       371       853       745
Interest on loans held for sale                                        34       136        65       241
Interest on federal funds sold and other short-term investments        23        35       231        46
                                                                  -------   -------   -------   -------
   Total interest income                                           39,442    34,700    76,556    68,196
INTEREST EXPENSE
Interest on deposits                                               13,329     8,445    24,382    16,121
Interest on short-term borrowings                                   3,283     2,610     6,548     3,424
Interest on long-term borrowings                                    2,087     2,849     4,765     6,794
                                                                  -------   -------   -------   -------
   Total interest expense                                          18,699    13,904    35,695    26,339
NET INTEREST INCOME                                                20,743    20,796    40,861    41,857
Provision for loan losses                                             859     4,316     1,253     4,691
                                                                  -------   -------   -------   -------
   Net interest income after provision for loan losses             19,884    16,480    39,608    37,166
                                                                  -------   -------   -------   -------
NON-INTEREST INCOME
Service charges on deposit accounts                                 5,036     3,945     9,091     6,967
Other service charges and fees                                      1,020       990     2,106     2,322
Debit card income-interchange                                         800       579     1,539     1,121
Mortgage banking                                                       46       139       133       291
Trust income                                                          558       518     1,190       995
Net securities gains (losses)                                           1      (340)        1    (1,073)
Gain on mortgage loans sold                                           141        93       249       210
Gain on sale of other assets                                           35     6,037       126     6,459
Cash surrender value life insurance                                   442       376       873       756
Other                                                               1,038       774     1,870     1,607
                                                                  -------   -------   -------   -------
   Total non-interest income                                        9,117    13,111    17,178    19,655
NON-INTEREST EXPENSE
Salaries                                                            7,189     7,662    14,445    14,978
Commissions and incentives                                            918     1,321     1,851     2,184
Other benefits                                                      1,853     1,727     4,127     3,363
Occupancy                                                           1,997     1,901     3,939     3,782
Equipment                                                             856       923     1,701     1,846
Professional fees                                                     835     1,168     1,611     2,150
Communication and transportation                                    1,222     1,128     2,480     2,250
Processing                                                            602       608     1,046     1,542
Software                                                              379       379       812       815
Marketing                                                             588       577     1,052     1,087
Low income housing project losses                                     629       568     1,257     1,114
Amortization of intangible assets                                     233       233       466       466
Other                                                               1,959     1,880     3,631     3,727
                                                                  -------   -------   -------   -------
   Total non-interest expense                                      19,260    20,075    38,418    39,304
                                                                  -------   -------   -------   -------
Income before income taxes                                          9,741     9,516    18,368    17,517
Income tax expense                                                  2,351     2,066     4,421     3,678
                                                                  -------   -------   -------   -------
NET INCOME                                                        $ 7,390   $ 7,450   $13,947   $13,839
                                                                  =======   =======   =======   =======
Earnings per share:
   Basic                                                          $  0.42   $  0.43   $  0.80   $  0.80
   Diluted                                                           0.42      0.43      0.80      0.79

Weighted average shares outstanding:
   Basic                                                           17,466    17,365    17,450    17,354
   Diluted                                                         17,562    17,440    17,543    17,434

Dividends per share                                               $  0.17   $  0.16   $  0.33   $  0.32
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                        4
<PAGE>

                    INTEGRA BANK CORPORATION AND SUBSIDIARIES
            UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                               Three Months Ended    Six Months Ended
                                                                                    June 30,             June 30,
                                                                               ------------------   -----------------
                                                                                  2006      2005      2006      2005
                                                                               --------   -------   -------   -------
<S>                                                                            <C>       <C>        <C>       <C>
Net income                                                                      $ 7,390   $ 7,450   $13,947   $13,839
Other comprehensive income, net of tax:
   Unrealized gain (loss) on securities:
      Unrealized gain (loss) arising in period
         (net of tax of $(2,920), $2,741, $(4,213) and $(775), respectively)     (4,236)    4,028    (5,947)   (1,136)
      Reclassification of realized amounts
         (net of tax of $138 and $435 respectively for 2005)                         (1)      202        (1)      638
                                                                                -------   -------   -------   -------
      Net unrealized gain (loss) on securities                                   (4,237)    4,230    (5,948)     (498)
                                                                                -------   -------   -------   -------
Comprehensive income                                                            $ 3,153   $11,680   $ 7,999   $13,341
                                                                                =======   =======   =======   =======
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                       5

<PAGE>

                    INTEGRA BANK CORPORATION AND SUBSIDIARIES
      UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
               (In thousands, except for share and per share data)

<TABLE>
<CAPTION>
                                                                          Additional              Accumulated Other
                                                     Common      Common     Paid-in    Retained     Comprehensive
                                                     Shares      Stock      Capital    Earnings     Income (Loss)       Total
                                                   ----------   -------   ----------   --------   -----------------   ---------
<S>                                                <C>          <C>       <C>          <C>        <C>                 <C>
BALANCE AT DECEMBER 31, 2005                       17,464,948   $17,465    $127,980    $80,622        $ (5,969)       $220,098
                                                   ----------   -------    --------    -------        --------        --------
Net income                                                 --        --          --     13,947              --          13,947
Cash dividend declared ($0.33 per share)                   --        --          --     (5,779)             --          (5,779)
Change, net of tax, in unrealized gain (loss) on
   Securities                                              --        --          --         --          (5,948)         (5,948)
Exercise of stock options                              41,484        41         758         --              --             799
Grant of restricted stock, net of forfeitures          32,662        33           6         --              --              39
Unearned compensation amortization                         --        --         317         --              --             317
                                                   ----------   -------    --------    -------        --------        --------
BALANCE AT JUNE 30, 2006                           17,539,094   $17,539    $129,061    $88,790        $(11,917)       $223,473
                                                   ----------   -------    --------    -------        --------        --------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                       6

<PAGE>

                    INTEGRA BANK CORPORATION AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                           Six Months Ended
                                                                               June 30,
                                                                         --------------------
                                                                            2006       2005
                                                                         ---------   --------
<S>                                                                      <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                               $  13,947   $ 13,839
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
   Amortization and depreciation                                             3,086      3,694
   Provision for loan losses                                                 1,253      4,691
   Net securities (gains) losses                                                (1)     1,073
   (Gain) loss on sale of premises and equipment                               (92)       196
   (Gain) loss on sale of other real estate owned                              (34)       (25)
   Gain on sale of merchant processing program                                  --       (411)
   Gain on sale of branches                                                     --     (6,218)
   Loss on low-income housing investments                                    1,257      1,114
   Increase (decrease) in deferred taxes                                     1,148       (504)
   Net gain on sale of loans held for sale                                    (249)      (210)
   Proceeds from sale of loans held for sale                                26,591     29,994
   Origination of loans held for sale                                      (26,487)   (39,265)
   Change in other operating                                                (1,534)    11,513
                                                                         ---------   --------
      Net cash flows provided by (used in) operating activities             18,885     19,481
                                                                         ---------   --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and paydowns of securities available for sale      61,308     82,230
Proceeds from sales of securities available for sale                            --     30,109
Purchase of securities available for sale                                  (43,767)   (74,666)
Change in loans made to customers                                          (47,852)   (20,732)
Proceeds from sale of loans                                                     --    (13,772)
Proceeds from sale of merchant processing program                               --        585
Purchase of premises and equipment                                            (351)    (3,761)
Proceeds from sale of premises and equipment from sale of branches              --        608
Proceeds from sale of premises and equipment                                   119        162
Proceeds from sale of other real estate owned                                  375        320
                                                                         ---------   --------
      Net cash flows provided by (used in) investing activities            (30,168)     1,083
                                                                         ---------   --------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in deposits                                                         236,848     16,917
Decrease in deposits from sale of branches                                      --    (68,448)
Change in short-term borrowed funds                                        (88,496)    38,189
Repayment of long-term borrowings                                         (113,733)    (1,262)
Dividends paid                                                              (5,592)    (5,562)
Proceeds from exercise of stock options                                        799        535
                                                                         ---------   --------
      Net cash flows provided by (used in) financing activities             29,826    (19,631)
                                                                         ---------   --------
Net increase (decrease) in cash and cash equivalents                        18,543        933
                                                                         ---------   --------
Cash and cash equivalents at beginning of period                            62,755     71,834
                                                                         ---------   --------
Cash and cash equivalents at end of period                               $  81,298   $ 72,767
                                                                         =========   ========
</TABLE>

Unaudited Consolidated Statements of Cash Flow are continued on next page.


                                       7
<PAGE>

                    INTEGRA BANK CORPORATION AND SUBSIDIARIES
           UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW (CONTINUED)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                    Six Months Ended
                                                        June 30,
                                                    ----------------
                                                      2006      2005
                                                    --------   ------
<S>                                                 <C>        <C>
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Change in allowance for unrealized (gain)
   loss on securities available for sale            $(10,408)   $  860
Change in deferred taxes attributable to
   securities available for sale                      (4,214)     (340)
Other real estate acquired in settlement of loans        667       282
Dividends declared and not paid                        2,982     2,788
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                       8

<PAGE>

                    INTEGRA BANK CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               (In thousands, except for share and per share data)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the
accounts of Integra Bank Corporation and our subsidiaries. At June 30, 2006, our
subsidiaries consisted of Integra Bank N.A. (the "Bank"), a reinsurance company
and two statutory business trusts, which are no longer included in the
consolidation. All significant intercompany transactions are eliminated in
consolidation.

The financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). While the
financial statements are unaudited, they do reflect all adjustments which, in
the opinion of management, are necessary for a fair statement of the financial
position, results of operations, and cash flows for the interim periods. All
such adjustments are of a normal recurring nature. Pursuant to SEC rules,
certain information and note disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America ("GAAP") have been condensed or omitted from
these financial statements unless significant changes have taken place since the
end of the most recent fiscal year. The accompanying financial statements and
notes thereto should be read in conjunction with our financial statements and
notes for the year ended December 31, 2005 included in our Annual Report on Form
10-K filed with the SEC.

Because the results from banking operations are so closely related and
responsive to changes in economic conditions, the results for any interim period
are not necessarily indicative of the results that can be expected for the
entire year.

RECENT ACCOUNTING PRONOUNCEMENTS:

In December 2004, the FASB issued Statement No. 123 (revised 2004), "Share-Based
Payment" ("SFAS No. 123(R)"), which requires the recognition of share based
payments cost in earnings. This Statement replaces Statement No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123") and supersedes
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB No. 25"), which permitted the recognition of compensation
expense using the intrinsic value method. The adoption of SFAS No. 123(R)
applies to awards issued after January 1, 2006, with expense being recognized
for future grants. We use the Black-Scholes model to determine the value of the
options granted. We adopted SFAS No. 123(R) on January 1, 2006, using the
prospective application method. We have recorded expense in accordance with SFAS
No. 123(R) for all awards granted since the adoption date.

In March, 2006, the FASB issued Statement No. 156, "Accounting for Servicing of
Financial Assets--an amendment of FASB Statement No. 140", which changes the
accounting for all servicing rights which are recorded as the result of
purchasing a servicing right or selling a loan with servicing retained.
Statement No. 156 amends the current accounting guidance for servicing rights in
that it allows companies to carry their servicing rights at fair value.
Presently servicing rights are recorded at inception at cost, allocated on a
fair value basis and then assessed for impairment based on their fair value at
each reporting date, using lower of cost or market value. This pronouncement is
effective for us beginning January 1, 2007.

In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes--an interpretation of FASB Statement No. 109" ("FIN
48"), which prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective beginning in 2007. We
are in the process of evaluating the impact, if any, the adoption of FIN 48 will
have on our financial statements.

STOCK-BASED COMPENSATION:

Our 2003 Stock Option and Incentive Plan currently reserves shares of common
stock for issuance as incentive awards to our directors and key employees.
Awards may include incentive stock options, non-qualified stock options,
restricted shares, performance shares and performance units. All shares issued
upon exercise of options and all issued restricted shares are newly issued under
these Plans. Our 1999 Stock Option and Incentive Plan provided for incentive
stock options and non-qualified stock options. All options granted under the
current plans or any predecessor (the "Plans") are required to be exercised
within ten years of the date granted. The exercise price of options granted
under the Plans cannot be less than the market value of the common stock on the
date of grant. Under the Plans, at June 30, 2006, there were 142,300 shares
available for the granting of additional awards.


                                       9

<PAGE>

In 1999, we also granted non-qualified options to purchase 31,500 shares of
common stock at an exercise price of $25.83, outside of the Plans, in connection
with the employment of our Chairman and CEO. Such options are vested and must be
exercised within ten years. At June 30, 2006, all 31,500 options remained
outstanding.

Prior to 2006, stock options were accounted for using the intrinsic value method
following APB No. 25 and related interpretations. Had compensation costs been
determined based on the grant date market values of awards (the method described
in SFAS No. 123(R)), reported net income and earnings per common share, for the
three and six months ended June 30, 2005 would have been reduced to the proforma
amounts shown below.

<TABLE>
<CAPTION>
                                                              Three Months Ended   Six Months Ended
                                                                   June 30,            June 30,
                                                                     2005                2005
                                                              ------------------   ----------------
<S>                                                           <C>                  <C>
Net income:
   As reported                                                      $7,450              $13,839
   Add: Stock-based compensation expense
      included in reported net income, net of tax                       44                   71
   Deduct: Total stock-based employee compensation expense
      determined under fair value based method for all
      awards, net of tax                                             1,146                1,197
                                                                    ------              -------
   Proforma                                                         $6,348              $12,713
                                                                    ======              =======
Earnings per share:
   Basic
      As reported                                                   $ 0.43              $  0.80
      Proforma                                                        0.37                 0.73
   Diluted
      As reported                                                   $ 0.43              $  0.79
      Proforma                                                        0.36                 0.73
</TABLE>

The weighted average fair value of each stock option included in the preceding
proforma amounts for 2005 was estimated using the Black-Scholes option-pricing
model and is amortized over the vesting period of the underlying options. The
following assumptions were utilized in computing 2005 and 2006 fair values:

<TABLE>
<CAPTION>
                            2006      2005
                          --------   ------
<S>                       <C>        <C>
Risk-free interest rate       5.01%    3.85%
Expected life, in years          6        7
Expected volatility          24.73%   33.20%
Expected dividend yield       2.82%    3.02%
</TABLE>

The Compensation Committee of the Board of Directors approved the accelerated
vesting of outstanding unvested stock options awarded to recipients under the
Plans effective December 19, 2005. All other terms and conditions applicable to
such options, including the exercise prices and exercise periods, remained
unchanged.

On January 1, 2006, we adopted SFAS 123(R). The revised standard eliminated the
intrinsic value method of accounting required under APB 25. We adopted SFAS
123(R) using the prospective method of adoption, which does not require
restatement of prior periods. Under application of this method, compensation
expense recognized in 2006 for all share-based awards granted in 2006 is based
on the grant date fair value of the stock grants less estimated forfeitures.

We typically consider making awards under the Plans to current employees
annually during the second quarter. A summary of the status of the options
granted under the Plans for the six months ended June 30, 2006 is presented
below:


                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                   June 30, 2006
                                           ----------------------------
                                                       Weighted Average
                                             Shares     Exercise Price
                                           ---------   ----------------
<S>                                        <C>         <C>
Options outstanding at December 31, 2005   1,320,553        $21.44
Options granted                              228,235         22.88
Options exercised                            (41,484)        19.27
Options forfeited/expired                     (4,250)        22.01
                                           ---------        ------
Options outstanding at June 30, 2006       1,503,054        $21.72
                                           =========        ======
Options exercisable at June 30, 2006       1,274,819        $21.51

</TABLE>

During the six months ended June 30, 2006, 41,484 stock options with an
intrinsic value of $123 were exercised. We received $799 for these exercises and
approximately $40 of tax benefit was realized.

The following table summarizes information about options granted under the Plans
that were outstanding at June 30, 2006:

<TABLE>
<CAPTION>
                                                              Weighted Average
   Range of                    Weighted Average   Aggregate      Remaining                     Weighted Average
   Exercise         Number         Exercise       Intrinsic   Contractual Life      Number         Exercise
    Price        Outstanding         Price          Value        (in years)      Exercisable         Price
--------------   -----------   ----------------   ---------   ----------------   -----------   ----------------
<S>              <C>           <C>                <C>         <C>                <C>           <C>
$15.75 - 20.00      361,166         $18.37          $1,221           6.6            361,166         $18.37
 20.01 - 23.50      997,760          21.88             363           7.6            769,525          21.59
 23.51 - 26.00       96,700          25.51             N/A           3.3             96,700          25.51
 26.01 - 38.00       47,428          35.96             N/A           1.8             47,428          35.96
                  ---------         ------          ------           ---          ---------         ------
                  1,503,054         $21.72          $1,584           6.9          1,274,819         $21.51
                  =========         ======          ======           ===          =========         ======
</TABLE>

The 2003 Plan permits the award of up to 300,000 shares of restricted stock. The
shares vest equally over a three-year period. Unvested shares are subject to
certain restrictions and risk of forfeiture by the participants. A summary of
restricted shares that were granted, vested or forfeited during the six months
ended June 30, 2006 follows below:

<TABLE>
<CAPTION>
                                                   June 30,
                                                     2006
                                                   --------
                                                    Shares
                                                   --------
<S>                                                <C>
Restricted shares outstanding, December 31, 2005     42,061
Shares granted                                       34,162
Shares vested                                       (17,675)
Shares forfeited                                     (1,500)
                                                    -------
Restricted shares outstanding, June 30, 2006         57,048
                                                    =======
</TABLE>

Consistent with the provisions of SFAS No. 123, we recorded the fair value of
restricted stock grants, net of estimated forfeitures, and an offsetting
deferred compensation amount within stockholders' equity for unvested restricted
stock. To comply with the provisions of SFAS 123(R), we reclassified the
deferred compensation balance for grants issued prior to 2006 under APB 25 to
additional paid-in capital on the consolidated balance sheet. As of June 30,
2006, there was $418 of unamortized restricted stock compensation related to
nonvested restricted stock grants awarded under our Plans prior to 2006. Of this
unamortized expense, $154, $210, and $54 are expected to be expensed in 2006,
2007, and 2008, respectively. For restricted stock awards granted prior to the
adoptions of SFAS 123(R), we will continue to recognize compensation expense
over the full vesting period. Compensation expense for restricted stock for the
three and six months ended June 30, 2006 was $86 and $158, compared to $74, and
$120 for 1995.

NOTE 2. EARNINGS PER SHARE

The calculation of earnings per share for the three and six months ended June
30, 2006 and 2005 is summarized as follows:


                                       11

<PAGE>

<TABLE>
<CAPTION>
                                                                    Three Months Ended           Six Months Ended
                                                                         June 30,                    June 30,
                                                                -------------------------   -------------------------
                                                                    2006          2005         2006          2005
                                                                -----------   -----------   -----------   -----------
<S>                                                             <C>           <C>           <C>           <C>
Net income                                                      $     7,390   $     7,450   $    13,947   $    13,839
                                                                ===========   ===========   ===========   ===========

   Weighted average shares outstanding - Basic                   17,466,095    17,364,644    17,450,118    17,354,059
   Incremental shares related to stock compensation                  96,031        74,961        92,862        80,424
                                                                -----------   -----------   -----------   -----------
   Average shares outstanding - Diluted                          17,562,126    17,439,605    17,542,980    17,434,483
                                                                ===========   ===========   ===========   ===========

Earnings per share-Basic                                        $      0.42   $      0.43   $      0.80   $      0.80
   Effect of incremental shares related to stock compensation            --            --            --            --
                                                                -----------   -----------   -----------   -----------
Earnings per share - Diluted                                    $      0.42   $      0.43   $      0.80   $      0.79
                                                                ===========   ===========   ===========   ===========
</TABLE>

On June 30, 2006 and June 30, 2005, there were vested options outstanding to
purchase 1,306,319 and 734,072 shares, respectively, of the Company's common
stock. The calculations in the table above exclude options that could
potentially dilute basic earnings per share in the future but were antidilutive
for the periods presented. The number of such options excluded was 348,509 for
both the three and six months ended June 30, 2006. The number of such options
excluded was 317,460 for both the three and six months ended June 30, 2005.

NOTE 3. SECURITIES

All investment securities are held as available for sale. Amortized cost and
fair value of securities classified as available for sale as of June 30, 2006
and December 31, 2005 are as follows:

<TABLE>
<CAPTION>
                                                     Gross        Gross
                                      Amortized   Unrealized   Unrealized     Fair
                                         Cost        Gains       Losses       Value
                                      ---------   ----------   ----------   --------
<S>                                   <C>         <C>          <C>          <C>
June 30, 2006:
U.S. Government agencies               $ 16,150     $   --       $   326    $ 15,824
Mortgage-backed securities              152,667        191         5,244     147,614
Collateralized Mortgage Obligations     354,209         --        16,690     337,519
States & political subdivisions          77,767      2,017            11      79,773
Other securities                         72,705      1,083         1,697      72,091
                                       --------     ------       -------    --------
   Total                               $673,498     $3,291       $23,968    $652,821
                                       ========     ======       =======    ========
</TABLE>

<TABLE>
<CAPTION>
                                                     Gross        Gross
                                      Amortized   Unrealized   Unrealized     Fair
                                        Cost         Gains       Losses       Value
                                      ---------   ----------   ----------   --------
<S>                                   <C>         <C>           <C>         <C>
December 31, 2005:
U.S. Government agencies               $  1,149     $   --       $    30    $  1,119
Mortgage-backed securities              169,942        292         3,730     166,504
Collateralized Mortgage Obligations     373,198         --        10,885     362,313
States & political subdivisions          82,415      2,935            96      85,254
Other securities                         64,595      1,605           360      65,840
                                       --------     ------       -------    --------
   Total                               $691,299     $4,832       $15,101    $681,030
                                       ========     ======       =======    ========
</TABLE>

The following table provides the unrealized losses and fair value, aggregated by
investment category and length of time the individual securities have been in a
continuous unrealized loss position at June 30, 2006:


                                       12
<PAGE>

<TABLE>
<CAPTION>
                                        Less than 12 Months        12 Months or More               Total
                                      -----------------------   -----------------------   -----------------------
                                                   Unrealized                Unrealized                Unrealized
June 30, 2006                         Fair Value     Losses     Fair Value     Losses     Fair Value     Losses
-------------                         ----------   ----------   ----------   ----------   ----------   ----------
<S>                                   <C>          <C>          <C>          <C>          <C>          <C>
U.S. government agencies               $ 15,105      $  293      $    719      $    33     $ 15,824      $   326
Mortgage-backed securities               45,949       1,247        94,133        3,997      140,082        5,244
Collateralized mortgage obligations      40,454         978       297,065       15,712      337,519       16,690
State & political subdivisions            1,006           8           146            3        1,152           11
Other securities                         20,653       1,549        18,064          148       38,717        1,697
                                       --------      ------      --------      -------     --------      -------
Total                                  $123,167      $4,075      $410,127      $19,893     $533,294      $23,968
                                       ========      ======      ========      =======     ========      =======
</TABLE>

We do not believe any individual unrealized loss represents other-than-temporary
impairment. Factors considered in evaluating the securities included whether the
securities were backed by the U.S. government or its agencies and how that
affects credit quality and recovery of the full principal balance, the
relationship of the unrealized losses to increases in market interest rates, the
length of time the securities have had temporary impairment, and our ability to
hold the securities for the time necessary to recover the amortized cost. At
June 30, 2006, the market value of every security held by us was at least 90% of
the book value, with the differences being primarily attributable to changes in
interest rates.

NOTE 4. INCOME TAXES

A reconciliation of income taxes in the statement of income, with the amount
computed by applying the statutory rate of 35%, is as follows:

<TABLE>
<CAPTION>
                                                       Three Months    Six Months Ended
                                                      Ended June 30,        June 30,
                                                     ---------------   -----------------
                                                      2006     2005      2006     2005
                                                     ------   ------   -------   -------
<S>                                                  <C>      <C>      <C>       <C>
Federal income tax computed at the statutory rates   $3,409   $3,331   $ 6,429   $ 6,131
Adjusted for effects of:
   Tax exempt interest                                 (376)    (466)     (757)     (941)
   Nondeductible expenses                                56       57       110       112
   Low income housing credit                           (595)    (691)   (1,204)   (1,320)
   Cash surrender value of life insurance policies     (155)    (132)     (306)     (265)
   Dividend received deduction                          (54)     (54)     (108)     (222)
   State taxes, net of federal tax benefit               74       38       140        89
   Other differences                                     (8)     (17)      117        94
                                                     ------   ------   -------   -------
      Total income taxes (benefit)                   $2,351   $2,066   $ 4,421   $ 3,678
                                                     ======   ======   =======   =======
</TABLE>

NOTE 5. SHORT-TERM BORROWINGS

Included in short-term borrowings are Federal funds purchased, securities sold
under repurchase agreements, Federal Home Loan Bank ("FHLB") advances with
remaining maturities less than one year and other short-term borrowings. We also
have an unsecured line of credit for $15,000 with the entire amount available at
June 30, 2006.

<TABLE>
<CAPTION>
                                                 June 30,   December 31,
                                                   2006         2005
                                                 --------   ------------
<S>                                              <C>        <C>
Federal funds purchased                          $ 30,000     $ 44,400
Securities sold under agreements to repurchase    138,863      202,262
Short-term Federal Home Loan Bank advances       $142,800      152,926
                                                 --------     --------
   Total short-term borrowed funds               $311,663     $399,588
                                                 ========     ========
</TABLE>

We must pledge collateral in the form of mortgage-backed securities or mortgage
loans to secure FHLB advances. At June 30, 2006, we had sufficient collateral
pledged to satisfy the FHLB's requirements.


                                       13

<PAGE>

NOTE 6. LONG-TERM BORROWINGS

Long-term borrowings consist of the following:

<TABLE>
<CAPTION>
                                                                                    June 30,   December 31,
                                                                                      2006         2005
                                                                                    --------   ------------
<S>                                                                                 <C>        <C>
FHLB Advances
   Fixed maturity advances (weighted average rate
      of 2.64% as of December 31, 2005)                                             $     --     $102,500
   Amortizing and other advances (weighted average rate
      of 5.64% and 5.71% as of June 30, 2006 and December 31, 2005, respectively)      3,722        4,506
                                                                                    --------     --------
      Total FHLB Advances                                                              3,722      107,006
Securities sold under repurchase agreements with maturities
   at various dates through 2008 (weighted average fixed rate of 2.84%
   and 2.78% as of June 30, 2006 and December 31, 2005, respectively)                 65,000       75,000

Notes payable, secured by equipment, with a fixed interest rate of 7.26%,
   due at various dates through 2012                                                   6,282        6,731

Subordinated 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       10,000

Subordinated 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        4,000

Floating Rate Capital Securities, with an interest rate equal to six-month
   LIBOR plus 3.75%, with a maturity date of July 25, 2031, callable at a
   premium beginning July 25, 2006, and callable at par effective July 25, 2011       18,557       18,557

Floating 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 at par
   effective June 26, 2008                                                            35,568       35,568
                                                                                    --------     --------
      Total long-term borrowings                                                    $143,129     $256,862
                                                                                    ========     ========
</TABLE>

NOTE 7. COMMITMENTS AND CONTINGENCIES

We are party to legal actions that arise in the normal course of our business
activities. In our opinion, the ultimate resolution of these matters is not
expected to have a materially adverse effect on the financial position or
results of operations.

On August 31, 2005, we received a notice of proposed deficiency from the
Internal Revenue Service (IRS) related to the IRS examination of our 2002
federal income tax return. The notice included a significant increase to taxable
income with respect to our mark-to-market of mortgage loans for income tax
purposes. If the IRS ultimately were to prevail on its position with respect to
our mark-to-market of these loans, we would owe approximately $45,000 in
additional federal income tax, plus interest. Any such taxes would be the result
of temporary differences. As these mortgage loans pay off or down, the tax
liability will reverse and therefore not impact our earnings. However, there
would be an income statement impact to the extent interest is owed. We do not
agree with the position of the examiner and filed a formal protest with the IRS
on September 29, 2005. The IRS has not finalized its review of our formal
protest. We continue to believe that we have a clearly defensible position on
this issue. There were no new material developments related to this matter prior
to the date of this report.

In the normal course of business, there are additional outstanding commitments
and contingent liabilities that are not reflected in the accompanying
consolidated financial statements. We use the same credit policies in making
commitments and conditional obligations as we do for other instruments.


                                       14
<PAGE>

The commitments and contingent liabilities not reflected in the consolidated
financial statements were:

<TABLE>
<CAPTION>
                                             June 30,   December 31,
                                               2006         2005
                                             --------   ------------
<S>                                          <C>        <C>
Commitments to extend credit                 $574,872     $485,887
Standby letters of credit                      13,511       14,011
Non-reimbursable standby letters of credit      2,620        2,740
</TABLE>

NOTE 8. INTEREST RATE CONTRACTS

During the fourth quarter of 2004, we entered into an interest rate swap
agreement with a $7,500 notional amount to convert a fixed rate security to a
variable rate. This rate swap is designated as a cash flow hedge. The interest
rate swap requires us to pay a fixed rate of interest of 4.90% and receive a
variable rate based on three-month LIBOR. This rate was 5.71% at June 30, 2006.
The swap expires on or prior to January 5, 2016 and had a notional amount of
$6,975 at June 30, 2006.

We are exposed to losses if a counterparty fails to make its payments under a
contract in which we are in a receiving status. Although collateral or other
security is not obtained, we minimize our credit risk by monitoring the credit
standing of the counterparties. We anticipate that the counterparty will be able
to fully satisfy its obligations under the remaining agreement.

During the first quarter of 2003, we entered into interest rate swap contracts
with a $75,000 notional amount to convert a portion of our liabilities from
fixed rate to variable rate as part of our balance sheet management strategy. A
total of $25,000 of this notional amount matured during the first quarter of
2006, with the remaining $50,000 having expired during the second quarter.

During the second quarter of 2006, we initiated an interest rate protection
program in order to provide our commercial loan customers the ability to swap
from variable to fixed, or fixed to variable interest rates. Under these
agreements, we enter into a variable or fixed rate loan agreement with our
customer in addition to a swap agreement. The swap agreement effectively swaps
the customer's variable rate to a fixed rate or vice versa. We then enter into a
corresponding swap agreement with a third party in order to swap our exposure on
the variable to fixed rate swap with our customer. Since the swaps are
structured to offset each other, changes in market values, while recorded, have
no net earnings impact.

NOTE 9. SEGMENT INFORMATION

We operate one reporting line of business, banking. Banking services include
various types of deposit accounts; safe deposit boxes; automated teller
machines; consumer, mortgage and commercial loans; mortgage loan sales and
servicing; letters of credit; corporate cash management services; brokerage and
annuity products and services; and complete personal and corporate trust
services. Other includes the operating results of the parent company and its
reinsurance subsidiary. The reinsurance subsidiary does not meet the reporting
criteria for a separate segment.

The accounting policies of the banking segment are the same as those described
in the summary of significant accounting policies. The following tables present
selected segment information for banking and other operating units:

<TABLE>
<CAPTION>
For three months ended June 30,2006   Banking    Other    Eliminations    Total
-----------------------------------   -------   -------   ------------   -------
<S>                                   <C>       <C>       <C>            <C>
Interest income                       $39,394   $    52     $    (4)     $39,442
Interest expense                       17,284     1,419          (4)      18,699
                                      -------   -------     -------      -------
Net interest income (loss)             22,110    (1,367)         --       20,743
Provision for loan losses                 859        --          --          859
Other income (1)                        9,042     8,555      (8,480)       9,117
Other expense                          18,867       411         (18)      19,260
                                      -------   -------     -------      -------
Earnings before income taxes           11,426     6,777      (8,462)       9,741
                                      -------   -------     -------      -------
Income tax expense (benefit)            3,033      (682)         --        2,351
                                      -------   -------     -------      -------
Net income                            $ 8,393   $ 7,459     $(8,462)     $ 7,390
                                      =======   =======     =======      =======
</TABLE>


                                       15

<PAGE>

<TABLE>
<CAPTION>
For six months ended June 30, 2006       Banking      Other    Eliminations      Total
----------------------------------     ----------   --------   ------------   ----------
<S>                                    <C>          <C>        <C>            <C>
Interest income                        $   76,463   $    101    $      (8)    $   76,556
Interest expense                           32,950      2,753           (8)        35,695
                                       ----------   --------    ---------     ----------
Net interest income (loss)                 43,513     (2,652)          --         40,861
Provision for loan losses                   1,253         --           --          1,253
Other income (1)                           16,995     16,241      (16,058)        17,178
Other expense                              37,700        754          (36)        38,418
                                       ----------   --------    ---------     ----------
Earnings before income taxes               21,555     12,835      (16,022)        18,368
                                       ----------   --------    ---------     ----------
Income tax expense (benefit)                5,676     (1,255)          --          4,421
                                       ----------   --------    ---------     ----------
Net income                             $   15,879   $ 14,090    $ (16,022)    $   13,947
                                       ==========   ========    =========     ==========
Segment assets                         $2,716,957   $292,764    $(266,213)    $2,743,508
                                       ==========   ========    =========     ==========
</TABLE>

(1)  Includes income (loss) on subsidiaries.

<TABLE>
<CAPTION>
For three months ended June 30, 2005   Banking    Other    Eliminations    Total
------------------------------------   -------   -------   ------------   -------
<S>                                    <C>       <C>       <C>            <C>
Interest income                        $34,662   $    43     $    (5)     $34,700
Interest expense                        12,817     1,092          (5)      13,904
                                       -------   -------     -------      -------
Net interest income (loss)              21,845    (1,049)         --       20,796
Provision for loan losses                4,316        --          --        4,316
Other income (1)                        13,032     8,532      (8,453)      13,111
Other expense                           19,552       542         (19)      20,075
                                       -------   -------     -------      -------
Earnings before income taxes            11,009     6,941      (8,434)       9,516
                                       -------   -------     -------      -------
Income tax expense (benefit)             2,623      (557)         --        2,066
                                       -------   -------     -------      -------
Net income                             $ 8,386   $ 7,498     $(8,434)     $ 7,450
                                       =======   =======     =======      =======
</TABLE>

<TABLE>
<CAPTION>
For six months ended June 30, 2005       Banking      Other    Eliminations      Total
----------------------------------     ----------   --------   ------------   ----------
<S>                                    <C>          <C>        <C>            <C>
Interest income                        $   68,098   $    105    $      (7)    $   68,196
Interest expense                           24,248      2,098           (7)        26,339
                                       ----------   --------    ---------     ----------
Net interest income (loss)                 43,850     (1,993)          --         41,857
Provision for loan losses                   4,691         --           --          4,691
Other income (1)                           19,475     15,985      (15,805)        19,655
Other expense                              38,354        989          (39)        39,304
                                       ----------   --------    ---------     ----------
Earnings before income taxes               20,280     13,003      (15,766)        17,517
                                       ----------   --------    ---------     ----------
Income tax expense (benefit)                4,657       (979)          --          3,678
                                       ----------   --------    ---------     ----------
Net income                             $   15,623   $ 13,982    $ (15,766)    $   13,839
                                       ----------   --------    ---------     ----------
Segment assets                         $2,732,263   $285,236    $(261,202)    $2,756,297
                                       ==========   ========    =========     ==========
</TABLE>

(1)  Includes income on subsidiaries.


                                       16
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

(Dollar amounts in thousands except for share data)

INTRODUCTION

The discussion and analysis which follows is presented to assist in the
understanding and evaluation of the financial condition and results of
operations of Integra Bank Corporation and our subsidiaries as presented in the
preceding condensed consolidated financial statements and related notes. The
text of this review is supplemented with various financial data and statistics.

Certain statements made in this release may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. When used in this document, the words "may," "will," "should," "would,"
"anticipate," "expect," "plan," "believe," "intend," and similar expressions
identify forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements to be materially different from the
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include: risks relating to changes in
interest rates; risks of default on loans and concentrations within our
portfolio; the possible insufficiency of our allowance for loan losses; regional
economic conditions; competition; governmental regulation and supervision;
failure or circumvention of our internal controls; reliance on Integra Bank to
fund dividends to our shareholders; disruption of business or dilution of
shareholder value as a result of mergers or acquisitions; our ability to retain
key personnel; failure or disruption of our information systems; and
technological change. We discuss these risks and other factors in our most
recent Annual Report on Form 10-K. We may update that discussion in this or
another periodic report we file with the SEC thereafter. We undertake no
obligation to revise or update these risks, uncertainties and other factors
except as may be set forth in our periodic reports.

OVERVIEW

This overview of management's discussion and analysis highlights selected
information and may not contain all of the information that is important to you
in understanding our performance during the period. For a more complete
understanding of trends, events, commitments, uncertainties, liquidity, capital
resources, and critical accounting estimates, you should carefully read this
entire document.

During the first six months of 2006, we continued to make progress in
implementing our three-year strategic plan (2004-2006) to build shareholder
value relative to our peers. The plan consists of four key elements:

     1.   Accelerate revenue growth;

     2.   Improve operating efficiency;

     3.   Provide quality service, develop employees and continue to increase
          our managerial depth; and

     4.   Lower our risk profile by reducing non-performing loans.

Second quarter net income was $7,390, a decrease of $60, or 0.8% from the second
quarter of 2005, and an increase of $833, or 12.7%, from the first quarter of
2006. Earnings per diluted share were $0.42 and $0.43 for the second quarter
2006 and 2005, respectively. Net income and earnings per diluted share were
$13,947 and $0.795 for the six months ended June 30, 2006, as compared to
$13,839 or $0.794 for the six months ended June 30, 2005.

Return on assets and return on equity were 1.09% and 13.24%, respectively, for
the second quarter of 2006, compared to 1.08% and 13.92% for the second quarter
of 2005 and 0.98% and 11.96% for the first quarter of 2006.

The second quarter of 2006 was highlighted by the following items:

1.   Commercial loans grew 11% on an annualized basis from the first quarter of
     2006, accompanied by strong growth in commercial demand deposit balances.
     Continued strong commercial loan growth, accompanied by an increase in
     commercial demand deposit account balances from the first quarter of
     $7,064, or 17.2% on an annualized basis, resulted in an improved asset mix
     and stronger balance sheet that helped contribute to a higher level of
     earnings. To help continue that growth, we added a commercial banking team
     during the second quarter to the Cincinnati and Northern Kentucky area that
     we expect will add to the success experienced by our commercial real estate
     lending team.

2.   Our net interest margin increased 8 basis points and net interest income
     increased $625 from the first quarter of 2006. In addition to the improved
     asset mix and increase in non-interest bearing deposits, non-accrual loans
     decreased by $14,486 from the first quarter of 2006. We reinvested those
     funds in earning assets, contributing to a higher level of interest income.
     Fee income also increased. The yield on earning assets increased 32 basis
     points for the quarter, outpacing the increase in costs of the liabilities
     funding those assets, which increased 27 basis points. These yields
     increased in part due to increases in market interest rates. Should the
     current trend of rising interest rates cease, we could continue to
     experience an increase in interest expense on deposits due to our customers
     opting for higher rate deposit products.


                                       17

<PAGE>

3.   Non-interest income increased by $1.1 million or 13% from the first quarter
     of 2006. The increase in non-interest income was driven by higher deposit
     service charges, which increased $981 or 24.2% from the first quarter of
     2006. The ongoing and continued success of the High Performance Checking
     ("HPC") program implemented in 2005 continues to increase fee income and
     overall profitability.

4.   Non-performing loans declined by $14,525 and the ratio of non-performing to
     total loans declined to 0.43%, a reduction of 84 basis points from the
     first quarter and the lowest since 1995. We received a payoff on a $12,643
     non-performing loan in April 2006, resulting in a charge-off of $1,671. Net
     charge-offs for the quarter were 69 basis points and this loan accounted
     for 38 basis points. This compares to net charge-offs of 36 basis points in
     net charge-offs for the first quarter of 2006.

5.   Non-interest expenses were consistent with the first quarter of 2006.
     Second quarter non-interest expense was consistent with the first quarter
     and included a $503 decline in personnel expense, which was offset by
     slight increases in other areas. The quarter included the expense
     associated with the issuance of stock options and restricted stock for
     employees and directors. The annualized full year expense associated with
     the stock based compensation issued during the second quarter is expected
     to approximate $500. We reduced our efficiency ratio to 62.3%, the lowest
     since the second quarter of 2001 and expect non-interest expense to decline
     in the second half of the year. This expected reduction, coupled with
     continued anticipated higher revenue levels, should improve our efficiency
     ratio over the second half of the year.

In summary, we believe that the results for the second quarter indicate that we
are making progress on achieving the four key elements of our plan. The quarter
was marked by continued strong commercial loan and deposit growth and higher
levels of deposit service charges, as well as the reduction of non-performing
loans to our lowest levels since 1995. We continue to experience margin pressure
as a result of the flat yield curve and increasing rates, however expect the
margin and net interest income to be stable to improving in future quarters if
we can continue to improve our earning asset mix by growing higher yielding
commercial loans and generating low cost funds. We expect to manage our expenses
closely and realize future benefits from the expense reduction initiatives
undertaken during the first half of the year. We will continue to focus on
adding more customers and doing more with them, while continuing our focus on
expense and capital management.

We believe that comparisons of the current quarter to the second quarter of 2005
are not as meaningful as comparisons to the first quarter of 2006, primarily
because the results for the second quarter of 2005 included the following items:

     1.   The sale of three branches that resulted in a gain of $6,218, and
          included loans of $13,772 and deposits of $68,448;

     2.   the transfer of $9,788 in identified loans to held-for-sale and the
          recording of $1,460 in charge-offs to reflect the estimated market
          value of the loans;

     3.   an increase in the provision for loan losses of $4,316, including a
          specific reserve for one $14,256 secured loan;

     4.   a $383 writedown of premiums related to acquired loans, offset by an
          interest recovery of $421 and related fees on previously charged-off
          loans;

     5.   a loss on the sale of securities of $340; and

     6.   the sale of an insurance affiliate for a loss of $185.

Our financial results are more fully discussed in the following sections of this
report.

FINANCIAL OVERVIEW

Net income for the quarter ended June 30, 2006 was $7,390 compared to $7,450 for
the same period of 2005. Earnings per share, on a diluted basis, were $0.42 for
the second quarter of 2006, compared to $0.43 for the second quarter of 2005.

Annualized returns on average assets and equity for the three months ended June
30, 2006 were 1.09% and 13.24%, respectively, compared with 1.08% and 13.92% in
the same period of 2005.

Net income for the six months ended June 30, 2006 was $13,947, compared to net
income of $13,839 for the same period of 2005. The income per share, on a
diluted basis, was $0.795 and $0.794 for the first half of 2006 and 2005,
respectively. Returns on average assets and equity for the six months ended June
30, 2006 were 1.03% and 12.60%, respectively, compared with 1.01% and 13.1% in
the same period of 2005.

CRITICAL ACCOUNTING POLICIES

There have been no changes to our critical accounting policies since those
disclosed in the Annual Report on Form 10-K for the year ended December 31,
2005, with the exception of the adoption of SFAS No. 123(R), "Share Based
Payments", as discussed in Note 1.


                                       18

<PAGE>

NET INTEREST INCOME

Net interest income was $20,743 for the three months ended June 30, 2006
compared with $20,796 for the same period in 2005 and $40,861 and $41,857 for
the six months ended June 30, 2006 and 2005, respectively. The net interest
margin for the three months ended June 30, 2006 was 3.42% compared to 3.45% for
the same three months of 2005, while the margin for the six months ended June
30, 2006 was 3.38%, as compared to 3.47% for the six months ended June 30, 2005.

The primary components of the change in margin and net interest income for the
second quarter of 2006 to the second quarter of 2005 were:

     1.   Our interest income and the resulting margin increased due to
          increases in average loan yields, which increased from 6.02% to 6.98%
          and were driven by an increase in commercial loan yields, including
          loan fees, from 6.21% to 7.35%. This increase to the margin was
          diluted by increases in investment yields of only 7 basis points.
          Commercial loan yields increased to 7.10% for the six months ended
          June 30, 2006, as compared to 6.02% for the six months ended June 30,
          2005, contributing to an overall increase in yield on earning assets
          of 69 basis points to 6.27%. The increases in yields were due, in
          part, to increases in market interest rates and resulting changes to
          our pricing. Yields for the second quarter of 2006, as compared to the
          first quarter of 2006, increased in part to the payoff of a $12,643
          non-performing loan in April, 2006 and the reinvestment of those funds
          to interest earning assets.

     2.   Our margin and net interest income decreased as a result of increases
          in interest bearing liabilities costs of 94 basis points from 2.43% to
          3.37%, which outpaced the increase in overall asset yields of 77 basis
          points. The cost of interest bearing liabilities was negatively
          impacted by 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. It was also negatively impacted by a shift in balances
          from lower rate checking and savings accounts to higher cost money
          market accounts and certificates of deposit, as the rates on those
          products increased and became more attractive to our customers.
          Interest bearing liabilities costs increased 91 basis points for the
          six months ended June 30, 2006, as compared to the six months ended
          June 30, 2005, outpacing yields on earning assets, which increased 69
          basis points.

     3.   An increase to net interest income resulting from an increase in
          average loan outstandings of $89,452, which included an increase of
          $100,542 in higher yielding commercial loans, partially offset by a
          decline in lower yielding residential real estate mortgage loans of
          $29,981. Total average loans represented 71.4% of earning assets for
          the second quarter of 2006, compared to 67.2% for the second quarter
          of 2005, reflecting an improvement in our mix of earning assets to
          higher yielding assets.

     4.   The impact of the strategic decision to reduce the our securities
          portfolio by an average of $101,788 for the second quarter of 2006, as
          compared to the second quarter of 2005. This reduction resulted in a
          decline in net interest income, but in an increase in the net interest
          margin. The average balance of investment balances, on a year-to-date
          basis, declined $115,462, producing similar results.


                                       19

<PAGE>

AVERAGE BALANCE SHEET AND ANALYSIS OF NET INTEREST INCOME

<TABLE>
<CAPTION>
                                                         2006                             2005
                                            ------------------------------   ------------------------------
                                              Average    Interest   Yield/     Average    Interest   Yield/
For Three Months Ended June 30,              Balances      &Fees     Cost     Balances      &Fees     Cost
-------------------------------             ----------   --------   ------   ----------   --------   ------
<S>                                         <C>          <C>        <C>      <C>          <C>        <C>
EARNING ASSETS:
Short-term investments                      $    2,763    $    23    3.24%   $    4,658    $    35    3.05%
Loans held for sale                              1,909         34    7.21%        8,644        136    6.28%
Securities                                     674,782      8,475    5.02%      776,570      9,603    4.95%
Regulatory Stock                                31,359        447    5.71%       33,068        371    4.49%
Loans                                        1,774,532     31,133    6.98%    1,685,080     25,495    6.02%
                                            ----------    -------    ----    ----------    -------    ----
   Total earning assets                      2,485,345    $40,112    6.43%    2,508,020    $35,640    5.66%
                                                          =======                          =======
Allowance for loan loss                        (21,291)                         (23,160)
Other non-earning assets                       261,756                          283,922
                                            ----------                       ----------
TOTAL ASSETS                                $2,725,810                       $2,768,782
                                            ==========                       ==========
INTEREST-BEARING LIABILITIES:
Deposits
   Savings and interest-bearing demand      $  507,404    $ 1,023    0.80%   $  571,946    $ 1,026    0.72%
   Money market accounts                       273,986      2,506    3.67%      228,912      1,255    2.20%
   Certificates of deposit and other time      964,046      9,800    4.08%      848,730      6,164    2.91%
                                            ----------    -------    ----    ----------    -------    ----
      Total interest-bearing deposits        1,745,436     13,329    3.06%    1,649,588      8,445    2.05%
Short-term borrowings                          321,978      3,283    3.91%      345,873      2,610    2.91%
Long-term borrowings                           148,970      2,087    5.87%      286,322      2,849    4.03%
                                            ----------    -------    ----    ----------    -------    ----
   Total interest-bearing liabilities        2,216,384    $18,699    3.37%    2,281,783    $13,904    2.43%
                                                          =======                          =======
Non-interest bearing deposits                  265,806                          251,258
Other noninterest-bearing liabilities and
   shareholders' equity                        243,620                          235,741
                                            ----------                       ----------
TOTAL LIABILITIES AND
   SHAREHOLDERS' EQUITY                     $2,725,810                        2,768,782
                                            ==========    =======    ====    ==========    =======    ====
Interest income/earning assets                            $40,112    6.43%                 $35,640    5.66%
Interest expense/earning assets                            18,699    3.01%                  13,904    2.21%
                                                          -------    ----                  -------    ----
   Net interest income/earning assets                     $21,413    3.42%                 $21,736    3.45%
                                                          =======    ====                  =======    ====
</TABLE>

Tax exempt income presented on a tax equivalent basis based on a 35% federal tax
rate.

Federal tax equivalent adjustments on securities are $614 and $882 for 2006 and
2005, respectively

Federal tax equivalent adjustments on loans are $56 and $57 for 2006 and 2005,
respectively.


                                       20
<PAGE>

AVERAGE BALANCE SHEET AND ANALYSIS OF NET INTEREST INCOME

<TABLE>
<CAPTION>
                                                         2006                             2005
                                            ------------------------------   ------------------------------
                                              Average    Interest   Yield/     Average    Interest   Yield/
For Six Months Ended June 30,                Balances     & Fees     Cost     Balances     & Fees     Cost
-----------------------------               ----------   --------   ------   ----------   --------   ------
<S>                                         <C>          <C>        <C>      <C>          <C>        <C>
EARNING ASSETS:
Short-term investments                      $   10,577    $   231    4.38%   $    3,211    $    46    2.90%
Loans held for sale                              1,846         65    7.17%        7,669        241    6.36%
Securities                                     675,459     16,822    5.01%      790,921     19,275    4.87%
Regulatory Stock                                32,226        853    5.32%       33,055        745    4.51%
Loans                                        1,762,614     59,919    6.79%    1,667,223     49,618    5.95%
                                            ----------    -------    ----    ----------    -------    ----
   Total earning assets                      2,482,722    $77,890    6.27%    2,502,079    $69,925    5.58%
                                                          =======                          =======
Allowance for loan loss                        (22,720)                         (23,354)
Other non-earning assets                       262,070                          281,303
                                            ----------                       ----------
TOTAL ASSETS                                $2,722,072                       $2,760,028
                                            ==========                       ==========
INTEREST-BEARING LIABILITIES:
Deposits
   Savings and interest-bearing demand      $  506,727    $ 1,974    0.76%   $  578,541    $ 1,993    0.69%
   Money market accounts                       266,778      4,649    3.51%      226,900      2,262    2.01%
   Certificates of deposit and other time      910,480     17,759    3.93%      847,160     11,866    2.82%
                                            ----------    -------    ----    ----------    -------    ----
      Total interest-bearing deposits        1,683,985     24,382    2.91%    1,652,601     16,121    1.97%
Short-term borrowings                          333,375      6,548    3.67%      253,915      3,424    2.63%
Long-term borrowings                           199,997      4,765    5.19%      369,114      6,794    3.70%
                                            ----------    -------    ----    ----------    -------    ----
   Total interest-bearing liabilities        2,217,357    $35,695    3.23%    2,275,630    $26,339    2.32%
                                                          =======                          =======
Non-interest bearing deposits                  260,958                          251,819
Other noninterest-bearing liabilities
   and shareholders' equity                    243,757                          232,579
                                            ----------                       ----------
TOTAL LIABILITIES AND
   SHAREHOLDERS' EQUITY                     $2,722,072                       $2,760,028
                                            ==========                       ==========
Interest income/earning assets                            $77,890    6.27%                 $69,925    5.58%
Interest expense/earning assets                            35,695    2.89%                  26,339    2.11%
                                                          -------    ----                  -------    ----
   Net interest income/earning assets                     $42,195    3.38%                 $43,586    3.47%
                                                          =======    ====                  =======    ====
</TABLE>

Tax exempt income presented on a tax equivalent basis based on a 35% federal tax
rate.

Federal tax equivalent adjustments on securities are $1,223 and $1,610 for 2006
and 2005, respectively

Federal tax equivalent adjustments on loans are $111 and $119 for 2006 and 2005,
respectively.

NON-INTEREST INCOME

Non-interest income decreased $3,994 to $9,117 for the second quarter ended June
30, 2006, compared to $13,111 from the second quarter of 2005. The net decrease
was primarily attributable to:

     1.   The $6,218 gain on the sale of three branches during the second
          quarter of 2005.

     2.   Losses during the second quarter of 2005 of $340 on the sale of
          securities, and $185 on the sale of an insurance agency affiliate.

     3.   Higher service charges on deposit accounts for the second quarter of
          2006, which increased $1,091 from the second quarter of 2005, or
          27.7%, as we continued to add new customers and open new accounts.


                                       21

<PAGE>

     4.   An increase in debit card interchange fee income of $222, which was
          driven by a higher number of active accounts and higher levels of
          usage.

Non-interest income for the six months ended June 30, 2006 was $17,178 compared
to $19,655 from the same period in 2005. The six-month results for 2005 included
the gain on the sale of the three branches of $6,218, securities losses of
$1,073 and the $185 loss on the sale of the insurance agency. The results for
the six months ended June 30, 2006, as compared to the same period in 2005,
included increases in deposit service charges of $2,124 and debit card
interchange income of $417.

NON-INTEREST EXPENSE

Non-interest expense decreased $815 to $19,260 for the quarter ended June 30,
2006, compared to $20,075 from the second quarter of 2005. The net decrease was
primarily attributable to:

     1.   A reduction in salaries and employee benefits expense of $750. The
          decrease is due to a lower number of full-time equivalent employees
          (FTEs), which were 803 at June 30, 2006, as compared to 847 at June
          30, 2005. This reduction has occurred throughout the past year as we
          have identified opportunities to improve efficiency and redeploy
          resources to business activities that have the highest potential for
          revenue or improved productivity. The reduction in incentives has been
          impacted by the redesign of some of our sales incentive plans and,
          partially, the impact of the lower level of FTEs. The increase in
          benefits expense is largely a result of higher health insurance
          expenses.

     2.   Lower professional fees, which declined $333 from the year ago
          quarter. This includes a portion of the impact of changing our audit
          firm and significantly reducing those fees, lower legal fees and
          non-recurring consulting fees incurred during the second quarter of
          2005 related to the HPC program.

     3.   Partially offsetting expenses related to the issuance of stock options
          and restricted stock issued in May 2006, which were accounted for
          using SFAS No. 123(R), and are expected to approximate $500 on an
          annual, full-year basis. Expense for the second quarter included $118
          of expense for restricted stock issued to recipients eligible for
          immediate retirement.

Non-interest expense for the six months ended June 30, 2006 was $38,418,
compared to $39,304 from the same period in 2005. These results included an
increase in health insurance expense of $859. This increase was due to lower
than expected expense during the first half of 2005 resulting from lower
estimates of incurred but not reported claims for our self-insured health plan,
coupled with higher than expected claims during the first half of 2006.

The six months ended June 30, 2006 also included lower salary expense of $533, a
reduction in incentives and commissions expense of $333 and lower professional
fees, all of which are discussed above. Additionally, processing costs declined
by $496, almost all of which came during the first quarter of 2006, due
primarily to the elimination of processing costs for the merchant credit card
program we sold in 2005.

INCOME TAX EXPENSE

Income tax expense was $2,351 and $4,421 for the three months and six months
ended June 30, 2006, respectively, compared to $2,066 and $3,678 for the same
period in 2005. An increase in the effective tax rate from 21.7% to 24.1%
resulted in $231 of the quarterly increase, while the remainder was due to a
higher level of pre-tax income. An increase in the effective tax rate from 21.0%
to 24.1% for the six months ended June 30, 2006, accounted for $537 of the year
to date increase of $743. We continue to expect an approximate 24% effective tax
rate for all of 2006 because we project higher levels of taxable income.

FINANCIAL POSITION

Total assets at June 30, 2006 were $2,743,508 compared to $2,708,142 at December
31, 2005.

SECURITIES

Investment securities available for sale were $652,821 at June 30, 2006,
compared to $681,030 at December 31, 2005, and represent the second highest
earning asset component after loans. All of our securities are currently held as
"available for sale" and recorded at their fair market values. Because of an
increasing rate environment, the market value of securities available for sale
on June 30, 2006, was $20,677 lower than the amortized cost, as compared to
$10,269 lower at December 31, 2005.

We do not believe any individual unrealized loss in the securities portfolio
represents other-than-temporary impairment. The factors we consider in
evaluating the securities include whether the securities are backed by the U.S.
government or its agencies and how that affects credit quality and recovery of
the full principal balance, the relationship of the unrealized losses to
increases in market interest rates, the length of time the securities have had
temporary impairment, and our ability to hold the securities for the time
necessary to


                                       22

<PAGE>

recover the amortized cost. At June 30, 2006, the market value of every security
held by us was at least 90% of the book value, with the differences being
primarily attributable to changes in interest rates.

We regularly review the composition of our securities portfolio, taking into
account market risks, the current and expected interest rate environment,
liquidity needs, and our overall interest rate risk profile and strategic goals.

REGULATORY STOCK

Regulatory stock, defined as Federal Reserve Bank and FHLB stock, includes
mandatory equity securities, which do not have a readily determinable fair value
and are therefore carried at cost on the balance sheet. From time to time we
purchase Federal Reserve stock according to requirements set by the regulatory
agency.

LOANS HELD FOR SALE

Loans held for sale represent less than 1% of total assets and increased to $667
at June 30, 2006 from $522 at December 31, 2005. Loans held for sale consist of
residential mortgage loans sold to the secondary market and are valued at the
lower of cost or market in the aggregate.

LOANS

Total loans at June 30, 2006, were $1,792,775 compared to $1,750,192 at December
31, 2005. The increase is mainly attributable to an increase in commercial real
estate loans of $62,806, partially offset by declines in commercial and
industrial loans of $12,859, and consumer loans of $7,080.

The average balance of total loans for the second quarter of 2006 increased
$23,967 from the first quarter average, driven primarily by the increased volume
of commercial real estate loans.

The increased balances in commercial real estate loans result from our ongoing
commercial real estate initiative and reflect high levels of real estate
construction and land development loans originated through this line of
business.

The decrease in consumer loans is primarily due to the rapid increase in
interest rates and higher gas prices. As rates have increased, borrowers with
increasing variable rate home equity line of credit products have refinanced
into fixed rate first and second mortgages. Higher interest rates and higher gas
prices have also negatively impacted our funding levels for loans originated
through marine and recreational vehicle dealerships. In addition, we
strategically chose not to match low rate competitor pricing in dealer finance
loans, instead choosing to invest those funds in higher yielding commercial
loans.

Total residential mortgage loan originations have continued to decline from
prior levels, as higher rates have led to a lower level of refinancing activity.
Total residential mortgage loans were relatively unchanged from December 31,
2005, increasing $3,409 or 1.5% on an annualized basis.

The average balance of commercial and industrial loans, excluding commercial
real estate, increased $5,630 during the second quarter of 2006 from the first
quarter, driven primarily by an increase in floor plan loans of $1,893.


                                       23
<PAGE>

LOAN PORTFOLIO

<TABLE>
<CAPTION>
                                       June 30,    December 31,
                                         2006          2005
                                      ----------   ------------
<S>                                   <C>          <C>
Commercial, industrial and
   agricultural loans                 $  560,923    $  572,936
Economic development loans and
   other obligations of state and
   political subdivisions                  7,842         8,422
Lease financing                            5,474         5,740
                                      ----------    ----------
      Total commercial                   574,239       587,098

   Commercial real estate
   Commercial mortgages                  188,115       180,907
   Construction and development          241,775       186,177
                                      ----------    ----------
      Total commercial real estate       429,890       367,084

Residential mortgages                    450,659       447,250
Home equity                              131,991       135,685
Consumer loans                           205,999       213,079
                                      ----------    ----------
      Total loans                      1,792,778     1,750,196
Less: unearned income                          3             4
                                      ----------    ----------
      Loans, net of unearned income   $1,792,775    $1,750,192
                                      ==========    ==========
</TABLE>

ASSET QUALITY

The allowance for loan losses is the amount that, in our opinion, is adequate to
absorb probable inherent loan losses as determined by the ongoing evaluation of
the loan portfolio. Our evaluation is based upon consideration of various
factors including growth of the loan portfolio, an analysis of individual
credits, loss data over an extended period of time, adverse situations that
could affect a borrower's ability to repay, prior and current loss experience,
the results of recent regulatory examinations and current economic conditions.

We charge-off loans that we deem uncollectible to the allowance, and we credit
recoveries of previously charged off amounts to the allowance. We charge a
provision for loan losses against earnings at levels we believe are necessary to
assure that the allowance for loan losses can absorb probable losses.

The allowance for loan losses was $21,043 at June 30, 2006, representing 1.17%
of total loans, compared with $24,392 at December 31, 2005. The allowance for
loan losses to non-performing loans ratio improved to 275.8%, compared to 84.2%
at June 30, 2005.

The provision for loan losses was $859 for the three months ended June 30, 2006,
and $1,253 for the six months ended June 30, 2006. This compares to $4,316 and
$4,691 for the three and six months ended June 30, 2005.

During the second quarter of 2005, we established a specific reserve of $2,905
for a $14,256 participation in a multi-bank secured loan and placed this loan on
non-accrual status. During the second quarter of 2006, we received a payoff of
this loan, which then carried a balance of $12,643, resulting in a net
charge-off of $1,671. We loaned $6,500 to a new company that is 100% owned by a
principal of the former borrower and participated part of this loan to another
bank. The new company is an independent operator of limited assortment food
stores that are now part of a nationwide operation with sales in excess of
$4,000,000. The new company's projected performance supports its ability to
repay the newly extended debt.

Also, during the second quarter of 2005, we approved plans to sell approximately
$9,788 in under-performing loans, marked $3,469 in non-accrual loans and $6,319
in performing loans to market and moved the loans to held-for-sale at June 30,
2005. We recorded $1,460 in charge-offs and related provision expense in the
second quarter of 2005 for these loans and sold them as planned in the third
quarter of 2005.

Net charge-offs exceeded the provision by $2,191 during the second quarter of
2006, of which the charge-off mentioned above was $1,671. Net charge-offs for
the quarter totaled $3,050, of which $592 did not have specific reserves and
were covered by the provision of $859. Annualized net charge-offs to average
loans were 0.69% for the quarter, of which the previously mentioned loan made up
38 basis points. This compares to 0.55% for the second quarter of 2005. For the
quarter, net charge-offs included $2,348 of commercial, $610 of consumer and $92
in residential mortgage net charge-offs.


                                       24

<PAGE>

SUMMARY OF ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
                                 Three Months Ended    Six Months Ended
                                      June 30,             June 30,
                                 ------------------   -----------------
                                    2006      2005      2006      2005
                                  -------   -------   -------   -------
<S>                              <C>        <C>       <C>       <C>
Beginning Balance                 $23,234   $23,259   $24,392   $23,794
Loans charged off                  (3,679)   (2,737)   (5,605)   (3,870)
Recoveries                            629       409     1,003       632
Provision for loan losses             859     4,316     1,253     4,691
Decrease due to sale of loans          --        --        --        --
                                  -------   -------   -------   -------
Ending Balance                    $21,043   $25,247   $21,043   $25,247
                                  =======   =======   =======   =======
Percent of total loans               1.17%     1.49%     1.17%     1.49%
Annualized % of average loans:
   Net charge-offs                   0.69%     0.55%     0.53%     0.39%
   Provision for loan losses         0.19%     1.03%     0.14%     0.57%
</TABLE>

Total non-performing loans, at June 30, 2006, consisting of nonaccrual and loans
90 days or more past due, were $7,631, declines of $17,422 from December 31,
2005 and $14,525 from March 31, 2006. Non-performing loans were 0.43% of total
loans, compared to 1.43% and 1.27% at December 31, 2005 and March 31, 2006. The
0.43% non-performing to total loans ratio is the lowest we have experienced
since 1995.

Listed below is a comparison of non-performing assets.

<TABLE>
<CAPTION>
                                 June 30,   December 31,
                                   2006        2005
                                 --------   ------------
<S>                              <C>        <C>
Nonaccrual loans                  $7,511       $25,013
90 days or more past due loans       120            40
                                  ------       -------
   Total non-performing loans      7,631        25,053
Other real estate owned              719           440
                                  ------       -------
   Total non-performing assets    $8,350       $25,493
                                  ======       =======
Ratios:
Non-performing Loans to Loans       0.43%         1.43%
Non-performing Assets to Loans
   and Other Real Estate Owned      0.47%         1.46%
Allowance for Loan Losses to
   Non-performing Loans           275.76%        97.36%
</TABLE>

DEPOSITS

Total deposits were $2,045,351 at June 30, 2006, compared to $1,808,503 at
December 31, 2005, an increase of $236,848. Total valuable core deposits, which
include non-interest and interest bearing demand, money market and savings
deposits, increased from $1,023,978 at December 31, 2005 to $1,081,825 at June
30, 2006.

Changes in the average balances of deposits for the second quarter of 2006, as
compared to the first quarter, included increases in non-interest bearing demand
deposits of $9,749, or 15.2% on an annualized basis, driven by an increase in
business checking of $7,064. Average interest bearing deposit account balances
for the second quarter of 2006, as compared to the first quarter, increased by
$14,494 in money market accounts, $15,291 in retail certificates of deposit,
$36,588 in public fund time deposits and $51,184 in brokered certificates of
deposit. These increases are part of our funding strategy, which included less
reliance on repurchase agreements and other short and long-term borrowings.

SHORT-TERM BORROWINGS

Short-term borrowings include federal funds purchased, short-term Federal Home
Loan Bank advances and securities sold under repurchase agreements, which
decreased $87,925 from $399,588 at December 31, 2005, to $311,663 at June 30,
2006. Securities sold under repurchase agreements are collateralized
transactions acquired in national markets as well as from our commercial
customers as part of a cash management service.


                                       25

<PAGE>

At June 30, 2006, we had a $15,000 line of credit with no outstanding balance.
We also had the capacity to borrow from the Federal Reserve Bank discount
window, uncommitted securities eligible for pledging, and available uncommitted
Fed Funds lines from various financial institutions.

LONG-TERM BORROWINGS

Long-term borrowings include FHLB advances, term notes, or other similar
obligations. Included in long-term borrowings is $3,722 of FHLB advances to fund
investments and loans and to satisfy other funding needs, which decreased
$103,284 from December 31, 2005. We must pledge mortgage-backed securities and
mortgage loans as collateral to secure these advances. At June 30, 2006, we were
in compliance with those requirements.

OFF-BALANCE SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL OBLIGATIONS

There have been no material changes in off-balance sheet arrangements and
contractual obligations since December 31, 2005.

CAPITAL RESOURCES AND LIQUIDITY

We and our banking subsidiary, Integra Bank N.A. (the "Bank") have capital
ratios that substantially exceed all regulatory requirements, including the
regulatory guidelines for "well-capitalized" that apply to the Bank. It is our
intent for the Bank to remain well-capitalized at all times. The regulatory
capital ratios for us and the Bank are shown below.

<TABLE>
<CAPTION>
                                              Regulatory Guidelines              Actual
                                           --------------------------   -----------------------
                                              Minimum        Well-      June 30,   December 31,
                                           Requirements   Capitalized     2006         2005
                                           ------------   -----------   --------   ------------
<S>                                        <C>            <C>           <C>        <C>
Integra Bank Corporation:
Total Capital (to Risk-Weighted Assets)        8.00%           N/A       12.20%       13.15%
Tier 1 Capital (to Risk-Weighted Assets)       4.00%           N/A       10.49%       11.21%
Tier 1 Capital (to Average Assets)             4.00%           N/A        8.11%        8.33%

Integra Bank N.A.:
Total Capital (to Risk-Weighted Assets)        8.00%         10.00%      11.76%       12.66%
Tier 1 Capital (to Risk-Weighted Assets)       4.00%          6.00%      10.74%       11.43%
Tier 1 Capital (to Average Assets)             4.00%          5.00%       8.35%        8.56%
</TABLE>

Liquidity of a banking institution reflects the ability to provide funds to meet
loan requests, accommodate possible outflows in deposits and other borrowings
and protect it against interest rate volatility. We continuously analyze our
business activity to match maturities of specific categories of short-term and
long-term loans and investments with specific types of deposits and borrowings.

For the Bank, the primary sources of short-term asset liquidity have been
Federal Funds sold, commercial paper, interest-bearing deposits with other
financial institutions, and securities available for sale. In addition to these
sources, short-term asset liquidity is provided by scheduled principal paydowns
and maturing loans and securities. The balance between these sources and the
need to fund loan demand and deposit withdrawals is monitored under our capital
markets program. When these sources are not adequate, we may use Federal Funds
purchases, brokered deposits and repurchase agreements, sell investment
securities or utilize the Bank's borrowing capacity with the FHLB, as
alternative sources of liquidity. At June 30, 2006, and December 31, 2005,
respectively, Federal Funds sold and other short-term investments were $2,598
and $112. Additionally, at June 30, 2006, we had $380,000 available from unused
Federal Funds lines and in excess of $321,880 in unencumbered securities
available for repurchase agreements or liquidation. The Bank also has a
"borrower in custody" line with the Federal Reserve Bank totaling over $502,805
as part of its liquidity contingency plan.

Our liquidity is provided by dividends from the Bank, cash balances, credit line
availability, liquid assets, and proceeds from capital market transactions.
Federal banking law limits the amount of capital distributions that national
banks can make to their holding companies without obtaining prior regulatory
approval. A national bank's dividend paying capacity is affected by several
factors, including the amount of its net profits (as defined by statute) for the
two previous calendar years and net profits for the current year up to the date
of dividend declaration. We also have an unsecured line of credit available
which permits us to borrow up to $15,000. There was no balance outstanding on
this line as of June 30, 2006.

Our liquidity is required to support operational expenses, pay taxes, meet
outstanding debt and trust preferred securities obligations, provide dividends
to shareholders and other general corporate purposes. The Board of Directors has
approved a long-term dividend


                                       26
<PAGE>

payout ratio of 35% to 50% of anticipated earnings, and in June 2006, increased
the quarterly dividend from $0.16 to $0.17 per share. We believe that funds to
fulfill these obligations for 2006 will be available from currently available
cash and marketable securities, dividends from the Bank, our line of credit, or
other sources that we expect to be available during the year. We believe that we
have adequate liquidity to meet our foreseeable needs.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk is the exposure of earnings and capital to changes in
interest rates. Fluctuations in rates affect earnings by changing net interest
income and other interest-sensitive income and expense levels. Interest rate
changes affect the market value of capital by altering the underlying value of
assets, liabilities and off balance sheet instruments. Our interest rate risk
management program is comprised of several components. The components include
(1) Board of Directors' oversight, (2) senior management oversight, (3) risk
limits and control, (4) risk identification and measurement, (5) risk monitoring
and reporting and (6) independent review. The objective of our interest rate
risk management processes is to manage the impact of interest rate volatility on
earnings and capital.

Our interest rate risk is managed through the Corporate Asset and Liability
Committee (Corporate ALCO) with oversight through the ALCO Committee of the
Board of Directors (Board ALCO). The Board ALCO meets at least twice a quarter
and is responsible for the establishment of policies, risk limits and
authorization levels. The Corporate ALCO meets at least monthly and is
responsible for implementing policies and procedures, overseeing the entire
interest rate risk management process and establishing internal controls.

Interest rate risk is measured and monitored on a proactive basis by utilizing a
simulation model. The model is externally validated periodically by an
independent third party.

We use the following key methodologies to measure interest rate risk.

EARNINGS AT RISK (EAR). EAR is considered our best source of managing short-term
interest rate risk (one year time frame). This measure reflects the dollar
amount of net interest income that will be impacted by changes in interest
rates. We use a simulation model to run immediate and parallel changes in
interest rates from a base scenario using implied forward rates. The standard
simulation analysis assesses the impact on net interest income over a 12-month
horizon by shocking the implied forward yield curve up and down 100, 200, and
300 basis points. Additional yield curve scenarios are tested from time to time
to assess the risk to changes in the slope of the yield curve and changes in
basis relationships. These interest rate scenarios are executed against a
balance sheet utilizing projected growth and composition. Additional simulations
are run from time to time to assess the risk to earnings and liquidity from
balance sheet growth occurring faster or slower than anticipated as well as the
impact of faster or slower prepayments in the loan and securities portfolio.
This simulation model projects the net interest income forecasted under each
scenario and calculates the percentage change from the base interest rate
scenario. The Board ALCO has approved policy limits for changes in one year EAR
from the base interest rate scenario of minus 10 percent to a 200 basis point
rate shock in either direction. At June 30, 2006, we would experience a negative
0.80% change in net interest income if interest rates moved downward 200 basis
points. If interest rates moved upward 200 basis points, we would experience a
negative 1.50% change in net interest income. The reduction in EAR in the
declining rate scenario and the increase in EAR in the rising rate scenario can
be attributed to an increase in short term CD funding and the aging of $112,500
in fixed term debt. In addition, changes in prepayment expectations had a
positive impact on the risk in the declining rate scenario. Both simulation
results are within the policy limits established by the Board ALCO.

Trends in Earnings at Risk

<TABLE>
<CAPTION>
                         Estimated Change in EAR from
                       the Base Interest Rate Scenario
                    -------------------------------------
                    -200 basis points   +200 basis points
                    -----------------   -----------------
<S>                 <C>                 <C>
June 30, 2006             -0.80%              -1.50%
March 31, 2006            -3.33%               0.20%
December 31, 2005         -3.76%              -0.99%
</TABLE>

ECONOMIC VALUE OF EQUITY (EVE). We consider EVE to be our best analytical tool
for measuring long-term interest rate risk. This measure reflects the dollar
amount of net equity that will be impacted by changes in interest rates. We use
a simulation model to evaluate the impact of immediate and parallel changes in
interest rates from a base scenario using current market rates. The standard
simulation analysis assesses the impact on EVE by shocking the current market
yield curve up and down 100, 200, and 300 basis points. This simulation model
generates multiple rate paths under each rate scenario and projects the
estimated economic value of assets and liabilities for each scenario. The
difference between the economic value of total assets and the economic value of
total liabilities is referred to as the economic value of equity. The simulation
model calculates the percentage change from the base interest rate scenario.

The Board ALCO has approved policy limits for changes in EVE. The variance limit
for EVE is measured in an environment when the base interest rate scenario is
shocked up or down 200 basis points within a range of plus or minus 15%.


                                       27

<PAGE>

At June 30, 2006, we would experience a positive 2.50% change in EVE if interest
rates moved downward 200 basis points. If interest rates moved upward 200 basis
points, we would experience a negative 6.70% change in EVE. The positive change
in the EVE risk measure for the declining rate scenario is primarily attributed
to the change in prepayment expectations that accompanied the increase in market
rates. Both of these measures are within Board approved policy limits.

Trends in Economic Value of Equity

<TABLE>
<CAPTION>
                    Estimated Change in EVE from the Base
                           Interest Rate Scenario
                    -------------------------------------
                    -200 basis points   +200 basis points
                    -----------------   -----------------
<S>                 <C>                 <C>
June 30, 2006              2.50%              -6.70%
March 31, 2006             0.70%              -6.56%
December 31, 2005         -0.51%              -6.35%
</TABLE>

The assumptions in any of these simulation runs are inherently uncertain. Any
simulation cannot precisely estimate net interest income or economic value of
the assets and liabilities or precisely predict the impact of higher or lower
interest rates on net interest income or on the economic value of the assets and
liabilities. Actual results will differ from simulated results due to the
timing, magnitude and frequency of interest-rate changes, the difference between
actual experience and the characteristics assumed, as well as changes in market
conditions and management strategies.

ITEM 4: CONTROLS AND PROCEDURES

Based on an evaluation of our disclosure controls and procedures, as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e), as of June 30, 2006, our principal
executive officer and principal financial officer have concluded that such
disclosure controls and procedures were effective as of that date.

There have been no changes in the Company's internal control over financial
reporting that occurred during the quarter ended June 30, 2006, that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.


                                       28

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no material developments in the legal proceedings disclosed in
our Annual Report on Form 10-K for the year ended December 31, 2005. We are
involved in other legal proceedings in the ordinary course of our business. We
do not expect that any of those legal proceedings would have a material adverse
effect on our consolidated financial position, results of operations or cash
flows.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in our Annual
Report on Form 10-K for the year ended December 31,2005.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In April, 2006, we authorized a common stock repurchase program under which we
may purchase up to 2.5 percent of our outstanding common shares, or
approximately 450,000 shares, or a maximum aggregate purchase amount of $10
million through June 30, 2007. Stock repurchases under this program may be made
through open market and privately negotiated transactions at such times and in
such amounts as we deem appropriate. The timing and actual number of shares
repurchased will depend on a variety of factors including price, corporate and
regulatory requirements, and other market conditions. We do not intend to
publicly announce any suspension of the program. There were no purchases made
under this program through June 30, 2006.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

On April 19, 2006, we held our annual meeting of shareholders. There were
17,481,948 shares of common stock outstanding on the February 21, 2006 record
date that were entitled to vote at the meeting.

The following directors received votes as noted and were elected to terms to
expire in 2009:

<TABLE>
<CAPTION>
                                              Abstain & Broker
                     Affirmative   Negative       Non-Votes
                     -----------   --------   ----------------
<S>                  <C>           <C>        <C>
Sandra Clark Berry    13,467,285    272,259        243,219
Thomas W. Miller      13,466,713    272,242        243,109
Richard M. Stivers    13,389,894    272,201        320,610
Michael T. Vea        13,363,252    274,291        320,610
</TABLE>

Continuing directors and the date of the expiration of their term in office are
as follows:

<TABLE>
<S>                <C>
2007               2008
Dr. H. Ray Hoops   George D. Martin
Robert W. Swan     William E. Vieth
Robert D. Vance    Daniel T. Wolfe
Roxy M. Baas
</TABLE>

The shareholders also approved the appointment of Crowe Chizek and Company LLC
as our independent auditors for 2006. The following represents the results of
the vote:

<TABLE>
<CAPTION>
Affirmative   Negative   Abstain
-----------   --------   -------
<S>           <C>        <C>
 13,455,459    491,834    51,689
</TABLE>

ITEM 5. OTHER INFORMATION

During the period covered by this report, the Audit Committee of the Board of
Directors approved the engagement of Crowe Chizek and Company LLC, our
independent registered public accounting firm, to perform certain tax planning,
compliance and advisory services which represent 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 of the
Sarbanes Oxley Act of 2002.


                                       29

<PAGE>

ITEM 6. EXHIBITS

Exhibits. The following documents are filed as exhibits to this report:

31.1   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
       of Chief Executive Officer

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

32     Certification of Chief Executive Officer and Chief Financial Officer


                                       30

<PAGE>

                                   SIGNATURES

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

                                        INTEGRA BANK CORPORATION


                                        By /s/ Michael T. Vea
                                           -------------------------------------
                                           Chairman of the Board, Chief
                                           Executive Officer and President
                                           August 8, 2006


                                        /s/ Martin M. Zorn
                                        ----------------------------------------
                                        Executive Vice President, and
                                        Chief Financial Officer
                                        August 8, 2006


                                       31