INTEGRA BANK CORP - FORM 10-K

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EX-21 - INTEGRA BANK CORP	v214502_ex21.htm
EX-23 - INTEGRA BANK CORP	v214502_ex23.htm
EX-32 - INTEGRA BANK CORP	v214502_ex32.htm
EX-31.(A) - INTEGRA BANK CORP	v214502_ex31a.htm
EX-10.(R) - INTEGRA BANK CORP	v214502_ex10r.htm
EX-31.(B) - INTEGRA BANK CORP	v214502_ex31b.htm
EX-99.2 - INTEGRA BANK CORP	v214502_ex99-2.htm
EX-99.1 - INTEGRA BANK CORP	v214502_ex99-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2010

¨	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)

Indiana		35-1632155
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification number)

21 S.E. Third Street, P.O. Box 868, Evansville, IN		47705-0868
(Address of principal executive offices)		(Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act: COMMON STOCK, $1.00 STATED VALUE

(Title of Class)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨ No x

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company x

(Do not check if a smaller reporting company)

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

Based on the closing sales price as of June 30, 2010 (the last business day of the registrant’s most recently completed second quarter), the aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $15,268,000.

The number of shares outstanding of the registrant's common stock was 21,052,697 at March 1, 2011.

Documents incorporated by reference: None

INTEGRA BANK CORPORATION

2010 FORM 10-K ANNUAL REPORT

Table of Contents

		PAGE
		NUMBER

PART I

Item 1.	Business	4
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	16
Item 3.	Legal Proceedings	16
Item 4.	[Removed and Reserved]	17

PART II

Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters, and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data	17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 8.	Financial Statements and Supplementary Data	41
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	91
Item 9A.	Controls and Procedures	91
Item 9B.	Other Information	91

PART III

Item 10.	Directors and Executive Officers and Corporate Governance	91
Item 11.	Executive Compensation	91
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	91
Item 13.	Certain Relationships and Related Transactions, and Director Independence	91
Item 14.	Principal Accountant Fees and Services	91

PART IV

Item 15.	Exhibits and Financial Statement Schedules	92

Signatures		93

Forward Looking Statements

Certain matters discussed in the Annual Report on Form 10-K including, but not limited to, matters described in Item 1, “Business,” Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” and Item 8, “Financial Statements and Supplementary Data” are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). Such forward-looking statements may include statements of forecasts about the Company’s financial condition and results of operation, expectations for future financial performance, and assumptions for those forecasts and expectations. The Company makes forward-looking statements about potential problem loans, cash flows, strategic initiatives, capital initiatives, and the adequacy of the allowance for loan losses. Actual results might differ significantly from the Company’s forecasts and expectations due to several factors. Some of these factors include, but are not limited to, impact of the current national and regional economy (including real estate values), changes in loan portfolio composition, the ability of the Company and its subsidiary to comply with regulatory enforcement agreements, directives and obligations, the Company’s ability to recapitalize its subsidiary, the Company’s access to liquidity sources, the Company’s ability to attract and retain quality customers, interest rate movements and the impact on net interest margins such movements may cause, the Company’s products and services, the Company’s ability to attract and retain qualified employees, regulatory changes, and competition with other banks and financial institutions. Words such as “expects,” “anticipates,” “believes,” and other similar expressions, and future or conditional verbs such as “will,” “may,” “should,” “would,” and “could,” are intended to identify such forward-looking statements. Readers should not place undue reliance on the forward-looking statements, which reflect management’s view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. This statement is included for the express purpose of protecting the Company under PSLRA’s safe harbor provisions.

FORM 10-K

INTEGRA BANK CORPORATION

December 31, 2010

ITEM 1. BUSINESS

General

Integra Bank Corporation is a bank holding company that is based in Evansville, Indiana, whose principal subsidiary is Integra Bank N.A., a national banking association, or Integra Bank or the Bank. As used in this report and unless the context provides otherwise, the terms we, us, the company and Integra refer to Integra Bank Corporation and its subsidiaries. At December 31, 2010, we had total consolidated assets of $2.4 billion. We provide services and assistance to our wholly-owned subsidiaries and Integra Bank’s subsidiaries in the areas of strategic planning, administration, and general corporate activities. In return, we receive income and/or dividends from Integra Bank, where most of our business activities take place.

Integra Bank provides a wide range of financial services to the communities it serves in Indiana, Kentucky, and Illinois. These services include commercial, consumer and mortgage loans, lines of credit, credit, debit and gift cards, transaction accounts, time deposits, repurchase agreements, letters of credit, corporate treasury management services, correspondent banking services, mortgage servicing, annuity products and services, credit life and other selected insurance products, safe deposit boxes, online banking, and complete personal and corporate trust services.

Integra Bank’s products and services are delivered through its customers’ channel of preference. At December 31, 2010, Integra Bank had 52 banking centers, and 100 automatic teller machines. Integra Bank also provides telephone banking services, and a suite of Internet-based products and services that can be found at our website, http://www.integrabank.com.

At December 31, 2010, we had 517 full-time equivalent employees. We provide a wide range of employee benefits, are not a party to any collective bargaining agreements, and in the opinion of management, enjoy good relations with our employees. We are an Indiana corporation which was formed in 1985.

COMPETITION

We have active competition in all areas in which we presently engage in business. Integra Bank competes for commercial and individual deposits, loans and financial services with other banks and depository institutions and non-bank financial service companies in its market area. Since the amount of money a bank may lend to a single borrower, or to a group of related borrowers, is limited to a percentage of the bank’s capital, competitors larger than Integra Bank have higher lending limits than Integra Bank.

We also compete with various money market and other mutual funds, brokerage houses, other financial institutions, insurance companies, leasing companies, regulated small loan companies, credit unions, governmental agencies, and commercial entities offering financial services and products.

FOREIGN OPERATIONS

We and our subsidiaries have no foreign banking centers or significant business with foreign obligors or depositors.

REGULATION AND SUPERVISION

General

We are a registered bank holding company under the Bank Holding Company Act of 1956, or BHCA, and as such are subject to regulation by the Board of Governors of the Federal Reserve System, or the Federal Reserve. We file periodic reports with the Federal Reserve regarding our business operations, and are subject to examination by the Federal Reserve.

Integra Bank is supervised and regulated primarily by the Office of the Comptroller of the Currency, or the OCC. It is also a member of the Federal Reserve System and subject to the applicable provisions of the Federal Reserve Act and the Federal Deposit Insurance Act.

The federal banking agencies have broad enforcement powers, including the power to terminate deposit insurance, impose substantial fines and other civil and criminal penalties, and appoint a conservator or receiver. Failure to comply with applicable laws, regulations, and supervisory agreements could subject us, Integra Bank, as well as our officers, directors, and other institution-affiliated parties, to administrative sanctions and potentially substantial civil money penalties.

Capital Adequacy and Prompt Corrective Action

Federal bank regulatory agencies use capital adequacy guidelines in the examination and regulation of banks and bank holding companies. If regulatory capital falls below minimum guideline levels, a bank or bank holding company will become subject to certain restrictions, depending on the severity of the capital deficiency.

The OCC and Federal Reserve Board use risk-based capital guidelines that are designed to make such capital requirements more sensitive to differences in risk profiles among banks and bank holding companies, to account for off-balance sheet exposure and to minimize disincentives for holding liquid assets. Under the guidelines, an institution’s regulatory capital is divided into two categories, tier 1 capital and tier 2 capital. Tier 1 capital generally consists of common shareholders’ equity, surplus, undivided profits, and certain trust preferred securities, less intangibles. Tier 2 capital generally consists of the allowance for credit losses subject to certain limitations and hybrid capital instruments, such as preferred stock and mandatory convertible debt. Tier 2 capital is limited to 100% of tier 1 capital. Total capital is the sum of tier 1 and tier 2 capital. Capital adequacy is primarily measured with reference to the institution’s risk-weighted assets. The guidelines assign risk weightings to an institution’s assets and certain off balance sheet items, such as commitments, in an effort to quantify the relative risk of each asset and to determine the minimum capital required to support the risk. These risk-weighted assets are then divided by tier 1 capital and to total capital to arrive at the tier 1 risk-based ratio and the total capital risk-based ratio, respectively. Current guidelines require all bank holding companies and federally regulated banks to maintain a minimum risk-based total capital ratio equal to 8%, of which at least 4% must be tier 1 capital. However, the agencies may require banks or bank holding companies to maintain ratios in excess of the minimums.

The federal regulations also establish, as a supplement to risk-based guidelines, minimum requirements for a leverage ratio, which is tier 1 capital as a percentage of total average assets less intangibles. The principal objective of the tier 1 leverage ratio is to constrain the maximum degree to which a bank or bank holding company may leverage its tangible equity capital base.

Under Prompt Corrective Action, or PCA, regulations adopted by the OCC, an institution is assigned to one of five capital categories depending on its total risk-based capital ratio, tier 1 risk-based capital ratio, tier 1 leverage ratio and certain subjective factors. As of December 31, 2010, Integra Bank was considered undercapitalized which is the third of the five categories for purposes of the PCA regulations. An institution which is deemed to be undercapitalized, or worse, may be subject to certain mandatory supervisory corrective actions and face restrictions on increasing its average total assets, making acquisitions, establishing branches, engaging in new lines of business, accepting or renewing brokered deposits, paying interest rates on deposits in excess of regulatory limits and making senior executive management changes without prior regulatory approval and will be required to submit a capital restoration plan, or CRP.

As discussed below, Integra Bank is subject to a Capital Directive requiring it to increase its regulatory capital to achieve and maintain a Total Risk-Based Capital Ratio of at least 11.5% and a Tier 1 Leverage Ratio of at least 8.0%. Integra Bank is not in compliance with the Capital Directive. The Company’s and Bank’s regulatory capital ratios are also reported in Note 16 to the Consolidated Financial Statements under Item 8.

Additional broad regulatory authority is granted with respect to the lowest two capital categories – significantly undercapitalized and critically undercapitalized – including forced mergers, ordering new elections for directors, forcing divestiture by its holding company, requiring management changes and prohibiting the payment of bonuses to senior management. Additional mandatory and discretionary regulatory actions apply to significantly undercapitalized and critically undercapitalized banks, the latter being a bank with a tangible capital ratio of 2% or less. The primary federal regulatory agency may appoint a receiver or conservator for a critically undercapitalized bank after 90 days, even if the bank is still solvent.

In addition, the appropriate federal banking agency may appoint the FDIC as conservator or receiver for a banking institution (or the FDIC may appoint itself, under certain circumstances) if one or more of a number of circumstances exist, including, without limitation, the banking institution: becoming undercapitalized and having no reasonable prospect of becoming adequately capitalized; failing to become adequately capitalized when required to do so; failing to submit a timely and acceptable capital restoration plan, or materially failing to implement an accepted capital restoration plan. Supervision and regulation of bank holding companies and their subsidiaries is intended primarily for the protection of depositors, the deposit insurance funds of the FDIC, and the banking system as a whole, not for the protection of bank holding company shareholders or creditors.

Failure to submit an acceptable Capital Restoration Plan, or CRP, could result in the Bank being treated as if it was in the "significantly undercapitalized" category for PCA purposes. This would result in the imposition of additional enforcement actions or restrictions, and could include the following:

Additional restrictions regarding transactions with affiliates;

More stringent asset growth restrictions;

Additional restrictions on other Bank activities;

Directives to improve management, such as ordering election of a new board of directors, dismissing directors or senior executives and employing qualified senior executive officers;

Prohibiting deposits from correspondent banks;

Requiring prior approval for any capital distributions by a parent holding company;

Requiring the holding company to divest itself of the Bank; and

Other actions the OCC believes would enable the Bank to carry out its obligations.

Recent Regulatory Developments

The Bank is subject to a formal agreement it entered into with the OCC in May 2009 that requires the Bank to reduce its non-performing assets and improve earnings. In August 2010, the Bank received a Capital Directive from the OCC directing it to increase and maintain its Total Risk-Based Capital Ratio to at least 11.5% and its Tier 1 Leverage Ratio to at least 8% by November 20, 2010, which it failed to do. The additional capital required to satisfy the Capital Directive as of December 31, 2010 was approximately $119.0 million.

On January 30, 2011, the Bank filed its call report as of December 31, 2010, indicating that its regulatory capital had declined from the "adequately capitalized" to "undercapitalized" category for purposes of the PCA regulations. As an undercapitalized bank, the Bank is subject to several mandatory requirements, including restrictions on payment of capital distributions and management fees, asset growth and on certain expansionary activities, including acquisitions, new branches and new lines of business. The Bank is also restricted from accepting certain types of employee benefit plan deposits. The Bank is also required to submit an acceptable CRP to the OCC no later than March 16, 2011. The CRP must include a written guarantee from the Company of the Bank's obligations until the Bank has been adequately capitalized on average during each of four consecutive calendar quarters and the guarantee must be secured by a pledge of assets acceptable to the OCC.

Acquisitions and Changes in Control

Under the BHCA, without the prior approval of the Federal Reserve, we may not acquire direct or indirect control of more than 5% of the voting stock or substantially all of the assets of any company, including a bank, and may not merge or consolidate with another bank holding company. In addition, the BHCA generally prohibits us from engaging in any non-banking business unless such business is determined by the Federal Reserve to be so closely related to banking as to be a proper incident thereto. Under the BHCA, the Federal Reserve has the authority to require a bank holding company to terminate any activity or relinquish control of a non-bank subsidiary (other than a non-bank subsidiary of a bank) upon the Federal Reserve's determination that such activity or control constitutes a serious risk to the financial soundness and stability of any bank subsidiary of the bank holding company.

The Change in Bank Control Act prohibits a person or group of persons from acquiring "control" of a bank holding company unless the Federal Reserve has been notified and has not objected to the transaction. Under a rebuttable presumption established by the Federal Reserve, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Securities Exchange Act of 1934 would, under the circumstances set forth in the presumption, constitute acquisition of control of the Company. In addition, any company is required to obtain the approval of the Federal Reserve, under the BHCA, before acquiring 25% (5% in the case of an acquirer that is a bank holding company) or more of our outstanding common stock, or otherwise obtaining control or a "controlling influence" over us.

Dividends and Other Relationships with Affiliates

The parent holding company is a legal entity separate and distinct from its subsidiaries. The primary source of the parent company's cash flow has been the payment of dividends to it by Integra Bank. Generally, such dividends are limited to the lesser of: undivided profits (less bad debts in excess of the allowance for credit losses); and absent regulatory approval, the net profits for the current year combined with retained net profits for the preceding two years. Further, a depository institution may not pay a dividend if it would become "undercapitalized" as determined by federal banking regulatory agencies; or if, in the opinion of the appropriate banking regulator, the payment of dividends would constitute an unsafe or unsound practice. Due to recent operating losses, Integra Bank can not pay any dividends without prior regulatory approval.

Integra Bank is subject to additional restrictions on its transactions with affiliates, including the parent company. State and federal statutes limit credit transactions with affiliates, prescribing forms and conditions deemed consistent with sound banking practices, and imposing limits on permitted collateral for credit extended.

Under Federal Reserve policy, the parent company is expected to serve as a source of financial and managerial strength to Integra Bank. The Federal Reserve requires the parent company to stand ready to use its resources to provide adequate capital funds during periods of financial stress or adversity. This support may be required by the Federal Reserve at times when the parent company may not have the resources to provide it or, for other reasons, would not be inclined to provide it. Additionally, under the Federal Deposit Insurance Corporation Improvements Act of 1991, the parent company may be required to provide a limited guarantee of compliance of any insured depository institution subsidiary that may become "undercapitalized" with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency. We intend to guarantee the Bank's obligations under the CRP that is to be filed no later than March 16, 2011. We currently have no source of revenues because of the Bank's inability to pay us dividends and our other resources are limited. As a result, our guarantee may, as a practical matter, provide no meaningful support for the CRP.

Deposit Insurance

Integra Bank is subject to federal deposit insurance assessments by the FDIC. The assessment rate is based on classification of a depository institution into a risk assessment category. Such classification is based upon the institution's capital level and certain supervisory evaluations of the institution by its primary regulator.

The FDIC may terminate the deposit insurance of any insured depository institution if the FDIC determines, after a hearing, that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, order, or any condition imposed in writing by, or written agreement with, the FDIC. The FDIC may also suspend deposit insurance temporarily during the hearing process for a permanent termination of insurance if the institution has no tangible capital. Management is not aware of any activity or condition that could result in termination of the deposit insurance of Integra Bank.

Community Reinvestment Act

The Community Reinvestment Act of 1977, or CRA requires financial institutions to meet the credit needs of their entire communities, including low-income and moderate-income areas. CRA regulations impose a performance-based evaluation system, which bases the CRA rating on an institution's actual lending, service, and investment performance. Federal banking agencies may take CRA compliance into account when regulating a bank or bank holding company's activities; for example, CRA performance may be considered in approving proposed bank acquisitions. A copy of the most recent CRA public evaluation issued by the OCC for Integra Bank is available at each banking center location.

Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Act, or the GLB Act, fostered further consolidation among banks, securities firms, and insurance companies by allowing eligible bank holding companies to register as “financial holding companies.” Financial holding companies can offer banking, securities underwriting, insurance (both agency and underwriting) and merchant banking services.

The Federal Reserve serves as the primary “umbrella” regulator of financial holding companies, with jurisdiction over the parent company and more limited oversight over its subsidiaries. The primary regulator of each subsidiary of a financial holding company depends on the activities conducted by the subsidiary. A financial holding company need not obtain Federal Reserve approval prior to engaging, either de novo or through acquisitions, in financial activities previously determined to be permissible by the Federal Reserve. Instead, a financial holding company need only provide notice to the Federal Reserve within 30 days after commencing the new activity or consummating the acquisition. We have no present plans to become a financial holding company.

Under the GLB Act, federal banking regulators adopted rules limiting the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties. The rules require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to nonaffiliated third parties. The privacy provisions of the GLB Act affect how consumer information is transmitted through diversified financial services companies and conveyed to outside vendors.

We do not disclose any nonpublic personal information about any current or former customers to anyone except as permitted by law and subject to contractual confidentiality provisions which restrict the release and use of such information.

USA Patriot Act of 2001

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 or USA Patriot Act increased the power of the United States Government to obtain access to information and to investigate a full array of criminal activities. In the area of money laundering activities, the statute added terrorism, terrorism support, and foreign corruption to the definition of money laundering offenses and increased the civil and criminal penalties for money laundering; applied certain anti-money laundering measures to United States bank accounts used by foreign persons; prohibited financial institutions from establishing, maintaining, administering or managing a correspondent account with a foreign shell bank; provided for certain forfeitures of funds deposited in United States interbank accounts by foreign banks; provided the Secretary of the Treasury with regulatory authority to ensure that certain types of bank accounts are not used to hide the identity of customers transferring funds and to impose additional reporting requirements with respect to money laundering activities; and included other measures. The Department of Treasury has issued regulations concerning compliance by covered United States financial institutions with the statutory anti-money laundering requirements regarding correspondent accounts established or maintained for foreign banking institutions, including the requirement that financial institutions take reasonable steps to ensure that correspondent accounts provided to foreign banks are not being used to indirectly provide banking services to foreign shell banks.

Integra Bank has policies, procedures and controls in place to detect, prevent and report money laundering and terrorist financing. Integra has implemented policies and procedures to comply with regulations including: (1) due diligence requirements that administer, maintain, or manage private bank accounts or correspondent accounts for non-U.S. persons; (2) standards for verifying customer identification at account opening; and (3) rules to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering.

The Dodd-Frank Act

On July 21, 2010, financial regulatory reform legislation entitled the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (the “Dodd-Frank Act”) was signed into law. The Dodd-Frank Act implements many changes across the financial services sector, including provision that, among other things, will:

Centralize responsibility for consumer financial protection by creating a new agency within the Federal Reserve, the Consumer Financial Protection Bureau, responsible for implementing, examining and enforcing compliance with federal consumer financial laws;

Apply the same leverage and risk-based capital requirements that apply to insured depository institutions to most bank holding companies;

Change the assessment base for federal deposit insurance from the amount of insured deposits to consolidated assets less tangible capital, eliminate the ceiling on the size of the Deposit Insurance Fund (“DIF”) and increase the floor of the DIF;

Make permanent the $250,000 limit for federal deposit insurance and increase the cash limit of Securities Investor Protection Corporation protection from $100,000 to $250,000 and provide unlimited federal deposit insurance until December 31, 2012 for non-interest bearing demand transaction accounts, including Interest on Lawyer Trust Accounts (“IOLTAs”), at all insured depository institutions;

Repeal the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transactions and other accounts;

Implement corporate governance revisions, including with regard to executive compensation and proxy access by shareholders that apply to all public companies, not just financial institutions; and

Increase the authority of the Federal Reserve to examine us and any of our non-bank subsidiaries.

Some of these provisions may have the consequence of increasing our expenses, decreasing our revenues, and changing the activities in which we choose to engage. The environment in which banking organizations will now operate, including legislative and regulatory changes affecting capital, liquidity, supervision, permissible activities, corporate governance and compensation, changes in fiscal policy and steps to eliminate government support for banking organizations cannot now be foreseen. Provisions in the legislation that revoke the Tier 1 capital treatment of trust preferred securities do not affect us as our trust preferred securities were issued before May 19, 2010, and we are grandfathered under an exception for depository institution holding companies with total consolidated assets of less than $15 billion as of December 31, 2009. The specific impact of the Dodd-Frank Act on our current activities or new financial activities we may consider in the future, our financial performance and the markets in which we operate will depend on the manner in which the relevant agencies develop and implement the required rules and the reaction of market participants to these regulatory developments. Many aspects of the Dodd-Frank Act are subject to rulemaking and will take effect over several years, making it difficult to anticipate the overall financial impact on us, our customers or the financial industry more generally.

Additional Regulation, Government Policies, and Legislation

In addition to the restrictions discussed above, the activities and operations of us and Integra Bank are subject to a number of additional complex and, sometimes overlapping, laws and regulations. These include state usury and consumer credit laws, state laws relating to fiduciaries, the Federal Truth-in-Lending Act, the Federal Equal Credit Opportunity Act, the Fair and Accurate Credit Transactions Act, the Fair Credit Reporting Act, the Truth-in-Savings Act, anti-redlining legislation, and antitrust laws.

The actions and policies of banking regulatory authorities have had a significant effect on our operating results and those of Integra Bank in the past and are expected to do so in the future.

Finally, the earnings of Integra Bank are affected by actions of the Federal Reserve to regulate aggregate national credit and the money supply through such means as open market dealings in securities, establishment of the discount rate on member bank borrowings from the Federal Reserve, establishment of the federal funds rate on member bank borrowings among themselves, and changes in reserve requirements against member bank deposits. The Federal Reserve's policies may be influenced by many factors, including inflation, unemployment, short-term and long-term changes in the international trade balance and fiscal policies of the United States Government. The effects of Federal Reserve actions on our future performance cannot be predicted.

Capital Purchase Program

On February 27, 2009, we entered into a Letter Agreement with the United States Department of Treasury, or Treasury Department, as part of the Treasury Department’s Troubled Asset Relief Program/Capital Purchase Program, or CPP, established under the Emergency Economic Stabilization Act of 2008, or EESA. Pursuant to the Securities Purchase Agreement-Standard Terms, or Securities Purchase Agreement, attached to the Letter Agreement, we issued to the Treasury Department 83,586 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series B, or Treasury Preferred Stock, having a liquidation amount per share of $1, and a warrant, or Warrant, to purchase up to 7,418,876 shares, or Warrant Shares, of our common stock, at an initial per share exercise price of $1.69, for an aggregate purchase price of $83.6 million.

The Treasury Preferred Stock pays cumulative dividends at a rate of 5% per year for the first five years and 9% per year thereafter. The Treasury Preferred Stock is generally non-voting. The Warrant entitles the holder to purchase 7,418,876 shares of common stock at an initial per share exercise price of $1.69, subject to adjustment, for a term of ten years. The Warrant also provides for the adjustment of the exercise price and the number of shares of common stock issuable upon exercise pursuant to customary anti-dilution provisions, such as upon stock splits or distributions of securities or other assets to holders of our common stock, and upon certain issuances of our common stock at or below a specified price relative to the initial exercise price. The Treasury Department has agreed not to exercise voting power with respect to any shares of common stock issued upon exercise of the Warrant.

We did not have a sufficient number of authorized shares of our common stock to permit full exercise of the Warrant as of February 27, 2009. Our shareholders approved an amendment to our articles of incorporation increasing the number of authorized shares of common stock and the issuance of the common stock upon exercise of the Warrant in accordance with applicable stock exchange rules.

As a result of our participation in the CPP, we agreed to various requirements and restrictions imposed on all participants. The Treasury Department can change the terms of participation at any time.

The current terms of participation in the Capital Purchase Program include the following:

To the extent we are eligible to use a Registration Statement on Form S-3 under the Securities Act of 1933, we are required to register for resale the Treasury Preferred Stock, the Warrant and the Warrant Shares. We registered the resale of the Warrant and the Warrant Shares in June 2009. We are not currently eligible to use Form S-3 to register the resale of the Treasury Preferred Stock.

As long as the Treasury Preferred Stock remains outstanding, unless all accrued and unpaid dividends for all past dividend periods on the Treasury Preferred Stock are fully paid, we will not be permitted to declare or pay dividends on any common stock, any junior preferred shares or, generally, any preferred shares ranking pari passu with the Treasury Preferred Stock (other than in the case of pari passu preferred shares, dividends on a pro rata basis with the Treasury Preferred Stock), nor will we be permitted to repurchase or redeem any common stock or preferred shares other than the Treasury Preferred Stock. We suspended payment of cash dividends on the Treasury Preferred Stock and common stock during 2009. The unpaid dividends on the Treasury Preferred Stock will continue to accrue and cumulate until paid in full. Because we have not paid dividends on the Treasury Preferred Stock for six consecutive quarters, the Treasury Department has the right to appoint two new members to our Board of Directors. To date, the Treasury Department has not exercised this right.

Unless the Treasury Preferred Stock has been transferred to unaffiliated third parties or redeemed in whole, until February 27, 2012, the Treasury Department’s approval is required for any increase in common stock dividends or any share repurchases other than repurchases of the Treasury Preferred Stock, repurchases of junior preferred shares or common stock in connection with the administration of any employee benefit plan in the ordinary course of business and consistent with past practice and purchases under certain other limited circumstances specified in the Securities Purchase Agreement.

We must also comply with the executive compensation and corporate governance standards imposed by the American Recovery & Reinvestment Act of 2009, or ARRA, for so long as the Treasury Department holds any securities acquired from us pursuant to the Securities Purchase Agreement or upon exercise of the Warrant, excluding any period during which the Treasury Department holds only the Warrant, or the Covered Period. The ARRA executive compensation standards apply to our Senior Executive Officers (as defined in the ARRA) as well as certain other employees. The Treasury Department adopted an interim final rule effective June 15, 2009, which includes, without limitation, the following requirements:

Any incentive compensation for Senior Executive Officers must not encourage unnecessary and excessive risks that threaten the value of the financial institution;

Any bonus, retention award or incentive compensation paid (or under a legally binding obligation to be paid) to a Senior Executive Officer or any of our 20 next most highly-compensated employees based on statements of earnings, revenues, gains or other criteria that are later proven to be materially inaccurate must be subject to recovery or “clawback” by us;

We are prohibited from paying or accruing any bonus, retention award or incentive compensation with respect to our five most highly-compensated employees or such higher number as the Secretary of the Treasury Department may determine is in the public interest, except for grants of restricted stock that do not fully vest during the Covered Period and do not have a value which exceeds one-third of an employee’s total annual compensation;

Severance payments to the Senior Executive Officers and our five next most highly-compensated employees, generally referred to as “golden parachute” payments, are prohibited, except for payments for services performed or benefits accrued;

Compensation plans that encourage manipulation of reported earnings are prohibited;

The Treasury Department may retroactively review bonuses, retention awards and other compensation previously paid to a Senior Executive Officer or any of our 20 next most highly-compensated employees that the Treasury Department finds to be inconsistent with the purposes of the Capital Purchase Program or otherwise contrary to the public interest;

Our Board of Directors had to establish a company-wide policy regarding excessive or luxury expenditures;

Our proxy statements for annual shareholder meetings must permit a non-binding “say on pay” shareholder vote on the compensation of executives;

Compensation in excess of $500,000 for each Senior Executive Officer must not be deducted for federal income tax purposes; and

We must comply with the executive compensation reporting and recordkeeping requirements established by the Treasury Department.

The Treasury Department has certain supervisory and oversight duties and responsibilities under the EESA, the CPP and the ARRA. Also, the Special Inspector General for the Troubled Asset Relief Program has the duty, among other things, to conduct, supervise and coordinate audits and investigations of the purchase, management and sale of assets by the Treasury Department under the CPP, including the Treasury Preferred Stock purchased from us.

STATISTICAL DISCLOSURE

The statistical disclosure concerning us and Integra Bank, on a consolidated basis, included in response to Item 7 of this report is hereby incorporated by reference herein.

AVAILABLE INFORMATION

Our Internet website address is http://www.integrabank.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available or may be accessed free of charge through the Investor Relations section of our Internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission, or SEC. Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

The following corporate governance documents are also available through the Investor Relations section of our Internet website or may be obtained in print form by request to Secretary, Integra Bank Corporation, 21 S. E. Third Street, P. O. Box 868, Evansville, IN 47705-0868: ALCO and Finance Committee Charter, Audit Committee Charter, Code of Business Conduct and Ethics, Compensation Committee Charter, Nominating and Governance Committee Charter, Corporate Governance Principles, Credit and Risk Management Committee Charter, Wealth Management Committee Charter, and Policy Against Excessive or Luxury Expenditures.

EXECUTIVE OFFICERS OF THE COMPANY

Certain information concerning our executive officers as of March 1, 2011, is set forth in the following table.

NAME	AGE	OFFICE AND BUSINESS EXPERIENCE

Michael J. Alley	55	Chairman of the Board, President, and Chief Executive Officer of the Company (May 2009 to present); Chairman of the Board, Patriot Investments LLC (June 2002 to present).

Michael B. Carroll	49	Executive Vice President and Chief Financial Officer, (December 2009 to present), Executive Vice President and Controller of the Company (December 2008 to December 2009); Senior Vice President and Controller of the Company (December 2005 to December 2008); Senior Vice President and Risk Manager of the Company (May 2002 to December 2005).
Roger M. Duncan	57	Executive Vice President, Integra Bank, Retail Manager and Community Markets Manager; President of Evansville Region (July 2008 to present); Executive Vice President, Integra Bank, President of Evansville Region and Community Banking Division (October 2006 to July 2008); Market Executive, Community Banking Division (January 2000 to October 2006).

John W. Key	51	Executive Vice President, Chief Credit and Risk Officer (December 2009 to present); Executive Vice President of Corporate Banking (April 2007 to December 2009); South Central Region President, Old National Bank (January 2004 to April 2007).

The above information includes business experience during the past five years for each of our executive officers. Our executive officers serve at the discretion of the Board of Directors. There is no family relationship between any of our directors or executive officers.

ITEM 1A. RISK FACTORS

The following are the material risks and uncertainties that we believe are relevant to us. You should carefully consider the risks and uncertainties described below together with all of the other information included or incorporated by reference in this report. These are not the only risks facing us. Additional risks and uncertainties that management is not aware of, focused on, or that we currently deem immaterial may also impair our business operations.

RISKS RELATED TO OUR BUSINESS

We May Not be Able to Continue to Operate as a Going Concern.

We reported a net loss of $124.2 million in 2010, and total losses of $430.1 million in the past three years. We have determined that the Bank will have to be recapitalized in the very near future to continue operations. We have engaged financial advisors and have been working with them to explore a number of strategic alternatives to recapitalize the Bank. However, there can be no assurance that we will be able to raise enough capital to complete a successful recapitalization. Federal regulators are continually monitoring the Bank’s liquidity and capital adequacy and evaluating our ability to continue to operate in a safe and sound manner. The Bank’s regulator could, if deemed warranted, impose additional enforcement actions or appoint the FDIC as receiver of the Bank, to protect the interests of the depositors insured by the FDIC. The uncertainty regarding our ability to obtain additional capital or meet future liquidity requirements raises doubt about our ability to continue as a going concern. The consolidated financial statements included in this report, however, do not include any adjustments that may result as an outcome of these uncertainties.

In addition, our customers, employees, vendors, correspondent institutions, and others with whom we do business may react negatively to the substantial doubt about our ability to continue as a going concern. This negative reaction may lead to heightened concerns regarding our financial condition that could result in losses in deposits and customer relationships, key employees, vendor relationships and our ability to do business with correspondent institutions upon which we rely.

Failure to Comply With Bank Regulatory Agreements and Directives Will Have a Material Adverse Effect on Our Business.

The Bank is subject to primary supervision and regulation by the OCC, while we are subject to primary supervision and regulation by the Federal Reserve. We and the Bank are currently subject to a number of enforcement actions with our regulators.

In May 2010, we entered into an agreement with the Federal Reserve Bank of St. Louis. Pursuant to the agreement, we made commitments to, among other things, use financial and management resources to assist Integra Bank in addressing weaknesses identified by the OCC, not pay dividends on outstanding shares or interest or other sums on outstanding trust preferred securities and not incur any additional debt. Any material failures to comply with the agreement would likely result in more stringent enforcement actions by the Federal Reserve which could damage our reputation and have a material adverse effect on our financial position or results of operations.

On January 30, 2011, the Bank filed its call report as of December 31, 2010, indicating that its regulatory capital had declined from the "adequately capitalized" to "undercapitalized" category for purposes of the Prompt Corrective Action (PCA) regulations. As an undercapitalized bank, the Bank is subject to several mandatory requirements, including restrictions on payment of capital distributions and management fees, asset growth and on certain expansionary activities, including acquisitions, new branches and new lines of business. The Bank is also required to submit an acceptable Capital Restoration Plan ("CRP") to the OCC no later than March 16, 2011. The CRP must include a written guarantee from the Company of the Bank's obligations until the Bank has been adequately capitalized on average during each of four consecutive calendar quarters and the guarantee must be secured by a pledge of assets acceptable to the OCC.

Failure to submit an acceptable CRP would result in the Bank being treated as if it was in the "significantly undercapitalized" category for PCA purposes. This would result in the imposition of additional enforcement actions or restrictions.

Imposition of additional enforcement actions could damage our reputation and have a material adverse effect on our business. Ultimately, if the OCC believes the CRP is unacceptable or is not expected to result in the recapitalization of the Bank, it could appoint the FDIC as receiver of the Bank.

Imposition of more stringent enforcement actions could damage our reputation and have a material adverse effect on our business. The OCC may also appoint the FDIC as receiver for the Bank if the OCC believes the CRP is unacceptable and is not expected to result in the recapitalization of the Bank.

We are Required to Raise Additional Capital, but That Capital May Not Be Available.

We and the Bank are required by federal regulatory authorities to maintain adequate levels of capital to support operations. Additional capital is also required for the Bank to support future loan losses. Our ability to raise additional capital depends on conditions in the capital markets, which are outside our control, and on our financial performance and prospects. Accordingly, we cannot be certain of our ability to raise additional capital on any terms. If we cannot raise additional capital, we and the Bank expect to be subject to additional adverse regulatory action including the prospect of the Bank being placed into FDIC receivership, resulting in a complete loss of value for all of our equity holders.

Our Holding Company Debt and Preferred Stock Makes it Difficult to Raise Capital.

At December 31, 2010, we had an aggregate obligation of $102.7 million relating to the principal and accrued unpaid interest on six issues of junior subordinate debentures we have issued. Four of the debentures are held by our statutory business trust subsidiaries that issued trust preferred securities or TRUPs. The TRUPs and the other junior subordinated debentures are held in collaterallized debt obligation (CDO) trusts and were pooled with similar securities issued at the same time by other banks or bank holding companies. The CDO trusts then issued CDO securities to investors in multiple tranches with differing terms of payment and priority. Payments on the CDO securities are funded by payments on the TRUPs or debentures held by the CDO trusts. Each of the CDO trusts are fixed pools meaning that the pooled assets were not intended to be sold, exchanged or modified prior to their maturity. Although we are permitted to defer payments on these securities for up to five years (and we commenced doing so in 2009), the deferred interest payments continue to accrue until paid in full.

In addition, in February 2009 we issued shares of preferred stock and common stock purchase warrants to the U. S. Treasury Department under the TARP/Capital Purchase Plan. The preferred stock has an aggregate liquidation preference of $83.6 million and carries a cumulative dividend of 5% per annum which would increase to 9% in 2014. We stopped paying dividends on the Treasury preferred stock in 2009. Like the holding company debt, unpaid dividends on the Treasury preferred stock continue to accrue until the preferred stock is repaid or restructured.

Our holding company debt and the Treasury preferred stock make it difficult to recapitalize or sell the parent company because any investor or purchaser would effectively assume the outstanding liability on the debt and be required to repay or restructure the Treasury preferred stock in addition to the amount of funds such investors or purchaser would need to recapitalize the Bank.

The Bank has a Significant Concentration in Commercial Real Estate Loans and Continued Deterioration in the Market for Commercial Properties could Significantly Harm its Business and Prospects for Growth.

As of December 31, 2010, approximately 75% of our loan portfolio consisted of commercial and industrial, agricultural, construction and commercial real estate loans. These types of loans are typically larger than residential real estate and consumer loans, which made up the remaining 25% of our loan portfolio. Because the portfolio contains a significant number of commercial and industrial, agricultural, construction and commercial real estate loans with relatively large balances, the deterioration of one or a few of these loans can lead to a significant increase in non-performing loans. Increases in non-performing loans typically result in a net loss of earnings from these loans, an increase in the provision for loan losses and an increase in loan charge-offs, all of which could have a material adverse effect on our financial condition and results of operations.

The Allowance for Credit losses may not be Adequate to Cover Actual Losses.

In accordance with generally accepted accounting principles, we maintain an allowance for credit losses. The allowance for credit losses may not be adequate to cover actual loan losses, and future provisions for loan losses could adversely impact operating results. The allowance for credit losses is based on prior experience, as well as an evaluation of the inherent risks in the current portfolio. The amount of future losses is susceptible to changes in economic, operating and other conditions that may be beyond our control, and these losses may exceed current estimates. Federal regulatory agencies, as an integral part of their examination process, review the loans and allowance for credit losses. While management believes that the allowance for credit losses is adequate to cover current potential losses, management may decide to increase the allowance for credit losses or regulators may require us to increase this allowance. Either of these occurrences could reduce future earnings and regulatory capital ratios.

Our Net Interest Income Has Been Declining.

Our earnings and cash flows are largely dependent upon our net interest income. Net interest income is the difference between interest income earned on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowed funds. Net interest income is dependent on both the level of our earning assets and interest spread. The portions of our assets that are non-earning have increased significantly during the past three years, reducing our net interest income. Further increases in non-earning assets would further reduce net interest income. We have also experienced a significant increase in low earning assets such as cash and zero percent risk weighted U.S. Treasuries and GNMA investment securities in order to maintain a high level of liquidity. Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve. Changes in monetary policy, including changes in interest rates, could influence not only the interest we receive on loans and securities and the amount of interest we pay on deposits and borrowings, but such changes could also affect (1) our ability to originate loans and obtain deposits, (2) the fair value of our financial assets and liabilities, and (3) the average duration of our earning assets. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could be adversely affected. Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings.

Our Allowance for Loan Losses May be Insufficient.

We maintain an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense. This reserve represents our best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in our judgment is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The level of the allowance reflects our ongoing evaluation of various factors, including growth of the portfolio, an analysis of individual credits, adverse situations that could affect a borrower’s ability to repay, prior and current loss experience, the results of regulatory examinations, and current economic conditions. The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks and future trends, all of which may undergo material changes. Changes in economic conditions affecting borrowers and guarantors, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for loan losses. In addition, bank regulatory agencies periodically review our allowance for loan losses and may require an increase in the provision for loan losses or the recognition of further loan charge-offs, based on judgments different than those of management. In addition, if charge-offs in future periods exceed the allowance for loan losses, we will need additional provisions to increase the allowance for loan losses. Any further significant increases in the allowance for loan losses will result in a decrease in net income and possibly capital, and may have a material adverse effect on our financial condition and results of operations. Our annual provision for 2010 was $134.6 million, $20.2 million more than our net charge-offs of $114.4 million.

Our Profitability Depends Significantly on Local Economic Conditions and Trends.

Our success depends primarily on the general economic conditions of the specific local markets in which we operate. Unlike larger national or other regional banks that are more geographically diversified, we provide banking and financial services primarily to customers within a market area of approximately 100 miles surrounding Evansville, Indiana. The local economic conditions in this area have a significant impact on the demand for our products and services as well as the ability of our customers to repay loans, the value of the collateral securing loans and the stability of our deposit funding sources. A significant decline in general economic conditions, caused by inflation, recession, acts of terrorism, outbreak of hostilities or other domestic occurrences, unemployment, changes in securities markets or other factors could impact these local economic conditions and, in turn, have a material adverse effect on our financial condition and results of operations.

We Are Not Able to Pay Interest Payments on our Junior Subordinated Debentures and Dividends on our Common and Preferred Stock.

We have suspended cash dividends on our common stock and the Treasury Preferred Stock and are deferring interest payments on our outstanding junior subordinated debentures. Deferring interest payments on certain of the junior subordinated debentures also results in a deferral of distributions on related trust preferred securities. Deferred payments on our junior subordinated debentures and dividends on the Treasury Preferred Stock are cumulative and therefore unpaid dividends and distributions will accrue and compound on each subsequent payment date. In the event we become subject to any liquidation, dissolution or winding up of affairs, first, the holders of our trust preferred securities, junior subordinated debentures and other creditors and second, holders of the preferred stock will be entitled to receive the liquidation amounts they are entitled to plus the amount of any accrued and unpaid distributions and dividends, before any distribution to the holders of common stock.

We Operate in a Highly Competitive Industry and Market Area.

We face substantial competition in all areas of our operations from a variety of different competitors, many of which are larger and may have more financial resources. Such competitors primarily include national, regional, and community banks within the various markets in which we operate. We also face competition from many other types of financial institutions, including, without limitation, savings and loans, credit unions, finance companies, brokerage firms, insurance companies, factoring companies and other financial intermediaries. Additionally, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Some of our competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can. Local or privately held community banking organizations in certain markets may price or structure their products in such a way that it makes it difficult for us to compete in those markets in a way that allows us to meet our profitability or credit goals. Any competitor may choose to offer pricing on loans and deposits that we think is irrational and choose to not compete with. Competitors may also be willing to extend credit without obtaining covenants or collateral and by offering weaker loan structures than we are willing to accept.

If we fail to develop, maintain and build upon long-term customer relationships in any of these areas, our competitive position and ability to retain market share or grow would be weakened, which, in turn, could have a material adverse effect on our financial condition and results of operations.

We Are Subject to Extensive Government Regulation and Supervision and Face Legal Risks.

We are subject to extensive federal and state regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not creditors or shareholders. These regulations affect several areas, including our lending practices, capital structure, investment practices, dividend policy and growth, and requirements to maintain the confidentiality of information relating to our customers. Congress and federal agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation of statutes, regulations or policies could affect us in substantial and unpredictable ways. Such changes could subject us to additional costs, limit the types of financial services and products we may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things. Failure to comply with laws, regulations or policies, or the agreements with our regulators could result in more severe enforcement sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on our business, financial condition and results of operations. While we have policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. Additionally, the number of regulations we must comply with and the financial resources required to comply with those regulations has continually increased. The cost of complying with these regulations makes it more difficult to remain competitive.

The agencies regulating the financial services industry frequently adopt changes to their regulations. Substantial regulatory and legislative initiatives, including a comprehensive overhaul of the regulatory system in the United States are possible in the years ahead. We are unable to predict whether any of these initiatives will succeed, which form they will take, or whether any additional changes to statutes or regulations, including the interpretation or implementation thereof, will occur in the future. Any such action could affect us in substantial and unpredictable ways and could have a material adverse effect on our business, financial condition and results of operations.

Our Controls and Procedures May Fail or be Circumvented.

We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could result in fraud, operational or other losses that adversely impact our business, results of operations and financial condition. Fraud risks could include fraud by employees, vendors, customers or anyone we or our customers do business or come in contact with.

We Cannot Rely On Dividends From the Bank.

As a holding company we are a separate and distinct legal entity from our subsidiary, Integra Bank. Historically, we have received substantially all of our revenue in the form of dividends from the Bank. Federal laws and regulations limit the amount of dividends that the Bank may pay to us. Recent losses have had the consequence of not allowing the Bank to pay any dividends to us without prior regulatory approval. The holding company has no other sources of revenue.

We May Not Be Able to Attract and Retain Skilled People.

Our success depends, in large part, on our ability to attract and retain key people. Competition for the best people in most activities engaged in by us can be intense and we may not be able to hire people or to retain them. The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of our local markets, years of industry experience and the difficulty of promptly finding qualified replacement personnel.

Our Information Systems May Experience an Interruption or Breach in Security.

We rely heavily on communications and information systems to conduct our business. Any failure, interruption or breach in security of these systems could result in failures or disruptions in our general ledger, deposit, loan and other systems, including risks to data integrity. While we have policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of our information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures, interruptions or security breaches of our information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.

We Continually Encounter Technological Change.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations.

We Are Subject to the Risk of Additional Impairment Charges Relating to Our Securities Portfolio.

Our investment securities portfolio is our second largest earning asset. The value of our investment portfolio has been adversely affected by the unfavorable conditions of the capital markets in general as well as declines in values of the securities we hold. We have taken an aggregate of $22.6 million in charges against earnings since January 1, 2009 for impairments to the value of pooled collateralized debt obligations that we have concluded were "other than temporary." The value of this segment is particularly sensitive to adverse developments affecting the banking industry and the financial condition or performance of the issuing banks – factors that we have no control over and as to which we may receive no advance warning. Although we believe we have appropriately valued our securities portfolio, we cannot assure you that there will not be additional material impairment charges which could have a material adverse effect on our financial condition and results of operations.

Our Common Stock May Not Qualify for Continued Listing on the Nasdaq Capital Market after June 27, 2011.

Our common stock is currently listed on the Nasdaq Capital Market, but it will be delisted unless the closing price of the common stock exceeds $1 for at least ten consecutive trading days prior to June 27, 2011. Although we have agreed to effect a reverse stock split if necessary to regain compliance with the minimum bid rule of the Nasdaq Capital Market, the reverse stock may not have the desired effect. If our common stock is delisted from the Nasdaq Capital Market, there is no assurance that a liquid and efficient market for common stock will be available or develop. Although the shares may be eligible for trading on other exchanges, such as the “OTC Bulletin Board,” it is possible that the ability of a selling shareholder to realize the best market price will be impeded as the result of wider bid-ask spreads.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our net investment in real estate and equipment at December 31, 2010, including that which was held for sale, was $35.4 million. Our offices are located at 21 S.E. Third Street, Evansville, Indiana. The main and all banking center and loan production offices of Integra Bank, and other subsidiaries are located on premises either owned or leased. None of the property is subject to any major encumbrance.

ITEM 3. LEGAL PROCEEDINGS

We are involved in 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 4. [REMOVED AND RESERVED]

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the Nasdaq Capital Market under the symbol IBNK.

The following table lists the stock price for the past two years and dividend information for our common stock.

		Range of Stock Price				Dividends
	Quarter	High		Low		Declared
2010	1st	$	1.25	$	0.55		0.00
	2nd		2.00		0.62		0.00
	3rd		1.00		0.62		0.00
	4th		0.87		0.50		0.00

2009	1st	$	2.90	$	0.75		0.01
	2nd		2.65		0.97		0.01
	3rd		1.90		0.97		0.00
	4th		1.40		0.56		0.00

Historically, the holding company has depended upon the dividends it received from Integra Bank to pay cash dividends to its shareholders. Currently, Integra Bank cannot pay such dividends without prior approval of the OCC. Given our and the Bank’s regulatory agreements and obligations and the need to recapitalize the Bank, it is highly unlikely that we will pay dividends in the foreseeable future.

As of February 1, 2011, we were owned by 1,941 shareholders of record not including nominee holders.

The following table shows certain information as of December 31, 2010, regarding our compensation plans under which our equity securities are authorized for issuance.

				Number of securities
				remaining available for
				future issuance under
	Number of securities to		Weighted-average	equity compensation
	be issued upon exercise		exercise price of	plans (excluding
	of outstanding options,		outstanding options,	securities reflected in
	warrants and rights		warrants and rights	column A)
Plan Category	(A)		(B)	(C)

Equity compensation plans
approved by security holders	375,993	$	20.57	434,940

ITEM 6. SELECTED FINANCIAL DATA

Not Applicable.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

INTRODUCTION

The discussion and analysis which follows is presented to assist in the understanding and evaluation of our financial condition and results of operations as presented in the following consolidated financial statements and related notes. The text of this review is supplemented with various financial data and statistics. All amounts presented are in thousands, except for share and per share data and ratios.

The following discussion contains certain forward-looking statements that reflect our plans, estimates and beliefs. The actual results may be materially different from the results implied by such forward-looking statements.

OVERVIEW

The unfavorable economic conditions that have persisted since 2007 continued to significantly impact the banking industry and our performance during 2010. During 2010, we continued to experience significant loan loss provisions and charge-offs. Our level of non-performing assets, and resulting credit quality impacted our operations during 2010 in the areas of net interest income, provision for loan losses, non-interest expense and reversals of tax benefits.

While we faced many challenges in 2010, we substantially completed restructuring to our new operating footprint. Our core banking operations in that market remain strong and we received much support from our employees, customers and communities.

The net loss for 2010 was $124,222, or $6.01 per share, compared to net loss of $194,981 or $9.42 per share in 2009. The 2010 results include a provision for loan losses of $134,571 and loan collection and other real estate owned expenses of $13,921. The 2009 results included a provision for loan losses of $113,368, other than temporary securities impairment of $21,484, and an increase of $100,964 in our deferred income tax valuation allowance, which was for the entire amount of our remaining deferred tax asset. The net interest margin for 2010 was 2.18%, compared to 2.37% in 2009.

The provision for loan losses was primarily attributed to commercial real estate and construction and land development loans originated out of either our Chicago operations or one of the commercial real estate, or CRE, loan production offices, or LPOs, that existed prior to December 31, 2010. Net charge-offs increased to $114,370 in 2010 from $89,135 in 2009.

The allowance to total loans was 7.10% at December 31, 2010 compared to 4.20% at December 31, 2009, while the allowance to non-performing loans increased to 48.63% at December 31, 2010, up from 41.26% at December 31, 2009. The increase in the allowance for loan losses to total loans was due in part to the reduction in the loan portfolio resulting from the 2010 branch sale transactions and other payoffs and paydowns of performing loans. Net charge-offs totaled 643 basis points for 2010, compared to 381 basis points for 2009. Non-performing loans were $197,015, or 14.60% of total loans at December 31, 2010 compared to $214,880 or 10.64% of total loans at December 31, 2009. The decrease in non-performing loans was primarily due to a decline in the amount of additional loans being classified as non-performing, coupled with net charge-offs of $114,370. Non-performing assets decreased to $246,582 at December 31, 2010, compared to $246,898 at December 31, 2009.

Net interest income was $49,574 for 2010, compared to $66,036 for 2009, while the net interest margin was 2.18% for 2010, compared to 2.37% in 2009. The decline in net interest income reflects the lower amount of earning assets and related funding that resulted from second and third quarter branch sales. The decrease in the net interest margin was primarily due to the lower level of earning assets, lower securities and loan yields and an increase in average cash levels of $206,407, partially offset by lower retail funding costs.

Non-interest income increased $38,282 to $61,450 and included $15,612 of premiums on sales of deposits realized from second and third quarter branch sales, net of a core deposit intangible write-off of $2,959 and net gains on the sale of loans sold in branch sales of $11,742. Non-interest income for 2010 also included a decrease in net securities gains of $2,257 and a reduction in other-than-temporary securities impairment of $20,382. Service charges on deposit accounts declined $4,735 to $15,144, primarily due to a lower number of deposit accounts because of the second and third quarter branch sales in 2010. Non-interest income for 2009 also included a negative mark-to-market adjustment for the warrant we issued to the U.S. Treasury of $6,145.

Non-interest expense decreased $8,327 to $97,842, primarily due to declines in salaries and employee benefits of $7,420, offset by increases in professional fees of $4,179 and loan collection and OREO expenses of $2,918. Non-interest expense in 2009 also included $1,639 of building impairment expense, as well as $1,538 of debt prepayment penalties. The increase in professional fees includes legal and professional fees related to the second and third quarter branch sales, while the lower amount of salaries and employee benefits resulted from a lower number of employees due to the branch sales and reductions in force.

Commercial real estate loans, including construction and land development loans, declined 36.5%, or $352,662 to $612,529 at December 31, 2010, as compared to December 31, 2009. Low cost deposits, which include non-interest bearing, interest checking and savings deposits, decreased 27.4%, or $282,285 to $747,652 at December 31, 2010, primarily due to the effect of the second and third quarter branch sales.

We increased our liquidity during 2010. Cash and due from bank average balances increased $206,407, or 59.8%, during 2010 to $551,753.

We successfully executed a number of strategic initiatives in our strategic recovery plan during 2010, as outlined below:

We completed the transition to new executive leadership that was clearly focused throughout 2010 on the execution of strategies to position us for long term success and a more disciplined focus on community banking within a narrower geographic footprint;

We completed five multi-branch and loan sale transactions, which generated deposit premiums of $15,612, after consideration of a write-off of $2,959 of core deposit intangible assets, as well as a net gain on the loans sold in those transactions of $11,742. These transactions helped offset a portion of the provision for loan losses of $129,571 and loan collection and other real estate owned expenses of $13,921;

We experienced a decline in total non-performing assets from December 31, 2009 to $246,582 – the first decline reported since 2006. This included a $17,865, or 10.6% reduction in non-performing loans from December 31, 2009;

We continued to reduce our concentration in CRE loans, including construction and land development loans, which declined $352,662, or 36.5%, from December 31, 2009. This included a reduction in commercial real estate loan balances in Chicago of $63,827 to $139,044, as well as a reduction of CRE loans made in our previously owned LPOs of $252,923 to $425,757;

We executed our second profit improvement initiative in two years, which resulted in a significant reduction in non-interest expenses to better match our lower core earning capacity;

We closed our remaining CRE LPOs in Cleveland and Columbus, Ohio and Covington, Kentucky;

We continued to execute efforts to retain and grow deposits, and added several new accounts, while experiencing only minimal loss of accounts related to customers’ concerns about our financial condition; and

We completed implementation of Regulation E and were successful in minimizing its potential impact to our fee income by communicating with customers and educating them on its potential impact.

Throughout 2010, we pursued multiple initiatives in our plan to raise new capital. Working with our financial advisor, Keefe, Bruyette & Woods (KBW), we had, and continue to have, discussions with private investors, private equity firms and others about potential capital investments. To date, we have not been able to finalize a strategy that would recapitalize the Bank to levels required by regulators; however, we continue to pursue these initiatives.

During 2010, we experienced higher levels of provision and charge-offs than anticipated. In part, this is due to the updated appraisals we obtain on non-performing assets which leads to lower carrying values, increased loan loss provision and OREO expense and increased loan loss reserves. These losses have almost entirely come from loans made prior to 2010 in either Chicago or from the previously operating CRE LPOs. We continue to pursue aggressive disposition strategies for all of these assets which further contributed to our significant loan loss provision and increased level of net charge-offs during 2010. We did report the first decrease in non-performing assets since 2006 and disposed of several of our non-performing assets. Our efforts continue to be focused on reducing our level of non-performing assets, improving our capital and liquidity and increasing the operating income of our core community banking franchise.

Integra Bank’s Total Risk-Based Capital Ratio declined 272 basis points to 7.32% from December 31, 2009, its Tier 1 Risk-Based Capital Ratio decreased 276 basis points to 6.00% and its Tier 1 Leverage Ratio decreased 296 basis points to 3.34%. The decline in these ratios during the year means that Integra Bank is now considered to be in the undercapitalized category for purposes of the Prompt Corrective Action, or PCA, regulations. Our Total Risk-Based Capital Ratio declined 1,120 basis points to (1.26)%, while our Tier 1 Leverage Ratio decreased 513 basis points to (0.70)%.

Additional information on the PCA regulations and capital levels is discussed in Item 1, “Business – Capital Adequacy and Prompt Corrective Action” and Note 16 to the Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data”.

At January 31, 2011, the Bank had approximately $117,000 of deposits from public fund entities based in the State of Indiana, consisting of approximately $81,600 of transaction account and $35,400 of time deposit balances. Because Integra Bank is considered as being in the undercapitalized category for purposes of the PCA regulations, its no longer eligible to accept new Indiana public fund deposits. Existing time accounts may be held to maturity, while transaction accounts are being transitioned to other eligible financial institutions. During February 2011, we communicated this information to the public fund entities affected and have assisted them in understanding these consequences. The ongoing decline in these public fund balances in 2011 has not had a material impact on liquidity because of the effect of freeing up the investment securities used to collateralize them.

Our plans for 2011 include the following:

Pursue all available strategies to recapitalize the Bank to the levels required by the Capital Directive;

Continue to reduce our concentration in CRE credit exposure by obtaining paydowns and payoffs;

Continue to reduce non-performing assets and our overall credit exposure; and

Market our services to community banking customers in our core market area that we serve and make continual adjustments to increase profitability.

CRITICAL ACCOUNTING POLICIES

Our accounting and reporting policies conform with accounting principles generally accepted in the United States and general practices within the financial services industry. The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. We consider our critical accounting policies to include the following:

Allowance for Loan Losses: The allowance for loan losses represents our best estimate of probable losses inherent in the existing loan portfolio. The allowance for loan losses is increased by the provision for losses, and reduced by loans charged off, net of recoveries. The provision for loan losses is determined based on our assessment of several factors: actual loss experience, changes in composition of the loan portfolio, evaluation of specific borrowers and collateral, current economic conditions, trends in past-due and non-accrual loan balances, and the results of recent regulatory examinations. The section labeled “Credit Management” below provides additional information on this subject.

We consider loans impaired when, based on current information and events, it is probable we will not be able to collect all amounts due in accordance with the contractual terms. The measurement of impaired loans is generally based on the present value of expected future cash flows discounted at the historical effective interest rate stipulated in the loan agreement, except that all collateral-dependent loans are measured for impairment based on the market value of the collateral, less estimated cost to liquidate. In measuring the market value of the collateral, we use assumptions and methodologies consistent with those that would be utilized by unrelated third parties.

Changes in the financial condition of individual borrowers, economic conditions, historical loss experience and the conditions of the various markets in which the collateral may be liquidated may all affect the required level of the allowance for loan losses and the associated provision for loan losses.

Estimation of Fair Value: The estimation of fair value is significant to several of our assets, including loans held for sale, investment securities available for sale and other real estate owned, as well as fair values associated with derivative financial instruments, intangible assets and the value of loan collateral when valuing loans. These are all recorded at either market value or the lower of cost or fair value. Fair values are determined based on third party sources, when available. Furthermore, accounting principles generally accepted in the United States require disclosure of the fair value of financial instruments as a part of the notes to the consolidated financial statements. Fair values may be influenced by a number of factors, including market interest rates, prepayment speeds, discount rates and the shape of yield curves.

Fair values for securities available for sale are typically based on quoted market prices. If a quoted market price is not available, fair values are estimated using quoted market prices for similar securities or level 3 values. Note 18 to the consolidated financial statements provides additional information on how we determine level 3 values. The fair values for loans held for sale are based upon quoted prices. The fair values of other real estate owned are typically determined based on appraisals by third parties, less estimated costs to sell. If necessary, appraisals are updated to reflect changes in market conditions. The fair values of derivative financial instruments are estimated based on current market quotes.

Other intangible assets represent purchased assets that also lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with an asset or liability. Core deposit intangibles are recorded at fair value based on a discounted cash flow model valuation at the time of acquisition and are evaluated periodically for impairment. Customer relationship intangibles utilize a method that discounts the cash flows related to future loan relationships that are expected to result from referrals from existing customers. Estimated cash flows are determined based on estimated future net interest income resulting from these relationships, less a provision for loan losses, non-interest expense, income taxes and contributory asset charges.

Other-than-temporary securities impairment: Declines in the fair value of securities below their cost that are other than temporary are reflected as realized losses. In estimating other-than-temporary losses, we consider: 1) the length of time and extent that fair value has been less than cost; 2) the financial condition and near term prospects of the issuer; and 3) our ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value.

For securities falling under EITF 99-20, “Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to be Held by a Transferor in Securitized Financial Assets”, which was subsequently incorporated into ASC 325, such as collateralized mortgage obligations, or CMOs, and collateralized debt obligations, or CDOs, an other-than-temporary impairment is deemed to have occurred when there is an adverse change in the expected cash flows (principal or interest) to be received and the fair value of the beneficial interest is less than its carrying amount. In determining whether an adverse change in cash flows occurred, the present value of the remaining cash flows, as estimated at the initial transaction date (or the last date previously revised), was compared to the present value of the expected cash flows at the current reporting date. The estimated cash flows reflect those a “market participant” would use and were discounted at a rate equal to the current effective yield. If an other-than-temporary impairment was recognized as a result of this analysis, the yield was changed to the market rate. The last revised estimated cash flows were then used for future impairment analysis purposes.

In January 2009, the Financial Accounting Standards Board, or FASB, issued FASB Staff Position No 99-20-1 (ASC 325). This ASC substantially aligns the basis for determining impairment with the guidance found in paragraph 16 of SFAS No. 115, or ASC 320, which requires entities to assess whether it is probable that the holder will be unable to collect all amounts due according to contractual terms. ASC 320 does not require exclusive reliance on market participant assumptions regarding future cash flows, permitting the use of reasonable management judgment of the probability that the holder will be unable to collect all amounts due.

In April 2009, the FASB issued Staff Position (FSP) No. 115-2 and No. 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments”, which amends existing guidance for determining OTTI for debt securities. The FSP requires an entity to assess whether it intends to sell, or it is more likely than not that it will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. If either of these criteria is met, the entire difference between amortized cost and fair value is recognized in earnings. For securities that do not meet the aforementioned criteria, the amount of impairment recognized in earnings is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income. Additionally, the FSP expands and increases the frequency of existing disclosures about other-than-temporary impairments for debt and equity securities.

Income Taxes: The provision for income taxes is based on income as reported in the financial statements. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future. The deferred tax assets and liabilities are computed based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. An assessment is made as to whether it is more likely than not that deferred tax assets will be realized. Valuation allowances are established when necessary to reduce deferred tax assets to an amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Tax credits are recorded as a reduction to tax provision in the period for which the credits may be utilized.

NET INCOME (LOSS)

Net loss available to common shareholders for 2010 was $124,222 compared to $194,981 in 2009. Earnings per share on a diluted basis were $(6.01) and $(9.42) for 2010 and 2009, respectively. Return on average assets and return on average common equity were (4.20)% and (220.91)% for 2010, and (5.68)% and (122.77)% for 2009, respectively.

NET INTEREST INCOME

Net interest income in the following tables is presented on a tax equivalent basis and is the difference between interest income on earning assets, such as loans and investments, and interest expense paid on liabilities, such as deposits and borrowings. Net interest income is affected by the general level of interest rates, changes in interest rates, and by changes in the amount and composition of interest-earning assets and interest-bearing liabilities. Changes in net interest income are presented in the schedule following the average balance sheet analysis. The change in net interest income not solely due to changes in volume or rates has been allocated in proportion to the absolute dollar amounts of the change in each.

AVERAGE BALANCE SHEET AND ANALYSIS OF NET INTEREST INCOME

Year Ended December 31,	2010								2009
	Average			Interest		Yield/			Average			Interest		Yield/
	Balances			& Fees		Cost			Balances			& Fees		Cost
EARNING ASSETS:

Interest-bearing deposits in banks	$	51,617		$	1,249		2.42	%	$	24,497		$	745		3.04	%
Loans held for sale		2,788			123		4.41	%		14,189			516		3.64	%
Securities:
Taxable		425,625			13,678		3.21	%		395,970			17,179		4.34	%
Tax-exempt		17,607			1,282		7.28	%		58,699			4,088		6.96	%

Total securities		443,232			14,960		3.38	%		454,669			21,267		4.68	%
Regulatory Stock		26,157			717		2.74	%		29,138			1,184		4.06	%
Loans		1,777,756			75,551		4.25	%		2,338,918			99,600		4.26	%
Total earning assets		2,301,550		$	92,600		4.02	%		2,861,411		$	123,312		4.31	%

Fair value adjustment on securities available for sale		5								(5,476	)
Allowance for loan loss		(99,101	)							(77,905	)
Other non-earning assets		649,649								590,629

TOTAL ASSETS	$	2,852,103							$	3,368,659

INTEREST-BEARING LIABILITIES:

Deposits
Savings and interest-bearing demand	$	665,560		$	3,339		0.50	%	$	720,073		$	6,034		0.84	%
Money market accounts		245,666			2,318		0.94	%		311,042			4,077		1.31	%
Certificates of deposit and other time		1,186,016			25,203		2.13	%		1,189,550			33,110		2.78	%
Total interest-bearing deposits		2,097,242			30,860		1.47	%		2,220,665			43,221		1.95	%
Short-term borrowings		59,685			194		0.33	%		223,151			1,682		0.75	%
Long-term borrowings		351,132			11,335		3.23	%		367,695			10,527		2.86	%
Total interest-bearing liabilities		2,508,059		$	42,389		1.69	%		2,811,511		$	55,430		1.97	%

Non-interest bearing deposits		253,155								292,859
Other noninterest-bearing liabilities and shareholders' equity		90,889								264,289

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,852,103							$	3,368,659

Interest income/earning assets				$	92,600		4.02	%				$	123,312		4.31	%
Interest expense/earning assets					42,389		1.84	%					55,430		1.94	%

Net interest income/earning assets				$	50,211		2.18	%				$	67,882		2.37	%

Note:

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

Loans include loan fees of $3,933 and $3,863 for 2010 and 2009, respectively, and nonaccrual loans.

Securities yields are calculated on an amortized cost basis.

Federal tax equivalent adjustments on securities are $448 and $1,431 for 2010 and 2009, respectively.

Federal tax equivalent adjustments on loans are $189 and $415 for 2010 and 2009, respectively.

CHANGES IN NET INTEREST INCOME (INTEREST ON A FEDERAL-TAX-EQUIVALENT BASIS)

	2010 Compared to 2009
	Change Due to
Increase (decrease)	a Change in
							Total
Interest income	Volume			Rate			Change

Loans	$	(23,816	)	$	(233	)	$	(24,049	)
Securities		(523	)		(5,783	)		(6,306	)
Regulatory Stock		(112	)		(355	)		(467	)
Loans held for sale		(482	)		88			(394	)
Other short-term investments		682			(178	)		504

Total interest income		(24,251	)		(6,461	)		(30,712	)

Interest expense

Deposits		(2,277	)		(10,084	)		(12,361	)
Short-term borrowings		(843	)		(645	)		(1,488	)
Long-term borrowings		(494	)		1,302			808

Total interest expense		(3,614	)		(9,427	)		(13,041	)

Net interest income	$	(20,637	)	$	2,966		$	(17,671	)

The following discussion of results of operations is on a tax-equivalent basis. Tax-exempt income, such as interest on loans and securities of state and political subdivisions, has been increased to an amount that would have been earned had such income been taxable.

Net interest income for 2010 was $50,211, or 26.0% lower than 2009. The increase in non-accrual loans contributed to this decrease, as did reductions in interest rates. Yields on earning assets decreased 29 basis points, while costs on interest-bearing liabilities decreased 28 basis points in 2010. The net interest margin was 2.18%, compared to 2.37% in 2009.

Major components of the change in net interest income from 2009 to 2010 are as follows:

Average earning assets decreased $559,861, or 19.6%, primarily due to the branch divestitures and loan sales occurring during 2010 and the full year effect of the sales occurring late in the third and fourth quarters of 2009.

The average yield on loans remained basically flat compared to 2009. Approximately 32% of our variable rate loans are tied to prime, 57% to a LIBOR index and 11% to other floating rate indexes. During 2010, the prime rate remained the same, while one-month and three-month LIBOR rates increased 3 and 5 basis points, respectively. The impact of non-accrual loans on the net interest margin was 57 basis points, or approximately 63 cents of earnings per share. Commercial loan average balances represented 58.3% of total earning assets for 2010, down from 61.4% for 2009. We are asset sensitive, meaning that a change in prevailing interest rates impacts our assets more quickly than our liabilities. If rates were to rise, our asset yields should increase faster than the cost of the liabilities funding those assets, causing our net interest margin to increase.

Non-interest bearing deposit average balances decreased $39,704, while the average balances of savings and interest-bearing demand deposits, which have an average cost of 50 basis points, also decreased $54,513. Average money market accounts declined by $65,376. The majority of the declines are due to the branch divestitures in 2010 and late 2009.

The average yield on total securities declined 130 basis points from 2009 to 2010. This decrease in yield resulted primarily from a shift in the mix of the portfolio from higher rate municipal and FNMA and FHLMC securities which carry a higher risk based capital weighting to lower yielding, zero risk weighted GNMA and treasury securities.

The higher level of liquidity and increased cash position that we elected to maintain due to our recent financial performance included an increase in average cash balances of $206,407. Earnings on that cash were less than the costs of the related funding resulting in a reduction in net interest income.

The average balance of interest-bearing liabilities decreased $303,452 compared to 2009. A decrease in short-term borrowings consists of a $87,115 decrease in Term Auction Facility borrowings from the Federal Reserve, a decrease in Federal Home Loan Bank advances of $60,356, and a decrease in repurchase agreements of $15,250. These decreases were slightly offset by an increase of $12,192 in borrowings under the FDIC’s Temporary Loan Guaranty Program. The average rate paid on interest-bearing liabilities was 1.69% for 2010, a 28 basis point decline from 2009. Short-term borrowing rates declined 42 basis points as maturing FHLB advances were not renewed. Long-term borrowings increased by 37 basis points as $80,000 in variable rate structured repurchase agreements converted to fixed rate debt during 2009 and 2010 at an average rate of 4.60%.

NON-INTEREST INCOME

Non-interest income for 2010 was $61,450 compared to $23,168 for 2009. Results for 2010 included deposit premiums of $15,612 from the branch sales and $11,742 of gains from the sale of divested loans, which were offset by decreases in deposit service charges of $4,735, bank owned life insurance, or BOLI, income of $818, and debit card interchange income of $312. Securities gains, including other-than-temporary impairment (“OTTI”) losses, were $4,701 for 2010, compared to losses of $13,424 for 2009.

Major contributors to the change in non-interest income from 2009 to 2010 are as follows:

Premiums received from the assumption of deposits in the sales of 17 branch locations in 2010 totaled $15,612, after giving effect to a write-off of $2,959 of core deposit intangible assets. This compares to the sale of 10 branch locations in 2009, which included premiums of $7,812. Deposit service charges declined by $4,735, primarily, due to the sale of the deposit accounts.

The sale of the branch loans and other loans sold in 2010 branch divestitures resulted in an $11,742 gain.

Net securities gains of $4,701 included other-than-temporary impairment charges of $1,102 on two securities. In 2009, we had gains on securities sales of $8,060 and OTTI of $21,484. The “Securities Available for Sale and Trading Securities” section of Management Discussion and Analysis, as well as Note 5 of the Notes to the Consolidated Financial Statements provides additional information on the other-than-temporary impairment.

Our Treasury Warrant was reflected as a liability at March 31, 2009, because it was not fully exercisable at the time of issuance. In 2009, a $6,145 non-tax deductible fair value adjustment reflected the change in value of the Treasury Warrant from March 31, 2009, through the date it was reclassified to equity.

Bank owned life insurance declined $818, due to our decision to sell or surrender the majority of the policies in 2009.

NON-INTEREST EXPENSE

Non-interest expense for 2010 was $97,842, compared to $106,169 in 2009, a decrease of 7.8%. Non-interest expense for 2010 reflected decreases in personnel expense of $7,420, building impairment charges of $1,639, occupancy expense of $1,602, debt prepayment penalties of $1,538, and increases in loan and OREO expenses of $2,918, consultant fees of $2,667, legal fees of $1,752, and FDIC assessments of $1,597.

Major contributors to the differences in non-interest expense for 2010 and 2009 are as follows:

Personnel expense declined $7,420, or 17.6% during 2010. The decrease included declines in salaries of $7,940, or 21.9%, offset slightly by an increase in post retirement insurance of $1,574. The decrease in salaries was mainly due to the sale of seventeen branches throughout 2010, as well as a reduction in workforce as part of our profit improvement program. Post retirement insurance increased due to the sale or surrender of the BOLI policies in 2009, in which the liability from the related compensation cost of the split dollar policies was reversed through post retirement insurance. At December 31, 2010, we had 517 full-time equivalent employees or FTEs, compared to 736 FTEs at December 31, 2009.

We took a $1,639 charge in 2009 as we wrote down three properties, that we intended to sell, to their fair value.

Occupancy and communication and transportation expenses decreased by $1,602 and $863, respectively in 2010, due to the branch divestitures and the closing of loan production offices during 2010 and late 2009.

Debt prepayment penalties decreased $1,538 due to the penalties incurred in 2009 when we repaid a $20,000 structured repurchase agreement prior to maturity.

Loan and OREO expenses increased by $2,918, or 26.5% in 2010. This increase is attributed to higher levels of real estate owned and related expenses, expenses incurred in connection with loan workout and collection activities and loan portfolio management expenses, such as the cost of obtaining new appraisals on real estate securing some of our commercial real estate loans. The increase in writedowns on OREO properties in 2010 totaled $1,489.

Professional fees increased $4,179, primarily due to legal fees of $1,752 and investment banking fees of $2,765 for the branch sales completed during 2010.

FDIC insurance premiums increased by $1,597, or 20.8% in 2010.

INCOME TAXES

We recognized income tax benefit of $1,694 in 2010, as compared to income tax expense of $60,850 in 2009. Generally, the calculation for the income tax provision or benefit does not consider the tax effects of changes in other comprehensive income, or OCI, which is a component of shareholders’ equity on the balance sheet. However, an exception is provided in certain circumstances, such as when there is a full valuation allowance against net deferred tax assets, there is a loss from continuing operations and income in other components of the financial statements. In such a case, pre-tax income from other categories, such as changes in OCI, must be considered in determining a tax benefit to be allocated to the loss from continuing operations. For 2010, this resulted in $1,354 of income tax benefit allocated to continuing operations. The recognition of income tax expense for 2009 resulted mainly from a non-cash charge of approximately $100,964 to increase the valuation allowance for our deferred tax asset. The increase resulted in a full valuation allowance of our deferred tax asset at December 31, 2009, which continued in 2010.

We establish valuation allowances for our deferred tax assets when the amount of the expected future taxable income is not sufficient to support the use of the carryforward, credit or other deferred tax asset. A three year cumulative loss position and continued near-term losses provided significant negative evidence to maintain a full valuation allowance at December 31, 2010.

The valuation allowance does not have any impact on our liquidity, nor does it preclude us from using the tax losses, tax credits or other timing differences in the future. To the extent that we generate taxable income in a given quarter, the valuation allowance may be reduced to fully or partially offset the corresponding income tax expense. Any remaining deferred tax asset valuation allowance may be reversed through income tax expense once we can demonstrate a sustainable return to profitability and conclude that it is more likely than not the deferred tax asset will be utilized prior to expiration.

See Note 13 of the Notes to the Consolidated Financial Statements for an additional discussion of our income taxes.

INTERIM FINANCIAL DATA

The following tables reflect summarized quarterly data for the periods described:

	2010
Three months ended	December 31			September 30			June 30			March 31

Interest income	$	18,920		$	22,184		$	25,231		$	25,628
Interest expense		9,578			10,723			11,320			10,768
Net interest income		9,342			11,461			13,911			14,860
Provision for loan losses		36,351			26,240			19,280			52,700
Non-interest income		8,014			27,379			18,467			7,590
Non-interest expense		24,067			28,796			22,486			22,493
Income (Loss) before income taxes		(43,062	)		(16,196	)		(9,388	)		(52,743	)
Income taxes (benefits)		(1,344	)		(42	)		(316	)		8
NET INCOME (LOSS)		(41,718	)		(16,154	)		(9,072	)		(52,751	)
Preferred stock dividends and discount accretion		1,133			1,133			1,133			1,128
NET INCOME (LOSS) AVAILABLE
TO COMMON SHAREHOLDERS	$	(42,851	)	$	(17,287	)	$	(10,205	)	$	(53,879	)

Earnings (Loss) per share:
Basic	$	(2.07	)	$	(0.84	)	$	(0.49	)	$	(2.61	)
Diluted		(2.07	)		(0.84	)		(0.49	)	$	(2.61	)

Average shares:
Basic		20,690			20,686			20,664			20,666
Diluted		20,690			20,686			20,664			20,666

	2009
Three months ended	December 31			September 30			June 30			March 31

Interest income	$	27,322		$	29,202		$	31,799		$	33,143
Interest expense		11,593			13,152			15,025			15,660
Net interest income		15,729			16,050			16,774			17,483
Provision for loan losses		30,525			18,913			32,536			31,394
Non-interest income		13,833			14,827			(10,984	)		5,492
Non-interest expense		23,158			24,369			29,169			29,473
Income (Loss) before income taxes		(24,121	)		(12,405	)		(55,915	)		(37,892	)
Income taxes (benefits)		70,802			7,330			(7,451	)		(9,831	)
NET INCOME (LOSS)		(94,923	)		(19,735	)		(48,464	)		(28,061	)
Preferred stock dividends and discount accretion		1,129			1,117			1,139			413
NET INCOME (LOSS) AVAILABLE
TO COMMON SHAREHOLDERS	$	(96,052	)	$	(20,852	)	$	(49,603	)	$	(28,474	)

Earnings (Loss) per share:
Basic	$	(4.64	)	$	(1.01	)	$	(2.39	)	$	(1.37	)
Diluted		(4.64	)		(1.01	)		(2.39	)		(1.37	)

Average shares:
Basic		20,685			20,707			20,715			20,732
Diluted		20,685			20,707			20,715			20,732

FOURTH QUARTER 2010 AND 2009

The fourth quarter 2010 net loss available to common shareholders was $42,851, or $(2.07) per diluted share, while the pre-tax loss was $43,062. The pre-tax loss for the fourth quarter of 2010 was largely attributable to the provision for loan losses of $36,351. The income tax benefit for the fourth quarter of 2010 was $1,344, which resulted mainly from the disproportionate tax effects within Other Comprehensive Income.

Fourth quarter 2010 results, as compared to third quarter 2010, included an increase in the provision for loan losses of $10,111 and decreases in non-interest income of $19,365, non-interest expense of $4,729, and net interest income of $2,119.

The increased provision was primarily allocated to CRE and construction and land development loans which represented 84% of total non-performing loans. The provision for loan losses was $36,351 compared to net charge-offs of $35,885 for the fourth quarter of 2010.

The allowance to total loans increased 54 basis points to 7.10% at December 31, 2010, while annualized net charge-offs increased 364 basis points to 10.07%. Non-performing loans decreased to $197,015, or 14.60% of total loans, compared to 14.60% at September 30, 2010, while the allowance to non-performing loans increased from 44.92% to 49.63% for the same dates. Non-performing assets decreased to $246,582, compared to $247,628 at September 30, 2010. The net charge-off ratio for all of 2010 was 6.43%.

Net interest income was $9,342 for the fourth quarter of 2010, compared to $11,461 for the third quarter of 2010, while the net interest margin decreased 22 basis points to 1.86%. The decrease in the margin was due partially from the full quarter impact of the third quarter 2010 branch divestitures and loan sales.

Low cost deposits, which include non-interest checking, NOW and savings deposits, decreased during the fourth quarter by $6,013, primarily due to the full quarter impact of the branch divestitures. Retail certificates of deposit decreased $7,191, brokered certificates of deposit decreased $52,307, and money market balances declined $18,681.

Commercial loan average balances decreased $184,160 in the fourth quarter of 2010. CRE loan average balances decreased $93,319, and commercial and land development loan average balances decreased $39,405. The average balance of all other commercial loans decreased $51,436, mainly due to the branch divestitures and loan sales that occurred during the third quarter.

Non-interest income was $8,014 for the fourth quarter of 2010, compared to $27,379 for the third quarter. The third quarter included $11,241 from net premiums on the sale of deposits from the branch sales and $9,498 from net gains on the sale of divested loans.

Non-interest expense for the fourth quarter of 2010 was $24,067.

The fourth quarter 2009 net loss was $96,052, or $(4.64), per diluted share.

FINANCIAL CONDITION

Total assets at December 31, 2010, were $2,420,785, compared to $2,921,941 at December 31, 2009.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents, including federal funds sold and other short-term investments totaled $486,812 at December 31, 2010, compared to $354,574 one-year prior. The balance of this account fluctuates daily based on the needs of our customers. However, the majority of the year over year increase in the cash position was driven by our desire to maintain a higher level of liquidity.

SECURITIES AVAILABLE FOR SALE AND TRADING SECURITIES

The securities portfolio represents our second largest earning asset after loans and serves as a liquidity source for us. Total investment securities classified as available for sale of $528,904 comprised 21.8% of total assets at December 31, 2010, compared to 12.4% at December 31, 2009, reflecting a $167,185 increase during 2010. Securities held for trading totaled $329 at December 31, 2010 and were comprised of four pooled trust preferred collateralized debt obligations, or CDOs.

During 2010, we increased the size of our securities portfolio and restructured a portion to take available gains. The increase in the portfolio facilitated our compliance with the collateralization requirements for Indiana public funds that went into effect in 2010. In 2010, we purchased $494,658 in securities that carry a zero percent risk weight including $18,610 in U.S. Treasuries and $476,048 in GNMA securities. During 2010, we sold or experienced maturities, calls or pay-downs of $331,189. We took gains during the second and fourth quarter related to the sale of Treasuries and GNMA securities totaling $5,791.

During 2009, we reduced the size of our securities portfolio. In 2009, we used the cash flow to reduce debt and improve liquidity. During 2009, we sold $145,839 of agency issued collateralized mortgage obligations, or CMOs, $88,479 of mortgage backed securities, and $54,263 of municipal securities at a gain of $8,041. A portion of the proceeds from these sales was used to purchase $199,742 of GNMA securities and $8,856 of U.S. Treasuries which carry a zero percent risk weight, therefore lowering the risk weighted assets and improving our total risk based capital ratios.

Mortgage-backed securities and CMOs represented 88.7% of the available for sale securities portfolio at December 31, 2010, as compared to 85.4% at December 31, 2009. Mortgage-backed securities carry an inherent prepayment risk, which occurs when borrowers prepay their obligations due to market fluctuations and rates. Prepayment rates generally can be expected to increase during periods of lower interest rates as underlying mortgages are refinanced at lower rates.

SECURITIES AVAILABLE FOR SALE	December 31,
(At Fair Value)	2010		2009
U.S. Treasuries	$	18,739	$	8,833
U.S. Government agencies		106		279
Collateralized Mortgage Obligations:
Agency		250,057		118,431
Private Label		16,155		23,229
Mortgage-backed securities		202,752		167,232
Trust Preferred		10,749		10,038
State & political subdivisions		21,679		25,040
Other securities		8,667		8,637
Total	$	528,904	$	361,719

The fair value of available for sale securities as of December 31, 2010, by contractual maturity, except for mortgage-backed securities and CMOs, which are based on estimated average lives, are shown below. Expected maturities may differ from contractual maturities in mortgage-backed securities, because certain mortgages may be called or prepaid without penalties.

Available for Sale Securities	Fair Value

Due in one year or less	$	1,965
Due from one to five years		224,029
Due from five to ten years		180,643
Due after ten years		122,267
	$	528,904

Proceeds from sales and calls of securities available for sale were $209,881and $302,760 for the twelve months ended December 31, 2010 and 2009, respectively. Gross gains of $5,805 and $8,076 and gross losses of $2 and $16 were realized on these sales and calls during 2010 and 2009, respectively.

SECURITIES HELD FOR TRADING
(At Fair Value)	December 31, 2010		December 31, 2009
Trust Preferred	$	329	$	36
Total	$	329	$	36

The net gain (loss) on trading activities included in non-interest income for 2010 and 2009 was $292 and $(1,004), respectively.

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.

On a quarterly basis, or more frequently when necessary, we evaluate each security in our portfolio with an individual unrealized loss to determine if that loss represents other-than-temporary impairment. The factors we consider in evaluating the securities include whether the securities were guaranteed by the U.S. government or its agencies and the securities’ public ratings, if available, and how those two factors affect credit quality and recovery of the full principal balance, whether the market decline was affected by macroeconomic conditions, the length of time the securities have had temporary impairment and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and whether we have the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. We also review the payment performance, delinquency history and credit support of the underlying collateral for certain securities in our portfolio as part of our impairment analysis and review. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to us at a point in time.

See Note 5 of the Notes to Consolidated Financial Statements for additional information on our securities portfolio.

REGULATORY STOCK

Regulatory stock includes mandatory equity securities which do not have a readily determinable fair value and are therefore carried at cost on the balance sheet. This includes both Federal Reserve and Federal Home Loan Bank, or FHLB stock. From time to time, we purchase or sell shares of these dividend paying securities according to capital requirements set by the Federal Reserve or FHLB. During 2010 and 2009, we sold $2,541 and $39, respectively, of our FHLB stock back to the FHLB at par. We also sold $4,411 of Federal Reserve stock back at par during 2010.

LOANS

Loans at December 31, 2010, totaled $1,349,504 compared to $2,110,348 at year-end 2009, which included loans held for sale in probable branch divestitures, reflecting a decrease of $760,844, or 36.1%. This decrease was due partially to the branch and loan sales in 2010 that included $332,675 of loans. Commercial loans (which include commercial, industrial and agricultural, tax exempt, lease financing, commercial real estate, and construction and development) decreased $564,268 at December 31, 2010, compared to year-end 2009. This decrease was driven primarily by a decrease in commercial construction and development loans of $219,831, or 57.5%, commercial, industrial and agricultural loans of $200,670, or 33.3%, and commercial mortgage loans of $132,831, or 22.8%. Commercial loans in the Chicago region totaled $174,284 at December 31, 2010, compared to $261,445 at December 31, 2009. During 2010, the Chicago commercial portfolio experienced significant increases in past due and non-performing loans, as well as higher losses. Charge-offs recorded during 2010 from this portfolio totaled $32,918, down from $34,976 taken in 2009.

Our non-owner occupied CRE portfolio originated from three areas, with $429,941 being formerly managed by our commercial lending team that was headquartered in Greater Cincinnati, our CRE line of business, $140,678 managed by our Chicago region and the remainder managed in our community banking markets. Our largest property-type concentration is in retail projects at $154,871, or 25.0%, of the total CRE portfolio, which includes direct loans or participations in larger loans primarily for stand-alone retail buildings for large national or regional retailers with national and regional tenants. Our second largest concentration is multifamily at $115,150, or 18.6%, of the total CRE portfolio. Our third largest concentration is for land acquisition and development at $97,378, or 15.7%, of the total, which represents both commercial development and residential development. Finally, our fourth largest concentration at $69,912, or 11.3%, is to the single-family residential and construction category, 77.0% of which is in the Chicago area. No other category exceeds 9% of the CRE portfolio. Of the total non-owner occupied CRE portfolio, 36.9%, or $228,592 is classified as construction. At December 31, 2010, $280,626, or 45.3%, of the CRE portfolio is located in our core market states of Indiana, Kentucky, and Illinois. The three largest concentrations outside of our core market states are $187,348, or 30.3% located in Ohio, $28,632, or 4.6% located in Florida and $23,222, or 3.8%, located in Tennessee. Non-owner occupied CRE non-performing loans in our core market states totaled $98,493 at December 2010, with another $33,286 located in Ohio, $24,402 located in Florida, and $6,306 located in Tennessee. A total of $1,700 of our non-performing loans at December 31, 2010 were located in North Carolina, in which we had $18,562 of loans outstanding. We do not offer non-recourse financing.

The reduction in size of our loan portfolio, including the decline in CRE loans, coupled with the planned decline in our indirect consumer and residential mortgage loan portfolios and sale of consumer and commercial loans in branch sale transactions, has resulted in a small decline in our CRE concentration risk. The balance in our non-owner occupied CRE portfolio decreased from $978,927, or 46.4% of the total loan portfolio at December 31, 2009, to $618,873 or 45.9% of the total portfolio at December 31, 2010.

The change in our non-owner occupied CRE portfolio from 2007 to 2010 is attributable, in part, to the disruption of the permanent financing market, which made it more difficult for borrowers to refinance completed and stabilized projects on a permanent basis. During the third quarter of 2008, we discontinued pursuing new non-owner occupied CRE opportunities, regardless of property type, as additional stress to the portfolio of this product became apparent. While exiting the CRE line of business all together, we have been reducing our current CRE exposure through the sale of performing and nonperforming loans, not making any new commitments, and incenting our customers and relationship managers to reduce their outstandings ahead of their prescribed maturities and increasing our yields as pricing opportunities arise.

CRE loan balances in Chicago were $139,043 at December 31, 2010 compared to $202,871 at December 31, 2009. CRE balances from our former CRE line of business in Cincinnati, Ohio were $425,757 at December 31, 2010 compared to $678,680 at December 31, 2009.

C&I loans decreased $200,670, or 33.3%, from year-end 2009. Approximately $90,326 of the decline was due to the branch divestitures, loan sales and sales of participation interests to limit the Bank’s exposure to larger credits.

Residential mortgage loans decreased $89,556, or 38.5%, from year-end 2009, primarily due to the sale of $59,893 of loans in the branch divestitures and loan sales. We expect the balance of residential mortgage loans will continue to decline during 2011, since we sell substantially all originations to a private label provider on a servicing released basis. We evaluate our counterparty risk with this provider on a quarterly basis by evaluating their financial results and the potential impact to our relationship with them of any declines in financial performance. If we were unable to sell loans to this provider, we would seek an alternate provider and record new loans on our balance sheet until one was found, impacting both our liquidity and our interest rate risk. We have never had a strategy of originating subprime or Alt-A mortgages, option adjustable rate mortgages or any other exotic mortgage products. The impact of private mortgage insurance is not material to our determination of loss factors within the allowance for loan losses for the residential mortgage portfolio. Loans with private mortgage insurance comprise only a portion of our portfolio and the coverage amount typically does not exceed 10% of the loan balance.

Home equity lines of credit, or HELOC loans decreased $44,528, or 27.3%, at December 31, 2010, from year end 2009. Approximately $38,021 loans were sold in connection with the branch divestitures. HELOC loans are generally collateralized by a second mortgage on the customer’s primary residence.

Consumer loans, which include both direct and indirect loans, decreased $62,492, or 49.4% from the prior year, of which approximately $48,355 was from the branch divestitures during 2010. The average balance of indirect consumer loans declined $29,476, or 42.1% during 2010, as we exited the indirect line of business in December 2006 in order to originate higher yielding commercial loans and sold $32,928 of indirect loans in a third quarter branch and loan sale. The indirect loans are to borrowers located primarily in the Midwest and are generally secured by recreational vehicle or marine assets. Indirect loans at December 31, 2010, were $17,963 compared to $62,062 at December 31, 2009.

The average balance of direct consumer loans decreased $38,690, or 24.2% during 2010, in large part due to the sale of $15,427 in branch sale transactions.

Loans delinquent 30-89 days were $19,623, or 1.45% of our portfolio at December 31, 2010, an increase of $678 from September 30, 2010. Delinquent loans include $10,570 of CRE loans, or 1.73% of that portfolio, $2,289 of C&I loans, or 0.56% of that portfolio, $4,946 of residential mortgage loans, or 3.45% of that portfolio, and $1,818 of consumer and home equity loans, or 1.00%, of that portfolio.

Of the delinquent CRE loans, $9,265, or 88%, were originated by the former CRE group. The increase in the delinquencies during the fourth quarter reflects greater attention managing delinquent accounts, as well as, the reclassification of delinquent loans to nonaccrual status and into OREO.

We have limited exposure to shared national credits. Our total outstanding amount of shared national credits, which are any loans or loan commitments of at least $20,000 that are shared by three or more supervised institutions, was $34,891 at December 31, 2010. Of this amount, $11,282, or 34.3% was classified as non-performing.

LOAN PORTFOLIO AT YEAR END

	2010		2009		2008		2007		2006
Commercial, industrial and agricultural loans	$	401,936	$	602,606	$	748,446	$	689,504	$	568,841
Economic development loans and other obligations of state and political subdivisions		8,992		14,773		24,502		7,227		7,179
Lease financing		424		5,579		5,397		5,291		5,495
Commercial mortgages		450,292		583,123		436,336		298,151		180,249
Construction and development		162,237		382,068		641,460		609,858		260,314
Residential mortgages		143,243		232,799		309,397		380,429		436,309
Home equity lines of credit		118,406		162,934		171,241		145,403		132,704
Consumer loans		63,974		126,466		153,464		175,516		199,887
Total loans		1,349,504		2,110,348		2,490,243		2,311,379		1,790,978
Less: unearned income		-		-		-		1		2
Loans, net of unearned income		1,349,504		2,110,348		2,490,243		2,311,378		1,790,976

Less: Loans held for sale in probable branch divestitures		-		90,616		-		-		-

Loans, net of unearned income and loans held for sale in probable branch divestitures	$	1,349,504	$	2,019,732	$	2,490,243	$	2,311,378	$	1,790,976

Different types of loans are subject to varying levels of risk, and we mitigate this risk through portfolio diversification by type of loan and industry. We concentrate substantially all of our lending activity by lending to customers located in the geographic market areas that we serve, primarily Indiana, Illinois, and Kentucky.

We lend to customers in various industries including real estate, agricultural, health and other related services, and manufacturing. Our loan portfolio does not contain any loans to foreign entities.

LOAN MATURITIES AND RATE SENSITIVITIES AT DECEMBER 31, 2010
Total Loans				After 1 Year
	Within			But Within			Over
Rate sensitivities:	1 Year			5 Years			5 Years			Total

Fixed rate loans	$	180,557		$	348,692		$	102,881		$	632,130
Variable rate loans		475,418			44,291			723			520,432

Subtotal	$	655,975		$	392,983		$	103,604			1,152,562

Percent of total		56.91	%		34.10	%		8.99	%

Nonaccrual loans											196,942

Total loans										$	1,349,504

LOAN MATURITIES AND RATE SENSITIVITIES AT DECEMBER 31, 2010
Commercial, Industrial, Agricultural, Economic Development, Obligations of State and Political Division, Construction
and Development Loans

				After 1 Year
	Within			But Within			Over
	1 Year			5 Years			5 Years			Total
Commercial, industrial and agriculture loans	$	143,907		$	223,399		$	10,290		$	377,596
Economic development loans and other obligations of state and political subdivisions		1,074			7,414			504			8,992
Construction and development		66,125			9,316			-			75,441
Total	$	211,106		$	240,129		$	10,794		$	462,029

Fixed rate	$	87,544		$	222,667		$	10,567		$	320,778
Variable rate		123,562			17,463			226			141,251

Subtotal	$	211,106		$	240,130		$	10,793			462,029

Percent of total		45.69	%		51.97	%		2.34	%

Nonaccrual loans											111,136

Total										$	573,165

NON-PERFORMING ASSETS

Non-performing assets consist primarily of nonaccrual loans, restructured loans, loans past due 90 days or more and other real estate owned. Nonaccrual loans are loans on which we have suspended recognizing interest because of doubts as to the borrower's ability to repay principal or interest according to the terms of the contract. Loans are generally placed on nonaccrual status after becoming 90 days past due if the ultimate collectability of the loan is in question or when we determine the loan is impaired. Loans which are less than 90 days past due, but as to which serious doubt exists about repayment ability, may also be placed on nonaccrual status. Restructured loans are loans for which the terms have been renegotiated to provide a reduction or deferral of principal or interest because of the borrower's financial position. Loans 90 days or more past due, which totaled $73 at December 31, 2010, are loans that are continuing to accrue interest, but which are contractually past due 90 days or more as to interest or principal payments. Other real estate owned represents properties obtained for debts previously contracted.

NON-PERFORMING ASSETS AT YEAR END
	2010		2009		2008		2007		2006
Non-performing loans:

Nonaccrual	$	196,942	$	210,753	$	150,002	$	18,549	$	8,625
90 days past due and still accruing interest		73		4,127		897		4,118		228

Total non-performing loans		197,015		214,880		150,899		22,667		8,853

Trust preferred held for trading		329		36		-		-		-
Other real estate owned (OREO)		49,238		31,982		19,396		2,923		936

Total non-performing assets	$	246,582	$	246,898	$	170,295	$	25,590	$	9,789

Non-performing loans were 14.60% and 10.64% of total loans, net of unearned income at the end of 2010 and 2009, respectively. The primary reason for the increase in 2010 was the decrease in the size of the loan portfolio resulting from the branch and loan sales and moderate improvement in non-performing loans. As the overall portfolio continues to reduce, the percentage of non-performing loans will remain at an elevated level. Although we have seen a modest slowing of new non-performing loans, the macro factors continue to deteriorate, limiting our ability to improve these ratios in a meaningful way. Since we do not underwrite a subprime product, the performance of our residential mortgage portfolio continues to be acceptable.

Non-performing loans were $197,015 at December 31, 2010, compared to $214,880 at December 31, 2009. Of the non-performing loans, $166,949 are in our CRE portfolio and $24,764 are in commercial and industrial, or C & I portfolio, while the balance of $5,302 consists of 1-4 family residential and consumer loans which totaled 163 basis points at December 31, 2010.

Our residential builder portfolio was originated primarily in Chicago. Our largest concentration in non-performing loans and assets during 2010 came primarily from this product line and from our CRE line of business. Total non-performing CRE loans at December 31, 2010, totaled $166,949, of which $93,474 was for residential real estate related projects. Of this total, $64,611 were Chicago loans and $26,741 were CRE loans from our former CRE line of business. The Chicago non-owner occupied commercial real estate portfolio had commitments of $141,148, including outstanding balances of $140,678 at December 31, 2010. The Chicago portfolio made up 52.7% and 53.3% of our total non-performing loans and non-performing assets, respectively, at December 31, 2010. The CRE line of business had commitments of $470,191, including outstanding balances of $429,941 at December 31, 2010. This portfolio made up 40.9% of our total non-performing loans and 40.6% of our non-performing assets at December 31, 2010. The Chicago and CRE lines of business make up 13.9% and 36.7% of total outstanding loans.

Only 6.4% of the remaining non-performing loans and 6.1% of the total non-performing assets come from our core community banking lending activities. This portfolio represents $666,822 of loan outstandings, with a delinquency rate of 1.20% and non-performing loans of $12,703.

At December 31, 2010, the largest non-performing loan relationship is to a developer with real estate in Chicago that has a total balance of $12,800. The second largest non-performing loan relationship is to a Chicago area based builder with an outstanding balance of $11,461. The third largest non-performing relationship is secured by undeveloped property in Florida which is collateral for a $9,900 loan. The fourth largest relationship loan is to a developer in Ohio secured by a mixed use retail and commercial development with a balance of $9,751 at the end of the year.

The majority of the remainder of our commercial non-performing loans are secured by one or more residential properties in the Chicago area, typically at an 80% or less loan to value ratio at inception. The Case-Schiller index of residential housing values shows a decline in the value of Chicago single-family residential properties of 29.1% from the peak of the index in September 2006 to the most recent index for November 2010, as published in January 2011. The Zillow index for the fourth quarter of 2010 shows a decline of 31.2% from its peak during the second quarter of 2006. On a year over year basis, the Zillow index shows a decline of 11.6% for all homes, with a 11.7% decline for single family housing and a 15.8% decline for condominiums. New appraisal values we have obtained for existing loans have been consistent generally with the declines indicated by the Case-Schiller and Zillow indices. Many potential buyers are choosing to rent rather than buy at this time, with market information indicating an increase in rental demand and rental rates. Should sales levels in Chicago remain at their current values or continue to decline in 2011, we will likely experience further deterioration in this segment.

Impaired loans totaled $199,008 at December 31, 2010, compared to $207,736 at December 31, 2009. A total of $160,381 of impaired loans at December 31, 2010 had a specific allowance for loan loss, compared to $129,017 at December 31, 2009. The allowance for impaired loans included in the allowance for loan losses was $34,985 at December 31, 2010, compared to $32,753 at December 31, 2009. The average balance of impaired loans was $235,892 for 2010, compared to $189,730 for 2009.

OREO increased to $49,238 at December 31, 2010, compared to $31,982 at December 31, 2009, again, due largely to the Chicago residential builder portfolio. The ratio of non-performing assets to total loans and OREO increased to 17.63% at December 31, 2010, compared to 12.03% at year end 2009 because of the increase in OREO combined with the sharp decline in total loans. More than 53%, or $131,419, of our total non-performing assets are in our Chicago region. These assets represent more than 67% of the total assets in our Chicago region.

The interest recognized on nonaccrual loans was approximately $17, and $40 in 2010 and 2009, respectively. The amount of interest that would have been earned had these nonaccrual loans remained in accruing status was $3,626 and $3,929 for 2010 and 2009, respectively.

Potential problem loans, which consisted of primarily non-owner occupied CRE loans at December 31, 2010, are maintained on a watch list and reviewed at least quarterly. For the most part, loans are designated as watch list loans to ensure more frequent monitoring. The assets are reviewed to ensure proper earning status and management strategy. If we determine that there is serious doubt as to performance in accordance with the original terms of the contract, then the loan is placed on nonaccrual. We also review nonaccrual loans on an ongoing basis. See Note 6 of the Notes to Consolidated Financial Statements for additional information on our potential problem loans.

CREDIT MANAGEMENT

Our credit management procedures include Board oversight of the lending function by the Board’s Credit and Risk Management Committee, which meets at least quarterly. The committee met eleven times during 2010. The committee monitors credit quality through its review of information such as delinquencies, non-performing loans and assets, problem and watch list loans and charge-offs. The lending policies address risks associated with each type of lending, including collateralization, loan-to-value ratios, loan concentrations, insider lending and other pertinent matters and are regularly reviewed to ensure that they remain appropriate for the current lending environment. In addition, a sample of loans is reviewed by an independent loan review department, as well as by a compliance department and regulatory agencies.

Consumer, mortgage and small business loans are centrally underwritten and approved while commercial loans are approved through a combination of limited individual lending authorities, independent senior credit officers, Senior Loan Committee, the Chief Credit and Risk Officer and the Chief Executive Officer. A limited number of officers have the authority, in certain cases and for certain loan types, to override centrally denied loan requests. Those overrides must meet certain conditions and are centrally tracked and monitored for performance. In addition, any relationship that has an aggregate exposure of $4,000 must be approved by the Senior Loan Committee consisting of Senior Credit Officers, the Chief Credit and Risk Officer, and the Chief Executive Officer.

The allowance for loan losses is the amount that, in our opinion, is adequate to absorb probable incurred loan losses as determined by our 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, industry concentrations, 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 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 can absorb probable losses.

The adequacy of the allowance for loan losses is based on ongoing quarterly assessments of the probable losses inherent in the credit portfolios. The methodology for assessing the adequacy of the allowance establishes both an allocated and unallocated component. The allocated component of the allowance for commercial loans is based on a review of specific loans as well as delinquency, classification levels and historic charge-offs for pools of non-reviewed loans. For consumer loans, the allocated component is based on loan payment status and historical loss rates.

We conduct reviews on selected loans, based on size to identify loans with heightened risk or probable losses quarterly or more frequently as stated within our formal agreement with our federal regulators. The primary responsibility for this review rests with the relationship manager responsible for the credit relationship. This review is supplemented by the loan review area, which provides information assisting in the timely identification of problems and potential problems and in deciding whether the credit represents a probable loss or risk which should be recognized. Where appropriate, an allocation is made to the allowance for individual loans based on our estimate of the borrower’s ability to repay the loan given the availability of collateral, other sources of cash flow and legal options available to us.

Included in the review of individual loans are those that are impaired as provided in SFAS No. 114, “Accounting by Creditors for Impairment of a Loan”, which was subsequently incorporated into ASC 310. We consider loans impaired when, based on current information and events, it is probable we will not be able to collect all amounts due in accordance with the contractual terms. The allowance established for impaired loans is generally based, for all collateral-dependent loans, on the market value of the collateral, less estimated cost to liquidate. For non-collateral dependent loans, the allowance is based on the present value of expected future cash flows discounted at the historical effective interest rate stipulated in the loan agreement.

Homogeneous pools of loans, such as consumer, installment and residential real estate loans, are not individually reviewed. An allowance is established for each pool of loans based upon historical loss ratios, based on the net charge-off history by loan category. In addition, the allowance reflects other risks affecting the loan portfolio, such as economic conditions in our geographic areas, specific industry financial conditions and other factors.

The unallocated portion of the allowance covers general economic uncertainties as well as the imprecision inherent in any forecasting methodology. At December 31, 2010, the unallocated reserve included within the allowance for loan losses was $7,354, as compared to $8,877 at December 31, 2009. The unallocated portion of the allowance decreased during 2010 for two reasons. The first was to reflect the smaller overall loan portfolio. The second represents the transfer of certain unallocated portions of the allowance for loan losses to specific allocations reflecting the identification of specific assets due to continued declines in real estate values within our lending footprint.

The factors used to evaluate homogenous loans in accordance with the SFAS No. 5, “Accounting for Contingencies”, which was subsequently incorporated into ASC 450, are reviewed at least quarterly and are updated as conditions warrant. The provision for loan losses is the amount necessary to adjust the allowance for loan losses to an amount that is adequate to absorb estimated loan losses as determined by our periodic evaluations of the loan portfolio. Our evaluation is based upon consideration of actual loss experience, changes in composition of the loan portfolio, evaluation of specific borrowers and collateral, current economic conditions, trends in past-due and non-accrual loan balances and the results of recent regulatory examinations.

The adequacy of the allowance for loan losses is reviewed on a quarterly basis and presented to the Credit and Risk Management Committee of the Board of Directors for review, and to the Audit Committee of the Board of Directors for approval. The accounting policies related to the allowance for loan losses are significant policies that involve the use of estimates and a high degree of subjectivity. We have developed appropriate policies and procedures for assessing the adequacy of the allowance for loan losses that reflect the assessment of credit risk after careful consideration of known relevant facts. In developing this assessment, we rely on estimates and exercise judgment regarding matters where the ultimate outcome is unknown such as economic factors, developments affecting companies in specific industries or issues with respect to single borrowers. Depending on changes in circumstances, future assessments of credit risk may yield different results, which may require an increase or decrease in the allowance for loan losses.

Our process to perform this analysis includes expanded data analysis, back-testing and ongoing refinements to documentation surrounding the adequacy of the allowance. The allowance provides measures of the probability of default and risk of loss for our categories of loans with similar risk characteristics and analyzes loss data over the period of time that we believe is appropriate when coupled with management adjustments we apply towards that data. The appropriateness of management adjustments is considered in terms of market conditions, portfolio performance and portfolio concentrations. In considering market conditions, we review a variety of information including unemployment statistics, foreclosure rates and housing statistics from third party indices and reports. We believe this improves the measure of inherent loss over a complete economic cycle and reduces the impact for qualitative adjustments.

The allowance for loan losses was $95,801 at December 31, 2010, representing 7.10% of total loans, compared to $95,539 at September 30, 2010, or 6.56% of total loans and $88,670 at December 31, 2009, or 4.20% of total loans. The allowance for loan losses to non-performing loans ratio was 48.6% at December 31, 2010, compared to 44.9% at September 30, 2010 and 41.3% at December 31, 2009. We do not target specific allowance to total loans or allowance to non-performing loan percentages when determining the adequacy of the allowance, but we do consider and evaluate the factors that go into making that determination. At December 31, 2010, we believe that our allowance appropriately considers the expected loss in our loan portfolio. The provision for loan losses was $36,351 for the three months ended December 31, 2010, and $134,571 for the twelve months ended December 31, 2010. This compares to $30,525 and $113,368 for the three and twelve months ended December 31, 2009.

Net charge-offs exceeded provision for loan losses by $465 during the fourth quarter of 2010. Annualized net charge-offs to average loans were 10.07% for the quarter, compared to 3.86% for the fourth quarter of 2009, and 6.43% for the twelve months ended December 31, 2010. For the fourth quarter of 2010, net charge-offs included $25,689 of CRE, $9,395 of commercial, $318 of residential mortgages, $222 of indirect consumer loan, $115 of home equity, and $90 of checking account net charge-offs, while the remaining $57 came from various other loan categories. CRE net charge-offs during the fourth quarter of 2010 included $4,691 for a mixed use retail office property located in Georgia, $3,083 for a retail purpose property located in Florida, and $2,809 for a retail purpose property located in Ohio.

For 2010, net charge-offs included $91,891 of CRE, $18,445 of commercial, $895 of indirect consumer loans, $1,388 of home equity loans, $837 of residential mortgage and $522 of checking account net charge-offs while the remaining $392 came from various other loan categories. The largest loss taken during the year was $11,578 for a mix use retail office property located in Georgia. The second largest loss was $6,872 secured by commercial real estate in Florida originated by our CRE line of business followed by $5,931 secured by a retail project located in Ohio. The next largest loss was secured by commercial real estate for land acquisition purposes located in Arizona totaling $4,277. The fifth largest loss is a retail project located in Ohio that totaled a loss of $3,869. Each of these five lending relationships were originated by our former CRE line of business.

We continuously improve our credit management processes. In 2010, we took the following actions.

We continued to obtain new appraisals on properties securing our CRE non-performing loans and used those appraisals to help determine any specific reserves within the allowance for loan losses. As we receive lower appraised values on properties securing non-performing loans, we recognize charge-offs, and adjust specific reserves as appropriate.

We conducted an internal loan review on the remaining portion of performing CRE loans from our former CRE line of business. Although we regularly review all relationships on an annual basis, this review included location visits as well as appointments with certain principals. While the review was intended to identify relationships in need for elevated attention by our managed asset group, we believe it also confirmed the quality of the risk ratings assigned to the pass grade performing credits.

The Bank contracted an outside consultant to perform a valuation on the remaining Chicago builder based portfolio. We believe the findings validated our current exit strategy.

We have consolidated both our Chicago based work out team and the former CRE team located in Greater Cincinnati into our managed asset group. This enables us to realize greater levels of efficiency in assigned problem assets within our managed asset group.

We continue to offer modest discounts to reduce our exposure to certain CRE related assets.

Loans, for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings. Troubled debt restructurings totaled $6,522 at December 31, 2010.

The following table includes loans held for sale in connection with probable branch divestitures in the totals and calculations.

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

	2010			2009			2008			2007			2006
Allowance for loan losses, January 1	$	88,670		$	64,437		$	27,261		$	21,155		$	24,392
Allowance associated with purchase acquisitions		-			-			-			5,982			-
Loans charged off:
Commercial, industrial and agriculture		51,320			41,211			8,338			1,244			21,509
Commercial mortgages		9,019			10,991			3,257			54			66
Construction and development		47,540			30,774			12,368			200			-
Residential mortgages		1,808			2,483			1,485			797			704
Home equity		946			1,378			352			246			397
Consumer		2,728			4,615			4,412			2,900			2,665
Leases		3,778			-			-			-			-
Total		117,139			91,452			30,212			5,441			25,341
Recoveries on charged off loans:
Commercial, industrial and agriculture		1,019			551			280			315			633
Commercial mortgages		104			115			20			18			174
Construction and development		199			83			-			-			-
Residential mortgages		396			351			184			154			171
Home equity		132			137			11			105			41
Consumer		919			1,080			1,109			780			791
Total		2,769			2,317			1,604			1,372			1,810
Net charge-offs		114,370			89,135			28,608			4,069			23,531
Provision for loan losses		134,571			113,368			65,784			4,193			20,294
Allowance related to divested loans sold		(13,070	)		-			-			-			-
Allowance for loan losses, December 31	$	95,801		$	88,670		$	64,437		$	27,261		$	21,155

Total loans at year-end, net of unearned income	$	1,349,504		$	2,110,348		$	2,490,243		$	2,311,378		$	1,790,976
Average loans		1,777,756			2,338,919			2,407,677			2,128,551			1,782,918
Total non-performing loans		197,015			214,880			150,899			22,667			8,853

Net charge-offs to average loans		6.43	%		3.81	%		1.19	%		0.19	%		1.32	%
Provision for loan losses to average loans		7.57			4.85			2.73			0.20			1.14
Allowance for loan losses to loans		7.10			4.20			2.59			1.18			1.18
Allowance for loan losses to non-performing loans		48.63			41.26			42.70			120.27			238.96

In 2009, loans held for probable branch sales of $90,616 were included in total loans used in this calculation. Excluding these loans, the allowance for loan losses to loans is 4.39% for 2009.

The increase in the allowance during 2010, for commercial and commercial mortgage loans is due to an increase in loss factors, changes in the economic conditions such as unemployment and foreclosures, and conversion of construction oriented loans to mini-permanent loans that typically have a maturity duration of 3-5 years.

DEPOSITS

Total deposits were $1,989,879 at December 31, 2010, compared to $2,365,106 at December 31, 2009, with the decline due primarily to the $405,781 of deposits sold in branch divestitures during 2010, on which we received premiums of $15,612. Low cost deposits, defined as non-interest bearing, interest checking and savings deposits, were $747,652 at December 31, 2010, down $282,285, or 27.4% from $1,029,937 at December 31, 2009.

Average balances of deposits for 2010, as compared to 2009, included decreases in money market accounts of $65,376, interest checking accounts of $43,114, non-interest bearing demand deposits of $39,705, retail certificates of deposit of $24,731, savings accounts of $11,399 and public fund time deposits of $3,843. Average balances of brokered time deposits increased $25,041 from the year ago period.

The Bank cannot currently accept new brokered funds as a funding source and is subject to rate restrictions that limit the amount that can be paid on all types of retail deposits. The maximum rates the Bank can pay on all types of retail deposits are limited to the weekly national rates, as posted on the FDIC website, plus 75 basis points. The Bank’s rates have all been below the national rate cap limits since those limits became effective.

The Bank is no longer eligible to accept new Indiana public fund deposits. Existing time accounts may be held to maturity, while transaction accounts are expected to be transitioned to other eligible financial institutions. During February 2011, we communicated this information to the public fund entities affected and have assisted them in understanding these consequences. All of these deposits were collateralized by securities. As these deposit balances decrease, the securities are released and can be sold to provide additional liquidity.

TIME DEPOSITS OF $100 OR MORE AT DECEMBER 31, 2010
Maturing:
3 months or less	$	97,137
Over 3 to 6 months		86,691
Over 6 to 12 months		161,397
Over 12 months		321,446
Total	$	666,671

SHORT-TERM BORROWINGS

Short-term borrowings totaled $59,893 at December 31, 2010, a decrease of $2,221 from year-end 2009. Short-term borrowings primarily include federal funds purchased (which are purchased from other financial institutions, generally on an overnight basis) securities sold under agreements to repurchase (which are collateralized transactions acquired in national markets as well as from our commercial customers as a part of a cash management service), and short-term FHLB advances.

At December 31, 2010, we had available federal funds purchased lines of $135,000. However, our ability to draw under these lines is conditional, and it is highly unlikely that we would be able to access them. We also had availability from the FHLB of $74,512, and availability of $62,205 under the Federal Reserve secondary credit program.

LONG-TERM BORROWINGS

Long-term borrowings have original maturities greater than one year and include long-term advances from the FHLB, securities sold under repurchase agreements, term notes from other financial institutions, floating rate unsecured subordinated debt and trust preferred securities. Long-term borrowings decreased to $347,847 at December 31, 2010, compared to $361,071 at December 31, 2009.

We continuously review our liability composition. Any modifications could adversely affect our profitability and capital levels over the near term, but would be undertaken if we believe that restructuring the balance sheet will improve our interest rate risk and liquidity risk profile on a longer-term basis.

Note 15 to the consolidated financial statements provides additional information about our long-term debt.

OFF-BALANCE SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL OBLIGATIONS

We have obligations and commitments to make future payments under contracts. Our long-term borrowings represent FHLB advances with various terms and rates collateralized primarily by first mortgage loans and certain specifically assigned securities, securities sold under repurchase agreements, notes payable secured by equipment, junior subordinated debentures and trust preferred securities. We are also committed under various operating leases for premises and equipment.

In the normal course of our business, there are various outstanding commitments and contingencies, including letters of credit and standby letters of credit that are not reflected in the consolidated financial statements. Our exposure to credit loss in the event of nonperformance by the other party to the commitment is limited to the contractual amount. Many commitments expire without being used. We use the same credit policies in making commitments and conditional obligations as we do for other on-balance sheet instruments.

CAPITAL RESOURCES

Shareholder’s equity totaled $(18,839) at December 31, 2010, a decrease of $121,185 from 2009. The decrease was primarily due to the net loss of $124,222.

On February 27, 2009, we received $83,586 from the Treasury Department in exchange for shares of a new series of senior preferred stock, or the Treasury Preferred Stock, and a related warrant to purchase 7,418,876 shares of common stock, or the Treasury Warrant, at an initial exercise price of $1.69 per share through the CPP. The Treasury Preferred Stock bears a five percent dividend for each of the first five years of the investment, and nine percent thereafter, unless the shares are redeemed. The shares are callable at par at any time subject to prior consultation with the Federal Reserve and may be repurchased at any time under certain conditions. The Treasury Department also received a 10-year warrant to purchase 7,418,876 shares of common stock at an initial exercise price of $1.69 per share. We are subject to the CPP’s standards for executive compensation and corporate governance for the period during which the Treasury holds our securities. See the discussion of the Capital Purchase Program, in the “Regulation and Supervision” section contained in Item 1 of this document for further details about those standards.

Shareholders’ equity totaled $102,346 at December 31, 2009, a decrease of $102,445 or 50.0% from 2008. The sale of the Treasury preferred stock partially offset the net loss for the year of $191,183.

During 2009, we made capital contributions of $60,900 into Integra Bank using CPP funds. This additional capital positively impacted Integra Bank’s capital ratios and liquidity. In the fourth quarter of 2010, we made additional capital contributions of $1,750.

We ceased paying cash dividends on our common stock in September 2009. We also suspended cash dividends on the Treasury Preferred Stock and began deferring interest payments on the junior subordinated debentures. Future payment of any cash dividends on our common stock will be subject to the prior payment of all unpaid dividends on the Treasury Preferred Stock and all deferred distributions. Because we have not paid dividends on the Treasury Preferred Stock for six quarters, the Treasury Department has the right to appoint two directors to our board of directors until all accrued but unpaid dividends have been paid. To date, the Treasury Department has not exercised this right.

The banking industry is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can elicit certain mandatory actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Capital adequacy in the banking industry is evaluated primarily by the use of ratios that measure capital against assets and certain off-balance sheet items. Certain ratios weight these assets based on risk characteristics according to regulatory accounting practices. At December 31, 2010, Integra Bank was considered to be in the undercapitalized category for PCA regulations. See additional discussion in Item 1, “Business” and Note 16 to the Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data.

Capital trust preferred securities currently qualify as Tier 1 capital for the parent holding company under Federal Reserve guidelines.

LIQUIDITY

Liquidity management involves monitoring sources and uses of funds in order to meet day-to-day cash flow requirements. These daily requirements reflect the ability to provide funds to meet loan requests, to fund existing commitments, to accommodate possible outflows in deposits and other borrowings. Liquidity represents the ability of a company to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Asset liquidity is provided by cash assets that are readily marketable, can be pledged, or will mature in the near future.

For Integra Bank, the primary sources of short-term asset liquidity have been cash, federal funds sold, interest-bearing deposits with other financial institutions, retail and public fund customer deposits and securities classified as available for sale. In addition to these sources, short-term asset liquidity is provided by scheduled principal paydowns and maturing loans along with monthly cash flows from mortgage backed securities and maturing securities. We continuously monitor our current and prospective business activity in order to design maturities of specific categories of short-term and long-term loans and investments that are in line with specific types of deposits and borrowings. The balance between these sources and the need to fund loan demand and deposit withdrawals is monitored under our Capital Markets Risk Policy. We may also utilize Integra Bank’s borrowing capacity with the FHLB and sell investment securities and loans.

Due to our financial performance in 2010, we increased our liquidity and cash position. Cash and due from banks totaled $430,253 at December 31, 2010, as compared to $304,921 at December 31, 2009. The decline in the Bank’s capital levels during 2010 restricted us from using sources of funds we would normally have used. Once the Bank was considered to be in the adequately capitalized category, it was restricted from accepting new brokered deposits and became subject to rate restrictions that limited the rate of interest we could pay on retail deposits. The maximum rates we were allowed to pay on all types of retail deposits continued to be limited to the national average rate plus 75 basis points. We continue to monitor the rates we are currently paying against the national rate caps and all rates remain within those caps. We designed a product that established a new source for retail deposits that significantly mitigated the risk associated with potential deposit runoff associated with the rate restriction requirements. During the second and third quarters of 2010, we entered a non-brokered deposit program where we utilized deposit listing service companies as an alternative source of funds to replace the use of brokered deposits.

Historically, we have had significant amounts of public fund deposits in Indiana, Kentucky and Illinois. We have always been required to pledge collateral to cover the deposit balances in Kentucky and Illinois as required by the laws of each state. We became subject to a similar requirement in Indiana during 2010. During 2010, we increased the size of our investment portfolio to provide collateral for the pledging of the Indiana public deposits. The balance in the securities available for sale portfolio as of December 31, 2010 was $528,904 as compared to $361,719 at December 31, 2009. As of December 31, 2010, we had $120,879 in deposits from public fund entities based in the State of Indiana, consisting of $79,347 of transaction accounts and $41,532 of time deposit balances. After the Bank was considered to be in the undercapitalized category for PCA purposes, we were no longer eligible to accept new Indiana public fund deposits. Existing time accounts may be held to maturity, while transaction accounts are being transitioned to other eligible financial institutions.

The Transaction Account Guarantee (TAG) program provided unlimited insurance coverage through December 31, 2010 on non-interest bearing transaction accounts, IOLTAs, and NOW accounts bearing an interest rate of 0.25% or less. As part of the new financial regulatory reform bill signed on November 9, 2010 the TAG program was replaced by a final rule that provides unlimited insurance coverage on non-interest bearing transaction accounts until December 31, 2012. On December 29, 2010, IOLTA accounts were added to the unlimited insurance coverage. The financial regulatory reform bill also made permanent the extension of the $250 per depositor insurance coverage, which was increased from the $100 limit.

At December 31, 2010 and 2009, respectively, short-term investments were $56,559 and $49,653. Additionally, at December 31, 2010, we had in excess of $173,814 as compared to $108,634 at December 2009 in unencumbered securities available for repurchase agreements or liquidation. At December 31, 2010, Integra Bank was eligible for over $74,512 in additional borrowing capacity with the FHLB and had in excess of $62,204 with the Federal Reserve Bank under the secondary credit program.

We utilized the TAF program at various times throughout 2009 as a source of short-term funding and paid off the $85,000 balance in October 2009. Integra Bank participated in the TLGP debt program and issued a $50,000 aggregate principal amount FDIC guaranteed note during the first quarter 2009. This senior unsecured note is due in 2012 and carries an interest rate of 2.625%.

Liquidity at the holding company level has historically been provided by dividends from Integra Bank, cash balances, liquid assets, and proceeds from capital market transactions. Because of its recent losses, the Bank cannot pay any dividends to us without advance approval from the OCC. Given our and the Bank’s regulatory agreements and obligations and the need to recapitalize the Bank, it is highly unlikely that we will pay dividends in the foreseeable future. There is a possibility that the holding company may, at some future point, not have sufficient resources to fund its operations.

Liquidity is required to support operational expenses, pay taxes, meet outstanding debt obligations, and other general corporate purposes. In order to enhance our liquidity, we have suspended payments of cash dividends on all of our outstanding stock, and deferred the payment of interest on our outstanding junior subordinated debentures. We can defer payments of interest on the subordinated debentures related to our trust preferred securities for up to five years without default or penalty. During the deferral period, the respective trusts will likewise suspend the declaration and payment of distributions on the trust preferred securities. Also during the deferral period, we may not, among other things and with limited exceptions, pay cash dividends on or repurchase our common stock or preferred stock nor make any payment on outstanding debt obligations that rank equally with or lower than the subordinated debentures.

We believe the suspension of dividends on our common and preferred stock and the deferral of interest payments on our subordinated debentures are preserving approximately $1,900 per quarter, thereby allowing us to maintain our current liquidity position. At December 31, 2010, the cash balance held by the parent company was $1,699.

ACCOUNTING CHANGES

For information regarding accounting standards issued which will be adopted in future periods, see Note 1 to the Consolidated Financial Statements included in this report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Integra Bank Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles and includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.

Based on that assessment, we believe that, as of December 31, 2010, our internal control over financial reporting is effective based on those criteria.

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our report was not subject to the attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this report.

/s/ Michael J. Alley		/s/ Michael B. Carroll
Chairman of the Board		Executive Vice President and
and Chief Executive Officer		Chief Financial Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

Integra Bank Corporation

Evansville, Indiana

We have audited the accompanying balance sheets of Integra Bank Corporation as of December 31, 2010 and 2009, and the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s cumulative net loss to common shareholders from 2008 through 2010 exceeded $430 million and the Company has negative shareholders’ equity at December 31, 2010. These results are primarily due to asset impairments, particularly loans. The Company cannot currently generate sufficient revenue to support its operating expenses and the Company’s bank subsidiary has not been able to achieve the capital levels required by regulatory order. These events raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Crowe Horwath LLP

Louisville, Kentucky

March 14, 2011

INTEGRA BANK CORPORATION and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share Data)

	December 31,
	2010			2009
ASSETS
Cash and due from banks	$	430,253		$	304,921
Short-term investments		56,559			49,653
Total cash and cash equivalents		486,812			354,574
Loans held for sale (at lower of cost or fair value)		1,899			93,572
Securities available for sale		528,904			361,719
Securities held for trading		329			36
Regulatory stock		22,172			29,124
Loans, net of unearned income		1,349,504			2,019,732
Less: Allowance for loan losses		(95,801	)		(88,670	)
Net loans		1,253,703			1,931,062
Premises and equipment		34,019			37,814
Premises and equipment held for sale		1,387			4,249
Other real estate owned		49,238			31,982
Other intangible assets		3,950			8,242
Other assets		38,372			69,567
TOTAL ASSETS	$	2,420,785		$	2,921,941

LIABILITIES
Deposits:
Non-interest-bearing demand	$	224,184		$	263,530
Non-interest-bearing held for sale		-			7,319
Interest-bearing		1,765,695			2,004,369
Interest-bearing held for sale		-			89,888
Total deposits		1,989,879			2,365,106
Short-term borrowings		59,893			62,114
Long-term borrowings		347,847			361,071
Other liabilities		42,005			31,304
TOTAL LIABILITIES		2,439,624			2,819,595

Commitments and contingent liabilities (Note 19)		-			-

SHAREHOLDERS' EQUITY
Preferred stock - no par, $1,000 per share liquidation preference:
Shares authorized: 1,000,000
Shares outstanding: 83,586		82,359			82,011
Common stock - $1.00 stated value:
Shares authorized: 129,000,000
Shares outstanding: 21,052,697 and 20,847,589 respectively		21,053			20,848
Additional paid-in capital		217,174			216,939
Retained earnings		(334,593	)		(210,371	)
Accumulated other comprehensive income (loss)		(4,832	)		(7,081	)
TOTAL SHAREHOLDERS' EQUITY		(18,839	)		102,346
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,420,785		$	2,921,941

See Accompanying Notes to Consolidated Financial Statements.

INTEGRA BANK CORPORATION and Subsidiaries

Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

	Year Ended December 31,
	2010			2009
INTEREST INCOME
Interest and fees on loans:
Taxable	$	75,010		$	98,414
Tax-exempt		352			771
Interest and dividends on securities:
Taxable		13,679			17,018
Tax-exempt		834			2,657
Interest on securities held for trading		-			161
Dividends on regulatory stock		717			1,184
Interest on loans held for sale		122			516
Interest on federal funds sold and other short-term investments		1,249			745
Total interest income		91,963			121,466

INTEREST EXPENSE
Interest on deposits		30,860			43,221
Interest on short-term borrowings		194			1,682
Interest on long-term borrowings		11,335			10,527
Total interest expense		42,389			55,430

NET INTEREST INCOME		49,574			66,036
Provision for loan losses		134,571			113,368
Net interest income after provision for loan losses		(84,997	)		(47,332	)

NON-INTEREST INCOME
Service charges on deposit accounts		15,144			19,879
Other service charges and fees		3,923			4,137
Debit card income-interchange		5,049			5,361
Trust income		1,905			2,102
Net securities gains		5,803			8,060
Net premiums on sales of deposits		15,612			7,812
Other than temporary impairment loss:
Total impairment losses recognized on securities		(1,173	)		(22,634	)
Loss or reclassification recognized in other comprehensive income		(71	)		(1,150	)
Net impairment loss recognized in earnings		(1,102	)		(21,484	)
Warrant fair value adjustment		-			(6,145	)
Cash surrender value life insurance		95			913
Net gain on sale of divested loans		11,742			727
Other		3,279			1,806
Total non-interest income		61,450			23,168

NON-INTEREST EXPENSE
Salaries and employee benefits		34,814			42,234
Occupancy		7,897			9,499
Equipment		2,608			3,151
Professional fees		11,632			7,453
Communication and transportation		3,483			4,346
Processing		2,174			2,781
Software		2,154			2,549
Marketing		853			1,432
Loan collection and OREO expense		13,921			11,003
FDIC assessment		9,278			7,681
Low income housing project losses		1,709			1,779
Building impairment expense		-			1,639
Debt prepayment penalties		-			1,538
Amortization of intangible assets		1,333			1,686
Other		5,986			7,398
Total non-interest expense		97,842			106,169
Income (Loss) before income taxes		(121,389	)		(130,333	)
Income taxes (benefit)		(1,694	)		60,850
NET INCOME (LOSS)	$	(119,695	)	$	(191,183	)
Preferred stock dividends and discount accretion		4,527			3,798
Net income (loss) available to common shareholders	$	(124,222	)	$	(194,981	)

Consolidated Statements of Operations are continued on the following page.

INTEGRA BANK CORPORATION and Subsidiaries

Consolidated Statements of Operations (Continued)

(In Thousands, Except Per Share Data)

	Year Ended December 31,
	2010			2009
Earnings (Loss) per share:
Basic	$	(6.01	)	$	(9.42	)
Diluted		(6.01	)		(9.42	)

Weighted average shares outstanding:
Basic		20,676			20,706
Diluted		20,676			20,706

See Accompanying Notes to Consolidated Financial Statements.

INTEGRA BANK CORPORATION and Subsidiaries

Consolidated Statements of Comprehensive Income

(In Thousands)

	Year Ended December 31,
	2010			2009

Net income (loss)	$	(119,695	)	$	(191,183	)

Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities:
Unrealized gain (loss) arising in period (net of tax of $2,968 and $(4,639), respectively)		4,992			(7,634	)
Reclassification of amounts realized through impairment charges and sales (net of tax of $(1,752) and $5,075, respectively)		(2,948	)		8,349
Net unrealized gain (loss) on securities		2,044			715

Change in net pension plan liability
(net of tax of $581 and $(785), respectively)		978			(1,292	)
Unrealized gain (loss) on derivative hedging instruments arising in period
(net of tax of $(233) in 2009)		-			(384	)

Net unrealized gain (loss), recognized in other comprehensive income (loss)		3,022			(961	)

Comprehensive income (loss)	$	(116,673	)	$	(192,144	)

See Accompanying Notes to Consolidated Financial Statements.

INTEGRA BANK CORPORATION and Subsidiaries

Consolidated Statements of Changes In Shareholders’ Equity

(In Thousands, Except Share and Per Share Data)

																Accumulated
				Shares of						Additional						Other			Total
	Preferred			Common			Common			Paid-In			Retained			Comprehensive			Shareholders'
	Stock			Stock			Stock			Capital			Earnings			Income (Loss)			Equity

BALANCE AT JANUARY 1, 2009	$	-			20,748,880		$	20,749		$	208,732		$	(15,754	)	$	(8,936	)	$	204,791

Net income (loss)		-			-			-			-			(191,183	)		-			(191,183	)
Cash dividend declared ($0.02 per share)		-			-			-			-			(414	)		-			(414	)
Net change, net of tax, in accumulated other comprehensive income		-			-			-			-			-			1,918			1,918
Cumulative effect of change in accounting principles, adoption of FSP FAS 115-2 and 124-2 (net of tax) (ASC 320)		-			-			-			-			778			(778	)		-
Change in unrealized gains (losses) on securities available-for-sale for which a portion of an other-than temporary impairment has been recognized in earnings, net of reclassification and taxes		-			-			-			-			-			715			715
Preferred stock		83,586			-			-			-			-			-			83,586
Common stock warrants		-									7,999									7,999
Discount on preferred stock		(1,855	)		-			-			-			-			-			(1,855	)
Preferred stock dividend and discount accretion		280			-			-			-			(3,798	)		-			(3,518	)
Vesting of restricted shares, net		-			(9,873	)		(10	)		(307	)		-			-			(317	)
Grant of restricted stock, net of forfeitures		-			108,582			109			(109	)		-			-			-
Stock-based compensation expense		-			-			-			624			-			-			624
BALANCE AT DECEMBER 31, 2009	$	82,011		$	20,847,589		$	20,848		$	216,939		$	(210,371	)	$	(7,081	)	$	102,346

Net income (loss)		-			-			-			-			(119,695	)		-			(119,695	)
Net change, net of tax, in accumulated other comprehensive income		-			-			-			-			-			2,249			2,249
Preferred stock dividend and discount accretion		348			-			-			-			(4,527	)		-			(4,179	)
Vesting of restricted shares, net		-			(1,398	)		(2	)		-			-			-			(2	)
Grant of restricted stock, net of forfeitures		-			206,506			207			(207	)		-			-			-
Stock-based compensation expense		-			-			-			442			-			-			442
BALANCE AT DECEMBER 31, 2010	$	82,359		$	21,052,697		$	21,053		$	217,174		$	(334,593	)	$	(4,832	)	$	(18,839	)

See Accompanying Notes to Consolidated Financial Statements.

INTEGRA BANK CORPORATION and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

	Year ended December 31,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(119,695	)	$	(191,183	)
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation		8,993			6,301
Provision for loan losses		134,571			113,368
Net gain on sale of divested loans		(11,742	)		-
Income tax valuation allowance		-			64,266
Net securities (gains) losses		(5,803	)		(8,060	)
Impairment charge on available for sale securities		1,102			21,484
Net held for trading (gains) losses		(293	)		1,004
(Gain) loss on sale of premises and equipment		(457	)		86
(Gain) loss on sale of other real estate owned		879			506
Net premiums on sale of deposits		(15,612	)		(7,812	)
Loss on low-income housing investments		1,710			1,779
Proceeds from sale of held for trading securities		-			20,298
Purchase of held for trading securities		-			(19,745	)
Net gain on sale of loans held for sale		(12,158	)		(1,491	)
Proceeds from sale of loans held for sale		86,308			182,017
Origination of loans held for sale		(73,094	)		(127,246	)
Debt prepayment fees		-			1,538
Change in other operating		25,563			18,984
Net cash flows provided by operating activities	$	20,272		$	76,094
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of securities available for sale		122,493			112,727
Proceeds from sales of securities available for sale		208,697			296,751
Purchase of securities available for sale		(494,821	)		(218,145	)
Proceeds from sale of regulatory stock		6,952			(9	)
Proceeds from sale of bank owned life insurance		16,900			45,067
Decrease in loans made to customers		278,790			133,608
Purchase of premises and equipment		(5,358	)		(1,293	)
Proceeds from sale of premises and equipment		718			(95	)
Proceeds from sale of other real estate owned		10,152			8,791
Increase (decrease) from sale of branches, net of cash acquired		(66,359	)		(48,112	)
Net cash flows provided by (used in) investing activities	$	78,164		$	329,290

Consolidated Statements of Cash Flows are continued on the following page.

INTEGRA BANK CORPORATION and Subsidiaries

Consolidated Statements of Cash Flows (Continued)

(In Thousands)

	Year ended December 31,
	2010			2009
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits	$	49,245		$	152,029
Net increase (decrease) in short-term borrowed funds		(2,221	)		(352,892	)
Proceeds from long-term borrowings		-			50,000
Repayment of long-term borrowings		(13,220	)		(49,841	)
Proceeds from issuance of TARP preferred stock		-			90,010
Dividends paid on TARP preferred stock		-			(1,950	)
Dividends paid on common stock		-			(622	)
Proceeds from exercise of stock options and restricted shares, net		(2	)		(317	)
Net cash flows provided by financing activities	$	33,802		$	(113,583	)
Net increase in cash and cash equivalents		132,238			291,801
Cash and cash equivalents at beginning of period		354,574			62,773
Cash and cash equivalents at end of period	$	486,812		$	354,574

	Year ended December 31,
	2010			2009
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Cash paid during the year:
Interest	$	41,879		$	57,790
Income taxes		(7,297	)		(5,931	)

Other real estate acquired in settlement of loans		37,010			29,512
Dividends accrued not paid on preferred stock		4,180			1,567
Accretion of discount on TARP preferred stock		(4,527	)		(3,798	)

See Accompanying Notes to Consolidated Financial Statements.

INTEGRA BANK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(In Thousands, Except Share and Per Share Data)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Integra Bank Corporation is a bank holding company based in Evansville, Indiana, whose principal subsidiary is Integra Bank N.A., a national banking association, or Integra Bank. As used in these notes, and unless the context provides otherwise, the terms “we”, “us”, “our”, “the company” and “Integra” refer to Integra Bank Corporation and its subsidiaries. We also own Integra Reinsurance Company, Ltd. which was formed under the laws of the Turks and Caicos Islands and the state of Arizona. We also have a controlling interest in four statutory business trusts. We provide services and assistance to our wholly owned subsidiaries and Integra Bank’s subsidiaries in the areas of strategic planning, administration, and general corporate activities. In return, we receive income and/or dividends from Integra Bank, where most of our activities take place, when it is able to provide such income and/or dividends.

Integra Bank provides a wide range of financial services to the communities it serves in Indiana, Kentucky, and Illinois. These services include various types of personal and commercial banking services and products, investment and trust services and selected insurance services. Specifically, these products and services include commercial, consumer and mortgage loans, lines of credit, credit cards, transaction accounts, time deposits, repurchase agreements, letters of credit, corporate cash management services, correspondent banking services, mortgage servicing, brokerage and annuity products and services, credit life and other selected insurance products, securities safekeeping, safe deposit boxes, online banking, and complete personal and corporate trust services. Integra Bank also has a 65.5% ownership interest in Total Title Services, LLC, a provider of residential title insurance.

Integra Bank’s products and services are delivered through its customers’ channel of preference. At December 31, 2010, Integra Bank serves its customers through 52 banking centers, and 100 automatic teller machines. Integra Bank also serves its customers through its telephone banking and offers a suite of Internet-based products and services that can be found at our website, http://www.integrabank.com.

Integra Reinsurance Company, Ltd. is an insurance company formed in June 2002 under the laws of the Turks and Caicos Islands as an exempted company for twenty years under the companies Ordinance 1981. It operates as an alien corporation in the state of Arizona and as such is subject to the rules and regulations of the National Association of Insurance Companies. The company sells only Allied Solutions credit life and disability policies and operates within the Bank’s banking center network. Integra Reinsurance Company began operations in May 2003.

Our consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States. The following is a description of our significant accounting policies.

BASIS OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of the parent company and two of our subsidiaries. At December 31, 2010, the subsidiaries included in the consolidated financial statements consisted of Integra Bank and a reinsurance company. Our four statutory business trusts are not consolidated due to the guidance of Accounting Standard Codification (ASC) 810.

All significant intercompany transactions and balances have been eliminated. We utilize the accrual basis of accounting. Certain prior period amounts have been reclassified to conform to the 2010 financial reporting presentation.

To prepare the consolidated financial statements in accordance with U.S. generally accepted accounting principles, we are required to make estimates and assumptions based on available information that affect the amounts reported in the consolidated financial statements. Significant estimates which are particularly susceptible to short-term changes include the valuation of the securities portfolio, the determination of the allowance for loan losses and valuation of real estate and other properties acquired in connection with foreclosures or in satisfaction of amounts due from borrowers on loans. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, amounts due from banks, commercial paper and federal funds sold which are readily convertible to known amounts of cash. Interest-bearing deposits in banks, regardless of maturity, are considered short-term investments and included as cash equivalents. The substantial increase in cash and cash equivalents year over year was driven by our desire to maintain a higher level of liquidity during 2010. The majority of the cash is held in our account at the Federal Reserve.

SECURITIES

Securities can be classified as trading, available for sale and held to maturity. At December 31, 2010, the majority of our securities were classified as available for sale.

Securities classified as available for sale are those debt and equity securities that we intend to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors. Securities available for sale are carried at fair value. Unrealized gains or losses are reported as increases or decreases in shareholders' equity, typically, net of the related deferred tax effect. Interest income includes amortization of premiums or discounts. Premiums and discounts are amortized on the level yield method without anticipating prepayments, except for mortgage-backed securities, where prepayments are anticipated. Realized gains or losses, determined on the basis of the cost of specific securities sold, are included as a component of net income. Security transactions are accounted for on a trade date basis.

Declines in the fair value of available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other than temporary impairment losses, we consider the length of time and the extent to which the fair value has been less than cost, the financial condition and near term prospects of the issuer, and our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. We evaluate securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.

Securities classified as held for trading are held principally for resale in the near term and are recorded at fair value with changes in fair value included in earnings. Interest and dividends are included in net interest income.

REGULATORY STOCK

Regulatory stock includes mandatory equity securities which do not have a readily determinable fair value and are therefore carried at cost on the balance sheet. This includes both Federal Reserve and Federal Home Loan Bank, or FHLB stock. From time to time, we purchase and sell shares of these dividend paying securities according to capital requirements set by the Federal Reserve or FHLB. During 2010 and 2009, we sold $2,541 and $39, respectively, of our FHLB stock back to the FHLB at par. We also sold $4,411 of Federal Reserve stock back at par during 2010.

LOANS

Loans are stated at the principal amount outstanding, net of unearned income. Loans held for sale are valued at the lower of aggregate cost or fair value and include loans held for probable branch sales.

Interest income on loans is based on the principal balance outstanding, with the exception of interest on discount basis loans, computed using a method which approximates the effective interest rate. Loan origination fees, certain direct costs and unearned discounts are amortized as an adjustment to the yield over the term of the loan. We endeavor to recognize as quickly as possible situations where the borrower’s repayment ability has become impaired or the collectability of interest is doubtful or involves more than the normal degree of risk. Generally, we place a loan on non-accrual status upon becoming 90 days past due as to interest or principal (unless both well-secured and in the process of collection), when the full timely collection of interest or principal becomes uncertain or when a portion of the principal balance has been charged-off. Real estate 1 – 4 family loans (both first and junior liens) are placed on nonaccrual status within 120 days of becoming past due as to interest or principal, regardless of security. We adhere to the standards for classification and treatment of open and closed-end credit extended to individuals for household, family and other personal expenditures, including consumer loans and credit cards that are established by the Uniform Retail Classification and Account Management Policy (OCC Bulletin 2000-20). At the time a loan is placed in nonaccrual status, all unpaid accrued interest is reversed and deferred loan fees or costs amortization is discontinued. When doubt exists as to the collectability of the remaining book balance of a loan placed in nonaccrual status, any payments received will be applied to reduce principal to the extent necessary to eliminate such doubt. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collectability of interest and principal. Past due loans are loans that are contractually past due as to interest or principal payments. Loans, for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings.

CONCENTRATION RISK

We have concentrated our efforts in liquidating our non-owner occupied CRE exposure in 2010 and 2009, and reduced our exposure $360,054 or 36.8% to $618,873 in 2010. Due to the reduction in the overall portfolio resulting from branch and loan sales, our concentration level marginally improved from 46.4% to 45.9% of the total portfolio for the same period. Our exposure to credit risk is significantly affected by changes in economic conditions within the property types within non-owner occupied real estate. At December 31, 2010, retail projects exposure reduced $105,984 to $154,871 and is 25.0% of the total non-owner occupied CRE portfolio, multifamily declined $63,916 to $115,150 or 18.6%, land acquisition and development reduced $46,068 to $97,378 or 15.7%, and single family residential and construction decreased $43,275 to $69,912 or 11.3% of the total. These four types of non-owner occupied CRE represent our largest exposures as of the end of the year.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is that amount which, in our opinion, is adequate to absorb probable incurred loan losses as determined by our ongoing evaluation of the loan portfolio and its inherent risks. Our evaluation is based upon consideration of various factors including growth of the portfolio, an analysis of individual credits, adverse situations that could affect a borrower’s ability to repay, prior and current loss experience, the results of recent regulatory examinations and economic conditions. Our process includes expanded data analysis, back-testing and continued refinements to documentation surrounding the adequacy of the allowance. The allowance provides measures of the probability of default and risk of loss given default for our categories of loans with similar risk characteristics, analyzes loss data over a period of time that we believe is appropriate and which is periodically reevaluated. This improves the measure of inherent loss over a complete economic cycle and reduces the impact for qualitative adjustments.

Loans that are deemed to be uncollectible are charged-off to the allowance, while recoveries of previously charged off amounts are credited to the allowance. A provision for loan losses is expensed to operations at levels deemed necessary to provide assurance that the allowance for loan losses is sufficient to absorb probable incurred losses based on our ongoing evaluation of the loan portfolio.

We recognize charge-offs when, based on all available information, we determine that a loan or a portion of a loan is uncollectible. Commercial and commercial real estate loan charge-offs, which in general are more complex and larger in nature than retail loans, typically are identified by account officers and credit administration personnel. Retail loans are recognized in accordance with the Office of the Comptroller of the Currency’s Uniform Retail Credit Classification and Account Management policy parameters. Charge-offs are approved by credit administration personnel or by executive management depending on the size of the loss and are charged to the allowance for loan and lease losses. Losses then are ratified by the Credit and Risk Management Committee of the Board of Directors.

We conduct reviews on selected loans, based on size to identify loans with heightened risk or probable losses quarterly or more frequently as stated within Integra Bank’s formal agreement with its federal regulators. The primary responsibility for this review rests with the relationship manager responsible for the credit relationship. This review is supplemented by the loan review area, which provides information assisting in the timely identification of problems and potential problems and in deciding whether the credit represents a probable loss or risk which should be recognized. Where appropriate, an allocation is made to the allowance for individual loans based on our estimate of the borrower’s ability to repay the loan given the availability of collateral, other sources of cash flow and legal options available to us.

Included in the review of individual loans are those that are impaired as provided in Statement of Financial Accounting Standards No. 114, “Accounting by Creditors for Impairment of a Loan” (ASC 310). We consider loans impaired when, based on current information and events, it is probable we will not be able to collect all amounts due in accordance with the contractual terms. The allowance established for impaired loans is generally based for all collateral-dependent loans on the market value of the collateral, less estimated cost to liquidate. For non-collateral dependent loans, the allowance is based on the present value of expected future cash flows discounted at the historical effective interest rate stipulated in the loan agreement.

Historical loss ratios are applied to other homogeneous pools of loans, such as consumer installment and residential real estate loans. In addition, the allowance reflects other risks affecting the loan portfolio, such as economic conditions in the bank’s geographic areas, specific industry financial conditions and other factors.

The unallocated portion of the allowance is determined based on our assessment of economic conditions and specific economic factors in the individual markets in which we operate.

OTHER REAL ESTATE OWNED

Properties acquired through foreclosure and unused bank premises are initially recorded at fair value, reduced by estimated selling costs and are accounted for at lower of cost or fair value. The fair values of other real estate are typically determined based on appraisals by independent third parties. Write-downs of the related loans at or prior to the date of foreclosure are charged to the allowance for losses on loans. Subsequent write-downs, income and expense incurred in connection with holding such assets, and gains and losses realized from the sales of such assets, are included in non-interest income and expense. At December 31, 2010 and 2009, net other real estate owned was $49,238 and $31,982, respectively.

PREMISES AND EQUIPMENT

Land is carried at cost. Premises and equipment, including leasehold improvements, are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method based on estimated useful lives of up to thirty-nine years for premises and three to ten years for furniture and equipment. Costs of major additions and improvements are capitalized. Maintenance and repairs are charged to operating expenses as incurred.

INTANGIBLE ASSETS

Core deposit intangibles are recorded at fair value, based on a discounted cash model valuation at the time of acquisition and are evaluated periodically for impairment. They are amortized over their estimated useful lives and also are subject to impairment testing.

BANK-OWNED LIFE INSURANCE

Bank-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts that are probable at settlement.

HELD FOR SALE

Loans held for sale include mortgage loans held for sale and loans held for probable branch sales. Assets and liabilities classified as held for sale are carried at the lower of cost or fair value. Premises and equipment held for sale, non-interest bearing deposits held for sale and interest-bearing deposits held for sale are reflective of the fixed assets and deposits which are held for probable branch sales.

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase are generally treated as collateralized financing transactions and are recorded at the amounts at which the securities were sold plus accrued interest. Securities, generally U.S. government and federal agency securities, pledged as collateral under these financing arrangements cannot be sold or repledged by the secured party. The market value of collateral provided to a third party is continually monitored and additional collateral provided, obtained or requested to be returned to us as deemed appropriate.

MORTGAGE BANKING DERIVATIVES

Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these mortgage loans are accounted for as derivatives not qualifying for hedge accounting. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date of the commitments. Changes in the fair values of these derivatives are included in net gains on sales of loans.

DERIVATIVE FINANCIAL INSTRUMENTS

We maintain an overall interest rate risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility. Our interest rate risk management strategy involves modifying the repricing characteristics of certain assets and liabilities so that changes in interest rates do not adversely affect the net interest margin and cash flows. Derivative instruments that we may use as part of our interest rate risk management strategy include interest rate swaps, interest rate floors, interest rate caps, forward contracts and both futures contracts and options on futures contracts. Interest rate swap contracts are exchanges of interest payments, such as fixed-rate payments for floating-rate payments, based on a common notional amount and maturity date. Forward contracts are contracts in which the buyer agrees to purchase and the seller agrees to make delivery of a specific financial instrument at a predetermined price or yield. Futures contracts represent the obligation to buy or sell a predetermined amount of debt subject to the contract’s specific delivery requirements at a predetermined date and a predetermined price. Options on futures contracts represent the right but not the obligation to buy or sell. Freestanding derivatives include derivative transactions entered into for risk management purposes that either do not qualify for hedge accounting or which we decide to record at their market value, with changes going through earnings.

All derivatives are recorded as either assets or liabilities in the statement of financial condition and measured at fair value. On the date we enter into a derivative contract, we designate the derivative instrument as either a fair value hedge, cash flow hedge or as a freestanding derivative instrument. For a fair value hedge, changes in the market value of the derivative instrument and changes in the market value of the hedged asset or liability or of an unrecognized firm commitment attributable to the hedged risk are recorded in current period net income. For a cash flow hedge, changes in the market value of the derivative instrument, to the extent that it is effective, are recorded as a component of accumulated other comprehensive income within shareholders’ equity and subsequently reclassified to net income in the same period that the hedged transaction impacts net income. For freestanding derivative instruments, changes in the market values are reported in current period net income.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

Prior to entering a hedge transaction, we formally document the relationship between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivative instruments that are designated as fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific forecasted transactions along with a formal assessment at both inception of the hedge and on an ongoing basis as to the effectiveness of the derivative instrument in offsetting changes in market values or cash flows of the hedged item. We consider hedge instruments with a correlation from 80% to 125% to be sufficiently effective to qualify as a hedge instrument. If it is determined that the derivative instrument is no longer highly effective as a hedge or if the hedge instrument is terminated, hedge accounting is discontinued and the adjustment to market value of the derivative instrument is recorded in net income.

Derivative transactions that do not qualify for hedge accounting treatment would be considered free-standing derivative instruments. Gains or losses from these instruments would be marked–to-market on a monthly basis and the impact recorded in net income.

INCOME TAXES

We and our subsidiaries file a consolidated federal income tax return with each organization computing its taxes on a separate company basis. The provision for income taxes is based on income as reported in the financial statements. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future. The deferred tax assets and liabilities are computed based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to an amount more likely than not to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Low income housing tax credits are recorded as a reduction to tax provision in the period for which the credits may be utilized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no benefit is recorded. The adoption had no effect on our financial statements.

We recognize interest and/or penalties related to income tax matters as other income or other expense.

COMPREHENSIVE INCOME

Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale, unrealized gains and losses on cash flow hedges and changes in our minimum postretirement health and life plan, which are recognized as separate components of equity. At December 31, 2010, accumulated other comprehensive income included $3,706 of unrealized losses on securities available for sale and $1,126 of changes in our minimum postretirement health and life plan liability.

LOSS CONTINGENCIES

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. We do not believe there are currently any such matters that will have a material effect on the financial statements.

STOCK-BASED COMPENSATION

Compensation expense recognized for all share-based awards granted in or after 2006 is based on the grant date fair value of the stock grants less estimated forfeitures and is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. The amortized stock option and restricted stock expense is included in the statement of changes in shareholders’ equity as stock based compensation expense.

The weighted average fair value of each stock option or stock appreciation right (“SAR”) 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 fair values in 2009. There were no stock option or stock appreciation right grants made in 2010.

	2009

Number of options/SARs granted		5,000
Stock price	$	2.13
Risk-free interest rate		3.09	%
Expected life, in years		8
Expected volatility		57.96	%
Expected dividend yield		1.83	%
Estimated fair value per option/SAR	$	1.12

RECENT ACCOUNTING PRONOUNCEMENTS

Effective for our financial statements as of December 31, 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-20, “Receivables (Topic 310) – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” ASU 2010-20 requires us to provide disclosures designed to facilitate financial statement users’ evaluation of (i) the nature of credit risk inherent in our loan portfolio, (ii) how that risk is analyzed and assessed in arriving at the allowance for loan losses and (iii) the changes and reasons for those changes in the allowance for loan losses. Disclosures must be disaggregated by portfolio segment, and the level at which we develop and document a systematic method for determining our allowance for loan losses. The required disclosures include, among other things, a rollforward of the allowance for loan losses as well as information about modified, impaired, non-accrual and past due loans and credit quality indicators. Disclosures that relate to activity during a reporting period will be required for our financial statements that include periods beginning on or after January 1, 2011. ASU 2011-01, “Receivables (Topic 310) – Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20,” temporarily deferred the effective date for disclosures related to troubled debt restructurings to coincide with the effective date of a proposed accounting standards update related to troubled debt restructurings, which is currently expected to be effective for periods after June 15, 2011.

PREFERRED STOCK

In February 2009, we were approved to participate in the U.S. Treasury Department’s Capital Purchase Program, or CPP, and received funding of $83,586, in exchange for shares of a new series of senior preferred stock and a related warrant to purchase common stock on the standard terms and conditions of the program. The Treasury Preferred stock bears a five percent dividend for each of the first five years of the investment, and nine percent thereafter, unless the shares are redeemed. The shares are callable at par at any time subject to prior consultation with the Federal Reserve and may be repurchased at any time under certain conditions. The Treasury Department also received a 10-year warrant to purchase 7,418,876 shares of common stock at an initial exercise price of $1.69 per share. As part of this program, we were required to adopt the Treasury’s standards for executive compensation and corporate governance for the period during which the Treasury holds equity issued under the CPP. We stopped paying dividends on the Treasury preferred stock in 2009; however, dividends continue to be accrued.

NOTE 2. GOING CONCERN

These consolidated financial statements have been prepared assuming the Company will continue as a going concern. We reported a net loss of $124,222 in 2010 and total losses of $430,078 for the past three years. As a result, we and the Bank are subject to a number of enforcement actions and other requirements imposed by federal banking regulators.

The Bank is subject to a formal agreement it entered into with the OCC in May 2009 that requires the Bank to reduce its non-performing assets and improve earnings. In August 2010, the Bank received a Capital Directive from the OCC directing it to increase and maintain its Total Risk-Based Capital Ratio to at least 11.5% and its Tier 1 Leverage Ratio to at least 8% by November 20, 2010, which it failed to do. The Directive also required Integra Bank to submit a capital plan to the OCC, which it did; however, the OCC did not accept the plan. The additional capital required to satisfy the Capital Directive as of December 31, 2010 was approximately $119,000.

On January 30, 2011, the Bank filed its call report as of December 31, 2010, indicating that its regulatory capital had declined from the "adequately capitalized" to "undercapitalized" category for purposes of the Prompt Corrective Action (PCA) regulations. As an undercapitalized bank, the Bank is subject to several mandatory requirements, including restrictions on payment of capital distributions and management fees, asset growth and on certain expansionary activities, including acquisitions, new branches and new lines of business. The Bank is also required to submit an acceptable Capital Restoration Plan ("CRP") to the OCC no later than March 16, 2011. The CRP must include a written guarantee from the Company of the Bank's obligations until the Bank has been adequately capitalized on average during each of four consecutive calendar quarters and the guarantee must be secured by a pledge of assets acceptable to the OCC. We intend to guarantee the Bank's obligations under the CRP that is to be filed no later than March 16, 2011. We currently have no source of revenues because of the Bank's inability to pay us dividends and our other resources are limited. As a result, our guarantee may, as a practical matter, provide no meaningful support for the CRP.

As a part of our capital raising efforts that began in 2009, we engaged an investment banking firm with expertise in the financial services sector to assist with a review of all strategic opportunities available to us. The principal focus of this effort has been on securing a significant private equity investment to recapitalize the Bank. During the past year, discussions have been held and due diligence has been undertaken by numerous prospective investors.

While there have been some financial institutions of similar size that have been successful in raising capital in the past year, there has been a limited amount of new equity raised by under-capitalized banks operating under regulatory enforcement actions. We are continuing to have discussions with prospective investors and plan to pursue all available alternatives to effect a recapitalization of the Bank in order to comply with the Capital Directive and implement the CRP. Our efforts to raise capital have been impacted by our capitalization structure which includes subordinated debt obligations of $99,054 and the Treasury preferred stock with a liquidation preference of $83,586 at December 31, 2010. These obligations rank senior to the right of holders of our common stock. Any investor in or purchaser of our company would effectively assume the outstanding liability on the debt and be required to repay or restructure the Treasury preferred stock in addition to the amount of funds such investors or purchaser would need to recapitalize the Bank.

During 2009 and 2010, we have, under new senior executive leadership, taken several decisive actions to improve the Bank's capital and reduce overall credit risk including the following.

We have narrowed our geographic operating footprint through the sale of multiple branch clusters while improving capital as detailed in Note 3 below.

We continued our exit from the commercial real estate (CRE) lending line of business and decreased our outstanding CRE balances by $352,662.

We also increased pricing on $90,374 of commercial credits from low LIBOR based variable rates to minimum floor rates of at least 4% during 2010.

We executed multiple cost reduction initiatives during 2010 that are expected to result in lower annualized personnel costs of approximately $4,000, as well as other expense reductions.

Despite the restrictions under which the Bank has been operating, it has maintained adequate liquidity, even during the transitioning of Indiana public fund deposits to other banks. We believe that the Bank's core operations are profitable and our deposit base has substantial value. Additionally, the steps we have taken have significantly reduced the Bank's non-performing assets and loans and credit risk. Accordingly, we believe that the Bank has substantial franchise value and remain committed to exploring all options to recapitalize it.

Our plans for 2011 include the following:

Pursue all available strategies to recapitalize the Bank to the levels required by the Capital Directive;

Continue to reduce our concentration in CRE credit exposure by obtaining paydowns and payoffs;

Continue to reduce non-performing assets and our overall credit exposure; and

Market our services to community banking customers in our core market area that we serve and make continual adjustments to increase profitability.

There can be no assurance that our actions referred to above will successfully resolve all of the concerns of the federal banking regulatory authorities. These events and uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

NOTE 3. BRANCH DIVESTITURES AND LOAN SALES

In 2009, we initiated specific plans to narrow our geographic operating footprint through the sale of multiple branch clusters. We continued this plan during 2010 with the branch divestitures and loan sales that are outlined in the table below. Execution of these sales reduced our asset size and generated capital that improved our capital ratios.

Branch Divestitures
		Number						Premium		Net gain
		of		Loans		Deposits		on sales of		on sale of
Sold to	Date	offices		sold		sold		deposits		divested loans
United Community Bank	June 2010		3	$	45,913	$	53,057	$	2,394	$	1,066
The Cecilian Bank	June 2010		2		40,733		45,000		1,977		1,172
First Security Bank of Owensboro, Inc.	July 2010		5		104,929		115,110		2,799		4,959
FNB Bank	September 2010		3		71,855		118,928		6,010		2,078
Citizens Deposit Bank and Trust	September 2010		4		69,671		73,686		2,432		2,565

The deposit premium on the transaction with First Security Bank of Owensboro Inc. was net of the write-off of a core deposit intangible for those branches of $2,959.

We have substantially completed our planned reduced geographic operating footprint with the exception of our four branches in the Chicago market. Excluding that market, our pro-forma operating footprint includes forty-eight branches within a one-hundred mile radius of Evansville with a genuine focus on community banking.

NOTE 4. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income (loss) for the year by the weighted average number of shares outstanding. Diluted earnings per share is computed as above, adjusted for the dilutive effects of stock options, stock appreciation rights (SARs), and restricted stock. Weighted average shares of common stock have been increased for the assumed exercise of stock options and SARs with proceeds used to purchase treasury stock at the average market price for the period.

The following provides a reconciliation of basic and diluted earnings per share:

For the Year Ended December 31,	2010			2009
Net income (loss)	$	(119,695	)	$	(191,183	)
Preferred dividends and discount accretion		(4,527	)		(3,798	)
Net income (loss) available to common shareholders	$	(124,222	)	$	(194,981	)

Weighted average shares outstanding - Basic		20,676,434			20,706,184
Stock option adjustment		-			-
Restricted stock adjustment		-			-
Average shares outstanding - Diluted		20,676,434			20,706,184

Earnings per share-Basic	$	(6.01	)	$	(9.42	)
Effect of stock options and restricted shares		-			-
Earnings per share - Diluted	$	(6.01	)	$	(9.42	)

Options to purchase 375,993 shares and 1,099,536 shares were outstanding at December 31, 2010 and 2009, respectively, and were not included in the computation of net income per diluted share because the exercise price of these options was greater than the average market price of the common shares, and therefore, would be antidilutive.

The warrant shares from the CPP to purchase up to 7,418,876 shares of common stock were not included in the computation of net income per diluted share because the exercise price of these shares was greater than the average market price of the common shares, and therefore, antidilutive and also because of the net loss.

NOTE 5. SECURITIES

At December 31, 2010 and 2009, securities in our investment portfolio were classified as either available for sale or trading. The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at December 31, 2010 and 2009 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2010
U.S. Treasuries	$	18,607	$	132	$	-	$	18,739
U.S. Government agencies		100		6		-		106
Collateralized mortgage obligations:
Agency		250,097		798		838		250,057
Private label		16,760		-		605		16,155
Mortgage-backed securities - residential		203,438		725		1,411		202,752
Trust preferred		16,193		59		5,503		10,749
States & political subdivisions		20,438		1,242		1		21,679
Other securities		8,641		28		2		8,667
Total	$	534,274	$	2,990	$	8,360	$	528,904

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2009
U.S. Treasuries	$	8,856	$	-	$	23	$	8,833
U.S. Government agencies		277		5		3		279
Collateralized mortgage obligations:
Agency		117,930		1,624		1,123		118,431
Private label		25,164		-		1,935		23,229
Mortgage-backed securities - residential		167,533		537		838		167,232
Trust preferred		17,238		10		7,210		10,038
States & political subdivisions		23,529		1,589		78		25,040
Other securities		8,640		-		3		8,637
Total	$	369,167	$	3,765	$	11,213	$	361,719

The amortized cost and fair value of available for sale securities as of December 31, 2010, by contractual maturity, except for mortgage-backed securities and collateralized mortgage obligations which are based on estimated average lives, are shown below. Expected maturities may differ from contractual maturities in mortgage-backed securities, because certain mortgages may be called or prepaid without penalties.

	December 31, 2010
	Amortized		Fair
	Cost		Value
Maturity
Available-for-sale

Within one year	$	1,942	$	1,965
One to five years		223,810		224,029
Five to ten years		181,225		180,643
Beyond ten years		127,297		122,267
Total	$	534,274	$	528,904

Securities available for sale realized gains, losses and other-than-temporary impairments are summarized as follows:

	2010			2009

Gross realized gains	$	5,805		$	8,076
Gross realized losses		(2	)		(16	)
Other-than-temporary impairment		(1,102	)		(21,484	)

Total	$	4,701		$	(13,424	)

Proceeds from sales and calls of securities available for sale were $209,881 and $302,760 for the twelve months ended December 31, 2010 and 2009 respectively. Gross gains of $5,805 and $8,076 and gross losses of $2 and $16 were realized on these sales and calls during 2010 and 2009, respectively.

Available for sale securities with unrealized losses at December 31, 2010 and 2009, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, are as follows:

	Less than 12 Months				12 Months or More				Total
December 31, 2010	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Collateralized mortgage obligations:
Agency	$	110,593	$	838	$	-	$	-	$	110,593	$	838
Private Label		4,509		17		11,646		588		16,155		605
Mortgage-backed securities - residential		126,749		1,411		-		-		126,749		1,411
Trust Preferred		-		-		6,699		5,503		6,699		5,503
State & political subdivisions		1,754		1		-		-		1,754		1
Other securities		-		-		24		2		24		2
Total	$	243,605	$	2,267	$	18,369	$	6,093	$	261,974	$	8,360

	Less than 12 Months				12 Months or More				Total
December 31, 2009	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasuries	$	8,833	$	23	$	-	$	-	$	8,833	$	23
U.S. Government agencies		149		3		-		-		149		3
Collateralized mortgage obligations:
Agency		59,198		1,123		-		-		59,198		1,123
Private Label		-		-		23,229		1,935		23,229		1,935
Mortgage-backed securities - residential		105,719		838		-		-		105,719		838
Trust Preferred		602		123		5,436		7,087		6,038		7,210
State & political subdivisions		1,806		22		1,066		56		2,872		78
Other securities		-		-		21		3		21		3
Total	$	176,307	$	2,132	$	29,752	$	9,081	$	206,059	$	11,213

SECURITIES HELD FOR TRADING

(At Fair Value)	December 31, 2010		December 31, 2009
Trust Preferred	$	329	$	36
Total	$	329	$	36

The net gain (loss) on trading activities included in non-interest income for 2010 and 2009 was $292 and $(1,004), respectively.

On a quarterly basis, we evaluate each security in our portfolio with an individual unrealized loss to determine if that loss represents other-than-temporary impairment. The factors we consider in evaluating the securities include whether the securities were guaranteed by the U.S. government or its agencies and the securities’ public ratings, if available, and how those two factors affect credit quality and recovery of the full principal balance, whether the market decline was affected by macroeconomic conditions, the length of time the securities have had temporary impairment and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and whether we have the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. We also review the payment performance, delinquency history and credit support of the underlying collateral for certain securities in our portfolio as part of our impairment analysis and review. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When other-than-temporary impairment occurs for debt securities, the amount of the other-than-temporary impairment recognized in earnings depends on whether an entity intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss. If we intend to sell or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss, the other-than-temporary impairment shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If we do not intend to sell the security and it is not more likely than not that we would be required to sell the security before recovery of its amortized cost basis less any current-period loss, the other-than-temporary impairment shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total other-than-temporary impairment related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the other-than-temporary impairment recognized in earnings becomes the new amortized cost basis of the investment.

The ratings of our pooled trust preferred collateralized debt obligations (CDOs), single issue trust preferred securities, and private label CMOs are listed below as of December 31, 2010 and at December 31, 2009. The trust preferred securities consist of two pooled trust preferred CDOs classified as available for sale and four pooled CDOs classified as held for trading and four single name issues listed below. The private label CMOs consist of five issues as one issue paid off in 2010 of which four were originated in 2003-2004, while one was originated in 2006.

Ratings

Issuer	Ratings as of December 31, 2010	Ratings as of December 31, 2009
Pooled Trust Preferred CDOs (Amortized cost $2,197, fair value $974)
PreTSL VI	Ca (Moodys) / D (Fitch)	Caa1 (Moodys) / CCC (Fitch)
PreTSL XIV	Ca (Moodys) /C (Fitch)	Ca (Moodys) /CC (Fitch)

Pooled Trust Preferred CDOs (Held For Trading)-Carried at fair value, $329
Alesco 10A C1	Ca (Moodys) / C (Fitch)	Ca (Moodys) / CC (Fitch)
Trapeza 11A D1	C (Fitch)	C (Fitch)
Trapeza 12A D1	C (Fitch)	C (Fitch)
US Capital Funding	C (Moodys) / C (Fitch)	Caa3 (Moodys) / CC (Fitch)

Single Issue Trust Preferred (Amortized cost $13,996, fair value $9,775)
Bank One Cap Tr VI (JP Morgan)	A2(Moodys) / A (Fitch)	A2(Moodys)
First Citizen Bancshare	Non-Rated	Non-Rated
First Union Instit Cap I (Wells Fargo)	Baa1(Moodys)/A-(S&P)/A(Fitch)	Baa2(Moodys)/A-(S&P)/A(Fitch)
Sky Financial Cap Trust III (Huntington)	BB-(S&P)	B(S&P)

Private Label CMOs (Amortized cost $16,760 fair value $16,155)
CWHL 2003-58 2A1	Aaa/*-(Moodys)/AAA(S&P)	Aaa(Moodys)/AAA(S&P)
CMSI 2004-4 A2	Paid-off	AAA(S&P)/AAA(Fitch)
GSR 2003-10 2A1	Aaa/*-(Moodys)/AAA(S&P)	Aaa(Moodys)/AAA(S&P)
RAST 2003-A15 1A1	AAA(S&P)/AAA(Fitch)	AAA(S&P)/AAA(Fitch)
SASC 2003-31A 3A	A1/*-(Moodys)/AAA(S&P)	A1(Moodys)/AAA(S&P)
WFMBS 2006-8 A13	B2(Moodys)/B(Fitch)	B3/*-(Moodys)/B(Fitch)

The ratings above range from highly speculative, defined as equal to or below “Ca” per Moody’s and “CC” per Fitch and S&P, to the highest credit quality defined as “Aaa” or “AAA” per the aforementioned rating agencies, respectively. The *- indicates a negative watch.

Pooled Trust Preferred CDOs

We incorporated several factors into our determination of whether the CDOs in our portfolio had incurred other-than-temporary impairment, including review of current defaults and deferrals, the likelihood that a deferring issuer will reinstate, recovery assumptions on defaulted issuers, expectations for future defaults and deferrals and the coupon rate at the issuer level compared to the coupon on the tranche. We examined the trustee reports to determine current payment history and the structural support that existed within the CDOs. We also reviewed key financial characteristics of each individual issuer in the pooled CDOs. Additionally, we utilized an internal watch list and near watch list which is updated and reviewed quarterly. Changes are compared to the prior quarter to determine migration patterns and direction. This review analyzed capital ratios, leverage ratios, non-performing loan and non-performing asset ratios

We utilize a third party cash flow analysis that compares the present value of expected cash flows to the previous estimate to ensure there are no adverse changes in cash flows during the quarter. This analysis considers the structure and term of the CDO and the financial condition of the underlying issuers. The review details the interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities along with new capital raises that may indicate the potential to cure a financial institution’s deferral status. Assumptions used in the review include expected future default rates and prepayments. During 2010, this review also incorporated the impact of the Dodd-Frank Act, whereby banks with total assets greater then $15 billion may call their TRUPS. The cash flow analysis also incorporates future growth and consolidation in the financial service sector. The analysis of PreTSL VI assumes a 20% recovery lagged for two years on the BankAtlantic debt with a 10% recovery lagged for two years on all other issuers. PreTSL XIV assumed a 10% recovery lagged for two years on defaults and treats all interest payment deferrals as defaults. We also used a model to stress these two pooled CDOs based on various degrees of severity to determine the degree to which assumptions could deteriorate before the CDO could no longer fully support repayment of our note class. Based on the December 31, 2010 analysis, the review indicated no additional other-than-temporary impairment has occurred for PreTSL VI, while PreTSL XIV is experiencing additional credit impairment at this time.

We recognized impairment charges during the first, third and fourth quarters of 2010 on the remaining two pooled CDOs. In the first quarter we incurred impairment charges for the first time on PreTSL XIV of $201. We also incurred additional impairment charges on PreTSL VI for $9. During the second quarter of 2010, we saw improvement in the credit component for both PreTSL VI and PreTSL XIV. The credit component for PreTSL VI experienced minimal fluctuation in the fourth quarter. PreTSL VI ended the year with the same credit component it had in the first quarter 2010. This pooled CDO continues to receive a partial interest payment. Based on the analysis for PreTSL XIV, it experienced additional credit deterioration in both the third and fourth quarters of 2010. The OTTI charge of $585 was recorded in the third quarter and an additional $307 in OTTI was taken in the fourth quarter of 2010.

We recognized impairment charges during the first and second quarters of 2009 on five of our six pooled CDOs. In the first quarter of 2009, we incurred impairment charges for the first time on PreTSL VI for $415. We also incurred additional impairment charges on Alesco 10A C1 of $755. During the second quarter 2009, we noticed substantial deterioration in the underlying credit quality of four of the six pooled issuers as deferrals and defaults increased substantially. Additional impairment charges were incurred on Alesco 10A C1 of $3,693; Trapeza 11A D1 of $4,441; Trapeza 12A D1 for $3,649 and US Capital Funding V B1 for $1,725. We also recognized an impairment charge of $5,656 for Colonial BancGroup, one of our five single issue trust preferred bonds.

During the second quarter of 2009, we adopted the FSP No. 115-2 and No. 124-2, which was subsequently incorporated into ASC 320, effective April 1, 2009 and reversed $1,250 for the non-credit portion of the cumulative other-than-temporary impairment charge. The adoption was recognized as a cumulative effect adjustment that increased retained earnings and decreased accumulated other comprehensive income by $778, net of tax of $472, as of April 1, 2009. As a result of implementing the new standard, the amount of other-than-temporary impairment recognized in income for the year was $21,484. Had the standard not been issued, the amount of other-than-temporary impairment that would have been recognized in income for the same period would have been $20,334.

Due to the implementation of ASC 320, we determined that the previously recognized other-than-temporary impairment recorded for PreTSL VI included a portion that was attributed to the non-credit component such as changes in interest rates, market volatility and liquidity and as a result, $100 was recognized in other comprehensive income during the second quarter of 2009. We determined that previously recognized other-than-temporary impairment recorded for the Alesco CDO was considered to be all credit related, while the Trapeza 11, Trapeza 12 and the US Capital Funding CDO each previously had a portion that was attributed to the non-credit component. Accordingly the amount recognized in other comprehensive income in the second quarter of 2009 was also recognized as additional other-than-temporary impairment totaling $1,150.

Based on the significant decline in the value of Alesco, Trap 11, Trap 12 and the US Cap CDOs and given our intention to sell these four securities when it is more economically attractive, we reclassified these securities as of June 30, 2009, and designated them as trading.

Single Issued Trust Preferred

With respect to our remaining single issued trust preferred securities, we look at rating agency actions, payment history, the capital levels of the banks, and the financial performance as filed in regulatory reports.

Based on the overall review of the single issuers, Sky Financial Cap Trust III (Huntington Bancshares “HBAN”) remains on our watch list given their past financial performance and ratings. These ratings improved from a B to a BB- during the fourth quarter 2010. Overall HBAN’s regulatory capital ratios continue to show improvement reducing their overall risk profile. They completed a $920,000 common offering in December 2010 and subsequently repurchased their TARP warrants in January 2011. We will continue to monitor this issuer but expect to see continued improvement in the price of this security.

The Dodd-Frank financial reform bill may have a positive impact on the default risk associated with our single issue Trust Preferred securities. Banks having assets greater than $15 billion will have an opportunity to redeem their Trust Preferred securities at face value as they may no longer qualify as tier one capital. TRUP CDOs may benefit from the reduction of default risk in their collateral portfolios; however, there is always the risk that the banks may not be able to obtain favorable refinancing terms.

As of December 31, 2010, all of these securities are still performing and as we expect to receive all principal and interest in accordance with contractual terms and we have the ability to hold these securities to maturity, and as such, the unrealized loss is temporary.

In July 2009, Colonial BancGroup’s (CNB) one of our five single name issue CDOs announced the termination of its agreement with investors for a previously-announced equity infusion into CNB. Because of this announcement, we determined the unrealized loss in the CNB security of $5,656 was other-than-temporary impairment. We moved this security to held for trading at a market value of $1,344. CNB’s banking subsidiary was subsequently seized by regulators and we sold this security in August 2009 for $76, recognizing a trading loss of $1,268.

Private Label CMOs

Factors utilized in the analysis of the private label CMOs in our portfolio included a review of underlying collateral performance, the length of time and extent that fair value has been less than cost, changes in market valuation and review of rating changes to determine if other-than-temporary impairment has occurred. As of December 2010, we had five remaining private label CMOs in our portfolio as CMSI 2004-4 A2 paid off during 2010. As of December 2010 four of the remaining private label CMO’s in our portfolio had experienced unrealized losses for 12 consecutive months, while GSR 2003-10 2A1 experienced unrealized gains in April, September, October and November 2010.

The issuers within the portfolio continue to perform according to their contractual terms. The underlying collateral performance for all of the private label CMOs has been reviewed. Four of the securities have seen an increase in delinquencies greater than 90 days, while one RAST 03 A15 1A1 experienced declines in the fourth quarter. The reported cumulative loss for WFMBS 2006-8 A13 shows the highest cumulative loss at 1.271% while the remaining securities cumulative loss remains low with little change over the prior period. The exposure to the high risk geographies (CA, AZ, NV, and FL) has experienced little change since our last review all five securities have exposure in at least one of these states. The credit support for three of the private label CMO’s increased in the fourth quarter 2010 while the support for the remaining two experienced a slight decline. All five securities continue to maintain a credit support level that is higher than their original level.

We also received a third party review of our private label CMOs. This review includes a stress test for each security that models multiple scenarios projecting various levels of delinquencies, loss severity rates and different liquidation time frames. The purpose of the stress test is to account for increasingly stressful macroeconomic scenarios that take into consideration various economic stresses including but not limited to home price and employment data including impact of changes to the gross domestic product (GDP). The three scenarios we reviewed included the Liq scenario which liquidates all 60+ delinquent loans and realized losses at current 3-month trailing severities; the Liq Sev 85 scenario, which is similar to the Liq scenario but uses 85% of the severity rate used in the Liq scenario making it is considered the least stressful; of the three scenarios; the Liq Def 125 scenario, which is the most severe of the three and is similar to Liq but includes liquidation of an additional 25% of the current 60 days bucket. WFMBS 2006-8 A13 continues to be the only private label CMO in the portfolio that projects any type of loss. The Liq Def 125 scenario continues to project a minimal loss of $23 and is not targeted to occur until November 2011. Throughout 2010 this projected loss has declined and the targeted date has moved further into the future. The findings in this report continue to support our analysis that there is adequate structural support even under stressed scenarios. The overall review of the underlying mortgage collateral for the tranches we own demonstrates that it is unlikely that the contractual cash flows will be disrupted. Therefore, given the performance of these securities at December 31, 2010, and that it is not our intent to sell these securities and it is likely that we will not be required to sell the securities before their anticipated recovery, we concluded that there is no other-than-temporary impairment. The $605 in unrealized loss was temporary.

Summary of Other-Than Temporary Impairment

As noted in the above discussion for year end 2010 related to collateralized debt obligations, including both pooled and single issue CDOs, and the private label CMOs, the total other-than-temporary charge for 2010 was $1,102.

As noted in the above discussion for year end 2009 related to collateralized debt obligations, including both pooled and single issue CDOs, and the private label CMOs, we determined there was no additional impairment charges recognized during the third or fourth quarters of 2009 on our investment portfolio. The total other-than-temporary charge for 2009 was $21,484.

The tables below present a roll forward of the credit losses recognized in earnings for the periods ended December 31, 2010 and 2009:

Beginning balance January 1, 2010	$	315
Additions for amounts related to credit loss for which an other- than-temporary impairment was not previously recognized		1,102
Reductions for amounts related to securities for which the company intends to sell or that it will be more likely than not that the company will be required to sell prior to recovery of amortized cost basis		-
Ending balance, December 31, 2010	$	1,417

Beginning balance April 1, 2009	$	10,531
Additions for amounts related to credit loss for which an other- than-temporary impairment was not previously recognized		20,314
Reductions for amounts related to securities for which the company intends to sell or that it will be more likely than not that the company will be required to sell prior to recovery of amortized cost basis		(30,530	)
Ending balance, December 31, 2009	$	315

NOTE 6. LOANS

A summary of loans at December 31, follows:

	2010		2009
Commercial
Commercial, industrial and agricultural loans:
Commercial real estate	$	68,910	$	87,243
Chicago		35,090		56,620
Community		297,936		458,743
Economic development loans and other obligations of state and political subdivisions:
Chicago		-		37
Community		8,992		14,736
Lease financing:
Community		424		5,579
Total commercial		411,352		622,958
Commercial real estate
Commercial mortgages:
Commercial real estate		318,902		388,443
Chicago		87,099		116,690
Community		44,291		77,990
Construction and development:
Commercial real estate		106,855		290,237
Chicago		51,944		86,181
Community		3,438		5,650
Total commercial real estate		612,529		965,191

Residential mortgages:
Chicago		4,101		5,547
Community		139,142		227,252
Home equity:
Chicago		8,541		10,190
Community		109,865		152,744
Consumer loans:
Commercial real estate		2		3
Chicago		1,150		1,319
Community		62,822		125,144
Total loans		1,349,504		2,110,348
Less: Loans held for sale in probable
branch divestiture		-		90,616
Loans, net of loans held for sale in
probable branch divestiture	$	1,349,504	$	2,019,732

A summary of the unpaid principal balances of nonaccrual and loans past due over 90 days still on accrual by class of loans as of December 31, 2010 follows:

	Nonaccrual		Loans Past Due Over 90 Days Still Accruing

Commercial
Commercial, industrial and agricultural loans:
Commercial real estate	$	6,673	$	-
Chicago		14,078		-
Community		3,589		7
Economic development loans and other obligations of state and political subdivisions		-		-
Lease financing		424		-
Total commercial		24,764		7
Commercial real estate
Commercial mortgages:
Commercial real estate		32,462		-
Chicago		43,184		-
Community		4,507		-
Construction and development:
Commercial real estate		41,433		-
Chicago		45,092		-
Community		271		-
Total commercial real estate		166,949		-

Residential mortgages:
Chicago		494		-
Community		2,637		8
Home equity:
Chicago		896		-
Community		606		30
Consumer loans:
Community		596		28
Total loans	$	196,942	$	73

Nonaccrual loans and loans past due 90 days still accruing were $210,752 and $4,127, respectively, at December 31, 2009.

The following table presents the aging of the unpaid principal in past due loans, not including nonaccrual loans, as of December 31, 2010:

	30-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due

Commercial
Commercial, industrial and agricultural loans:
Commercial real estate	$	536	$	-	$	536
Chicago		276				276
Community		1,477		7		1,484
Economic development loans and other obligations of state and political subdivisions		-		-		-
Lease financing		-		-		-
Total commercial		2,289		7		2,296
Commercial real estate
Commercial mortgages:
Commercial real estate		5,735		-		5,735
Chicago		695		-		695
Community		611		-		611
Construction and development:
Commercial real estate		3,529		-		3,529
Chicago		-		-		-
Community		-		-		-
Total commercial real estate		10,570		-		10,570

Residential mortgages:
Chicago		314		-		314
Community		4,632		8		4,640
Home equity:
Chicago		507		-		507
Community		336		30		366
Consumer loans:
Commercial real estate		-		-		-
Chicago		35		-		35
Community		940		28		968
Total loans	$	19,623	$	73	$	19,696

The following table presents the balance in unpaid principal of loans by portfolio segment and based on impairment method as of December 31, 2010 and 2009.

At December 31, 2010
	Loans evaluated for impairment:				Allowance based on impairment method:
	Individually		Collectively		Individually		Collectively

Commercial
Commercial, industrial and agricultural loans:
Commercial real estate	$	9,187	$	59,723	$	1,218	$	2,684
Chicago		14,078		21,012		3,417		883
Community		3,596		294,340		537		8,612
Economic development loans and other obligations of state and political subdivisions:
Community		-		8,992		-		11
Lease financing:
Community		424		-		-		-
Total commercial		27,285		384,067		5,172		12,190
Commercial real estate
Commercial mortgages:
Commercial real estate		35,210		283,692		6,198		17,654
Chicago		43,184		43,915		5,921		3,190
Community		4,507		39,784		645		675
Construction and development:
Commercial real estate		41,433		65,422		7,843		6,097
Chicago		45,179		6,765		8,915		557
Community		271		3,167				50
Total commercial real estate		169,784		442,745		29,522		28,223
Residential mortgages:
Chicago		60		4,041		17		182
Community		516		138,626		149		6,577
Home equity:
Chicago		1,021		7,520		80		147
Community		68		109,797		20		2,145
Consumer loans:
Commercial real estate		-		2		-		-
Chicago		-		1,150		-		49
Community		274		62,548		25		3,949
Unallocated:		-		-		-		7,354
Total loans	$	199,008	$	1,150,496	$	34,985	$	60,816

Impaired loans were as follows at December 31:

	2010		2009

Year-end loans with no allocated allowance for loan losses	$	38,627	$	78,719
Year-end loans with allocated allowance for loan losses		160,381		129,017

Total	$	199,008	$	207,736

Amount of the allowance for loan losses allocated	$	34,985	$	32,753
Average of individually impaired loans during year		235,892		189,730
Interest income recognized during impairment		2,483		1,811
Cash-basis interest income recognized		17		40

There were $1,575 of unused commitments available on impaired loans at December 31, 2010. The interest recognized on nonaccrual loans was approximately $17 and $40 in 2010 and 2009, respectively. The amount of interest that would have been earned had these nonaccrual loans remained in accruing status was $3,626 and $3,929 for 2010 and 2009, respectively.

Loans, for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings, or TDRs. There was $6,522 of troubled debt restructurings at December 31, 2010, compared to $4,266 at December 31, 2009.

We have allocated $241 and $717 of specific reserves to TDRs as of December 31, 2010 and 2009, respectively. We have committed to lend additional amounts totaling up to $6,522 and $4,266 as of December 31, 2010 and 2009 to customers with outstanding loans that are classified as TDRs.

NOTE 7. RELATED PARTY TRANSACTIONS

Integra Bank makes loans to its executive officers and directors and to companies and individuals affiliated with officers and directors of Integra Bank and us. The activity in these loans during 2010 and 2009 is as follows:

	2010			2009

Balance as of January 1	$	2,087		$	6,432
New loans		1,731			572
Repayments		(1,898	)		(1,983	)
Director and officer changes		(55	)		(2,934	)

Balance as of December 31	$	1,865		$	2,087

The balance of related party deposits as of December 31	$	4,880		$	4,414

NOTE 8. ALLOWANCE FOR LOAN LOSSES

Changes in the allowance for loan losses were as follows during the two years ended December 31:

	2010			2009

Balance at beginning of year	$	88,670		$	64,437
Loans charged to allowance		(117,139	)		(91,452	)
Recoveries credited to allowance		2,769			2,317
Net charge-offs		(114,370	)		(89,135	)
Allowance related to divested loans sold		(13,070	)		-
Provision for loan losses		134,571			113,368
Balance at end of year	$	95,801		$	88,670

We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debts such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. We analyze loans individually by classifying the loans as to credit risk. This analysis is performed on a monthly basis. We use the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of our credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values highly questionable and improbable.

Loss. Loans classified as loss are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean that loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future. Losses are taken in the period in which they surface as uncollectible.

Loans not meeting the criteria above as part of the above described process are considered to be pass rated loans. Loans listed as not rated are included in groups of homogeneous loans. As of December 31, 2010, and based on the most recent analysis performed, the risk category of loans is as follows:

	Special Mention		Substandard		Doubtful		Loss		Pass			Not Rated	Total Loans

Commercial
Commercial, industrial and agricultural loans:
Commercial real estate	$	1,720	$	20,805	$	1,218	$	-	$	45,167	$	-	$	68,910
Chicago		3,686		14,568		3,417		-		13,419		-		35,090
Community		12,475		22,958		537		-		261,966		-		297,936
Economic development loans and other obligations of state and political subdivisions:
Community		527		-		-		-		8,465		-		8,992
Lease financing:
Community		-		424		-		-		-		-		424
Total commercial		18,408		58,755		5,172		-		329,017		-		411,352
Commercial real estate
Commercial mortgages:
Commercial real estate		4,241		67,055		6,198		-		241,408		-		318,902
Chicago		5,937		58,455		5,921		-		16,786		-		87,099
Community		2,376		7,973		645		-		33,297		-		44,291
Construction and development:
Commercial real estate		5,335		49,516		7,843		-		44,161		-		106,855
Chicago		650		40,085		8,915		-		2,294		-		51,944
Community		983		308		-		-		2,147		-		3,438
Total commercial real estate		19,522		223,392		29,522		-		340,093		-		612,529

Residential mortgages:
Chicago		-		400		17		-		-		3,684		4,101
Community		122		1,692		149		16		-		137,163		139,142
Home equity:
Chicago		-		527		80		-		-		7,934		8,541
Community		171		460		20		-		-		109,214		109,865
Consumer loans:
Commercial real estate		-		-		-		-		-		2		2
Chicago		-		-		-		-		-		1,150		1,150
Community		72		429		25		-		-		62,296		62,822
Total loans	$	38,295	$	285,655	$	34,985	$	16	$	669,110	$	321,443	$	1,349,504

NOTE 9. OTHER REAL ESTATE OWNED

A summary of other real estate owned as of December 31, follows:

	2010			2009

Beginning balance	$	31,982		$	18,646
Additions		37,010			30,262
Writedowns		(8,612	)		(7,937	)
Sales proceeds		(10,152	)		(8,791	)
Net loss on sales		(879	)		(506	)
Other changes		(111	)		308
Balance at end of year	$	49,238		$	31,982

NOTE 10. PREMISES AND EQUIPMENT

Premises and equipment as of December 31 consist of:

	2010		2009

Land	$	5,423	$	6,306
Buildings and lease improvements		55,590		62,202
Equipment		18,873		21,157
Construction in progress		234		898

Total cost		80,120		90,563

Less accumulated depreciation		46,101		51,505
Less held for sale in probable branch divestiture				1,244
Net premises and equipment	$	34,019	$	37,814

Depreciation and amortization expense for 2010 and 2009 was $3,103 and $4,036, respectively.

NOTE 11. INTANGIBLE ASSETS

	December 31, 2010							December 31, 2009
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount

Core deposits (Amortizing)		23,320		(19,384	)		3,936		23,320		(15,113	)		8,207
Customer Relationship (Amortizing)		140		(126	)		14		140		(105	)		35
Total intangible assets	$	23,460	$	(19,510	)	$	3,950	$	23,460	$	(15,218	)	$	8,242

Amortization expense for core deposit intangibles and customer relationship intangible assets for 2010 and 2009 was $1,333 and $1,686, respectively. In conjunction with the branch sales occurring during the third quarter of 2010, $2,959 of core deposit intangibles were written off and netted against the premium from the sale of deposits. Core deposit intangibles are amortized using both straight line and accelerated methods over varying periods through 2018.

Estimated intangible asset amortization expense for each of the succeeding years is as follows:

Year ending December 31,
2011	$	854
2012		809
2013		704
2014		569
Thereafter		1,014
	$	3,950

NOTE 12. DEPOSITS

The following table shows deposits, including those held for probable branch sales in 2009, by category.

	December 31,
	2010		2009
Deposits:
Non-interest-bearing	$	224,184	$	270,849
Interest checking		286,654		416,635
Money market accounts		199,854		249,490
Savings		236,814		342,453
Time deposits of $100 or more		666,671		623,670
Other interest-bearing		375,702		462,009
	$	1,989,879	$	2,365,106

As of December 31, 2010, the scheduled maturities of time deposits are as follows:

Time Deposit Maturities

2011	$	563,261
2012		293,676
2013		98,492
2014		23,062
2015 and thereafter		63,881

Total	$	1,042,372

We had $341,263 in brokered deposits at December 31, 2010 and $353,050 at December 31, 2009.

NOTE 13. INCOME TAXES

The components of income tax expense for the two years ended December 31 are as follows:

	2010			2009
Federal:
Current	$	(340	)	$	(5,696	)
Deferred		(1,226	)		(29,640	)
Total		(1,566	)		(35,336	)

State:
Current	$	-		$	(212	)
Deferred		(128	)		(4,566	)
Total		(128	)		(4,778	)

Establishment of valuation allowance		-			100,964
Total income taxes (benefit)	$	(1,694	)	$	60,850

The portion of the tax provision relating to net realized securities gains or losses, including recognized impairment, amounted to $1,753 and $(5,075) for 2010 and 2009, respectively.

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

	December 31			December 31,
	2010			2009

Federal income tax computed at the statutory rates	$	(42,486	)	$	(45,617	)
Adjusted for effects of:
Change in valuation allowance		45,313			100,964
Taxable proceeds from BOLI sale		-			5,464
State taxes, net of federal benefit		(1,809	)		(3,106	)
Nondeductible fair value adjustment - warrants		-			2,151
Low income housing credit		(1,052	)		(1,788	)
Tax exempt interest		(415	)		(1,200	)
Cash surrender value of life insurance policies		(33	)		(561	)
Nondeductible expenses		68			170
Intraperiod Tax Allocation		(1,271	)		-
Other differences		(9	)		4,373
Total income taxes	$	(1,694	)	$	60,850

The calculation for the income tax provision or benefit generally does not consider the tax effects of changes in other comprehensive income, or OCI, which is a component of shareholders’ equity on the balance sheet. However, an exception is provided in certain circumstances, such as when there is a full valuation allowance against net deferred tax assets, there is a loss from continuing operations and income in other components of the financial statements. In such a case, pre-tax income from other categories, such as changes in OCI, must be considered in determining a tax benefit to be allocated to the loss from continuing operations. For 2010, this resulted in $1,354 of income tax benefit allocated to continuing operations.

The tax effects of principal temporary differences are shown in the following table:

	December 31,			December 31,
	2010			2009
Allowance for loan losses	$	35,729		$	33,514
Goodwill and core deposit intangibles		17,339			20,996
General business credits		19,135			18,088
Net operating loss carryforward		52,505			15,910
Other-than-temporary impairment		9,841			9,560
Alternative minimum tax credit carryforward		4,769			4,772
Interest on non-accrual loans		5,950			4,456
Other real estate owned		3,726			1,345
Unrealized loss on securities available for sale		2,004			2,815
Postretirement liability		1,568			1,849
Building impairment		577			619
Other, net		638			795
Total deferred tax assets		153,781			114,719

Premises and equipment		(3,169	)		(3,827	)
Direct financing and leveraged leases					(3,625	)
FHLB dividend		(1,237	)		(1,478	)
Partnership income		(1,147	)		(1,383	)
Fair value adjustments from acquisitions		(171	)		(262	)
Total deferred tax liabilities		(5,724	)		(10,575	)

Net temporary differences		148,057			104,144
Valuation allowance		(148,057	)		(104,144	)
Net deferred tax asset (liability)	$	-		$	-

At December 31, 2010, we had federal operating loss carryforwards of $129,725 and state operating loss carryforwards of $131,473 which will expire at various dates beginning in 2017 through 2030. General business credit carryforwards totaling $19,135 at year end are being carried forward and will begin to expire in 2022.

We continue to have a full valuation allowance for all deferred tax assets. A three year cumulative loss position and continued near-term losses represent significant negative evidence that support that a full valuation allowance continues to be necessary at December 31, 2010.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	December 31,			December 31,
	2010			2009
Balance at January 1	$	95		$	-
Additions for tax positions of prior years					315
Reductions for tax positions of prior years		(95	)		(104	)
Reductions due to statute of limitations					(116	)
Balance at December 31		-			95

The December 31, 2010, balance related to uncertain tax positions was zero. The beginning balance was attributable to the 2007 tax year, which was amended during 2010, bringing the balance to zero. There are no interest and penalties recorded in the income statement and accrued at December 31, 2010. At December 31, 2009, there was $14 accrued.

We are subject to U. S. federal income tax, as well as state income tax in the state of Indiana and various other states. In May 2010, we were notified by the Illinois Department of Revenue that we had been selected for audit for the years 2007 and 2008. The audit results have not been finalized as of December 31, 2010. We are no longer subject to income tax examinations for tax years before 2007.

NOTE 14. SHORT-TERM BORROWINGS

Short-term borrowings consist of securities sold under agreements to repurchase and totaled $59,893 and $62,114 at December 31, 2010 and 2009, respectively.

	2010			2009

A summary of selected data related to short-term borrowed funds follows:
Average amount outstanding	$	59,685		$	223,151
Maximum amount at any month-end		66,058			493,097
Weighted average interest rate:
During year		0.33	%		0.75	%
End of year		0.28	%		0.30	%

NOTE 15. LONG-TERM BORROWINGS

Long-term borrowings at December 31 consist of the following:

	2010		2009
Federal Home Loan Bank (FHLB) Advances
Fixed maturity advances (weighted average rate of 2.78% and 2.53%	$	114,000	$	126,004
as of December 31, 2010 and 2009, respectively)

Securities sold under repurchase agreements with maturities		80,000		80,000
at various dates through 2013 (weighted average rate of 4.60%
and 3.29% as of December 31, 2010 and 2009, respectively)

Note payable, secured by equipment, with a fixed interest rate of 7.26%,		1,425		2,645
due at various dates through 2012

Subordinated debt, unsecured, with a floating interest rate equal to three-		10,000		10,000
month LIBOR plus 3.20%, with a maturity date of April 24, 2013

Subordinated debt, unsecured, with a floating interest rate equal to three-		4,000		4,000
month LIBOR plus 2.85%, with a maturity date of April 7, 2014

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

Floating Rate Capital Securities, with an interest rate equal to three-month		35,568		35,568
LIBOR plus 3.10%, with a maturity date of June 26, 2033, and callable
quarterly, at par *

Floating Rate Capital Securities, with an interest rate equal to three-month		20,619		20,619
LIBOR plus 1.57%, with a maturity date of June 30, 2037, and callable
effective June 30, 2012, at par *

Floating Rate Capital Securities, with an interest rate equal to three-month		10,310		10,310
LIBOR plus 1.70%, with a maturity date of December 15, 2036, and callable
effective December 15, 2011, at par *

Senior unsecured debt guaranteed by FDIC under the TLGP, with a fixed		50,000		50,000
rate of 2.625%, with a maturity date of March 30, 2012

Other		3,368		3,368
Total long-term borrowings	$	347,847	$	361,071

*	Payment of interest has been deferred since September 2009.

Aggregate maturities required on long-term borrowings at December 31, 2010, are due in future years as follows:

2011		13,311
2012		120,482
2013		110,000
2014		4,000
Thereafter		100,054
Total principal payments	$	347,847

Securities sold under agreements to repurchase consist of $80,000 in fixed rate national market repurchase agreements. A $25,000 variable rate agreement converted to a 4.565% fixed rate instrument on April 30, 2010. These repurchase agreements have an average rate of 4.60%, with $30,000 maturing in 2012, and $50,000 maturing in 2013. We borrowed these funds under a master repurchase agreement. The counterparty to our repurchase agreements is exposed to credit risk. We are required to pledge collateral for the repurchase agreement. The amount of collateral pledged December 31, 2010, included $54,511 in cash and $36,118 in securities.

Also included in long-term borrowings are $114,000 in FHLB advances to fund investments in mortgage-backed securities, loan programs and to satisfy certain other funding needs. Included in the long-term FHLB borrowings are $40,000 of putable advances.

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances. Total FHLB advances were collateralized by $201,168 of mortgage loans and securities under collateral agreements at December 31, 2010. Based on this collateral and our holdings of FHLB stock, we were eligible to borrow additional amounts of $74,512 at December 31, 2010.

The floating rate capital securities with a maturity date of July 25, 2031, are callable at par on July 25, 2011. Unamortized organizational costs for these securities were $397 at December 31, 2010.

The floating rate capital securities with a maturity date of June 26, 2033, are callable at par quarterly. Unamortized organizational costs for these securities were $783 at December 31, 2009.

The floating rate capital securities with a maturity date of December 15, 2036, are callable at par quarterly.

The floating rate capital securities callable at par on June 30, 2012, and quarterly thereafter may be called prior to that date with a payment of a call premium, which is based on a percentage of the outstanding principal balance. The call at a premium of 0.70% is effective at June 30, 2011.

The principal assets of each trust subsidiary are our subordinated debentures. The subordinated debentures bear interest at the same rate as the related trust preferred securities and mature on the same dates. Our obligations with respect to the trust preferred securities constitute a full and unconditional guarantee by us of the trusts’ obligations with respect to the securities.

Unsecured subordinated debt includes $4,000 of debt that has a floating rate of three-month LIBOR plus 2.85% and will mature on April 7, 2014. We paid issuance costs of $141 and are amortizing those costs over the life of the debt. A second issue includes $10,000 of floating rate-subordinated debt issued in April 2003 that has a floating rate of three-month LIBOR plus 3.20%, which will mature on April 24, 2013. We paid issuance costs of $331 and are amortizing those costs over the life of the debt.

Subject to certain exceptions and limitations, we may from time to time defer subordinated debenture interest payments, which would result in a deferral of distribution payments on the related trust preferred securities and, with certain exceptions, prevent us from declaring or paying cash distributions on our common stock or debt securities that rank junior to the subordinated debenture. In September 2009, we deferred payment on the trust preferred securities indicated in the table above.

NOTE 16. REGULATORY MATTERS

Integra Bank is required by the Board of Governors of the Federal Reserve System to maintain reserve balances in the form of vault cash or deposits with the Federal Reserve Bank of St. Louis based on specified percentages of certain deposit types, subject to various adjustments. At December 31, 2010, the net reserve requirement totaled $4,936. Integra Bank was in compliance with all cash reserve requirements as of December 31, 2010. Integra Bank is required to pledge collateral as backing for transactions settled in our Federal Reserve account. At December 31, 2010, the value of collateral pledged to the Federal Reserve for this purpose totaled $60,000.

We and Integra Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a materially adverse effect on our financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, a bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require us and Integra Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined).

Integra Bank must maintain the minimum Total Risk-Based, Tier 1 Risk-Based, and Tier 1 Leverage Ratios as set forth in the table. In August 2010, Integra Bank received a Capital Directive from the OCC, requiring it to achieve and maintain a minimum Total Risk-Based Capital Ratio of at least equal to 11.5% of risk-weighted assets and a minimum Tier 1 Capital Ratio of at least equal to 8.0% of adjusted total assets by mid-November, which Integra Bank failed to do. The Directive also required Integra Bank to submit a capital plan to the OCC, which it did; however, the OCC did not accept the plan.

On January 30, 2011, the Bank filed its call report, indicating that its regulatory capital as of December 31, 2010 had declined from the "adequately capitalized" to "undercapitalized" category for purposes of the Prompt Corrective Action (PCA) regulations. As an undercapitalized bank, the Bank is subject to several mandatory requirements, including restrictions on payment of capital distributions and management fees, asset growth and on certain expansionary activities, including acquisitions, new branches and new lines of business. The Bank is also required to submit an acceptable Capital Restoration Plan ("CRP") to the OCC no later than March 16, 2011. The CRP must include a written guarantee from the Company of the Bank's obligations until the Bank has been adequately capitalized on average during each of four consecutive calendar quarters and the guarantee must be secured by a pledge of assets acceptable to the OCC.

The amount of dividends which our subsidiaries may pay is governed by applicable laws and regulations. For Integra Bank, prior regulatory approval is required if dividends to be declared in any year would exceed net earnings of the current year (as defined under the National Banking Act) plus retained net profits for the preceding two years, subject to the capital requirements discussed above. As of December 31, 2010, Integra Bank did not have retained earnings available for distribution in the form of dividends to the holding company without prior regulatory approval. Further, under the Capital Directive, the Bank is currently prohibited from paying any dividends.

The following table presents the actual capital amounts and ratios for us, on a consolidated basis, and Integra Bank:

												Minimum
							Minimum Ratios For Capital					Capital Ratios
	Actual						Adequacy Purposes					Under Capital Directive
	Amount			Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2010
Total Capital (to Risk Weighted Assets)
Consolidated	$	(17,957	)		-1.26	%	$	114,117		8.00	%		N/A		N/A
Integra Bank		104,322			7.32	%		114,015		8.00	%		163,896		11.50	%

Tier 1 Capital (to Risk Weighted Assets)
Consolidated	$	(17,957	)		-1.26	%	$	57,058		4.00	%		N/A		N/A
Integra Bank		85,529			6.00	%		57,007		4.00	%		85,511		6.00	%

Tier 1 Capital (to Average Assets)
Consolidated	$	(17,957	)		-0.70	%	$	102,527		4.00	%		N/A		N/A
Integra Bank		85,529			3.34	%		102,288		4.00	%		204,576		8.00	%

											Minimum
						Minimum Ratios For Capital					Capital Ratios
	Actual					Adequacy Purposes					To Be Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2009
Total Capital (to Risk Weighted Assets)
Consolidated	$	221,590		9.94	%	$	178,377		8.00	%		N/A		N/A
Integra Bank		224,127		10.05	%		178,377		8.00	%		222,971		10.00	%

Tier 1 Capital (to Risk Weighted Assets)
Consolidated	$	137,658		6.17	%	$	89,189		4.00	%		N/A		N/A
Integra Bank		195,416		8.76	%		89,188		4.00	%		133,783		6.00	%

Tier 1 Capital (to Average Assets)
Consolidated	$	137,658		4.43	%	$	124,397		4.00	%		N/A		N/A
Integra Bank		195,416		6.30	%		124,136		4.00	%		155,170		5.00	%

In February 2009, we sold shares of a new series of senior preferred stock, or the Treasury Preferred Stock, and a related warrant to purchase common stock, the Treasury Warrant, for $83,586 to the U.S. Department of Treasury under its Troubled Asset Relief Program/Capital Purchase Program, or CPP. The Treasury Preferred Stock bears a five percent dividend for each of the first five years of the investment, and nine percent thereafter, unless the shares are redeemed. The shares are callable at par at any time subject to prior consultation with the Federal Reserve and may be repurchased at any time under certain conditions. The Treasury Warrant gives the holder the right to purchase 7,418,876 shares of common stock at an initial exercise price of $1.69 per share for ten years. As part of this program, we were required to adopt the Treasury’s standards for executive compensation and corporate governance for the period during which the Treasury holds the equity we issued under the CPP.

NOTE 17. STOCK OPTION PLAN AND AWARDS

In April 2007, our shareholders approved the Integra Bank Corporation 2007 Equity Incentive Plan (the “2007 Plan”) which reserves 600,000 shares of common stock for issuance as incentive awards to directors and key employees. Awards may include incentive stock options, non-qualified stock options, restricted shares, performance shares, performance units or stock appreciation rights (SARs). All options granted under the 2007 plan or any predecessor stock-based incentive plans (the “Prior Plans”) have a termination period of ten years from 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. Upon the adoption of the 2007 Plan, no additional awards may be granted under the Prior Plans. In April 2009, our shareholders approved an amendment to the 2007 Plan that increased the number of shares available under the plan to 1,000,000 shares. Under the 2007 Plan, at December 31, 2010, there were 434,940 shares available for the granting of additional awards.

A summary of the status of the options or SARs granted under the plans as of December 31, 2010, and changes during the year is presented below:

	December 31, 2010
						Weighted Average
				Weighted Average		Remaining Term
	Shares			Exercise Price		(In years)

Options/SARs outstanding at December 31, 2009		1,099,536		$	20.53
Options/SARs granted		-			-
Options/SARs exercised		-			-
Options/SARs forfeited/expired		(723,543	)		20.49

Options/SARs outstanding at December 31, 2010		375,993		$	20.58		4.4

Options/SARs exercisable at December 31, 2010		366,225		$	20.64		4.3

The options and SARs outstanding at December 31, 2010, had a weighted average remaining term of 4.4 years with no aggregate intrinsic value, while the options and SARs that were exercisable at December 31, 2010, had a weighted average remaining term of 4.3 years and no aggregate intrinsic value. As of December 31, 2010, there was $15 of total unrecognized compensation cost related to the stock options and SARs. The cost is expected to be recognized over a weighted-average period of less than one year. Compensation expense for options and SARs for the years ended December 31, 2010 and 2009 was $37 and $255, respectively. No stock options were exercised during 2010 or 2009.

Shares granted since 2007 were granted from the 2007 Plan which, prior to April 2009, permitted the award of up to 450,000 shares of restricted stock or SARs. In April 2009, our shareholders approved an amendment to the Plan that eliminated the 450,000 share limit. The shares granted under the 2007 Plan vest equally over a three or four-year period.

A summary of the status of the restricted stock granted by us as of December 31, 2010 and changes during the year is presented below:

				Weighted-Average
				Grant-Date
	Shares			Fair Value

Restricted shares outstanding, December 31, 2009		226,113		$	4.94
Shares granted		288,000		$	0.76
Shares vested		(54,882	)
Shares forfeited		(81,494	)

Restricted shares outstanding, December 31, 2010		377,737		$	1.46

We record the fair value of restricted stock grants, net of estimated forfeitures, and an offsetting deferred compensation amount within shareholders’ equity for unvested restricted stock. As of December 31, 2010, there was $318 of total unrecognized compensation cost related to the nonvested restricted stock granted after the adoption of SFAS 123(R), which was subsequently incorporated into ASC 718. The cost is expected to be recognized over a weighted-average period of 1.8 years. Compensation expense for restricted stock for the years ended December 31, 2010 and 2009 was $405 and $367, respectively. The total fair value at exercise of shares vested during the years ended December 31, 2010 and 2009 was $43, and $117, respectively.

We do not pay any cash dividends on restricted shares granted after we began participating in the CPP, to any participants during the restriction period. Our participation in this program imposes additional vesting restrictions on shares held by any of our five most-highly compensated employees. These restricted shares vest over time; however, they are also subject to the limitations of the CPP.

NOTE 18. FAIR VALUE

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We use various valuation techniques to determine fair value, including market, income and cost approaches. The accounting literature also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that an entity has the ability to access as of the measurement date, or observable inputs.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When that occurs, we classify the fair value hierarchy on the lowest level of input that is significant to the fair value measurement. We used the following methods and significant assumptions to estimate fair value.

Securities: We determine the fair values of trading securities and securities available for sale in our investment portfolio by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. Matrix pricing relies on the securities’ relationship to similarly traded securities, benchmark curves, and the benchmarking of like securities. Matrix pricing utilizes observable market inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and industry and economic events and is considered Level 2. In instances where broker quotes are used, these quotes are obtained from market makers or broker-dealers recognized to be market participants. This valuation method is classified as Level 2 in the fair value hierarchy.

The markets for pooled collateralized debt obligations, or CDOs continue to reflect an overall lack of activity and observable transactions in the secondary and new issue markets for these securities. Those conditions are indicative of an illiquid market and transactions that do occur are not considered orderly. This led us to value our CDOs using both Level 2 and Level 3 inputs. The single name issues continue to come from the brokers and are considered Level 2 valuations. The marks for the pooled issues classified as available for sale were derived from a financial model and are considered Level 3 valuations. The pricing for the pooled CDOs held for trading were derived from a broker and are considered Level 2 inputs.

When determining fair value, ASC 820 indicates that the observable market data should be used to determine the lowest available level. It also provides guidance on determining fair value when a transaction is not considered orderly because the volume and level of activity have significantly decreased. In evaluating the fair value of our two PreTSL pooled CDOs, we determined that the market transactions for similar securities were disorderly. Therefore we priced our PreTSL pooled CDOs using the fair value generated from the cash flow analysis used as part of our review for other-than-temporary impairment. The cash flows include the deferrals and defaults associated with each security, along with anticipated deferrals, defaults and projected recoveries. This price is considered Level 3 pricing.

The effective discount rates are highly dependent upon the credit quality of the collateral, the relative position of the tranche in the capital structure of the CDO and the prepayment assumptions.

The remaining four pooled CDOs were classified as trading. We utilized pricing from a broker that was considered to be Level 2. The broker provided us with actual prices if they had executed a trade for the same deal or if they had knowledge that another trader had traded the same deal. Otherwise they compared the structure of the pooled CDO with other CDOs exhibiting the same characteristics that had experienced recent trades.

Loans held for sale: The fair value of residential mortgage loans held for sale is determined using quoted secondary-market prices. The purchaser provides us with a commitment to purchase the loan at the origination price. Under ASC 820, this commitment is classified as a Level 2 in the fair value hierarchy. If no such quoted price exists, the fair value of these loans would be determined using quoted prices for a similar asset or assets, adjusted for the specific attributes of that loan. Loans held for sale associated with branch transactions are presented at face value, which is substantially the same as the value in the transaction. Loans held for sale at December 31, 2009 included $90,616 of loans that we expected to sell in branch divestiture transactions during 2010.

Derivatives: Our derivative instruments consist of over-the-counter (OTC) interest-rate swaps and mortgage loan interest locks that trade in liquid markets. The fair value of our derivative instruments is primarily measured by obtaining pricing from broker-dealers recognized to be market participants. On those occasions that broker-dealer pricing is not available, pricing is obtained using the Bloomberg system. The pricing is derived from market observable inputs that can generally be verified and do not typically involve significant judgment by us. This valuation method is classified as Level 2 in the fair value hierarchy.

Impaired Loans: Impaired loans are evaluated at the time full payment under the loan terms is not expected. If a loan is impaired, a portion of the allowance for loan losses is allocated so that the loan is reported, net, at the present value of estimated cash flows using the loan’s existing rate or at the fair value of the collateral, if the loan is collateral dependent. Fair value is measured based on the value of the collateral securing these loans, is classified as Level 3 in the fair value hierarchy and is determined using several methods. Generally the fair value of real estate is determined based on appraisals by qualified licensed appraisers. If an appraisal is not available, the fair value may be determined by using a cash flow analysis, a broker’s opinion of value, the net present value of future cash flows, or an observable market price from an active market. Fair value on non-real estate loans is determined using similar methods. In addition, business equipment may be valued by using the net book value from the business’ financial statements. Impaired loans are evaluated quarterly for additional impairment.

Other Real Estate Owned: Other real estate owned is evaluated at the time a property is acquired through foreclosure or shortly thereafter. Fair value is based on appraisals by qualified licensed appraisers and is classified as Level 3 input.

Premises and equipment held for sale: Premises and equipment held for sale are evaluated at the time the property is deemed as held for sale. Fair value is based on appraisals by qualified licensed appraisers and is classified as Level 3 input. On occasion, when an appraisal is not performed fair value is based on sales offers received from potential buyers. Premises and equipment held for sale at December 31, 2009 included $1,244 of premises and equipment that were expected to be sold in the branch divestitures.

Deposits held for sale: The fair value of deposits held for sale is based on the actual purchase price as agreed upon between Integra Bank and the purchaser. Because this transaction occurs in an orderly transaction between market participants the fair value qualifies as a level 2 fair value. Deposits held for sale at December 31, 2009 included $99,084 of deposits that were expected to be sold in the branch divestitures.

Assets and Liabilities Measured on a Recurring Basis:

Assets and liabilities measured at fair value on a recurring basis, including financial liabilities for which we have elected the fair value option, are summarized below.

December 31, 2010

	Quoted Prices
	in Active
	Markets for		Significant
	Identical		Other		Significant
	Assets and		Observable		Unobservable
	Liabilities		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2010
Assets
Securities, available for sale
U.S. Treasuries	$	-	$	18,739	$	-	$	18,739
U.S. Government agencies		-		106		-		106
Collateralized mortgage obligations:
Agency				250,057				250,057
Private Label		-		16,155		-		16,155
Mortgage backed securities: residential				202,752				202,752
Trust Preferred		-		9,776		973		10,749
State & political subdivisions		-		21,679		-		21,679
Other securities		-		8,667				8,667
Total securities, available for sale	$	-	$	527,931	$	973	$	528,904

Securities, held for trading
Trust Preferred	$	-	$	329	$	-	$	329

Derivatives		-		7,018		-		7,018

Liabilities
Derivatives	$	-	$	7,008	$	-	$	7,008

December 31, 2009

	Quoted Prices
	in Active
	Markets for		Significant
	Identical		Other		Significant
	Assets and		Observable		Unobservable
	Liabilities		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2009
Assets
Securities, available for sale
U.S. Treasuries	$	-	$	8,833	$	-	$	8,833
U.S. Government agencies		-		279		-		279
Collateralized mortgage obligations:
Agency		-		118,431		-		118,431
Private Label		-		23,229		-		23,229
Mortgage backed securities		-		167,232		-		167,232
Trust Preferred		-		8,450		1,588		10,038
State & political subdivisions		-		25,040		-		25,040
Other securities		-		8,637		-		8,637
Total securities, available for sale	$	-	$	360,131	$	1,588	$	361,719

Securities, held for trading
U.S. Treasuries	$	-	$	-	$	-	$	-
Trust Preferred		-		36		-		36
Total securities, held for trading	$	-	$	36	$	-	$	36

Derivatives		-		5,945		-		5,945

Liabilities
Derivatives	$	-	$	6,307	$	-	$	6,307

Assets and Liabilities Measured on a Non-Recurring Basis:

Assets and liabilities measured at fair value on a non-recurring basis are summarized below.

	Fair Value Measurements at December 31, 2010

	Quoted Prices
	in Active
	Markets for		Significant
	Identical		Other		Significant
	Assets and		Observable		Unobservable
	Liabilities		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2010
Assets
Impaired loans	$	-	$	-	$	164,023	$	164,023
Loans held for sale		-		1,899		-		1,899
Other real estate owned		-		-		49,238		49,238
Premises and equipment held for sale		-		-		1,387		1,387

Liabilities
Deposits held for sale	$	-	$	-	$	-	$	-

	Fair Value Measurements at December 31, 2009

	Quoted Prices
	in Active
	Markets for		Significant
	Identical		Other		Significant
	Assets and		Observable		Unobservable
	Liabilities		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2009
Assets
Impaired loans	$	-	$	-	$	92,715	$	92,715
Loans held for sale		-		93,572		-		93,572
Other real estate owned		-		-		29,317		29,317
Premises and equipment held for sale		-		-		4,249		4,249

Liabilities
Deposits held for sale	$	-	$	97,207	$	-	$	97,207

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $199,008, with a valuation allowance of $34,985 at December 31, 2010, resulting in an additional provision for loan losses of $53,624 for the year ending December 31, 2010. At December 31, 2009, impaired loans had a carrying amount of $124,751, with a valuation allowance of $32,036 resulting in an additional provision for loan losses of $26,763 for the year ending December 31, 2009.

For those properties held in other real estate owned and carried at fair value at December 31, 2010 and 2009, writedowns of $5,754 and $4,265, respectively, were charged to earnings for the period ending December 31, 2010 and 2009, respectively.

The following table presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2010.

	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)

	Securities
	Available for sale			Total

Beginning Balance at January 1, 2010	$	1,588		$	1,588
Transfers in and/or out of Level 3		-			-
Gains (Losses) included in other comprehensive income		487			487
Gains (Losses) included in earnings		(1,102	)		(1,102	)
Ending Balance at December 31, 2010	$	973		$	973

	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)

	Securities
	Available for sale			Total

Beginning Balance at January 1, 2009	$	17,535		$	17,535
Transfers in and/or out of Level 3		(250	)		(250	)
Gains (Losses) included in other comprehensive income		131			131
Gains (Losses) included in earnings		(15,828	)		(15,828	)
Ending Balance at December 31, 2009	$	1,588		$	1,588

Unrealized gains and losses for securities classified as available for sale are generally not recorded in earnings. However, during the period ended December 31, 2010 and 2009, impairment charges of $1,102 and $21,484, respectively, were charged to earnings for some of our trust preferred securities.

The majority of the changes in unrealized gains and losses recorded in earnings for Level 3 assets and liabilities that were still held at December 31, 2010 and 2009 were mainly attributed to fluctuations in interest rates.

The carrying amounts and estimated fair values of financial instruments, at December 31, 2010 and December 31, 2009 are as follows:

	December 31, 2010				December 31, 2009
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value

Financial Assets:
Cash and short-term investments	$	486,812	$	486,812	$	354,574	$	354,574
Loans-net of allowance		1,093,866		1,095,070		1,838,347		1,840,053
Accrued interest receivable		7,561		7,561		9,336		9,336

Financial Liabilities:
Deposits	$	1,989,879	$	2,009,837	$	2,267,899	$	2,288,866
Short-term borrowings		59,893		59,893		62,114		62,114
Long-term borrowings		347,847		352,149		361,071		362,271
Accrued interest payable		8,710		8,710		8,200		8,200

The above fair value information was derived using the information described below for the groups of instruments listed. It should be noted the fair values disclosed in this table do not represent fair values of all assets and liabilities of ours and, thus, should not be interpreted to represent a market or liquidation value for us.

Carrying amount is the estimated fair value for cash and short-term investments, accrued interest receivable and payable, demand deposits and short-term debt. The fair value of loans is estimated in accordance with paragraph 31 of SFAS No. 107 “Disclosures about Fair Value of Financial Instruments”, which was subsequently incorporated into ASC 825, by discounting expected future cash flows using market rates of like maturity. For time deposits, fair value is based on discounted cash flows using current market rates applied to the estimated life. Fair value of debt is based on current rates for similar financing. It was not practicable to determine the fair value of regulatory stock due to restrictions placed on its transferability. The fair value of off-balance-sheet items is not considered material.

NOTE 19. COMMITMENTS, CONTINGENCIES, AND CREDIT RISK

We are committed under various operating leases for premises and equipment. Future minimum rentals for lease commitments having initial or remaining non-cancelable lease terms in excess of one year are as follows:

Year Ending December 31,
2011	$	1,436
2012		1,255
2013		1,186
2014		1,055
2015		974
Thereafter		5,399
Total	$	11,305

Rental expense for these operating leases totaled $1,436 and $1,879 in 2010 and 2009, respectively.

Most of our business activity and that of our subsidiaries is conducted with customers located in the immediate geographic area of their offices. These areas are comprised of Indiana, Illinois, and Kentucky.

Integra Bank evaluates each credit request of its customers in accordance with established lending policies. Based on these evaluations and the underlying policies, the amount of required collateral (if any) is established. Collateral held varies but may include negotiable instruments, accounts receivable, inventory, property, plant and equipment, income producing properties, residential real estate and vehicles. Integra Bank’s access to these collateral items is generally established through the maintenance of recorded liens or, in the case of negotiable instruments, possession.

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contractual or notional amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments.

Our exposure to credit loss, in the event of nonperformance by the counterparty to the financial instrument for commitments to extend credit and standby letters of credit, is represented by the contractual notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for other on-balance sheet instruments. Financial instruments whose contract amounts represent credit risk at December 31, 2010, follows:

							Ranges of Rates
	Variable Rate		Fixed Rate		Total		on Fixed Rate
	Commitment		Commitment		Commitment		Commitments

Commitments to extend credit	$	227,228	$	34,563	$	261,791		0.00% - 21.00	%

Standby letters of credit		10,491		226		10,717		0.00% - 10.00	%

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Standby letters of credit, both financial and performance, are written conditional commitments issued by the banks to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. We also have $780 of additional non-reimbursable standby letters of credit and commitments.

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

NOTE 20. INTEREST RATE CONTRACTS

We are exposed to interest rate risk relating to our ongoing business operations and utilize derivatives, such as interest rate swaps and floors to help manage that risk.

In 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 fair value 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. The variable rate received was 0.99563% at December 31, 2010. The swap expires on or prior to January 5, 2016, and had a notional amount of $4,220 at December 31, 2010.

In 2006, we initiated an interest rate protection program in which we earn fee income by providing 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 fair values, while recorded, have no net earnings impact. We no longer offer this program for new commercial loans.

The loans associated with the customer interest rate swap program are monitored for changes to their risk ratings. The loans rated watch or worse are reviewed on a quarterly basis and market valuation of the swap is noted. We retain all collection rights associated with these loans including those related to the change in market valuation of the swap.

The counterparties to our derivatives are exposed to credit risk whenever the derivatives discussed above are in a liability position. As a result, we have collateralized the liabilities with securities and cash. We are required to post collateral to cover the market value of the various swaps. The amount of collateral pledged to cover the market position at December 31, 2010 was $11,014.

Mortgage banking derivatives used in the ordinary course of business consist of forward sales contracts and rate lock loan commitments. The fair value of these derivative instruments is obtained using the Bloomberg system.

The table below provides data about the carrying values of our derivative instruments, which are included in “Other assets” and “Other liabilities” in our consolidated balance sheets.

	December 31, 2010								December 31, 2009
	Assets		(Liabilities)			Derivative			Assets		(Liabilities)			Derivative
	Carrying		Carrying			Net Carrying			Carrying		Carrying			Net Carrying
	Value		Value			Value			Value		Value			Value

Derivatives designated as hedging instruments:
Interest rate contracts	$	6,630	$	(7,008	)	$	(378	)	$	5,963	$	(6,307	)	$	(344	)

Derivatives not designated as hedging instruments:
Mortgage banking derivatives		31		(149	)		(118	)		91		(109	)		(18	)

We did not recognize an after tax loss related to our interest rate contracts in other comprehensive income during 2010, compared to a loss of $384 during 2009.

Losses recognized on our mortgage rate locks, which are derivative instruments not designated as hedging instruments, were $394 for 2010. During 2009, we recognized income of $150 from the change in value of our mortgage loan commitments.

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 counterparties will be able to fully satisfy their obligations under these agreements.

NOTE 21. EMPLOYEE RETIREMENT PLANS

Substantially all employees are eligible to contribute a portion of their pre-tax and/or after-tax salary to a defined contribution plan. We may make contributions to the plan in varying amounts depending on the level of employee contributions. Our expense related to this plan was $137 and $238 for 2010 and 2009, respectively.

We also have a benefit plan offering postretirement medical and life benefits. The medical portion of the plan is contributory to the participants, while the life portion is not. We have no plan assets attributable to the plan and fund the benefits as claims arise. Benefit costs related to this plan are recognized in the periods employees are provided service for such benefits. Certain employees hired before 1978 that are age 55 with 5 years of service and retire directly from our company are eligible for a medical plan premium reimbursement. Additionally, employees hired after 1977 who retire are able to stay in the medical plan until age 65, paying the same premium rates charged to employees. This generates a liability in that actual health insurance costs typically exceed the premiums paid. We reserve the right to terminate or make changes at any time.

The 2011 health care cost trend rate is projected to be 7.9%. The rate is assumed to decrease incrementally each year until it reaches 4.5% in 2029. A one percentage point increase in the health care cost trend rates would have resulted in a $407 increase in the December 31, 2010 accumulated postretirement benefit obligation, and a $87 increase to service and interest cost. A one percentage point decrease would have resulted in a $354 decrease in the December 31, 2010 accumulated postretirement benefit obligation and a $75 decrease to service and interest cost. The 2009 valuation assumed a 2010 health care cost trend rate of 8.1%, assuming that the rate would decrease incrementally each year until it reached 4.5% in 2029. A one percentage point increase in the health care cost trend rates would have resulted in a $454 increase in the December 31, 2009 accumulated postretirement benefit obligation, and a $43 increase to service and interest cost. A one percentage point decrease would have resulted in a $396 decrease in the December 31, 2009 benefit obligation and a $37 increase to service and interest cost.

The discount rate is used to determine the present value of future benefit obligations and net periodic pension cost and is determined by matching the expected cash flows of the plan to a yield curve based on long-term, high quality corporate bonds as of the measurement date. The discount rate reflected in the financial statements was 5.00% for 2010 and 5.50% for 2009.

The following summary reflects the plan's funded status and the amounts reflected on our financial statements.

Actuarial present values of benefit obligations at December 31 are:

	Postretirement Benefits
	2010			2009

Change in Fair Value of Plan Assets:
Balance at beginning of year	$	-		$	-
Employer contributions		239			153
Benefits paid, net of retiree contributions		(239	)		(153	)

Balance at end of year	$	-		$	-

Change in Accumulated Projected Benefit Obligation:
Balance at beginning of year	$	4,773		$	2,427
Service cost		426			198
Interest costs		256			180
Actuarial (gains) losses		(1,201	)		2,177
Adjustment for prior year benefits paid		191			(56	)
Benefits paid, net of retiree contributions		(239	)		(153	)

Balance at end of year	$	4,206		$	4,773

Funded status-(accrued) prepaid benefit cost	$	(4,206	)	$	(4,773	)

Amounts recognized in accumulated other comprehensive income at December 31, 2010 and December 31, 2009, on a pre-tax basis, includes prior service costs of $63 and $97, and actuarial losses of $1,745, and $3,152, respectively.

Components of Net Periodic Pension Cost and Other Amounts Recognized in Net Income:

	Postretirement Benefits
	2010			2009

Service cost - benefits earned during the period	$	426		$	198
Interest cost on projected benefit obligation		256			180
Amortization of prior service costs		34			34
Amortization of net (gain) loss		206			56
Net periodic benefit cost		922			468
Net loss (gain)		(1,201	)		2,177
Prior service (cost) credit		(34	)		(34	)
Amortization of gain (loss)		(206	)		(56	)
Total recognized in other comprehensive income		(1,441	)		2,087
Total recognized in net periodic benefit cost and
other comprehensive income	$	(519	)	$	2,555

The estimated prior service costs and net loss for the plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over 2011 are $34 and $102, respectively.

The following table shows the future benefit payments, net of retiree contributions, which are expected to be paid during the following years:

Year ending December 31,
2011	$	231
2012		254
2013		268
2014		300
2015		316
Thereafter		2,039

NOTE 22. SEGMENT INFORMATION

Segments represent the part of our company we evaluate with separate financial information. Our financial information is primarily reported and evaluated in one 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 treasury management services; brokerage and insurance products and services; and complete personal and corporate trust services. Other includes the operating results of the parent company and its reinsurance subsidiary, as well as eliminations. The reinsurance company 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 the banking and other operating units.

For the Year Ended
December 31, 2010	Banking			Other			Total
Interest income	$	91,868		$	95		$	91,963
Interest expense		39,181			3,208			42,389
Net interest income		52,687			(3,113	)		49,574
Provision for loan losses		134,571			-			134,571
Other income		61,169			281			61,450
Other expense		96,668			1,174			97,842
Earnings (Loss) before income taxes		(117,383	)		(4,006	)		(121,389	)
Income taxes (benefit)		(1,451	)		(243	)		(1,694	)
Net income (loss)		(115,932	)		(3,763	)		(119,695	)
Preferred stock dividends and discount accretion		-			4,527			4,527
Net income (loss) available to common shareholders	$	(115,932	)	$	(8,290	)	$	(124,222	)

Segment assets	$	2,416,159		$	4,626		$	2,420,785

For the Year Ended
December 31, 2009	Banking			Other			Total
Interest income	$	121,338		$	128		$	121,466
Interest expense		51,772			3,658			55,430
Net interest income		69,566			(3,530	)		66,036
Provision for loan losses		113,368			-			113,368
Other income		29,068			(5,900	)		23,168
Other expense		104,589			1,580			106,169
Earnings (Loss) before income taxes		(119,323	)		(11,010	)		(130,333	)
Income taxes (benefit)		56,470			4,380			60,850
Net income (loss)	$	(175,793	)	$	(15,390	)	$	(191,183	)
Preferred stock dividends and discount accretion		-			3,798			3,798
Net income (loss) available to common shareholders	$	(175,793	)		(19,188	)	$	(194,981	)

Segment assets	$	2,919,085		$	2,856		$	2,921,941

NOTE 23. FINANCIAL INFORMATION OF PARENT COMPANY

Condensed financial data for Integra Bank Corporation (parent holding company only) follows:

CONDENSED BALANCE SHEETS	December 31,
	2010			2009

ASSETS
Cash and cash equivalents	$	1,699		$	5,294
Investment in banking subsidiaries		84,643			196,579
Investment in other subsidiaries		503			360
Securities available for sale		2,554			2,554
Other assets		1,424			2,735

TOTAL ASSETS	$	90,823		$	207,522

LIABILITIES
Long-term borrowings	$	99,054		$	99,054
Dividends payable		6,528			1,567
Other liabilities		4,080			4,555
Total liabilities		109,662			105,176

SHAREHOLDERS' EQUITY
Preferred Stock		82,359			82,011
Common stock		21,053			20,848
Additional paid-in capital		217,174			216,939
Retained earnings		(334,593	)		(210,371	)
Accumulated other comprehensive income (loss)		(4,832	)		(7,081	)
Total shareholders' equity		(18,839	)		102,346
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	90,823		$	207,522

CONDENSED STATEMENTS OF INCOME	Year Ended December 31,
	2010			2009
Dividends from banking subsidiaries	$	-		$	-
Dividends from other subsidiaries		-			400
Other income		86			(5,903	)

Total income		86			(5,503	)

Interest expense		3,212			3,803
Other expenses		1,039			1,495

Total expenses		4,251			5,298

Income before income taxes and equity in
undistributed earnings of subsidiaries		(4,165	)		(10,801	)

Income taxes (benefit)		(264	)		4,425

Income before equity in undistributed earnings of subsidiaries		(3,901	)		(15,226	)

Equity in undistributed earnings of subsidiaries		(115,794	)		(175,957	)

Net income (loss)		(119,695	)		(191,183	)
Preferred stock dividends and discount accretion		4,527			3,798

Net income (loss) available to common shareholders	$	(124,222	)	$	(194,981	)

CONDENSED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(119,695	)	$	(191,183	)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Amortization and depreciation		160			161
Employee benefit expenses		442			922
Excess distributions (undistributed) earnings of subsidiaries		115,795			175,180
(Gain) loss on sale of premises and equipment		(523	)		-
Decrease in deferred taxes		-			943
(Increase) decrease in other assets		(78	)		858
(Decrease) increase in other liabilities		4,485			7,437
Net cash flows provided by (used in) operating activities		586			(5,682	)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for investments in and advances to subsidiaries		(1,750	)		(60,900	)
Proceeds from sale of premise		1,750			(19	)
Net cash flows provided by (used in) investing activities		-			(60,919	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term borrowings		-			(18,000	)
Proceeds from issuance of common stock warrants		-			7,999
Proceeds from vesting of restricted shares, net		(2	)		(317	)
Proceeds from issuance of TARP preferred stock		-			82,011
Dividends paid		-			(2,572	)
Accrued dividends on preferred stock		(4,179	)		(3,798	)
Net cash flows provided by (used in) financing activities		(4,181	)		65,323
Net increase (decrease) in cash and cash equivalents		(3,595	)		(1,278	)
Cash and cash equivalents at beginning of year		5,294			6,572
Cash and cash equivalents at end of year	$	1,699		$	5,294

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There are no changes in or disagreements with accountants on accounting and financial disclosures.

ITEM 9A. CONTROLS AND PROCEDURES

Based on an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15c) as of December 31, 2010, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of that date in timely alerting our management to material information required to be included in this Form 10-K and other Exchange Act filings.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2010, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

During the fourth quarter of 2010, the Audit Committee of the Board of Directors did not approve the engagement of Crowe Horwath LLP, our independent registered public accounting firm, to perform any non-audit services. This disclosure is made pursuant to Section 10A(i)(2) of the Securities Exchange Act of 1934, as added by Section 202 of the Sarbanes Oxley Act of 2002.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

In accordance with General Instruction G(3) of Form 10-K, certain information required by Part III is omitted from this Form 10-K. The Company will file an amendment to this Form 10-K on Form 10-K/A containing such information not later than 120 days after the end of the fiscal year covered by this report. In addition, as permitted by Instruction G(3), the information on executive officers called for by Part III, Item 10 is included in Part I, Item 1 of this Annual Report on Form 10-K under the caption “Executive Officers of the Registrant.”

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Documents Filed as Part of Form 10-K

1.	Financial Statements

	Report of Independent Registered Public Accounting Firm
	Consolidated Balance Sheets at December 31, 2010 and 2009
	Consolidated Statements of Operations for the years ended December 31, 2010 and 2009
	Consolidated Statements of Comprehensive Income for the years ended December 31, 2010 and 2009
	Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2010 and 2009
	Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009
	Notes to Consolidated Financial Statements

2.	Schedules

	No schedules are included because they are not applicable or the required information is shown in the financial statements or the notes thereto.

3.	Exhibits

	Exhibit Index is on page 95.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on the dates indicated.

	INTEGRA BANK CORPORATION

	/s/ MICHAEL J. ALLEY		3/14/2011
	Michael J. Alley		Date
	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

	/s/ MICHAEL B. CARROLL		3/14/2011
	Michael B. Carroll		Date
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

	/s/ ROBERT L. GOOCHER		3/14/2011
	Robert L. Goocher		Date
	Director

	/s/ H. RAY HOOPS		3/14/2011
	H. Ray Hoops		Date
	Director

	/s/ THOMAS W. MILLER		3/14/2011
	Thomas W. Miller		Date
	Director

	/s/ RICHARD M. STIVERS		3/14/2011
	Richard M. Stivers		Date
	Director

	/s/ WAYNE S. TROCKMAN		3/14/2011
	Wayne S. Trockman		Date
	Director

	/s/ DANIEL T. WOLFE		3/14/2011
	Daniel T. Wolfe		Date
	Director

EXHIBIT INDEX

EXHIBIT
NUMBER		DESCRIPTION OF EXHIBIT

3(a)(i)		Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-A/A dated June 12, 1998)
3(a)(ii)		Articles of Amendment dated May 17, 2000 (incorporated by reference to Exhibit 3(a) to Quarterly Report on Form 10-Q for the period ending September 30, 2000)
3(a)(iii)		Articles of Amendment dated July 18, 2001 (incorporated by reference to Exhibit 1 to the Current Report on Form 8-K dated July 18, 2001)
3(a)(iv)		Articles of Amendment dated February 25, 2009 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K dated March 2, 2009)
3(a)(v)		Articles of Amendment dated April 15, 2009 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K dated April 15, 2009)
3(b)		By-Laws (as amended through June 17, 2009 incorporated by reference to Exhibit 3.1 to Quarterly Report on Form 10-Q for the period ending June 30, 2009)
4(a)		Form of Certificate for the Fixed Rate Cumulative Perpetual Preferred Stock, Series B (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K dated March 2, 2009)
4(b)		Warrant for the Purchase of Shares of Common Stock of Integra Bank Corporation (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K dated March 2, 2009)
10(a)*		Integra Bank Corporation Employees' 401(K) Plan (2003 Restatement) (incorporated by reference to Exhibit 10(a) to Annual Report on Form 10-K for the fiscal year ended December 31, 2006)
10(b)*		Change in Control Benefits Agreement dated May 22, 2007, between Integra Bank Corporation and Roger M. Duncan (incorporated by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q for the period ending June 30, 2007)
10(c)*		Change in Control Benefits Agreement dated May 22, 2007, between Integra Bank Corporation and John W. Key (incorporated by reference to Exhibit 10(d) to Annual Report on Form 10-K for the period ending December 31, 2009)
10(d)*		Change in Control Benefits Agreement dated October 15, 2008, between Integra Bank Corporation and Michael B. Carroll (incorporated by reference to Exhibit 10(j) to Annual Report on Form 10-K for period ending December 31, 2008)
10(e)*		First Amendment to Integra Bank Corporation Employees 401 (k) Plan dated January 1, 2003 (incorporated by reference to Exhibit 10(h) to Annual Report on Form 10-K for the fiscal year ended December 31, 2006)
10(f)*		Second Amendment to Integra Bank Corporation Employees 401 (k) Plan dated March 28, 2005 (incorporated by reference to Exhibit 10(i) to Annual Report on Form 10-K for the fiscal year ended December 31, 2006)
10(g)*		Third Amendment to Integra Bank Corporation Employees 401 (k) Plan dated January 1, 2006 (incorporated by reference to Exhibit 10(j) to Annual Report on Form 10-K for the fiscal year ended December 31, 2006)
10(h)*		Fourth Amendment to Integra Bank Corporation Employees 401 (k) Plan dated July 1, 2007 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the period ending September 30, 2007)
10(i)*		Integra Bank Corporation 2007 Equity Incentive Plan (incorporated by reference to Exhibit A to Proxy Statement on Schedule 14A filed March 16, 2007)
10(j)*		Amendment to Integra Bank Corporation 2007 Equity Incentive Plan dated April 15, 2009 (incorporated by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q for the period ending March 31, 2009)
10(k)*		Integra Bank Corporation Annual Cash Incentive Plan (incorporated by reference to Exhibit B to Proxy Statement on Schedule 14A filed March 16, 2007)
10(l)*		Form of Restricted Stock Agreement (Director) under 2007 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K dated April 18, 2007)
10(m)*		Form of Restricted Stock Agreement (Employee) under 2007 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K dated April 18, 2007)

10(n)*		Form of Nonqualified Stock Option Agreement under 2007 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K dated April 18, 2007)
10(o)*		Form of Stock Appreciation Right Agreement under 2007 Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K dated April 18, 2007)
10(p)*		Form of Restricted Stock Agreement (CPP) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated July 20, 2009)
10(q)*		Form of Restricted Stock Agreement (Employee) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated July 20, 2009)
10(r)*		Summary Sheet of 2011 Compensation
10(s)*		Letter Agreement, dated February 27, 2009, between Integra Bank Corporation and the United States Department of Treasury, which includes the Securities Purchase Agreement-Standard Terms attached thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated March 2, 2009)
10(t)*		Form of Senior Officer Letter Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated March 2, 2009)
10(u)*		Amended Form of Senior Officer Letter Agreement (incorporated by reference to Exhibit 10(v) to Annual Report on Form 10-K for period ending December 31, 2009)
10(v)*		Form of Waiver (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K dated March 2, 2009)
10(w)*		ARRA Letter Agreement, dated February 27, 2009, between Integra Bank Corporation and the United States Department of the Treasury (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K dated March 2, 2009)
10(x)*		Formal Written Agreement dated May 20, 2009 between Integra Bank N.A. and the Office of the Comptroller of the Currency (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K-A dated May 27, 2009)
10(y)*		Agreement dated May 6, 2010, between Integra Bank Corporation and the Federal Reserve Bank of St Louis (incorporated by reference to Exhibit 99(a) to the Current Report on Form 8-K dated May 6, 2010)
10(z)*		Capital Directive dated August 12, 2010 between Integra Bank, National Association and the Office of the Comptroller of the Currency (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K dated August 12, 2010)
21		Subsidiaries of the Registrant
23		Consent of Crowe Horwath LLP
31(a)		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer
31(b)		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer
32		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1		EESA Section 111(b)(4) Certification of Principal Executive Officer
99.2		EESA Section 111(b)(4) Certification of Principal Financial Officer

*		The indicated exhibit is a management contract, compensatory plan or arrangement required to be filed by Item 601 of Regulation S-K.

Attached files

INTEGRA BANK CORP Reports

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