NOTE 3 – ACQUISITIONS

Monroe Bancorp

On January 1, 2011, Old National acquired 100 % of Monroe Bancorp ("Monroe") in an all stock transaction. Monroe was headquartered in Bloomington, Indiana and had 15 banking centers. The acquisition increases Old National's market position to number 1 in Bloomington and strengthens its position as the third largest branch network in Indiana. Pursuant to the merger agreement, the shareholders of Monroe received approximately 7.6 million shares of Old National Bancorp stock valued at approximately $90.1 million.

Under the purchase method of accounting, the total estimated purchase price is allocated to Monroe's net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on management's preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the preliminary purchase price for the Monroe acquisition is allocated as follows (in thousands):


Cash and cash equivalents	$	83,604
Investment securities		153,594
Loans		453,366
Premises and equipment		19,738
Accrued interest receivable		1,804
Company-owned life insurance		17,206
Other assets		41,538
Deposits		(653,813	)
Short-term borrowings		(62,529	)
Other borrowings		(37,352	)
Accrued expenses and other liabilities		(6,000	)
Net tangible assets acquired		11,156
Definite-lived intangible assets acquired		10,485
Goodwill		68,429
Total estimated purchase price	$	90,070

Prior to the end of the measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively.

Of the total estimated purchase price, an estimate of $11.2 million has been allocated to net tangible assets acquired and $10.5 million has been allocated to definite-lived intangible assets acquired. The remaining purchase price has been allocated to goodwill. The goodwill will not be deductible for tax purposes and is included in the "Community Banking" and "Other" segments, as described in Note 18 of these consolidated financial statement footnotes.

The components of the estimated fair value of the acquired identifiable intangible assets are in the table below. These intangible assets will be amortized on an accelerated basis over their estimated lives and are included in the "Community Banking" and "Other" segments, as described in Note 18 of these consolidated financial statement footnotes.


		Estimated	Estimated
		Fair Value	Useful Lives (Years)
Core deposit intangible	$	8.2	10
Trust customer relationship intangible	$	2.3	12

Pro Forma Results

The following schedule includes consolidated statements of income data for the un-audited pro forma results for the periods ended June 30, 2011 and 2010 as if the Monroe acquisition had occurred as of the beginning of the periods presented after giving effect to certain adjustments. The un-audited pro forma information is provided for illustrative purposes only and is not indicative of the results of operations or financial condition that would have been achieved if the Monroe acquisition would have taken place at the beginning of the periods presented and should not be taken as indicative of the Company's future consolidated results of operations or financial condition.


		Three Months Ended				Six Months Ended
		June 30,				June 30,
(dollars in thousands)		2011		2010		2011		2010
Net interest income	$	57,791	$	66,100	$	117,572	$	129,347
Other non-interest income		43,589		45,750		86,410		91,129
Total revenue		101,380		111,850		203,982		220,476
Provision expense		3,207		11,221		6,519		20,502
Other non-interest expense		77,545		84,863		153,894		169,857
Income before income taxes		20,628		15,766		43,569		30,117
Income tax expense		5,027		1,664		10,319		3,319
Net income	$	15,601	$	14,102	$	33,250	$	26,798

Diluted earnings per share	$	0.16	$	0.15	$	0.35	$	0.28

In accordance with accounting for business combinations, there was no allowance brought forward on any of the January 1, 2011 acquired loans, as the credit losses evident in the losses were included in the determination of the fair value of the loans at the date of acquisition. Provision expense of $3.2 million was included in the three months ended June 30, 2011 and 2010 for Monroe.

Supplemental pro forma earnings for the three and six months ended June 30, 2011 were adjusted to exclude $2,169 and $5,700, respectively, of acquisition and integration-related costs. A tax rate of 38.87% was used to adjust tax provision expense for the income statement impact. Second quarter and year-to-date 2010 supplemental pro forma earnings were adjusted to include these charges.

Trust Business of Integra Bank

On June 1, 2011, Old National Bancorp's wholly owned trust subsidiary, American National Trust and Investment Management Company d/b/a Old National Trust Company ("ONTC"), acquired the trust business of Integra Bank, N.A. As of the closing, the trust business had approximately $328 million in assets under management. This transaction brings the total assets under management by Old National's Wealth Management division to approximately $4.4 billion. Old National paid Integra $1.3 million in an all cash transaction and anticipates acquisition-related costs will approximate $150 thousand. Old National recorded $1.3 million of customer relationship intangible assets which will be amortized on an accelerated basis over 12 years and is included in the "Other" segment, as described in Note 18 of the consolidated financial statement footnotes.

Subsequent Event – Integra Bank N.A.On July 29, 2011, Old National acquired the banking operations of Integra Bank N.A. ("Integra") in an FDIC assisted transaction. The Company acquired approximately $1.9 billion of assets and assumed approximately $1.6 billion of liabilities, including $1.5 billion of deposits. The Company entered into separate loss sharing agreements with the FDIC providing for specified credit loss protection for substantially all acquired single family residential loans, commercial loans, and foreclosed real estate. Under the terms of the loss sharing agreements, the FDIC will reimburse the Company for 80 percent of up to $275.0 million of losses on those assets, zero percent for losses between $275.0 and $467.2 million, and 80 percent for losses above $467.2 million. At the acquisition date, the Company estimated the Integra assets would incur approximately $269.0 million of losses, of which $211.2 million would be reimbursable under the loss sharing agreements as losses are realized in future periods. The loss sharing agreements provide for coverage on losses for ten years on single family residential mortgages, and five years on commercial loans. The Company recorded the acquired assets and liabilities at their estimated fair values at the acquisition date. The estimated fair value for loans reflected expected credit losses at the acquisition date and related reimbursement under the loss sharing agreements. As a result, the Company will only recognize a provision for credit losses and charge-offs on the acquired loans for any further credit deterioration, net of any expected reimbursement under the loss sharing agreements.