Welcome to the Old National Bancorp's Third Quarter 2007 EarningsCall. This call is being recorded and made accessible to the public inaccordance with the SEC's Regulation FD. The call, along with the correspondingpresentation slides, will be archived for twelve months on the shareholderrelations page at www.oldnational.com. A replay of the call will also beavailable beginning at 1:00 pm Central today through November 12. To access thereplay, dial 1-800-642-1687, conference ID code 206-45931. Those participating today will be analysts and members ofthe financial community. At this time, all participants are in a listen-onlymode. Then we will hold a question-and-answer session and instructions willfollow at that time. At this time, the call will be turned over to Lynell Walton,Vice President of Investor Relations, for opening remarks. Ms. Walton?

Thank you, Laney, and good morning to all of you on thecall. We appreciate you're joining us for Old National Bancorp's third quarter2007 earnings conference call. With me today are our President and ChiefExecutive Officer, Bob Jones, our Chief Financial Officer, Chris Wolking, andour Chief Credit Officer, Daryl Moore. Before we begin, I would like to refer you to slide three,and to point out that the presentation today does contain certain forward-lookingstatements that are subject to certain risks and uncertainties that could causethe Company's actual future results to materially differ from those discussed.These risks and uncertainties include, but are not limited, to those which arecontained in this slide deck and in the Company's filings with the SEC. Slide four contains our non-GAAP financial measuresinformation. Various numbers in this presentation have been adjusted forcertain items to provide more comparable data between periods and as an aid toyou in establishing more realistic trends going forward. Included in theappendix to this presentation, are the reconciliations for such non-GAAP data.We feel that these adjusted metrics provide a meaningful look at our thirdquarter performance as well as ongoing financial trends. Slide five is our agenda for thecall. First, Bob Jones will provide an overview of our improved third quarterearnings results, which include the continuation of many other positive trendsthat began in the second quarter. Daryl Moore will then lead the discussion ofour improving credit quality metrics. Chris Wolking will discuss in detail ourthird quarter financial analysis of certain segments of our third quarterresults. Chris will also discuss the anticipated impact of our most recent saleleaseback transactions. Bob Jones will complete it with our expectations forthe remainder of 2007, and then we will open the call for questions. With that, I will turn the callover to Bob.

Great. Thank you Lynell, and letme add my welcome to all of you that are joining us on the call this morning. Iwill begin my comments with slide seven on your presentation. As you all know,this morning we announced earnings of $0.34 per share, which represent aslightly over 13% increase over the prior quarter of 2007, and slightly over 6%over the third quarter of 2006. As I have seen for the quarter,it's much the same as we discussed last quarter. We did see continuedimprovement in two of our key drivers, credit quality and our net interestmargin. We did once again see a decline in our non-accrual loans, loans thatour classified and criticized loans. This decline in conjunction with ouroverall and continued improvement in the quality of our loan portfolio meantthat our AOOO model showed no need for a loan loss provision for the quarter. Daryl, as usual, will give youmore in depth review later on in the call. We also did see a 17 basis pointincreased in our net interest margin for the quarter. This increase is due toimpart to our continued effort to reduce our dependency on high cost funding,an overall much more disciplined approach to pricing, all which we havediscussed with you in the past. Chris will give you a little more detail on thatparticularly that pertains the building of a model for the next quarter. Whilewe are very pleased with the overall improvement in our earnings, most notablyshown in our ROE 14.22%, and our ROA at 1.15%, I want to assure all of you onthe phone that we remain diligent in our outlook for the credit environment,that we are not arrogant enough to think that we can totally escape any of theissues that exist in today's turbulent market. While we firmly believe thatwe've been extremely aggressive in…

Thank you, Bob. I would like to begin my part of thisquarter's presentation reviewing the trends in our classified, criticized, andnon-accrual loans. As slide 13 shows, classified loans fell during the quarter,showing a decline of slightly more than $1.5 million in the period, and nowstand at approximately $130 million, eliminating what now appears to be atemporary bump up in the fourth quarter of 2006 and the increase in classifiedloans associated with the acquisition of St. Joseph Capital Bank at the end ofthe first quarter. This quarter continues our general trend of decliningclassified loans over the last 14 quarters. Year-to-date, we've now reducedclassified loans $23 million, representing a 15% reduction in those outstandingssince the end of 2006. Slide 14 shows our criticized loan trends over the last 14quarters. As we have discussed in prior calls, our trendline showed goodprogress resulting from our efforts to reduce criticized loans up until thethird and fourth quarters of 2006, where we posted elevated levels. We'repleased to be able to report to you that in the third quarter we continue theprogress we made in the first two quarter 2007 by reducing criticized loans byanother $11 million in the period. Year-to-date, we have reduced criticizedloans by $41 million, representing a 34% reduction from 2006 year-end totals. As the next slide shows, 90-plus delinquencies in ourportfolio were up in the quarter from two basis points to five basis pointswith total outstandings. The increase was reflected of roughly $1.1 million inadditional outstandings in this category from the prior quarter. On credit theamount of approximately $1 million accounted for much of the increase. As youcan see we have historically managed our 90-plus delinquencies well, and ourresults compare very favorably to the peer group against which we measure ourperformance. As you can see on slide 16, non-accrual loans fell $9million to…

Thank you, Daryl. As I was preparing for our call today, Iwas struck by the similarities of this quarter's discussion with ourpresentation to you last quarter. Major trends we discussed in July,improvement in our credit metrics and improvement in our net interest margin,are still in place and drove our strong results in the third quarter. We will begin on slide 19. Our reported net interest marginimproved to 3.37%, from 3.20% in the second quarter. In the third quarter, asDaryl explained, we recovered $1.6 million of interest related to a commercialreal estate loan. As you may recall from our last conference call, werecovered $1 million in interest related to another loan in the second quarter.If we subtract the impact from both recoveries, net interest income increasedto $58 million in the third quarter from $57.6 million in the second. And netinterest margin increased from 3.14% to 3.28%. The 14 basis point increase inthe normalized net interest margin is our second consecutive quarterlyimprovement to 14 basis points. The normalized margin of 3.28% in the thirdquarter of 2007 is 13 basis points higher than our third quarter 2006 margin. On to slide 20. We've broken down the components of ourmargin improvement. I'll take you though these components in more detail.Starting with the 3.20% recorded net interest margin in the second quarter,have subtracted the 6 basis point lift from our second quarter interestrecovery. As noted earlier, nine basis points of our third quarter reportedmargin was due to the recovery of interest on another commercial real estateloan. The yield on the investment portfolio increased from 5.10%in the second quarter to 5.19% in the third quarter. Additionally, we'vereduced our average investment portfolio $184.4 million from second quarter2007. Subtracting out the impact of the interest recoveries in both the secondand third quarters, loan yields were flat at 7.38%…

Great, thank you, Chris. I want to be brief in my closing. Iam using slide 27. I just hope that everyone on the call gets to the sense ofour firm commitments to the three strategic competitors that we have operatedunder for three years. At the base of our need to continue to improve andmaintain a strong risk profile followed by the need to continue to enhance ourmanagement discipline. Both of which will lead to our ultimate goal ofproviding a consistent quality return to our shareholders in terms of theirearnings. Simply stated, we would love to be known as beingconsistently borrowing. Clearly, we are not there yet, but I think we havetaken some major steps towards that goal. I also believe it would be very easyto deviate from our strategy during difficult times. We believe and just theopposite consistency is the key to better execution. With that very shorteditorial, let me say that we still remain comfortable with the guidance wegave you for the full-year. Our full-year earnings should between $1.11 and$1.17. As you began to think about 2008, we will be guidance on ourJanuary call for the full year. With that, we will be happy to open up to anyquestions you might have.

(Operator Instruction) Your first question comes from theline of Scott Siefers with Sandler O'Neill.

Good morning, guys.

Hi Scott, how you doing?

Good, how is everyone over there doing?

Good.

Good. I just had a couple of questions just on credit.First, the loans sales in this quarter, were those all non-performing loans?

Yes. They were.

Okay. And how are you finding the market for secondary loansales just given all the dislocation that we saw during second quarter?

Yeah, Scott, it's interesting what we have found, as wecontinue to talk to our loan sale advisors, is that everything exclusive ofone-to four-family residential loans there still appears to be a fairly vibrantmarket for them, pricing maybe up slightly, but not materially. If you've gotresidential one-to four-family development acquisition, development projects, theyare trading probably at about $0.50 on a $1. So, many banks are not evenputting those in the loan sales. But, that seems to be today, the only segmentthat's been hit very hard.

Okay, excellent. And then let's see am I [tossed] back on; Ithink that should do it for now. Good. Thanks, everyone.

Thanks Scott

Your next question comes from the line of Erika Penala with Merrill Lynch.

Hey Erika, how are you?

I am doing well. How are you?

We are doing great.

Daryl, I just wanted to tick your brain about how we shouldthink about reserves going forward. I know that the formula didn't cause you toreport the provision this quarter. But, it seems like the tone is appropriatelycautious going forward. So, how should we think about reserves?

Yeah, Erika, if you don't mind I might chime in and then letDaryl fill in the blanks. But, I think that's in part why we want to hold offtill January to give guidance for 2008. And I want to assure everybody on thephone, we don't see any dark clouds. And again, as I think, you all know we'vebeen conservative, but I think we're been appropriately cautious. We also wouldbe naïve to think that we won't return to some normalization of credit cost aswe begin to think about 2008. Daryl, do have anything to add? Hope that answersthe question.

Okay.

And we would be able to give you a little more color as wemove to January call.

And also my other question is on the expense line.Efficiency management was excellent this quarter and should we -- excluding theoccupancy expenses that are going to come on line, because of the saleleaseback, is this a consistent run rate to look forward to?

I think Erika, it's a good first step. I think we realizedthat we need to continue to look at our expenses and continue to be moreprudent with our spending. So, again, in '08 in January we'll give you a little moreguidance. But, we realized that why it was a good first step or couple of stepsfor efficiency. We’ve still got some opportunities there.

Okay. Thanks for taking my call.

Thank you.

Your next question comes from the line of Charlie Ernst withSandler O'Neill.

Good morning.

Hey, Charlie, how are you doing?

Good. How are you guys? Just a follow-up a little bit on theexpenses. It looks like the communications expense was down $0.5 million or soin the quarter. Can you add any detail there?

Yeah, I would say of that maybe related to [St. Joe] in thesecond quarter. Again, it's just prudent watching of expenses, I think thatyou'll remember in the first quarter we'd put in some pretty tight controls anda lot of that begins to show its full commitment in the third and quartersbeyond.

Okay. Andthen the other expense line was had a pretty quarter and I might be including abunch of different things in there. But, I guess the bottom-line is, do youfeel like this is a decent number to run off other than the increase inoccupancy?

Charlie, this is Chris Wolking. I think that when you lookjust a little bit, I think in quarters passed we talked about 40ish, 49 to alittle bit higher than that for salary and benefits. So, we had a little bit ofa benefit, I think, in the third quarter. But, as Bob said, I think its continuedattention, continued management of those expenses, and we feel pretty goodabout our continued ability to keep a little lid on expenses. But, there isalways work to be done.

Okay. And then I think you guys touched on the marginbriefly saying that it would be -- you think it's going to be up some. Can youadd some color, especially given the rate cuts?

I'll tackle that one too. As you've seen from our previousSEC releases, we are still slightly liability sensitive, but not nearly what wehave been in years passed. So, we feel like we'll still have some incrementalbenefit here from rates declining, but not significantly. I think the realbenefit to the margin has been the fundamental changes that we've made in ourdeposit pricing, our continued attention to keeping an efficient balance sheet,if you will, making sure we deploy our funding appropriately into good assets,and the benefit from the sale/leaseback. When you look at the sale/leaseback transaction,the impact on the margin, just on the margin itself, when you think of thatsignificant redeployed cash, it will be a nice lift on the margin goingforward. But, of course, that's offset by a lot of the occupancy expensesrelated to the transaction. So…

I would just add, for modeling purposes, I think as Chrissaid, I would suggest to use the 328 for the third quarter, but as Chris and Iboth said, you should see a modest expansion in that margin as you look at thefourth quarter.

Right.

Okay. And then lastly, can you just comment on the tax rate?It's been very volatile this year, what's a good tax rate to be thinking aboutyou guys?

Taxes themselves, we don't expect significant changes goingforward. I can't give you too much more color on that Charlie. I will be happyto address that question offline, if we feel like it's appropriate, as I'm prepareto deal with -- to answer that question right now.

I think for modeling purposes, '07 as you look forwardreally is not in a nominalization in the short-term?

So, if I take kind of year-to-date, you are around 30% on aFTE basis, and that’s prior not too bad to be thinking about?

Yes, that's not too bad at all.

Okay, great.

Continue to benefit from previous year's losses and such.

Thanks a lot you guys.

Thanks Charlie.

Your next question comes from the line of Michael Cohen withSunova.

Hi.

Hey Michael, how are you?

Doing great. How are you guys?

Welcome to the call.

Thank you for taking my question. I just had a couple ofquick questions. You guys are sort of kind of taking a dual-prong approach tothe view of credit, in the sense that all your hard work seems to continue topay off, yet you are sort of a mindful of kind of good economy. Can you providemaybe any more color, I mean in a sense of the nature of the types of loans thatyou guys have originated over the past year and half to two years, thediversity of such, maybe that gives you some confidence over the sort of loan-to-valuethat says kind of okay, yeah, things are going to normalize. But you keepsaying you don’t see anything on the immediate --

We still see major dark clouds, I don’t want anybody whogets to sense [or rather have] any challenges that we do believe we've got theright control. I think Daryl can give you a little more color.

Yeah, Michael. Let me tell you, as Bob said earlier, and aswe said on prior calls, a year plus ago we decided that the commercial realestate area was really not something that we are going to take a lot of riskin, and although, we did originate some commercial real estate loans, in ourunderwriting was, if you just look at the deals that we lost was a lot moreconservative than what was going on in the market. So, we didn't put a lot of commercial real estate loans onthe books. The stuff that we were putting on was mainly commercial andindustrial. We had some consumer growth; it was really pretty plain vanillastuff. We didn't do a lot of residential subdivision lending, didn't do a lotof commercial real estate, construction or land development lending. So, wethink that at least right now, those are segments that we see some weakness in,in the book that we've got, but we don't have a lot of new exposure, and Ithink that's where a lot of banks are getting problems -- is on the newexposures. So, I think that's why you hear us saying, we are glad we'vegot the proposals we have, we're glad we addressed the risk when we did, but weare not immune, because of the existing projects we have and some of thosecustomers from the CNI side that have some sort of and gentle exposure to theone or more family real estate markets are probably going to show someweakening over the next couple of quarters, and we just realize that andunderstand that, that's going to affect our portfolio.

Sure, that's helpful. You had also mentioned, I think yousaid, in terms of loan sales, was it NPAs of construction and development ortrading at $0.50 on the dollar or just any construction and development loansare accreting at $0.50 on a dollar?

What the guys are saying is, their wonderful familyacquisition and development loans that are troubled are accreting at $0.50 onthe dollar. Those you have to keep mind a very interesting loan, because whenyou have a residential acquisition development loan that it shows someweakness, you've got a lot of slow adsorption and when you've got slowadsorption you have to look at your interest reserves and then that translatesback to the value of the projects. So if you a got project like that, that issignificantly behind where you thought was going to be, a lot of those projectsare going to have a more than a couple of quarters on them, they aren’t goingto go to non-performing. So, I think when they talk about that, they are probablytalking about the non-performing, but there are going to be a lot of thosetypes of loans they are going to split through that category.

And can you just refresh our memory as to the total size ofyour C&D book and the NPAs in that book and kind of what you were, you aresort of eluding. Is that where over the next two quarters you -- or a fewquarters you might expect to see the NPAs creep up?

I think that if you look at the riskiness of any bank'sportfolio, I would say that, yeah, that would be the first portfolio where youwould show non-performers probably creep into that risk profile. I don’t haveall our statistics today. We can follow back up with you on the total dollarsin the NPA net portfolio.

Great. And then, I don’t know if you guys have a kind ofnear-term outlook. There certainly have been banks buying in the Indiana market. Can yousort of give an update on your thought process and your kind of appetite forM&A within Indiana or would you be lookingto kind of go to continuous markets outside of Indiana.

Yeah. We've been pretty forthright about really wanting toconcentrate on Indiana, and we would includethe Louisvillemarket as part of that, but Louisville North up by 65. A lot of chatter in themarket. We continue to do a lot of dating. But, as my team has heard me say,much like my dating career in college, I wasn’t very successful. So, I am stilljust doing a lot of conversations, nothing imminent. We continue to be open toany opportunities, particularly if it pertains to the state of Indiana.

Okay great. Thank you so much for your time.

Thanks.

(Operator Instructions) Your next question comes from theline of Stephen Geyen with Stifel Nicolaus.

Good morning.

Hey Steve, how are you?

I am well, thank you. Just a quick question on the insurancepremiums. Looking at Q4 or going back to Q4 of 2006, I heard there's a bigjump, is there something seasonal that occurs there, or it is something completelydifferent?

Yeah. Stephen, we had a reclassification in certain incomeassociated with our insurance operations that was classify from other incomeinto insurance premium. So that accounted for that increase. I think generallyspeaking, the insurance agency, the insurance market in Midwestis still something to a fairly soft market; pricing is typical right nowrelative to previous years. Plus in 2006, we had a weather event through Indiana that reduced ourcontingency revenue for 2007. So, generally speaking, 2007 has been a difficultyear for our agency relative to previous years.

Okay. Andjust if you can give me some thoughts on local economies, commercial realestate is probably hurting all over Indiana, just a C&I is particularly thestronger, in some areas risk to others and consumer how the consumers behaving,look at Evansville, Louisville Indianapolis, Northern Indiana?

Sure. I would say that we're not immune to some of thechallenges, but we're clearly not in the same state of the economy as ourjoining states of Ohio and Michigan in particular. We do see moderategrowth in most of our markets. We have not seen some of the challenges thatwe've seen again as I said, Ohio and Michigan. Indianapolis is probablybeing a little more pressured in the housing and commercial real estate side.We are hearing and seeing some challenges there, Louisvillehas been just the opposite, Louisvillecontinues to have a very good economy. So, I will just characterize the economyin our market is okay, now robust, but again we don't have the significantchallenges that we see some of the other Midweststates.

Okay, thank you.

Thank you.

(Operator Instructions) And there are no further questionsat this time.

Great, Laney. Again for all of you, if you have any furtherquestions, call Lynell, or Chris or myself. And we thank you for your time andwe look forward to see talking to you in January.

This concludes Old National's call. Once again, a replayalong with the presentation slides will be available for twelve months on theshareholder relations page of Old National's web site at www.oldnational.com. Areplay of a call will also be available by dialing 1-800-642-1687, conferenceID code 206-45931. This replay will be available through November 12. If anyonehas additional questions, please contact Lynell Walton at 812-464-1366. Thankyou for your participation in today's conference call.