SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ___________________
Commission File Number: 0-6233
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
TRUSTCORP MORTGAGE COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
1st Source Corporation
100 N. Michigan Street
South Bend, Indiana 46601
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
TRUSTCORP MORTGAGE COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
By the Plan Administrator
TRUSTCORP MORTGAGE COMPANY
/s/Jay A. Rudynski
--------------------------------------------
Jay A. Rudynski, Chief Financial Officer
Date: June 28, 2004
Financial Statements and Schedule
Trustcorp Mortgage Company Employee Retirement Savings Plan
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
Trustcorp Mortgage Company
Employee Retirement Savings Plan
For the years ended December 31, 2003 and 2002
CONTENTS
Report of Independent Registered Public Accounting Firm.......................1
Financial Statements
Statements of Net Assets Available for Benefits...............................2
Statements of Changes in Net Assets Available for Benefits....................3
Notes to Financial Statements.................................................4
Schedule
Schedule of Assets Held for Investment Purposes At End of Year................8
Exhibits
Consent of Independent Registered Public Accounting Firm...........Exhibit 23.1
Report of Independent Registered Public Accounting Firm
Board of Directors
Trustcorp Mortgage Company
We have audited the accompanying statements of net assets available for benefits
of the Trustcorp Mortgage Company Employee Retirement Savings Plan as of
December 31, 2003 and 2002, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan'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. 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 net assets available for benefits of the Plan as of
December 31, 2003 and 2002, and the changes in its net assets available for
benefits for the years then ended, in conformity with U.S. generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes at end of year as of December 31, 2003, is
presented for purposes of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/Ernst & Young LLP
-------------------
Columbus, Ohio
June 24, 2004
1
Trustcorp Mortgage Company Employee Retirement Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2003 2002
--------------------------------
ASSETS
Cash and cash equivalents $ 45,683 $ 35,204
Investments at fair value
Common stock 923,402 474,928
Mutual funds 2,961,002 2,022,428
1st Source Bank common trust fund 511,452 590,188
Participant loans receivable 217,024 240,387
--------------------------------
Total investments 4,612,880 3,327,931
Contribution receivable
Employer 24,151 8,553
Employee 15,332 22,146
--------------------------------
39,483 30,699
Other assets
Other Receivables 6,374 7,404
Total assets 4,704,420 3,401,238
LIABILITIES
Accrued expenses payable 10,806 12,374
Investment purchases payable - 15,016
--------------------------------
Total liabilites 10,806 27,390
--------------------------------
Net assets available for benefits $ 4,693,614 $ 3,373,848
================================
See accompanying notes.
2
Trustcorp Mortgage Company Employee Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits
FOR THE YEAR ENDED
DECEMBER 31
2003 2002
-----------------------------
ADDITIONS
Investment income:
Interest $ 16,471 $ 19,213
Dividends 49,425 45,903
Capital losses (32,776) (104,315)
Net appreciation (depreciation)
in fair value of investments 797,185 (232,489)
-----------------------------
830,305 (271,688)
-----------------------------
Contributions:
Employer 174,768 146,278
Employee 453,176 392,153
-----------------------------
627,944 538,431
-----------------------------
Total additions 1,458,249 266,743
DEDUCTIONS
Benefits paid to participants 113,361 552,963
Plan expenses 25,122 27,791
-----------------------------
Total deductions 138,483 580,754
-----------------------------
Net increase (decrease) 1,319,766 (314,011)
Net assets available for benefits:
Beginning of year 3,373,848 3,687,859
-----------------------------
End of year $4,693,614 $3,373,848
=============================
See accompanying notes.
3
Trustcorp Mortgage Company Employee Retirement Savings Plan
Notes to Financial Statements
December 31, 2003
1. DESCRIPTION OF THE PLAN
GENERAL
The Trustcorp Mortgage Company Employee Retirement Savings Plan
(the "Plan") is a defined contribution plan covering substantially all employees
of Trustcorp Mortgage Company ("Trustcorp") who have completed one year of
service in which the employee has worked 1,000 hours. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
Trustcorp is a wholly owned subsidiary of 1st Source Corporation.
The Board of Directors of Trustcorp Mortgage Company may authorize a
contribution from consolidated net profit or retained earnings in excess of the
401(k) matching contributions which are also approved by the Board. These
discretionary contributions are made in cash and are allocated to each
participant based upon provisions of the Plan Agreement.
FUNDING AND VESTING
Participants are permitted to designate up to 25% of their annual compensation
as a salary reduction contribution to the Plan under Section 401(k) of the
Internal Revenue Code. In addition, participants age 50 or older may elect to
defer up to an additional $2,000 (in 2003) and $1,000 (in 2002) per year (called
"catch-up contributions") to the plan. When applying the discretionary matching
contributions, only salary reductions up to six percent (6%) of eligible
employee compensation is considered. For the years 2003 and 2002, the
discretionary matching contribution percentage was 50%. In addition, as part of
the profit sharing component of the Plan, Trustcorp has the discretion to make
an additional contribution to the Plan, out of current or accumulated net
profits. For the years 2003 and 2002, this discretionary contribution was equal
to $16,000 and $0 respectively.
Vesting of participant contributions and Trustcorp's 401(k) matching
contributions are immediate. Vesting of the Trustcorp contributions for the
profit sharing component of the Plan is based on years of credited service, with
participants becoming 100% vested after seven years of credited service.
However, a participant becomes 100% vested upon satisfying the requirements for
early retirement under the terms of the Plan document.
Each participant's account is credited with the participant's contribution and
an allocation of (a) Trustcorp's contribution, (b) Plan earnings net of Plan
expenses, and (c) forfeitures of terminated participants' non-vested accounts.
Allocations are based on participant compensation or account balances, as
defined. The benefit to which a participant is entitled is the benefit that can
be provided from the participant's vested account balance.
4
Trustcorp Mortgage Company Employee Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PARTICIPANT LOANS
Participants may borrow from the Plan amounts not to exceed the lesser of
one-half of the participant's vested account balance or $50,000. The loans are
collateralized by the participant's vested account balance and bear interest at
fixed rates of 1% above the national prime rate as posted in the Wall Street
Journal. The loans are repayable over five years except for loans used to
acquire or construct a participant's principal residence, in which case the
repayment term may be up to fifteen years.
PAYMENT OF BENEFITS
On termination of service, a participant may elect to receive either a lump-sum
amount equal to the value of his or her vested account balance or periodic
installments in accordance with Plan provisions. At December 31, 2003 and 2002,
there have been no amounts allocated to participants who had effectively
withdrawn from the Plan and requested distribution as of the end of those
respective years, but had yet to receive their final distribution.
PLAN TERMINATION
Although it has not expressed any intention to do so, Trustcorp has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become fully vested in their accounts.
The foregoing description of the Plan provides only general information.
Participants should refer to the Plan Agreement, the Summary Plan Description,
or the Employee Handbook for a more complete description of the Plan's
provisions. Copies are available from the Trustcorp Human Resources Division.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments are stated at fair value. Securities traded on a national securities
exchange are valued at the last reported sales price on the last business day of
the Plan year; securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are valued at the average
of the last reported bid and ask prices. The fair value of mutual funds and the
Plan's participation in common/collective trust funds of 1st Source Bank are
stated at the aggregate current value as reported by the funds. Loans to
participants are stated at cost, which approximates fair value.
5
Trustcorp Mortgage Company Employee Retirement Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
USE OF ESTIMATES
The financial statements of the Trustcorp Mortgage Company Employee Retirement
Savings Plan (the "Plan") are presented on the accrual basis and are prepared in
conformity with accounting principles generally accepted in the United States,
which require management to make estimates and assumptions that affect amounts
in the financial statements and accompanying notes. Actual results could differ
from those estimates.
3. INVESTMENTS
During 2003 and 2002, the Plan's investments (including investments purchased,
sold, as well as held during the year) appreciated (depreciated) in value by
$797,185 and ($232,489), respectively, as follows:
NET APPRECIATION NET APPRECIATION
(DEPRECIATION) IN (DEPRECIATION) IN
FAIR VALUE DURING FAIR VALUE DURING
2003 2002
------------------ ---------------------
Common stock $ 203,596 $ (80,083)
Mutual funds 584,992 (160,108)
1st Source Bank common trust fund 8,597 7,702
---------------- ---------------------
$ 797,185 $ (232,489)
================ =====================
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
2003 2002
-------- ----------
1st Source Corporation common stock $779,587 $ 351,214
Morgan Stanley Institutional International Equity 540,031 476,495
1st Source Monogram Income Equity Fund 584,843 421,885
1st Source Monogram Diversified Equity Fund 579,368 416,327
1st Source Monogram Special Equity Fund 582,345 417,196
1st Source Monogram Income Fund 414,627 290,525
1st Source Monogram Long/Short Fund 243,173 -
1st Source Bank Employee
Benefit Guaranteed Income Fund 511,452 590,188
6
Trustcorp Mortgage Company Employee Retirement Savings Plan
Notes to Financial Statements (continued)
4. TRANSACTIONS WITH PARTIES-IN-INTEREST
Parties-in-interest are defined under Department of Labor regulations as any
fiduciary of the Plan, any party rendering service to the Plan, the employer and
certain others.
Plan assets are held in custody by the trust division of 1st Source Bank, a
wholly owned subsidiary of 1st Source Corporation, parent of Trustcorp.
Professional fees for the audit of the Plan for the year ended December 31, 2003
were paid by Trustcorp.
The Plan held the following party-in-interest investments at fair value at
December 31:
2003 2002
---------- ----------
1st Source Corporation Common Stock $779,587 $ 351,214
1st Source Monogram Income Equity Fund 584,843 421,885
1st Source Monogram Diversified Equity Fund 579,368 416,327
1st Source Monogram Special Equity Fund 582,345 417,196
1st Source Monogram Income Fund 414,627 290,525
1st Source Monogram Long/Short Fund 243,173 -
1st Source Bank Employee
Benefit Guaranteed Income Fund 511,452 590,188
Plan transactions with parties-in-interest during the years ended December 31,
2003 and 2002 were as follows:
IDENTITY RELATIONSHIP 2003 2002
-------- ------------
RSM McGladrey, Inc. Recordkeeper & Tax Accountant $16,701 $ 19,021
1st Source Bank Trustee 8,421 8,770
-----------------------
$25,122 $ 27,791
=======================
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated September 30, 2003, stating that the Plan is qualified under Section
401(a) of the Internal Revenue Code (the "Code") and, therefore, the related
trust is exempt from taxation. Once qualified, the Plan is required to operate
in conformity with the Code to maintain its qualification. The Plan
Administrator believes the Plan is being operated in compliance with the
applicable requirements of the Code and, therefore, believes that the Plan is
qualified and the related trust is tax exempt.
7
Trustcorp Mortgage Company Employee Retirement Savings Plan
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2003
EIN: 35-1933290
Plan Number: 003
IDENTITY OF ISSUE,
BORROWER, LESSOR
OR SIMILAR PARTY DESCRIPTION OF INVESTMENT FAIR VALUE
-----------------------------------------------------------------------------------------------------------
Common Stock:
*1st Source Corporation 36,243 shares $ 779,587
Key Corp 4,905 shares 143,815
--------------
923,402
Mutual Funds:
Morgan Stanley Institutional
International Equity Fund 28,498 units 540,032
*1st Source Monogram Income Equity Fund 48,615 units 584,843
*1st Source Monogram Diversified Equity Fund 86,344 units 579,367
*1st Source Mongram Special Equity Fund 50,463 units 582,345
*1st Source Mongram Long/Short Fund 24,439 units 259,788
*1st Source Monogram Income Fund 40,451 units 414,627
--------------
2,961,002
Common Trust Funds:
*1st Source Bank Employee Benefits
Guaranteed Income Fund 21,119 units 511,452
--------------
511,452
Loans to Participants: $217,024 principal amount, interest
rates ranging from 5.00% to
10.50%, maturities through 2009 217,024
--------------
217,024
Total Assets Held for Investment
Purposes at End of Year: $ 4,612,880
==============