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:
1ST SOURCE CORPORATION EMPLOYEES' PROFIT SHARING PLAN AND TRUST
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.
1st SOURCE CORPORATION
EMPLOYEES' PROFIT SHARING PLAN AND TRUST
By the Plan Administrator
1st Source Corporation
/s/ Dan L. Craft
-----------------------------------
Dan L. Craft, Senior Vice President
Date: June 25, 2004
FINANCIAL STATEMENTS AND SCHEDULES
1ST SOURCE CORPORATION EMPLOYEES' PROFIT SHARING PLAN AND TRUST
December 31, 2003 and 2002, and year ended December 31, 2003
1ST SOURCE CORPORATION
EMPLOYEES' PROFIT SHARING PLAN AND TRUST
As of December 31, 2003 and 2002,
and for the year ended December 31, 2003
CONTENTS
Report of Independent Registered Public Accounting Firm ....................1
Financial Statements
Statements of Net Assets Available for Benefits.............................2
Statement of Changes in Net Assets Available for Benefits...................3
Notes to Financial Statements...............................................4
Schedule of Assets (Held at End of Year)...................................10
Exhibits
Consent of Independent Registered Public Accounting Firm.........Exhibit 23.1
Report of Independent Registered Public Accounting Firm
Human Resources Committee of the Board of Directors
1st Source Corporation
We have audited the accompanying statements of net assets available for benefits
of the 1st Source Corporation Employees' Profit Sharing Plan and Trust as of
December 31, 2003 and 2002, and the related statement of changes in net assets
available for benefits for the year ended December 31, 2003. 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 year ended December 31, 2003, in conformity with U.S. generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the 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
basic 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
-------------------
June 23, 2004
1
1st Source Corporation Employees' Profit Sharing Plan and Trust
Statements of Net Assets Available for Benefits
DECEMBER 31
2003 2002
-------------------------------------
ASSETS
Cash and cash equivalents $ 601,280 $ 174,671
Investments at fair value:
Mutual funds 39,341,657 27,138,293
1st Source Corporation common stock 30,209,790 21,043,291
1st Source Bank common trust fund 3,560,951 1,724,916
Participant notes receivable 690,361 718,204
-------------------------------------
Total investments 73,802,759 50,624,704
Employer contributions receivable 2,546,665 1,697,799
Accrued investment income 2,617 18,895
-------------------------------------
Net assets available for benefits $ 76,953,321 $ 52,516,069
=====================================
See accompanying notes.
2
1st Source Corporation Employees' Profit Sharing Plan and Trust
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2003
Additions
Investment income:
Interest $ 64,949
Dividends 1,480,479
------------
1,545,428
Contributions:
Employer 3,294,665
Employees 3,261,329
------------
6,555,994
Transfer from money purchase pension plan and trust 5,968,926
Net realized and unrealized appreciation 12,363,119
in fair value of investments:
Total additions 26,433,467
Deductions
Benefits paid to participants 1,996,215
Total deductions 1,996,215
------------
Net increase 24,437,252
Net assets available for benefits:
Beginning of year 52,516,069
------------
End of year $ 76,953,321
============
See accompanying notes.
3
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements
December 31, 2003
1. DESCRIPTION OF THE PLAN
GENERAL
The 1st Source Corporation Employees' Profit Sharing Plan and Trust (the "Plan")
is a defined contribution plan covering substantially all employees of 1st
Source Corporation and its subsidiaries, with the exception of Trustcorp
Mortgage Company, ("1st Source") 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").
CONTRIBUTIONS AND VESTING
Effective July 1, 2002 participants are permitted to designate up to 25% of
their annual pre-tax compensation as a salary reduction contribution to the Plan
(prior to that date participants were permitted to designate up to 15%).
Provided net profits or retained earnings are sufficient, 1st Source will match
employee salary reduction contributions one hundred percent (100%) for the first
four percent (4%) of compensation that is deferred and fifty percent (50%) of
any additional contributions up to six percent (6%) of compensation that is
deferred. Participants direct the investment of their contributions into various
investment options offered by the Plan. The Plan currently offers nine different
fund options, one of which is the 1st Source Stock Fund, which primarily
consists of 1st Source Corporation common stock. 1st Source matching
contributions are invested in the 1st Source Stock Fund.
1st Source makes an annual, mandatory contribution to the plan based on 2%
of participants' eligible annual compensation. This contribution is made to the
Profit Sharing Mandatory Account of the Plan. The Profit Sharing Mandatory
Account is invested in a diversified portfolio of investments as directed by 1st
Source.
In addition, the Human Resources Committee of the Board of Directors of 1st
Source Corporation may authorize a contribution from consolidated net profits or
retained earnings in excess of the minimum 401(k) matching contributions
required by the Plan. This discretionary profit sharing contribution is made to
the Profit Sharing Regular Account of the Plan. The Profit Sharing Regular
Account is invested in a diversified portfolio of investments as directed by 1st
Source. There was no discretionary contribution for 2003.
Vesting of participant contributions is immediate upon contribution to the Plan.
Vesting of 1st Source contributions, both of the match of the employee salary
reduction contributions, the discretionary profit sharing contribution and the
mandatory 2% contribution, is based on years of credited service. A participant
is one hundred percent (100%) vested after five years of credited service or
upon reaching early retirement age, normal retirement age, or disability.
4
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements (Continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
CONTRIBUTIONS AND VESTING (CONTINUED)
Each participant's account is credited with the participant's contribution and
an allocation of (a) 1st Source's contribution, (b) Plan earnings, and (c)
forfeitures of terminated participants' nonvested 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.
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 1st Source Bank's (a wholly owned subsidiary of 1st
Source Corporation) prime rate. 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 exceed five 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,
$1,748,546 and $1,056,932, respectively, of the net assets available for
benefits at the end of the year has been 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, 1st Source Corporation 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 for a more complete description
of the Plan's provisions. Copies are available from the 1st Source Corporation
Human Resources Division.
5
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments are stated at fair value. Securities traded on a national securities
exchange are valued at the average of the reported sales prices for the last
five business days 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 net asset value as reported by the funds on
the last business day of the plan year. Loans to participants and short-term
temporary investments are stated at cost, which approximates fair value.
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 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.
CASH EQUIVALENTS
All short-term investments with a maturity of less than 90 days are deemed to be
cash equivalents.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior year financial statements
to conform with the current year presentation.
6
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements (Continued)
3. INVESTMENTS
During 2003, the Plan's investments (including investments purchased, sold, as
well as held during the year) appreciated in value by $12,363,119, including net
realized losses of $780,247 as follows:
2003
-----------------------
NET APPRECIATION
(DEPRECIATION) IN FAIR
VALUE DURING THE YEAR
-----------------------
1st Source Corporation common stock $ 6,917,225
Mutual funds 5,332,174
1st Source Bank common trust funds 113,720
-----------------------
$ 12,363,119
=======================
The fair value of individual investments that represent 5% or more of the fair
value of the Plan's net assets are as follows:
2003 2002
------------ -----------
1st Source Corporation common stock $30,209,790 $21,043,291
1st Source Monogram Income Fund 12,359,803 8,180,916
1st Source Monogram Diversified Equity Fund 6,252,351 4,775,285
1st Source Monogram Income Equity Fund 8,097,023 5,110,932
1st Source Monogram Special Equity Fund 6,807,081 4,399,277
Morgan Stanley Institutional International Equity Fund 4,189,758 3,177,015
7
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements (Continued)
4. NON-PARTICIPANT DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the non-participant directed investment is as follows:
DECEMBER 31
2003 2002
------------------ -------------------
NET ASSETS
Cash & Cash Equivalents $ 135,040 $ 85,303
1st Source Corporation Common Stock 24,602,474 17,512,296
1st Source Corporation Mutual Funds 14,745,149 7,920,207
1st Source Bank Employee
Benefit Guaranteed Income Fund
1,842,029 518,822
------------------ -------------------
TOTAL NET ASSETS $41,324,692 $26,036,628
================== ===================
YEAR ENDED
DECEMBER 31, 2003
-----------------
CHANGES IN NET ASSETS
Contributions $ 2,529,638
Investment income 908,518
Transfer from money purchase pension plan and trust 5,968,926
Net realized/unrealized depreciation 6,774,010
Benefits paid to participants (893,028)
-----------------
Total changes in net assets: $15,288,064
=================
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
The Plan held the following party-in-interest investments at fair value at
December 31:
2003 2002
------------ -----------
1st Source Corporation Common Stock $30,209,790 $21,043,291
1st Source Monogram Income Fund 12,359,803 8,180,916
1st Source Monogram Income Equity Fund 8,097,023 5,110,932
1st Source Monogram Diversified Equity Fund 6,252,351 4,775,285
1st Source Monogram Special Equity Fund 6,807,081 4,399,277
1st Source Bank Employee Benefit
Guaranteed Income Fund 3,560,951 1,724,916
8
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements (Continued)
5. TRANSACTIONS WITH PARTIES-IN-INTEREST (CONTINUED)
All expenses incurred in administration of the Plan are paid by 1st Source
Corporation.
6. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated June 24, 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. PLAN MERGER
Effective December 31, 2002 the 1st Source Corporation Money Purchase Pension
Plan was merged into the Plan. The resulting plan, titled 1st Source Employees'
Profit Sharing Plan and Trust, is covered by the determination letter dated June
24, 2003. The addition of 1st Source Corporation Money Purchase Plan is included
on the Statement of Changes in Net Assets Available for Benefits.
9
1ST SOURCE CORPORATION EMPLOYEES' PROFIT SHARING PLAN AND TRUST
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2003
EIN: 35-1068133
Plan Number: 003
IDENTITY OF ISSUE,
BORROWER, LESSOR
OR SIMILAR PARTY DESCRIPTION OF INVESTMENT COST FAIR VALUE
--------------------------------------------------------------------------- --------------------------
Common Stock:
*1st Source Corporation 1,373,422 shares $ 16,750,892 $ 30,209,790
--------------------------
16,750,892 30,209,790
Mututal Funds:
American Century Benham Equity Fund 169,848 units 1,623,205 1,635,641
Morgan Stanley Institutional International
Equity Fund A 15,288 units 204,878 291,381
Morgan Stanley Institutional International
Equity Fund B 205,719 units 3,582,127 3,898,377
*1st Source Monogram Income Fund 1,205,834 units 12,168,947 12,359,803
*1st Source Monogram Income Equity Fund 673,069 units 7,044,682 8,097,023
*1st Source Monogram Diversified Equity Fund 931,796 units 7,654,988 6,252,351
*1st Source Mongram Special Equity Fund 589,868 units 5,723,624 6,807,081
----------------------------
38,002,451 39,341,657
Common Trust Funds:
*1st Source Bank Employee Benefit Guaranteed
Income Fund 147,039 units 2,948,464 3,560,951
----------------------------
2,948,464 3,560,951
Loans to Participants $690,361 principal amount,
interest rates ranging 6.00% - 11.75%,
maturities through 2017 - 690,361
----------------------------
- 690,361
$ 57,701,807 $ 73,802,759
============================
* Indicates party-in-interest to the Plan.
10