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, 2002
[ ] 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
Date: June 27, 2003 /s/ Jay A. Rudynski
----------------------------------------
Jay A.Rudynski, Chief Financial Officer
Financial Statements and Schedule
Trustcorp Mortgage Company Employee Retirement Savings Plan
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
Trustcorp Mortgage Company
Employee Retirement Savings Plan
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
CONTENTS
Report of Independent Accountants ............................................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 of Assets Held for Investment Purposes at Year End...................8
Exhibits
Consent of Independent Auditors.....................................Exhibit 23.1
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002..........................................Exhibit 99.1
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002..........................................Exhibit 99.2
Report of Independent Accountants
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, 2002 and 2001, 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 auditing standards generally accepted
in the 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, 2002 and 2001, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
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, 2002, 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 23, 2003
1
Trustcorp Mortgage Company Employee Retirement Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31,
2002 2001
--------------------------
ASSETS
Cash and cash equivalents $ 35,204 $ 35,549
Investments at fair value
Common stock 474,928 627,067
Mutual funds 2,022,428 2,477,279
1st Source Bank common trust fund 590,188 132,486
Participant loans receivable 240,387 183,721
---------- ----------
Total investments 3,327,931 3,420,553
Contribution receivable
Employer 8,553 210,427
Employee 22,146 25,256
---------- ----------
30,699 235,683
Other Receivables 7,404 5,355
Total assets 3,401,238 3,697,140
LIABILITIES
Accrued expenses payable 12,374 9,281
Investment purchases payable 15,016 --
---------- ----------
Total liabilites 27,390 9,281
---------- ----------
Net assets available for benefits $3,373,848 $3,687,859
========== ==========
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,
2002 2001
-------------------------
Additions
Investment income:
Interest $ 19,213 $ 20,899
Dividends 45,903 47,264
Capital (losses) gains (104,315) (24,517)
------------ -----------
(39,199) 43,646
----------- -----------
Contributions:
Employer 146,278 319,670
Employee 392,153 304,717
----------- -----------
538,431 624,387
----------- -----------
Total additions 499,232 668,033
DEDUCTIONS
Net depreciation (appreciation)
in fair value of investments 232,489 (32,422)
Benefits paid to participants 552,963 225,831
Plan expenses 27,791 24,308
----------- -----------
Total deductions 813,243 217,717
----------- -----------
Net (decrease) increase (314,011) 450,316
Net assets available for benefits:
Beginning of year 3,687,859 3,237,543
----------- -----------
End of year $ 3,373,848 $ 3,687,859
=========== ===========
SEE ACCOMPANYING NOTES.
3
Trustcorp Mortgage Company Employee Retirement Savings Plan
Notes to Financial Statements
December 31, 2002
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 attained age 21 and 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 15% of their annual compensation
as a salary reduction contribution to the Plan under Section 401(k) of the
Internal Revenue Code. Beginning in 2002, participants age 50 or older may elect
to defer up to an additional $1,000 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 year 2002 and 2001, 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 2002 and 2001,
this discretionary contribution was equal to $0 and $202,000, 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.
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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 ten 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, 2002 and 2001,
$0, has been allocated to participants who had effectively withdrawn from the
Plan 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.
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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 2002 and 2001, the Plan's investments (including investments purchased,
sold, as well as held during the year) (depreciated) appreciated in value by
$(232,489) and $32,422, respectively, as follows:
NET APPRECIATION NET APPRECIATION
(DEPRECIATION) IN (DEPRECIATION) IN
FAIR VALUE DURING FAIR VALUE DURING
2002 2001
------------------ ---------------------
Common stock $ (80,083) $ 90,083
Mutual funds (160,108) (60,124)
1st Source Bank common trust fund 7,702 2,463
------------------ ---------------------
$ (232,489) $ 32,422
================== =====================
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
2002 2001
---------- -----------
1st Source Corporation common stock $ 351,214 $ 505,805
Morgan Stanley Institutional International Equity 476,495 423,048
1st Source Monogram Income Equity Fund 421,885 584,926
1st Source Monogram Diversified Equity Fund 416,327 577,196
1st Source Monogram Special Equity Fund 417,196 591,789
1st Source Monogram Income Fund 290,525 300,320
1st Source Bank EB Guaranteed Income Fund 590,188 132,486
6
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, 2002
were paid by Trustcorp.
The Plan held the following party-in-interest investments at fair value at
December 31:
2002 2001
--------- ---------
1st Source Corporation Common Stock $ 351,214 $ 505,805
1st Source Monogram Income Equity Fund 421,885 584,926
1st Source Monogram Diversified Equity Fund 416,327 577,196
1st Source Monogram Special Equity Fund 417,196 591,789
1st Source Monogram Income Fund 290,525 300,320
1st Source Bank Employee Benefit Guaranteed Income Fund 590,188 132,486
Plan transactions with parties-in-interest during the years ended December 31,
2002 and 2001 were as follows:
IDENTITY RELATIONSHIP 2002 2001
-------- ------------ ---- ----
RSM McGladrey, Inc. Recordkeeper & Tax Accountant $ 19,021 $ 15,280
1st Source Bank Trustee 8,770 9,028
-------- --------
$ 27,791 $ 24,308
======== ========
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated July 18, 1994, 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. The Plan has subsequently been amended and restated. The
Plan sponsor intends to seek a determination letter as to the qualification of
the Plan as amended and restated. Once qualified, the Plan is required to
operate in conformity with the Code to maintain its qualification. The Plan
Administrator believes the Plan, as amended and restated 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
for Investment Purposes at Year End
December 31, 2002
EIN: 35-1933290
Plan Number: 003
IDENTITY OF ISSUE,
BORROWER, LESSOR
OR SIMILAR PARTY DESCRIPTION OF INVESTMENT FAIR VALUE
-----------------------------------------------------------------------------------------------
Common Stock:
* 1st Source Corporation 20,968 shares $ 351,214
Key Corp 4,921 shares 123,714
-----------
474,928
Mutual Funds:
Morgan Stanley Institutional
International Equity Fund 32,771 units 476,495
* 1st Source Monogram Income Equity Fund 44,362 units 421,885
* 1st Source Monogram Diversified Equity Fund 73,686 units 416,327
* 1st Source Mongram Special Equity Fund 51,002 units 417,196
* 1st Source Monogram Income Fund 27,881 units 290,525
-----------
2,022,428
Common Trust Funds:
* 1st Source Bank Employee Benefits 25,256 units 590,188
-----------
Guarenteed Income Fund 590,188
Loans to Participants: $240,387 principal amount,
interest rates ranging from
5.75% to 10.50%,
maturities through 2009 240,387
-----------
240,387
Total Assets Held for Investment
Purposes at End of Year: $3,327,931
===========
* Indicates a party-in-interest to the Plan.
8