11-K 1 tmc02-11k.txt TMC 2002 11-K 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. 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 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. 5 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