SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
[ ] 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 29, 2005
FINANCIAL STATEMENTS AND SCHEDULE
Trustcorp Mortgage Company Employee Retirement Savings Plan
December 31, 2004 and 2003, and Year Ended December 31, 2004
Trustcorp Mortgage Company
Employee Retirement Savings Plan
Financial Statements and
Supplemental Schedule
December 31, 2004 and 2003, and
Year Ended December 31, 2004
Contents
Report of Independent Registered Public Accounting Firm........................1
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 H, Line 4i - Schedule of Assets (Held at End of Year).................9
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 and Savings Plan as of
December 31, 2004 and 2003, and the related statement 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. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
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, 2004 and 2003, and the changes in 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 financial
statements taken as a whole. The accompanying schedule of assets (held at end of
year) as of December 31, 2004 is presented for the purpose 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
Chicago, Illinois
June 27, 2005
1
TRUSTCORP MORTGAGE COMPANY EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31
2004 2003
--------------------------------
Assets
Cash and cash equivalents $ 75,609 $ 45,683
Investments at fair value
Common stock 848,443 923,402
Mutual funds 3,676,785 2,961,002
1st Source Bank common trust fund 377,301 511,452
Participant loans receivable 198,250 217,024
--------------------------------
Total investments 5,100,779 4,612,880
Contribution receivable
Employer 36,349 24,151
Employee 17,031 15,332
--------------------------------
53,380 39,483
Other assets
Other receivables 5,789 6,374
--------------------------------
Total assets 5,235,557 4,704,420
Liabilities
Accrued expenses payable 10,757 10,806
--------------------------------
Total liabilities 10,757 10,806
--------------------------------
Net assets available for benefits $ 5,224,800 $ 4,693,614
================================
See accompanying notes.
2
TRUSTCORP MORTGAGE COMPANY EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Years Ended
December 31
2004 2003
-----------------------------
Additions
Investment income:
Interest $ 17,327 $ 16,471
Dividends 58,661 49,425
-----------------------------
75,988 65,896
Contributions:
Employer 157,885 174,768
Employee 330,607 453,176
-----------------------------
488,492 627,944
Net realized and unrealized appreciation
in fair value of investments: 427,212 764,409
-----------------------------
Total additions 991,692 1,458,249
Deductions
Benefits paid to participants 432,316 113,361
Plan expenses 28,190 25,122
-----------------------------
Total deductions 460,506 138,483
-----------------------------
Net increase 531,186 1,319,766
Net assets available for benefits:
Beginning of year 4,693,614 3,373,848
-----------------------------
End of year $ 5,224,800 $4,693,614
=============================
See accompanying notes.
3
Trustcorp Mortgage Company Employee Retirement Savings Plan
Notes to Financial Statements
December 31, 2004
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 $3,000 (in 2004) and $2,000 (in 2003) 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 2004 and 2003, 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. There was no discretionary contribution to the Plan for 2004 and the
discretionary contribution for 2003 was $16,000.
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
December 31, 2004
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 receives a lump-sum amount equal to the
value of his or her vested account balance. At December 31, 2004 and 2003, 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
5
Trustcorp Mortgage Company Employee Retirement Savings Plan
Notes to Financial Statements
December 31, 2004
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENT VALUATION AND INCOME RECOGNITION (CONTINUED)
net asset value as reported by the funds. Loans to participants 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 preparation of financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. INVESTMENTS
During 2004 and 2003, the Plan's investments (including investments purchased,
sold, as well as held during the year) appreciated in value by $427,212 and
$764,409, respectively, as follows:
Net Appreciation (Depreciation) in Fair
Value During
2004 2003
------------------- --------------------
Common stock $124,479 $205,600
Mutual funds 290,895 539,009
1st Source Bank common trust fund 11,838 19,800
------------------- --------------------
$427,212 $764,409
=================== ====================
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Trustcorp Mortgage Company Employee Retirement Savings Plan
Notes to Financial Statements
December 31, 2004
3. INVESTMENTS (CONTINUED)
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
2004 2003
----------- -----------
1st Source Corporation common stock $ 682,164 $779,587
Morgan Stanley Institutional International Equity 1,016,874 540,031
1st Source Monogram Income Equity Fund 738,785 584,843
1st Source Monogram Diversified Equity Fund 736,269 579,368
1st Source Monogram Special Equity Fund 397,025 582,345
1st Source Monogram Income Fund 412,769 414,627
1st Source Monogram Long/Short Fund 375,063 243,173
1st Source Bank Employee Benefit
Guaranteed Income Fund 377,301 511,452
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, 2004
were paid by Trustcorp.
The Plan held the following party-in-interest investments at fair value at
December 31:
2004 2003
------------ -----------
1st Source Corporation Common Stock $682,164 $779,587
1st Source Monogram Income Equity Fund 738,785 584,843
1st Source Monogram Diversified Equity Fund 736,269 579,368
1st Source Monogram Special Equity Fund 397,025 582,345
1st Source Monogram Income Fund 412,769 414,627
1st Source Monogram Long/Short Fund 375,063 243,173
1st Source Bank Employee Benefit
Guaranteed Income Fund 377,301 511,452
7
Trustcorp Mortgage Company Employee Retirement Savings Plan
Notes to Financial Statements
December 31, 2004
4. TRANSACTIONS WITH PARTIES-IN-INTEREST (CONTINUED)
Plan transactions with parties-in-interest during the years ended December 31,
2004 and 2003 were as follows:
Identity Relationship 2004 2003
-------- ------------ --------- --------
RSM McGladrey, Inc. Recordkeeper & Tax Accountant $18,839 $16,701
1st Source Bank Trustee 9,351 8,421
--------- --------
$28,190 $25,122
========= ========
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.
6. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities are
exposed to various risks such as interest rate, market and credit risks. Due to
the level of risk associated with certain investment securities, it is likely
that changes in the values of investment securities will occur in the near term
and that such changes could materially affect participants' account balances and
the amounts reported in the statements of assets available for benefits.
8
Trustcorp Mortgage Company Employee Retirement Savings Plan
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2004
EIN: 35-1933290
Plan Number: 003
Identity of Issue,
Borrower, Lessor
or Similar Party Description of Investment Cost Fair Value
-----------------------------------------------------------------------------------------------------------------------
Common Stock:
* 1st Source Corporation 26,741 shares ** $ 682,164
Key Corp 4,905 shares ** 166,279
--------------
848,443
Mutual Funds:
Morgan Stanley Institutional
International Equity Fund 48,771 units ** 1,016,874
* 1st Source Monogram Income Equity Fund 54,969 units ** 738,785
* 1st Source Monogram Diversified Equity Fund 100,037 units ** 736,269
* 1st Source Monogram Special Equity Fund 45,793 units ** 397,025
* 1st Source Monogram Long/Short Fund 34,760 units ** 375,063
* 1st Source Monogram Income Fund 41,112 units ** 412,769
--------------
3,676,785
Common Trust Funds:
* 1st Source Bank Employee Benefits 15,121 units ** 377,301
--------------
Guaranteed Income Fund 377,301
* Loans to Participants: $198,250 principal amount, interest
rates ranging from 5.00% to
10.50%, maturities through 2012 ** 198,250
--------------
198,250
$ 5,100,779
==============
* Indicates a party-in-interest to the Plan.
**Historical cost information is not required for participant-directed
investments.
9