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:
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 AND TRUST
By the Plan Administrator
1st Source Corporation
/s/ Dan L. Craft
--------------------------------
Dan L. Craft, Senior Vice President
Date: June 29, 2005
FINANCIAL STATEMENTS AND SCHEDULES
1st Source Corporation Employees' Profit Sharing Plan and Trust
December 31, 2004 and 2003
And Year Ended December 31, 2004
1
1st Source Corporation
Employees' Profit Sharing Plan and Trust
Financial Statements and
Supplemental Schedules
December 31, 2004 and 2003,
And for the Year Ended December 31, 2004
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
Supplemental Schedules
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)................11
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, 2004 and 2003, and the related statement of changes in net assets
available for benefits for the year ended December 31, 2004. 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 year ended December 31, 2004, 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, are fairly stated in all material respects in relation to the financial
statements taken as a whole.
Chicago, Illinois
June 27, 2005
1
1st Source Corporation Employees' Profit Sharing Plan and Trust
Statements of Net Assets Available for Benefits
December 31
2004 2003
-----------------------------------
Assets
Cash and cash equivalents $ 971,090 $ 601,280
Investments at fair value:
Mutual funds 47,179,412 39,341,657
1st Source Corporation common stock 34,319,512 30,209,790
1st Source Bank common trust fund 3,799,312 3,560,951
Participant notes receivable 835,884 690,361
-----------------------------------
Total investments 86,134,120 73,802,759
Employer contributions receivable 2,969,537 2,546,665
Accrued investment income 676 2,617
-----------------------------------
Net assets available for benefits $ 90,075,423 $ 76,953,321
===================================
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, 2004
Additions
Investment income:
Interest $ 63,693
Dividends 1,602,063
-------------
1,665,756
Contributions:
Employer 2,969,958
Employees 3,755,904
-------------
6,725,862
Net realized and unrealized appreciation
in fair value of investments: 7,184,528
Total additions 15,576,146
Deductions
Benefits paid to participants 2,454,044
Total deductions 2,454,044
-------------
Net increase 13,122,102
Net assets available for benefits:
Beginning of year 76,953,321
-------------
End of year $ 90,075,423
=============
See accompanying notes.
3
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements
December 31, 2004
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%). 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. 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 ten 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 directly in the 1st Source Stock
Fund.
In addition, 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 Executive Compensation and 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 match for
2004.
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)
Vesting of participant contributions is immediate upon contribution to the Plan.
Vesting of 1st Source contributions, both 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.
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, 2004 and 2003,
$1,897,793 and $1,748,546, 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.
5
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
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.
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 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.
6
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
3. INVESTMENTS
During 2004, the Plan's investments (including investments purchased, sold, as
well as held during the year) appreciated in value by $7,184,528, including net
realized losses of $107,458 as follows:
2004
------------------------
NET APPRECIATION
(DEPRECIATION) IN FAIR
VALUE DURING THE YEAR
------------------------
1st Source Corporation common stock $ 4,455,024
Mutual funds 2,951,893
1st Source Bank common trust funds (222,389)
---------------------
$ 7,184,528
=====================
7
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The fair value of individual investments that represent 5% or more of the fair
value of the Plan's net assets are as follows:
2004 2003
-------------------------
1st Source Corporation common stock $34,319,512 $30,209,790
1st Source Monogram Income Fund 13,024,204 12,359,803
1st Source Monogram Diversified Equity Fund 8,399,933 6,252,351
1st Source Monogram Income Equity Fund 11,415,005 8,097,023
1st Source Monogram Special Equity Fund 5,304,207 6,807,081
Morgan Stanley Institutional International Equity Fund 6,817,552 4,189,758
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
2004 2003
---------------- -------------------
NET ASSETS
Cash and Cash Equivalents $ (25,405) $ 135,040
1st Source Corporation Common Stock 28,218,005 24,602,474
1st Source Corporation Mutual Funds 16,649,206 14,745,149
1st Source Bank Employee
Benefit Guaranteed Income Fund
2,017,759 1,842,029
---------------- -----------------
TOTAL NET ASSETS $ 46,859,564 $ 41,324,692
================ =================
8
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
4. NON-PARTICIPANT DIRECTED INVESTMENTS (CONTINUED)
Year Ended
December 31, 2004
-----------------
CHANGES IN NET ASSETS
Contributions $2,651,155
Investment income 986,871
Net realized/unrealized depreciation 3,139,891
Benefits paid to participants (1,243,045)
-----------------
TOTAL CHANGES IN NET ASSETS: $5,534,872
=================
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
The Plan held the following party-in-interest investments at fair value at
December 31:
2004 2003
----------- -----------
$34,319,512 $30,209,790
1st Source Corporation Common Stock
1st Source Monogram Income Fund 13,024,204 12,359,803
1st Source Monogram Income Equity Fund 11,415,005 8,097,023
1st Source Monogram Diversified Equity Fund 8,399,933 6,252,351
1st Source Monogram Special Equity Fund 5,304,207 6,807,081
1st Source Bank Employee
Benefit Guaranteed Income Fund 6,817,552 3,560,951
1st Source Monogram Long/Short Fund 518,947 -
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.
9
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
7. 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.
10
1st Source Corporation Employees' Profit Sharing Plan and Trust
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2004
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 1,334,974 shares $ 18,338,044 $ 34,319,512
-----------------------------
18,338,044 34,319,512
Mutual Funds:
American Century Benham Equity Fund 178,713 units 1,709,614 1,699,564
Morgan Stanley Institutional
International Equity Fund A 324,800 units 5,913,597 6,817,552
* 1st Source Monogram Long/Short Fund 48,095 units 512,578 518,947
* 1st Source Monogram Income Fund 1,297,232 units 13,101,956 13,024,204
* 1st Source Monogram Income Equity Fund 852,331 units 9,341,215 11,415,005
* 1st Source Monogram Diversified Equity Fund 1,141,295 units 8,963,323 8,399,933
* 1st Source Monogram Special Equity Fund 611,789 units 5,874,527 5,304,207
-----------------------------
45,416,810 47,179,412
Common Trust Funds:
* 1st Source Bank Employee Benefit Guaranteed
Income Fund 152,267 units 3,141,290 3,799,312
-----------------------------
3,141,290 3,799,312
* Loans to Participants $835,884 principal amount,
interest rates ranging
6.00% - 11.75%,
maturities through 2017 - 835,884
-----------------------------
- 835,884
-----------------------------
$ 66,896,144 $ 86,134,120
=============================
* Indicates party-in-interest to the Plan.
11