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, 2001
OR
[ ] 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
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
REQUIRED INFORMATION
FINANCIAL STATEMENTS:
A list of the required financial statements filed as part of this Form
11-K is set forth on page F-1. The consent of Ernst & Young LLP to the
incorporation by reference of these financial statements into 1st Source
Corporation's Form S-8 Registration Statement relating to the Plan (Reg. No.
33-8840) is set forth hereto as Exhibit 23.1.
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
By the Plan Administrator:
1ST SOURCE CORPORATION
Date: June 28, 2002 /s/ Dan L. Craft
----------------------------------------------
Dan L. Craft, Senior Vice President
Human Resources Division
1st Source Corporation
Employees' Profit Sharing Plan and Trust
As of December 31, 2001 and 2000,
and for the year ended December 31, 2001
Contents
Report of Independent Accountants ...........................................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
Schedules
Schedule of Assets Held for Investment Purposes at End of Year..............10
Schedule of Reportable Transactions.........................................11
Consent of Ernst & Young LLP......................................Exhibit 23.1
F-1
Report of Independent Accountants
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, 2001 and 2000, and the related statement of changes in net assets
available for benefits for the year ended December 31, 2001. 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, 2001 and 2000, and the changes in its net assets available for
benefits for the year ended December 31, 2001, 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 schedules
of assets held at end of year as of December 31, 2001, and reportable
transactions for the year then ended, are presented for purposes of additional
analysis and are not a required part of the basic financial statements but are
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. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
s/ Ernst & Young LLP
Columbus, Ohio
May 24, 2002
-1-
1st Source Corporation Employees' Profit Sharing Plan and Trust
Statements of Net Assets Available for Benefits
December 31
2001 2000
-------------------------------------
Assets
Cash and cash equivalents $ 160,558 $ 233,846
Investments at fair value:
Mutual funds 27,283,341 25,798,206
1st Source Corporation common stock 25,879,509 21,278,794
1st Source Bank common trust fund 1,287,908 1,067,206
Participant notes receivable 589,019 585,461
------------------------------------
Total investments 55,039,777 48,729,667
Employer contributions receivable 1,875,611 1,716,807
Accrued investment income 49,506 17,099
------------------------------------
Net assets available for benefits $ 57,125,452 $ 50,697,419
=====================================
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, 2001
Additions
Investment income:
Interest $ 76,573
Dividends 1,649,204
Net realized and unrealized appreciation
in fair value of investments: 2,513,725
-----------------
4,239,502
Contributions:
Employer 1,687,620
Employees 2,973,587
-----------------
4,661,207
-----------------
Total additions 8,900,709
Deductions
Benefits paid to participants 2,472,676
-----------------
Total deductions 2,472,676
-----------------
Net increase 6,428,033
Net assets available for benefits:
Beginning of year 50,697,419
-----------------
End of year $ 57,125,452
=================
See accompanying notes.
-3-
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements
December 31, 2001
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
Participants are permitted to designate up to 15% of their annual pre-tax
compensation as a salary reduction contribution 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 and fifty percent (50%) of any additional
contributions up to six percent (6%) of compensation. Participants direct the
investment of their contributions into various investment options offered by the
Plan. The Plan currently offers five 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, 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. The discretionary match for 2001 was 1% of consolidated net profits of
1st Source Corporation.
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 and the discretionary profit sharing contribution is
based on years of credited service. A participant is one hundred percent (100%)
vested after seven years of credited service or upon reaching age 55.
-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, 2001 and 2000,
$2,478,874 and $1,258,762, 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 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 and the Summary Plan Description
in the Employee Handbook 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 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 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 2001, the Plan's investments (including investments purchased, sold, as
well as held during the year) appreciated in value by $2,513,725, including net
realized losses of $423,468 as follows:
2001
-------------------------
Net Appreciation
(Depreciation) in Fair
Value During the Year
-------------------------
1st Source Corporation common stock $ 3,825,927
Mutual funds (1,379,488)
1st Source Bank common trust funds 67,286
-------------------------
$ 2,513,725
=========================
The fair value of individual investments that represent 5% or more of the fair
value of the Plan's net assets are as follows:
2001 2000
-------------------- -------------------
1st Source Corporation common stock: $25,879,509 $21,278,794
1st Source Monogram Income Fund: 8,313,740 7,377,721
1st Source Monogram Diversified Equity Fund: 5,228,956 6,716,899
1st Source Monogram Income Equity Fund: 5,584,954 5,718,625
1st Source Monogram Special Equity Fund: 3,951,509 2,343,673
Morgan Stanley Institutional International Equity Fund: 3,211,515 2,915,217
-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
2001 2000
--------------------- -------------------
Net assets:
Cash & Cash Equivalents $ 152,835 $ 27,333
1st Source Corporation Common Stock 21,047,718 17,051,734
1st Source Corporation Mutual Funds 7,875,913 7,911,325
1st Source Bank Employee Benefit Guaranteed
Income Fund 494,830 467,561
--------------------- -------------------
Total net assets: $ 29,571,296 $ 25,457,953
=========================================
Year ended
December 31, 2001
-------------------
Changes in net assets:
Contributions $ 1,716,229
Investment income 692,574
Net realized/unrealized appreciation 2,600,831
Benefits paid to participants (896,799)
Transfers to participant directed accounts 508
-------------------
Total changes in net assets: $ 4,113,343
===================
5. Transactions with Parties-In-Interest
The Plan held the following party-in-interest investments at fair value at
December 31:
2001 2000
--------------------- -------------------
1st Source Corporation Common Stock $ 25,879,509 $ 21,278,794
1st Source Monogram Income Fund 8,313,740 7,377,721
1st Source Monogram Income Equity Fund 5,584,954 5,718,625
1st Source Monogram Diversified Equity Fund 5,228,956 6,716,899
1st Source Monogram Special Equity Fund 3,951,509 2,343,673
1st Source Bank Employee Benefit Guaranteed
Income Fund 1,287,908 1,067,206
All expenses incurred in administration of the Plan are paid by 1st Source
Corporation.
-8-
1st Source Corporation Employees' Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
6. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated September 6, 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. However, subsequent to the issuance of the favorable
determination letter, the Plan was amended. Once qualified, the Plan, as
amended, is required to operate in conformity with the Code to maintain its
qualification. The Plan Administrator believes the Plan, as amended,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
Schedule H, Line 4i - Schedule of Assets
Held for Investment Purposes at End of Year
December 31, 2001
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 1,231,185 shares $ 13,506,077 $ 25,879,509
---------------------------------
13,506,077 25,879,509
Mututal Funds:
American Century Benham Equity Fund 76,853 units 723,737 733,175
Federated Money Market Fund 259,492 units 259,492 259,492
Morgan Stanley Institutional International Equity Fund 206,927 units 3,827,462 3,211,515
* 1st Source Monogram Income Fund 826,415 units 8,289,358 8,313,740
* 1st Source Monogram Income Equity Fund 507,723 units 5,484,338 5,584,954
* 1st Source Monogram Diversified Equity Fund 711,423 units 6,985,087 5,228,956
* 1st Source Monogram Special Equity Fund 362,191 units 3,747,734 3,951,509
---------------------------------
29,317,208 27,283,341
Common Trust Funds:
* 1st Source Bank Employee Benefit Guaranteed
Income Fund 57,785 units 959,306 1,287,908
---------------------------------
959,306 1,287,908
Loans to Participants $589,019 principal amount,
interest rates ranging 7.00% - 11.75%,
maturities through 2016 - 589,019
---------------------------------
$ 43,782,591 $ 55,039,777
=================================
* Indicates party-in-interest to the Plan.
-10-
1st Source Corporation Employees' Profit Sharing Plan and Trust
Schedule H, Line 4j - Schedule of Reportable Transactions
Year ended December 31, 2001
EIN: 35-1068133
Plan Number: 003
Purchases Sales
------------------------------- -------------------------------
Identity of Number of Dollar Value Number of Dollar Value Net Gain
Party Involved Description of Asset Transactions of Purchase Transactions of Sales or (Loss)
------------------------------------------------------------------------------------------------------------------------------------
There were no category (i), (ii), (iii),or (iv) reportable transactions during
2001.
-11-