Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
1st Source carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, at December 31, 2021, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by 1st Source in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and are designed to ensure that information required to be disclosed in those reports is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.
In addition, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the fourth fiscal quarter of 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of 1st Source Corporation (“1st Source”) is responsible for establishing and maintaining adequate internal control over financial reporting. 1st Source’s internal control over financial reporting includes policies and procedures pertaining to 1st Source’s ability to record, process, and report reliable information. Actions are taken to correct any deficiencies as they are identified through internal and external audits, regular examinations by bank regulatory agencies, 1st Source’s formal risk management process, and other means. 1st Source’s internal control system is designed to provide reasonable assurance to 1st Source’s management and Board of Directors regarding the preparation and fair presentation of 1st Source’s published financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.
1st Source’s management assessed the effectiveness of internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013 framework). Based on management’s assessment, 1st Source believes that, as of December 31, 2021, 1st Source’s internal control over financial reporting is effective based on those criteria.
BKD LLP, independent registered public accounting firm, has issued an attestation report on management’s assessment of 1st Source’s internal control over financial reporting. This report appears on page 43 .
By /s/ CHRISTOPHER J. MURPHY III
Christopher J. Murphy III, Chief Executive Officer
By /s/ BRETT A. BAUER
Brett A. Bauer, Treasurer and Chief Financial Officer
South Bend, Indiana
Item 9B. Other Information.
None
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
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Part III
Item 10. Directors, Executive Officers and Corporate Governance.
The information under the caption “Proposal Number 1: Election of Directors,” “Board Committees and Other Corporate Governance Matters,” and “Delinquent Section 16(a) Reports” of the 2022 Proxy Statement is incorporated herein by reference.
Item 11. Executive Compensation.
The information under the caption “Compensation Discussion & Analysis” of the 2022 Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information under the caption “Voting Securities and Principal Holders Thereof” and “Proposal Number 1: Election of Directors” of the 2022 Proxy Statement is incorporated herein by reference.
The following table shows Equity Compensation Plan Information as of December 31, 2021.
(A) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted-average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans [excluding securities reflected in column (A)]
Equity compensation plans approved by shareholders
2011 Stock Option Plan — $ — 250,000
1997 Employee Stock Purchase Plan 12,083 39.16 110,714
1982 Executive Incentive Plan — — 58,693 (1)(2)
1982 Restricted Stock Award Plan — — 153,417 (1)
Strategic Deployment Incentive Plan — — 98,645 (1)(2)
Total plans approved by shareholders 12,083 $ — 671,469
Equity compensation plans not approved by shareholders
Director Retainer Stock Plan
— — 101,911
Total equity compensation plans 12,083 $ — 773,380
(1) Amount is to be awarded by grants administered by the Executive Compensation and Human Resources Committee of the 1st Source Corporation Board of Directors.
(2) Amount includes market value stock only. Book value shares used for annual awards may only be sold to 1st Source.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information under the caption “Proposal Number 1: Election of Directors”, “Board Committees and Other Corporate Governance Matters, “ and “Transactions with Related Persons” of the 2022 Proxy Statement is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
The information under the caption “Relationship with Independent Registered Public Accounting Firm” of the 2022 Proxy Statement is incorporated herein by reference.
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Part IV
Item 15. Exhibits and Financial Statement Schedules.
(a) Financial Statements and Schedules:
The following Financial Statements and Supplementary Data are filed as part of this annual report:
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Financial Condition — December 31, 2021 and 2020
Consolidated Statements of Income — Years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Comprehensive Income — Years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Shareholders’ Equity — Years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Cash Flows — Years ended December 31, 2021, 2020, and 2019
Notes to Consolidated Financial Statements — December 31, 2021, 2020, and 2019
Financial statement schedules required by Article 9 of Regulation S-X are not required under the related instructions, or are inapplicable and, therefore, have been omitted.
(b) Exhibits (numbered in accordance with Item 601 of Regulation S-K):
3(a) Articles of Incorporation of Registrant, amended April 30, 1996, filed as exhibit to Form 10-K, dated December 31, 2017, and incorporated herein by reference.
3(b) By-Laws of Registrant, as amended March 20, 2020, filed as an exhibit to Form 10-Q, dated March 31, 2020, and incorporated herein by reference.
3(c) Certificate of Designations for Series A Preferred Stock, dated January 23, 2009, filed as exhibit to Form 8-K, dated January 23, 2009, and incorporated herein by reference.
4(a) Form of Common Stock Certificates of Registrant, filed as exhibit to Registration Statement 2-40481 and incorporated herein by reference.
4(b) 1st Source agrees to furnish to the Commission, upon request, a copy of each instrument defining the rights of holders of Senior and Subordinated debt of 1st Source.
10(a)(1) Employment Agreement of Christopher J. Murphy III, dated January 1, 2008, filed as exhibit to Form 8-K, dated March 17, 2008 , amended February 6, 2014, filed as exhibit to Form 8-K, dated March 12, 2014 , and incorporated herein by reference.
10(a)(2) Employment Agreement of Andrea G. Short dated January 1, 2013, filed as exhibit to Form 10-K, dated December 31, 2012 , amended February 6, 2014, filed as exhibit to Form 8-K, dated March 12, 2014 , and incorporated herein by reference.
10(a)(3) Employment Agreement of John B. Griffith, dated January 1, 2008, filed as exhibit to Form 8-K, dated March 17, 2008 , amended February 6, 2014, filed as exhibit to Form 8-K, dated March 12, 2014 , and incorporated herein by reference.
10(a)(4) Employment Agreement of Jeffrey L. Buhr, dated May 23, 2017, filed as an exhibit to Form 8-K, dated May 23, 2017, and incorporated herein by reference.
10(a)(5) Employment Agreement of Brett A. Bauer, dated August 1, 2021, filed as an exhibit to Form 8-K, dated August 3 , 2021, and incorporated herein by reference.
10(b) 1st Source Corporation Employee Stock Purchase Plan dated April 17, 1997, filed as exhibit to Form 10-K, dated December 31, 2017, and incorporated herein by reference.
10(c) 1st Source Corporation 1982 Executive Incentive Plan, amended November 9, 2016, filed as an exhibit to Form 10-K, dated December 31, 2016, and incorporated herein by reference.
10(d) 1st Source Corporation 1982 Restricted Stock Award Plan, amended November 9, 2016, filed as Exhibit 4.3 to Registration Statement on Form S-8 No. 333-215910, filed February 6, 2017, and incorporated herein by reference.
10(e) 1st Source Corporation Strategic Deployment Incentive Plan, amended February 26, 2016, filed as exhibit to registrant’s 2016 definitive proxy statement, filed March 15, 2016, and incorporated herein by reference.
10(f) 1st Source Corporation 2011 Stock Option Plan, amended November 9, 2016, filed as exhibit to Form 10-K, dated December 31, 2016, and incorporated herein by reference.
10(g) 1st Source Corporation Director Retainer Stock Plan, amended August 3, 2018, filed as exhibit to Form 10-Q, dated September 30, 2018, and incorporated herein by reference.
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21 Subsidiaries of Registrant (unless otherwise indicated, each subsidiary does business under its own name):
Name Jurisdiction
1st Source Bank Indiana
SFG Aircraft, Inc. *
(formerly known as SFG Equipment Leasing, Inc.) Indiana
1st Source Insurance, Inc. * Indiana
1st Source Specialty Finance, Inc. * Indiana
1st Source Capital Corporation * Indiana
Trustcorp Mortgage Company (Inactive) Indiana
1st Source Master Trust Delaware
Michigan Transportation Finance Corporation * Michigan
1st Source Intermediate Holding, LLC Delaware
1st Source Funding, LLC (Inactive) Delaware
SFG Commercial Aircraft Leasing, Inc. * Indiana
SFG Equipment Leasing Corporation I* Indiana
1st Source Solar 1, LLC* Delaware
1st Source Solar 2, LLC Delaware
1st Source Solar 3, LLC Delaware
1st Source Solar 4, LLC Delaware
1st Source Solar 5, LLC Delaware
1st Source Solar 6, LLC Delaware
1st Source Solar 7, LLC Delaware
*Wholly-owned subsidiaries of 1st Source Bank
23
Consent of BKD, LLP, Independent Registered Public Accounting Firm.
31.1
Certification of Christopher J. Murphy III, Chief Executive Officer (Rule 13a-14(a)).
31.2
Certification of Brett A. Bauer, Chief Financial Officer (Rule 13a-14(a)).
32.1
Certification of Christopher J. Murphy III, Chief Executive Officer.
32.2
Certification of Brett A. Bauer, Chief Financial Officer.
101.INS XBRL Instance Document — The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Labels Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)
(c) Financial Statement Schedules — None.
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Item 16. Form 10-K Summary.
Not provided.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
1st SOURCE CORPORATION
By /s/ CHRISTOPHER J. MURPHY III
Christopher J. Murphy III, Chairman of the Board
and Chief Executive Officer
Date: February 17, 2022
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ CHRISTOPHER J. MURPHY III Chairman of the Board, February 17, 2022
Christopher J. Murphy III President and Chief Executive Officer
/s/ BRETT A. BAUER Treasurer, Chief Financial Officer February 17, 2022
Brett A. Bauer and Principal Accounting Officer
/s/ JOHN B. GRIFFITH Secretary February 17, 2022
John B. Griffith and General Counsel
/s/ JOHN F. AFFLECK-GRAVES Director February 17, 2022
John F. Affleck-Graves
/s/ MELODY BIRMINGHAM Director February 17, 2022
Melody Birmingham
/s/ DANIEL B. FITZPATRICK Director February 17, 2022
Daniel B. Fitzpatrick
/s/ TRACY D. GRAHAM Director February 17, 2022
Tracy D. Graham
/s/ VINOD M. KHILNANI Director February 17, 2022
Vinod M. Khilnani
/s/ CHRISTOPHER J. MURPHY IV Director February 17, 2022
Christopher J. Murphy IV
/s/ TIMOTHY K. OZARK Director February 17, 2022
Timothy K. Ozark
/s/ TODD F. SCHURZ Director February 17, 2022
Todd F. Schurz
/s/ MARK D. SCHWABERO Director February 17, 2022
Mark D. Schwabero
/s/ RONDA SHREWSBURY Director February 17, 2022
Ronda Shrewsbury
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.