SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended June 30, 2001
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission file number 0-24040
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PENN FEDERAL SAVINGS BANK 401(k) PLAN
PennFed Financial Services, Inc.
622 Eagle Rock Avenue
West Orange, New Jersey 07052-2989
PENN FEDERAL SAVINGS BANK 401(k) PLAN
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF JUNE 30, 2001 AND
2000 AND FOR THE YEAR ENDED JUNE 30, 2001:
Statements of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULE:
Form 5500, Schedule H, Part IV, Schedule of Assets Held for Investment 8
Purposes at End of Year as of June 30, 2001
Supplemental Schedules not included herein are omitted due to the absence of
conditions under which they are required.
INDEPENDENT AUDITORS' REPORT
Penn Federal Savings Bank
401(k) Plan Trustees
West Orange, New Jersey
We have audited the accompanying statements of net assets available for benefits
of Penn Federal Savings Bank 401(k) Plan (the "Plan") as of June 30, 2001 and
2000, and the related statement of changes in net assets available for benefits
for the year ended June 30, 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 of America. 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of June 30, 2001
and 2000, and the changes in net assets available for benefits for the year
ended June 30, 2001 in conformity with accounting principles generally accepted
in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets Held
for Investment Purposes is presented for the purpose of additional analysis and
is not a required part of the basic 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 schedule is the responsibility of Plan management. Such schedule has
been subjected to the auditing procedures applied in our audit of the basic 2001
financial statements and, in our opinion, is fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
December 18, 2001
PENN FEDERAL SAVINGS BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 30, 2001 AND 2000
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2001 2000
ASSETS:
Investments, at fair value $4,836,442 $4,445,614
Participant loans receivable 58,525 68,266
Contributions receivable:
Employer contribution 111,040 103,572
Participant contributions 58,173 53,172
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Total contributions receivable 169,213 156,744
Other accrued income 208 75
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NET ASSETS AVAILABLE FOR BENEFITS $5,064,388 $4,670,699
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The accompanying notes are an integral part of these financial statements
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PENN FEDERAL SAVINGS BANK 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEARS ENDED JUNE 30,
2001
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NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS:
Additions to fund:
Employer's contributions $ 108,296
Participants' contributions 492,779
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Total contributions 601,075
Interest income 5,474
Investment income 491,259
Net depreciation in fair value of investments (538,151)
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Total additions 559,657
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Deductions from fund:
Payments to participants (165,968)
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Total deductions (165,968)
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NET INCREASE 393,689
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 4,670,699
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NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $ 5,064,388
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The accompanying notes are an integral part of these financial statements.
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PENN FEDERAL SAVINGS BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
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A. PLAN DESCRIPTION
The following description of the Penn Federal Savings Bank 401(k) Plan (the
"Plan") provides only general information. Participants should refer to the
Plan document for a more complete description of the Plan's provisions.
1. Plan Agreement - The Plan was established January 1, 1990 as a defined
contribution plan. Employees become eligible to participate in the Plan on
January 1, April 1, July 1, or October 1, immediately after obtaining age
twenty and one-half and completing three months of service, working 1,000
hours at Penn Federal Savings Bank (the "Bank").
2. Contributions
(a) Salary Deferral Contributions - An eligible employee may elect to have
a percentage of compensation contributed to this Plan on a pre-tax salary
reduction basis. A participant may elect to defer between 1% and 15% of
their compensation under a Salary Reduction Agreement to the Plan.
Additionally, participants may contribute an amount not to exceed 10% of
compensation on an after tax basis and may allocate their contributions to
eight different investment funds and to the common stock of PennFed
Financial Services, Inc. In no event can the total amount deferred exceed
$10,500 (adjusted annually).
(b) Matching Employer Contributions - Pursuant to an amendment approved by
the Bank's Board of Directors, the employer matching contribution is a
discretionary matching contribution that varies between 25% and 100% of the
participant's contribution (subject to certain limitations) depending on
the Bank's financial performance.
(c) Vesting - Participants are always vested with respect to their
contributions plus actual earnings thereon. Vesting with respect to the
Bank's contributions is 20% per year of service and 100% vesting after 5
years.
Effective October 1, 1991, a resolution of the Board of Directors was passed
allowing nondiscriminatory participant loans from the Plan. Loans are made for
hardship situations only. Each loan must be adequately secured and the loan
repayment must be made before any distribution of retirement benefits.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The financial statements of the Plan are presented
on the accrual basis of accounting.
Investment Valuation and Income Recognition - Investments in mutual funds
consisting of the Basic Value Fund, Capital Fund, CMA Money Fund, Corporate
Intermediate Bond Fund, Global Allocation Fund, Growth Fund for Investment
and Retirement and Ready Asset Trust Fund were managed by Merrill Lynch.
Investments in mutual funds consisting of the MFS Emerging Growth Fund and
Massachusetts Investors Trust Fund were managed by Massachusetts Financial
Services Company ("MFS"). Investments in mutual funds and investments in
PennFed Financial Services, Inc. common stock are recorded at market value
as determined by quoted market prices.
4
Purchases and sales of securities are recorded as of the settlement date.
There were no material unsettled trades at June 30, 2001 or 2000. Interest
income is recorded on the accrual basis. Participant loans receivable are
valued at cost which approximates fair value.
Participant Accounts - Under the trusteeship of Merrill Lynch Trust Company
participants may designate their contributions to be invested in any of the
following eight funds and common stock:
1. Basic Value Fund - The investment objective of the Fund is to seek
capital appreciation and, secondarily, income by investing primarily in
equity securities.
2. Capital Fund - The investment objective of the Fund is to maximize total
investment return by shifting emphasis among equity, debt and convertible
securities.
3. Corporate Intermediate Bond Fund - The investment objective of the Fund
is to seek current income. The Fund anticipates that under normal
circumstances, the majority of its assets will be invested in fixed-income
securities, including convertible and nonconvertible debt securities and
preferred stock.
4. Global Allocation Fund - The investment objective of the Fund is to seek
a high total investment return utilizing United States and foreign equity,
debt and money market securities; the combination of which will vary from
time to time both with respect to types of securities and markets in
response to changing market and economic trends.
5. Growth Fund for Investment and Retirement - The investment objectives of
the Fund are to seek growth of capital and, secondarily, income by
investing in a diversified portfolio of equity securities.
6. Ready Assets Trust Fund - The investment objectives of the Fund are to
seek preservation of capital, liquidity and current income by investing in
a diversified portfolio of short-term money market securities.
7. MFS Emerging Growth Fund - The investment objective of the Fund is to
seek long-term growth of capital by investing primarily in common stock.
8. Massachusetts Investors Trust Fund -The investment objective of the Fund
is to seek current income and long-term growth of capital and income by
investing primarily in common stock and convertibles.
9. PennFed Financial Services, Inc. Common Stock - Allows the participants
in the Plan to direct the investment of all or a portion of the assets in
their Plan accounts to the common stock of PennFed Financial Services, Inc.
(the holding company for Penn Federal Savings Bank).
Benefit Payments - Participants or their designated beneficiary, may elect
to receive benefit distributions in either one lump-sum payment; or equal
monthly, quarterly, or semi-annual installments, equal to the total value
of their separate accounts upon termination of employment, disability or
death. If the election is in installments, the account will either be
segregated and separately invested by the trustees, or invested in a
nontransferable annuity policy.
During employment and in the event of financial hardship, participants may
request payments of their account value; however, this distribution cannot
exceed the amount required to relieve the hardship. Such payment is subject
to approval by the Plan administrator.
5
Benefits Payable - Net assets available for benefits included benefits of
$564,146 and $440,352 due to participants who have withdrawn from
participation in the Plan, but were not yet paid as of June 30, 2001 and
2000, respectively.
Administrative Expenses - The Bank has elected to pay administrative
expenses on behalf of the Plan.
Forfeitures - Forfeitures (the portions of terminated participants'
accounts in which they did not have a vested interest) are used to reduce
future Bank contributions.
C. INVESTMENTS
The Plan's investments are held in a trust fund. The following table
presents investments. Investments that represent 5 % or more of the Plan's
net assets are separately identified.
June 30
2001 2000
Investments at Fair Value as Determined
by Quoted Market Price:
Growth Fund for Investment and Retirement $ 787,038 $1,144,551
Global Allocation Fund 970,140 789,836
Basic Value Fund 1,096,539 921,025
Capital Fund 589,771 543,548
Corporate Intermediate Bond Fund 381,062 303,695
Ready Asset Trust Fund 250,821 279,718
PennFed Financial Services, Inc. Stock 537,553 290,092
Other Mutual Funds 223,518 173,149
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Total investments $4,836,442 $4,445,614
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During the year ended June 30, 2001, the Plan's investments (including
investments bought, sold, and held during the year) depreciated in value by
$538,151 as follows:
Investments at Fair Value as Determined by
Quoted Market Price:
Mutual funds $(740,928)
Common stock 202,777
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Net change in fair value $(538,151)
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D. PLAN TERMINATION
Although it has not expressed any intention to do so, the Bank has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. If the Plan is
terminated, all participants automatically become 100% vested in their
accounts.
E. INVESTMENT INCOME
The Plan is valued at least quarterly and participants' accounts are
credited with a proportional share of investment income. Additionally,
investments are priced daily.
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F. TAX STATUS
The sponsor adopted a non-standardized prototype plan which received an
Internal Revenue Service opinion letter dated June 29, 1993 and the
Internal Revenue Service has determined and informed the Company by letter
dated December 7, 1995 that the Plan, as adopted, and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (the "Code"). The Plan has since been amended, however, the Plan
Administrator believes that the Plan is currently being operated in
compliance with the applicable requirements of the Internal Revenue Code.
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PENN FEDERAL SAVINGS BANK 401(k) PLAN
FORM 5500, SCHEDULE H, PART IV
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT END OF YEAR
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Number Current
Description of Units Value
Investments managed by Merrill Lynch Trust Company:
Mutual Funds and Equity:
MFS Emerging Growth Fund 3,836.856 $ 148,486
MFS Massachusetts Investors Trust Fund 4,215.296 75,032
Merrill Lynch Growth Fund for Investment and Retirement 45,388.556 787,038
Merrill Lynch Global Allocation Fund 71,281.406 970,140
Merrill Lynch Basic Value Fund 32,605.967 1,096,539
Merrill Lynch Capital Fund 20,053.401 589,771
Merrill Lynch Corporate Intermediate Bond Fund 34,206.663 381,062
Merrill Lynch Ready Asset Trust Fund 250,821.380 250,821
PennFed Financial Services, Inc. Stock 23,270.678 537,553
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4,836,442
Personal loans with interest rates of
9.75% to 11.50%, with due dates ranging from
2001 to 2026 58,525
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$ 4,894,967
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EXHIBIT INDEX
Exhibit
Number
23 Consent of Deloitte & Touche LLP