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, 2002
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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____________
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, 2002 AND
2001 AND FOR THE YEAR ENDED JUNE 30, 2002:
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:
Schedule H, Part IV,line 4i -Schedule of Assets Held at End of Year 8
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, 2002 and
2001, and the related statement of changes in net assets available for benefits
for the year ended June 30, 2002. 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, 2002
and 2001, and the changes in net assets available for benefits for the year
ended June 30, 2002 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
at End of Year 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 the Plan's management. Such schedule has been
subjected to the auditing procedures applied in our audit of the basic 2002
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, 2002
PENN FEDERAL SAVINGS BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 30, 2002 AND 2001
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2002 2001
ASSETS:
Investments, at fair value $4,888,700 $4,836,442
Participant loans receivable 18,650 58,525
Contributions receivable:
Employer contribution 135,189 111,040
Participant contributions -- 58,173
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Total contributions receivable 135,189 169,213
Other accrued income -- 208
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NET ASSETS AVAILABLE FOR BENEFITS $5,042,539 $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
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED JUNE 30, 2002
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NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS:
Additions to fund:
Employer's contributions $ 136,150
Participants' contributions 601,890
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Total contributions 738,040
Interest income 3,595
Investment income 224,686
Net depreciation in fair value of investments (582,814)
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Total additions 383,507
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Deductions from fund:
Payments to participants 405,356
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Total deductions 405,356
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NET DECREASE (21,849)
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 5,064,388
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NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $ 5,042,539
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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 one and completing three months of service
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
$11,000 (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, Fundamental Growth Fund and
Ready Assets Trust Fund were managed by Merrill Lynch Investment Managers
Limited. 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.
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Purchases and sales of securities are recorded as of the settlement date.
There were no material unsettled trades at June 30, 2002 or 2001. Interest
income is recorded on the accrual basis. Participant loans receivable are
valued at cost, which approximates fair value.
Participant Accounts - Prior to December 1, 2001, plan assets were under
the trusteeship of Merrill Lynch Trust Company. Beginning December 1, 2001,
plan assets are under the trusteeship of Frontier Trust Company, FSB.
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. Fundamental Growth Fund - The investment objective of the Fund is to
seek long term growth of capital by investing in a 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).
Investments in the CMA Money Fund represent contributions by employees or
the employer that have been paid into the fund, but not yet allocated based
on a participant's designated investment allocation.
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.
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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.
Benefits Payable - Net assets available for benefits included benefits of
$709,523 and $564,146 due to participants who have withdrawn from
participation in the Plan, but were not yet paid as of June 30, 2002 and
2001, 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
2002 2001
Investments at Fair Value as Determined
by Quoted Market Price:
Fundamental Growth Fund $ 564,471 $ 787,038
Global Allocation Fund 991,841 970,140
Basic Value Fund 990,338 1,096,539
Capital Fund 578,004 589,771
Corporate Intermediate Bond Fund 418,842 381,062
Ready Assets Trust Fund 324,631 250,821
PennFed Financial Services, Inc. Stock 754,626 537,553
Other Mutual Funds 265,947 223,518
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Total investments $4,888,700 $4,836,442
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During the year ended June 30, 2002, the Plan's investments (including
investments bought, sold, and held during the year) depreciated in value by
$582,814 as follows:
Investments at Fair Value as Determined by
Quoted Market Price:
Mutual funds $(709,172)
Common stock 126,358
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Net change in fair value $(582,814)
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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 August 7, 2001. The plan
administrator believes that the Plan is currently designed and is being
operated in accordance with the applicable requirements of the Internal
Revenue Code.
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PENN FEDERAL SAVINGS BANK 401(k) PLAN
JUNE 30, 2002
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS AT END OF YEAR
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Number **Current
Description of Units Value
Mutual Funds and Equity:
MFS Emerging Growth Fund 5,678.288 $ 141,787
MFS Massachusetts Investors Trust Fund 5,337.651 77,289
Merrill Lynch Fundamental Growth Fund 38,399.401 564,471
Merrill Lynch Global Allocation Fund 79,220.511 991,841
Merrill Lynch Basic Value Fund 36,665.591 990,338
Merrill Lynch Capital Fund 22,845.999 578,004
Merrill Lynch Corporate Intermediate Bond Fund 36,612.023 418,842
Merrill Lynch Ready Asset Trust Fund 324,631.380 324,631
Merrill Lynch CMA Money Fund 46,871.110 46,871
*PennFed Financial Services, Inc. Stock 27,047.541 754,626
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Total 4,888,700
Personal loans with interest rates of
8.50% to 11.01%, with due dates ranging from
2003 to 2007 18,650
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Total $4,907,350
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* Represents party-in-interest
** Cost information is not required for participant-directed investments and
is, therefore, not included.
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EXHIBIT INDEX
Exhibit
Number
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23 Consent of Deloitte & Touche LLP