SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 11-K
_____________
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended June 30, 2003
-------------------------------------------------------
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
----------------------------------------------------------
-----------------------------
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
- --------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF JUNE 30, 2003 AND
2002 AND FOR THE YEAR ENDED JUNE 30, 2003:
Statements of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-6
SUPPLEMENTAL SCHEDULE:
Form 5500, Schedule H, Part IV, Schedule of Assets Held 7
at End of Year as of June 30, 2003
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, 2003 and
2002, and the related statement of changes in net assets available for benefits
for the year ended June 30, 2003. 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, 2003
and 2002, and the changes in net assets available for benefits for the year
ended June 30, 2003 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
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 2003 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, 2003
PENN FEDERAL SAVINGS BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 30, 2003 AND 2002
- --------------------------------------------------------------------------------
2003 2002
ASSETS:
Investments, at fair value $5,587,276 $4,888,700
Participant loans receivable 13,263 18,650
Contributions receivable:
Employer contribution -- 135,189
Participant contributions -- --
---------- ----------
Total contributions receivable -- 135,189
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $5,600,539 $5,042,539
========== ==========
The accompanying notes are an integral part of
these financial statements.
- 2 -
PENN FEDERAL SAVINGS BANK 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED JUNE 30, 2003
- --------------------------------------------------------------------------------
ADDITIONS:
Employer's contributions $ 134,574
Participants' contributions 614,096
-----------
Total contributions 748,670
Interest income 1,571
Investment income 119,088
Net depreciation in fair value of investments (56,745)
-----------
Total additions 812,584
-----------
DEDUCTIONS:
Payments to participants 254,584
-----------
Total deductions 254,584
-----------
NET INCREASE 558,000
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 5,042,539
-----------
NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $ 5,600,539
===========
The accompanying notes are an integral
part of these financial statements.
- 3 -
PENN FEDERAL SAVINGS BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
I. 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. The
plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
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").
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 allocate
their contributions to eight different investment funds and to
the common stock of PennFed Financial Services, Inc. In 2003 in
no event can the total amount deferred exceed $12,000 (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.
(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.
Participant Loans -- 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. Principal and interest is paid ratably
through payroll deductions.
Participant Accounts--Individual accounts are maintained for each Plan
participant. Each participant's account is credited with the participant
contribution, the Bank's matching contributions, and allocations of
participant forfeitures. Allocations are based on participant earnings or
account balances, as defined. The benefit to which participant is entitled
is the benefit that can be provided from participant's vested account.
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.
-4-
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.
II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation--The financial statements of the Plan are prepared in
accordance with accounting principals generally accepted in the United
States of America.
Use of estimates-- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of net assets
available for benefits and changes therein. Actual results could differ
from those estimates. The Plan utilizes various investment instruments
including mutual funds. Investment securities, in general, are exposed to
various risks such as interest rate, credit, and overall market volatility.
Due to the level of risk associated with certain investment securities, it
is reasonably possible that changes in values of the investment securities
will occur in the near term and that such changes could materially affect
the amounts reported in the financial statements.
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 Asset Trust Fund were managed by Merrill Lynch. Investments in mutual
funds consisting of the MFS Emerging Growth Fund and held by Father Trust
Company 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 valued and
recorded at market value as determined by quoted market prices, which
represent the net asset value of the shares held by the Plan at the end of
the year. The Plan is valued at least quarterly and participants' accounts
are credited with a proportional share of investment income. Additionally,
investments are priced daily.
Purchases and sales of securities are recorded as of the settlement date.
There were no material unsettled trades at June 30, 2003 or 2002. Interest
income is recorded on the accrual basis. Participant loans receivable are
valued at cost which approximates fair value.
Benefits Payable--Net assets available for benefits included benefits of
$697,027 and $709,523 due to participants who have withdrawn from
participation in the Plan, but were not yet paid as of June 30, 2003 and
2002, respectively.
Administrative Expenses--The Bank has elected to pay administrative
expenses on behalf of the Plan.
Forfeitures-- At June 30, 2003 and 2002, forfeited nonvested accounts
totaled $5,579 and $4,303, respectively. These accounts were used to reduce
employer contributions. During the year ended June 30, 2003, employer
contributions were reduced by $5,579, from forfeited nonvested accounts.
III. INVESTMENTS
The Plan's investments are held in a trust fund. The following table
presents investments. All of the investments represent 5% or more of the
Plan's net assets.
-5-
June 30
2003 2002
Investments at Fair Value as Determined
by Quoted Market Price:
Basic Value Fund $ 999,885 $ 990,338
Global Allocation Fund 995,887 991,841
PennFed Financial Services, Inc. Stock 782,022 754,626
Ready Asset Trust Fund 707,265 324,631
Corporate Intermediate Bond Fund 586,812 418,842
Fundamental Growth Fund 509,284 564,471
Other Funds 504,091 265,947
Capital Fund 502,030 578,004
---------- ----------
Total investments $5,587,276 $4,888,700
========== ==========
During the year ended June 30, 2003, the Plan's investments (including
investments bought, sold, and held during the year) depreciated in value by
$56,745 as follows:
Investments at Fair Value as Determined by
Quoted Market Price:
Mutual funds $(48,059)
Common stock (8,686)
--------
Net change in fair value $(56,745)
========
IV. 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.
V. 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.
VI. TAX STATUS
The sponsor adopted a non-standardized prototype plan which received an
Internal Revenue Service opinion letter dated November 27, 2001 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 ("IRC"). 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 IRC.
******
-6-
PENN FEDERAL SAVINGS BANK 401(k) PLAN
FORM 5500, SCHEDULE H, PART IV
SCHEDULE OF ASSETS HELD EIN NUMBR 22-1192273
AT END OF YEAR JUNE 30, 2003 PLAN NUMBER 002
- --------------------------------------------------------------------------------
Number Current
Description of Units Value
Investments managed by Merrill Lynch Trust Company:
Mutual Funds and Equity:
MFS Emerging Growth Fund 9,353.841 $ 236,746
MFS Massachusetts Investors Trust Fund 7,355.075 102,750
CMA Money Fund 164,595.330 164,595
Merrill Lynch Fundamental Growth Fund 37,146.934 509,284
Merrill Lynch Global Allocation Fund 75,388.851 995,887
Merrill Lynch Basic Value Fund 38,875.786 999,885
Merrill Lynch Capital Fund 20,710.814 502,030
Merrill Lynch Corporate Intermediate Bond Fund 48,416.818 586,812
Merrill Lynch Ready Asset Trust Fund 707,264.790 707,265
PennFed Financial Services, Inc. Stock 28,180.960 782,022
----------
Total Mutual Funds and Equity 5,587,276
Participant loans with interest rates of
6.25% to 11.00%, with due dates ranging from
2003 to 2008 13,263
----------
$5,600,539
==========
-7-
EXHIBIT INDEX
Exhibit
Number
- ------
23 Consent of Deloitte & Touche LLP