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, 2004
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-24040
A. Full title of the plan and the address of
the plan, if different from that of the
issuer named below:
Penn Federal Savings Bank 401(k) Plan
B. Name of issuer of the securities held
pursuant to the plan and the address of its
principal executive office:
PennFed Financial Services, Inc.
622 Eagle Rock Avenue
West Orange, New Jersey 07052-2989
Financial Statements and Exhibits
---------------------------------
(a) Financial Statements for the Years Ended June 30, 2004 and 2003,
Supplemental Schedule as of June 30, 2004, and Report of Independent Registered
Public Accounting Firm.
The financial statements required to be filed hereunder appear commencing at
page 2 hereof.
(b) Exhibits
(23) Consent of Independent Registered Public Accounting Firm (following
financial statements).
PENN FEDERAL SAVINGS BANK 401(k) PLAN
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS AS OF JUNE 30, 2004 AND 2003 AND FOR THE YEAR ENDED JUNE
30, 2004:
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 Line 4i, Schedule of Assets (Held at Year End)
as of June 30, 2004 8
EXHIBIT 23
Consent of Independent Registered Public Accounting Firm
All other schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 have been omitted because they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2004 and
2003, and the related statement of changes in net assets available for benefits
for the year ended June 30, 2004. 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 standards of the Public Company
Accounting Oversight Board (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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of June 30, 2004
and 2003, and the changes in net assets available for benefits for the year
ended June 30, 2004 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 listed in the
table of contents 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. The supplemental schedule is the responsibility of the Plan's management.
Such supplemental schedule has been subjected to the auditing procedures applied
in our audit of the basic 2004 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.
/s/ Deloitte & Touche LLP
December 14, 2004
PENN FEDERAL SAVINGS BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 30, 2004 AND 2003
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2004 2003
ASSETS:
Investments, at fair value $6,929,745 $5,587,276
Participant loans receivable 25,884 13,263
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NET ASSETS AVAILABLE FOR BENEFITS $6,955,629 $5,600,539
========== ==========
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
YEAR ENDED JUNE 30, 2004
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ADDITIONS:
Employer's contributions $ 136,432
Participants' contributions 483,676
----------
Total contributions 620,108
Interest income 1,146
Investment income 99,519
Net appreciation in fair value of investments 791,852
----------
Total additions 1,512,625
DEDUCTIONS:
Payments to participants 157,535
----------
INCREASE IN NET ASSETS 1,355,090
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 5,600,539
----------
NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $6,955,629
==========
The accompanying notes are an integral part of these financial statements.
-3-
PENN FEDERAL SAVINGS BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2004 AND 2003, AND FOR THE YEAR ENDED JUNE 30, 2004
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1. 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").
General--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. ("Penn Fed"). In 2004, the
total amount that could be deferred was $13,000 (adjusted annually).
In addition, certain eligible participants can contribute additional
amounts as catch-up contributions, thereby increasing the total
elective deferrals to $14,000 or $16,000 for 2003 and 2004,
respectively.
(b) Matching Employer Contributions- The employer matching
contribution is equal to a percentage of a participant's contribution,
determined each year by the employer in its sole discretion.
(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 --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 and the Bank's matching contributions. 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.
-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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation--The financial statements of the Plan are prepared in
accordance with accounting principles generally accepted in the United
States of America.
Use of estimates-- The preparation of financial statements in conformity
with accounting principles generally accepted in the Unites States of
America requires Plan 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 the common stock of
PennFed Financial Services, Inc. and 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 ("ML") and held by
Frontier Trust Company. 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 Penn Fed 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, 2004 or 2003. Interest
income is recorded on the accrual basis. Participant loans receivable are
valued at cost which approximates fair value.
Administrative Expenses--The Bank has elected to pay certain administrative
expenses on behalf of the Plan.
Forfeitures-- At June 30, 2004 and 2003, forfeited nonvested accounts
totaled $11,146 and $5,579, respectively. These accounts were used to
reduce employer contributions.
-5-
3. INVESTMENTS
The Plan's investments are held in a trust fund. The values of individual
investments that represent 5% or more of the total Plan's assets at June
30, 2004 and 2003 are as follows:
2004 2003
Investments at fair value as determined by quoted market price:
ML Basic Value Fund $1,494,556 $ 999,885
ML Global Allocation Fund 1,379,616 995,887
PennFed Financial Services, Inc. Stock 830,840 782,022
ML Fundamental Growth Fund 743,585 509,284
ML Ready Asset Trust Fund 702,861 707,265
ML Capital Fund 630,880 502,030
ML Corporate Intermediate Bond Fund 560,787 586,812
MFS Emerging Growth Fund 411,091 --
During the year ended June 30, 2004, the Plan's investments (including
investments bought, sold, and held during the year) appreciated in value by
$791,852 as follows:
Investments at fair value as determined by quoted market price:
Mutual funds $665,691
Common stock 126,161
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Net appreciation in investments $791,852
========
4. RELATED PARTIES
Employees of the Bank, who may also be participants of the Plan, perform
certain administrative functions on behalf of the Plan. No such employee
receives compensation from the Plan. At June 30, 2004 and 2003, the Plan
held 25,010 and 28,181 shares, respectively, of common stock of PennFed
Financial Services, Inc., the parent of Penn Federal Savings Bank, with
cost basis of $565,263 and $573,846, respectively. During the year ended
June 30, 2004, the Plan recorded dividends of $10,052 from these shares.
5. 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. In the event of the
termination of the Plan, all participants automatically become fully vested
in their accounts, no further allocations shall be made, and no eligible
employee shall become a participant after the date of termination.
6. TAX STATUS
The sponsor adopted a non-standardized prototype plan which received an
Internal Revenue Service opinion letter dated November 27, 2001. The Plan
has been amended since receiving the opinion letter, however, the Plan
Administrator believes that the Plan is currently designed and being
operated in compliance with the applicable requirements of the IRC.
-6-
7. SUBSEQUENT EVENT
In October 2004, Penn Fed declared a 2-for-1 split in the form of a 100%
stock dividend, paid to the stockholders on October 29, 2004. The dividend
was paid from authorized but unissued shares of common stock of Penn Fed.
The par value of the stock was not affected by the split.
-7-
PENN FEDERAL SAVINGS BANK 401(k) PLAN
FORM 5500, SCHEDULE H, PART IV, Line 4i EIN NUMBER 22-1192273
SCHEDULE OF ASSETS (HELD AT END OF YEAR) PLAN NUMBER 002
AS OF JUNE 30, 2004
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Number Current
Description of Units Value
Registered Investment Companies:
Merrill Lynch Basic Value Fund 47,087.455 $1,494,556
Merrill Lynch Global Allocation Fund 89,064.964 1,379,616
Merrill Lynch Fundamental Growth Fund 44,606.153 743,585
Merrill Lynch Ready Asset Trust Fund 702,861.000 702,861
Merrill Lynch Captial Fund 23,383.260 630,880
Merrill Lynch Corporate Intermediate Bond Fund 47,605.050 560,787
MFS Emerging Growth Fund 13,795.015 411,091
MFS Massachusetts Investors Trust Fund 10,980.291 174,916
CMA Money Fund 611.940 612
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Total Registered Investment Companies 6,098,905
Common Stock:
*PennFed Financial Services, Inc. Stock 25,010.239 830,840
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Participant loans with interest rates of
6.00% to 8.75%, with due dates ranging from
2004 to 2008 25,884
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Total investments $6,955,629
==========
* Party-in-interest as defined by ERISA.
Cost information is not required for participant-directed investments and,
therefore, is not included.
-8-
EXHIBIT INDEX
Exhibit
Number
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23 Consent of Deloitte & Touche LLP