UNITED STATES
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, 2005
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, 2005 and 2004,
Supplemental Schedule as of June 30, 2005, and Reports of Independent Registered
Public Accounting Firms.
The financial statements required to be filed hereunder appear commencing at
page 3 hereof.
(b) Exhibits
(23) Consents of Independent Registered Public Accounting Firm (following
financial statements).
PENN FEDERAL SAVINGS BANK 401(k) PLAN
Table of Contents
Page
Report of Independent Registered Public Accounting Firm 1
Report of Independent Registered Public Accounting Firm 2
Statements of Net Assets Available for Benefits - June 30, 2005 and 2004 3
Statement of Changes in Net Assets Available for Benefits - Year ended June 30, 2005 4
Notes to Financial Statements 5-8
Supplemental Schedule
Schedule of Assets (Held at End of Year) - June 30, 2005 9
Exhibit Index 10
Report of Independent Registered Public Accounting Firm
Penn Federal Savings Bank
401(k) Plan Trustees:
We have audited the accompanying statement of net assets available for benefits
of the Penn Federal Savings Bank 401(k) Plan (the Plan) as of June 30, 2005, and
the related statement of changes in net assets available for benefits for the
year then ended. 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 audit.
We conducted our audit in accordance with the 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Penn Federal
Savings Bank 401(k) Plan as of June 30, 2005, and the changes in net assets
available for benefits for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audit was 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
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the 2005 basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the 2005 basic financial
statements taken as a whole.
As dicussed further in note 7 of the financial statements, the Penn Federal
Savings Bank 401(k) Plan was merged with the PennFed Financial Services, Inc.
Employee Stock Ownership Plan effective July 1, 2005.
/s/ KPMG LLP
December 21,2005
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Penn Federal Savings Bank
401(k) Plan Trustees
West Orange, New Jersey
We have audited the accompanying statement of net assets available for benefits
of the Penn Federal Savings Bank 401(k) Plan (the "Plan") as of June 30, 2004.
This financial statement is the responsibility of the Plan's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with the 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 audit provides a
reasonable basis for our opinion.
In our opinion, such financial statement presents fairly, in all material
respects, the net assets available for benefits of the Plan as of June 30, 2004
in conformity with accounting principles generally accepted in the United States
of America.
/s/ Deloitte & Touche LLP
December 14, 2004
2
PENN FEDERAL SAVINGS BANK 401(k) PLAN
Statements of Net Assets Available for Benefits
June 30, 2005 and 2004
2005 2004
----------- -----------
Assets:
Investments, at fair value $ 7,533,690 $ 6,929,745
Participant loans receivable 93,246 25,884
----------- -----------
Total investments 7,626,936 6,955,629
----------- -----------
Receivables:
Employer receivables 641,003 --
Employee receivables 43,340 --
----------- -----------
684,343 --
----------- -----------
Net assets available for benefits $ 8,311,279 $ 6,955,629
=========== ===========
See accompanying notes to financial statements.
3
PENN FEDERAL SAVINGS BANK 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended June 30, 2005
Additions:
Employer's contributions $ 641,003
Participants' contributions 550,843
-----------
Total contributions 1,191,846
Interest income 1,846
Investment income 224,756
Net appreciation in fair value of investments 158,561
-----------
Total additions 1,577,009
Deductions:
Payment to participants 221,359
-----------
Increase in net assets 1,355,650
Net assets available for benefits, beginning of year 6,955,629
-----------
Net assets available for benefits, end of year $ 8,311,279
===========
See accompanying notes to financial statements.
4
PENN FEDERAL SAVINGS BANK 401(k) PLAN
Notes to Financial Statements
June 30, 2005 and 2004
(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).
(a) General
The Plan was established January 1, 1990 as a defined contribution
plan. Employees become eligible to participate in the Plan on
January 1 or July 1, immediately after obtaining age 21 and
completing 1,000 hours of service at Penn Federal Savings Bank (the
Bank).
(b) 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. (PennFed). This contribution amount
is limited by the Internal Revenue Code (the Code) on a pretax
basis to $14,000 and $13,000 in 2005 and 2004, respectively.
In addition, certain eligible participants can make "catch-up"
contributions if the maximum amount of regular contributions
are made and the participant is age 50 or older, thereby
increasing the total elective deferrals to $18,000 or $16,000
for 2005 and 2004, respectively.
(b) Vesting - Participants are always vested with respect to their
contributions plus actual earnings thereon. Vesting with
respect to the Bank's matching contributions is 20% per year
of service and 100% vesting after 5 years.
(c) The Plan was amended July 1, 2004 to provide for a Safe Harbor
Nonelective contribution of 6% of compensation as defined in
the Plan. The amount of the contribution for the plan year
ended June 30, 2005 was $641,003. Participants are always 100%
vested in the Safe Harbor Nonelective contributions.
(c) 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.
(d) 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 the Safe Harbor Nonelective
contribution. 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.
5 (Continued)
PENN FEDERAL SAVINGS BANK 401(k) PLAN
Notes to Financial Statements
June 30, 2005 and 2004
(e) 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.
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
(a) Basis of Presentation
The financial statements of the Plan have been prepared on an
accrual basis and present the net assets available for benefits and
the changes in those net assets.
(b) Use of Estimates
In preparing plan financial statements, estimates and assumptions
have been made relating to the reporting of assets and liabilities
and changes therein, and the disclosure of contingent assets and
liabilities to prepare these financial statements in conformity with
U.S. generally accepted accounting principles.
(c) Risks and Uncertainties
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. As a result, interest
rates have a more significant impact on the Plan's performance than
do the effects of general levels of inflation. Interest rates do not
necessarily move in the same direction or in the same magnitude as
the prices of goods and services as measured by the consumer price
index. 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.
(d) 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 PennFed 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.
6 (Continued)
PENN FEDERAL SAVINGS BANK 401(k) PLAN
Notes to Financial Statements
June 30, 2005 and 2004
Purchases and sales of securities are recorded as of the settlement
date. There were no material unsettled trades at June 30, 2005 or
2004. Interest income is recorded on the accrual basis. Participant
loans receivable are valued at cost which approximates fair value.
(e) Administrative Expenses
The Bank has elected to pay certain administrative expenses on
behalf of the Plan.
(f) Forfeitures
At June 30, 2005 and 2004, forfeited nonvested accounts totaled
$5,340 and $11,146, respectively. These accounts were used to reduce
employer contributions.
(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, 2005 and 2004 are as follows:
2005 2004
------------ ------------
Investments at fair value as determined
by quoted market price:
ML Basic Value Fund $ 1,501,985 $ 1,494,556
ML Global Allocation Fund 1,625,763 1,379,616
PennFed Financial Services, Inc. Stock 925,919 830,840
ML Fundamental Growth Fund 815,587 743,585
ML Ready Asset Trust Fund 726,914 702,861
ML Capital Fund 661,177 630,880
ML Corporate Intermediate Bond Fund 616,764 560,787
MFS Emerging Growth Fund 442,241 411,091
During the year ended June 30, 2005, the Plan's investments (including
investments bought, sold, and held during the year) appreciated in value
by $158,561 as follows:
Investments at fair value as determined by quoted market price:
Mutual funds $ 140,998
Common stock 17,563
----------
Net appreciation in investments $ 158,561
==========
7 (Continued)
PENN FEDERAL SAVINGS BANK 401(k) PLAN
Notes to Financial Statements
June 30, 2005 and 2004
(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, 2005 and 2004, the Plan
held 54,853 and 50,020 shares, respectively, of common stock of PennFed
Financial Services Inc., the parent of Penn Federal Savings Bank, with
cost basis of $638,962 and $565,263, respectively. During the year ended
June 30, 2005, the Plan recorded dividend income of $11,209 from these
shares. In October 2004, PennFed declared a 2-for-1 split in the form of a
100% stock dividend, paid to the shareholders on October 29, 2004. The
dividend was paid from authorized but unissued shares of common stock of
PennFed and the par value of the stock was not affected by the split.
(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 Internal Revenue Service issued its latest opinion letter dated
January 29, 2004 to BISYS Retirement Services, the sponsor of the
prototype document, which states that the Plan and its underlying trust
qualify under the applicable provisions of the Code and, therefore, are
exempt from federal income taxes. The Company has not received a
determination letter issued directly to the Plan.
(7) Subsequent Event
Effective July 1, 2005, the Plan was merged with the PennFed Financial
Services, Inc. Employee Stock Ownership Plan.
8
PENN FEDERAL SAVINGS BANK 401(k) PLAN
Schedule of Assets (Held at End of Year)
June 30, 2005
Number of Current
Description units value
- -------------------------------------------------------------- ----------- ------------
Registered investment companies:
Merrill Lynch Basic Value Fund 48,404 $ 1,501,985
Merrill Lynch Global Allocation Fund 97,468 1,625,762
Merrill Lynch Fundamental Growth Fund 47,445 815,587
Merrill Lynch Ready Asset Trust Fund 726,914 726,914
Merrill Lynch Capital Fund 24,912 661,177
Merrill Lynch Corporate Intermediate Bond Fund 51,226 616,764
MFS Emerging Growth Fund 14,098 442,241
MFS Massachusetts Investors Trust Fund 12,620 216,682
CMA Money Fund 659 659
-----------
Total registered investment companies 6,607,771
Common stock:
* PennFed Financial Services, Inc. Stock 54,853 925,919
Participant loans with interest rates of 6.00% to 9.00% 93,246
-----------
Total investments $ 7,626,936
===========
* Party-in-interest as defined by ERISA.
Cost information is not required for participant-directed investments and,
therefore, is not included.
See accompanying independent registered public accounting firm's report.
9
Exhibit Index
Regulation Reference to
S-K Prior Filing
Exhibit or Exhibit
Number Document Number
- --------------------------------------------------------------------------------
23 Consents of independent registered public
accounting firm and counsel
(a) Consent of KPMG LLP 23.1
(b) Consent of Deloitte & Touche LLP 23.2
10
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Penn Federal Savings Bank 401(k) Plan
-------------------------------------
(Name of Plan)
/s/ Joseph L. LaMonica
----------------------
Joseph L. LaMonica
Trustee
Date: December 23, 2005
/s/ Jeffrey J. Carfora
----------------------
Jeffrey J. Carfora
Trustee
Date: December 23, 2005
/s/ Laura Beckmeyer
-------------------
Laura Beckmeyer
Trustee
Date: December 23, 2005