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, 1997
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
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INDEPENDENT AUDITORS' REPORT 1-2
FINANCIAL STATEMENTS AS OF JUNE 30, 1997
AND 1996 AND FOR THE YEAR ENDED JUNE 30, 1997:
Statements of Net Assets Available for Benefits 3
Statement of Changes in Net Assets Available for Benefits 4
Notes to Financial Statements 5-7
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE
YEAR ENDED JUNE 30, 1997:
Schedule of Assets Held for Investment Purposes (Item 27a) 8
Schedule of Reportable Transactions - Transactions or Series of
Transactions in Excess of 5% of Current Value of Plan Assets
(Item 27d) 9
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, 1997 and
1996, and the related statement of changes in net assets available for benefits
for the year ended June 30, 1997. 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.
Except as explained in the following paragraph, we conducted our audits in
accordance with generally accepted auditing standards. 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.
As permitted by Section 2520.103-8 of the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, investment assets held by Merrill Lynch Trust Company, the
trustee of the Plan, and transactions in those assets were excluded from the
scope of our audit of the Plan's 1996 financial statements, except for comparing
the information provided by the trustee, which is summarized in Note E, with the
related information included in the financial statements.
Because of the significance of the information that we did not audit, we are
unable to, and do not, express an opinion on the Plan's financial statements as
of June 30, 1996. The form and content of the information included in the 1996
financial statements, other than that derived from the information certified by
the trustee, have been audited by us and, in our opinion, are presented in
compliance with the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974.
In our opinion, the financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of June 30, 1997,
and the changes in net assets available for benefits for the year then ended in
conformity with generally accepted accounting principles.
Our audit of the Plan's financial statements as of and for the year ended June
30, 1997, was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedules of Assets Held for
Investment Purposes and Reportable Transactions are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements, but are 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. These schedules are the responsibility
of Plan management. These schedules have been subjected to the auditing
procedures applied in our audit of the basic financial statements for the year
ended June 30, 1997, and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
/s/Deloitte & Touche
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Deloitte & Touche
April 6, 1998
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PENN FEDERAL SAVINGS BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 30, 1997 AND 1996
1997 1996
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ASSETS:
Investments, at fair value:
Investments held by Merrill Lynch Trust Company:
Growth Fund for Investment and Retirement .... $ 903,038 $ 632,798
Global Allocation Fund ....................... 580,426 439,514
Basic Value Fund ............................. 623,600 414,614
Capital Fund ................................. 459,131 352,334
Corporate Intermediate Bond Fund ............. 267,052 280,359
Ready Asset Trust Fund ....................... 257,354 276,044
CMA Money Fund ............................... 18,404 87,663
PennFed Financial Services, Inc. Stock ......... 13,652 --
Participant loans receivable ..................... 91,857 61,590
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Total investments ................... 3,214,514 2,544,916
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Receivables:
Other accrued income ........................... 56 142
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Total receivables ................... 56 142
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NET ASSETS AVAILABLE FOR BENEFITS .................. $3,214,570 $2,545,058
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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, 1997
Participant Directed
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Growth PennFed
Fund for Corporate Financial
Investment Global Basic Inter- Ready Services,
Inc.
and Allocation Value Capital mediate Asset Common
Retirement Fund Fund Fund Bond Fund Trust Fund Stock
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NET INCREASE (DECREASE) IN
NET ASSETS AVAILABLE FOR
BENEFITS:
Additions to fund:
Employer's contributions ..... $ 18,957 $ 12,575 $ 12,866 $ 12,936 $ 5,861 $ 5,589 $ 535
Participants' contributions .. 90,869 49,621 52,821 54,128 30,600 45,135 163
--------- --------- --------- --------- --------- --------- ---------
Total contributions ... 109,826 62,196 65,687 67,064 36,461 50,724 698
Interest income .............. -- -- -- -- -- -- --
Investment income ........... 53,123 42,262 27,859 34,193 16,688 13,031 --
Net appreciation
in fair value of investments 107,440 35,898 101,360 41,504 1,801 -- 125
--------- --------- --------- --------- --------- --------- ---------
Total additions ........ 270,389 140,356 194,906 142,761 54,950 63,755 823
--------- --------- --------- --------- --------- --------- ---------
Deductions from fund:
Payments to participants ..... 40,242 39,818 22,541 47,432 20,917 28,754 --
--------- --------- --------- --------- --------- --------- ---------
Total deductions ....... 40,242 39,818 22,541 47,432 20,917 28,754 --
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NET INCREASE PRIOR TO
INTER-FUND TRANSFERS ........... 230,147 100,538 172,365 95,329 34,033 35,001 823
INTER-FUND TRANSFERS ............. 40,093 40,374 36,621 11,468 (47,340) (53,691) 12,829
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NET INCREASE (DECREASE) .......... 270,240 140,912 208,986 106,797 (13,307) (18,690) 13,652
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR ... 632,798 439,514 414,614 352,334 280,359 276,044 --
--------- --------- --------- --------- --------- --------- ---------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR .......... $ 903,038 $ 580,426 $ 623,600 $ 459,131 $ 267,052 $ 257,354 $ 13,652
========= ========= ========= ========= ========= ========= =========
PENN FEDERAL SAVINGS BANK 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED JUNE 30, 1997 (continued)
Participant Other CMA Money
Loans Unallocated Fund Total
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NET INCREASE (DECREASE) IN
NET ASSETS AVAILABLE FOR
BENEFITS:
Additions to fund:
Employer's contributions ..... $ -- $ -- $ -- $ 69,319
Participants' contributions .. -- -- -- 323,337
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Total contributions ... -- -- -- 392,656
Interest income .............. 1,060 (86) -- 974
Investment income ........... -- -- 302 187,458
Net appreciation
in fair value of investments -- -- -- 288,128
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Total additions ........ 1,060 (86) 302 869,216
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Deductions from fund:
Payments to participants ..... -- -- -- 199,704
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Total deductions ....... -- -- -- 199,704
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NET INCREASE PRIOR TO
INTER-FUND TRANSFERS ........... 1,060 (86) 302 669,512
INTER-FUND TRANSFERS ............. 29,207 -- (69,561) --
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NET INCREASE (DECREASE) .......... 30,267 (86) (69,259) 669,512
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR ... 61,590 142 87,663 2,545,058
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NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR .......... $ 91,857 $ 56 18,404 3,214,570
========== ========== ========== ==========
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The accompanying notes are an integral part of these financial statements.
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 six different investment funds and to the
common stock of PennFed Financial Services, Inc. In no event
can the total amount deferred exceed $9,500 (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. Pursuant to an
amendment approved by the Bank's Board of Directors, vesting
with respect to the Bank's contributions will be 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 the Ready Asset Trust Fund 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, 1997 or 1996. 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 six 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. 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 of 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.
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Benefits Payable - Net assets available for benefits included benefits of
$276,987 and $294,653 due to participants who have withdrawn from
participation in the Plan, but were not yet paid as of June 30, 1997 and
1996, respectively.
Administrative Expenses - The Bank has elected to pay administrative
expenses on the behalf of the Plan.
Forfeitures - Forfeitures (the portions of terminated participants'
accounts in which they did not have a vested interest) will be used to
reduce future Bank contributions.
C. 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.
D. 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.
E. TRUSTEE CERTIFICATION
The Trustee, Merrill Lynch Trust Company, has certified to the Plan that
the following unaudited information is complete and accurate as it
pertains to the assets it holds and transactions it made for the Plan year
ended June 30, 1996.
1. Fair value of investments:
1996
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Investments held by Merrill Lynch Trust Co.:
Growth Fund for Investment and Retirement $ 632,798
Global Allocation Fund 439,514
Basic Value Fund 414,614
Capital Fund 352,334
Corporate Intermediate Bond Fund 280,359
Ready Asset Trust Fund 276,044
CMA Money Fund 87,663
F. TAX STATUS
The Plan is intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986 (the "Code") and is intended to be exempt from
taxation under Section 501(a) of the Code. No provision of income taxes
has been included in the Plan's financial statements. The Plan received a
favorable IRS determination letter dated December 7, 1995.
******
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PENN FEDERAL SAVINGS BANK 401(k) PLAN
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
JUNE 30, 1997
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Number Current
Description of Units Cost Value
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Investments managed by Merrill Lynch Trust Company:
Mutual Funds and Equity:
Growth Fund for Investment and Retirement 34,180.081 $ 693,707 $ 903,038
Global Allocation Fund 37,206.805 508,646 580,426
Basic Value Fund 17,375.327 463,928 623,600
Capital Fund 13,563.702 391,567 459,131
Corporate Intermediate Bond Fund 23,528.794 266,516 267,052
Ready Asset Trust Fund 257,354.000 257,354 257,354
CMA Money Fund 18,404.000 18,404 18,404
PennFed Financial Services, Inc. Stock 13,527 13,652
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501.000
2,613,649 3,122,657
Personal loans with interest rates of
8% to 10 3/4%, with due dates ranging from
1997 to 2026 91,857 91,857
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$ 2,705,506 $ 3,214,514
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PENN FEDERAL SAVINGS BANK 401(k) PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED JUNE 30, 1997
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(a) (b) (c) (d) (g) (i)
Net
Purchase Selling Gain
Identity of Party Description of Assets Price Price Cost (Loss)
- ----------------- --------------------- ----- ----- ---- ------
Merrill Lynch Growth Fund for Investment
and Retirement $ 241,645 $ - $ - $ -
Merrill Lynch Global Allocation Fund 158,238 - - -
Merrill Lynch Basic Value Fund 148,490 - - -
Merrill Lynch CMA Money Fund 431,994 - - -
Merrill Lynch CMA Money Fund - 501,253 501,253 0
Note: The above series of transactions exceed in the aggregate 5% of the
Plan's net assets available for benefits at the beginning of the
year ended June 30, 1997.
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EXHIBIT INDEX
Exhibit
Number
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23 Consent of Deloitte & Touche LLP