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, 1999
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
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF JUNE 30, 1999 AND
1998 AND FOR THE YEAR ENDED JUNE 30, 1999:
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 SCHEDULES AS OF AND FOR THE
YEAR ENDED JUNE 30, 1999:
Schedule of Assets Held for Investment Purposes (Item 27a) 7
Schedule of Reportable Transactions - Transactions or Series of
Transactions in Excess of 5% of Current Value of Plan Assets
(Item 27d) 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, 1999 and
1998, and the related statement of changes in net assets available for benefits
for the year ended June 30, 1999. 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 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.
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, 1999
and 1998, and the changes in net assets available for benefits for the year
ended June 30, 1999 in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
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. Such schedules have been subjected to the
auditing procedures applied in our audit of the basic 1999 financial statements
and, in our opinion, are fairly stated in all material respects when considered
in relation to the basic financial statements taken as a whole.
December 10, 1999
/s/Deloitte & Touche LLP
PENN FEDERAL SAVINGS BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 30, 1999 AND 1998
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1999 1998
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ASSETS:
Investments, at fair value $4,086,655 $3,620,558
Participant loans receivable 75,773 86,530
Other accrued income 41 58
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NET ASSETS AVAILABLE FOR BENEFITS $4,162,469 $3,707,146
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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, 1999
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Year Ended
June 30, 1999
NET INCREASE (DECREASE) IN NET
NET ASSETS AVAILABLE FOR
BENEFITS:
Additions to fund:
Employer's contributions $ 94,272
Participants' contributions 428,811
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Total contributions 523,083
Interest income 8,402
Investment income 186,092
Net (depreciation) appreciation
in fair value of investments (110,231)
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Total additions 607,346
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Deductions from fund:
Payments to participants 152,023
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Total deductions 152,023
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NET INCREASE 455,323
NET INCREASE (DECREASE) 455,323
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR 3,707,146
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NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $ 4,162,469
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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 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 eight different investment funds and to the
common stock of PennFed Financial Services, Inc. In no event
can the total amount deferred exceed $10,000 (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, Growth Fund for
Investment and Retirement, Ready Asset Trust Fund, MFS Emerging Growth
Fund, Massachusetts Investors 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, 1999 or 1998. 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 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. 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. MFS Emerging Growth Fund - The investment objective of the Fund is to
seek long-term growth of capital by investing primarily in common
stock (available to participants as of September 22, 1998).
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
(available to participants as of September 22, 1998).
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).
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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.
Benefits Payable - Net assets available for benefits included benefits of
$574,655 and $346,859 due to participants who have withdrawn from
participation in the Plan, but were not yet paid as of June 30, 1999 and
1998, 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.
Recently Adopted Statement of Position - Effective July 1, 1998, the Plan
adopted Statement of Position 99-3, Accounting for and Reporting of
Certain Defined Contribution Plan Investments and Other Disclosure Matters
("SOP 99-3"). SOP 99-3 simplifies disclosure for certain investments and
supersedes AICPA Practice Bulletin 12, Reporting Separate Investment Fund
Option Information of Defined-Contribution Pension Plans. The adoption of
SOP 99-3 no longer requires the Plan to disclose amounts relating to
participant-directed investment programs as a separate fund in the
financial statements in columnar form, or in the related disclosures, or
by separate financial statements for each program.
C. INVESTMENTS
The Plan's investments are held in a trust fund. The following table
presents investments. Investments that represent 5 percent or more of the
Plan's net assets are separately identified.
June 30
1999 1998
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Investments at Fair Value as Determined
by Quoted Market Price:
Growth Fund for Investment and Retirement $ 811,473 $ 915,089
Global Allocation Fund 737,335 643,082
Basic Value Fund 1,018,547 825,022
Capital Fund 587,642 523,654
Corporate Intermediate Bond Fund 311,025 280,032
Ready Asset Trust Fund 283,243 253,317
PennFed Financial Services, Inc. Stock 282,225 144,238
Other Mutual Funds 55,165 36,124
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Total Investments $4,086,655 $3,620,558
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During the year ended June 30, 1999, the Plan's investments (including
invesments bought, sold, and held during the year) depreciated in value by
$110,231 as follows:
Investments at Fair Value as Determined
by Quoted Market Price:
Mutual Funds $ 95,681
Common stock 14,550
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Net change in fair value $110,231
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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.
F. TAX STATUS
The sponsor adopted a non-standardized prototype plan which received an
Internal Revenue Service opinion letter dated June 29, 1993 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 the applicable sections of the Internal
Revenue Code ("the Code"). 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 Code. Therefore, no
provision of income taxes has been included in the Plan's financial
statements.
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ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
JUNE 30, 1999
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Number Current
Description of Units Cost Value
Investments managed by Merrill Lynch Trust Company:
Mutual Funds and Equity:
MFS Emerging Growth Fund 381.824 $ 16,912 $ 18,622
Massachusetts Investors Trust Fund 365.548 7,394 7,677
Growth Fund for Investment and Retirement 41,656.727 887,381 811,473
Global Allocation Fund 49,786.281 681,186 737,335
Basic Value Fund 23,775.639 734,057 1,018,547
Capital Fund 16,157.316 495,202 587,642
Corporate Intermediate Bond Fund 27,720.548 315,936 311,025
Ready Asset Trust Fund 283,242.660 283,243 283,243
CMA Money Fund 28,866.000 28,866 28,866
PennFed Financial Services, Inc. Stock 17,919.000 288,319 282,225
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3,738,496 4,086,655
Personal loans with interest rates of 8% to 10 3/4%, with due dates ranging from
1999 to 2026 75,773 75,773
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$ 3,814,269 $ 4,162,428
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PENN FEDERAL SAVINGS BANK 401(k) PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED JUNE 30, 1999
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Net
Purchase Selling Gain
Identity of Party Description of Assets Price Price Cost (Loss)
Merrill Lynch Basic Value Fund 185,719 - - -
Merrill Lynch CMA Money Fund - 715,209 715,209 -
Merrill Lynch CMA Money Fund 707,951 - - -
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, 1999.
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EXHIBIT INDEX
Exhibit
Number
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23 Consent of Deloitte & Touche LLP