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, 1998
------------------------------------------------
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
<PAGE>
PENN FEDERAL SAVINGS BANK 401(k) PLAN
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS AS OF JUNE 30, 1998 AND 1997 AND FOR THE YEAR ENDED
JUNE 30, 1998:
Statements of Net Assets Available for Benefits
Statement of Changes in Net Assets Available for Benefits
Notes to Financial Statements
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE
YEAR ENDED JUNE 30, 1998:
Schedule of Assets Held for Investment Purposes (Item 27a)
Schedule of Reportable Transactions - Transactions or Series of
Transactions in Excess of 5% of Current Value of Plan Assets
(Item 27d)
Supplemental Schedules not included herein are omitted due to the absence of
conditions under which they are required.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Penn Federal Savings Bank
401(k) Plan Trustees
West Orange, New Jersey
We have audited, by fund and in total, the accompanying statements of net assets
available for benefits of Penn Federal Savings Bank 401(k) Plan (the "Plan") as
of June 30, 1998 and 1997, and the related statement of changes in net assets
available for benefits for the year ended June 30, 1998. 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, by fund and in total,
in all material respects, the net assets available for benefits of the Plan as
of June 30, 1998 and 1997, and the changes in net assets available for benefits
for the year ended June 30, 1998 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 1998 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 14, 1998
<PAGE>
<TABLE>
PENN FEDERAL SAVINGS BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 30, 1998 AND 1997
- -------------------------------------------------------------------------------------------------
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
ASSETS:
Investments, at fair value:
Investments held by Merrill Lynch Trust Company:
Growth Fund for Investment and Retirement ............... $ 915,089 $ 903,038
Global Allocation Fund .................................. 643,082 580,426
Basic Value Fund ........................................ 825,022 623,600
Capital Fund ............................................ 523,654 459,131
Corporate Intermediate Bond Fund ........................ 280,032 267,052
Ready Asset Trust Fund .................................. 253,317 257,354
CMA Money Fund .......................................... 36,124 18,404
PennFed Financial Services, Inc. Stock .................... 144,238 13,652
Participant loans receivable ................................ 86,530 91,857
---------- ----------
Total investments .............................. 3,707,088 3,214,514
---------- ----------
Receivables:
Other accrued income ...................................... 58 56
---------- ----------
Total receivables .............................. 58 56
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS ............................. $3,707,146 $3,214,570
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
PENN FEDERAL SAVINGS BANK 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED JUNE 30, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Participant Directed
-------------------------------------------------------------------------------------------
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
---------- ---- ---- ---- --------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
NET INCREASE (DECREASE) IN NET
NET ASSETS AVAILABLE FOR
BENEFITS:
Additions to fund:
Employer's contributions $ 20,551 $ 13,690 $ 13,595 $ 10,044 $ 4,753 $ 4,319 $ 22,462
Participants' contributions 96,035 58,245 53,654 44,097 20,521 20,830 89,163
--------- --------- --------- --------- --------- --------- ---------
Total contributions 116,586 71,935 67,249 54,141 25,274 25,149 111,625
Interest income - - - - - - -
Investment income 76,747 70,837 48,766 37,378 15,209 12,553 535
Net (depreciation) appreciation
in fair value of investments (94,871) (34,489) 83,863 33,027 5,541 - (4,692)
--------- --------- --------- --------- --------- --------- ---------
Total additions 98,462 108,283 199,878 124,546 46,024 37,702 107,468
--------- --------- --------- --------- --------- --------- ---------
Deductions from fund:
Payments to participants 68,059 45,676 35,645 40,158 26,991 14,709 -
--------- --------- --------- --------- --------- --------- ---------
Total deductions 68,059 45,676 35,645 40,158 26,991 14,709 -
--------- --------- --------- --------- --------- --------- ---------
NET INCREASE PRIOR TO
INTER-FUND TRANSFERS 30,403 62,607 164,233 84,388 19,033 22,993 107,468
INTER-FUND TRANSFERS (18,352) 49 37,189 (19,865) (6,053) (27,030) 23,118
--------- --------- --------- --------- --------- --------- ---------
NET INCREASE (DECREASE) 12,051 62,656 201,422 64,523 12,980 (4,037) 130,586
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR 903,038 580,426 623,600 459,131 267,052 257,354 13,652
--------- --------- --------- --------- --------- --------- ---------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $ 915,089 $ 643,082 $ 825,022 $ 523,654 $ 280,032 $ 253,317 $ 144,238
========= ========= ========= ========= ========= ========= =========
<PAGE>
<CAPTION>
Participant Other CMA Money
Loans Unallocated Fund Total
----- ----------- ---- -----
<S> <C> <C> <C> <C>
NET INCREASE (DECREASE) IN NET
NET ASSETS AVAILABLE FOR
BENEFITS:
Additions to fund:
Employer's contributions $ - $ - $ - $ 89,414
Participants' contributions - - - 382,545
-------- ---- -------- -----------
Total contributions - - - 471,959
Interest income 1,013 2 - 1,015
Investment income - - 436 262,461
Net (depreciation) appreciation
in fair value of investments - - - (11,621)
-------- ---- -------- -----------
Total additions 1,013 2 436 723,814
-------- ---- -------- -----------
Deductions from fund:
Payments to participants - - - 231,238
-------- ---- -------- -----------
Total deductions - - - 231,238
-------- ---- -------- -----------
NET INCREASE PRIOR TO
INTER-FUND TRANSFERS 1,013 2 436 492,576
INTER-FUND TRANSFERS (6,340) - 17,284 -
-------- ---- -------- -----------
NET INCREASE (DECREASE) (5,327) 2 17,720 492,576
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR 91,857 56 18,404 3,214,570
-------- ---- -------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $ 86,530 $ 58 $ 36,124 $ 3,707,146
======== ==== ======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
PENN FEDERAL SAVINGS BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 $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, 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.
<PAGE>
Purchases and sales of securities are recorded as of the settlement date.
There were no material unsettled trades at June 30, 1998 or 1997. 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.
<PAGE>
Benefits Payable - Net assets available for benefits included benefits of
$346,859 and $276,987 due to participants who have withdrawn from
participation in the Plan, but were not yet paid as of June 30, 1998 and
1997, 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. 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. The Plan received a favorable IRS
determination letter dated December 7, 1995. The Plan has been amended since
receiving the determination letter. However, the Plan administrator believes
that the Plan is currently designed and being operated in compliance with the
applicable requirements of the Code and the related trust was tax-exempt as
of the financial statement date. Therefore, no provision of income taxes has
been included in the Plan's financial statements.
F. SUBSEQUENT EVENT
As of September 22, 1998, the Board of Directors approved the following two
funds as investment options of the Plan:
1. MFS Emerging Growth Fund - The investment objective of the Fund is to seek
long-term growth of capital by investing primarily in common stock.
2. 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.
******
<PAGE>
<TABLE>
PENN FEDERAL SAVINGS BANK 401(k) PLAN
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
JUNE 30, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Number Current
Description of Units Cost Value
----------- -------- ---- -----
<S> <C> <C> <C>
Investments managed by Merrill Lynch Trust Company:
Mutual Funds and Equity:
Growth Fund for Investment and Retirement .................................. 37,844.863 $ 819,689 $ 915,089
Global Allocation Fund ..................................................... 43,956.416 609,961 643,082
Basic Value Fund ........................................................... 20,231.043 590,423 825,022
Capital Fund ............................................................... 14,433.673 432,241 523,654
Corporate Intermediate Bond Fund ........................................... 24,140.695 274,425 280,032
Ready Asset Trust Fund ..................................................... 253,317.220 253,317 253,317
CMA Money Fund ............................................................. 36,124.000 36,124 36,124
PennFed Financial Services, Inc. Stock ....................................... 8,709.000 148,814 144,238
---------- ----------
3,164,994 3,620,558
Personal loans with interest rates of
8% to 10 3/4%, with due dates ranging from
1998 to 2026 ................................................................. 86,530 86,530
---------- ----------
$3,251,524 $3,707,088
========== ==========
</TABLE>
<PAGE>
<TABLE>
PENN FEDERAL SAVINGS BANK 401(k) PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED JUNE 30, 1998
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
(a) (b) (c) (d) (g) (i)
Net
Purchase Selling Gain
Identity of Party Description of Assets Price Price Cost (Loss)
- ----------------- --------------------- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C>
Merrill Lynch Growth Fund for Investment
and Retirement $ 220,113 $ - $ - $ -
Merrill Lynch Basic Value Fund 171,604 - - -
Merrill Lynch CMA Money Fund 651,450 - - -
Merrill Lynch CMA Money Fund - 633,730 633,730 -
</TABLE>
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, 1998.
<PAGE>
EXHIBIT INDEX
Exhibit
Number
23 Consent of Deloitte & Touche LLP
EXHIBIT 23
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-47591 of PennFed Financial Services, Inc. on Form S-8 of our report dated
December 14, 1998, appearing in this Annual Report on Form 11-K of Penn Federal
Savings Bank 401(k) Plan for the year ended June 30, 1998.
Deloitte & Touche LLP
Parsippany, New Jersey
December 21, 1998
