PennFed Financial Services, Inc. Reports First Quarter Earnings

PennFed Financial Services, Inc. Reports First Quarter Earnings 


WEST ORANGE, N.J., Oct. 29  /PRNewswire-FirstCall/ -- PennFed Financial
Services, Inc. , the $1.8 billion holding company for New Jersey-based Penn
Federal Savings Bank, announced earnings of 47 cents per diluted share for its
first fiscal quarter ended September 30, 2003. Earnings for the comparable prior
year quarter were 50 cents per diluted share.

Joseph L. LaMonica, President and Chief Executive Officer of PennFed, noted
that, "the challenges that we experienced in Fiscal 2003 continued into our
first quarter of fiscal 2004."

Total assets at September 30, 2003 of $1.778 billion reflected a decline from
$1.812 billion at June 30, 2003.  One- to four-family mortgage loan production
for the September 2003 quarter of $178 million represented the highest quarterly
level in PennFed's history.  The balance in this portfolio, however, continued
to decline during the quarter due to the effects of continued accelerated
prepayments on loans as well as the sale of over $56 million of one- to
four-family mortgage loans.

As a result of the low interest rate environment and as a means of managing
interest rate risk and long-term profitability, the Company continues to sell
predominately conforming, fixed rate one- to four-family loan production.  For
the quarter ended September 30, 2003, as part of its mortgage banking
activities, PennFed recorded $334,000 of gains from loan sales.

Net interest margin for the three months ended September 30, 2003 was reported
as 2.11%, down from 2.28% for the three months ended June 30, 2003.
Approximately 0.15% of the total 0.17% margin compression is attributable to the
Company's adoption of Financial Accounting Standards Board Interpretation No.
46, "Consolidation of Variable Interest Entities" ("FIN 46").  Pursuant to FIN
46, the Company's trust preferred subsidiaries are no longer consolidated and
the costs associated with the related issuance of trust preferred securities are
now reflected as interest expense.  Previously, these costs had been categorized
as non-interest expense.  The decrease in net interest income is offset by a
decrease in non-interest expense resulting in no overall effect on net income.

PennFed's deposit composition continued to show reduced levels of certificates
of deposit and increased reliance on core deposits (checking, money market and
savings accounts).  As of September 30, 2003, core deposits represent 50% of
total deposits compared to 48% at June 30, 2003.  During September, Penn Federal
Savings Bank opened its 22nd branch located on Chestnut Street in the Ironbound
section of Newark.  Mr. LaMonica commented that, "After being open less than two
months, deposits at this community branch total over $8 million."

For the three months ended September 30, 2003 service charges and other
non-interest income, while greater than the prior year quarter, showed a modest
decline when compared to the June 2003 quarter.  With a recent rise in interest
rates, income associated with loan prepayments and modifications slowed.

Asset quality remained exceptional.  Non-performing assets totaled $2.2 million,
or 0.12% of total assets at September 30, 2003.  Furthermore, the Company's
current quarter expense ratio also remained strong at 1.28%. The expense ratio
for the three months ended September 30, 2002 was 1.51%, but because this was
prior to the adoption of FIN 46 this ratio included 0.23% of expense associated
with trust preferred securities.

PennFed continues to employ stock repurchases as a means of utilizing capital. 
During the September 2003 quarter, the Company repurchased 50,000 shares for a
total cost of $1.4 million.

PennFed stockholders of record as of November 14, 2003 will be paid a cash
dividend of $0.10 per share on November 28, 2003.  The Company's dividend policy
will continue to be reviewed on a regular basis.

Penn Federal Savings Bank maintains 22 New Jersey branch offices.  The Bank's
deposits are insured by the Federal Deposit Insurance Corporation.

This release contains forward-looking statements that are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995.  These statements are subject to certain risks
and uncertainties, including, among other things, changes in economic conditions
in the Company's market area, changes in policies by regulatory agencies,
fluctuations in interest rates and demand for loans in the Company's market
area, the relationship of short-term interest rates to long-term interest rates,
competition and terrorist acts that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected.  The Company wishes to caution readers not to place undue reliance on
any forward-looking statements, which speak only as of the date made.  The
Company wishes to advise readers that the factors listed above, as well as other
factors, could affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods in any current
statements.

                    PennFed Financial Services, Inc.
             (Holding Company for Penn Federal Savings Bank)
               Selected Consolidated Financial Information
            (dollars in thousands, except per share amounts)

                               September 30,     June 30,    September 30,
                                   2003            2003          2002

  Selected Financial Condition
   Data:
   Cash and cash equivalents      $80,655        $83,046       $52,427
   Investments, net and FHLB
    stock                         379,407        369,462       208,538
   Mortgage-backed securities,
    net                            82,548         93,632       155,889
   Loans held for sale             11,530         11,496         4,437
   Loans receivable:
    One- to four-family mortgage
     loans                        895,274        935,064     1,143,734
    Commercial and multi-family
     real estate loans            164,269        165,905       161,021
    Consumer loans                115,305        116,658       118,541
    Allowance for loan losses      (6,279)        (6,284)       (6,038)
    Other, net                      6,300          6,079         8,489
   Loans receivable, net        1,174,869      1,217,422     1,425,747

   Other intangible assets          2,721          3,175         4,535
   Other assets                    46,439         34,219        31,014
   Total assets                $1,778,169     $1,812,452    $1,882,587

  Deposits:
    Checking and money market    $169,710       $172,898      $167,648
    Savings                       371,672        355,118       326,695
    Certificates of deposit
     and accrued interest         539,472        566,650       672,461
  Total deposits                1,080,854      1,094,666     1,166,804

   FHLB advances                  495,465        504,465       504,465
   Other borrowings                24,390         26,644        25,420
   Junior subordinated debentures  42,003         30,005             0
   Other liabilities               15,902         28,216        22,104
   Preferred securities of Trust,
     net                                0         11,621        44,556
   Stockholders' equity           119,555(a)     116,835       119,238
   Total liabilities and
    stockholders' equity       $1,778,169     $1,812,452    $1,882,587

   Book value per share(b)         $17.65         $17.41        $16.98
   Tangible book value per
    share(b)                       $17.25         $16.94        $16.33

   Equity to assets                  6.72%          6.45%         6.33%
   Tangible equity to tangible
    assets                           6.58%          6.28%         6.11%

  Asset Quality Data:
   Non-performing loans            $2,164         $1,682        $2,431
   Real estate owned, net              28             28            28
   Total non-performing assets     $2,192         $1,710        $2,459

   Non-performing loans to total
    loans                            0.18%          0.14%         0.17%
   Non-performing assets to total
    assets                           0.12%          0.09%         0.13%
   Allowance for loan losses to
    non-performing loans           290.16%        373.60%       248.38%
   Allowance for loan losses to
    total gross loans                0.53%          0.51%         0.42%

  Regulatory Capital Ratios
   (of the Bank):
   Tangible capital ratio
    (requirement - 1.50%)            8.97%          8.73%         8.59%
   Core capital ratio
    (requirement - 4.00%)            8.97%          8.73%         8.59%
   Risk-based capital ratio
    (requirement - 8.00%)           17.57%         17.21%        16.29%

   (a) Common shares outstanding as of September 30, 2003 totaled 6,870,178
       shares.

   (b) In accordance with SOP 93-6, the calculation of book value per share
       only includes ESOP shares to the extent that they are released or
       committed to be released during the fiscal year.


                    PennFed Financial Services, Inc.
             (Holding Company for Penn Federal Savings Bank)
               Selected Consolidated Financial Information
            (dollars in thousands, except per share amounts)

                                              For the three months ended
                                                     September 30,
                                              2003                   2002
  Selected Operating Data:
   Interest and dividend income             $23,741                $29,001
   Interest expense                          14,804                 17,211
    Net interest and dividend income          8,937                 11,790
   Provision for loan losses                      0                    225
   Net interest and dividend income
    after provision for loan losses           8,937                 11,565
   Non-interest income:
    Service charges                           1,303                  1,123
    Net gain from real estate operations          0                      2
    Net gain on sales of loans                  334                    231
    Other                                       373                    226
    Total non-interest income                 2,010                  1,582
   Non-interest expenses:
    Compensation & employee benefits          3,324                  3,481
    Net occupancy expense                       423                    403
    Equipment                                   486                    517
    Advertising                                  56                     87
    Amortization of intangibles                 455                    474
    Federal deposit insurance premium            44                     48
    Preferred securities expense                  0                  1,092
    Other                                       911                  1,015
    Total non-interest expenses               5,699                  7,117
   Income before income taxes                 5,248                  6,030
   Income tax expense                         1,875                  2,206
   Net income                                $3,373                 $3,824

   Weighted avg. no. of diluted common
    shares(c)                             7,233,777              7,655,481
   Diluted earnings per common share(c)       $0.47                  $0.50

   Return on average common equity            11.47%                 12.81%

   Return on average assets                    0.76%                  0.81%

   Average earning assets                $1,715,887             $1,821,783

   Yield on average interest-earning
    assets                                     5.51%                  6.34%
   Cost of average interest-bearing
    liabilities                                3.55%                  4.01%
   Net interest rate spread                    1.96%                  2.33%

   Net interest margin                         2.11%                  2.62%

   Non-interest exp. as a % of avg. assets     1.28%                  1.51%
   Efficiency ratio                           47.90%                 49.69%

   Loan originations and purchases:
    One- to four-family mortgage loans     $178,333                $89,379
    Commercial and multi-family real
     estate loans                             9,072                 19,828
    Consumer loans                           22,732                 18,187
    Total loan originations and purchases  $210,137               $127,394

   (c) In accordance with SOP 93-6, the calculation of EPS only includes
       ESOP shares to the extent that they are released or committed to be
       released during the fiscal year.


                    PennFed Financial Services, Inc.
             (Holding Company for Penn Federal Savings Bank)
               Selected Consolidated Financial Information
            (dollars in thousands, except per share amounts)

                                  For the three months ended
                      Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,
                         2003       2003       2003      2002       2002
  Selected Operating Data:
   Interest and
    dividend income   $23,741    $24,433    $25,576    $27,361    $29,001
   Interest expense    14,804     14,548     14,787     16,410     17,211
   Net interest and
    dividend income     8,937      9,885     10,789     10,951     11,790
   Provision for loan
    losses                  0          0        100        200        225
   Net interest and
    dividend income
    after provision
    for loan losses     8,937      9,885     10,689     10,751     11,565
   Non-interest income:
    Service charges     1,303      1,585      1,294      1,230      1,123
    Net gain from real
     estate operations      0          0          1          0          2
    Net gain on sales
     of loans             334        571        498        563        231
    Other                 373        261        220        266        226
    Total non-interest
     income             2,010      2,417      2,013      2,059      1,582
   Non-interest expenses:
    Compensation &
     employee benefits  3,324      3,302      3,358      3,313      3,481
    Net occupancy
     expense              423        384        498        407        403
    Equipment             486        514        544        510        517
    Advertising            56         56         36         31         87
    Amortization of
     intangibles          455        459        465        468        474
    Federal deposit
     insurance premium     44         45         49         50         48
    Preferred securities
     expense                0      2,362      1,092      1,092      1,092
    Other                 911      1,045        982        941      1,015
    Total non-interest
     expenses           5,699      8,167      7,024      6,812      7,117
   Income before income
    taxes               5,248      4,135      5,678      5,998      6,030
   Income tax expens    1,875      1,621      2,106      2,174      2,206
   Net income          $3,373     $2,514     $3,572     $3,824     $3,824

   Weighted avg. no.
    of diluted common
    shares(d)       7,233,777  7,290,877  7,464,791  7,526,698  7,655,481
   Diluted earnings
    per common
    share(d)           $ 0.47     $ 0.34     $ 0.48     $ 0.51     $ 0.50

   Return on average
    common equity       11.47%      8.54%     11.89%     12.84%     12.81%
   Return on average
    assets               0.76%      0.56%      0.79%      0.82%      0.81%
   Average earning
    assets         $1,715,887 $1,741,302 $1,754,724 $1,791,775 $1,821,783

   Yield on average
    interest-earning
    assets               5.51%      5.61%      5.85%      6.08%      6.34%
   Cost of average
    interest-bearing
    liabilities          3.55%      3.55%      3.64%      3.86%      4.01%
   Net interest rate
    spread               1.96%      2.06%      2.21%      2.22%      2.33%

   Net interest margin   2.11%      2.28%      2.45%      2.47%      2.62%

   Non-interest exp. as
    a % of avg. assets   1.28%      1.81%      1.55%      1.46%      1.51%
   Efficiency ratio     47.90%     62.66%     51.24%     48.76%     49.69%

   Loan originations
    and purchases:
    One- to four-
    family mortgage
    loans            $178,333   $113,411   $154,118   $172,637    $89,379
    Commercial and
     multi-family
     real estate loans  9,072     11,039      9,196      8,986     19,828
    Consumer loans     22,732     32,842     19,939     18,807     18,187
    Total loan
     originations
     and purchases   $210,137   $157,292   $183,253   $200,430   $127,394

   (d) In accordance with SOP 93-6, the calculation of EPS only includes
       ESOP shares to the extent that they are released or committed to be
       released during the fiscal year.


                    PennFed Financial Services, Inc.
             (Holding Company for Penn Federal Savings Bank)
               Selected Consolidated Financial Information
            (dollars in thousands, except per share amounts)

       CALCULATION OF NET INCOME ADJUSTED FOR NON-RECURRING CHARGE

                                  For the three months ended
                       Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,
                         2003       2003       2003       2002       2002

  Reported net income   $3,373     $2,514     $3,572     $3,824     $3,824

  Non-recurring charges:
   Accelerated amorti-
    zation on PennFed
    Capital Trust I
     issuance costs          0      1,514          0          0          0
   Tax effect                0       (530)         0          0          0
   Non-recurring charges,
    net of taxes             0        984          0          0          0

  "Adjusted" net income $3,373     $3,498     $3,572     $3,824     $3,824

  Weighted avg. no.
   of diluted common
   shares(e)         7,233,777  7,290,877  7,464,791  7,526,698  7,655,481
  Diluted earnings
   per common share(e)  $ 0.47     $ 0.48     $ 0.48     $ 0.51     $ 0.50
  Return on average
   common equity         11.47%     11.89%     11.89%     12.84%     12.81%

  Return on average
   assets                0.76%       0.78%      0.79%      0.82%      0.81%

  Non-interest exp. as
   a % of avg. assets    1.28%       1.47%      1.55%      1.46%      1.51%
  Efficiency ratio      47.90%      50.35%     51.24%     48.76%     49.69%

   (e) In accordance with SOP 93-6, the calculation of EPS only includes
       ESOP shares to the extent that they are released or committed to be
       released during the fiscal year.


DATASOURCE: PennFed Financial Services, Inc.



CONTACT:  Claire M. Chadwick, CFO of PennFed Financial Services, Inc.,

[phone], ext. 267

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