PennFed Financial Services, Inc. Reports Third Quarter Earnings

PennFed Financial Services, Inc. Reports Third Quarter Earnings
Announces Plans For 24th Branch 


WEST ORANGE, N.J., April 28  /PRNewswire-FirstCall/ -- PennFed Financial
Services, Inc. , the $1.8 billion holding company for New Jersey-based Penn
Federal Savings Bank, reported earnings of 41 cents per diluted share for the
third fiscal quarter ended March 31, 2004 compared to 48 cents per diluted
share for the comparable prior year quarter.  The March 2004 earnings represent
an increase from 40 cents per diluted share for the previous quarter ended
December 31, 2003.

For the first nine months of fiscal 2004, PennFed reported earnings of $1.28
per diluted share, compared to $1.49 per diluted share for the nine months
ended March 31, 2003.

At March 31, 2004, total assets of $1.816 billion were relatively unchanged
from June 30, 2003 but up slightly from $1.792 billion at December 31, 2003. 
During the first six months of fiscal 2004, the effects of accelerated
prepayments on loans and the sale of conforming, fixed rate, one- to
four-family mortgage loans into the secondary market more than offset total
loan originations.  At the end of the December 2003 quarter, with a significant
slowdown in mortgage loan applications and as a means to invest available cash
at higher yields, the Company discontinued its loan sale strategy and began to
retain originated one- to four-family loans for portfolio.

"With the retention of loans in portfolio, reported gains were minimal for the
current quarter.  However, the Company reported a continuing increase in net
interest margin," stated President and Chief Executive Officer Joseph L.
LaMonica.  For the three months ended March 31, 2004, net interest margin was
2.24%, a 10 basis point improvement from 2.14% for the three months ended
December 31, 2003.

Deposits continue to grow modestly.  "Our focus on gathering deposits
continues," LaMonica commented.  Deposits at Penn Federal's newest branches in
the Ironbound section of Newark (opened September 2003) and in Union, New
Jersey (opened February 2004) currently total over $15 million and $10 million,
respectively.  Following the opening of these two new branches, the Bank filed
for regulatory approval in early April to open a 24th branch -- a full-service
branch located in West Caldwell.  "The facility is a complement to existing
Penn Federal branches in the area and is expected to open in June 2004," said
LaMonica.

For the three months ended March 31, 2004, service charges and other non-
interest income showed a decline when compared to the comparable prior year
quarter, but an increase when compared to the December 2003 quarter.  Fee
income associated with loan prepayments and modifications in the March 2004
quarter reflected a decrease when compared to the prior year March 2003 quarter
but accelerated slightly when compared to the December 2003 quarter.

LaMonica stated, "Asset quality during the quarter remained strong.  Non-
performing assets totaled $2.9 million and represented only 0.16% of total
assets at March 31, 2004." Furthermore, the Company's expense ratio also
remained strong at 1.47% for the current quarter.

For the three and nine months ended March 31, 2004, the Company recorded
compensation expense related to the Employee Stock Ownership Plan (ESOP) of
$1.1 million and $3.0 million, respectively.  This compares to $784,000 and
$2.3 million for the three and nine months ended March 31, 2003, respectively. 
The majority of the ESOP expense represents a non-cash valuation adjustment to
reflect the value of PennFed stock.  The Company will cease recognizing
compensation expense related to the ESOP after June 2004, when the ESOP shares
will be fully allocated.  Modifications to the Bank's existing benefit plans
after June 30, 2004 are expected to cost less than 25% of the current expense
level of the ESOP.

The Company continues to employ stock repurchases as a means of utilizing
capital.  During the March 2004 quarter, the Company was successful in
repurchasing 188,500 shares of its outstanding stock at prices ranging from
$33.61 to $36.06, for a total cost of $6.5 million.  PennFed continues to
employ stock repurchases as a means of utilizing capital.

PennFed stockholders of record as of May 14, 2004 will be paid a cash dividend
of $0.10 per share on May 28, 2004.  The Company continues to review its
dividend policy on a regular basis.

With its February 2004 opening of a branch in Union, New Jersey, Penn Federal
Savings Bank now maintains 23 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)

                        March 31,   December 31,    June 30,    March 31,
                          2004         2003           2003        2003

  Selected Financial
   Condition Data:
    Cash and cash
     equivalents         $18,897     $ 36,737      $83,046      $90,714
    Investments, net     425,103      417,994      344,239      260,834
    Mortgage-backed
     securities, net      99,487      104,856       93,632      106,017
    Loans held for sale        0        3,364       11,496       14,443
    Loans receivable:
      One- to four-family
       mortgage loans    917,374      879,479      935,064    1,021,697
      Commercial and
       multi-family real
       estate loans      164,200      160,926      165,905      162,911
      Consumer loans     115,875      114,206      116,658      110,014
      Allowance for
       loan losses        (6,252)      (6,271)      (6,284)      (6,314)
      Other, net           6,533        6,251        6,079        6,887
    Loans receivable,
     net               1,197,730    1,154,591    1,217,422    1,295,195

    FHLB stock            24,273       24,273       25,223       25,223
    Other intangible
     assets                1,814        2,268        3,175        3,636
    Other assets          49,109       47,903       34,219       32,841
    Total assets      $1,816,413   $1,791,986   $1,812,452   $1,828,903

    Deposits:
      Checking and
       money market     $163,893     $168,113     $172,898     $172,340
      Savings            406,830      388,229      355,118      347,204
      Certificates of
       deposit and
       accrued interest  558,814      550,915      566,650      586,492
    Total deposits     1,129,537    1,107,257    1,094,666    1,106,036

    FHLB advances        485,465      485,465      504,465      504,465
    Other borrowings      27,046       23,118       26,644       26,456
    Junior subordinated
     debentures           42,026       42,015       30,005            0
    Other liabilities     14,759       13,367       28,216       28,994
    Preferred securities
     of Trust, net             0            0       11,621       44,594
    Stockholders'
     equity              117,580(a)   120,764      116,835      118,358
    Total liabilities
     and stockholders'
      equity          $1,816,413   $1,791,986   $1,812,452   $1,828,903

    Book value
     per share(b)         $17.63       $17.74       $17.41       $17.36
    Tangible book
     value per share(b)   $17.35       $17.41       $16.94       $16.82

    Equity to assets       6.47%        6.74%        6.45%        6.47%
    Tangible equity
     to tangible assets    6.38%        6.62%        6.28%        6.29%

  Asset Quality Data:
    Non-performing loans  $2,900       $3,116       $1,682       $1,752
    Real estate owned, net    28           28           28           28
    Total non-performing
     assets               $2,928       $3,144       $1,710       $1,780

    Non-performing loans
     to total loans        0.24%        0.27%        0.14%        0.13%
    Non-performing assets
     to total assets       0.16%        0.18%        0.09%        0.10%
    Allowance for loan
     losses to non-
     performing loans    215.59%      201.25%      373.60%      360.39%
    Allowance for loan
     losses to total
     gross loans           0.52%        0.54%        0.51%        0.48%

  Regulatory Capital Ratios
   (of the Bank):
    Tangible capital ratio
    (requirement - 1.50%)  8.86%        8.91%        8.73%        8.94%
    Core capital ratio
   (requirement - 4.00%)   8.86%        8.91%        8.73%        8.94%
    Risk-based capital
     ratio (requirement
     - 8.00%)             17.48%       17.69%       17.21%       17.29%

  (a) Common shares outstanding as of March 31, 2004 totaled 6,703,004
      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                    For the
                          three months ended          nine months ended
                               March 31,                  March 31,
                            2004         2003         2004         2003
  Selected Operating Data:
    Interest and dividend
     income              $24,326      $25,576      $71,725      $81,938
    Interest expense      14,598       14,787       44,022       48,408
      Net interest and
       dividend income     9,728       10,789       27,703       33,530
    Provision for
     loan losses               0          100            0          525
    Net interest and
     dividend income after
     provision for
     loan losses           9,728       10,689       27,703       33,005
    Non-interest income:
      Service charges        957        1,294        3,131        3,647
      Net gain (loss)
      from real estate
       operations              0            1            1            3
      Net gain on
       sales of loans         57          498          754        1,292
      Other                  360          220        1,062          712
      Total non-interest
       income              1,374        2,013        4,948        5,654
    Non-interest expenses:
      Compensation &
       employee benefits   3,901        3,358       10,841       10,152
      Net occupancy expense  514          498        1,417        1,308
      Equipment              536          544        1,520        1,571
      Advertising            102           36          236          154
      Amortization of
       intangibles           453          465        1,362        1,407
      Federal deposit
       insurance premium      41           49          126          147
      Preferred securities
       expense                 0        1,092            0        3,276
      Other                1,090          982        3,091        2,938
      Total non-interest
       expenses            6,637        7,024       18,593       20,953
    Income before
     income taxes          4,465        5,678       14,058       17,706
    Income tax expense     1,499        2,106        4,838        6,486
    Net income            $2,966       $3,572       $9,220      $11,220

    Weighted avg. no.
     of diluted common
     shares(c)         7,192,948    7,464,791    7,227,905    7,546,527
    Diluted earnings
     per common share(c)  $ 0.41       $ 0.48       $ 1.28       $ 1.49

    Return on average
     common equity         9.98%       11.89%       10.36%       12.51%

    Return on average
     assets                0.66%        0.79%        0.69%        0.81%

    Average earning
     assets           $1,741,017   $1,754,724   $1,724,232   $1,789,428

    Yield on average
     interest-earning
      assets               5.59%        5.85%        5.53%        6.10%
    Cost of average
     interest-bearing
     liabilities           3.48%        3.64%        3.51%        3.84%
    Net interest
     rate spread           2.11%        2.21%        2.02%        2.26%

    Net interest margin    2.24%        2.45%        2.16%        2.51%

    Non-interest
     exp. as a % of avg.
     assets                1.47%        1.55%        1.39%        1.51%
    Efficiency ratio      55.70%       51.24%       52.77%       49.89%

    Loan originations
     and purchases:
      One- to four-family
       mortgage loans    $79,438     $154,118     $319,075     $416,134
      Commercial and
       multi-family
       real estate
       loans              10,143        9,196       27,359       38,010
      Consumer loans      17,248       19,939       55,421       56,933
      Total loan
       originations
       and purchases    $106,829     $183,253     $401,855     $511,077

  (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
                 Mar. 31,      Dec. 31,    Sep. 30,    Jun. 30,   Mar. 31,
                   2004          2003        2003        2003       2003
  Selected
   Operating Data:
    Interest and
     dividend
     income      $24,326      $23,658     $23,741     $24,433   $25,576
    Interest
     expense      14,598       14,620      14,804      14,548    14,787
      Net interest
       and dividend
       income      9,728        9,038       8,937       9,885    10,789
    Provision for
     loan losses       0            0           0           0       100
    Net interest
     and dividend
     income after
     provision for
     loan losses   9,728        9,038       8,937       9,885    10,689
    Non-interest
     income:
      Service
      charges        957          871       1,303       1,585     1,294
      Net gain from
       real estate
       operations      0            1           0           0         1
      Net gain on
       sales of
       loans          57          363         334         571       498
      Other          360          329         373         261       220
      Total non-
       interest
       income      1,374        1,564       2,010       2,417     2,013
    Non-interest
     expenses:
      Compensation
       & employee
       benefits    3,901        3,616       3,324       3,302     3,358
      Net occupancy
       expense       514          480         423         384       498
      Equipment      536          498         486         514       544
      Advertising    102           78          56          56        36
      Amortization
       of
      intangibles    453          454         455         459       465
      Federal deposit
       insurance
       premium        41           41          44          45        49
      Preferred
       securities
       expense         0            0           0       2,362     1,092
      Other        1,090        1,090         911       1,045       982
      Total non-
       interest
       expenses    6,637        6,257       5,699       8,167     7,024
    Income before
     income taxes  4,465        4,345       5,248       4,135     5,678
    Income tax
     expense       1,499        1,464       1,875       1,621     2,106
    Net income    $2,966       $2,881      $3,373      $2,514    $3,572

    Weighted avg.
       no. of
       diluted
       common
       shares
      (d)      7,192,948    7,243,944   7,233,777   7,290,877 7,464,791
    Diluted
     earnings
     per common
     share (d)    $ 0.41       $ 0.40      $ 0.47      $ 0.34    $ 0.48

    Return on
     average common
     equity        9.98%        9.65%      11.47%       8.54%     11.89%

    Return on
     average
     assets        0.66%        0.65%       0.76%       0.56%      0.79%

    Average
     earning
     assets  $1,741,017  $1,715,792   $1,715,887  $1,741,302 $1,754,724

    Yield on
     average
     interest-
     earning
     assets        5.59%        5.50%       5.51%       5.61%      5.85%
    Cost of average
     interest-
     bearing
     liabilities   3.48%        3.50%       3.55%       3.55%      3.64%
    Net interest
     rate spread   2.11%        2.00%       1.96%       2.06%      2.21%

    Net interest
     margin        2.24%        2.14%       2.11%       2.28%      2.45%

    Non-interest
    exp. as a % of
    avg. assets    1.47%        1.40%       1.28%       1.81%      1.55%
    Efficiency
     ratio        55.70%       54.74%      47.90%      62.66%     51.24%

    Loan origina-
     tions and
     purchases:
      One- to
       four-family
       mortgage
       loans     $79,438      $61,304    $178,333    $113,411  $154,118
      Commercial
       and multi-
       family real
       estate
       loans      10,143        8,144       9,072      11,039     9,196
      Consumer
       loans      17,248       15,441      22,732      32,842    19,939
      Total loan
       origina-
       tions and
       purcha-
       ses      $106,829      $84,889    $210,137    $157,292  $183,253

  (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
                 Mar. 31,    Dec. 31,     Sep. 30,    Jun. 30,   Mar. 31,
                  2004        2003         2003        2003        2003

  Reported net
   income        $2,966      $2,881      $3,373      $2,514      $3,572

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

  "Adjusted" net
   income        $2,966      $2,881      $3,373      $3,498      $3,572

  Weighted avg.
   no. of
   diluted
   common
   shares(e)  7,192,948   7,243,944   7,233,777   7,290,877   7,464,791
  Diluted
   earnings
   per common
   share (e)     $ 0.41      $ 0.40      $ 0.47      $ 0.48      $ 0.48

  Return on
   average
   common
   equity         9.98%       9.65%      11.47%      11.89%      11.89%

  Return on
   average
   assets         0.66%       0.65%       0.76%       0.78%       0.79%

  Non-interest
   exp. as a %
   of avg.
   assets         1.47%       1.40%       1.28%       1.47%       1.55%
  Efficiency
   ratio         55.70%      54.74%      47.90%      50.35%      51.24%


  (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:  Jeffrey J. Carfora, COO of PennFed Financial Services, Inc.,

[phone], ext. 207

Copyright