PennFed Financial Services, Inc. Reports Second Quarter Earnings


WEST ORANGE, N.J., Feb. 9, 2007 (PRIME NEWSWIRE) -- PennFed Financial Services, Inc. (Nasdaq:PFSB), the $2.3 billion holding company for New Jersey-based Penn Federal Savings Bank, announced a loss of 12 cents per share for its second fiscal quarter ended December 31, 2006. The loss was attributable to merger-related expenses. Earnings for the comparable prior year quarter were 26 cents per diluted share.

For the first six months of fiscal 2007, PennFed reported earnings of 6 cents per diluted share, compared to 56 cents per diluted share for the comparable six months ended December 31, 2005.

On November 2, 2006, the Company announced the signing of a definitive agreement pursuant to which PennFed will merge with and into New York Community Bancorp, Inc. PennFed shareholders will receive 1.222 shares of New York Community Bancorp common stock in a tax-free exchange for each share of PennFed common stock held at the closing date. The transaction is expected to be completed on or about March 31, 2007, pending the approval of PennFed's stockholders and the approval of state and federal regulatory agencies. Included in the Company's results are $4.6 million of merger-related expenses, representing attorney fees, investment banking fees and compensation payments made under the merger agreement. The merger-related expenses had the effect of reducing earnings per share by $0.27 and $0.26 per share for the three months and six months ended December 31, 2006, respectively, net of related tax.

Certain information provided in this press release excludes income and expense items, which management believes should be excluded in order to provide investors with a clear understanding of the results of the Company's normal business operations. These items, which are included in the financial results prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) but which are excluded from adjusted results, are described in a reconciliation table following this press release.

PennFed's net interest margin of 1.34% for the quarter ended December 31, 2006 reflects 4 basis points of compression from the September 2006 quarter. "We had anticipated some margin pressure, but now feel that stabilization of net interest margin has begun," said Joseph L. LaMonica, PennFed's President and Chief Executive Officer.

"While non-performing assets showed a slight increase in the quarter, the Company's asset quality remains stellar," LaMonica stated. Non-performing assets of $2.5 million represented just 0.10% of total assets at December 31, 2006. Actual chargeoffs continue to be minimal.

The reported non-interest expense ratio was 1.78% for the December 2006 quarter. However, excluding merger-related expenses, the Company continued to maintain a ratio of non-interest expenses to average assets of approximately 1% for the fifth consecutive quarter.

Total assets at December 31, 2006 of $2.339 billion reflected growth of just over 1% since June 30, 2006. Total loan production was $72 million for the December 2006 quarter. Demand for one- to four-family loans continued to be weak. "Therefore, the Company continues to focus on the origination of home equity loans in addition to one-to four-family mortgage loans and commercial real estate loans," said LaMonica. Although slightly below the pace of the previous few quarters, PennFed's consumer loan originations totaled $32.1 million -- a 15% increase over the December 31, 2005 quarter.

Deposits grew $132.2 million, or over 9%, to $1.547 billion at December 31, 2006 compared to $1.415 billion at June 30, 2006. While the New Jersey deposit market remains highly competitive, checking and money market balances increased $11 million, or 4%, since June 30, 2006. The Company continued to experience a shift in deposit mix as savings account customers moved funds to other higher yielding alternatives. Growth in CDs was primarily due to increased municipal deposit relationships as well as the shift of funds into higher interest-bearing products. The Company continues to monitor alternative wholesale funding sources and remains committed to utilize such funding when appropriate.

PennFed stockholders of record as of February 9, 2007 will be paid a cash dividend of 7 cents per share on February 23, 2007.

Penn Federal Savings Bank maintains 24 New Jersey branch offices. The Bank's deposits are insured by the Federal Deposit Insurance Corporation.

This release contains words or phrases, such as "will," "expect," "anticipate," "continue" and similar expressions, 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 and competitive 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.

NOTE: SEE FINANCIAL TABLES



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


                         Dec. 31,    Sept. 30,   June 30,    Dec. 31,
                           2006        2006        2006        2005
                        ----------  ----------  ----------  ----------

 Selected Financial
  Condition Data:
  Cash and cash
   equivalents            $ 18,252    $ 18,645    $ 16,614    $ 17,988
  Investments, net         440,723     445,442     445,296     425,405
  Mortgage-backed
   securities, net          57,703      60,293      62,963      68,978
  Loans held for
   sale                          0         285         217         242
  Loans receivable:
    One- to
     four-family
     mortgage loans      1,314,723   1,317,415   1,302,230   1,222,023
    Commercial and
     multi-family
     real estate
     loans                 170,544     170,807     172,600     170,653
    Consumer loans         234,598     219,840     204,446     166,723
    Allowance for
     loan losses            (5,859)     (5,865)     (5,888)     (5,913)
    Other, net              10,755      10,804      10,619       9,592
                        ----------  ----------  ----------  ----------
  Loans receivable,
   net                   1,724,761   1,713,001   1,684,007   1,563,078

  FHLB stock                25,971      26,511      27,714      25,028
  Other assets              71,137      70,085      69,699      60,546
                        ----------  ----------  ----------  ----------
  Total assets          $2,338,547  $2,334,262  $2,306,510  $2,161,265
                        ==========  ==========  ==========  ==========

  Deposits:
    Checking and
     money market       $  323,565  $  315,103  $  312,489  $  266,674
    Savings                268,100     280,052     300,247     335,367
    Certificates of
     deposit and
     accrued
     interest              955,091     906,651     801,852     784,334
                        ----------  ----------  ----------  ----------
  Total deposits         1,546,756   1,501,806   1,414,588   1,386,375

  FHLB advances            480,000     465,000     465,465     450,465
  Other borrowings         124,801     179,164     240,193     141,770
  Junior
   subordinated
   debentures               42,148      42,138      42,126      42,104
  Other liabilities         21,452      21,772      20,717      16,379
  Stockholders'
   equity                  123,390(a)  124,382     123,421     124,172
                        ----------  ----------  ----------  ----------
  Total liabilities
   and stockholders'
   equity               $2,338,547  $2,334,262  $2,306,510  $2,161,265
                        ==========  ==========  ==========  ==========

  Book value per
   share                $     9.52  $     9.69  $     9.59  $     9.54

  Equity to assets            5.28%       5.33%       5.35%       5.75%

 Asset Quality Data:
  Non-performing
   loans                $    2,455     $ 2,140  $    1,780     $ 2,718
  Real estate owned,
   net                           0           0           0         502
                        ----------  ----------  ----------  ----------
  Total
   non-performing
   assets               $    2,455  $    2,140  $    1,780  $    3,220
                        ==========  ==========  ==========  ==========

  Non-performing
   loans to total
   loans                      0.14%       0.12%       0.11%       0.17%
  Non-performing
   assets to total
   assets                     0.10%       0.09%       0.08%       0.15%
  Allowance for
   loan losses to
   non-performing
   loans                    238.66%     274.07%     330.79%     217.55%
  Allowance for
   loan losses to
   total gross
   loans                      0.34%       0.34%       0.35%       0.38%

 Regulatory Capital
   Ratios (of the
    Bank):
  Tangible capital
   ratio (requirement
    - 1.50%)                  7.20%       7.17%       7.33%       7.80%
  Core capital ratio
   (requirement -
   4.00%)                     7.20%       7.17%       7.33%       7.80%
  Risk-based capital
   ratio
   (requirement -
    8.00%)                   13.38%      13.43%      13.81%      14.89%

 (a) Common shares outstanding as of December 31, 2006 totaled
     12,963,201 shares.


                        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    For the six months
                                ended                  ended
                              December 31,           December 31,
                        ----------------------  ----------------------
                           2006       2005         2006        2005
                        ----------  ----------  ----------  ----------
 Selected Operating
  Data:
  Interest and
   dividend income      $   31,703  $   28,350  $   62,946  $   56,033
  Interest expense          24,337      18,715      48,052      36,206
                        ----------  ----------  ----------  ----------
    Net interest
     and dividend
     income                  7,366       9,635      14,894      19,827
  Provision for
   loan losses                   0           0           0           0
                        ----------  ----------  ----------  ----------
  Net interest and
   dividend income
   after provision
   for loan losses           7,366       9,635      14,894      19,827
  Non-interest income:
   Fees and service
    charges                    778         704       1,503       4,174
   Net gain (loss)
    from real estate
    owned                        0           2          22          (1)
   Net gain on
    sales of loans              70          21          79         143
   Income on Bank
    Owned Life
    Insurance                  318         219         616         435
   Other                       231         153         649         334
                        ----------  ----------  ----------  ----------
   Total
    non-interest
    income                   1,397       1,099       2,869       5,085
  Non-interest
   expenses:
   Compensation &
    employee
    benefits                 3,365       3,067       6,355       6,326
   Net occupancy
    expense                    571         594       1,158       1,179
   Equipment                   548         538       1,141       1,509
   Advertising                 143         165         263         299
   Federal deposit
    insurance
    premium                     44          45          87          87
   Extinguishment
    of debt                      0           0           0       1,351
   Merger-related
    expense                  4,576           0       4,576           0
   Other                     1,152         979       2,404       2,390
                        ----------  ----------  ----------  ----------
     Total
      non-interest
      expenses              10,399       5,388      15,984      13,141
                        ----------  ----------  ----------  ----------
  Income (loss)
   before income
   taxes                    (1,636)      5,346       1,779      11,771
  Income tax expense
   (benefit)                  (144)      1,892       1,007       4,185
                        ----------  ----------  ----------  ----------
  Net income (loss)     $   (1,492) $   3,454   $      772  $    7,586
                        ==========  ==========  ==========  ==========

  Weighted avg. no.
   of basic common
   shares               12,878,599  13,086,856  12,870,294  13,175,181
  Weighted avg. no.
   of diluted
   common shares        12,878,599  13,509,140  13,185,641  13,604,862
  Basic earnings
   (loss) per
   common share            $ (0.12)     $ 0.26      $ 0.06      $ 0.58
  Diluted earnings
   (loss) per
   common share            $ (0.12)     $ 0.26      $ 0.06      $ 0.56

  Return on average
   common equity (a)         -4.81%      11.09%       1.25%      12.11%

  Return on average
    assets (a)               -0.26%       0.65%       0.07%       0.72%

  Average total
   assets               $2,330,958  $2,137,449  $2,323,633  $2,112,355

  Average earning
   assets               $2,249,829  $2,066,915  $2,243,732  $2,042,199

  Yield on average
   interest-earning
   assets                     5.61%       5.46%      5.59%        5.47%
  Cost of average
   deposits and
   borrowings                 4.40%       3.70%      .36%        3.63%
                        ----------  ----------  ----------  ----------
  Net interest rate
   spread                     1.21%       1.76%       1.23%       1.84%
                        ==========  ==========  ==========  ==========

  Net interest
   margin                     1.34%       1.89%       1.36%       1.97%

  Non-interest exp.
   as a % of avg.
   assets (a)                 1.78%       1.01%       1.38%       1.24%
  Efficiency ratio          118.67%      50.20%      90.10%      52.75%

  Loan originations
   and purchases:
   One- to four-
    family mortgage
    loans                 $ 34,004    $ 73,061    $ 87,632   $ 191,290
   Commercial and
    multi-family
    real estate
    loans                    5,434      14,387       8,622      22,702
   Consumer loans           32,074      27,996      65,345      58,466
                        ----------  ----------  ----------  ----------
   Total loan
    originations
    and purchases       $   71,512  $  115,444  $  161,599  $  272,458
                        ==========  ==========  ==========  ==========

(a) - Annualized.



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


                      CALCULATION OF ADJUSTED NET INCOME
                      ----------------------------------
           
                          For the three months     For the six months  
                                ended                    ended
                              December 31,            December 31,
                        ----------------------  ----------------------
                           2006        2005        2006        2005
                        ----------  ----------  ----------  ----------

 Reported net 
  income (loss)           $ (1,492)    $ 3,454       $ 772     $ 7,586

 Adjustments:
   Merger-related 
    expense                  4,576           0       4,576           0
   Commercial loan 
    prepayment
    premium                      0           0           0      (2,688)
   Prepayment 
    penalty on FHLB
    advances                     0           0           0       1,351
   Acceleration of 
    depreciation on 
    branch
    automation 
    system software              0           0           0         372
   Increase in 
    obligation under 
    certain long-term 
    benefit plans                0           0           0         259
   Net tax effect           (1,130)          0      (1,130)        247
                        ----------  ----------  ----------  ----------
   Adjustments, net 
    of taxes                 3,446           0       3,446        (459)
                        ----------  ----------  ----------  ----------
 "Adjusted" net 
   income               $    1,954  $    3,454  $    4,218  $    7,127
                        ==========  ==========  ==========  ==========

 Weighted avg. no. 
  of basic common 
  shares                12,878,599  13,086,856  12,870,294  13,175,181
 Weighted avg. no. 
  of diluted  
  common shares         13,192,798  13,509,140  13,185,641  13,604,862
 Basic earnings per 
  common share          $     0.15      $ 0.26      $ 0.33      $ 0.54
 Diluted earnings
  per common share      $     0.15      $ 0.26      $ 0.32      $ 0.52

 Return on average 
  common equity (a)           6.30%      11.09%       6.81%      11.38%

 Return on average 
  assets (a)                  0.34%       0.65%       0.36%       0.67%

 Non-interest exp.
  as a % of avg. 
  assets (a)                  1.00%       1.01%       0.98%       1.06%
 Efficiency ratio            66.45%      50.20%      64.30%      50.21%

 (a) - Annualized.

                    
                   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                       
                                                                       
          ------------------------------------------------------------ 
            Dec. 31,    Sep. 30,    Jun. 30,    Mar. 31,    Dec. 31,   
              2006        2006        2006       2006         2005     
          ----------- ----------- ----------- ----------- -----------  
 Selected                                                              
  Operating                                                            
  Data:                                                                
 Interest                                                              
  and                                                                  
  dividend                                                             
  income   $   31,703  $   31,243  $   30,270  $   28,973  $   28,350  
 Interest                                                              
  expense      24,337      23,715      21,814      19,762      18,715  
          ----------- ----------- ----------- ----------- -----------  
   Net                                                                   
    interest                                                             
    and                                                                  
    dividend                                                             
    income      7,366       7,528       8,456       9,211       9,635  
 Provision                                                             
  for loan                                                             
  losses            0           0           0           0           0  
          ----------- ----------- ----------- ----------- -----------  
 Net                                                                   
  interest                                                             
  and                                                                  
  dividend                                                             
  income                                                               
  after                                                                
  provision                                                            
  for loan                                                             
  losses        7,366       7,528       8,456       9,211       9,635  
 Non-interest                                                          
  income:                                                              
   Fees and                                                            
    service                                                            
    charges       778         725         718         778         704  
   Net gain                                                            
    (loss)                                                             
    from                                                               
    real                                                               
    estate                                                             
    owned           0          22          (2)         (3)          2  
   Net gain                                                            
    on sales                                                           
    of loans       70           9           0           0          21  
   Income on                                                           
    Bank                                                               
    Owned                                                              
    Life                                                               
    Insurance     318         298         293         239         219  
   Other          231         418         204         201         153  
          ----------- ----------- ----------- ----------- -----------  
   Total                                                               
    non-                                                               
    interest                                                           
    income      1,397       1,472       1,213       1,215       1,099  
 Non-interest                                                          
  expenses:                                                            
   Compensation                                                        
    & employee                                                         
    benefits    3,365       2,990       2,742       3,134       3,067  
   Net                                                                 
    occupancy                                                          
    expense       571         587         583         664         594  
   Equipment      548         593         534         530         538  
   Advertising    143         120         170         168         165  
   Federal                                                             
    deposit                                                            
    insurance                                                          
    premium        44          43          43          45          45  
   Extinguishment                                                      
    of debt         0           0           0           0           0  
   Merger-                                                             
    related                                                            
    expense     4,576           0           0           0           0  
   Other        1,152       1,252       1,325       1,119         979  
          ----------- ----------- ----------- ----------- -----------  
   Total                                                               
    non-                                                               
    interest                                                           
    expenses   10,399       5,585       5,397       5,660       5,388  
          ----------- ----------- ----------- ----------- -----------  
 Income                                                                
  (loss)                                                               
  before                                                               
  income                                                               
  taxes        (1,636)      3,415       4,272       4,766       5,346  
 Income tax                                                            
  expense                                                              
  (benefit)      (144)      1,151       1,509       1,717       1,892  
          ----------- ----------- ----------- ----------- -----------  
 Net income                                                            
  (loss)  $    (1,492)$     2,264 $     2,763 $     3,049 $     3,454  
          =========== =========== =========== =========== ===========  
                                                                       
 Weighted                                                              
  avg. no                                                              
  of basic                                                             
  common                                                               
  shares   12,878,599  12,861,988  12,894,870  12,966,518  13,086,856  
 Weighted                                                              
  avg. no                                                              
  of diluted                                                           
  common                                                               
  shares   12,878,599  13,177,415  13,241,182  13,349,234  13,509,140  
 Basic                                                                 
  earnings                                                             
  (loss)                                                               
  per                                                                  
  common                                                               
  share     $   (0.12)  $    0.18   $    0.21   $    0.24   $    0.26  
 Diluted                                                               
  earnings                                                             
  (loss)                                                               
  per                                                                  
  common                                                               
  share    $    (0.12) $     0.17  $     0.21  $     0.23  $     0.26  
                                                                       
 Return on                                                              
  average                                                              
  common                                                               
  equity (a)    -4.81%       7.32%       8.97%       9.87%      11.09% 
                                                                       
 Return on                                                             
  average                                                              
  assets (a)    -0.26%       0.39%       0.49%       0.56%       0.65% 
                                                                       
 Average                                                               
  total                                                                
  assets   $2,330,958  $2,316,308  $2,267,507  $2,184,365  $2,137,449  
                                                                       
 Average                                                               
  earning                                                              
  assets   $2,249,829  $2,237,635  $2,188,499  $2,111,183  $2,066,915  
                                                                       
 Yield on                                                              
  average                                                              
  interest-                                                            
  earning                                                              
  assets         5.61%       5.56%       5.53%       5.51%       5.46% 
 Cost of                                                               
  average                                                              
  deposits                                                             
  and                                                                  
  borrowings     4.40%       4.31%       4.09%       3.90%       3.70% 
          ----------- ----------- ----------- ----------- -----------  
 Net                                                                    
  interest                                                             
  rate                                                                 
  spread         1.21%       1.25%       1.44%       1.61%       1.76% 
          =========== =========== =========== =========== ===========  
                                                                       
 Net                                                                   
  interest                                                             
  margin         1.34%       1.38%       1.56%       1.74%       1.89% 
                                                                       
 Non-interest                                                          
  exp. as a %                                                          
  of avg                                                               
  assets (a)     1.78%       0.96%       0.95%       1.04%       1.01% 
 Efficiency                                                            
  ratio        118.67%      62.21%      55.81%      54.27%      50.20% 
                                                                       
 Loan                                                                  
  originations                                                         
  and                                                                  
  purchases:                                                           
   One- to                                                             
    four-                                                              
    family                                                             
    mortgage                                                           
    loans   $  34,004   $  53,628   $  84,925   $  64,637   $  73,061  
   Commercial                                                          
    and                                                                
    multi-                                                             
    family                                                             
    real                                                               
    estate                                                             
    loans       5,434       3,188      12,353       7,005      14,387  
   Consumer                                                            
    loans      32,074      33,271      36,472      36,791      27,996  
          ----------- ----------- ----------- ----------- -----------  
   Total loan                                                          
    originations                                                       
    and                                                                
    purchases $71,512     $90,087    $133,750    $108,433    $115,444  
          =========== =========== =========== =========== ===========  
                                                                       
 (a) - Annualized                                                      


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


                   CALCULATION OF ADJUSTED NET INCOME
                   ----------------------------------

                             For the three months ended
           -----------------------------------------------------------
             Dec. 31,    Sep. 30,    Jun. 30,    Mar. 31,    Dec. 31,
               2006        2006        2006        2006        2005
           ----------- ----------- ----------- ----------- -----------

 Reported 
  net
  income 
  (loss)   $    (1,492) $    2,264 $     2,763 $     3,049 $     3,454

 Adjustments:
  Merger-
   related
   expense       4,576           0           0           0           0
  Commercial
   loan
   prepayment
   premium           0           0           0           0           0
  Prepayment
   penalty 
   on FHLB
   advances          0           0           0           0           0
  Acceleration
   of depreciation
   on branch
   automation
   system
   software          0           0           0           0           0
  Increase in
   obligation
   under certain
   long-term
   benefit 
   plans             0           0           0           0           0
  Net tax 
   effect       (1,130)          0           0           0           0
           ----------- ----------- ----------- ----------- -----------
  Adjustments,
   net of 
   taxes         3,446           0           0           0           0
           ----------- ----------- ----------- ----------- -----------
 "Adjusted" 
  net 
  income   $     1,954 $     2,264 $     2,763 $     3,049 $     3,454
           =========== =========== =========== =========== ===========

 Weighted 
  avg no. 
  of 
  basic
  common 
  shares    12,878,599  12,861,988  12,894,870  12,966,518  13,086,856
 Weighted 
  avg 
  no. of 
  diluted
  common 
  shares    13,192,798  13,177,415  13,241,182  13,349,234  13,509,140
 Basic 
  earnings
  per common
  share    $      0.15 $      0.18 $      0.21 $      0.24 $      0.26
 Diluted
  earnings 
  per common 
  share    $      0.15 $      0.17 $      0.21 $      0.23 $      0.26

 Return on
  average
  common
  equity (a)      6.30%       7.32%       8.97%       9.87%      11.09%

 Return on
  average
  assets (a)      0.34%       0.39%       0.49%       0.56%       0.65%

 Non-interest
  exp. as a %
  of avg 
  assets (a)      1.00%       0.96%       0.95%       1.04%       1.01%
 Efficiency
  ratio          66.45%      62.21%      55.81%      54.27%      50.20%

 (a) - Annualized.

            

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