Exhibit 99.1

FOR IMMEDIATE RELEASE                           Contact: Claire M. Chadwick, CFO
                                                         973-669-7366, ext. 267

                   PENNFED FINANCIAL SERVICES, INC. ADVISED OF
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        SUSPENSION OF DIVIDENDS BY THE FEDERAL HOME LOAN BANK OF NEW YORK
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     WEST ORANGE,  NJ,  September 24, 2003 - PennFed  Financial  Services,  Inc.
(Nasdaq:PFSB),  the $1.8  billion  holding  company  for New  Jersey-based  Penn
Federal Savings Bank,  announced that the Federal Home Loan Bank of New York has
informed the Company that the October  dividend on Federal Home Loan Bank of New
York stock  will not be paid.  Penn  Federal  is one of over 300  members of the
Federal  Home Loan Bank of New York.  The FHLB of New York is one of 12 regional
Federal Home Loan Banks that provides  loans and  correspondent  services to its
members. As a member, Penn Federal is required to purchase and maintain stock in
the  FHLB  of  New  York.  To  satisfy  this   requirement,   the  Company  owns
approximately  $25.2 million in FHLB of New York stock.  For the year ended June
30, 2003,  the Company  recorded $1.3 million in dividends  from the FHLB of New
York. The Company has received approximately $318,000 in dividend payments since
June 30, 2003.

     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.

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