UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934


        Date of Report (Date of earliest event reported) - July 25, 2006
                                                           -------------

                        PENNFED FINANCIAL SERVICES, INC.
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             (Exact name of Registrant as specified in its charter)


             Maryland                0-24040                  22-3297339
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(State or other jurisdiction of    (Commission            (I.R.S. Employer
 incorporation or organization)     File Number)        Identification Number)


622 Eagle Rock Avenue, West Orange, New Jersey                 07052-2989
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   (Address of principal executive offices)                    (Zip Code)


Registrant's telephone number, including area code:  (973) 669-7366
                                                    ----------------------------

                                       N/A
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          (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[_]   Written communications pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)

[_]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)

[_]   Pre-commencement communications pursuant to Rule 14d-2(b) under the
      Exchange Act (17 CFR 240.14d-2(b))

[_]   Pre-commencement communications pursuant to Rule 13e-4(c) under the
      Exchange Act (17 CFR 240.13e-4(c))

<PAGE>

Item 1.01 Entry Into a Material Definitive Agreement
----------------------------------------------------

At a meeting on July 25, 2006, the Compensation Committee of the Board of
Directors of PennFed Financial Services, Inc. (the "Company ") reviewed in
detail the compensation currently paid to the Company's executive officers,
including a review of an analysis of a peer group comprised of comparably sized
and similarly located thrifts. Based upon their detailed review, the Committee
established the following salaries effective July 1, 2006: President and Chief
Executive Officer Joseph L. LaMonica $575,000; Senior Executive Vice President
and General Counsel Patrick D. McTernan $275,000; Senior Executive Vice
President and Chief Operating Officer Jeffrey J. Carfora $260,000; Senior
Executive Vice President and Chief Financial Officer Claire M. Chadwick
$215,000, and Executive Vice President and Residential Lending Group Executive
Maria F. Magurno $144,900.

Although no bonuses were paid for the year ended June 30, 2006, on July 25,
2006, the Compensation Committee renewed for Fiscal 2007 the Incentive Plan for
Fiscal 2006. The executive officers who may earn bonus payments under the
Incentive Plan are Messrs. LaMonica, McTernan and Carfora and Ms. Chadwick. As
in the prior year, the Company's Fiscal 2007 Incentive Plan provides for cash
bonuses, payable quarterly, if the Company's annualized growth in earnings per
share (excluding unusual or other non-recurring items) exceeds the specified
percentage thresholds for either of two achievement tiers.


<PAGE>



                                   SIGNATURES
                                   ----------


      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.



                                            PENNFED FINANCIAL SERVICES, INC.



Date: July 31, 2006                         By: /s/ Joseph L. LaMonica
                                               -----------------------------
                                                  Joseph L. LaMonica
                                                  President and Chief
                                                  Executive Officer