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

                                    FORM 10-Q

[X]      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 [FEE REQUIRED]

         For the quarterly period ended September 30, 1998

                                       OR

[ ]      TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

         For the  transition  period from           to

                         Commission file number 0-24040 

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

             Delaware                                  22-3297339
--------------------------------------------------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

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


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


--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
requirements for the past 90 days.

                                   YES  [X]   NO[  ]  

         As of November 2, 1998,  there were  issued and  outstanding  9,214,859
shares of the Registrant's Common Stock.
<PAGE>
PART I - Financial Information
Item 1.  Financial Statements
<TABLE>
<CAPTION>
PennFed Financial Services, Inc. and Subsidiaries
Consolidated Statements of Financial Condition

                                                                                    September 30,       June 30,
                                                                                        1998              1998
                                                                                     -----------       ----------
                                                                                        (Dollars in thousands)
<S>                                                                                  <C>              <C>        
ASSETS
Cash and cash equivalents ......................................................     $    12,237      $    10,960
Investment securities held to maturity, at amortized cost, market value of
     $194,944 and $178,743 at  September 30, 1998 and June 30, 1998 ............         193,925          178,310
Mortgage-backed securities held to maturity, at amortized cost, market
     value of $185,935 and $208,128 at September 30, 1998 and
     June 30, 1998 .............................................................         181,795          204,452
Loans held for sale ............................................................          13,881              565
Loans receivable, net of allowance for loan losses of $2,869 and $2,776
     at September 30, 1998 and June 30, 1998 ...................................       1,101,078        1,095,287
Premises and equipment, net ....................................................          18,598           18,092
Real estate owned, net .........................................................           1,307            1,643
Federal Home Loan Bank of  New York stock, at cost .............................          16,298           15,065
Accrued interest receivable, net ...............................................          10,923            8,723
Goodwill and other intangible assets ...........................................          12,883           13,481
Other assets ...................................................................           3,493            5,360
                                                                                     -----------       ----------
                                                                                     $ 1,566,418       $1,551,938
                                                                                     ===========       ==========

LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities:
     Deposits ..................................................................     $ 1,083,284      $ 1,028,100
     Federal Home Loan Bank of New York advances ...............................         279,465          230,465
     Other borrowings ..........................................................          47,625          131,500
     Mortgage escrow funds .....................................................          10,898           10,534
     Due to banks ..............................................................           5,222           12,069
     Accounts payable and other liabilities ....................................           2,886            2,886
                                                                                     -----------       ----------
     Total liabilities .........................................................       1,429,380        1,415,554
                                                                                     -----------       ----------

     Guaranteed Preferred Beneficial Interests in the Company's
         Junior Subordinated Debentures ........................................          34,500           34,500
     Unamortized issuance expenses .............................................          (1,803)          (1,819)
                                                                                     -----------       ----------
     Net Trust Preferred Securities ............................................          32,697           32,681
                                                                                     -----------       ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PennFed Financial Services, Inc. and Subsidiaries
Consolidated Statements of Financial Condition (continued)

                                                                                    September 30,       June 30,
                                                                                        1998              1998
                                                                                     -----------       ----------
                                                                                        (Dollars in thousands)
<S>                                                                                  <C>              <C>        
Stockholders' Equity:
     Serial preferred stock, $.01 par value, 7,000,000 shares
         authorized, no shares issued ..........................................            --               --
     Common stock, $.01 par value, 30,000,000 shares authorized,
         11,900,000 shares issued, and 9,235,859 and  9,385,988     shares .....
         outstanding at September 30, 1998 and June 30, 1998  (excluding  shares
         held in treasury of 2,664,141 and 2,514,012 at
         September 30, 1998 and June 30, 1998) .................................              60               60
     Additional paid-in capital ................................................          58,589           58,278
     Restricted stock - Management Recognition Plan ............................            (531)            (531)
     Employee Stock Ownership Plan Trust debt ..................................          (3,163)          (3,253)
     Retained earnings, partially restricted ...................................          73,311           70,781
     Treasury stock, at cost, 2,664,141 and 2,514,012 shares at
         September 30, 1998 and June 30, 1998 ..................................         (23,925)         (21,632)
                                                                                     -----------       ----------
     Total stockholders' equity ................................................         104,341          103,703
                                                                                     -----------       ----------
                                                                                     $ 1,566,418       $1,551,938
                                                                                     ===========       ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
PennFed Financial Services, Inc. and Subsidiaries
Consolidated Statements of Income
                                                         Three months ended September 30,
                                                         --------------------------------
                                                             1998              1997
                                                          -----------      -----------
                                                          (Dollars in thousands, except
                                                                per share amounts)
<S>                                                       <C>              <C>        
Interest and Dividend Income:
    Interest and fees on loans .....................      $    20,199      $    17,909
     Interest on federal funds sold .................               3             --
     Interest and dividends on investment securities            3,788            1,064
     Interest on mortgage-backed securities .........           3,248            4,854
                                                          -----------      -----------
                                                               27,238           23,827
                                                          -----------      -----------
Interest Expense:
     Deposits .......................................          12,648           11,676
     Borrowed funds .................................           5,513            3,989
     Trust Preferred securities .....................             783             --
                                                          -----------      -----------
                                                               18,944           15,665
                                                          -----------      -----------
Net Interest and Dividend Income Before Provision
     for Loan Losses ................................           8,294            8,162
Provision for Loan Losses ...........................             175              150
                                                          -----------      -----------
Net Interest and Dividend Income After Provision
     for Loan Losses ................................           8,119            8,012
                                                          -----------      -----------

Non-Interest Income:
     Service charges ................................             541              436
     Net gain (loss) from real estate operations ....             (37)             (39)
     Net gain on sales of loans .....................             417             --
     Other ..........................................              94               88
                                                          -----------      -----------
                                                                1,015              485
                                                          -----------      -----------
Non-Interest Expenses:
     Compensation and employee benefits .............           2,235            2,073
     Net occupancy expense ..........................             327              295
     Equipment ......................................             425              358
     Advertising ....................................              76               71
     Amortization of intangibles ....................             598              616
     Federal deposit insurance premium ..............             159              140
     Other ..........................................             852              668
                                                          -----------      -----------
                                                                4,672            4,221
                                                          -----------      -----------

Income Before Income Taxes ..........................           4,462            4,276
Income Tax Expense ..................................           1,611            1,590
                                                          -----------      -----------
Net Income ..........................................     $     2,851      $     2,686
                                                          ===========      ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PennFed Financial Services, Inc. and Subsidiaries
Consolidated Statements of Income (continued)
                                                         Three months ended September 30,
                                                         --------------------------------
                                                             1998              1997
                                                          -----------      -----------
                                                          (Dollars in thousands, except
                                                                per share amounts)
<S>                                                       <C>              <C>        
Weighted average number of common shares outstanding:
     Basic ..........................................       8,663,450        8,931,210
                                                          ===========      ===========
     Diluted ........................................       9,327,443        9,669,702
                                                          ===========      ===========

Net income per common share:
     Basic ..........................................     $      0.33      $      0.30
                                                          ===========      ===========
     Diluted ........................................     $      0.31      $      0.28
                                                          ===========      ===========

</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
PennFed Financial Services, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

                                                                             Three months ended September 30,
                                                                             --------------------------------
                                                                                   1998          1997
                                                                                 --------      --------
                                                                                 (Dollars in thousands)
<S>                                                                              <C>           <C>     
Cash Flows from Operating Activities:
     Net income ............................................................     $  2,851      $  2,686
     Adjustments to reconcile net income to net cash provided by
       operating activities:
     Net gain on sales of loans ............................................         (417)         --
     Proceeds from sales of loans held for sale ............................         --             582
     Originations of loans held for sale ...................................         --          (1,153)
     Net gain on sales of real estate owned ................................           (7)           (1)
     Amortization of investment and mortgage-backed securities
       premium, net ........................................................          101            69
     Depreciation and amortization .........................................          345           320
     Provision for losses on loans and real estate owned ...................          208           185
     Amortization of cost of stock plans ...................................          533           421
     Amortization of intangibles ...........................................          598           616
     Amortization of premiums on loans and loan fees .......................          483           232
     Amortization of Trust Preferred securities issuance costs .............           16          --
     (Increase) decrease in accrued interest receivable, net of accrued
       interest payable ....................................................         (882)          779
     (Increase) decrease in other assets ...................................        1,867          (405)
     Increase (decrease) in accounts payable and other liabilities .........         (132)        1,036
     Increase in mortgage escrow funds .....................................          364           303
     Decrease in due to banks ..............................................       (6,847)       (1,044)
                                                                                 --------      --------
     Net cash provided by (used in) operating activities ...................         (919)        4,626
                                                                                 --------      --------

Cash Flows from Investing Activities:
     Proceeds from maturities of investment securities .....................       27,070           125
     Purchases of investment securities held to maturity ...................      (42,688)      (25,000)
     Net outflow from loan originations net of principal repayments of loans      (36,325)      (10,024)
     Purchases of loans ....................................................       (9,808)      (27,554)
     Proceeds from principal repayments of mortgage-backed securities ......       22,559        19,493
     Proceeds from sale of loans ...........................................       26,766          --
     Purchases of premises and equipment ...................................         (851)       (1,098)
     Proceeds from sale of real estate owned ...............................          329           214
     Purchases of Federal Home Loan Bank of New York stock .................       (1,233)         (262)
                                                                                 --------      --------
     Net cash used in investing activities .................................      (14,181)      (44,106)
                                                                                 --------      --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PennFed Financial Services, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (continued)

                                                                             Three months ended September 30,
                                                                             --------------------------------
                                                                                   1998          1997
                                                                                 --------      --------
                                                                                 (Dollars in thousands)
<S>                                                                              <C>           <C>     
Cash Flows from Financing Activities:
     Net increase in deposits ..............................................       53,866        55,324
     Decrease in advances from the Federal Home Loan Bank of
       New York and other borrowings .......................................      (34,875)      (17,700)
     Cash dividends paid ...................................................         (313)         (325)
     Purchases of treasury stock, net of reissuance ........................       (2,301)         --
                                                                                 --------      --------
     Net cash provided by financing activities .............................       16,377        37,299
                                                                                 --------      --------
Net Increase (Decrease) in Cash and Cash Equivalents .......................        1,277        (2,181)
Cash and Cash Equivalents, Beginning of Period .............................       10,960        10,729
                                                                                 --------      --------
Cash and Cash Equivalents, End of Period ...................................     $ 12,237      $  8,548
                                                                                 ========      ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PennFed Financial Services, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (continued)

                                                               Three months ended September 30,
                                                               --------------------------------
                                                                     1998           1997
                                                                   --------        -------
                                                                    (Dollars in thousands)
<S>                                                                <C>             <C>    
Supplemental Disclosures of Cash Flow Information:
     Cash paid during period for:
     Interest .............................................        $ 17,143        $13,968
                                                                   ========        =======
     Income taxes .........................................        $   --          $  --
                                                                   ========        =======

Supplemental Schedule of Non-Cash Activities:
     Transfer of loans receivable to real estate owned, net        $     19        $   899
                                                                   ========        =======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
                PENNFED FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. Basis of Presentation

The interim  consolidated  financial  statements of PennFed Financial  Services,
Inc. ("PennFed") and subsidiaries (with its subsidiaries, the "Company") include
the  accounts of PennFed and its  subsidiaries  Penn  Federal  Savings Bank (the
"Bank")  and  PennFed  Capital  Trust I. These  interim  consolidated  financial
statements  included  herein  should be read in  conjunction  with the Company's
Annual  Report  on Form  10-K for the year  ended  June 30,  1998.  The  interim
consolidated  financial statements reflect all normal and recurring  adjustments
which  are,  in the  opinion  of  management,  considered  necessary  for a fair
presentation  of the  financial  condition  and  results of  operations  for the
periods presented.  There were no adjustments of a non-recurring nature recorded
during the three months ended  September 30, 1998 and 1997. The interim  results
of operations  presented are not  necessarily  indicative of the results for the
full year.

When  necessary,  reclassifications  have been made to conform to current period
presentation.

2.  Adoption of Recently Issued Accounting Standards

Effective July 1, 1998, the Company  adopted  Statement of Financial  Accounting
Standards No. 130,  "Reporting  Comprehensive  Income"  ("SFAS  130").  SFAS 130
establishes  standards for reporting and display of comprehensive income and its
components.  SFAS 130 requires that all items that are required to be recognized
under accounting  standards as components of comprehensive income be reported in
a  financial  statement  that is  displayed  with the same  prominence  as other
financial  statements.  The  Company  is  required  to  classify  items of other
comprehensive  income by their nature in a financial  statement  and display the
accumulated  balance of other  comprehensive  income  separately  from  retained
earnings and additional  paid-in  capital in the equity section of the statement
of financial  condition.  The adoption of SFAS 130 did not have an effect on the
Company's financial condition or results of operations.
<PAGE>
3.  Computation of EPS

The computation of EPS is presented in the following table.
<TABLE>
<CAPTION>
                                                            Three months ended September 30,
                                                            --------------------------------
                                                                   1998            1997
                                                              -----------     -----------
                                                             (Dollars in thousands, except
                                                                   per share amounts)

<S>                                                           <C>             <C>        
Net income ..............................................     $     2,851     $     2,686
                                                              ===========     ===========

Number of shares outstanding:
  Weighted average shares issued ........................      11,900,000      11,900,000
  Less:  Weighted average shares held in treasury .......       2,608,412       2,255,430
  Less:  Average shares held by the ESOP ................         952,000         952,000
  Plus:  ESOP shares released or committed to be released
           during the fiscal year .......................         323,862         238,640
                                                              -----------     -----------
         Average basic shares ...........................       8,663,450       8,931,210
  Plus:  Average common stock equivalents ...............         663,993         738,492
                                                              -----------     -----------
         Average diluted shares .........................       9,327,443       9,669,702
                                                              ===========     ===========

Earnings per common share:
         Basic ..........................................     $      0.33     $      0.30
                                                              ===========     ===========
         Diluted ........................................     $      0.31     $      0.28
                                                              ===========     ===========
</TABLE>
<PAGE>

4. Stockholders' Equity and Regulatory Capital

The Bank's capital amounts and ratios are presented in the following table.
<TABLE>
<CAPTION>
                                                                                                             To Be Well
                                                                                                          Capitalized Under
                                                                                  For Capital             Prompt Corrective
                                                       Actual                  Adequacy Purposes          Action Provisions
                                                 ------------------            ------------------         ------------------
                                                  Amount      Ratio             Amount      Ratio         Amount       Ratio
                                                  ------      -----             ------      -----         ------       -----
                                                                             (Dollars in thousands)
<S>                                              <C>          <C>               <C>         <C>            <C>         <C>    
As of September 30, 1998
Tangible capital...........................      $112,655      7.28%            $23,209     1.50%              N/A        N/A
Core capital...............................      $112,840      7.29%            $61,899     4.00%          $77,373      5.00%
Risk-based capital.........................      $115,410     15.43%            $59,824     8.00%          $74,781     10.00%

As of June 30, 1998
Tangible capital...........................      $108,580      7.09%            $22,960     1.50%              N/A        N/A
Core capital...............................      $108,816      7.11%            $61,237     4.00%          $76,547      5.00%
Risk-based capital.........................      $111,262     15.16%            $58,705     8.00%          $73,381     10.00% 
</TABLE>

The above table  reflects  information  for the Bank.  Savings and loan  holding
companies,  such as PennFed, are not subject to capital requirements for capital
adequacy  purposes or for prompt corrective  action  requirements.  Bank holding
companies, however, are subject to capital requirements established by the Board
of Governors of the Federal Reserve System (the "FRB"). The following summarizes
the Company's  capital  position under the FRB's capital  requirements  for bank
holding companies.
<PAGE>
<TABLE>
<CAPTION>
                                                                                                                     To Be Well
                                                                                                                     Capitalized
                                                                                           For Minimum              Under Prompt
                                                                                         Capital Adequacy         Corrective Action
                                                                 Actual                     Purposes                 Provisions
                                                      ------------------------        ---------------------       -----------------
                                                        Amount          Ratio          Amount        Ratio        Amount      Ratio
                                                        ------          -----          ------        -----        ------      -----
                                                                                     (Dollars in thousands)
<S>                                                   <C>                <C>           <C>             <C>         <C>        <C>   
Stockholders' equity.............................     $   104,341
Add:   Qualifying preferred securities...........          30,528
Less:  Goodwill..................................            (907)
       Deposit premium intangible................         (11,976)
       Disallowed servicing assets...............             (59)
                                                      ------------ 
Tangible capital, and ratio to
       adjusted total assets.....................     $   121,927         7.85%        $23,308         1.50%
                                                      ===========                      =======

Add:   Qualifying intangible asset...............     $       185
                                                      ----------- 
Tier I (core) capital, and ratio to
       adjusted total assets.....................     $   122,112         7.86%        $46,617         3.00%       $77,694     5.00%
                                                      ===========                      =======                     =======

Tier I (core) capital, and ratio to
       risk-weighted assets......................     $   122,112        16.44%        $29,711         4.00%       $44,567     6.00%
                                                      ===========                      =======                     =======

Less:  Equity investments and
       investments in real estate................     $       (50)
Add:   Allowance for loan losses.................           2,620
                                                      ----------- 

Total risk-based capital, and ratio
       to risk-weighted assets...................     $   124,682        16.79%        $59,422         8.00%       $74,278    10.00%
                                                      ===========                      =======                     =======

Total assets.....................................     $ 1,566,418
                                                      ===========

Adjusted total assets............................     $ 1,553,885
                                                      ===========

Risk-weighted assets.............................     $   742,777
                                                      ===========
</TABLE>
<PAGE>
Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

General

The  Company's  results of operations  are  dependent  primarily on net interest
income,  which  is the  difference  between  the  income  earned  on  its  loan,
securities  and investment  portfolios and its cost of funds,  consisting of the
interest  paid on  deposits  and  borrowings.  Results  of  operations  are also
affected by the  Company's  provision  for loan losses and  operating  expenses.
General economic and competitive  conditions,  particularly  changes in interest
rates,   government   policies  and  actions  of  regulatory   authorities  also
significantly  affect the Company's  results of  operations.  Future  changes in
applicable  law,  regulations  or  government  policies may also have a material
impact on the Company.

When  used in this  Form  10-Q and in future  filings  by the  Company  with the
Securities and Exchange  Commission (the "SEC"), in the Company's press releases
or other public or stockholder communications,  and in oral statements made with
the approval of an  authorized  executive  officer,  the words or phrases  "will
likely   result,"  "are  expected  to,"  "will   continue,"  "is   anticipated,"
"estimate,"   "project'  or  similar   expressions   are  intended  to  identify
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation  Reform Act of 1995. Such 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,  demand for loans in the Company's  market area
and  competition,  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  such
forward-looking  statements,  which speak only as of the date made.  The Company
wishes  to advise  readers  that the  factors  listed  above  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.

The Company does not undertake -- and specifically  declines any obligation - to
publicly  release  the  result  of  any  revisions  which  may  be  made  to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

Financial Condition

Total assets  increased  slightly to $1.566  billion at September  30, 1998 from
total  assets  of  $1.552  billion  at  June  30,  1998.  Increases  due to loan
originations  and purchases,  particularly  in the Company's one- to four-family
first  mortgage loan  portfolio,  and purchases of  investment  securities  were
offset by sales of one- to four-family  residential loans and principal payments
on  loans  and  mortgage-backed  securities.  A  new  strategic  initiative  was
implemented  at the beginning of the fiscal year and focuses on recurring  sales
of fixed-rate,  low coupon,  one- to  four-family  first mortgage loans into the
secondary  market.  By restraining  asset growth,  this strategic  initiative is
expected  to  result  in an  improvement  in the  net  interest  margin  and the
Company's interest rate risk position and increase non-interest income.
<PAGE>
Deposits  increased  $55.2 million to $1.083  billion at September 30, 1998 from
$1.028  billion at June 30,  1998.  Federal  Home Loan Bank  advances  and other
borrowings  totaled  $327.1  million at  September  30,  1998,  a $34.9  million
decrease from $362.0 million at June 30, 1998.

Non-performing  assets at September 30, 1998 totaled $5.8 million,  representing
0.37% of total assets,  compared to $5.4 million,  or 0.35% of total assets,  at
June  30,  1998.  Non-accruing  loans  totaled  $4.5  million,  with a ratio  of
non-performing  loans to total loans of 0.41% at September  30, 1998 as compared
to $3.7 million,  or 0.34% of total loans,  at June 30, 1998.  Real estate owned
decreased to $1.3  million at  September  30, 1998 from $1.6 million at June 30,
1998.

Stockholders'  equity at September 30, 1998 totaled $104.3  million  compared to
$103.7 million at June 30, 1998. The increase  primarily reflects the net income
recorded for the three months ended September 30, 1998,  partially offset by the
repurchase  of 151,000  shares of the Company's  outstanding  common stock at an
average price of $15.24 per share and the declaration of dividends.

Results of Operations

General.  For the three  months  ended  September  30,  1998 net income was $2.9
million,  or $0.31 per diluted share, as compared to net income of $2.7 million,
or $0.28 per diluted share for the comparable prior year period.

Interest and Dividend Income.  Interest and dividend income for the three months
ended  September 30, 1998  increased to $27.2 million from $23.8 million for the
three months ended  September 30, 1997.  The increase in the current year period
was due to an increase in average  interest-earning assets partially offset by a
decrease  in the  average  yield  earned  on  interest-earning  assets.  Average
interest-earning assets were $1.520 billion for the three months ended September
30, 1998 compared to $1.285  billion for the comparable  prior year period.  The
average yield earned on interest-earning assets decreased to 7.16% for the three
months ended  September 30, 1998 from 7.42% for the three months ended September
30, 1997.

Interest income on residential one- to four-family  mortgage loans for the three
months ended  September 30, 1998  increased  $2.0 million to $17.7  million,  or
12.5%,  when compared to the prior year period.  The increase in interest income
on residential  one- to  four-family  mortgage loans was due to a $146.1 million
increase  in the average  balance  outstanding  to $995.7  million for the three
months ended  September 30, 1998  compared to $849.6  million for the prior year
period.  The increase in the average balance on residential  one- to four-family
mortgage  loans was  partially  offset by a decrease  of 30 basis  points in the
average yield earned on this loan  portfolio to 7.12% for the three months ended
September 30, 1998 from the comparable prior year period.

Interest  income on the  mortgage-backed  securities  portfolio  decreased  $1.6
million,  or 33.1%, for the three months ended September 30, 1998 as compared to
the prior year  period.  The  decrease  in  interest  income on  mortgage-backed
securities  primarily  reflects an $88.4 million decrease in the average balance
outstanding  to $192.0  million for the three  months ended  September  30, 1998
compared to $280.4 million for the prior year period.

Interest on investment  securities and other  interest-earning  assets increased
$2.7 million for the three months ended  September 30, 1998 from the  comparable
prior year  period  due to a $153.2  million  increase  in the  average  balance
<PAGE>
outstanding for the current year period.  The increase in the average balance on
investment securities and other interest-earning  assets was partially offset by
a 14 basis point decrease in the average yield earned on these  securities  when
compared to the prior year period.

Interest  Expense.  Interest expense increased $3.3 million to $18.9 million for
the three months ended  September 30, 1998 from $15.6 million for the comparable
1997  period.  The  increase was  attributable  to an increase in total  average
deposits,  primarily  certificates of deposit, and borrowings.  Interest expense
also increased due to the issuance of the Trust  Preferred  securities.  Average
deposits and borrowings increased $201.8 million to $1.419 billion for the three
months ended  September  30, 1998 compared to the 1997 period.  Trust  Preferred
securities had an average balance of $32.7 million for the current  period.  The
average  rate  paid on  deposits,  borrowings  and  Trust  Preferred  securities
increased to 5.17% for the three months ended  September 30, 1998 from 5.10% for
the comparable prior year period.

Net Interest and Dividend Income. Net interest and dividend income for the three
months ended  September 30, 1998 was $8.3 million,  reflecting a slight increase
from $8.2 million  recorded in the  comparable  prior year period.  The increase
reflects the Company's growth in assets,  primarily in investment securities and
residential one- to four-family mortgage loans. The increase in net interest and
dividend  income  was  partially  offset by a decline in the net  interest  rate
spread.  The net  interest  rate  spread and net  interest  margin for the three
months ended  September 30, 1998 were 1.99% and 2.22%,  respectively,  a decline
from 2.32% and 2.58%, respectively, during the comparable prior year period. For
the three months ended  September 30, 1998, the decline in the net interest rate
spread and net interest  margin was  partially  due to the addition of the Trust
Preferred  securities.  The  declines  in the net  interest  rate spread and net
interest  margin  were also  attributable  to the flat yield  curve  environment
recently experienced in which higher yielding loans prepaid at accelerated rates
and were  replaced by lower  yielding  loans.  Since the  Company's  liabilities
generally reprice more quickly than its assets, net interest rate spread and net
interest margin will likely decrease if interest rates rise.

Provision  for Loan Losses.  The  provision for loan losses for the three months
ended  September  30, 1998 was $175,000  compared to $150,000 for the prior year
period.  The  allowance  for loan losses at  September  30, 1998 of $2.9 million
reflects a $93,000 increase from the June 30, 1998 level. The allowance for loan
losses as a percentage of  non-accruing  loans was 63.31% at September 30, 1998,
compared to 74.18% at June 30, 1998.

Non-Interest  Income. For the three months ended September 30, 1998 non-interest
income was $1.0  million  compared to $485,000  for the prior year  period.  The
increase was primarily  attributable  to a $417,000 gain on sales of $26 million
of one- to four-family residential mortgage loans in the secondary market during
the three months ended  September 30, 1998.  These  recurring  loan sales should
allow the Company to maintain  its  origination  volume  profitably,  support an
improvement in net interest margin  performance,  improve its interest rate risk
position and add to non-interest  income. In addition to these gains,  growth in
non-interest income was partially attributable to an increase in service charges
related to checking accounts.

Non-Interest Expenses. The Company's non-interest expenses were $4.7 million for
the three months ended September 30, 1998 compared to $4.2 million for the prior
year period.  Non-interest  expenses  have  increased  to support the  Company's
<PAGE>
increased  lending  volumes and the new Bayville  branch which opened in October
1997. Nevertheless,  the Company's non-interest expenses as a percent of average
assets  declined to 1.18% for the three  months  ended  September  30, 1998 from
1.26% for the comparable prior year period.

Income Tax  Expense.  Income tax  expense  was $1.6  million  for both the three
months ended  September 30, 1998 and the three months ended  September 30, 1997.
The effective tax rate for the three months ended  September 30, 1998 was 36.1%.
The effective tax rate was 37.2% for the three months ended September 30, 1997.

Analysis of Net Interest Income

The  following  table sets forth certain  information  relating to the Company's
consolidated  statements of financial condition and the consolidated  statements
of income for the three months ended  September 30, 1998 and 1997,  and reflects
the average  yield on assets and  average  cost of  liabilities  for the periods
indicated.  Such yields and costs are derived from average daily  balances.  The
average balance of loans receivable includes  non-accruing loans. The yields and
costs include fees which are considered adjustments to yields.
<PAGE>
<TABLE>
<CAPTION>
                                                                           Three Months Ended September 30,
                                               ------------------------------------------------------------------------------------
                                                                 1998                                       1997
                                               --------------------------------------    ------------------------------------------
                                                 Average        Interest                    Average        Interest
                                               Outstanding      Earned/        Yield/    Outstanding       Earned/          Yield/
                                                 Balance          Paid        Rate (1)      Balance         Paid           Rate (1)
                                                 -------          ----        --------      -------         ----           --------
                                                                               (Dollars in thousands)
<S>                                            <C>             <C>               <C>      <C>             <C>                <C>  
Interest-earning assets:
    One- to four-family mortgage
       loans .............................     $  995,729      $   17,720        7.12%    $  849,647      $   15,752         7.42%
    Commercial and multi-family real                                                                                              
       estate loans ......................         64,804           1,431        8.83         55,892           1,261         9.02 
    Consumer loans .......................         56,451           1,048        7.37         40,576             896         8.76 
                                               ----------      ----------                 ----------      ----------              
                                                                                                                                  
       Total loans receivable ............      1,116,984          20,199        7.23        946,115          17,909         7.57 
                                                                                                                                  
    Mortgage-backed securities ...........        192,032           3,248        6.77        280,449           4,854         6.92 
    Investment securities and other ......        211,342           3,791        7.18         58,142           1,064         7.32 
                                               ----------      ----------                 ----------      ----------              
                                                                                                                                  
       Total interest-earning assets .....      1,520,358      $   27,238        7.16      1,284,706      $   23,827         7.42 
                                                               ==========                                 ==========              
                                                                                                                                  
    Non-interest earning assets ..........         58,435                                     50,931                              
                                               ----------                                 ----------                              
       Total assets ......................     $1,578,793                                 $1,335,637                              
                                               ==========                                 ==========                              
                                                                                                                                  
Deposits and borrowings:                                                                                                          
    Money market and demand                                                                                                       
       deposits (transaction accounts) ...     $   95,602      $      312        1.30%    $   81,388      $      248         1.21%
    Savings deposits .....................        164,804             831        2.00        168,158             928         2.19 
    Certificates of deposit ..............        792,145          11,505        5.76        709,078          10,500         5.88 
                                               ----------      ----------                 ----------      ----------              
        Total deposits ....................     1,052,551          12,648        4.77        958,624          11,676         4.83 
                                                                                                                                  
    FHLB of New York advances ............        262,413           4,006        6.06        205,465           3,190         6.16 
    Other borrowings .....................        104,532           1,507        5.64         53,583             799         5.83 
                                               ----------      ----------                 ----------      ----------              
       Total deposits and borrowings .....      1,419,496          18,161        5.07      1,217,672          15,665         5.10 
    Trust Preferred securities ...........         32,689             783        9.58           --              --                
                                                                                                                                  
                                               ----------      ----------                 ----------      ---------- 
       Total deposits, borrowings and                                                                                             
           Trust Preferred securities ....      1,452,185      $   18,944        5.17      1,217,672      $   15,665         5.10 
                                                               ==========                                 ==========              
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                           Three Months Ended September 30,
                                               ------------------------------------------------------------------------------------
                                                                 1998                                       1997
                                               --------------------------------------    ------------------------------------------
                                                 Average        Interest                    Average        Interest
                                               Outstanding      Earned/        Yield/    Outstanding       Earned/          Yield/
                                                 Balance          Paid        Rate (1)      Balance         Paid           Rate (1)
                                                 -------          ----        --------      -------         ----           --------
                                                                               (Dollars in thousands)
<S>                                            <C>             <C>               <C>      <C>             <C>                <C>   
    Other liabilities ....................         23,012                                     20,085                              
                                              -----------                                 ----------                              
       Total liabilities .................      1,475,197                                  1,237,757                              
    Stockholders' equity .................        103,596                                     97,880   
                                              -----------                                 ----------                              
       Total liabilities and stockholders'                                                                                        
           equity ........................    $ 1,578,793                                 $1,335,637                              
                                              ===========                                 ==========                              
                                                                                                                                  
    Net interest income and net                                                                                                   
       interest rate spread ..............                     $    8,294        1.99%                    $    8,162        2.32% 
                                                               ==========        ====                     ==========        ====  
                                                                                                                                  
                                                                                                                                  
    Net interest-earning assets and                                                                                               
       interest margin ...................    $    68,173                        2.22%    $   67,034                        2.58% 
                                              ===========                        ====     ==========                        ====  
                                                                                                                                  
                                                                                                                                  
    Ratio of interest-earning assets to                                                                                           
       deposits, borrowings and Trust                                                                                             
       Preferred securities ..............                                     104.69%                                    105.51% 
                                                                               ======                                     ====== 
</TABLE>                                              

(1)  Annualized.
<PAGE>
Non-Performing Assets

The  table  below  sets  forth  the   Company's   amounts  and   categories   of
non-performing  assets and restructured  loans.  Loans are placed on non-accrual
status when the collection of principal or interest becomes delinquent more than
90 days.  There  are no loans  delinquent  more  than 90 days  which  are  still
accruing.  Real estate owned  represents  assets acquired in settlement of loans
and is shown net of valuation  allowances.  Restructured loans are performing in
accordance with modified terms and are, therefore, considered performing.
<TABLE>
<CAPTION>

                                                            September 30,      June 30,
                                                                 1998           1998
                                                                ------         ------
<S>                                                             <C>            <C>   
Non-accruing loans:
     One- to four-family ...............................        $3,120         $2,575
     Commercial and multi-family .......................           734            414
     Consumer ..........................................           678            753
                                                                ------         ------
         Total non-accruing loans ......................         4,532          3,742

Real estate owned, net .................................         1,307          1,643
                                                                ------         ------

         Total non-performing assets ...................         5,839          5,385
Restructured loans .....................................         1,406          1,415
                                                                ------         ------

         Total risk elements ...........................        $7,245         $6,800
                                                                ======         ======

Non-accruing loans as a percentage of total loans ......          0.41%          0.34%
                                                                ======         ======

Non-performing assets as a percentage of total assets ..          0.37%          0.35%
                                                                ======         ======

Total risk elements as a percentage of total assets ....          0.46%          0.44%
                                                                ======         ======
</TABLE>

Allowance for Loan Losses. The allowance for loan losses is established  through
a  provision  for loan losses  based upon  management's  evaluation  of the risk
inherent in its loan  portfolio and changes in the nature and volume of its loan
activity.  Such  evaluation,  which  includes  a review of loans for which  full
collectibility  may not be reasonably  assured,  considers  among other matters,
loan  classifications,  the estimated fair value of the  underlying  collateral,
economic  conditions,  historical loan loss  experience,  and other factors that
warrant recognition in providing for an adequate loan loss allowance.

Real estate properties acquired through foreclosure are recorded at the lower of
cost or estimated fair value less costs to dispose of such  properties.  If fair
value at the date of  foreclosure is lower than the balance of the related loan,
the difference  will be charged-off to the allowance for loan losses at the time
of transfer.  Valuations are periodically updated by management and if the value
declines, a specific provision for losses on real estate owned is established by
a charge to operations.
<PAGE>
Although  management  believes  that it uses the best  information  available to
determine  the  allowances,   unforeseen   market  conditions  could  result  in
adjustments and net earnings could be  significantly  affected if  circumstances
differ   substantially   from  the   assumptions   used  in  making   the  final
determination.  Future additions to the Company's  allowances will be the result
of periodic loan,  property and collateral  reviews and thus cannot be predicted
in advance. In addition, federal regulatory agencies, as an integral part of the
examination  process,  periodically  review  the  Company's  allowance  for loan
losses.  Such  agencies  may  require  the  Company to record  additions  to the
allowance level based upon their assessment of the information available to them
at the time of their examination. At September 30, 1998, the Company had a total
allowance  for  loan  losses  of  $2.9  million  representing  63.31%  of  total
non-accruing loans.

Interest Rate Sensitivity

Interest Rate Gap. The interest rate risk inherent in assets and liabilities may
be determined by analyzing the extent to which such assets and  liabilities  are
"interest  rate  sensitive"  and by measuring  an  institution's  interest  rate
sensitivity  "gap." An asset or liability is said to be interest rate  sensitive
within a defined time period if it matures or reprices  within that period.  The
difference or mismatch between the amount of interest-earning assets maturing or
repricing within a defined period and the amount of interest-bearing liabilities
maturing or  repricing  within the same period is defined as the  interest  rate
sensitivity  gap. An  institution  is  considered  to have a negative gap if the
amount of interest-bearing  liabilities maturing or repricing within a specified
time period exceeds the amount of interest-earning  assets maturing or repricing
within the same period. If more  interest-earning  assets than  interest-bearing
liabilities mature or reprice within a specified period, then the institution is
considered  to have a  positive  gap.  Accordingly,  in a rising  interest  rate
environment,  in an  institution  with a  negative  gap,  the  cost of its  rate
sensitive  liabilities would  theoretically rise at a faster pace than the yield
on its rate sensitive assets, thereby diminishing future net interest income. In
a falling interest rate environment, a negative gap would indicate that the cost
of rate sensitive  liabilities  would decline at a faster pace than the yield on
rate sensitive assets and improve net interest income. For an institution with a
positive gap, the reverse would be expected.

At September  30, 1998,  the  Company's  total  deposits,  borrowings  and Trust
Preferred  securities  maturing or repricing  within one year exceeded its total
interest-earning  assets maturing or repricing within one year by $15.7 million,
representing a one year negative gap of 1.00% of total assets. At June 30, 1998,
the one year  negative gap was 7.28% of total  assets.  In addition to the newly
adopted strategy of selling fixed-rate,  one- to four-family first mortgage loan
production into the secondary  market,  improvement in the negative gap position
from  June  30,  1998  reflects  the  Company's  efforts  to take  advantage  of
opportunities  to  increase  medium-term  borrowings  at costs  at or less  than
short-term funding levels.

In evaluating the Company's exposure to interest rate risk, certain  limitations
inherent in the method of analysis  must be  considered.  For example,  although
certain  assets  and  liabilities  may have  similar  maturities  or  periods to
repricing,  they may react in  different  degrees to changes in market  interest
rates.  Also, the interest rates on certain types of assets and  liabilities may
fluctuate in advance of changes in market interest  rates,  while interest rates
on other types may lag behind  changes in market  rates.  Additionally,  certain
<PAGE>
assets, such as adjustable rate mortgages,  have features which restrict changes
in interest rates in the short-term and over the life of the asset.  Further, in
the event of a change in interest rates,  prepayment and early withdrawal levels
may deviate  significantly  from those assumed in calculating  the gap position.
Finally, the ability of many borrowers to service their debt may decrease in the
event of an interest rate increase.  The Company  considers all of these factors
in monitoring its exposure to interest rate risk.

Net Portfolio  Value.  The  Company's  interest  rate  sensitivity  is regularly
monitored by management through selected interest rate risk ("IRR") measures set
forth by the Office of Thrift Supervision  ("OTS"). The IRR measures used by the
OTS  include  an  IRR  "Exposure  Measure"  or  "Post-Shock"  NPV  ratio  and  a
"Sensitivity  Measure." A low Post-Shock NPV ratio indicates greater exposure to
IRR.  Greater  exposure  can  result  from  a low  initial  NPV  ratio  or  high
sensitivity to changes in interest rates. The Sensitivity  Measure is the change
in the NPV ratio, in basis points, caused by a 2% increase or decrease in rates,
whichever produces a larger decline. At least quarterly,  and generally monthly,
management  models the change in net  portfolio  value ("NPV") over a variety of
interest  rate  scenarios.  NPV is the present value of expected cash flows from
assets,  liabilities  and  off-balance  sheet  contracts.  An NPV ratio,  in any
interest rate scenario,  is defined as the NPV in that rate scenario  divided by
the market value of assets in the same scenario.

As of September 30, 1998, the Bank's internally  generated initial NPV ratio was
10.10%.  Following a 2% increase in interest  rates,  the Bank's  Post-Shock NPV
ratio was 8.69%. The change in the NPV ratio, or the Bank's Sensitivity  Measure
was 1.41%.  NPV is also  measured  internally  on a  consolidated  basis.  As of
September 30, 1998, the Company's  initial NPV ratio was 10.52%,  the Post-Shock
ratio was 8.92%, and the Sensitivity  Measure was 1.60%.  Variances  between the
Bank's and the  Company's  NPV ratios are  attributable  to balance  sheet items
which are  adjusted  during  consolidation,  such as  investments,  intercompany
borrowings and capital.

Internally  generated NPV  measurements  are based on simulations  which utilize
institution  specific assumptions and, as such, generally result in lower levels
of presumed  interest  rate risk (i.e.,  higher  Post-Shock  NPV ratio and lower
Sensitivity Measure) than OTS measurements indicate.

The OTS measures the Bank's (unconsolidated) IRR on a quarterly basis using data
from the  quarterly  Thrift  Financial  Reports,  coupled  with  non-institution
specific  assumptions which are based on national averages.  As of June 30, 1998
(the latest date for which  information  is  available),  the Bank's initial NPV
ratio, as measured by the OTS, was 8.03%, the Bank's  Post-Shock ratio was 6.02%
and the Sensitivity Measure was 2.01%.

In addition to monitoring NPV and gap,  management also monitors the duration of
assets and  liabilities  and the effects on net interest  income  resulting from
parallel and non-parallel increases or decreases in rates.

At September 30, 1998, based on its internally  generated simulation models, the
Company's  consolidated net interest income projected for one year forward would
decrease 3.9% from the base case, or current market, as a result of an immediate
and sustained 2% increase in interest rates.
<PAGE>
Year 2000

A formal Year 2000 Project Plan (the "Year 2000 Plan") was  previously  approved
by the  Company's  Board of  Directors.  The Board of Directors  continues to be
updated on a monthly basis as to the status of all phases,  with an  independent
verification  of progress  completed  on a quarterly  basis.  By  following  the
detailed  plan,  substantial  progress has been made and the Company  remains on
target for meeting its  commitment  to achieving  Year 2000  compliance  for its
mission-critical systems.

The task force,  with  representatives  from all divisions  within the Bank, has
completed  both the  awareness  and  assessment  phases of the Year  2000  Plan.
Certain steps within the renovation and validation phases are completed with the
remainder of the tasks  currently on schedule for completion in accordance  with
the Year 2000 Plan. As the Company primarily runs software  purchased from a few
key  vendors,  the task  force  continues  to meet and work  closely  with those
vendors and  suppliers.  Systems  critical to the  operation  of the Company are
receiving top priority,  with certain of the mission-critical  software elements
now  compliant.  Management  expects to have  renovated and tested all necessary
systems  by no  later  than  June  30,  1999  and  believes  that  its  level of
preparedness for the project is appropriate.

Although  certain  aspects  of  the  contingency   planning  process  have  been
completed, contingency planning is an ongoing process. Members of the task force
have  responsibility  for identifying a contingency plan for the different areas
of  software  being  tested in the  event  the Year  2000 Plan is not  timely or
successfully  implemented.  For example, if vendors for certain critical systems
are  unable  to supply  Year 2000  compliant  software  upgrades,  the use of an
alternative vendor would be required to be pursued, at an additional cost to the
Company.

The  estimated  cost for the Year 2000 effort of $75,000 is unchanged  from June
30, 1998. This estimate includes  approximately $44,000 of hardware and software
upgrades. The remaining $31,000 is estimated for software program consulting and
remediation.  Approximately  $5,000 of costs have been  incurred  to date.  This
estimate does not include  manpower costs of Company  personnel  associated with
the task  force,  who retain  their  individual  operation  responsibilities  in
addition  to Year 2000  duties.  The  completion  date and cost are  based  upon
management's analysis of the information currently available to it. No assurance
can be given  that  issues  relating  to the Year 2000 will not have a  material
adverse effect on the Company's financial condition or results of operations.

Liquidity and Capital Resources

The  Company's  primary  sources of funds are  deposits,  principal and interest
payments on loans and mortgage-backed  securities,  and borrowings from the FHLB
of New York.  While  scheduled  loan  repayments  and maturing  investments  are
relatively  predictable,  deposit  flows  and  early  loan  repayments  are more
influenced by interest rates,  general economic conditions and competition.  The
Company has  competitively set rates on deposit products for selected terms and,
when necessary,  has  supplemented  deposits with  longer-term or less expensive
alternative sources of funds.
<PAGE>
Federal  regulations  require  the Bank to  maintain  minimum  levels  of liquid
assets. The required percentage has varied from time to time based upon economic
conditions  and savings  flows.  The current  required  percentage  is 4% of net
withdrawable  deposits  payable on demand or in one year or less and  borrowings
payable  on demand or in one year or less,  both as of the end of the  preceding
calendar quarter. Liquid assets for purposes of this ratio include cash, accrued
interest  receivable,  certain  time  deposits,  U.S.  Treasury  and  Government
agencies  and  other  securities  and  obligations  generally  having  remaining
maturities  of  less  than  five  years.  All  mortgage-backed   securities  are
includable in liquid assets,  as well. The Company's most liquid assets are cash
and cash equivalents, short-term investments and mortgage-backed securities. The
levels of these assets are dependent on the Bank's operating, financing, lending
and investing activities during any given period. At September 30, 1998 and June
30, 1998, the Bank's liquidity ratios were 18.28% and 24.50%, respectively.

The Company uses its liquid resources  principally to fund maturing certificates
of deposit and deposit  withdrawals,  to purchase loans and securities,  to fund
existing and future loan commitments, and to meet operating expenses. Management
believes  that loan  repayments  and other  sources of funds will be adequate to
meet the Company's foreseeable liquidity needs.

The  Company's  cash needs for the three  months ended  September  30, 1998 were
principally  provided  by  increased  deposits,   proceeds  from  maturities  of
investment  securities,  principal repayments on mortgage-backed  securities and
sales of loans.  During this period,  the cash  provided was used for  investing
activities,  which  included  the  origination  and  purchase  of loans  and the
purchase of investment securities,  as well as to reduce borrowings. In addition
to cash  provided  by  operating  activities,  during  the  three  months  ended
September  30, 1997 the cash needs of the Company were  principally  provided by
increased deposits.  The cash was principally utilized for investing activities,
which  included  the  origination  and  purchase  of loans and the  purchase  of
investment securities, as well as to reduce borrowings.

Current  regulatory  standards  impose the  following  capital  requirements:  a
risk-based capital standard expressed as a percentage of risk adjusted assets; a
leverage ratio of core capital to total adjusted assets;  and a tangible capital
ratio  expressed as a percentage of total adjusted  assets.  As of September 30,
1998, the Bank exceeded all regulatory  capital  requirements and qualified as a
"well-capitalized"   institution  (see  Note  4.  -  Stockholders'   Equity  and
Regulatory Capital, in the Notes to Consolidated Financial Statements).
<PAGE>


PART II - Other Information

Item 1.    Legal Proceedings
           None.

Item 2.    Changes in Securities
           None.

Item 3.    Defaults Upon Senior Securities
           None.

Item 4.    Submission of Matters to a Vote of Security Holders
           None.

Item 5.    Other Information
           None.

Item 6.    Exhibits and Reports on Form 8-K

           (a)    Exhibit  11:  Statement  Regarding  Computation  of Per  Share
                  Earnings.
                  Exhibit 27: Financial Data Schedule.

           (b)  There  were no  reports  filed on Form 8-K for the  three  month
period ended September 30, 1998.


<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 thereunto duly authorized.


                                             PENNFED FINANCIAL SERVICES, INC.



Date: November  13, 1998              By:         /s/Joseph L. LaMonica
                                                  ---------------------
                                                  Joseph L. LaMonica
                                                  President and Chief
                                                  Executive Officer





Date: November  13, 1998              By:         /s/Lucy T. Tinker
                                                  -----------------
                                                  Lucy T. Tinker
                                                  Executive Vice President and
                                                  Chief Operating Officer
                                                  (Principal Financial Officer)





Date: November  13, 1998              By:         /s/Jeffrey J. Carfora
                                                  ---------------------
                                                  Jeffrey J. Carfora
                                                  Senior Vice President and
                                                  Chief Financial Officer
                                                  (Principal Accounting Officer)