November 2, 2006 Patrick D. McTernan West Orange, NJ 07052-2989 Dear Mr. McTernan:

Exhibit 10.4

November 2, 2006

Xxxxxxx X. XxXxxxxx

000 Xxxxx Xxxx Xxxxxx

Xxxx Xxxxxx, XX 00000-0000

Dear Xx. XxXxxxxx:

In connection with the anticipated merger (the “Merger”) of PennFed Financial Services, Inc. (the “Company”) with and into New York Community Bancorp, Inc. (“NYB”) as contemplated by the Agreement and Plan of Merger, dated as of November 2, 2006, by and between NYB and the Company (the “Merger Agreement”), which is entered into as of today, the Company, NYB and you hereby enter into this agreement (this “Agreement”). Capitalized terms used but not otherwise defined in this Agreement shall have the meaning set forth in the Merger Agreement.

1. Effective Time Payment. At or immediately following the Effective Time, the Company or NYB shall pay you $2,200,000. If your employment with the Company is terminated prior to the Effective Time due to disability or death, you or your estate, as applicable, shall be entitled to the foregoing payment at or immediately following the Effective Time. At your written election prior to the Effective Time, the foregoing payment shall be reduced by the present value at the Effective Time of the expected health and dental premiums to be paid by NYB, to maintain continuing health and dental insurance coverage for you and your dependents for the three year period following your employment termination (the “Extended Coverage”) and you and your dependents will be entitled to receive the Extended Coverage and to receive COBRA benefits thereafter. For the avoidance of doubt, and notwithstanding anything herein to the contrary, you agree that this payment shall not be taken into account in computing any benefits under any plan, program or arrangement of the Company or its Affiliates in which you participate or to which you are a party. Not later than 10 business days prior to the scheduled payment date, NYB shall be provided with sufficient information by the Company to enable its Tax Advisor (as defined below) to determine whether such payment is in compliance with Paragraph 4 of this Agreement..

2. Exercise of Nonqualified Stock Options. You agree that, on or before December 28, 2006, you will exercise all Company nonqualified stock options you hold as of the date of this Agreement.

3. Termination of Prior Agreement; Agreement to Remain Employed Through Effective Time. You hereby agree that, in consideration of the Company and NYB entering into this Agreement, effective as of the date hereof, the amended and restated Employment Agreement by and between the Company and you, dated as of November 28, 2004, shall be null and void and no person or entity shall be obligated to pay you or any person any amounts or provide any benefits in respect to such Employment Agreement. Further, in consideration of the benefits conferred upon you pursuant to this Agreement, you hereby agree not to voluntarily terminate your employment with the Company or any of its Affiliates prior to the Effective Time, and, prior to the Effective Time, the Company agrees not to terminate your employment with the Company or its Affiliates, except for cause as defined in your Employment Agreement.

4. Withholding and Reduction. The Company will withhold and deposit all federal, state and local income and employment taxes that are owed by you with respect to all amounts paid or benefits provided to or for you by the Company, NYB or any Affiliate pursuant to this Agreement.

It is the intention of the parties that no payment be made or benefit be provided to you under this Agreement or otherwise by the Company that would constitute an “excess parachute payment” within the meaning of Section 280G of the Code and any regulations thereunder, thereby resulting in a loss of an income tax deduction by the Company or NYB or the imposition of an excise tax on you under Section 4999 of the Code. If, at any time, it is determined as provided below that some or all of the payments or benefits scheduled to be made or provided under this Agreement, when combined with any other payments or benefits provided to you by the Company and/or any of its subsidiaries, would constitute nondeductible excess parachute payments under Section 280G of the Code, then the payments or benefits scheduled under this Agreement will be reduced to one dollar less than the maximum amount which may be paid or provided without causing any such payments or benefits scheduled hereunder to be nondeductible. The determination made as to the reduction of benefits or payments required hereunder by the Tax Advisor shall be binding on the parties, unless within 15 days after such determination, a reputable tax advisor retained by you disputes such determination in writing. If the two (2) tax advisors cannot resolve the dispute within five (5) business days, they shall jointly appoint a third tax advisor to make the final determination. If a dispute arises, the joint determination of the two (2) tax advisors or the determination of the third tax advisor, as applicable, shall be binding on the parties. You shall have the right to designate within a reasonable period which payments or benefits scheduled under this Agreement will be reduced; provided, however, that if you do not provide such direction, the Company or NYB will implement any necessary reductions in its discretion. For purposes of this paragraph, “Tax Advisor” shall mean a law firm, benefits consulting firm or independent accounting firm (which firm may be NYB’s independent auditors) appointed by NYB to make the determination required by this paragraph.

5. Successors. This Agreement is personal to you and without the prior written consent of the Company shall not be assignable by you otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by your legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company, NYB, and their successors and assigns.

6. Waiver. Failure of the Company or NYB to demand strict compliance with any of the terms, covenants or conditions of this Agreement shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any such term, covenant or condition on any occasion or multiple occasions be deemed a waiver or relinquishment of such term, covenant or condition.

7. Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the State of New York, without regard to conflict of laws rules. You, the Company and NYB (i) hereby consent to submit to the exclusive personal jurisdiction of any Federal court located in the State of New York or any court of the State of New York in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, and (ii) hereby waive any right to challenge jurisdiction or venue in such courts with regard to any suit, action, or proceeding under or in connection with the Agreement. Each party to this Agreement also hereby waives any right to trial by jury in connection with any suit, action, or proceeding under or in connection with this Agreement.

8. Entire and Final Agreement. Except for the Noncompetition Agreement and the Retention Agreement entered into between you and New York Community Bank dated as of the date hereof (but effective immediately following the Effective Time), this Agreement shall supersede any and all prior oral or written representations, understandings and agreements of the parties with respect to the matters addressed herein and it contains the entire agreement of the parties with respect to those matters.

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No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. Once signed by the parties hereto, no provision of this Agreement may be modified or amended unless agreed to in a writing, signed by you and a duly authorized officer of the Company and NYB.

9. Assignment. Neither this Agreement nor any of the rights, obligations or interests arising hereunder may be assigned by you. Neither this Agreement nor any of the rights, obligations or interests arising hereunder may be assigned by the Company without your prior written consent, to a person or entity other than an affiliate or parent entity of the Company or its successors or assigns; provided, however, that, in the event of the merger, consolidation, transfer, or sale of all or substantially all of the assets of the Company with or to any other individual or entity, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.

10. Section Headings. The section headings contained in this Agreement are inserted for purposes of convenience only and shall not affect the meaning or interpretation of this Agreement.

11. Notices. All notices required by this Agreement shall be sent in writing and delivered by one party to the other by overnight express mail to the following persons and addresses:

If to the Company:

PennFed Financial Services, Inc.

000 Xxxxx Xxxx Xxxxxx

Xxxx Xxxxxx, XX 00000-0000

Attn: Xxxxxxx X. XxXxxxxx, Secretary

If to you:

Xxxxxxx X. XxXxxxxx

At the most recent address on file at the Company.

12. Execution in Counterparts. This Agreement may be executed by the parties hereto in counterparts, and each of which shall be considered an original for all purposes.

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If the foregoing is satisfactory, please so indicate by signing and returning to the Company the enclosed copy of this letter whereupon this will constitute our agreement on the subject.

PENNFED FINANCIAL SERVICES, INC.
By:		/s/ Xxxxxx X. XxXxxxxx
Name:		Xxxxxx X. XxXxxxxx, President and CEO
Date:		November 2, 2006
NEW YORK COMMUNITY BANCORP, INC.
By:		/s/ Xxxxxx X. Xxxxxxxx
Name:		Xxxxxx X. Xxxxxxxx, President and CEO
Date:		November 2, 2006

ACCEPTED AND AGREED TO:
/s/ Xxxxxxx X. XxXxxxxx
Employee
Date:		November 2, 2006

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