SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED].
For the transition period from _______________ to ______________________
Commission File Number 000-25233
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Provident Bank 401(k) Plan
B: Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Provident Bancorp, Inc.
400 Rella Boulevard
Montebello, New York 10901
PROVIDENT BANK 401(k) PLAN
YEARS ENDED DECEMBER 31, 2002 AND 2001
CONTENTS
Page
Independent Auditor's Report 1
Statement of Net Assets Available for Plan Benefits 2
Statement of Changes in Net Assets Available for Plan Benefits 3
Notes to Financial Statements 4 - 7
Supplemental Information:
Schedule of Assets Held for Investment Purposes 9
Schedule of Reportable Transactions 10
Loans to Participants 11
Gaber, Berard & Donahue LLP
CERTIFIED PUBLIC ACCOUNTANTS
120 ROUTE 59 SUFFERN, NY 10901
715 ROUTE 304 BARDONIA, NY 10954
32 BALL ST, PO BOX 3108 PORT JERVIS, NY 12771
DENNIS L. GABER, C.P.A. Suffern: Tel: 845-357-5668
JOHN T. DONAHUE, C.P.A. Fax: 845-357-5637
DONALEE R. BERARD, C.P.A. Bardonia: Tel: 845-623-4500
Fax: 845-623-3064
Port Jervis Tel: 845-856-5237
INDEPENDENT AUDITOR'S REPORT
To the Board of Trustees
Provident Bank 401(k) Plan
Montebello, New York
We have audited the accompanying statement of net assets available for plan
benefits of the Provident Bank, 401(k) Plan as of December 31, 2002, and the
related statements of changes in net assets available for plan benefits for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The prior year summarized comparative
information has been derived from the Plan's 2001 financial statements and, in
our report dated June 7, 2002 we expressed an unqualified opinion on those
financial statements.
We conducted our audit in accordance with generally accepted auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Provident Bank, 401(k) Plan as of December 31, 2002 and the changes in net
assets available for plan benefits for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedules for the year ended
December 31, 2002 are presented for the purposes of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the financial statements
taken as a whole.
/s/ Gaber, Berard & Donahue LLP
- ---------------------------------
Suffern, New York
January 22, 2003
PROVIDENT BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2002 AND 2001
2002 2001
---------- ----------
ASSETS
Deposits with investment fund companies $7,778,806 $7,549,535
Loans receivable - participants 66,160 62,103
Cash 22,464 20,565
---------- ----------
TOTAL ASSETS 7,867,430 7,632,203
---------- ----------
LIABILITIES -- --
---------- ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $7,867,430 $7,632,203
========== ==========
See note to financial statements.
-2-
PROVIDENT BANK 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
---------- -----------
ADDITIONS:
Investment income:
Net appreciation in fair value of investments $ 9,091 $1,701,725
Interest on participant loans 3,912 5,180
---------- ----------
Total investment income 13,003 1,706,905
---------- ----------
Contributions:
Employer 221,816 188,612
Employee 547,147 481,847
---------- ----------
Total contributions 768,963 670,459
---------- ----------
TOTAL ADDITIONS 781,966 2,377,364
---------- ----------
DEDUCTIONS:
Distributions 546,739 560,984
Investment Fees -- 340
---------- ----------
TOTAL DEDUCTIONS 546,739 561,324
---------- ----------
NET INCREASE 235,227 1,816,040
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 7,632,203 5,816,163
---------- ----------
END OF YEAR $7,867,430 $7,632,203
========== ==========
See note to financial statements.
-3-
PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Provident Bank, 401(k) Plan (the "Plan") are
prepared on the accrual basis of accounting.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Quoted market prices are used
to value investments. Shares of mutual funds are valued at quoted market prices
which represent the net asset value of shares held by the Plan at year-end.
Purchases and sales of securities are recorded on a trade-date basis. Dividends
are recorded on the ex-dividend date. The investment income, capital gains and
losses (realized and unrealized), and any expenses incurred in conjunction with
the investments are reflected in the statement of changes in net assets
available for Plan benefits as net appreciation in the fair value of
investments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
2. DESCRIPTION OF THE PLAN
The following description of the Provident Bank, 401 (k) Plan has been extracted
from the Plan agreement and provides only general information. Participants
should refer to the Plan agreement for a more complete description of the Plan's
provisions.
The Plan, which was established by Provident Bank, ("Employer") on August 1,
1991, is a defined contribution plan, which covers all eligible employees who
have elected to participate. All employees are eligible to participate in the
Plan after completion of six months of service. The Employer shall give each
prospective eligible employee written notice of eligibility to participate in
the Plan prior to the close of the Plan year in which the employee first becomes
eligible.
For each Plan year, the employer shall contribute to the Plan:
(a) The amount of the total salary reduction of all Participants made
pursuant to Section 4.1 (a), which amount shall be deemed an
Employee's elective contribution.
(b) On behalf of each participant who is eligible to share in matching
contributions for the Plan year, the Bank may make a discretionary
matching contribution to the Plan on behalf of each participant. The
amount of matching contribution will be a percentage of the pre-tax
contributions to the Plan, up to a maximum of 3%, of the compensation
the participant elects to defer for the Plan year. The matching
contribution percentage is determined by the Bank, in its sole
discretion. The Bank may modify this percentage, as it deems
necessary.
-4-
PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
2. DESCRIPTION OF THE PLAN (Cont'd)
(c) Each participant may elect to defer from 2% to 10% of his/her
compensation which would have been received in the Plan year, but not
for deferral election. A deferral election (or modification in an
earlier election) may not be made with respect to compensation which
is currently available on or before the date the participant executed
such election or, if later, the latest of the date the Employer adopts
this cash or deferred arrangement, or the date such arrangement first
became effective.
The amount by which compensation is reduced shall be that participant's deferred
compensation, to be treated as an employee contribution and allocated to that
participant's elective account.
For year ending December 31, 2002, the discretionary matching employer
contribution was 3% (50% of employee contribution, up to 6%), which consisted of
100% cash.
The total deferral in any taxable year may not exceed a dollar limit, which is
set by law. The limit was $11,000 in 2002 and $10,500 in 2001. Annual
compensation limit was $200,000 for 2002 and $170,000 for 2001.
A participant has, at all times, a vested and nonforfeitable right to the entire
balance in his/her elective account, and will have a 100% vested interest in the
Employer's matching contributions following the completion of four full years of
service with the Employer, upon attainment of age 65, or upon death or permanent
and total disability.
Participants who have completed less than four years are entitled to a
percentage of the Employer's contributions on the basis of full years of service
in accordance with the following schedule:
Years of Vested
Services Percentage
---------- ------------
Less than 2 0%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
-5-
PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
2. DESCRIPTION OF THE PLAN (Cont'd)
Each participant shall direct the trustee as to the investment of the entire
interest in his/her aggregate account. The administrator shall provide pooled
and/or mutual funds for such investments and establish procedures to be applied
in a uniform nondiscriminatory manner for participants to direct the trustee in
writing to invest their aggregate account. The aggregate account of each
participant so directed will be considered a directed investment account.
A separate directed investment account shall be established for each
participant. The directed investment account shall be charged or credited as
appropriate with the net earnings, gains, losses and expenses, as well as any
appreciation or reduction in fair value during each Plan year attributable to
such account.
In determining the fair value of securities held in the trust fund, which are
listed on a registered stock exchange, the administrator shall direct the
trustee to value the same at the prices they were last traded on such exchange
preceding the close of business on the "valuation date." If such securities were
not traded on the "valuation date," or if the exchange on which they are traded
was not open for business on the "valuation date," then the securities shall be
valued at the prices at which they were last traded prior to the "valuation
date." Any unlisted security held in the trust fund shall be valued at its bid
price next preceding the close of business on the "valuation date," which bid
shall be obtained from a registered broker or an investment banker. In
determining the fair value of assets other than securities for which trading or
bid prices can be obtained, the trustee may appraise such assets itself, or at
its discretion, employ one or more appraisers for that purpose and rely on the
values established by such appraiser or appraisers.
Normal retirement date - the first day of the month coinciding with or the next
following the participant's normal retirement age (65th birthday). A participant
shall become fully vested in his/her account upon attaining his/her normal
retirement age.
Early retirement date - this Plan does not provide for a retirement date prior
to normal retirement date.
Upon termination of service, at the election of the terminated employee, the
administrator will direct the trustee to distribute the vested benefit due. If
the vested benefit exceeds $5,000, the participant must submit a written consent
before any distribution is made. There is no need for consent for distributions
amounting to $5,000 or less.
-6-
PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
3. TRANSACTIONS WITH RELATED PARTIES
The Plan has a non-interest bearing checking account with the Employer.
Accounting fees and other administrative services are paid for by the Employer.
4. DEPOSITS WITH INVESTMENT COMPANIES
As of December 31, 2002 the plan's deposits represent investments in various
mutual funds held in an account with Northeast Retirement Services, the plan's
investment administrator. During fiscal year 2001, the Plan's administrator
changed from USI Consulting Group to Northeast Retirement Services.
As of December 31, 2002, investments representing 5% or more of net assets
available for benefits were:
Cost/Beg. of year End of year
Current Value Current Value
--------------- ---------------
Wright Total Return Bond Fund $ 524,331 $ 520,747
Federated Cash 509,472 509,472
Janus Advisor Capital Appreciation 397,962 390,793
Provident Bank Stock 4,181,228 4,409,535
Contributions for participants are maintained in individual accounts. The
accounts are credited for actual earnings on investments and charged for Plan
withdrawals. The accounts are also adjusted for any change in fair value in the
investments.
5. INCOME TAX STATUS
The Internal Revenue Service has determined that the Plan qualifies under
Section 401 (a) of the Internal Revenue Code and is, therefore, not subject to
tax under present income tax laws.
6. TERMINATION
The Employer has the right to terminate the Plan at any time. Upon termination,
all amounts credited to the participants' accounts become 100% vested. A
complete discontinuance of contributions by the Employer will constitute a
termination.
7. INVESTMENT INCOME
Investment Income, exclusive of net appreciation in fair value, for years ending
December 31, 2002 and 2001 were $113,645 and $155,388, respectively.
-7-
PROVIDENT BANK 401(k) PLAN
SUPPLEMENTAL INFORMATION
YEAR ENDED DECEMBER 31, 2002
-8-
PROVIDENT BANK 401 (k) PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT
YEAR ENDED DECEMBER 31, 2002
Deposits with investment companies: Cost/ End of Year
Beg. of Year Current
Current Value Value
------------- ------------
American Century International Growth $ 156,321 $ 132,644
American Century Equity Income 359,461 258,236
American Century Strategic Allocation 464,637 339,886
Federated Cash Senior Prime 465,290 509,472 *
Fidelity Advisor Mid-Cap Fund 320,538 267,008
Fidelity Advisor Equity-Income 318,348 215,531
Janus Advisor Capital Appreciation 442,461 390,793
Neuberger Berman Genesis Fund 237,846 316,418
Provident Bank Stock Fund 4,085,664 4,409,535 *
Uninvested Cash 365 2,088
Wright Current Income 177,632 229,302
Wright Major Blue Chip 272,176 187,146
Wright Total Return Bond 248,796 520,747 *
----------- -----------
Total deposits 7,549,535 7,778,806
Employee 401(k) Holding Account : Provident Bank 20,565 22,464
Receivables: Participant Loans 62,103 66,160
----------- -----------
Total assets held for investment purposes $7,632,203 $7,867,430
=========== ===========
* = Denotes 5% or greater of total assets available for plan benefits.
See note to financial statements.
-9-
PROVIDENT BANK 401 (k) PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
DECEMBER 31, 2002
PLAN TRANSACTIONS IN EXCESS OF 5%
Current
Date Cost Value
--------- --------- ---------
There were no transactions in excess - - -
of 5% of net assets available for plan
benefits during 2002.
--------- ---------
$ - $ -
========= =========
See note to financial statements.
-10-
PROVIDENT BANK 401 (k) PLAN
LOANS TO PARTICIPANTS
DECEMBER 31, 2002
Provident Bank 401(k) Participant Loan balances as of December 31, 2002 were:
Principal
Balance
Participant 12/31/02
- ----------- ----------
Milagros Abril $ 1,767
Kathleen Campagna 133
John Carothers 5,524
Kathleen Ceravolo 5,062
Nina Coveleski 8,612
Fay Dallas-Browne 2,520
Maureen Farley 2,777
Marie Fiumara 4,958
William Lamadore 16,663
Jennifer Mc Nellis 2,000
Erin Quinn 589
Miguel Roman 6,449
Lucy Sierra-Alfonso 1,050
Eugee Whyte 8,056
---------
Total $66,160
=========
See note to financial statements.
-11-
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROVIDENT BANK 401(k) PLAN
Date: June 26, 2003 By: /s/ Robert J. Sansky
------------------------------------
Name: Robert J. Sansky
Title: Executive Vice President and
Director of Human Resources