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, 2004
-----------------------------------------
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
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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
Berard & Donahue
CERTIFIED PUBLIC ACCOUNTANTS, PC
120 ROUTE 59
SUFFERN, NEW YORK 10901
32 BALL STREET
PORT JERVIS, NEW YORK 12771
DONALEE R. BERARD,C.P.A. Suffern Tel: 845-357-5668
JOHN T. DONAHUE, C.P.A. Fax: 845-357-5637
Port Jervis Tel: 845-856-5237
Fax: 845-856-5239
Consent of Independent Registered Public Accounting Firm
To the Board of Trustees
Provident Bank 401(k) Plan
Montebello, New York 10901
We consent to the incorporation by reference in the registration statement
on Form S-8 of Provident Bank of our report dated February 28, 2005 with respect
to the statements of net assets avaliable for plan benefits of Provident Bank
401(k) Plan as of December 31, 2004 and 2003, the related statements of changes
in net assets available for benefits for the years then ended, and the related
supplemental schedules, which report appears in the December 31, 2004 Annual
report on Form 11-K of the Provident Bank 401(k) Plan.
Yours truly,
/s/ BERARD & DONAHUE, CPA'S PC
- -----------------------------
BERARD & DONAHUE, CPA'S PC
June 24, 2005
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PROVIDENT BANK
401(k) PLAN
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
YEARS ENDED DECEMBER 31, 2004 AND 2003
PROVIDENT BANK 401(k) PLAN
YEARS ENDED DECEMBER 31, 2004 AND 2003
CONTENTS
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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 - 8
Supplemental Information:
Schedule of Assets Held for Investment Purposes 10
Schedule of Reportable Transactions 11
Loans to Participants 12
Berard & Donahue
CERTIFIED PUBLIC ACCOUNTANTS, PC
120 ROUTE 59
SUFFERN, NEW YORK 10901
32 BALL STREET
PORT JERVIS, NEW YORK 12771
DONALEE R. BERARD,C.P.A. Suffern Tel: 845-357-5668
JOHN T. DONAHUE, C.P.A. Fax: 845-357-5637
Port Jervis Tel: 845-856-5237
Fax: 845-856-5239
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, 2004, 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 2003 financial statements and, in
our report dated March 9, 2004 (Restated November 1, 2004) we expressed an
unqualified opinion on those financial statements.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004 and the changes in net
assets available for plan benefits for the years then ended, in conformity with
U.S. generally accepted accounting principles.
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, 2004 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/ Berard & Donahue CPS's, PC
Suffern, New York
February 28, 2005
PROVIDENT BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2004 AND 2003
2004 2003
------------- --------------
ASSETS
Deposits with investment fund companies $ 14,445,655 $11,109,748
Loans receivable - participants 112,161 121,950
Contributions receivable - 27,584
Cash - 76,465
------------- ------------
TOTAL ASSETS 14,557,816 11,335,747
------------- ------------
LIABILITIES - -
------------- ------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 14,557,816 $11,335,747
============= ============
See notes to financial statements
-2-
PROVIDENT BANK 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEARS ENDED DECEMBER 31, 2004 AND 2003
2004 2003
------------- ----------------
ADDITIONS:
Investment income:
Net appreciation in fair value of investments $ 2,485,271 $ 2,985,409
Interest on participant loans 11,518 10,928
------------- ----------------
Total investment income 2,496,789 2,996,337
------------- ----------------
Contributions:
Employer 355,640 253,860
Employee 967,696 752,942
------------- ----------------
Total contributions 1,323,336 1,006,802
------------- ----------------
TOTAL ADDITIONS 3,820,125 4,003,139
------------- ----------------
DEDUCTIONS:
Distributions 598,056 534,823
------------- ----------------
TOTAL DEDUCTIONS 598,056 534,823
------------- ----------------
NET INCREASE 3,222,069 3,468,316
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 11,335,747 7,867,431
------------- ---------------
END OF YEAR $ 14,557,816 $ 11,335,747
============= ===============
See notes to financial statements
-3-
PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
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-
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PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
2. DESCRIPTION OF THE PLAN (Cont'd)
- -------------------------------------
(c) Each participant may elect to defer from 1% to 50% 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, 2004, 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 $13,000 in 2004 and $12,000 in 2003. Individuals age
50 or over were allowed to make additional contributions of $3,000 and $2,000 in
2004 and 2003, respectively. Annual compensation limit was $205,000 and $200,000
for 2004 and 2003, respectively.
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-
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PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
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-
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PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
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.
Seventy percent of total assets available for plan benefits are held in
Provident Bancorp, Inc. Common Stock.
4. DEPOSITS WITH INVESTMENT COMPANIES
- ---------------------------------------
As of December 31, 2004 the plan's deposits represent investments in various
mutual funds held in an account with Wright Investors. Northeast Retirement
Services is the plan's record keeper. Circle Trust Company is the
Custodian/Trustee. As of December 31, 2004, investments representing 5% or more
of net assets available for benefits were:
Beg.of year End of year
Current Value Current Value
------------- -------------
Provident Bancorp, Inc. Common Stock -
(Federal Corporation) $6,907,590 $ -
Provident Bancorp, Inc. Common Stock -
(Delaware Corporation) - 10,261,926
Federated Prime Cash Fund 385,118 916,818
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-
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PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
7. INVESTMENT INCOME
- ----------------------
Investment Income consists of:
2004 2003
---- ----
Realized gains $ 207,087 $ 136,084
Unrealized gains 2,064,772 2,718,103
Dividend income 213,412 131,222
---------- -----------
$ 2,485,271 $ 2,985,409
=========== ===========
8. FORM 5500
- -------------
IRS Form 5500, schedule H was reconciled to the audited financial statements as
prepared.
-8-
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PROVIDENT BANK 401(k) PLAN
SUPPLEMENTAL INFORMATION
YEAR ENDED DECEMBER 31, 2004
-9-
PROVIDENT BANK 401 (k) PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT
YEAR ENDED DECEMBER 31, 2004
Deposits with investment companies: Beg. of Year End of Year
Current Current
Value Value
------------------- --------------------
American Cash Management Trust $ 984,546 $ -
American Century International Growth 169,435 221,387
American Century Equity Income 294,506 316,863
American Century Strategic Allocation 310,849 449,374
American Century Ultra - 85,791
Federated Prime Cash Fund 385,118 916,818(1)
Federated Max - Cap Fund - 43,871
Fidelity Advisor Growth and Income - 115,150
Fidelity Advisor Mid-Cap Fund 299,443 493,711
Fidelity Advisor Equity-Income 268,499 343,425
Janus Advisor Capital Appreciation 385,135 -
Neuberger Berman Genesis Fund 435,127 651,599
Provident Bancorp, Inc. Common Stock Fund - (Delaware Corp.) - 10,261,926(1),(2)
Provident Bancorp, Inc. Common Stock Fund - (Federal Corp.) 6,907,590 -
Uninvested Cash 1,242 877
Wright Current Income 134,454 157,148
Wright Major Blue Chip Equities 244,056 -
Wright Total Return Bond 289,748 387,715
----------------- ---------------
Total deposits 11,109,748 14,445,655
Employee 401(k) Holding Bank Account at Provident Bank 76,465 -
Receivables: Employer Contributions 27,584 -
Receivables: Participant Loans 121,950 112,161
----------------- --------------
Total assets held for investment purposes $ 11,335,747 $ 14,557,816
================= ==============
(1) Denotes 5% or greater of total assets avaliable for plan benefits.
(2) Party-in-interest.
See notes to financial statements
-10-
PROVIDENT BANK 401 (k) PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
DECEMBER 31, 2004
PLAN TRANSACTIONS IN EXCESS OF 5%
- ---------------------------------
Current
Date Cost Value
---------- -------- ---------
Provident Bancorp, Inc. Common Stock -
(Delaware Corporation) purchase 1/14/2004 $ 984,510 $ 984,510
------------- ------------
$ 984,510 $ 984,510
============= =============
See notes to financial statements
-11-
PROVIDENT BANK 401 (k) PLAN
LOANS TO PARTICIPANTS
DECEMBER 31, 2004
Provident Bank 401(k) Participant Loan balance as of December 31, 2004 was:
Principal
Interest Balance
Rate 12/31/04
----------
Participant Loans 9.75% $ 112,161
==========
See notes to financial statements
-12-
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 24, 2005 By: /s/ Robert J. Sansky
-------------------------
Name: Robert J. Sansky
Title: Executive Vice President
and Regional President