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, 2003
---------------------------------------------------
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 ____________________
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
The Provident Bank Employee Savings Incentive Plan
B: Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Provident Financial Services, Inc.
830 Bergen Avenue
Jersey City, New Jersey 07306-4599
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Provident Financial Services, Inc.:
We consent to the incorporation by reference in Registration Statement No.
333-103041 on Form S-8 of Provident Financial Services, Inc. of our report dated
June 18, 2004, relating to the financial statements of The Provident Bank
Employee Savings Incentive Plan as of December 30, 2003 and 2002, and for the
years then ended, and supplemental schedules of assets held for investment
purposes at end of year as of December 30, 2003 and reportable transactions for
the year ended December 30, 2003, which report appears in the Annual Report on
Form 11-K of The Provident Bank Employee Savings Incentive Plan.
/s/ KPMG LLP
KPMG LLP
Short Hills, New Jersey
June 28, 2004
THE PROVIDENT BANK
EMPLOYEE SAVINGS INCENTIVE PLAN
Financial Statements and Schedule
December 30, 2003 and 2002
(With Report of Independent Registered Public Accountant Thereon)
THE PROVIDENT BANK
EMPLOYEE SAVINGS INCENTIVE PLAN
FINANCIAL STATEMENTS AND SCHEDULE
Index
Page
Report of Independent Registered Public Accounting Firm 1
Statements of Net Assets Available for Benefits - December 30, 2003
and 2002 2
Statements of Changes in Net Assets Available for Benefits - Years ended
December 30, 2003 and 2002 3
Notes to Financial Statements 4
Schedules
1 Schedule H, Item 4(i) - Schedule of Assets Held for Investment
Purposes at End of Year - December 30, 2003 8
2. Schedule H, Item 4(j) - Schedule of Reportable Transactions 9
Report of Independent Registered Public Accounting Firm
Benefits Committee
The Provident Bank:
We have audited the accompanying statements of net assets available for benefits
of The Provident Bank Employee Savings Incentive Plan as of December 30, 2003
and 2002, and the related statements of changes in net assets available for
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 audits.
We conducted our audits 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 that our audits provide 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 benefits of The Provident
Bank Employee Savings Incentive Plan as of December 30, 2003 and 2002, and the
changes in net assets available for benefits for the years then ended in
conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes at end of year as of December 30, 2003, and reportable
transactions for the year ended December 30, 2003, are presented for the purpose
of additional analysis and are not a required part of the basic 2003 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 are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audit of the basic 2003
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic 2003 financial statements taken as a whole.
KPMG
Short Hills, New Jersey
June 18, 2004
THE PROVIDENT BANK
EMPLOYEE SAVINGS INCENTIVE PLAN
Statements of Net Assets Available
for Benefits
December 30, 2003 and 2002
2003 2002
----------- ------------
Assets:
Investments, at fair value $ 20,902,945 14,017,983
Participant loans receivable 216,957 --
Contributions receivable 97,534 86,394
Fee sharing receivable 47,260 47,260
Accrued interest receivable -- 2,570
----------- ------------
Liabililties:
Participant loans payable 4,500 --
Other payables 29,299 --
----------- ------------
Net assets available for benefits $ 21,230,898 14,154,206
=========== ============
See accompanying notes to financial statements.
2
The Provident Bank
Employee Saving Incentive Plan
Statement of Changes in Net Assets
Available for Benefits
Year ended December 30, 2003 and for 2002
2003 2002
----------- -----------
Additions:
Interest income $ 14,907 14,817
Dividend income 60,656 --
Fee sharing income -- 47,260
Realized and unrealized (depreciation)
appreciation of investments 6,017,984 (2,613,486)
Employee contributions 1,642,385 1,084,968
Employer contributions 1,024,598 1,203,029
----------- -----------
Total additions 8,760,530 (263,412)
----------- -----------
Deductions:
Distributions 1,559,776 1,128,484
Administrative expenses 124,062 202,629
----------- -----------
Total deductions 1,683,839 1,331,113
----------- -----------
Increase (decreae)
in net assets 7,076,692 (1,594,525)
Net assets available for benefits
at beginning of year 14,154,206 15,748,731
----------- -----------
Net assets available for
benefits at end of year $21,230,898 14,154,206
=========== ===========
See accompanying notes to financial statements
3
The Provident Bank
Employee Saving Incentive Plan
Notes to the Financial Statements
Year ended December 30, 2003 and for 2002
(1) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements have been prepared on an
accrual basis of accounting. The Provident Bank Employee Savings
Incentive Plan (the Plan) is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
(b) Funds and Accounts Managed by UBS Fiduciary Trust Company
Under the terms of a trust agreement between the UBS Fiduciary
Trust Company (the custodian) and The Provident Bank (the Bank),
the custodian manages nine funds on behalf of the Plan. The
custodian holds the Plan's investment assets and executes
transactions therein. The investments in the funds have been
reported to the Bank by the custodian as having been determined
through the use of current values for all assets.
(c) Use of Estimates
The plan administrator has made estimates and assumptions relating
to the preparation of the financial statements in conformity with
accounting principles generally accepted in the United States of
America. Actual results could differ from those estimates.
(d) Concentration of Risk
The assets of the Plan are primarily financial instruments which
are monetary in nature. As a result, interest rates have a more
significant impact on the Plan's performance than the effects of
general levels of inflation. Interest rates do not necessarily
move in the same direction or in the same magnitude as the prices
of goods and services as measured by the consumer price index.
Investments in investment funds are subject to risk conditions of
the individual fund objectives, stock market fluctuations,
interest rates, economic conditions and world affairs.
(2) Plan Description
The Plan is a voluntary, participant-directed defined contribution plan
sponsored by the Bank and covers all employees who have completed one
year of continuous service, as defined, with the Bank and who have worked
at least 1,000 hours during such year. The following description of the
Plan provides only general information. Eligible employees who
participate should refer to the plan agreement for a more complete
description of the Plan's provisions.
(a) Employee Contributions
Until March 31, 2003, participants could elect to make voluntary
contributions of 1% to 5% of their compensation, as defined.
Beginning April 1, 2003, the Plan was amended to allow
participants to elect to make tax-deferred contributions, but not
more than $12,000, which is the maximum amount allowed by the
Internal Revenue Service.
(b) Employer Contributions
Until March 31, 2003, contributions were made by the Bank in an
amount equal to 100% of the employee's contributions. Effective
April 1, 2003, contributions are made by the Bank in an amount
equal to 75% of the first 6% of a participant's eligible
contribution. The Board of Directors sets the rate annually, and
has the power, in its sole discretion, to set the amount for any
calendar quarter, and it may suspend or alter Bank contributions
for any quarter thereafter.
4
The Provident Bank
Employee Saving Incentive Plan
Notes to the Financial Statements
Year ended December 30, 2003 and for 2002
(c) Vesting
Participants are always fully vested in their contributions and
income or losses thereon. Employer contributions and income or
losses thereon are vested as follows: 33% vested at the end of the
first year of service, 67% vested at the end of the second year of
service, and 100% vested at the end of the third year of service.
Additionally, a participant shall become 100% vested if he
terminates employment on or after he attains age 65, or as a
result of his death or disability.
(d) Forfeitures
Forfeitures of non-vested contributions are used to reduce
subsequent employer contributions. Forfeitures for the year ended
December 30, 2003 and 2002 amounted to $14,008 and $54,746
respectively.
(e) Participant Loans
Upon written application by a participant, the Administrator may
direct that a loan be made from his account. The maximum
permissible loan available shall not exceed the lesser of (i)
$50,000 with certain restrictions or (ii) 50% of his account. Any
loan made must generally be repaid within a period not to exceed
the earlier of termination of employment or five years. Loans bear
a reasonable rate of interest and, once fixed, remain in effect
for the duration of the loan.
Pricipal and interest are paid ratably through bi-weekly payroll
deductions.
(f) Withdrawals/Benefit Payments
During employment, participants may make withdrawals in cash of
vested amounts made prior to April 1, 2003, upon 30 days written
notice prior to any valuation date. Withdrawal of amounts that
vest on or after April 1, 2003 are subject to a withdrawal penalty
unless it is determined to be as a result of a financial hardship.
Upon retirement or termination of employment, participants may,
under certain conditions, elect to receive vested amounts in (i) a
cash lump sum, or (ii) equal monthly, quarterly, semi-annual or
annual installments over a period not to exceed the life
expectancy of the participant or the combined life expectancy of
the participant and his designated beneficiary.
(g) Participants' Accounts
Separate accounts for each participant are maintained and credited
with the participant's contributions, the Bank's contributions
made on behalf of that participant and the participant's
proportionate share, as defined, of plan earnings or losses. The
benefit to which a participant is entitled is the benefit that can
be provided from his account.
(h) Investment Valuation
Investments are valued at fair market value. Investment
transactions are recorded on a trade date basis
(3) Plan Expenses
Certain costs of administrative services rendered on behalf of the Plan
are borne by the Bank.
5
The Provident Bank
Employee Saving Incentive Plan
Notes to the Financial Statements
Year ended December 30, 2003 and for 2002
(4) Plan Termination
The Plan has no termination date, and it is the Bank's intention to
continue the Plan indefinitely. However, the Bank may discontinue
contributions or terminate the Plan by action of its Board of Directors.
Upon termination of the Plan, the amounts credited to participant
accounts would become fully vested.
(5) Federal Income Taxes
The Internal Revenue Service issued its latest determination letter on
January 6, 2004 which stated that the Plan and its underlying trust
qualify under the applicable provisions of the Internal Revenue Code and
therefore are exempt from federal income taxes. In the opinion of the
plan administrator, the Plan and its underlying trust have operated
within the terms of the Plan and remain qualified under the applicable
provisions of the Internal Revenue Code.
(6) Investments
At December 30, 2003 and 2002, individual investments in excess of 5% of
net assets available for plan benefits are as follows:
2003 2002
---------- ----------
UBS Fiduciary Trust Company:
Provident Financial Services,
Inc., investment in common
stock $8,475,089 --
Capital growth portfolio 2,427,841 1,784,533
Guaranteed investment
contracts portfolio 2,257,296 2,019,496
Conservative equity portfolio 2,046,583 1,367,380
Balanced value portfolio 1,747,143 1,446,833
Overseas equity portfolio 1,223,935 --
General Account -- 5,031,364
The increase (decrease) in realized and unrealized appreciation of
investments for the years ended December 30, 2003 and 2002 is as follows:
2003 2002
----------- -----------
Provident Financial Services,
Inc., investment in common
stock $ 4,190,968 --
Capital growth portfolio 346,628 (903,538)
Guaranteed investment
contracts portfolio 82,195 120,796
Conservative equity portfolio 486,483 (849,410)
Balanced value portfolio 256,107 (319,723)
Overseas equity portfolio 421,524 (279,408)
Mid-cap growth portfolio 169,673 (460,471)
Strategic bond portfolio 64,406 78,268
----------- -----------
$ 6,017,984 (2,613,486)
6
Schedule 1
THE PROVIDENT BANK
EMPLOYEE SAVINGS INCENTIVE PLAN
Schedule H, Item 4(i) - Schedule of Assets Held for
Investment Purposes at End of Year
December 30, 2003
Market
Cost value
-------------------------------
UBS Fiduciary Trust Company
General account $ 42,538 42,538
Money market portfolio 1,050,540 1,050,540
Guaranteed investment
contracts portfolio 1,872,530 2,257,296
Balanced value portfolio 1,350,498 1,747,143
Conservative equity portfolio 1,581,559 2,046,583
Capital growth portfolio 2,160,117 2,427,841
Mid-cap growth portfolio 888,219 831,258
Overseas equity portfolio 934,199 1,223,935
Strategic bond portfolio 671,929 771,425
Provident Financial Services,
Inc., investment in common
stock 4,796,161 8,475,089
===============================
--------------
See accompanying report of registered independent public accountant.
8
Schedule 2
THE PROVIDENT BANK
EMPLOYEE SAVINGS INCENTIVE PLAN
Schedule H, Item 4(j) - Schedule of Reportable Transactions
Year ended December 30, 2003
Number
of Net
Description of trans- Purchase Selling gain
investments actions price price Cost (loss)
------------------------------------------- ------------ -------------- -------------- ----------------------------
UBS Global Asset Management-
Money market portfolio 9 $ 444,505 306,938 306,938 --
Guaranteed investment
contracts portfolio 3 $ 121,716 319,099 259,636 59,463
Mid-cap growth portfolio 2 $ 71,201 -- -- --
Overseas equity portfolio 1 $ 35,573 -- -- --
Provident Financial Services, Inc.,
investment in common stock* 92 $ 995,153 1,453,390 925,343 528,048
* A party-in-interest as defined by ERISA
--------------
See accompanying report of registered independent public accountant.
9
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.
THE PROVIDENT BANK
EMPLOYEE SAVINGS INCENTIVE PLAN
By: UBS FIDUCIARY TRUST COMPANY, TRUSTEE
AS DIRECTED TRUSTEE
Date: June 14, 2004 By: /s/ Steve Awerman
Name: Steve Awerman
Title: Vice President