UNITED STATES
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 |
For the fiscal year ended December 31, 2007
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 001-31566
| A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
The 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 Financial Services, Inc.
830 Bergen Avenue
Jersey City, New Jersey 07306-4599
| Page | ||
| FINANCIAL STATEMENTS | ||
| Report of Independent Registered Public Accounting Firm | 1 | |
| Statements of Net Assets Available for Benefits — December 31, 2007 and 2006 | 2 | |
| Statements of Changes in Net Assets Available for Plan Benefits —Years ended December 31, 2007 and 2006 | 3 | |
| Notes to Financial Statements | 4 | |
| Schedule H, Line 4i — Schedule of Assets (Held at End of Year) |
10 | |
| SIGNATURE OF PLAN ADMINISTRATOR | 11 | |
| EXHIBIT INDEX | 12 | |
| Consent of Independent Registered Public Accounting Firm | 13 | |
| EX-23.1: CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||
Report of Independent Registered Public Accounting Firm
Benefits Committee
The Provident Bank 401(k) Plan
We have audited the accompanying statements of net assets available for plan benefits of The Provident Bank 401(k) Plan (the “Plan”) as of December 31, 2007 and 2006, 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 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 plan benefits of The Provident Bank 401(k) Plan as of December 31, 2007 and 2006, 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 audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2007, is presented for additional analysis and is not a required part of the 2007 basic financial statements, but is 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 schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the 2007 basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the 2007 basic financial statements taken as a whole.
| /s/ KPMG LLP |
Short Hills, New Jersey
June 27, 2008
THE PROVIDENT BANK 401(k) PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2007 and 2006
| 2007 | 2006 | ||||
| Assets: |
|||||
| Investments, at fair value |
$ | 38,979,940 | 37,619,294 | ||
| Participant loans receivable |
916,811 | 715,878 | |||
| Contributions receivable |
— | 16,932 | |||
| Net assets available for plan benefits at fair value |
39,896,751 | 38,352,104 | |||
| Adjustment from fair value to contract value for fully benefit-responsive investment contracts |
321,783 | 331,083 | |||
| Net assets available for plan benefits |
$ | 40,218,534 | 38,683,187 | ||
See accompanying notes to financial statements.
2
THE PROVIDENT BANK 401(k) PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 2007 and 2006
| 2007 | 2006 | ||||
| Additions: |
|||||
| Interest income |
267,225 | 271,271 | |||
| Dividend income |
267,318 | 260,225 | |||
| Net realized gains on sales of investments |
(188,297 | ) | 137,932 | ||
| Net (depreciation) appreciation of investments |
(590,214 | ) | 1,770,717 | ||
| Employee contributions |
2,654,024 | 2,191,613 | |||
| Employer contributions |
451,257 | 361,098 | |||
| Rollover contributions |
76,261 | 3,906,165 | |||
| Transfers from predecessor plan |
1,848,535 | — | |||
| Total additions |
4,786,109 | 8,899,021 | |||
| Deductions: |
|||||
| Benefits paid to participants |
3,242,549 | 3,507,752 | |||
| Administrative expenses |
8,213 | 4,169 | |||
| Total deductions |
3,250,762 | 3,511,921 | |||
| Increase in net assets available for plan benefits |
1,535,347 | 5,387,100 | |||
| Net assets available for plan benefits at beginning of year |
38,683,187 | 33,296,087 | |||
| Net assets available for plan benefits at end of year |
40,218,534 | 38,683,187 | |||
See accompanying notes to financial statements.
3
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2007 and 2006
| (1) | Summary of Significant Accounting Policies |
| (a) | Basis of Presentation |
The accompanying financial statements have been prepared on the accrual basis of accounting. The Provident Bank 401(k) Plan (the “Plan”) is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
| (b) | Plan Changes |
Effective January 1, 2007, the Plan was amended to clarify automatic enrollment procedures, to allow participants to have two loans outstanding at one time and to reduce the minimum loan amount from $3,000 to $2,000.
Effective June 21, 2007, the Plan was amended to merge the First Morris Bank Savings and Retirement Plan (“First Morris 401(k) Plan”) into the Plan.
Effective September 1, 2007, The First Morris 401(k) Plan was merged into the Plan. As a result of the merger, the Plan was amended to include a “Protected Benefit Clause” for the former First Morris 401(k) Plan participants with regards to a Rollover Contribution Withdrawal which can be made by a former First Morris 401(k) Plan participant at any time as opposed to a limit of one withdrawal in a Plan Year for existing participants; and to exclude the following restrictive language: “and that has persisted for at least 6 months”, from the definition of disability for the former First Morris 401(k) Plan participants.
| (c) | Funds and Accounts Managed by Principal Trust Company |
Under the terms of a trust agreement between the Principal Trust Company (the “Custodian”) and The Provident Bank (the “Bank”), the Custodian managed funds on behalf of the Plan. The Custodian held the Plan’s investment assets and executed transactions relating to such assets. The investments in the funds were reported to the Bank by the Custodian as having been determined through the use of current values for all assets.
| (d) | Use of Estimates |
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the Plan administrator to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
| (e) | 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 financial 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. Due to the level of risk associated
4
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2007 and 2006
with certain investment securities, it is at least reasonably possible that changes in values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for plan benefits.
| (f) | Investment Valuation |
Purchases and sales of securities are recorded on the trade date and are stated at fair value. Securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the Plan year. Securities for which no sale was reported on that date are valued at the average of the last reported bid and asked prices. Investments not traded on a national securities exchange are valued at fair value determined by the Plan’s investment managers. Investments and changes therein are reported at fair value for all assets of the Plan. Loans receivable from participants are valued at their outstanding balance, which approximates fair value.
As described in Financial Accounting Standards Board (“FASB”) Staff Position FSP AAG INV-1 and Statement of Position No. 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the “FSP”) investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Plan’s investment in the Principal Fixed Income 401 (A)/(K) holds investment contracts that are deemed to be fully benefit-responsive as of December 31, 2007 and 2006. As required by the FSP, the Statements of Net Assets Available for Plan Benefits presents the fair value as well as the amount necessary to adjust this fair value to contract value. The fair value of fully benefit-responsive investment contracts is calculated using a discounted cash flow model, which considers recent fee bids as determined by recognized dealers, discount rate and the duration of the underlying portfolio securities. The contract value represents contributions plus earnings, less participant withdrawals and administrative expense.
| (g) | Income Recognition |
Interest income is recorded as earned on the accrual basis. Dividend income is recorded on the ex-dividend date.
| (2) | Plan Description |
The Plan is a voluntary, participant-directed defined contribution plan sponsored by the Bank and covers all employees, as defined, with the Bank. The following description of the Plan provides only general information. Eligible employees who participated in the Plan should refer to the Plan documents for a more complete description of the Plan’s provisions.
5
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2007 and 2006
| (a) | Employee Contributions |
Participants may elect to make tax-deferred contributions up to the maximum amount allowed by the Internal Revenue Service.
A participant may make “catch-up” contributions if the maximum annual amount of regular contributions is made and the participant is age 50 or older. The maximum allowable catch-up contribution limit for the year ended December 31, 2007 is $5,000. Catch-up contributions are not eligible for the employer’s matching contributions. Tax law requires that a participant’s catch-up contributions be reclassified as regular contributions if the participant elects catch-up contributions and fails to make the maximum allowable regular 401(k) contribution.
| (b) | Employer Contributions |
In 2007 and 2006, contributions were made by the Bank in an amount equal to 25% of the first 6% of a participant’s eligible contributions. The Bank’s Board of Directors sets the matching contribution rate in its sole discretion.
| (c) | Vesting |
Participants are always fully vested in their contributions and income or losses thereon. Prior to October 1, 2005, employer contributions and income or losses thereon were also fully vested. Effective October 1, 2005, employer contributions and income or losses thereon were 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 or she terminates employment on or after he or she attains age 65, or as a result of his or her death or disability.
Effective January 1, 2006, the Plan was amended to provide that all future employer matching contributions to a participant’s account are fully vested.
| (d) | Forfeitures |
Forfeitures are used to reduce the Plan’s contributions. For the years ended December 31, 2007 and 2006, there were no forfeitures of non-vested contributions.
| (e) | Participant Loans |
Upon written application by a participant, the Plan administrator may direct that a loan be made from the participant’s account. The minimum permissible loan is $2,000. The maximum permissible loan available is limited to the lesser of (i) $50,000 with certain reductions or (ii) 50% of the participant’s account. Any loan made must generally be repaid within a period not to exceed the earlier of termination of employment or five years. The term of the loan may exceed 5 years for the purchase of a primary residence. Loans bear a reasonable rate of interest that remains in effect for the duration of the loan. As of December 31, 2007, the interest rate on these loans ranged from 4.75% to 9.50%.
Principal and interest is paid ratably through bi-weekly payroll deductions or directly by the participant to the trustee.
6
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2007 and 2006
| (f) | Benefit Payments/Withdrawals |
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 or her designated beneficiary. During employment, participants may make cash withdrawals of post-tax participant contributions and related vested employer matching contributions and earnings thereon once per year without penalty. Hardship withdrawals of pre-tax participant contributions are also permitted once per year, but with a penalty. Such benefits are recorded when paid.
| (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 or her account.
| (3) | Plan Expenses |
Certain costs of administrative services rendered on behalf of the Plan, including accounting, tax, legal, audit and other administrative support, were borne by the Bank. Contract administrator fees are paid from Plan assets.
| (4) | Plan Termination |
Although it has not expressed an intent to do so, the Bank has the right to terminate the Plan subject to the provisions of ERISA. Upon termination of the Plan, the amounts credited to participant accounts would become fully vested.
| (5) | Federal Income Taxes |
The Internal Revenue Service (“IRS”) issued its latest determination letter on November 23, 2005, 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. The Plan has been amended since the issuance of the IRS determination letter. In the opinion of the Plan administrator and the Plan’s tax counsel, the Plan and its underlying trust have operated within the terms of the Plan document and remain qualified under the applicable provisions of the Internal Revenue Code.
7
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2007 and 2006
| (6) | Investments |
Investments at December 31, 2007 and 2006 consisted of mutual funds, loans to participants and common stock issued by Provident Financial Services, Inc. At December 31, 2007 and 2006, individual investments in excess of 5% of the fair value of the net assets available for plan benefits were as follows:
| 2007 | 2006 | ||||
| Provident Financial Services, Inc. investment in common stock |
$ | 8,930,857 | 11,872,386 | ||
| Principal Life Insurance Company: |
|||||
| Investors Large Company Growth |
— | 3,625,308 | |||
| Principal Investors Lifetime Str Income Separate Account |
2,647,349 | 2,915,235 | |||
| Principal Diversified International Separate Account |
4,049,739 | 3,200,646 | |||
| Principal Fixed Income 401(a)/(k) |
6,113,878 | 6,290,589 | |||
| Principal Large Cap Value II Separate Account |
— | 3,471,417 | |||
| Columbus Circle Investors Large Company Growth |
4,702,720 | — | |||
| American Century Large Cap Value |
3,460,074 | — | |||
For the years ended December 31, 2007 and 2006, the Plan’s net (depreciation)/appreciation of investments was as follows:
| 2007 | 2006 | ||||||
| Investments in mutual funds |
$ | 1,562,306 | 2,026,207 | ||||
| Investment in Provident Financial Services, Inc. common stock |
(2,152,520 | ) | (255,490 | ) | |||
| $ | (590,214 | ) | 1,770,717 | ||||
| (7) | Related-Party Transactions |
Certain Plan investments are shares of mutual funds managed by The Principal Financial Group (“Principal”). Principal is also the trustee and record keeper as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. Contract administrator fees that were paid from plan assets were $8,213 and $4,169 for the years ended December 31, 2007 and 2006, respectively.
8
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2007 and 2006
| (8) | Prohibited Transactions |
The Bank discovered an error in the operation of the Plan for the 2006 Plan year. In October 2006, the Bank learned that it had inadvertently transmitted to the Plan’s Trustee duplicate information on participant elective deferral contributions and loan repayments in consecutive payrolls in September 2006. Specifically, elective deferral contributions and loan payments with respect to the payroll ended September 15, 2006 were correctly transmitted to the Plan’s Trustee on September 13, 2006, but were subsequently re-transmitted to the Plan’s Trustee with respect to the payroll ended September 29, 2006. As a result of this error, some Plan participants received larger or smaller elective deferral contributions than they were entitled to receive for the payroll ended September 29, 2006, and several incorrect participant loan payments were credited to certain participant loans. The net shortfall to the Plan was approximately $537, consisting of excess allocations of approximately $5,058, and under allocations of approximately $5,595. The Bank corrected the error on November 8, 2006 by contributing an additional $537 to the Plan, and reallocating elective deferral contributions and loan payments among participant accounts. The Bank prepared a submission under the Department of Labor’s Voluntary Fiduciary Correction Program (VFCP) on June 27, 2007 to correct any outstanding issues concerning the duplicate payroll contribution. The Department of Labor approved the VFCP submission on September 20, 2007.
| (9) | Reconciliation of Financial Statements to Form 5500 |
The following is a reconciliation of the financial statements to the Form 5500:
| 2007 | 2006 | |||||
| Participant contributions per the financial statements |
$ | 2,654,024 | $ | 2,191,613 | ||
| Corrective Distributions |
19,566 | 20,695 | ||||
| Total Participant Contributions per the Form 5500 |
$ | 2,673,590 | $ | 2,212,308 | ||
| 2007 | ||||
| Net assets available for plan benefits per the financial statements |
$ | 40,218,534 | ||
| Adjustment from fair value to contract value for fully benefit-responsive contracts |
(321,783 | ) | ||
| Net assets per the Form 5500 |
$ | 39,896,751 | ||
| 2007 | ||||
| Total investment income (loss) per financial statements |
$ | (243,968 | ) | |
| Adjustment from fair value to contract value for fully benefit-responsive contracts |
(321,783 | ) | ||
| Total investment income (loss) per the Form 5500 |
$ | (565,751 | ) | |
9
THE PROVIDENT BANK 401(k) PLAN
Schedule H, line 4i – Schedule of Assets (Held at End of Year)
December 31, 2007
| Identity of issuer |
Description of investment |
Cost | Current value | |||||
| Principal Life Insurance Company* |
Insurance Company General |
$ |
6,086,009 |
|
6,113,878 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
|
1,319,409 |
|
1,408,917 | |||
| MFS Investment Manager |
Registered Investment Company |
|
339,055 |
|
323,598 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
|
676,583 |
|
690,744 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
|
2,439,759 |
|
2,647,349 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
|
220,358 |
|
238,665 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
|
632,687 |
|
689,936 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
|
426,735 |
|
467,669 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
|
144,663 |
|
155,944 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
|
115,765 |
|
121,887 | |||
| T Rowe Price |
Lg Cap Blend |
|
296,289 |
|
315,121 | |||
| American Century Inv Mgmt |
Large Cap |
|
3,111,074 |
|
3,460,074 | |||
| Goldman Sachs Asset Mgt |
Midcap Value I |
|
492,326 |
|
522,424 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
203,289 | 221,882 | |||||
| Capital Research and Mgmt Co |
Registered Investment Company |
|
647,388 |
|
649,054 | |||
| Columbia Funds |
Registered Investment Company |
|
436,674 |
|
429,782 | |||
| Columbus Circle Investors |
Large Co Growth |
|
3,624,465 |
|
4,702,720 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
|
294,541 |
|
321,653 | |||
| Fidelity |
Fidelity Management & Research |
|
1,560,331 |
|
1,682,977 | |||
| JP Morgan/Mellon Equity |
Small Cap Value I |
|
190,925 |
|
177,207 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
|
680,086 |
|
657,863 | |||
| Principal Life Insurance Company* |
Pooled Separate Accounts |
|
2,983,128 |
|
4,049,739 | |||
| Total investment in mutual funds |
30,049,083 | |||||||
| *Provident Financial Services, Inc., investment in common stock |
10,796,973 | 8,930,857 | ||||||
| *Participant loans receivable (a) |
916,811 | |||||||
| Total other investments |
9,847,668 | |||||||
| Total investments |
$ | 39,896,751 | ||||||
| * | A party-in-interest as defined by ERISA |
See report of independent registered public accounting firm.
(a) As of December 31, 2007, the interest rate on these loans ranged from 4.75% to 9.50%.
10
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 401(k) PLAN | ||||
| Date: June 30, 2008 | By: | /s/ Sara Rispoli | ||
| Name: | Sara Rispoli | |||
| Title: | Plan Administrator Vice President, The Provident Bank | |||
11
| Exhibit |
Exhibit |
Location | ||
| 23.1 | Consent of Independent Registered Public Accounting Firm | Page 13 |
12