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, 2006
---------------------------------------------------
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
REQUIRED INFORMATION
FINANCIAL STATEMENTS Page
Report of Independent Registered Public Accounting Firm 3
Statements of Net Assets Available for Plan Benefits
---December 31, 2006 and 2005 4
Statements of Changes in Net Assets Available for
Plan Benefits Years ended December 31, 2006 and 2005 5
Notes to Financial Statements 6
Schedule H, Line 4a---Schedule of Delinquent Participant
Contributions Year Ended December 31, 2006 12
Schedule H, Line 4i---Schedule of Assets Held at
End of Year December 31, 2006 13
SIGNATURE OF PLAN ADMINISTRATOR 14
EXHIBIT INDEX 15
Consent of Independent Registered Public Accounting Firm 16
EX-23.1: CONSENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Report of Independent Registered Public Accounting Firm
The Board of Directors
Provident Financial Services, Inc. :
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, 2006
and 2005, 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, 2006 and 2005, 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 supplemental Schedule H, Line 4a-
Schedule of Delinquent Participant Contributions for the year ended December 31,
2006 and Schedule H, Line 4i- Schedule of Assets (Held at End of Year) as of
December 31, 3006, are presented for additional analysis and are not a required
part of the 2006 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 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 2006 basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the 2006 basic financial
statements taken as a whole.
/s/ KPMG LLP
Short Hills, New Jersey
June 27, 2007
3
THE PROVIDENT BANK 401(k) PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2006 and 2005
2006 2005
------------------- -------------------
Assets:
Investments at fair value $ 37,619,294 32,291,618
Participant loans receivable 715,878 617,080
Contributions receivable 16,932 48,369
------------------- -------------------
Net assets available for plan benefits at fair value 38,352,104 32,957,067
Adjustment from fair value to contract value for fully benefit-responsive
investment contracts 331,083 339,020
------------------- -------------------
Net assets available for plan benefits $ 38,683,187 33,296,087
=================== ===================
See accompanying notes to financial statements.
4
THE PROVIDENT BANK 401(k) PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 2006 and 2005
2006 2005
------------------ ----------------
Additions:
Interest income $ 271,271 87,703
Dividend income 260,225 53,857
Net realized gains (losses) on sales of investments 137,932 3,814,116
Net appreciation (depreciation) of investments 1,770,717 (3,694,682)
Employee contributions 2,191,613 505,177
Employer contributions 361,098 69,688
Rollover contributions 3,906,165 103,571
Transfers from predecessor plan -- 23,566,066
---------------- --------------
Total additions 8,899,021 24,505,496
---------------- --------------
Deductions:
Distributions 3,507,752 3,365,265
Administrative expenses 4,169 1,358
---------------- --------------
Total deductions 3,511,921 3,366,623
---------------- --------------
Increase in net assets available
for plan benefits 5,387,100 21,138,873
Net assets available for plan benefits at beginning of year 33,296,087 12,157,214
---------------- --------------
Net assets available for plan benefits at end of year $ 38,683,187 33,296,087
================ ==============
See accompanying notes to financial statements.
5
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2006 and 2005
(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 September 30, 2005, The Provident Bank Employee Savings
Incentive Plan was merged into the Incentive Savings Plan for the
Employees of First Savings Bank. The merged plan was re-named The
Provident Bank 401(k) Plan.
(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 plan administrator has made estimates and assumptions relating to
the preparation of the financial statements under U.S. generally
accepted accounting principals. 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 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
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.
6
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2006 and 2005
As of December 31, 2006, the Plan adopted 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"). The FSP requires the Statement of Net
Assets Available for Plan Benefits to present the fair value of the
Plan's investments as well as the adjustment from fair value to
contract value for the fully benefit-responsive investment contracts.
The Statement of Changes in Net Assets Available for Plan Benefits is
prepared on a contract value basis for the fully benefit-responsive
investment contracts. The FSP was applied retroactively to the prior
period presented on the Statement of Net Assets Available for Benefits
as of December 31, 2005.
The investment contracts are presented at fair value on the statement
of net assets available for plan benefits. The investments in the
fully benefit-responsive investment contracts are also stated at
contract value, which is equal to principal balance plus accrued
interest. As provided in the FSP, an investment contract is generally
valued at contract value, rather than fair value, to the extent it is
fully benefit-responsive. 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.
(g) Income Recognition
Interest income is recorded as earned on the accrual basis. Dividend
income is recorded on the ex-dividend date.
(h) Reclassifications
Certain prior period amounts have been reclassified to conform to the
current year presentation.
(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.
(a) Employee Contributions
Participants may elect to make tax-deferred contributions up to the
maximum amount allowed by the Internal Revenue Service.
7
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2006 and 2005
Catch-Up Contributions
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 is $5,000
(for 2006). 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. Reclassified catch-up
contributions are also not eligible for the employer's matching
contribution.
(b) Employer Contributions
In 2006 and 2005, 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 Bank's 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
contributions to a participant's account are fully vested.
(d) Forfeitures
For the year ended December 31, 2005, forfeitures of non-vested
contributions used to reduce subsequent employer contributions
amounted to $15,506.
(e) Participant Loans
Upon written application by a participant, the plan administrator may
have directed that a loan be made from the participant's account. The
maximum permissible loan available was limited to the lesser of (i)
$50,000 with certain restrictions or (ii) 50% of his or her 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 and, once fixed, the rate of
interest remains in effect for the duration of the loan.
Principal and interest was paid ratably through bi-weekly payroll
deductions or directly by the participants to the trustee.
8
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2006 and 2005
(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) Participant Accounts
Separate accounts for each participant were 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.
(h) Investment Valuation
Investments were valued at fair market value. Investment transactions
were recorded on a trade date basis.
(3) Plan Expenses
Certain costs of administrative services rendered on behalf of the Plan
were borne by the Bank.
(4) Plan Termination
Although it has not expressed an intention 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 issued its latest determination letter on
February 25, 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 receiving the determination letter. However, 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 and remain qualified under
the applicable provisions of the Internal Revenue Code.
9
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2006 and 2005
(6) Investments
Investments at December 31, 2006 and 2005 consisted of mutual funds, loans
to participants and common stock issued by Provident Financial Services,
Inc. At December 31, 2006 and 2005, individual investments in excess of 5%
of the fair value of the net assets available for plan benefits were as
follows:
2006 2005
------------------ ------------------
Provident Financial Services, Inc., investment in
common stock $ 11,872,386 11,093,771
Principal Life Insurance Company:
Investors Large Company Growth 3,625,308 3,531,200
Principal Investors Lifetime Strategic Income Separate Account 2,915,235 2,691,318
Principal Diversified International Separate Account 3,200,646 2,218,024
Principal Fixed Income 401(a)/(k) 6,290,589 6,441,374
Principal Large Cap Value II Separate Account 3,471,417 2,800,621
For the years ended December 31, 2006 and 2005, the Plan's net
appreciation/(depreciation) of investments was as follows:
2006 2005
--------------- -----------------
Investments in mutual funds $ 2,026,207 $ 503,129
Investment in Provident Financial Services, Inc. common stock (255,490) (4,179,811)
-------------- --------------
$ 1,770,717 $ (3,694,682)
============== ==============
(7) Changes in the Plan
There were no significant amendments to the Plan during the years ended
December 31, 2006 and 2005.
(8) 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.
10
THE PROVIDENT BANK 401(k) PLAN
Notes to Financial Statements
December 31, 2006 and 2005
(9) Prohibited Transactions
The Bank discovered an error in the operation of the Plan for the 2006 Plan
Year. During 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 retransmitted 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 by
contributing an additional $537 to the Plan in November 2006, and
reallocating elective deferral contributions and loan payments among
participant accounts. The Bank is currently preparing a submission under
the Department of Labor's Voluntary Fiduciary Correction Program ("VFCP")
to correct any outstanding issues concerning the duplicate payroll
contribution.
(10) Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of the employee contributions per the
financial statements for the year ended December 31, 2006 to the Form 5500:
2006
----------------
Employee Contributions per the Financial Statements $ 2,191,613
Corrective Distributions 20,695
----------------
Total Employee Contributions per the Form 5500 $ 2,212,308
================
(11) Subsequent Events
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 April 1, 2007, First Morris Bank & Trust ("First Morris") merged
with and into the Bank. As a result, the Plan was amended to give former
First Morris employees who continued to be employed by the Bank
("Continuing Employees") credit for service with First Morris to determine
eligibility to enroll in the Plan. The Plan was further amended to allow
eligible Continuing Employees to commence participation in the Plan
effective April 30, 2007.
11
THE PROVIDENT BANK 401(k) PLAN
Schedule H, line 4a- Schedule of Delinquent Participant Contributions
Year ended December 31, 2006
( a ) ( b ) ( c ) ( d ) (e)
Relationship to plan, Description of
Identity of Party employer, or other transaction, including Amount on line Lost
Involved party in interest rate of interest 4(a) interest
-------------------------- ------------------------- ----------------------- ----------------- ----------------
The Provident Bank Employer Employee contributions $5,595 $52
not deposited to Plan
in timely manner.
During 2006, The Provident Bank delayed in submitting employee
contributions in the amount of $5,595 to the Plan unintentionally. As soon
as administratively possible, The Provident Bank will reimburse the Plan
for lost interest in the amount of $52.
See accompanying report of independent registered public accounting firm.
12
THE PROVIDENT BANK 401(k) PLAN
Schedule H, line 4i- Schedule of Assets (Held at End of Year)
December 31, 2006
Identity of Issuer Description of Investment Cost Current value
-----------------------------------------------------------------------------------------------------------------------------------
Principal Life Insurance Company * Insurance Company General
Principal Fixed Income 401(A)/(K) 6,376,469 6,290,589
Principal Life Insurance Company * Pooled Separate Accounts
Principal Bind and Mtg Acc 1,186,244 1,240,812
MFS Investment Manager Registered Investment Company
MFS High-Yield Opp A Fund 249,817 255,038
Principal Life Insurance Company * Pooled Separate Accounts
Principal Lg Cp Stk Idx Sep Acct 177,114 202,073
Principal Life Insurance Company * Pooled Separate Accounts
Principal Lifetm Str Inc Sep Acct 2,667,001 2,915,235
Principal Life Insurance Company * Pooled Separate Accounts
Principal Lifetm 2010 Sep Acct 146,814 161,129
Principal Life Insurance Company * Pooled Separate Accounts
Principal Lifetm 2020 Sep Acct 394,310 437,029
Principal Life Insurance Company * Pooled Separate Accounts
Principal Lifetm 2030 Sep Acct 276,078 302,143
Principal Life Insurance Company * Pooled Separate Accounts
Principal Lifetm 2040 Sep Acct 93,554 101,430
Principal Life Insurance Company * Pooled Separate Accounts
Principal Lifetm 2050 Sep Acct 49,559 54,008
Principal Life Insurance Company * Pooled Separate Accounts
Prin Ptr Lg-Cap Blend Sep Acct 160,227 178,829
Principal Life Insurance Company * Pooled Separate Accounts
Prin Ptnrs Lg-Cap Value II Sa 2,920,387 3,471,417
Principal Life Insurance Company * Pooled Separate Accounts
Prin Ptr Md-Cp Val I Sep Acct 344,300 381,058
Principal Life Insurance Company * Pooled Separate Accounts
Principal U.S. Property Sep Acct 135,328 143,334
The American Funds Registered Investment Company
Am Fds Grwth Fd of Am R4 Fund 315,196 327,659
Columbia Funds Registered Investment Company
Columbia Acorn A Fund 355,252 360,108
Principal Life Insurance Company * Pooled Separate Accounts
Principal Lg Co Grwth Sep Acct 3,292,921 3,625,308
Principal Life Insurance Company * Pooled Separate Accounts
Principal Med Co Blnd Sep Acct 172,584 194,447
Principal Life Insurance Company * Pooled Separate Accounts
Prin Ptnr Md-Cp Gr II Sep Acct 1,349,892 1,469,952
Principal Life Insurance Company * Pooled Separate Accounts
Prin Ptr Sm-Cp Val I Sep Acct 222,690 233,872
Principal Life Insurance Company * Pooled Separate Accounts
Prin Sm Cap Stk Idx Sep Acct 181,012 200,792
Principal Life Insurance Company * Pooled Separate Accounts
Principal Divers Intl Sep Acct 2,476,152 3,200,646
--------------
Total investment in mutual funds 25,746,908
*Provident Financial Services, Inc.,
investment in common stock 11,510,301 11,872,386
*Participant loans receivable (a) 715,878
--------------
Total other investments 12,588,264
Total investments $ 38,335,172
==============
* A party-in-interest as defined by ERISA
(a) As of December 31, 2006, the interest rates on these loans ranged from
5.00% to 9.25%
See accompanying report of independent registered public accounting firm.
13
SIGNATURE OF PLAN ADMINSTRATOR
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 25, 2007 By: /s/ Joanne Hynes
----------------------------
Name: Joanne Hynes
Title: Plan Administrator
First Vice President-Benefits
The Provident Bank
14
EXHIBIT INDEX
Exhibit Number Exhibit Location
-------------- -------------------------------- -----------------
23.1 Consent of Independent Registered Page 16
Public Accounting Firm
15
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 27, 2007, relating to the statements of net assets available for plan
benefits of The Provident Bank 401(k) Plan as of December 31, 2006 and 2005, and
the related statements of changes in net assets available for plan benefits for
the years then ended, and the supplemental schedule of delinquent participant
contributions for the year ended December 31, 2006 and schedule of assets (held
at end of year) as of December 31, 2006, which report appears in the December
31, 2006 Annual Report on Form 11-K of The Provident Bank 401(k) Plan.
/s/ KPMG LLP
Short Hills, New Jersey
June 27, 2007
16