January 11, 2001
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of
Provident Bancorp, Inc. (the "Company"). The Annual Meeting will be held at the
Holiday Inn of Suffern, 3 Executive Boulevard, Suffern, New York on February 21,
2001, at 10:00 a.m., local time.
The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted. During the Annual Meeting we will also report on the
operations of the Company. Directors and officers of the Company will be present
to respond to any questions that stockholders may have. Also enclosed for your
review is our Annual Report to Stockholders, which contains detailed information
concerning the activities and operating performance of the Company.
The business to be conducted at the Annual Meeting consists of the election of
three directors and the ratification of the appointment of KPMG LLP as the
Company's independent auditors for the fiscal year ending September 30, 2001.
For the reasons set forth in the Proxy Statement, the Board of Directors of the
Company has determined that the matters to be considered at the Annual Meeting
are in the best interest of the Company and its stockholders, and the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible, even if you currently plan to attend
the Annual Meeting. This will not prevent you from voting in person, but will
assure that your vote is counted if you are unable to attend the meeting. Your
vote is important, regardless of the number of shares that you own.
Sincerely,
/s/ George Strayton
George Strayton
President and Chief Executive Officer
<PAGE>
Provident Bancorp, Inc.
400 Rella Boulevard
Montebello, New York 10901
(845) 369-8040
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On February 21, 2001
Notice is hereby given that the Annual Meeting of Stockholders of
Provident Bancorp, Inc. (the "Company") will be held at the Holiday Inn of
Suffern, 3 Executive Boulevard, Suffern, New York, on February 21, 2001 at 10:00
a.m., local time.
A Proxy Card and Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. the election of three Directors to the Board of Directors;
2. the ratification of the appointment of KPMG LLP as independent
auditors for the Company for the fiscal year ending
September 30, 2001; and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on the foregoing proposals at the Annual
Meeting on the date specified above, or on date or dates to which the Annual
Meeting may be adjourned. Stockholders of record at the close of business on
December 29, 2000 are the stockholders entitled to vote at the Annual Meeting,
and any adjournments thereof.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING,
IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE
HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL
MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN
ORDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ Carol Benoist
Carol Benoist
Secretary
Montebello, New York
January 11, 2001
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
Provident Bancorp, Inc.
400 Rella Boulevard
Montebello, New York 10901
(845) 369-8040
ANNUAL MEETING OF STOCKHOLDERS
February 21, 2001
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Provident Bancorp, Inc. (the
"Company") to be used at the Annual Meeting of Stockholders of the Company (the
"Meeting"), which will be held at the Holiday Inn of Suffern, 3 Executive
Boulevard, Suffern, New York, on February 21, 2001, at 10:00 a.m., local time,
and all adjournments of the Meeting. The accompanying Notice of Annual Meeting
of Stockholders and this Proxy Statement are first being mailed to stockholders
on or about January 11, 2001.
--------------------------------------------------------------------------------
REVOCATION OF PROXIES
--------------------------------------------------------------------------------
Stockholders who execute proxies in the form solicited hereby retain
the right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon. Where
no instructions are indicated, validly executed proxies will be voted "FOR" the
proposals set forth in this Proxy Statement for consideration at the Meeting.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company, at the address shown above. The presence at the
Meeting of any stockholder who had returned a proxy shall not revoke such proxy
unless the stockholder delivers his or her ballot in person at the Meeting or
delivers a written revocation to the Secretary of the Company prior to the
voting of such proxy.
--------------------------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
--------------------------------------------------------------------------------
Holders of record of the Company's common stock, par value $0.10 per
share (the "Common Stock"), as of the close of business on December 29, 2000
(the "Record Date") are entitled to one vote for each share then held. As of the
Record Date, the Company had 8,077,800 shares of Common Stock issued and
outstanding, of which 4,416,000 were held by Provident Bancorp, MHC (the "
Mutual Holding Company"), the Company's parent mutual holding company. The
presence in person or by proxy of a majority of the outstanding shares of Common
Stock entitled to vote is necessary to constitute a quorum at the Meeting.
Directors are elected by a plurality of votes cast, without regard to either
broker non-votes, or proxies as to which the authority to vote for the nominees
being proposed is withheld. The affirmative vote of holders of a majority of the
total votes present at the Meeting in person or by proxy is required for
approval of the ratification of KPMG LLP as the Company's independent auditors.
Shares as to which the "Abstain" box has been selected on the proxy card will
count as shares represented and entitled to vote and will be treated as votes
"Against" the proposal.
Persons and groups who beneficially own in excess of five percent of
the Common Stock are required to file certain reports with the Securities and
Exchange Commission (the "SEC") regarding such ownership. The following table
sets forth, as of November 30, 2000, the shares of Common Stock beneficially
owned by Executive Officers and Directors as a group and by each person who was
the beneficial owner of more than five percent of the Company's outstanding
shares of Common Stock.
1
<PAGE>
Amount of Shares
Owned and Nature Percent of Shares
Name and Address of of Beneficial of Common Stock
Beneficial Owners Ownership(2) Outstanding(3)
Provident Bancorp, MHC 4,416,000 54.7%
400 Rella Boulevard
Montebello, New York 10901
Provident Bancorp, MHC 4,932,242 61.1%
and all Directors and Executive
Officers as a Group (16 persons)(1)
BL Advisers, Inc. 498,375 6.2%
Barry Lewis
Barbara Lewis
177 S. Mountain Road
New City, New York 10956(4)
(1) The Company's executive officers and directors are also executive officers
and directors of the Mutual Holding Company.
(2) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
a person is deemed to be the beneficial owner for purposes of this
table, of any shares of Common Stock if he has shared voting or investment
power with respect to such security, or has a right to acquire beneficial
ownership at any time within 60 days from the date as of which beneficial
ownership is being determined. As used herein, "voting power" is the power
to vote or direct the voting of shares and "investment power" is the power
to dispose or direct the disposition of shares, and includes all shares
held directly as well as by spouses and minor children, in trust and other
indirect ownership, over which shares the named individuals effectively
exercise sole or shared voting or investment power.
(3) As of November 30, 2000, the Company had 8,077,800 shares of Common Stock
outstanding. (4) Based on a joint Schedule 13G filed with the SEC on
January 3, 2001.
--------------------------------------------------------------------------------
PROPOSAL I--ELECTION OF DIRECTORS
--------------------------------------------------------------------------------
The Company's Board of Directors is currently composed of 11 members.
The Company's Bylaws provide that approximately one-third of the Directors are
to be elected annually. Directors of the Company are generally elected to serve
for a three-year period and until their respective successors shall have been
elected and shall qualify. Three Directors will be elected at the Meeting to
serve for a three-year period and until their respective successors shall have
been elected and shall qualify. The Board of Directors has nominated to serve as
Directors for three-year terms William F. Helmer, William R. Sichol, Jr. and F.
Gary Zeh.
The table below sets forth certain information, as of November 30,
2000, regarding current members of the Company's Board of Directors and
Executive Officers who are not Directors, including the terms of office of Board
members. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to any nominee)
will be voted at the Meeting for the election of the nominees identified below.
If a nominee is unable to serve, the shares represented by all such proxies will
be voted for the election of such substitute as the Board of Directors may
recommend. At this time, the Board of Directors knows of no reason why any of
the nominees might be unable to serve, if elected. Except as indicated herein,
there are no arrangements or understandings between any of the nominees and any
other person pursuant to which such nominees were selected.
2
<PAGE>
<TABLE>
<CAPTION>
Shares
Position(s) Held With Director Current Beneficially Percent of
Name the Company Age Since(1) Term Expires Owned Class
---------------------- ---------------------- ------- --------- ------------ ----------- -----------
NOMINEES
<S> <C> <C> <C> <C> <C>
William F. Helmer Chairman of the Board 66 1974 2001 62,784(2) *
William R. Sichol, Jr. Director 60 1990 2001 39,553(3) *
F. Gary Zeh Director 62 1979 2001 47,984(3) *
OTHER BOARD MEMBERS
George Strayton President, Chief Executive 57 1991 2002 92,362(4) 1.1%
Officer and Director
Dennis L. Coyle Vice Chairman 64 1984 2002 72,983(2) *
Wilbur C. Ward Director 74 1990 2002 15,484(3) *
Burt Steinberg Director 55 2000 2002 10,984(5) *
Judith Hershaft Director 60 2000 2003 4,184(5) *
Thomas F. Jauntig, Jr. Director 56 2000 2003 3,484(5) *
Donald T. McNelis Director 67 1987 2003 27,259(3) *
Richard A. Nozell Director 67 1990 2003 15,910(3) *
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Daniel G. Rothstein Executive Vice President, 53 N/A N/A 38,689(6) *
Chief Credit Officer
and Regulatory Counsel
Robert J. Sansky Executive Vice President 53 N/A N/A 31,622(7) *
and Director of Human
Resources
Katherine A. Dering Senior Vice President and 52 N/A N/A 22,164(8) *
Chief Financial Officer
Stephen G. Dormer Senior Vice President and 50 N/A N/A 16,727(8) *
Director of Business Activity
John F. Fitzpatrick Senior Vice President and 48 N/A N/A 14,069(8) *
Director of Support Services
</TABLE>
* Less than 1%
(1) Reflects initial appointment to the Board of Directors of Provident Bank
(the "Bank") or its predecessors.
(2) Includes 4,479 shares of Common Stock granted pursuant to the Bank's 2000
Recognition and Retention Plan (the "Recognition Plan") over which the
individual has voting power, and 2,200 shares which the individual has the
right to acquire pursuant to stock options within 60 days of November 30,
2000.
(3) Includes 4,480 shares of Common Stock granted pursuant to the Recognition
Plan over which the individual has voting power, and 2,200 shares which the
individual has the right to acquire pursuant to stock options within 60 days
of November 30, 2000.
(4) Includes 29,866 shares of Common Stock granted pursuant to the Recognition
Plan over which the individual has voting power, and 18,000shares which can
be acquired pursuant to stock options within 60 days of November 30, 2000.
(5) Includes 2,200 shares which can be acquired pursuant to stock options within
60 days of November 30, 2000.
(6) Includes 13,141 shares of Common Stock granted pursuant to the Recognition
Plan over which the individual has voting power, and 4,040 shares which can
be acquired pursuant to stock options within 60 days of November 30, 2000.
(7) Includes 11,947 shares of Common Stock granted pursuant to the Recognition
Plan over which the individual has voting power, and 3,640 shares which can
be acquired pursuant to stock options within 60 days of November 30, 2000.
(8) Includes 9,557 shares of Common Stock granted pursuant to the Recognition
Plan over which the individual has voting power, and 3,091 shares which can
be acquired pursuant to stock options within 60 days of November 30, 2000.
The business experience for the past five years for each of the
Company's Directors and Executive Officers is as follows:
William F. Helmer has served as the Chairman of the Board of Directors
of Provident Bank (the "Bank") since 1994 and Chairman of the Board of the
Company since its formation in 1999, and is the President of Helmer-Cronin
Construction, Inc., a construction company.
William R. Sichol, Jr. is a principal of Sichol & Hicks, P.C.,
a private law firm.
3
<PAGE>
F. Gary Zeh is the President of Haverstraw Transit Inc., a bus
contracting company, and President of Quality Bus Sales and Service, Inc.
George Strayton has been employed by the Bank since 1982, was named
President and Chief Executive Officer of the Bank in 1986, and has served as
President and Chief Executive Officer of the Company since its formation in
1999.
Dennis L. Coyle has served as Vice Chairman of the Board of Directors
of the Bank since 1994 and Vice Chairman of the Board of the Company since its
formation in 1999. Mr. Coyle is the owner of the Coyle Insurance Agency, Inc.,
the owner and President of Denlo Realty Corp. and the owner of Dennis L. Coyle
Rental Properties.
Wilbur C. Ward is currently retired. Prior to his retirement, Mr. Ward
was the President of Ward Bulldozers.
Burt Steinberg is the President and Chief Operating Officer of The
Dress Barn, Inc., a woman's specialty store retailer.
Judith Hershaft is the Chief Executive Officer of Innovative Plastics
Corp., a manufacturer of custom plastic products. She is also the Chairman of
Greenway Plastics and Innovative Plastics.
Thomas F. Jauntig, Jr., is a partner in Korn, Rosenbaum, Phillips &
Jauntig LLP, CPAs.
Dr. Donald T. McNelis served as President of St. Thomas Aquinas College
in Sparkill, New York from 1974 until his retirement in 1995.
Richard A. Nozell is the owner of Richard Nozell Building Construction,
and serves as a general building contractor.
Daniel G. Rothstein has been employed by the Bank since 1983, and was
named Executive Vice President of the Bank in 1989. Mr. Rothstein has served as
the Bank's Chief Credit Officer and Regulatory Counsel since 1996.
Robert J. Sansky has been employed by the Bank since 1985, and was
named Executive Vice President in 1989. Mr. Sansky has served as the Bank's
Director of Human Resources since 1995.
Katherine A. Dering has served as the Bank's Chief Financial Officer
since 1994.
Stephen G. Dormer has served as Senior Vice President and Director of
Business Development of the Bank since 1996, and was previously Senior Vice
President and Manager of the Bank's Commercial Loan Department from 1994 until
1996.
John F. Fitzpatrick has been employed by the Bank since 1986, and was
named Senior Vice President and Director of Support Services in 1997.
Section 16(a) Beneficial Ownership Reporting Compliance
The Common Stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934. The Executive Officers and Directors of the
Company and beneficial owners of greater than 10% of the outstanding shares of
Common Stock ("10% beneficial owners") are required to file reports on Forms 3,
4 and 5 with the SEC disclosing beneficial ownership and changes in beneficial
ownership of the Common Stock. SEC rules require disclosure in the Proxy
Statement and Annual Report on Form 10-K of the failure of an officer, director
or 10% beneficial owner of the Common Stock to file a Form 3, 4 or 5 as
required. Director Judith Hershaft filed a Form 5 in October to report a
transaction that should have been reported on Form 4. Based on the Company's
review of ownership reports, no other
4
<PAGE>
Executive Officer, Director or 10% beneficial owner of the Company failed to
file ownership reports as required for the year ended September 30, 2000.
Meetings and Committees of the Board of Directors
The business of the Company is conducted at regular and special
meetings of the full Board and its standing committees. The standing committees
consist of the Executive and Audit Committees. The full Board of Directors acts
as Nominating Committee for the Company. During the fiscal year ended September
30, 2000, the Board of Directors met at 10 regular meetings and no special
meetings. No member of the Board or any committee thereof attended less than 75%
of said meetings.
The Executive Committee consists of Chairman Helmer, President, Chief
Executive Officer and Director Strayton, and Directors Coyle, McNelis and
Sichol. The Executive Committee meets as necessary when the Board is not in
session to exercise general control and supervision in all matters pertaining to
the interests of the Company, subject at all times to the direction of the Board
of Directors. The Executive Committee met seven times during the fiscal year
ended September 30, 2000.
The Audit Committee consists of Directors Nozell, who serves as
Chairman, Jauntig and Ward. This committee meets with the internal auditor to
review audit programs and the results of audits of specific areas. In addition,
the Audit Committee meets with the independent auditors to review the results of
the annual audit and other related matters. Each member of the Audit Committee
is "independent" as defined in the listing standards of the National Association
of Securities Dealers. The Company's Board of Directors has adopted a written
charter for the Audit Committee, which is attached to this proxy statement as
Exhibit A. The Audit Committee met six times during the fiscal year ended
September 30, 2000.
Audit Committee Report
In accordance with rules recently established by the SEC, the Audit
Committee has prepared the following report for inclusion in this proxy
statement:
As part of its ongoing activities, the Audit Committee has:
o Reviewed and discussed with management the Company's audited
consolidated financial statements for the fiscal year ended
September 30, 2000;
o Discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61,
Communications with Audit Committees, as amended; and
o Received the written disclosures and the letter from the
independent auditors required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit
Committees, and has discussed with the independent auditors
their independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2000.
This report has been provided by the Audit Committee:
Richard A. Nozell
Thomas F. Jaunting, Jr.
Wilbur C. Ward
5
<PAGE>
Stock Performance Graph
Set forth below is a stock performance graph comparing the yearly total
return on the Company's Common Stock commencing with the closing price on
January 8, 1999, the first day the Common Stock was publicly traded, with (a)
the cumulative total return on stocks included in the Nasdaq Composite Index,
and (b) the cumulative total return on stocks included in the SNL Mid-Atlantic
Thrift Index.
There can be no assurance that the Company's stock performance will
continue in the future with the same or similar trend depicted in the graph. The
Company will not make or endorse any predictions as to future stock performance.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
------------------------------------- -----------------------------------------------------------------------------
1/8/99 3/31/99 9/30/99 3/31/00 9/30/00
------------------------------------- -------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
|X| Provident Bancorp, Inc. 100.00 89.58 107.87 127.83 132.18
o Nasdaq Composite Index 100.00 104.90 117.60 195.07 156.13
|X| SNL Mid-Atlantic Thrift Index 100.00 92.38 81.91 74.80 90.23
</TABLE>
6
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Company does not independently compensate its executive officers,
directors, or employees. The Human Resources Committee of the Bank retains the
principal responsibility for the compensation of the officers, Directors and
employees of the Bank, including the benefits they receive. The Human Resources
Committee consists of Directors Zeh (who serves as Chairman), Helmer, McNelis,
Nozell and Strayton. Mr. Strayton is also the President and Chief Executive
Officer of the Company and the Bank. Mr. Strayton offers input and advice as to
executive compensation affecting members of the senior management team other
than himself. Compensation decisions and recommendations made as to Mr. Strayton
are made without the participation of Mr. Strayton, who recuses himself from any
such discussions.
During the fiscal year ended September 30, 2000, the Company had no
"interlocking" relationships in which (1) any Executive Officer is a member of
the Board of Directors of another entity, one of whose executive officers is a
member of the Company's Board of Directors, or (2) any Executive Officer is a
member of the compensation committee of another entity, one of whose executive
officers is a member of the Company's Board of Directors.
Report of the Compensation Committee
Under rules established by the SEC, the Company is required to provide
certain data and information in regard to the compensation and benefits provided
to the Company's Chief Executive Officer and other executive officers of the
Company. The disclosure requirements for the Chief Executive Officer and other
executive officers include the use of tables and a report explaining the
rationale and considerations that led to fundamental executive compensation
decisions affecting those individuals. In fulfillment of this requirement, the
Human Resources Committee of the Bank, at the direction of the Board of
Directors, has prepared the following report for inclusion in this proxy
statement.
The executive compensation program of the Bank is designed to attract
and retain experienced, motivated and productive officers who will help the Bank
reach its strategic and financial objectives. The compensation program is made
up of base salary, short and long-term incentive compensation, and benefits. The
following is a discussion of each component of the compensation program:
o Base Salary. Salaries paid to executives are designed to be competitive
with other financial institutions of similar size and locations.
Salaries are paid for performance and the successful completion of job
description responsibilities and accompanying standards.
o Incentive Compensation. The Bank provides short-term cash incentive
opportunities (the "Management Incentive Program") for operating plan
completion, return to the Bank from the operating plans and Bank
profitability. The Bank also offers long-term incentives in the form of
stock options awarded under the Provident Bank 2000 Stock Option Plan,
(the "Stock Option Plan") and restricted stock awarded under the
Provident Bank 2000 Recognition and Retention Plan (the "Recognition
Plan").
o Benefits. The Bank sponsors a variety of benefit plans, including the
Provident Bank Employee Stock Ownership Plan (the "ESOP"), a 401(k)
plan, the Provident Bank Defined Benefit Pension Plan, and for certain
senior executives, a supplemental executive retirement plan. Both the
ESOP and the 401(k) plan promote equity ownership in the Company and
the Bank by investment in Common Stock.
The Human Resources Committee of the Board of Directors is responsible
for the performance review of the Chief Executive Officer, who in turn reviews
each member of senior management. Compensation strategy is tied to performance,
productivity, operating results and market competitiveness. Incentive
compensation for officers is based upon completion of operating plans, their
degree of difficulty, return to the Bank, and Bank profitability. The Human
Resources Committee reviews officer salaries and other aspects of executive
compensation annually. The committee reviews compensation levels for
competitiveness and reasonableness as compared to industry peers and competitors
from information gathered by external consultants.
7
<PAGE>
Compensation for the Chief Executive Officer is comprised of base
salary, incentives and benefits. The Chief Executive Officer's base salary is
determined by individual performance, competitive salaries, successful
accomplishment of strategic goals and Bank profitability. The Bank's short-term
incentive plan provides goals for targeted returns of Bank profitability. Based
on the Bank's overall earnings, the Chief Executive Officer's short-term
incentive compensation for 2000 was equal to approximately 45% of his
then-existing base salary. Long-term incentives have been provided in the form
of awards of stock options and restricted stock.
This report has been provided by the Human Resources Committee:
F. Gary Zeh Richard A. Nozell
William F. Helmer George Strayton
Donald T. McNelis
Executive Compensation
Summary Compensation Table. The following table sets forth for the
years ended September 30, 2000 and 1999, certain information as to the total
remuneration paid by the Company to the Chief Executive Officer of the Company,
and the other four most highly compensated Executive Officers of the Company at
September 30, 2000 who received total annual compensation in excess of $100,000
(together, "Named Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
Other
Year Annual Restricted Options/ All Other
Name and Ended Compensation Stock SARS LTIP Compensation
Principal Position 9/30 Salary Bonus (1) Awards(2) (#) Payouts (3)
------------------------- --------- --------- --------- --------- --------------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George Strayton, President, 2000 $ 326,209 $ 120,000 -- $754,688 90,000 $ -- $32,831
Chief Executive Officer 1999 291,231 123,300 -- -- -- 68,500 17,933
and Director 1998 258,954 117,900 -- -- -- 13,100 33,349
Daniel G. Rothstein, 2000 $ 171,385 $ 58,100 -- $332,063 20,200 $ -- $15,732
Executive Vice President, 1999 164,592 59,963 -- -- -- 39,975 12,981
Chief Credit Officer 1998 158,250 57,525 -- -- -- 7,670 17,247
and Regulatory Counsel
Robert J. Sansky 2000 $ 155,815 $ 52,745 -- $301,875 18,200 $ -- $15,279
Executive Vice President and 1999 149,316 54,263 -- -- -- 36,175 12,767
Director of Human Resources 1998 142,974 51,713 -- -- -- 6,895 16,613
Stephen G. Dormer 2000 $ 139,365 $ 47,145 -- $241,500 16,200 $ -- $ 7,443
Senior Vice President and 1999 133,385 48,375 -- -- -- 32,250 5,754
Director of Business Activity1998 127,908 42,865 -- -- -- 6,235 9,003
Katherine A. Dering 2000 $ 139,035 $ 46,760 -- $241,500 16,200 $ -- $ 7,332
Senior Vice President and 1999 132,193 47,813 -- -- -- 31,875 5,606
Chief Financial Officer 1998 126,107 44,813 -- -- -- 5,975 9,195
</TABLE>
(1) The Bank provides certain members of senior management with certain other
personal benefits, the aggregate value of which did not exceed the lesser
of $50,000 or 10% of the total annual salary and bonus reported for each
officer. The value of such personal benefits is not included in this table.
(2) Represents the fair market value of shares granted pursuant to the
Recognition Plan. Messrs. Strayton, Rothstein, Sansky and Dormer and Ms.
Dering were awarded 48,300, 21,252, 19,320 15,456 and 15,456 shares of
restricted stock, respectively, which vest in five equal annual
installments commencing September 2000. Dividends are paid on the
restricted stock and participants can vote the restricted stock to the
extent shares have vested or are available for issuance pursuant to the
Recognition Plan.
(3) Includes employer contributions to a 401(k) Plan on behalf of Named
Executive Officers, as well as the payment of premiums for life insurance
policies.
Employment Agreements. In January 1996, the Bank entered into an
employment agreement with George Strayton, the President and Chief Executive
Officer of the Bank, which agreement was amended in 1998. On each day
8
<PAGE>
during the term of the agreement, the term of the agreement automatically renews
so that the agreement shall continually be for a three-year term unless notice
of non-renewal is provided at least 60 days prior to the anniversary date of the
agreement. In the event that notice of non-renewal is given, the agreement will
expire at the end of its then three-year term. Under the agreement, Mr. Strayton
will be paid $350,000 (the current annual rate of salary). For each calendar
year beginning after a change in control (as defined in the agreement) of the
Bank or Company, Mr. Strayton's annual salary will be increased by a formula set
forth in the agreement. In addition to his annual salary, Mr. Strayton is
entitled to participate in all tax-qualified plans and other incentive programs
of the Bank, and the Bank's group life, health, dental and disability plans.
In the event the Bank terminates Mr. Strayton's employment for any
reason other than for cause (as defined in the agreement), in the event of his
voluntary resignation within one year following a demotion in title or duties or
a change in control of the Bank or the Company, or in the event of termination
of his employment due to total and permanent disability, then Mr. Strayton will
be entitled to certain benefits payable by the Bank. These benefits include his
earned but unpaid salary, continuation of his life, health and disability
insurance benefits for the remaining unexpired employment period under the
agreement, and continued health coverage for Mr. Strayton and his spouse for
their remaining lifetimes. Mr. Strayton will also be entitled to certain lump
sum payments, such as the present value of any salary and director's fees that
he would have earned for the remaining unexpired employment period under the
agreement, although Mr. Strayton does not currently receive director's fees.
Within 60 days of termination of his employment, Mr. Strayton will also be
entitled to payments relating to the Bank's defined benefit pension plan, 401(k)
Plan, ESOP and Supplemental Executive Retirement Plan. Mr. Strayton will also be
entitled to immediate vesting of any unearned options or shares of restricted
stock awarded to him under any stock benefit plan maintained by the Company, and
the payments that would have been made to him under all incentive compensation
plans and programs adopted by the Bank, including the Management Incentive
Program. In the event that the Bank gives Mr. Strayton a notice of non-renewal,
or if the Bank does not extend the employment period at least 60 days prior to
any renewal date set forth under the agreement, Mr. Strayton may resign from the
Bank at any time and will receive a lump sum cash benefit within 30 days equal
to the amounts set forth above. Also, in such event the Bank will provide the
life and health insurance benefits set forth above. In the event that Mr.
Strayton becomes subject to an excise tax on payments made under the agreement
in connection with a change in control, Mr. Strayton will be reimbursed an
amount determined pursuant to a formula set forth in the agreement for payment
of such excise taxes by the Bank, so long as during the six- month period prior
to such change in control the Bank was in compliance with all applicable minimum
regulatory capital requirements. For a period of one year following the date of
his termination with the Bank for reasons other than for cause, the agreement
provides that Mr. Strayton shall not compete with the Bank.
In connection with its conversion to a stock bank, the Bank entered
into employment agreements with five other officers, including Messrs.
Rothstein, Sansky, Dormer, and Ms. Dering. The employment agreements are for
terms of up to two years and renew on a daily basis so that the remaining term
under the agreements is for up to two years unless notice of non-renewal is
given. Each Executive Officer covered by an employment agreement receives an
annual rate of salary, as specified in the employment agreement, and will be
entitled to participate in all tax-qualified plans and other incentive programs
of the Bank, and any group life, health, and disability plans maintained by the
Bank from time to time. The employment agreements for the five other officers
are substantially similar to the agreement with Mr. Strayton except that the
health coverage for the remaining officers does not continue for their
lifetimes.
Stock Option Plan. During the fiscal year ended September 30, 2000, the
Bank adopted, and the Company's stockholders approved, the Stock Option Plan.
Pursuant to the Stock Option Plan, options to purchase 11,000 shares of Common
Stock were each granted to non-employee Directors Coyle, Helmer, Hershaft,
Jauntig, McNelis, Nozell, Sichol, Steinberg, Ward and Zeh, at an exercise price
of $15.50 per share, the fair market value of the underlying shares on the date
of the award. The term of the options is ten years from the date of grant, and
the number of shares subject to awards will be adjusted in the event of any
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, combination or exchange of shares or other change in the corporate
structure of the Company. The stock options granted vest at the rate of 20% per
year, commencing February 22, 2000. To the extent described below, the awards
include an equal number of reload options ("Reload Options"), limited stock
appreciation rights ("Limited Rights") and dividend equivalent rights ("Dividend
Equivalent Rights"). A Limited Right gives the option holder the right, upon a
change in control of the Company or the Bank, to receive the excess of the
market value of the shares
9
<PAGE>
represented by the Limited Rights on the date exercised over the exercise price.
The Limited Rights are subject to the same terms and conditions as the stock
options. Payment upon exercise of Limited Rights will be in cash, or in the
event of a change in control in which pooling-of-interests accounting treatment
is a condition to the transaction, for shares of stock of the Company, or in the
event of a merger transaction, for shares of the acquiring corporation or its
parent, as applicable. Limited Rights have been granted to employees only. The
Dividend Equivalent Rights entitle the option holder to receive an amount of
cash at the time that certain extraordinary dividends are declared equal to the
amount of the extraordinary dividend multiplied by the number of options that
the person holds. For these purposes, an extraordinary dividend is defined as
any dividend where the rate of dividend exceeds the Bank's weighted average cost
of funds on interest-bearing liabilities for the current and preceding three
quarters. The Reload Options entitle the option holder, who has delivered shares
that he or she owns as payment of the exercise price for option stock, to a new
option to acquire additional shares equal in amount to the shares he or she has
delivered. Reload Options may also be granted to replace option shares retained
by the employer for payment of the option holder's withholding tax. The option
price at which additional shares of stock can be purchased by the option holder
through the exercise of a Reload Option is equal to the market value of the
previously owned stock at the time it was surrendered. The option period during
which the Reload Option may be exercised expires at the same time as that of the
original option that the holder has exercised.
Set forth in the table that follows is information relating to options
granted under the stock option plan to the Named Executive Officers during the
fiscal year ended September 30, 2000.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
=============================================================================================================================
Individual Grants
Percent of Total
Options Granted Exercise or Grant Date Present
to Employees in Base Expiration Value (2)
Name Options Granted FY 2000 Price(1) Date
<S> <C> <C> <C> <C> <C>
George Strayton 90,000 34.2% $15.50 2/22/10 $531,000
--------------------------- ----------------- ------------------- ------------- -------------- ------------------------
Daniel G. Rothstein 20,200 7.7% $15.50 2/22/10 $119,180
--------------------------- ----------------- ------------------- ------------- -------------- ------------------------
Robert J. Sansky 18,200 6.9% $15.50 2/22/10 $107,380
--------------------------- ----------------- ------------------- ------------- -------------- ------------------------
Stephen G. Dormer 16,200 6.2% $15.50 2/22/10 $95,580
--------------------------- ----------------- ------------------- ------------- -------------- ------------------------
Katherine A. Dering 16,200 6.2% $15.50 2/22/10 $95,580
=========================== ================= =================== ============= ============== ========================
</TABLE>
(1) The exercise price of the options is equal to the fair market value of the
underlying shares on the date of the award. The award included an equal
number of Reload Options, Limited Rights and Dividend Equivalent Rights,
the terms of which are as described above.
(2) Based on a grant date present value of $5.90 per share derived using the
Black-Scholes option pricing model with the following assumptions:
volatility of 22%; risk free rate of return of 6.6%; dividend yield of 1%;
and an eight-year option life.
10
<PAGE>
Set forth below is certain information concerning options outstanding
to the Named Executive Officers at September 30, 2000, and the options exercised
by the Named Executive Officers during 2000.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
=========================================================================================================================
Number of Unexercised Value of Unexercised In-
Options at The-Money Options at
Shares Acquired Value Year-End Year-End (1)
Name Upon Exercise Realized
Exercisable/Unexercisable Exercisable/Unexercisable
(#) ($)
<S> <C> <C> <C> <C>
George Strayton -- -- 18,000 / 72,000 2,250 / 9,000
--------------------------- ----------------- ----------------- -------------------------- --------------------------
Daniel G. Rothstein -- -- 4,040 / 16,160 505 / 2,020
--------------------------- ----------------- ----------------- -------------------------- --------------------------
Robert J. Sansky -- -- 3,640 / 14,560 455 / 1,820
--------------------------- ----------------- ----------------- -------------------------- --------------------------
Stephen G. Dormer -- -- 3,240 / 12,960 405 / 1,620
--------------------------- ----------------- ----------------- -------------------------- --------------------------
Katherine A. Dering -- -- 3,240 / 12,960 405 / 1,620
=========================== ================= ================= ========================== ==========================
</TABLE>
(1) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of Common Stock that
would be received upon exercise, assuming such exercise occurred on
September 30, 2000, at which date the last trade price of the Common Stock
as quoted on the Nasdaq National Market was $15.625.
Supplemental Executive Retirement Plan. The Bank maintains a
non-qualified supplemental executive retirement plan ("SERP") to compensate
executives whose benefits under the Bank's tax-qualified benefit plans are
limited by the Internal Revenue Code of 1986, as amended (the "Code," and, such
limitations, the "Applicable Limitations"). The SERP provides executives with
retirement benefits generally equal to the difference between (i) the annual
benefit the executive would have received under the Bank's Retirement Plan if
such benefits were computed without giving effect to the limitations on benefits
imposed by the Code, and (ii) the amounts actually payable to the executive
under the terms of the Retirement Plan. In addition, the executive is entitled
to a 401(k) benefit under the SERP equal to the product of (i) Bank
contributions that could not be credited to his or her account in the 401(k)
Plan due to the Applicable Limitations plus an earnings factor, and (ii) his or
her vested percentage in the 401(k) Plan. The SERP was amended in connection
with the adoption of the ESOP so that an executive who does not receive the
maximum contribution under the ESOP due to one of the Applicable Limitations
will be entitled to an ESOP benefit under the SERP, credited in units of the
Company's Common Stock, equal to the difference between the fair market value of
the number of shares of Common Stock of the Company that would have been
allocated to the account of the executive under the ESOP had the limitations
under the Code not been applicable, and the fair market value of the number of
shares of Common Stock actually allocated to the account of the executive. The
SERP is considered an unfunded plan for tax and ERISA purposes. All obligations
arising under the SERP are payable from the general assets of the Bank; however,
the Bank has established a trust to ensure that sufficient assets will be
available to pay the benefits under the SERP. The trust is entitled to purchase
Common Stock to fund the ESOP benefit under the SERP.
As of October 1, 1999, Mr. Strayton had accrued an annual benefit of
$32,784 under the Retirement Plan portion of the SERP, which would be payable
upon his reaching age 65. Benefits available to all Named Executive Officers
under the 401(k) portion of the SERP are included in "--Summary Compensation
Table," above.
Defined Benefit Pension Plan. The Bank maintains the Provident Bank
Defined Benefit Pension Plan (the "Retirement Plan") which is a qualified,
tax-exempt defined benefit plan. Employees age 21 or older who have worked at
the Bank for a period of one year and have been credited with 1,000 or more
hours of service with the Bank during the year are eligible to accrue benefits
under the Retirement Plan. The Bank contributes each year, if necessary, an
11
<PAGE>
amount to the Retirement Plan at least equal to the actuarially determined
minimum funding requirements in accordance with ERISA. For the plan year ended
September 30, 2000, a contribution of approximately $600,000 was made to the
Retirement Plan. At September 30, 2000, the total market value of the Retirement
Plan trust fund assets was approximately $7.5 million.
In the event of retirement at normal retirement age (i.e., the later of
age 65 or the 5th anniversary of participation in the Retirement Plan), the plan
provides a single life annuity. For a married participant, the normal form of
benefit is an actuarially reduced joint and survivor annuity where, upon the
participant's death, the participant's spouse is entitled to receive a benefit
equal to 50% of that paid during the participant's lifetime. Alternatively, a
participant may elect (with proper spousal consent, if necessary) a joint and
100% survivor annuity, a joint and 75% survivor annuity, a different form of
annuity, or installments payable over a period of not more than the life of the
participant (and spouse, if applicable). Payment may be made in a lump sum in
cash, provided the participant has completed 20 years of service and attained
age 55 or has attained normal retirement age. All forms in which a participant's
benefit may be paid will be actuarially equivalent to the single life annuity.
The monthly retirement benefit provided is an amount equal to the greater of a
participant's frozen accrued benefit (as provided for in the Retirement Plan) or
1.6% of a participant's average monthly compensation, multiplied by the
participant's years of service (up to a maximum of 35 years) plus 0.5% of the
participant's average monthly compensation in excess of one-twelfth of the
participant's Covered Compensation (as defined in the Retirement Plan)
multiplied by the participant's months of service (up to a maximum of 35 years),
computed to the nearest dollar. Retirement benefits are also payable upon
retirement due to early and late retirement or death and disability. A reduced
benefit is payable upon early retirement at or after age 55 and the completion
of 10 years of vested service with the Bank. No reduction in benefit will occur
as a result of special early retirement on or after age 62 and the completion of
20 years of vested service, if payment is made at the time of retirement. Upon
termination of employment other than as specified above, a participant who has
five years of vested service is eligible to receive his or her accrued benefit
commencing on such participant's retirement date, death or disability.
The following table indicates the annual retirement benefit that would
be payable under the Retirement Plan upon retirement at age 65 in calendar year
2000, expressed in the form of a single life annuity for the average monthly
salary and benefit service classifications specified below.
<TABLE>
<CAPTION>
Average
Monthly Years of Service and Annual Benefit Payable at Retirement
---------------------------------------------------------------
Compensation 15 20 25 30 35
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$4,167 $ 13,416 $ 17,892 $ 22,356 $ 26,832 $ 31,306
6,250 21,288 28,392 35,484 42,576 49,678
8,333 29,160 38,880 48,612 58,332 68,050
10,417 37,044 49,392 61,740 74,088 86,431
$13,333 and above(1) 48,060 64,080 80,112 96,132 112,150
</TABLE>
(1) Reflects the maximum benefit payable under the Retirement Plan due to tax
law limits.
As of September 30, 2000, Messrs. Strayton, Rothstein, Sansky, and
Dormer, and Ms. Dering had 18, 18, 15, 6 and 6 years, respectively, of credited
service (i.e., benefit service) under the Retirement Plan.
Compensation of Directors
Fees. Directors of the Bank receive an annual retainer fee of $12,000,
except for Chairman Helmer, who receives a retainer fee of $64,800. Directors
also receive a fee of $700 per Board meeting attended and $400 per committee
meeting attended. The Chairman of each committee receives an additional $2,000
per year. Directors who are also employees of the Bank are not eligible to
receive any fees for their service as a Director.
Deferred Compensation Agreements. The Bank has entered into
nonqualified deferred compensation agreements ("DCA") for the benefit of all of
the Bank's Directors. The DCAs comprise a non-qualified deferred compensation
plan into which a non-employee director can defer up to 100% of his or her board
fees earned during the calendar year. When a Director reaches the mandatory
retirement age, the Director's account will be paid to him or her
12
<PAGE>
in generally equal quarterly installments beginning on the first day of the
first calendar quarter after the Director becomes entitled to such payments and
continuing for five years. A Director may elect to receive distributions from
the plan prior to the Director's mandatory retirement age, and such
distributions may be paid over a longer period of time. In the event of the
Director's death, the balance of the Director's account will be paid to the
Director's designated beneficiary in the first calendar quarter after death. A
Director may also request a distribution from his or her account in the event
the Director suffers a hardship, such as a sudden or unexpected illness or
accident, affecting the Director, his beneficiary, or family member. Whether to
grant a hardship distribution is within the sole discretion of the Board. All
obligations arising under the DCAs are payable from the general assets of the
Bank; however, the Bank has established a trust to ensure that sufficient assets
will be available to pay the benefits under the DCAs. All record keeping,
distributions and investments are accomplished through a trustee that maintains
complete control over all deferred balances.
Recognition and Retention Plan. During the fiscal year ended September
30, 2000, the Bank adopted, and the Company's stockholders approved, the
Provident Bank 2000 Recognition and Retention Plan (the "Recognition Plan").
Pursuant to the Recognition Plan, 7,245 shares of stock were each awarded to
non-employee Directors Coyle, Helmer, McNelis, Nozell, Sichol, Ward and Zeh.
Awards vest in five equal annual installments commencing September 2000.
Dividends are paid on the restricted stock and participants can vote the
restricted stock to the extent shares have vested or are available for issuance
pursuant to the Recognition Plan
Transactions With Certain Related Persons
No Directors, Executive Officers or immediate family members of such
individuals were engaged in transactions with the Company or any subsidiary
involving more than $60,000 (other than through a loan) during the fiscal year
ended September 30, 2000. In addition, during the fiscal year ended September
30, 2000, no Directors, Executive Officers or immediate family members of such
individuals were involved in loans from the Company or the Bank involving more
than $60,000 which had not been made in the ordinary course of business and on
substantially the same terms and conditions, including interest rate and
collateral, as those of comparable transactions prevailing at the time with
other persons, and do not include more than the normal risk of collectibility or
present other unfavorable features.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPOSAL II--RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
The Board of Directors of the Company has approved the engagement of
KPMG LLP to be the Company's independent auditors for the 2001 fiscal year,
subject to the ratification of the engagement by the Company's stockholders. At
the Meeting, stockholders will consider and vote on the ratification of the
engagement of KPMG LLP for the Company's fiscal year ending September 30, 2001.
A representative of KPMG LLP is expected to attend the Meeting to respond to
appropriate questions and to make a statement if he so desires.
In order to ratify the selection of KPMG LLP as the independent
auditors for the 2001 fiscal year, the proposal must receive at least a majority
of the votes cast, either in person or by proxy, in favor of such ratification.
The Board of Directors recommends a vote "FOR" the ratification of KPMG LLP as
independent auditors for the 2001 fiscal year.
--------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
--------------------------------------------------------------------------------
In order to be eligible for inclusion in the proxy materials for next
year's Annual Meeting of Stockholders, any stockholder proposal to take action
at such meeting must be received at the Company's executive office, 400 Rella
Boulevard, Montebello, New York 10901, no later than September 14, 2001. Any
such proposals shall be subject to the requirements of the proxy rules adopted
under the Exchange Act.
Under the Company's Bylaws, certain procedures are provided which a
stockholder must follow to nominate persons for election as directors or to
introduce an item of business at a meeting of stockholders. These procedures
provide, generally, that stockholders desiring to make nominations for
directors, or to bring a proper subject of business before the meeting, must do
so by a written notice timely received (generally not later than 5 days in
advance of such meeting, subject to certain exceptions) by the Secretary of the
Company.
13
<PAGE>
--------------------------------------------------------------------------------
OTHER MATTERS
--------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in the Proxy Statement. However,
if any matters should properly come before the Meeting, it is intended that the
Board of Directors, as holders of the proxies, will act as determined by a
majority vote.
--------------------------------------------------------------------------------
MISCELLANEOUS
--------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telephone without additional compensation.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2000, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF
THE RECORD DATE UPON WRITTEN OR TELEPHONIC REQUEST TO ROBERTA LENETT, VICE
PRESIDENT, SHAREHOLDER RELATIONS, 400 RELLA BOULEVARD, MONTEBELLO, NEW YORK OR
CALL (845) 369-8082.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Carol Benoist
Carol Benoist
Secretary
Montebello, New York
January 11, 2001
14
<PAGE>
EXHIBIT A
AUDIT COMMITTEE CHARTER
Organization and Membership
There shall be a committee of the Board of Directors to be known as the
Audit Committee. The Audit Committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the Board of Directors, would interfere
with their exercise of independent judgment as a committee member. The members
of the committee should exhibit basic financial literacy, or should gain such
literacy within a reasonable time after appointment, to allow the members to
discharge their responsibilities hereunder. Financial literacy is signified by
the ability to read and understand fundamental financial statements.
Furthermore, at least one member of the committee should have financial
expertise, signified by past experience in finance or accounting, requisite
professional certification in accounting, or any other comparable experience or
background which results in the individual's financial sophistication, including
being or having been a chief executive officer or other senior officer with
financial oversight responsibilities.
Statement of Policy
The Audit Committee shall provide assistance to corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between and among the directors,
management, the independent auditors and the internal auditors. The Audit
Committee shall meet four times per year, or more frequently as circumstances
warrant.
Duties of the Audit Committee
The duties of the Audit Committee consist of the following:
a. Overseeing the internal audit function, including but not limited to:
1. reviewing and approving the audit plan, which shall include
all appropriate control and compliance matters;
2. reviewing reports of internal auditors as well as management's
response;
3. monitoring adherence to the audit plan;
4. monitoring corrective action taken by management;
5. reviewing reports issued pursuant to the Bank's Internal Loan
Review policies and monitoring corrective action;
6. monitoring corrective actions resulting from examination
reports or external audit reports; and
7. reviewing the policies adopted by the Board of Directors
governing the Internal Audit Department and recommending
modifications thereof if indicated.
b. Recommending to the board the engagement of the independent auditor after
consideration of: the nature and quality of audit services rendered or to be
rendered; the nature of and compensation for non-audit services rendered or
contracted for; the effect, if any, of any non-audit activities or relationships
that may bear on the objectivity or independence of the independent auditor; and
any other relevant factors.
A-1
<PAGE>
c. Reviewing with management and the independent auditor the scope of services
required by the audit, significant accounting policies, and audit conclusions
regarding significant accounting estimates.
d. Reviewing with management and the independent auditor their assessments of
the adequacy of internal controls and the resolution of identified material
weaknesses and reportable conditions in internal controls, if any, including the
prevention or detection of management override or compromise of the internal
control structure.
e. Reviewing with management the institution's compliance with laws and
regulations.
f. Discussing with management both the selection and termination of the
independent auditor and any significant disagreements between the independent
auditor and management.
g. Taking other action, independent of management, whenever appropriate.
h. Through its chairman, or in the absence of the chairman another designated
member, reviewing interim financial data and discussing with the Chief Financial
Officer (or other appropriate officer in the absence of the Chief Financial
Officer) and independent auditor, in person or by telephone conference, the
results of the auditor's review of the data prior to the filing of Form 10-Q,
and preferably prior to the public announcement of financial results.
i. Performing such other duties as assigned by law, the company's charter and
bylaws, or the Board of Directors.
Relationship to Internal Audit Department
The functions of the Internal Auditor and the Internal Audit Department
are under the direction of the Audit Committee. The Internal Auditor is hired by
and reports directly to the Audit Committee.
A-2
<PAGE>
REVOCABLE PROXY
PROVIDENT BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
February 21, 2001
The undersigned hereby appoints the official proxy committee consisting
of the Board of Directors with full powers of substitution to act as attorneys
and proxies for the undersigned to vote all shares of Common Stock of the
Company which the undersigned is entitled to vote at the Annual Meeting of
Stockholders ("Annual Meeting") to be held at the Holiday Inn of Suffern, 3
Executive Boulevard, Suffern, New York, on February 21, 2001, at 10:00 a.m.
local time. The official proxy committee is authorized to cast all votes to
which the undersigned is entitled as follows:
FOR VOTE
(except as WITHHELD
marked to the
contrary below)
1. The election as Directors of William F. -- --
Helmer, William R. Sichol, Jr. and F. | | | |
Gary Zeh each to serve for a three-year -- --
term.
INSTRUCTION: To withhold your vote for one or more nominees,
write the name of the nominee(s) on the line(s) below.
------------------------------
------------------------------
------------------------------
FOR AGAINST ABSTAIN
2. The ratification of KPMG LLP as the Company's -- -- --
independent auditors for the fiscal year ended | | | | | |
September 30, 2001. -- -- --
The Board of Directors recommends a vote "FOR" each of the listed proposals.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH ANNUAL MEETING, THIS PROXY WILL BE VOTED AS
DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
<PAGE>
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Annual Meeting of the stockholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. This proxy may also be revoked by sending written
notice to the Secretary of the Company at the address set forth on the Notice of
Annual Meeting of Stockholders, or by the filing of a later proxy prior to a
vote being taken on a particular proposal at the Annual Meeting.
The undersigned acknowledges receipt from the Company prior to the execution of
this proxy of notice of the Annual Meeting, a proxy statement dated January 11,
2001, and audited financial statements.
Dated: _________________________ --- Check Box if You Plan
--- to Attend Annual Meeting
------------------------------- ----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
------------------------------- ----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title.
--------------------------------------------------------------------------------
Please complete and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
--------------------------------------------------------------------------------
