SCHEDULE 14A

(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant x                            Filed by a Party other than the Registrant ¨

Check the appropriate box:

Provident New York Bancorp

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of filing fee (Check the appropriate box):

January 15, 2008

Dear Stockholder:

We cordially invite you to attend the Annual Meeting of Stockholders of Provident New York Bancorp. The Annual Meeting will be held at the Holiday Inn of Suffern, 3 Executive Boulevard, Suffern, New York on February 21, 2008, at 11:00 a.m., local time.

The enclosed Notice of Annual Meeting and Proxy Statement describe the formal business to be transacted. If you are a member of a household that has received only one Proxy Statement and you wish to receive your own Proxy Statement, please call our Stockholder Relations Department at 845.918.5580. During the Annual Meeting, we will also report on the operations of Provident New York Bancorp. Enclosed for your review is our Annual Report to Stockholders, which contains detailed information concerning the activities and operating performance of Provident New York Bancorp.

The business to be conducted at the Annual Meeting consists of the election of four (4) directors and the ratification of the appointment of Crowe Chizek and Company LLC as Provident New York Bancorp’s independent registered public accounting firm for the fiscal year ending September 30, 2008. The Board of Directors has determined that the matters to be considered at the Annual Meeting are in the best interest of Provident New York Bancorp 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 Annual Meeting. Your vote is important, regardless of the number of Provident New York Bancorp shares that you own.

Provident New York Bancorp

400 Rella Boulevard

Montebello, New York 10901

(845) 369-8040

NOTICE OF

ANNUAL MEETING OF STOCKHOLDERS

To Be Held On February 21, 2008

Notice is hereby given that the Annual Meeting of Stockholders of Provident New York Bancorp will be held at the Holiday Inn of Suffern, 3 Executive Boulevard, Suffern, New York, on February 21, 2008 at 11:00 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:

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 the date or dates to which the Annual Meeting may be adjourned. Stockholders of record at the close of business on December 24, 2007 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 VOTED. A PROXY MAY BE REVOKED BY FILING WITH THE SECRETARY OF PROVIDENT NEW YORK BANCORP A WRITTEN REVOCATION OR A DULY EXECUTED PROXY CARD 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 IN PERSON AT THE ANNUAL MEETING.

Montebello, New York

January 15, 2008

IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE 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.

PROXY STATEMENT

Provident New York Bancorp

400 Rella Boulevard

Montebello, New York 10901

(845) 369-8040

ANNUAL MEETING OF STOCKHOLDERS

February 21, 2008

This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors (the “Board”) of Provident New York Bancorp to be used at the Annual Meeting of Stockholders, which will be held at the Holiday Inn of Suffern, 3 Executive Boulevard, Suffern, New York, on February 21, 2008, at 11:00 a.m. local time, and all adjournments of the Annual Meeting. The accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement are first being mailed to stockholders on or about January 15, 2008.

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 Annual Meeting and all adjournments thereof. Proxies solicited on behalf of the Board of Directors of Provident New York Bancorp 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 Annual Meeting.

Proxies may be revoked by sending written notice of revocation to the Secretary of Provident New York Bancorp at the address shown above, delivering a later-dated proxy card, or by attending the Annual Meeting and voting in person. The presence at the Annual 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 Annual Meeting or delivers a written revocation to the Secretary of Provident New York Bancorp prior to the voting of such proxy. If you are a stockholder whose shares are not registered in your name, you will need appropriate documentation from your record holder to vote in person at the Annual Meeting.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

Except as otherwise noted below, holders of record of Provident New York Bancorp’s shares of common stock, par value $0.01 per share, as of the close of business on December 24, 2007 (the “Record Date”), are entitled to one vote for each share then held. As of the Record Date, there were 40,125,457 shares of common stock issued and outstanding. 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 Annual Meeting.

As to the election of directors, the proxy card being provided by the Board of Directors enables a stockholder to vote FOR all nominees proposed by the Board, to WITHHOLD authority for all nominees or to vote FOR ALL EXCEPT one or more of the nominees being proposed. Voting for all Directors except those you list on the proxy card is the equivalent of withholding your vote for those Directors you have listed. Directors are elected by a plurality of votes cast. Neither broker non-votes, nor proxies as to which the authority to vote for the nominees being proposed is withheld will affect the outcome of the vote.

As to the ratification of Crowe Chizek and Company LLC as the independent registered public accounting firm, by checking the appropriate box, a stockholder may: (i) vote FOR the ratification; (ii) vote AGAINST the ratification; or (iii) ABSTAIN from voting on such ratification. The affirmative vote of a majority of the votes represented by the aggregate of all of the shares of common stock cast with respect to each such matter is required for the ratification of Crowe Chizek and Company LLC as the independent registered public accounting firm for the fiscal year ending September 30, 2008. Abstentions from voting, as well as broker non-votes, if any, are not treated as votes cast and, therefore, will have no effect on any such proposal.

Provident New York Bancorp’s Employee Stock Ownership Plan (“ESOP”) is the beneficial owner of 5.2% of outstanding common stock. ESOP participants are entitled to provide voting instructions to the plan trustees via proxy card. If no voting instructions are received, the trustee will vote shares in proportion to the manner in which other participants have timely voted their interests, subject to the determination that such a vote is for the exclusive benefit of plan participants and beneficiaries.

In accordance with the provisions of our Certificate of Incorporation, record holders of common stock who, individually or together with their affiliates and any other person with whom they or their affiliates are acting in concert, beneficially own in excess of 10% of the issued and outstanding shares of common stock are not entitled to vote any of the shares held in excess of that limit. The Certificate of Incorporation further authorizes the Board of Directors (i) to make all determinations necessary to implement and apply that limit, including determining whether persons or entities are acting in concert, and (ii) to demand that any person who is reasonably believed to beneficially own shares of common stock in excess of the limit supply information to enable the Board of Directors to implement and apply the limit.

Persons and groups who beneficially own in excess of 5% of the shares of common stock are required to file certain reports with Provident New York Bancorp and the Securities and Exchange Commission regarding such ownership. The following table sets forth the shares of common stock beneficially owned by each person who was known to Provident New York Bancorp as the beneficial owner of more than 5% of the outstanding shares of common stock as of December 24, 2007.

PROPOSAL I — ELECTION OF DIRECTORS

The Board of Directors consists of thirteen (13) members. Our Bylaws provide that Directors are divided into three classes, with one class of Directors elected annually. Our Directors are generally elected to serve for a three-year period and until their respective successors shall have been elected and shall qualify. Four Directors will be elected at the Annual Meeting to serve for a three-year period and until their respective successors shall have been elected and shall qualify. The Nominating Committee of the Board of Directors has nominated the following persons to serve as Directors for three-year terms:

The table below sets forth certain information, as of December 24, 2007, regarding the nominees, other current members of our 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 Annual Meeting for the election of the proposed nominees. 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 determine. At this time, the Board of Directors knows of no reason why any of the nominees would 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.

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Column Notes:

All directors and executive officers as a group (1,334,398).

The business experience for the past five years for each of our directors and executive officers is as follows:

William F. Helmer has served as the Chairman of the Board of Directors of Provident Bank since 1994 and Chairman of the Board of Directors of Provident New York Bancorp since its formation in 1999. Mr. Helmer is the President of Helmer-Cronin Construction, Inc.

Dennis L. Coyle has served as Vice Chairman of the Board of Directors of Provident Bank since 1994 and Vice Chairman of the Board of Directors of Provident New York Bancorp since its formation in 1999. Mr. Coyle is the owner and President of Denlo Realty Corp., the owner of Dennis L. Coyle Rental Properties, and is formerly the co-owner of the Coyle Insurance Agency, Inc.

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George Strayton has been employed by Provident Bank since 1982, was named President and Chief Executive Officer of Provident Bank in 1986, and has served as President and Chief Executive Officer of Provident New York Bancorp since its formation in 1999. Mr. Strayton is a director of the Federal Home Loan Bank of New York.

Judith Hershaft is the President and Chief Executive Officer of Innovative Plastics Corp., a manufacturer of custom plastic products in Orangeburg, New York. She is also the Chairman of Innovative Plastics South Corp. in Tennessee and Innovative Plastics West Corp. in Arizona.

Thomas F. Jauntig, Jr. is a retired partner in Korn, Rosenbaum, Phillips & Jauntig LLP, certified public accountants.

Thomas G. Kahn is President of Kahn Brothers Group, Inc., Kahn Brothers LLC and Kahn Brothers Advisors LLC., all located in New York City. Kahn Brothers LLC is a member of the New York Stock Exchange. Kahn Brothers Advisors LLC is a Registered Investment Advisor with over $800 million of assets under management.

R. Michael Kennedy is a general partner and manager of various real estate companies, all managed through Kennedy Companies, Inc.

Victoria Kossover is a partner in Kossover Law Offices.

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.

Carl J. Rosenstock is Secretary-Treasurer of General Sportwear Co., Inc., a manufacturer of children’s apparel.

William R. Sichol, Jr. is a principal of Sichol & Hicks, P.C., a private law firm.

Burt Steinberg is the Executive Director of and serves as a member of the Board of Directors of The Dress Barn, Inc., a woman’s specialty store retailer.

Daniel G. Rothstein has been employed by Provident Bank since 1983, and was named Executive Vice President in 1989. Mr. Rothstein served as Provident Bank’s Chief Credit Officer and Regulatory Counsel from 1996 until August 2003, when he was appointed Chief Risk Officer. Mr. Rothstein was appointed Corporate Secretary effective January 2004 and was named General Counsel in January 2006.

Stephen G. Dormer was named Senior Vice President of Provident Bank in 1994 and served as Provident Bank’s Director of Business Development from 1996 until August 2003, when he was appointed Senior Vice President, Strategic Planning and Commercial Lending. Effective January 2005, Mr. Dormer was appointed Executive Vice President, Strategic Planning and Commercial Lending.

Richard O. Jones was appointed Executive Vice President, Business Services in December 2004. Mr. Jones has 30 years of retail banking, operations and sales management experience, starting with Manufacturers Hanover, followed by Chemical Bank and JP Morgan Chase. From 1996 to 2002, Mr. Jones served as Senior Vice President/Regional Manager for the Tri-State (New York-New Jersey-Connecticut) and Texas Regions for JP Morgan Chase. From 2002 to 2004, Mr. Jones served as Senior Vice President, Client Management and Personal Financial Services for JP Morgan Chase.

Paul A. Maisch has served as Chief Financial Officer of Provident Bank and Provident New York Bancorp since March 2003. Mr. Maisch was named Executive Vice President in January 2006. From 1998 through 2001, Mr. Maisch served as Executive Vice President and Chief Financial Officer of Premier National Bancorp, and had been employed by Premier National Bancorp and its predecessors since 1984.

The Board of Directors has determined that each of Provident New York Bancorp’s directors, with the exception of Messrs. Strayton and Sichol, is “independent” as defined in Rule 4200(a)(15) of the listing standards of the Nasdaq Marketplace Rules. In reaching these determinations, the Board considers any extensions of credit by Provident Bank to a

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director and a director’s other interests. The Board of Directors considered the lease transaction between Director Dennis L. Coyle and Provident Bank, discussed below in “Transactions with Certain Related Persons,” and determined that Mr. Coyle qualifies as “independent.” Payments under this lease totaled approximately $65,000 for the fiscal year ended September 30, 2007.

Section 16(a) Beneficial Ownership Reporting Compliance

Our Executive Officers and Directors and beneficial owners of greater than 10% of the outstanding shares of common stock are required to file reports with the Securities and Exchange Commission disclosing beneficial ownership and changes in beneficial ownership of our common stock. Securities and Exchange Commission rules require disclosure if an Executive Officer, Director or 10% beneficial owner fails to file these reports on a timely basis. Based on our review of ownership reports, Director Nozell filed one late Form 4 to report the sale of 671 shares of common stock from his deferred compensation account. Based on Provident New York Bancorp’s review of ownership reports required to be filed for the fiscal year ended September 30, 2007, no other Executive Officer, Director or 10% beneficial owner of Provident New York Bancorp’s shares of common stock failed to file ownership reports on a timely basis.

Code of Ethics

Provident New York Bancorp has adopted a Code of Ethics that is applicable to senior financial officers of Provident New York Bancorp, including Provident New York Bancorp’s principal executive officer, principal financial officer, principal accounting officer and all officers performing similar functions. The Code of Ethics is available on Provident Bank’s Internet website at www.providentbanking.com under the Investor Relations tab. Amendments to and waivers from the Code, as applicable, are disclosed on Provident Bank’s website.

Meetings and Committees of the Board of Directors

The business of the Board of Directors of Provident New York Bancorp is conducted at regular and special meetings of the Board and its committees. In addition, the “independent” members of the Board of Directors (as defined in the Nasdaq Marketplace Rules) meet in executive sessions. The standing committees of the Board of Directors of Provident New York Bancorp are the Executive, Nominating, Audit, Corporate Governance and Executive Compensation Committees. During the fiscal year ended September 30, 2007, the Board of Directors met at 12 regular meetings. One member, F. Gary Zeh, retired as of February 15, 2007. Except for Mr. Zeh, no member of the Board or any committee thereof attended less than 75% of the aggregate of (1) the total number of meetings of the board of directors (held during the period for which he has been a director) and (2) the total number of meetings held by all committees of the board on which he served (during the periods that he served).

Executive Committee. The Executive Committee consists of Chairman Helmer; President, Chief Executive Officer and Director Strayton; and Directors Coyle, Sichol and Steinberg. The Executive Committee meets as necessary when the Board of Directors is not in session to exercise general control and supervision over all matters pertaining to the interests of Provident New York Bancorp, subject at all times to the direction of the Board of Directors. The Executive Committee also meets in regularly scheduled sessions to provide more detailed oversight of the operations of Provident New York Bancorp. The Executive Committee met six times during the fiscal year ended September 30, 2007.

Nominating Committee. The Nominating Committee consists of all of the directors of Provident New York Bancorp who qualify as “independent” as defined in Rule 4200(a)(15) of the Nasdaq Marketplace Rules. These directors are: Chairman Helmer and Directors Coyle, Hershaft, Jauntig, Kahn, Kennedy, Kossover, McNelis, Nozell, Rosenstock and Steinberg.

Our Board of Directors has adopted a written charter for the Nominating Committee, which is available on the Company’s Internet website (www.providentbanking.com) under the About Us—Investor Relations tab. The Nominating Committee met once during the fiscal year ended September 30, 2007.

The Nominating Committee identifies nominees by first evaluating, or, through a sub-committee or the Corporate Governance Committee, causing an evaluation of the current members of the Board of Directors willing to continue in service. One of the four members of the Corporate Governance Committee is being considered for re-election in 2008, Dennis L. Coyle.

Current members of the Board with skills and experience that are relevant to Provident New York Bancorp’s business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If there were a vacancy on the Board

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because any member of the Board does not wish to continue in service, or if the Nominating Committee decides not to re-nominate a member for re-election, the Nominating Committee would determine the desired skills and experience of a new nominee, solicit suggestions for director candidates from all Board members, and may engage in other search activities, which activities may be conducted through a sub-committee or the Corporate Governance Committee.

Candidates should possess certain attributes, including integrity and a devotion to ethical behavior, a primary interest in the well-being of Provident New York Bancorp, a capacity for independent judgment, good business acumen, the capacity to protect confidential information, an ability to work as a member of a team and a willingness to evaluate other opinions or points of view. In addition to examining a candidate’s qualifications in light of the above attributes, the Nominating Committee would consider the following: the overall character of the candidate and any existing or potential conflict of interest; the candidate’s willingness to serve and ability to devote the time and effort required; the candidate’s record of leadership; and the ability to develop business for Provident New York Bancorp.

In addition, our Bylaws include the following qualifications for a Director: (1) a nominee must own at least 100 shares of our common stock; and (2) a Director must reside or work in a county in which Provident Bank (the banking subsidiary of Provident New York Bancorp) maintains an office or in a county contiguous to a county in which Provident Bank maintains an office at the time of first nomination and election, or appointment. During the year ended September 30, 2007, we did not pay a fee to any third party to identify or evaluate or assist in identifying or evaluating potential nominees for director.

The Nominating Committee may consider qualified candidates for Director suggested by our stockholders. Stockholders can suggest qualified candidates for Director by writing to our Corporate Secretary at 400 Rella Boulevard, Montebello, New York 10901. The Corporate Secretary must receive a submission not less than 180 days prior to the anniversary date of our proxy materials for the preceding year’s annual meeting. The submission must include the following:

Submissions that are received and that satisfy the above requirements are forwarded to the Chairman of the Nominating Committee for further review and consideration. A nomination submitted by a stockholder for presentation by the stockholder at an annual meeting of stockholders must comply with the procedural and informational requirements described in “Advance Notice of Business to be conducted at an Annual Meeting.”

Audit Committee. The Audit Committee consists of Directors Nozell, who serves as Chairman, Jauntig, Kossover, and Steinberg. The Board of Directors has determined that Director Jauntig qualifies as an “audit committee financial expert.” Each member of the Audit Committee is independent in accordance with the Nasdaq Marketplace Rules.

Our Board of Directors has adopted a written charter for the Audit Committee, which is available on the Company’s Internet website (www.providentbanking.com) under About Us—Investor Relations tab. As more fully described in the Audit Committee Charter, the Audit Committee is responsible for overseeing our accounting and financial reporting processes, including the quarterly review and the annual audit of our consolidated financial statements by the independent registered public accounting firm. In addition, the Audit Committee meets with our internal Chief Auditor to review the results of audits of specific areas on a quarterly basis. The Audit Committee met 15 times during the fiscal year ended September 30, 2007.

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Corporate Governance Committee. The Corporate Governance Committee consists of Directors McNelis, who serves as Chairman, Coyle, Helmer and Kennedy, each of whom is “independent” in accordance with the Nasdaq Marketplace Rules. The Corporate Governance Committee’s responsibilities include the periodic review of the size of the Board and making recommendations for change, if indicated, establishing procedures for evaluating the Board of Directors, assisting the Nominating Committee as requested, developing a Director orientation program, developing standards for Director training and continuing education, reviewing Board policies, reviewing and evaluating Board compensation and recommending changes thereto, reviewing Provident New York Bancorp’s Certificate of Incorporation and Bylaws, and reviewing and approving related-party transactions. The Corporate Governance Committee met four times during the fiscal year ended September 30, 2007.

Executive Compensation Committee. The Executive Compensation Committee consists of Directors Steinberg, who serves as Chairman, Helmer, Coyle, and McNelis, each of whom is “independent” in accordance with the Nasdaq Marketplace Rules. The Executive Compensation Committee is responsible for recommending increases in the salary of the President and Chief Executive Officer to the Board of Directors. The Executive Compensation Committee is also responsible for recommending for approval all executive officer salaries for our Executive Officers based on recommendations from our President and Chief Executive Officer. The Executive Compensation Committee also determines annual cash incentive payments to the CEO and other executive officers in accordance with the terms of the Executive Officer Incentive Plan. Determinations with respect to grants under stock benefit plans are made by the Executive Compensation Committee, excluding any Director who is not considered “disinterested” for purposes of Section 162(m) of the Internal Revenue Code. Mr. Coyle does not qualify as disinterested under Section 162(m). The Executive Compensation Committee met four times during the fiscal year ended September 30, 2007.

Our Board of Directors has adopted a written charter for the Executive Compensation Committee, which is available on the Company’s Internet website (www.providentbanking.com) under the About Us—Investor Relations tab.

Audit Committee Report

In accordance with Securities and Exchange Commission rules, the Audit Committee has prepared the following report for inclusion in this proxy statement:

As part of its ongoing activities, the Audit Committee has:

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 our Annual Report on Form 10-K for the fiscal year ended September 30, 2007 for filing with the Securities and Exchange Commission.

This report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Provident New York Bancorp specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

This report has been provided by the Audit Committee:

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Communications with the Board of Directors

Any stockholder who wishes to contact our Board of Directors or an individual director may do so by writing to: Board of Directors, Provident New York Bancorp, 400 Rella Boulevard, Montebello, New York 10901, Attention: Chief Executive Officer or Corporate Secretary. The letter should indicate that the author is a stockholder of Provident New York Bancorp, and, if shares are not held of record, should include appropriate evidence of stock ownership. Communications are reviewed by the Corporate Secretary and are then distributed to the Board of Directors or the individual director, as appropriate, depending on the facts and circumstances outlined in the communications received. The Chief Executive Officer, however, may directly respond in his discretion. If appropriate, the Corporate Secretary may (1) handle an inquiry directly or (2) forward a communication for response by another employee of Provident New York Bancorp. A copy of any such communication and response is forwarded to the Board at the next available Board meeting. The Corporate Secretary has the authority not to forward a communication if it is primarily commercial in nature, relates to an improper or irrelevant topic, or is unduly hostile, threatening, illegal or otherwise inappropriate.

Attendance at Annual Meetings of Stockholders

Provident New York Bancorp does not have a policy regarding director attendance at annual meetings of stockholders.

All of our directors, except for Mr. Zeh, attended the prior fiscal year’s annual meeting of stockholders.

Compensation Discussion & Analysis

This Compensation Discussion & Analysis (“CD&A”) is intended to outline, among other things, Provident New York Bancorp’s (“Provident” or the “Company”) compensation philosophy, objectives and processes. It also sets out our method for decision-making regarding executive compensation and the data and reasoning behind the decisions that are made.

Compensation Philosophy & Guiding Principles

Provident’s executive compensation program is designed to attract, develop and retain experienced, high quality executive officers who are capable of maximizing long term business performance for the benefit of our stockholders. The Executive Compensation Committee of Provident’s Board of Directors (the “Committee”) administers the total compensation program.

The Committee seeks to award executive officers with a total compensation package that is competitive and is aligned with the financial and non-financial business goals supporting Provident’s Brand Values and business strategy.

The executive total compensation program is designed to meet the following high-level objectives:

We accomplish these objectives through an integrated total compensation program which includes the following components:

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Through the combination of these various compensation components, we believe the Company has an effective program, which balances multiple needs and related objectives.

The Committee reviews its philosophy and executive compensation practices annually for alignment with our strategic goals and desired objectives.

Role of the Executive Compensation Committee, Management, and the Compensation Consultant in the Executive Compensation Process

Role of the Executive Compensation Committee

The Committee is responsible for discharging the Board’s responsibilities concerning executive compensation related matters. Four members of the Board, each of whom is independent, serve on the Committee. The Committee meets throughout the year, with four meetings held during fiscal year 2007. The Chairman of the Committee reports on Committee actions at Board meetings.

The Committee reviews all compensation components for Provident’s Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), and other three most highly compensated executive officers (collectively, the “Named Executive Officers”). The components are reviewed by element and in the aggregate, including base salary, annual incentive, total cash compensation, long-term incentives/equity, total direct compensation, benefits and perquisites, and total compensation. In addition, the Committee reviews the pay-for-performance relationship and considers all elements in the aggregate as part of the executive’s total compensation package.

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The Committee’s major duties and responsibilities are:

The Committee has the authority to retain any advisors needed to perform its responsibilities. The Committee also routinely obtains advice and assistance from internal or external legal, human resource, accounting or other experts, advisors, or consultants, as it deems appropriate.

Role of Provident’s Management

Although the Committee and the Board are ultimately responsible for executive compensation, they obtain information and input from management in connection with their decisions.

Below is a summary of the role of Provident’s management in assessing and recommending executive compensation:

Role of the Compensation Consultant

The Executive Compensation Committee is responsible for hiring the compensation consultant and advisors used throughout the year for advice on executive compensation. In fiscal year 2007, the Committee hired the compensation consulting firm Pearl Meyer & Partners. The Committee has direct access to the consultant for issues related to executive compensation and benefits. In addition to compensation consultants, the Committee has access to outside legal counsel or other experts as needed.

The compensation consultant conducts periodic comprehensive total compensation studies as well as ongoing updates on market trends and best practices. The Committee requests and utilizes this information as needed to make informed decisions and develop review processes.

The Committee periodically requests consultants and advisors to present findings or provide education regarding best practices and trends in the banking industry related to executive compensation.

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The compensation consultant reports directly to the Committee. In the event that the Company seeks the expertise of the consulting firm for assistance with other issues not directly related to executive compensation, the Committee approves such activities.

Compensation Determinations

Compensation Benchmarking

As part of its analysis and decision making process, the Committee assesses competitive market compensation using a number of data sources. The primary data source used in setting a competitive market for the executive officers is the information publicly disclosed by a peer group of companies. The Committee’s consultant selects the peer group to reflect banks of similar asset size and region, the two factors that the Committee believes most directly influence executive compensation in community banks.

The comparable companies are reviewed annually and may be changed from year to year depending on changes in the marketplace, acquisitions, divestitures and the business focus of Provident or comparable companies.

Below is a listing of the peer group used for 2007. This peer group includes 20 institutions in the Northeast reflecting banks generally between $1.5 billion and $5 billion in assets. The objective is to target Provident’s executive compensation at approximately the median of the peer group.

Proxy data comparisons are based on executives’ roles, rather than rank to ensure a better comparison.

As a secondary source for cash compensation (base salary and incentive), Pearl Meyer & Partners also provides comparative data from other industry surveys and general industry databases. Data is selected that best represent the asset size and region closest to Provident Bank. The consultant’s analysis reviews compensation elements individually and in the aggregate to provide more comprehensive information. This data forms the basis for developing total compensation targets and assessing the effectiveness of the programs.

Compensation Decision Process

In determining compensation for the CEO, the Committee considers the compensation consultant’s analysis, its assessment of the CEO’s performance, and overall Company performance. For all other senior executives, the Committee considers the consultant’s analysis, overall Company performance, and the CEO’s assessment of each executive officer’s performance.

The Committee considers many factors when making decisions about compensation including, but not limited to:

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The Committee reviews all aspects of compensation to ensure total compensation achieves its desired objectives. The mix of total compensation is designed to provide significant focus on performance incentives, both short-term and long-term. While the Committee does not specify a percentage of annual compensation that is based on performance (short and long-term), it does review executives’ pay relative to the pay mix in the market and generally targets at least 50% of total compensation based on performance.

Compensation Elements

Provident’s total compensation program consists of four main components of compensation.

Base Salary

The purpose of base salary is to provide competitive and fair base salary that recognizes the executives’ roles, responsibilities, contributions, experiences and performance. Base salary represents a fixed element of compensation that reflects executives’ long-term performance and market pay level for the role. Base salaries are targeted to be competitive with the practices of comparable financial institutions in the region. The Committee annually recommends to the Board each executive’s individual pay to reflect individual experience, expertise, performance, and contribution in the role.

The Committee establishes base salary ranges annually based on the competitive analysis conducted by our consultant. The ranges not only reflect competitive market rates (a range around median of peer and survey data) for each role, but also the internal relationships of the executive team members. The market range allows the Committee discretion to target the median while recognizing each executive’s individual contributions, experience and performance.

Base salary increases effective January 2007 considered Provident’s annual merit budget for all employees, as well as each executive’s role and contribution to the Company. As of January 1, 2007, the CEO’s base salary was increased to $475,000, an increase of 5.55% over his prior salary of $450,000.

Other Executive Officers: The Committee also reviews other executives’ compensation and determines salary increases considering performance feedback provided by the CEO, competitive market data, individual contribution and performance relative to individual and company-wide business and financial goals. Overall, the Committee approved salary increases ranging from 5% to 5.5% with an average of 5.2%. The CFO received an additional 5% increase based on external specific market data provided by the compensation consultant.

Annual Cash Incentive Compensation

An integral part of Provident’s total compensation program is the Executive Officer Incentive Plan. The plan is designed to reward executives for business achievements to the extent those achievements contribute measurably to Provident’s attainment of its business goals. The plan is designed to reward for overall Company performance, and does not consider individual contributions. This reflects our goal of creating an executive group that works together as a team for the overall good of the Company. The plan measures Provident’s performance in five areas deemed essential to building and maintaining stockholder value, which are:

As part of Provident’s business planning process, the Board of Directors approves an annual business plan at the beginning of each fiscal year. Based on the plan, the CEO provides the Committee with a summary of Company-wide goals and suggested weightings for each performance category. The Committee considers these recommendations and any other factors it deems relevant to determine the weightings for each performance category for the upcoming year. The Committee’s determination is reported to the Board of Directors. For the fiscal year ended September 30, 2007 the weightings were:

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Incentive award targets as a percentage of base salary are reviewed and recommended by the Committee, and approved by the Board of Directors. The percentage target is set to reflect competitive awards for achieving specific performance goals. Actual awards vary based on performance and can range from 50% of target for satisfactory performance relative to performance goals, to 150% of target for outstanding performance.

The target incentive for the CEO in effect for 2007 was 40% of base salary, and was 30% of base salary for the other Named Executive Officers. As a result of the compensation review conducted by Pearl Meyer & Partners for the fiscal year ending September 30, 2008, the Committee recommended and the Board approved an increase of the target award for the CEO to 50% of base salary.

Evaluation of Performance

At the end of the year, the Committee reviews the Company’s performance relative to each of the performance categories and weights defined at the start of the plan year. Each category receives a rating with an associated numerical score: unsatisfactory (1), marginally satisfactory (2), satisfactory (3), above satisfactory (4), or outstanding (5).

Each category’s numerical rating is multiplied by the weight to arrive at a “point score.” The total of the point score is then translated to the following payout matrix to determine the incentive award:

A summary of the evaluation process, ratings and award payout as determined by the Committee for fiscal year 2007 performance follows.

Quality and Level of Earnings (30%)

This category measures not only absolute earnings levels, but also the consistency of those earnings and, as a result, their contribution to building franchise value. In stressing the quality of earnings, we reflect our belief that short-term tactics and unusual events do not necessarily contribute to building franchise value. Key performance measures in this category include net interest margin and core earnings from banking activities. Efficiency and productivity measures are also included in this category, reflecting management efforts to optimize resources while achieving appropriate overall returns. Core earnings are defined in this context as earnings achieved without giving effect to accounting changes and one-time events. Since broader economic issues affect performance, peer comparisons are also included to establish earnings performance relative to the industry.

Assessment of 2007 performance: Net interest margin was below plan and prior year performance; however, the Committee considered that peer net interest margins had suffered more than Provident’s. The efficiency ratio was 100 basis points better than plan and prior year performance. The Committee also took into account the difficult interest rate environment that existed during fiscal year 2007, including the lack of opportunity to leverage. The Committee judged the performance of this category to be satisfactory relative to industry and peer performance, and rated performance a satisfactory, assigning a numerical rating of three.

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Balance Sheet Management (30%)

This category includes measures of asset/liability management, capital management and loan and investment portfolio management. It also includes measures of results in meeting asset and liability targets and achieving appropriate returns. As a result, this category is often the most comprehensive reflection of management effectiveness in both financial decision making and business generation. Performance here, as in other categories, is measured in comparison to peers.

Assessment of 2007 performance: The Committee reviewed the mix of assets, loan to deposit ratio, overall loan growth and deposit retention. Loan to deposit ratio exceeded plan, driven by quality loan growth, but deposits did not meet plan. The Committee reviewed the deposit pricing strategies management employed and the resulting favorable marginal cost of liabilities. The Committee also considered the launch of services and products to support growth in commercial demand deposit accounts. The Committee rated this category above satisfactory, assigning a numerical rating of four.

Market Share Growth (15%)

Market Share is a key expression of franchise value. The measurements in this category reflect both absolute and relative performance in maintaining or improving market share. While there are limitations in the data behind these measures, the Committee considers that the measures used (performance relative to peers, trends, and actual versus plan) are, generally, the best available for each category, and those most widely accepted.

Assessment of 2007 performance: The Committee acknowledged the significant increase in loans and Provident’s ranking as the number one small business lender in our primary market area, and the number two position in market share in deposits in our primary market area. The Committee again noted the disciplined pricing maintained by management in maintaining its balance sheet and judged the rating in this area to be above satisfactory, with a numerical rating of four.

Risk Management (15%)

Risk management is a discipline fundamental to all activities within the Company. This category measures management’s effectiveness across all risk categories. The measures reflect outside assessments of risk as well as internal evaluations.

Assessment of 2007 performance: The Committee considered the various elements of risk including credit, liquidity, operational, capital and interest rate. All risk levels were within guidelines and actively monitored. The Committee also considered the results of internal and external audits. It granted an outstanding rating for this category with a rating of five.

Stock Performance (10%)

This category provides a number of measures of the performance of Provident’s stock over the course of the plan period. While absolute EPS growth is a key measure, this section also provides EPS measures in comparison to analyst expectations and peer group performance. These measures provide context for evaluating management effectiveness in improving market capitalization and are considered in the context of industry and stock market performance. The lower weight for this factor reflects the limited influence management has on stock price over the short term as well as our belief that stock performance incentives are better addressed through long-term incentives, stock grants and options.

Assessment of 2007 performance: The total return on the Company’s stock for the fiscal year was—2.8%. Indices to which the Company is a member ranged from -5.4 to -10.2 %. The Company’s P/E ratio exceeded peer averages and its earnings per share of 48 cents was in line with analyst expectations and only one cent below the prior year. Although net income per share was below plan, the Committee judged overall performance to be above satisfactory given the interest and economic environment that existed during 2007 and gave it a rating of four.

Overall Incentive Award Determination

As a result of the rankings and weightings, the total score was 385. The score intervals and corresponding percentage of target are as follows:

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The score of 385 was between 350 (75% award payout) and 400 (100% payout). As a result, the cash incentive award was determined to be 75% of target. The Committee chose not to interpolate between scores.

The incentive target was 40% for the CEO and 30% for each of the other Named Executive Officers. Thus the CEO was awarded an incentive bonus of 30% of the average base salary in effect for the 2007 fiscal year, and each other Named Executive Officer received 22.5%.

Stock Based Compensation

Another key element of executive total compensation is the Company’s equity based plans, which are the Provident Bank 2000 Stock Option Plan (the “2000 Plan”) and the Provident Bancorp, Inc. 2004 Stock Incentive Plan (the “2004 Plan”), collectively referred to as “the Plans”. The purpose of the Plans is to provide long-term incentives that align executives with stockholder interests and the long-term interests of the Company. Stock is also a critical element to attract and retain highly qualified officers. Stock options align executives with stockholder interests by rewarding for stock price appreciation while restricted stock ensures an “ownership” interest.

The disinterested members of the Committee administer the Plans and are responsible for awarding any of three types of equity linked awards to eligible individuals – stock options, stock appreciation rights and restricted stock in accordance with the terms of the Plans.

No awards were granted in fiscal year 2007 since executives retain a significant equity interest through initial awards granted in 2005. The awards granted in 2005 provide a five-year vesting period (20% per year) for stock options and a ten-year term. The Committee believes the 2005 awards continue to focus executives on stockholder interests and provides significant focus on the long-term performance of the Company. The Committee retains the ability to provide additional grants at its discretion, and in accordance with plan limits.

Benefits

Provident sponsors a variety of benefit plans for all employees, in which the executives also participate. These benefits include the Provident Bank Employee Stock Ownership Plan, a 401(k) Plan, the Provident Bank Defined Benefit Pension Plan (for which benefit accruals have been frozen), life insurance and health and welfare benefits.

Provident also provides certain executive benefits and perquisites that are designed to provide benefits to executives to address tax code limitations. Provident’s policy on benefits has been to provide benefits consistent with market practice.

Additional benefits and perquisites provided for executives include:

Supplemental Retirement Benefits

Provident provides certain executives with supplemental retirement benefits to make up for benefits that would otherwise be payable if specified tax code limitations did not apply.

Insurance

Provident provides certain executives with supplemental long-term disability insurance, long term care insurance, and life insurance. The Committee believes that these insurance benefits are generally important to address market practices and attract and retain qualified employees.

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Perquisites

Provident does not provide significant perquisites or personal benefits to its executives. Certain executives may receive a company automobile and membership at a country club. These perquisites are in keeping with customary practice and support our business goals.

Other Matters

Impact of Accounting and Tax on the Form of Compensation

The Committee takes into account the various tax and accounting implications of compensation and benefit vehicles utilized by the Company.

Adjustment or Recovery of Awards

Under Section 304 of The Sarbanes-Oxley Act of 2002, if Provident New York Bancorp is required to restate its financial statements due to material non-compliance with any financial reporting requirements based upon a judicial determination of misconduct, the CEO and the CFO must reimburse Provident for:

Consideration of Prior Amounts Realized

In furtherance of Provident’s strategy of emphasizing rewards for future superior performance, prior compensation outcomes, including stock compensation gains, are generally not considered in setting future compensation levels.

Stock Ownership Guidelines and Hedging Policies

Provident does not currently have formal stock ownership guidelines in place, but does encourage executive officers to own shares by providing significant equity opportunities through stock options and restricted stock.

Employment Agreements

Provident provides employment agreements to all Named Executive Officers. For a discussion of their terms, see “Employment Agreements and Potential Payments upon Termination or a Change in Control.”

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Executive Compensation Committee Report

The Executive Compensation Committee evaluates and establishes compensation for executive officers. Although management has the primary responsibility for Provident’s financial statements and reporting process, including the disclosure of the CD&A, the Committee has reviewed the CD&A with management and is satisfied it represents the philosophy, intent, and actions of the Committee with regard to executive compensation. We recommend to the Board of Directors that the CD&A be included in this proxy statement for filing with the Securities and Exchange Commission.

Burt Steinberg, Chair

Dennis L. Coyle

William F. Helmer

Donald T. McNelis

Executive Compensation

Summary Compensation Table. The following table sets forth for the year ended September 30, 2007 certain information regarding total remuneration paid to our Chief Executive Officer, Chief Financial Officer, and to our other three most highly compensated executive officers. We refer to these executive officers in this Proxy as the “Named Executive Officers.”

Column Notes:

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ALL OTHER COMPENSATION

As discussed below under “Employment Agreements and Potential Payments upon Termination or a Change in Control,” we provide employment agreements to each of the Named Executive Officers.

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Grants of Plan-Based Awards

The following table sets forth for the year ended September 30, 2007 certain information regarding non-equity incentive plan compensation for the Named Executive Officers.

Column Notes:

During the last fiscal year, no outstanding option or other equity-based award was repriced or otherwise materially modified.

Executive Officer Incentive Plan

Please see CD&A section titled “Annual Cash Incentive Compensation” for a description of the material terms of the Executive Officer Incentive Plan.

2000 Stock Option Plan and 2004 Stock Incentive Plan

Provident’s stockholders approved the Provident Bank 2000 Stock Option Plan (the “2000 Plan”) in February 2000. A total of 1,712,640 shares of authorized but un-issued common stock were reserved for issuance under the 2000 Plan, although Provident may also fund option exercises using treasury shares. Under the terms of the 2004 Stock Incentive Plan (the “2004 Plan”), a total of 1,997,300 shares of authorized but un-issued common stock were reserved for issuance under the 2004 Plan. Under both plans, options have a ten-year term and may be either non-qualified stock options or incentive stock options. Reload options may be granted under the terms of the 2000 Plan and provide for the

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automatic grant of a new option at the then-current market price in exchange for each previously owned share tendered by an employee in a stock-for-stock exercise. Each option entitles the holder to purchase one share of common stock at an exercise price equal to the fair market value of the stock on the grant date. Employees who retire under circumstances in accordance with the terms of either the 2000 Plan or the 2004 Plan may be entitled to accelerate the vesting of individual awards. As of September 30, 2007, 162,600 shares were potentially subject to accelerated vesting.

Stock Awards and Stock Option Grants Outstanding

The following tables set forth information regarding stock awards and stock options outstanding at September 30, 2007, whether granted in 2007 or earlier.

Column Notes:

(b) & (c)

 (1)    Stock options granted pursuant to the 2004 Plan vest in five equal annual installments commencing on March 10, 2005.

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The following table presents options exercised and vesting of stock awards in 2007 for Named Executive Officers:

OPTION EXERCISES AND STOCK VESTED FOR THE YEAR ENDED 9/30/07

Column Notes:

Provident Bank Defined Benefit Pension Plan

The Defined Benefit Plan is a tax-qualified defined benefit pension plan. The plan was frozen to new participants effective September 30, 2006, and no additional benefit accruals have been earned under the plan since that date.

The normal retirement benefit is a single life annuity (with amounts payable to a participant during the participant’s lifetime only) or, for a married participant, a joint and survivor annuity (where, upon the participant’s death, the participant’s spouse is entitled to receive, for the remainder of the spouse’s lifetime, a benefit equal to 50% of the amount paid during the participant’s lifetime). Benefits may be paid in various other annuity forms or, if a participant has completed 20 years of service and has attained age 55 or greater, as a lump sum. Under the Defined Benefit Plan, normal retirement age is the later of a participant’s 65^th birthday and the fifth anniversary of the participant’s participation in the plan.

The normal retirement benefit is payable monthly and calculated, effective October 1, 1994, as an amount equal (on an annualized basis) to the sum of (A) 1.6% of a participant’s “average annual compensation” multiplied by the participant’s years of service (up to 35 years), and (B) 0.5% of the amount by which a participant’s average annual compensation exceeds “covered compensation” (the average of the taxable wage base for the 35 calendar years preceding

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the participant’s social security retirement age), multiplied by a participant’s years of service (up to 35 years). If a participant would be entitled to a greater amount under a method for calculating normal retirement benefits in effect prior to October 1, 1994, however, then the prior method of calculation will apply instead. The amount of the annual benefit that may be accrued by a participant under the Defined Benefit Plan is subject to a cap imposed under the Internal Revenue Code (“Code”).

A participant’s “average annual compensation” is generally the average of the participant’s annual compensation over the five consecutive calendar years (out of the last ten) in which his or her compensation was the highest. Compensation earned after December 31, 2006 is disregarded, however. A participant’s “compensation” includes wages and salary, but excludes commissions and bonuses where paid to a participant with a title of vice president or higher. The amount of annual compensation that may be taken into account for purposes of calculating benefits is subject to a cap under Code Section 401(a)(17), which was $210,000 in 2005.

Employees with ten years of service may retire as early as age 55, but generally with a reduction from normal retirement benefits. Benefits will not be reduced, however, for a participant who is 62 or older and has completed at least 20 years of service.

As of September 30, 2007, Messrs. Strayton, Rothstein and Dormer are ages 63, 60 and 57 and have been credited with 24, 24 and 12 years of service, respectively. Thus, they are eligible to retire under the early retirement benefit provisions of the Defined Benefit Plan and, in the case of Mr. Strayton, without any reduction in benefits.

For purposes of determining eligibility for early retirement benefits under the Defined Benefit Plan, a participant is credited with a year of eligibility service for each year in which a participant has performed at least 1,000 hours of eligibility service. Provident does not have a standing policy regarding service credit for employment under acquired companies whose plans were merged into the Defined Benefit Plan. Provident’s practice has been not to grant such credit. Benefits accrued under the plans of those prior employers are generally determined in accordance with the terms of those prior plans. However for purposes of plan participation, early retirement eligibility and vesting credit is given for years of service under employment of acquired companies. None of the Named Executive Officers has received any extra credit under the Defined Benefit Plan for service to employers other than Provident Bank.

Provident contributes each year to the Defined Benefit Plan an amount that is at least equal to the actuarially determined minimum funding requirements in accordance with ERISA and the Code. For the plan year ended September 30, 2007 no contribution was required.

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Pension Benefits

The following table sets forth information regarding the actuarial present value of benefits accrued by the Named Executive Officers under the Provident Bank Defined Benefit Pension Plan (the “Defined Benefit Plan”) and the defined benefit portion of Provident Bank’s Supplemental Executive Retirement Plan (the “SERP”) as of September 30, 2007.

Supplemental Executive Retirement Plan (Defined Benefit Component)

Provident maintains the SERP, a non-qualified supplemental retirement benefits plan. The purpose of the SERP is to make up for benefits that would otherwise be payable under the Defined Benefit Plan, the Provident Bank 401(k) Plan and the Provident Bank Employee Stock Ownership Plan if the Code limitations did not apply.

A participant in the SERP who has accrued benefits in the Defined Benefit Plan is eligible for a retirement benefit (a “supplemental retirement benefit”) generally equal to the difference between (a) the annual benefit the executive would have received under the Defined Benefit Plan if the amount of benefits were computed without giving effect to the limitations under the Code and (b) the annual benefit actually payable to the executive under the terms of the Defined Benefit Plan. For purposes of calculating the amount of supplemental retirement benefits payable to a participant, a participant’s compensation also includes any deferred compensation or fees payable to the participant as an officer or a director of Provident.

Supplemental retirement benefits under the SERP are generally payable at the time and in the form elected by a participant in accordance with the terms of the SERP. If the participant fails to designate a time of payment, the payment will be made upon the participant’s separation from service from Provident If the participant fails to designate a form of payment, the payment will be made in ten annual installments beginning on the first business day of the year following the participant’s separation from service, with each installment equaling the quotient of the amount of accrued and unpaid supplemental retirement benefits divided by the number of installments remaining. For “specified employees” under Code Section 409A, however, payments upon a separation from service cannot be made before the seventh month following separation from service and must be delayed until then. Amounts accrued as supplemental retirement benefits (to the extent unpaid) are deemed to accrue interest each year at the one-year Treasury rate for the first auction in January of the year.

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Supplemental Executive Retirement Plan (Defined Contribution Component)

The SERP provides for “supplemental 401(k) benefits” and “supplemental ESOP benefits” to compensate executives for benefits that would otherwise be payable due to Code limitations under the Provident Bank Retirement Savings Plan (the “401(k) Plan”) and the Provident Bank Employee Stock Ownership Plan (the “ESOP”).

In the case of supplemental 401(k) benefits, amounts are payable only to the same extent that a participant is vested in his or her benefits under the 401(k) plan. The time and form of payment of supplemental 401(k) benefits and supplemental ESOP benefits, as well as the measure for calculating interest on accrued benefits, is generally determined in the same manner as for supplemental retirement benefits (see “Defined Benefit Component”). Supplemental 401(k) benefits and supplemental ESOP benefits are generally paid in cash. If, however, Provident has established a trust permitted to hold company common stock, a participant may elect (with the approval of the Executive Compensation Committee) to be paid supplemental ESOP benefits in whole shares of company common stock, with fractional shares distributed in an equivalent amount in cash. It is Provident’s current policy not to fund the rabbi trust with Company common stock.

All obligations arising under the SERP (including the supplemental retirement benefits described under “Pension Benefits”) are payable from the general assets of Provident, although Provident has established a rabbi trust to help pay benefits under the SERP. The assets of the trust are at all times subject to the claims of Provident’s general creditors.

The following table sets forth information regarding amounts accrued by the Named Executive Officers as of September 30, 2007 under each defined contribution or other plan of Provident that provides for the deferral of compensation on a non tax-qualified basis.

Employment Agreements and Potential Payments upon Termination or Change in Control

We provide employment agreements to each of the Named Executive Officers. The agreements have an initial term of three years (for Messrs. Strayton and Rothstein), two years for Messrs. Dormer and Maisch, and one year for Mr. Jones. The agreements automatically renew daily unless notice is provided. If notice of non-renewal is provided, then the term of the agreement continues until the scheduled expiration date, unless an earlier termination date is agreed upon. The agreements automatically end on the last day of the calendar month in which Mr. Strayton reaches age 68 and Messrs. Rothstein, Dormer, Maisch and Jones reach age 65.

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Under the agreements, each Named Executive Officer receives a base salary. The base salary is reviewed at least annually and may be increased, but not decreased without the executive’s prior written consent. For each calendar year beginning after a change in control (as defined below) of Provident Bank or Provident New York Bancorp, the Named Executive Officers’ annual salaries will be increased by a formula set forth in the agreements.

In addition to an annual salary, each Named Executive Officer is entitled to participate in the Company’s bonus and incentive compensation programs, equity compensation programs, retirement plans, and group life, health, dental and disability plans. Additionally, Mr. Strayton is entitled to reimbursement for membership in certain clubs, and is provided with an automobile. During fiscal year 2007, Mr. Strayton discontinued using a Company owned automobile. Gross up provisions for “excess parachute payments” under Internal Revenue Code Section 280G are provided for Messrs. Strayton and Rothstein only.

Pursuant to their employment agreements, Provident may terminate the Named Executive Officers’ employment at any time for “cause,” in which event the executives would have no right to receive compensation or other benefits for any period after termination.

Termination for “cause” may occur when an executive performs dishonest acts intended to benefit the executive personally, repeatedly fails to perform his duties and responsibilities, or is convicted of a serious crime.

In certain circumstances, the Named Executive Officers are entitled to severance pay. These circumstances include: (1) the executive’s voluntary resignation within one year following a demotion in title or duties, notice of non-renewal or change in control; (2) Provident’s termination of employment for any reason other than for cause; or (3) total and permanent disability.

The definition of change in control differs depending on whether or not payment under the agreement is deferred compensation subject to Code Section 409A.

When payments are not subject to Code Section 409A, a change in control includes:

Where the payments are subject to the deferred compensation restrictions under Code Section 409A, a change in control includes:

Under any of those circumstances, the executive’s severance package includes:

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Notwithstanding the foregoing, to the extent required by regulations or interpretations of the Office of Thrift Supervision, all severance payments under the Agreement will be reduced so that the amount does not exceed three times the executive’s average annual compensation over the most recent five taxable years. Furthermore, to the extent necessary to comply with Internal Revenue Code Section 409A, the payment of severance benefits to Messrs. Strayton, Rothstein, Dormer, Maisch and Jones may be delayed six months.

In the event that the Named Executive Officer’s employment terminates on account of death, voluntary resignation without good reason, or retirement, Provident must pay the executive his earned but unpaid salary as of the date of termination, and provide benefits to which he is entitled as a former employee under Provident’s employee benefit plans and programs and compensation plans and programs.

Each agreement provides that, for a period of one year following the date of his termination of employment, the Named Executive Officers shall not compete with Provident Bank except in the event of a change in control. These provisions can be waived with the written consent of the Company. Additionally, the agreements provide that the Named Executive Officers must reasonably cooperate with Provident in the event that litigation is brought against Provident or its subsidiaries (provided that the litigation is not between the executive and Provident). No duration is specified for the cooperation provision. All payments and benefits to the Named Executive Officers are subject to their compliance with these non-solicitation, non-competition, and cooperation provisions of their employment agreements.

The amounts payable by Provident to each executive officer in the event of termination, death or disability, or retirement, are set out in the following chart assuming the event occurred on September 28, 2007:

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GEORGE STRAYTON, PRESIDENT AND CEO