The following summary explains the significant aspects of the conversion and reorganization and the related offering. It may not contain all of the information that is important to you. For additional information and before making an investment decision, you should read this entire document carefully, including the CONSOLIDATED FINANCIAL STATEMENTS and the section entitled “RISK FACTORS” .

 

The Companies

 

New Rockville Financial

 

Rockville Financial New, Inc., referred to in this prospectus as New Rockville Financial, is a newly formed Connecticut stock corporation that will own all of the outstanding common stock of Rockville Bank upon completion of the conversion and the offering. New Rockville Financial will be the successor to Existing Rockville Financial. It will be regulated by the State of Connecticut Department of Banking (the “Connecticut Department of Banking”) and the Federal Reserve Board. New Rockville Financial will change its name to Rockville Financial, Inc. upon completion of the conversion and the offering.

 

Rockville Financial MHC, Inc.

 

Rockville Financial MHC, Inc. (“Rockville Financial MHC”) is the Connecticut-chartered mutual holding company of Existing Rockville Financial. Rockville Financial MHC is regulated by the Connecticut Department of Banking and the Federal Reserve Board. Rockville Financial MHC’s principal business activity is the ownership of 10,689,250 shares of common stock of Existing Rockville Financial, or 56.7% of the issued and outstanding shares as of the date of this prospectus. Upon completion of the conversion and offering, Rockville Financial MHC will cease to exist.

 

Existing Rockville Financial

 

Rockville Financial, Inc., referred to in this prospectus as Existing Rockville Financial, is a Connecticut stock corporation that currently owns all of the issued and outstanding capital stock of Rockville Bank, a Connecticut-chartered stock savings bank. It is regulated by the Connecticut Department of Banking and the Federal Reserve Board. At June 30, 2010, Existing Rockville Financial had consolidated assets of $1.60 billion, deposits of $1.15 billion and stockholders’ equity of $162.4 million. As of June 30, 2010, Existing Rockville Financial had 18,853,112 shares of common stock issued and outstanding, excluding shares held in treasury, of which 56.7% was owned by Rockville Financial MHC and the remaining 43.3% was owned by public shareholders. After the completion of the conversion and offering, Existing Rockville Financial will cease to exist, and will be succeeded by New Rockville Financial.

 

Rockville Bank

 

Rockville Bank is a state-chartered stock savings bank organized in Connecticut in 1858 that provides a full range of banking services to consumer and commercial customers primarily located in the north-central part of Connecticut. Rockville Bank is regulated by the Connecticut Department of Banking and the Federal Deposit Insurance Corporation (“FDIC”). Rockville Bank’s deposits are insured to the maximum allowable under the Deposit Insurance Fund, which is administered by the FDIC. Rockville Bank is a member of the Federal Home Loan Bank of Boston (“FHLBB”).

 

Our executive offices are located at 25 Park Street, Rockville, Connecticut 06066. Our telephone number at this address is (860) 291-3600 and our website address is www.rockvillebank.com. Information on this website is not and should not be considered to be a part of this prospectus.

 

Our Business

 

We provide a full range of banking services to consumer and commercial customers through our main office in Rockville, Connecticut, 20 1 / 2 other branches located in Hartford, New London and Tolland Counties in Connecticut and 42 ATMs, including 13 stand-alone ATM facilities. The “1/2” branch refers to an “in

school” branch located at South Windsor High School in South Windsor, Connecticut, which serves only the school’s students, faculty and administrative staff and is not open to the general public.

 

We strive to remain a leader in meeting the financial service needs of our local community and to provide quality service to the individuals, families, professionals and businesses in the market areas we serve. We are a community-oriented provider of traditional banking products and services to business organizations and individuals, offering products such as residential mortgage, commercial real estate, commercial business and consumer loans and a variety of deposit products.

 

We employed 216 full-time equivalent employees as of June 30, 2010. Existing Rockville Financial does not currently own or lease any property but instead uses the premises, equipment and furniture of Rockville Bank.

 

SEE “BUSINESS OF EXISTING ROCKVILLE FINANCIAL AND ROCKVILLE BANK” for a more detailed discussion of our business.

 

Our Business Strategy

 

Our goal is to continue to operate and grow as a well capitalized, profitable and competitive financial institution. We seek to accomplish this goal by:

 

 

See “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Our Business Strategy” for a more detailed discussion of our business strategy.

 

Our Market Area

 

We operate in a primarily suburban market area that has a stable population and household base. All of our current offices are located in Connecticut in Hartford, New London and Tolland Counties. Our primary market area is located in the north-central part of Connecticut including, in part, the eastern portion of the greater Hartford metropolitan area. Our main office is located in Rockville and is located approximately 15 miles from Hartford. Hartford, New London and Tolland Counties have a mix of industry groups and employment sectors, including services, wholesale and retail trade and manufacturing as the basis of the local economy. Our primary market area for deposits includes the communities in which we maintain our banking office locations. Our primary lending area is broader than our primary deposit market area and includes all of Connecticut’s Hartford, New London and Tolland Counties, and parts of the adjacent Windham and Middlesex Counties.

 

Description of the Conversion

 

In 2005, Rockville Financial MHC and Existing Rockville Financial reorganized into the mutual two-tier holding company form of organization. In connection with this reorganization, Existing Rockville Financial sold 45% of its shares of common stock to the public, including depositors of Rockville Bank, the Rockville Bank employee stock ownership plan and Rockville Bank Foundation, Inc. Existing Rockville Financial issued the remaining 55% of its common stock to Rockville Financial MHC, our mutual holding company.

 

Pursuant to the terms of our plan of conversion and reorganization, which is referred to in this prospectus as the plan of conversion, Rockville Financial MHC will convert from a partially public mutual holding

company structure to a fully public stock holding company structure. As part of the conversion, we are offering for sale the ownership interest in Existing Rockville Financial that is currently held by Rockville Financial MHC. In addition, the public shareholders of Existing Rockville Financial will receive shares of common stock of New Rockville Financial in exchange for their existing shares of common stock of Existing Rockville Financial pursuant to an exchange ratio, adjusted as required by regulatory authorities. See “IMPACT OF ROCKVILLE FINANCIAL MHC’S ASSETS ON MINORITY STOCK OWNERSHIP.” We also plan to contribute cash equal to 3.0% of the net proceeds from the offering to the Rockville Bank Foundation, Inc.

 

The following diagram shows our current organizational structure, which is commonly referred to as the “two-tier” mutual holding company structure:

 

 

After the conversion and offering are completed, we will be organized as a fully public stock holding company, as follows:

 

 

Upon the completion of the conversion and offering, both Rockville Financial MHC and Existing Rockville Financial will cease to exist, and Rockville Bank will be a wholly-owned subsidiary of New Rockville Financial. Please see “THE CONVERSION AND OFFERING” for a more detailed discussion of the terms of the conversion.

Reasons for the Conversion

 

The purpose of converting to the fully public stock form of ownership and conducting the offering at this time is to provide us with additional capital to support our continued planned growth, to take advantage of potential growth and strategic opportunities, and to successfully implement our business strategies. In addition, the conversion is a necessary and appropriate response to the changing market and regulatory conditions and will allow us to continue to compete effectively in the changing financial services marketplace. The conversion and offering also provides our employees and customers with the opportunity to share in our success through the ownership of our stock, and our shareholders will benefit from the more active and liquid trading market that will exist when Rockville Bank’s holding company is 100.0% publicly owned. For more information regarding the reasons for the conversion see “THE CONVERSION AND OFFERING — Reasons for the Conversion”.

 

Terms of the Offering

 

We are first offering shares of our common stock in a subscription offering to eligible depositors and our tax-qualified employee stock benefit plans. Shares of common stock not subscribed for in the subscription offering will be offered for sale to the general public in a community offering, with a preference given first to natural persons residing in Hartford, New London and Tolland Counties in Connecticut, then to the existing shareholders of Existing Rockville Financial and then to all other natural persons residing in Connecticut. We also may offer for sale shares of common stock not subscribed for in the subscription offering or community offering in a syndicated community offering to be managed by Keefe, Bruyette & Woods, Inc.

 

We are offering for sale up to 14,950,000 shares of common stock on a best efforts basis. All shares of common stock are being offered for sale at a price of $10.00 per share. All investors will pay the same purchase price per share and will not be charged a commission to purchase shares of common stock in the offering. The amount of capital being raised is based on an independent appraisal of New Rockville Financial. In the event of a greater demand for shares of our common stock or a change in financial or market conditions, with the Connecticut Banking Commissioner’s approval, we may sell up to 17,192,500 shares without giving you further notice or providing you with the opportunity to change or cancel your order.

 

The offering is expected to expire at 12:00 noon, Eastern Time, on [Date 1], but we may extend this expiration date without notice to you until [Date 2] or longer if the Connecticut Banking Commissioner approves a later date. Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [Date 2], or the number of shares of common stock to be sold is increased to more than 17,192,500 shares or decreased to less than 11,050,000 shares. In the event the offering is extended beyond [Date 2] or the number of shares of common stock to be sold is increased to more than 17,192,500 shares or decreased to less than 11,050,000 shares, we will resolicit subscribers, and you will have the opportunity to confirm, change or cancel your order. If you do not provide us with a written indication of your intent, your funds will be returned to you, with interest. Funds received prior to the completion of the offering will be held in a segregated account at Rockville Bank. All subscriptions received will bear interest at Rockville Bank’s passbook savings rate, which is currently     % per annum.

 

Keefe, Bruyette & Woods, Inc., our marketing advisor and sales agent in the offering, will use its best efforts to assist us in selling shares of our common stock. However, Keefe, Bruyette & Woods, Inc. is not obligated to purchase any shares of common stock in the offering.

 

Initially, we intend to invest the proceeds retained in the offering by New Rockville Financial in short-term liquid investments, such as U.S. treasury and government agency securities, mortgage-backed securities and cash and cash equivalents. In the future, New Rockville Financial may use the funds for general corporate purposes, including, among other things, paying cash dividends to shareholders, repurchasing shares of its common stock, contributing additional capital to Rockville Bank and financing strategic growth opportunities, such as the acquisition of other financial institutions or related banking businesses. Rockville Bank will also initially invest the proceeds contributed to it by New Rockville Financial in short-term liquid investments. Rockville Bank also plans to pay off certain Federal Home Loan Bank advances totaling $32.3 million that are scheduled to mature between January 2011 and August 2011. In the future, the funds may be used by Rockville Bank to fund new loans and deposit generation, invest in securities, hire additional personnel to support growth, including new lending personnel, and finance capital improvements and strategic growth opportunities, such as branch expansion and bank and branch acquisitions. We have no agreements or understandings with respect to any expansion or acquisitions at this time.

 

Please see the section of this prospectus entitled “HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING” for more information on the proposed use of the proceeds from the offering.

 

How We Determined the Offering Range and the $10.00 Per Share Stock Price

 

The amount of common stock we are offering is based on an independent appraisal of the estimated market value of New Rockville Financial, assuming the conversion and offering are completed. RP Financial, LC. (“RP Financial”), our independent appraiser, has estimated that as of August 26, 2010, our market value ranged from $189.9 million to $295.45 million, with a midpoint of $223.41 million. Based on this valuation, the $10.00 per share price and the 58.2% pro forma ownership interest of Rockville Financial MHC being sold in the offering, the number of shares of common stock being offered for sale by New Rockville Financial will range from 11,050,000 shares to 14,950,000 shares. The $10.00 per share price was determined by us, taking into account, among other factors, the market price of our stock before we adopted the plan of conversion, the requirement under Connecticut regulations that the common stock be offered in a manner to promote widespread distribution of the stock, and desired liquidity in our common stock after the offering. In addition, the $10.00 per share price was selected because it is the price most commonly used in mutual-to-stock conversions of financial institutions.

The exchange ratio will range from 0.9725 at the minimum of the offering range to 1.3158 at the maximum of the offering range, and has been designed to preserve the existing percentage of ownership held by the public shareholders of Existing Rockville Financial, adjusted for the assets held by Rockville Financial MHC, which results in a 41.81% ownership interest (excluding any additional shares purchased by shareholders in the offering and their receipt of cash in lieu of fractional shares). If a greater demand for shares of our common stock or a change in financial or market conditions warrant, the offering range may be increased by 15.0%, which would result in an offering range from 11,050,000 shares to 17,192,500 shares and an exchange ratio of 1.5131 at the adjusted maximum of the offering range. The independent appraisal will be updated prior to the completion of the conversion and offering. If the appraised value changes to either below $189.9 million or above $295.5 million, we will resolicit persons who submitted stock orders and you will have the opportunity to confirm, change or cancel your order.

 

In preparing its appraisal, RP Financial considered the information in this prospectus, including our financial statements. RP Financial also considered the following factors, among others:

 

 

The appraisal was based in part on Existing Rockville Financial’s analysis of a peer group of 13 publicly traded savings bank and thrift holding companies that RP Financial considers comparable to Existing Rockville Financial, as listed below. The total assets of our peer group are presented as of June 30, 2010.

 

 

The following are average financial ratios for the peer group companies:

 

 

 

The following table presents a summary of selected pricing ratios for us (on a pro forma basis) and the peer group companies, utilized by RP Financial in its appraisal report dated August 26, 2010. These ratios are based on earnings for the 12 months ended June 30, 2010 and stock price information as of August 26, 2010.

 

 

Compared to the average pricing ratios of the peer group, our pro forma pricing ratios at the maximum of the offering range indicated a 39.2% premium on a price-to-earnings basis, a discount of 6.7% on a price-to-book basis and a discount of 16.5% on a price-to-tangible book basis. This means that, at the maximum of the offering range, a share of our common stock would be less expensive than the peer group on a book value and tangible book value basis.

 

Compared to the median pricing ratios of the peer group, our pro form pricing ratios at the maximum of the offering range indicated a 63.5% premium on a price-to earnings basis, a discount of 5.4% on a price-to-book basis and a 19.8% discount on a price-to-tangible book basis. This means that, at the maximum of the offering range, a share of our common stock would be less expensive than the peer group on a book value and tangible book value basis. For more information, see “PRO FORMA DATA”.

 

Our Board of Directors determined that the offering range was reasonable and appropriate after considering the different elements of the appraisal, the methodology utilized by RP Financial and the conclusions set forth in the appraisal report. The Board considered the range of price-to-earnings multiples and the range of price-to-book value and price-to-tangible book value ratios at the different amounts of shares to be sold in the offering, but did not consider one valuation approach to be more important than the others. Rather, in approving the appraisal, the Board concluded that these ranges represented the appropriate balance of the approaches to establishing our valuation and the number of shares to be sold in comparison to the peer group institutions. The estimated appraised value took into consideration the potential financial impact of the conversion and the offering, as well as the trading price of Existing Rockville Financial common stock. The closing price of the common stock was $      per share on          , 2010, the last trading day immediately preceding the announcement of the conversion, and $      per share on August 26, 2010, the effective date of the appraisal.

 

The independent appraisal also reflects the cash contribution to the charitable foundation. The cash contribution to the charitable foundation will reduce our estimated pro forma market value.

 

The appraisal is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing our common stock. The independent appraisal does not indicate market value. You should not assume or expect that our valuation as indicated in the appraisal means that after the conversion and offering the shares of our common stock will trade at or above the $10.00 per share purchase price. Furthermore, the pricing ratios presented in the appraisal were utilized by RP Financial to estimate our market value and not to compare the relative value of shares of our common stock with the value of the capital stock of the peer group. Because of differences in important factors such as

operating characteristics, location, financial performance, asset size, capital structure and business prospects between us and other fully converted institutions, you should not rely on these comparative valuation ratios as an indication as to whether or not our common stock is an appropriate investment for you.

 

Benefits to Management and Potential Dilution to Shareholders Resulting from the Conversion and Offering

 

We intend to maintain and adopt the stock benefit plans described in more detail below. We will recognize additional compensation expense related to expanding our existing employee stock ownership plan and adopting one or more new stock benefit plans. The actual expense will depend on the market value of our common stock and will increase or decrease as the value of our common stock increases or decreases. As reflected under “PRO FORMA DATA” based upon assumptions set forth therein, we would recognize additional expense of $      for the year ended December 31, 2009, assuming shares of our common stock are sold at the maximum of the offering range. If awards under the new stock benefit plans are funded from authorized but unissued stock, your ownership interest would be diluted by up to 7.53%. See “PRO FORMA DATA” for an illustration of the effects of each of these plans.

 

Employee Stock Ownership Plan.   Our existing employee stock ownership plan, the Rockville Bank Employee Stock Ownership Plan, currently expects to purchase up to 4.0% of the shares of common stock sold in the offering, or 520,000 shares of common stock, assuming we sell shares up to the maximum of the offering range. When combined with shares to be issued by New Rockville Financial in exchange for shares of Existing Rockville Financial, the employee stock ownership plan will own 5.91% of our issued and outstanding common stock following the conversion. In the event we increase the maximum amount of common stock offered after receiving the Connecticut Banking Commissioner’s approval of an increase in the stock valuation range, our employee stock ownership plan and our other tax-qualified employee stock benefit plans will have first priority to purchase shares offered over the maximum, up to a total of 10.0% of the shares of common stock sold in the offering. In the event our employee stock ownership plan chooses not to purchase shares in the offering, with the prior approval of the Connecticut Banking Commissioner, it may purchase shares in the open market or authorized but unissued shares of our common stock. We also reserve the right to have our employee stock ownership plan purchase more than 4.0% of the shares of common stock sold in the offering if necessary to complete the offering at the minimum of the offering range. The employee stock ownership plan will use the proceeds from a 30-year loan from New Rockville Financial to purchase these shares in the offering. As the loan is repaid and shares are released from collateral, the shares will be allocated to the accounts of employee participants. Allocations will be based on a participant’s individual compensation (subject to compensation caps established by law) as a percentage of total plan compensation. Non-employee directors are ineligible to participate in the employee stock ownership plan.

 

Stock Benefit Plans.   We intend to implement one or more new stock benefit plans no earlier than six months after the completion of the conversion and offering. We will submit any such plans to our shareholders for their approval. The terms and conditions of such stock benefit plans, including the number of shares available per award and the types of awards, have not been determined at this time. However, if we do implement one or more stock benefit plans within 12 months following the completion of the conversion and offering, with the Connecticut Banking Commissioner’s approval, the plans will reserve a number of shares up to 4.0% of the shares of common stock sold in the offering for awards to key employees and directors, at no cost to the recipients and a number of shares up to 10.0% of the shares of common stock sold in the offering for issuance pursuant to the exercise of stock options. The Connecticut Department of Banking regulations impose the above percentage limitations on all stock benefit plans implemented within 12 months of the conversion and offering. The following are other limitations imposed by these regulations on stock benefit plans implemented within 12 months of the completion of the conversion and offering: (i) an individual may not receive more than 25.0% of the shares under any plan; (ii) non-employee directors may not receive more than 5.0% of the shares of any plan individually, or 30.0% of the shares of any one or more plans in the aggregate; (iii) stock options may not be granted at less than the market price of such options at the time of grant; (iv) the grants may not vest earlier than one year after the plan is approved by shareholders or at a rate

exceeding 20.0% per year; (v) management and employee stock benefit plans may not be funded with shares issued at the time of the conversion; and (vi) officers and directors must exercise or forfeit their options if we become critically undercapitalized, are subject to an enforcement action by the Connecticut Banking Commissioner or receive a capital directive from the Connecticut Banking Commissioner. In the event the stock benefit plans are adopted more than 12 months after the completion of the conversion and the offering, we will not be subject to certain of the limitations set forth above. We have not yet determined when these plans will be adopted.

 

The following table summarizes the number of shares of common stock and the aggregate dollar value of grants under the stock benefit plans at each point in the offering range if such plans reserve a number of shares of common stock equal to 4.0% of the shares sold in the offering for restricted stock awards to key employees and directors and a number of shares of common stock equal to 10.0% of the shares sold in the offering for stock options. Also set forth below is the number of shares of common stock to be acquired by the employee stock ownership plan for allocation to all qualifying employees. The following table also shows the dilution to shareholders if shares are issued from authorized but unissued shares, instead of shares purchased in the open market.

 

 

 

 

We may fund our stock benefit plans through open market purchases, as opposed to new issuances of stock; however, if any options previously granted under our existing stock incentive plan are exercised during the first year following completion of the offering, they will be funded with newly issued shares, as Connecticut Department of Banking regulations do not permit us to repurchase our shares during the first year following the completion of the conversion and offering, except under certain limited circumstances, including funding tax-qualified employee stock benefit plans or management recognition plans that have been approved by shareholders.

The following table presents information as of June 30, 2010 regarding the Rockville Bank Employee Stock Ownership Plan, the Rockville Financial, Inc. 2006 Stock Incentive Award Plan, and our proposed stock benefit plans. The table below assumes that 25,691,700 shares are outstanding after the offering, which includes the sale of 14,950,000 shares in the offering at the maximum of the offering range and the issuance of shares in exchange for shares of Existing Rockville Financial using an exchange ratio of 1.3158. It also assumes that the value of the stock is $10.00 per share.

 

 

 

 

 

The grant-date fair value of the options granted under the new stock benefit plans, which will not be implemented until at least six months after the completion of the conversion, will be based in part on the price of shares of common stock of New Rockville Financial at the time the options are granted. The value also will depend on the various assumptions utilized in the option pricing model ultimately adopted. The following table presents the total estimated fair value of the options to be available for grant under the stock benefit plan using the Black-Scholes option pricing model, assuming the market price and exercise price for the stock options are equal and the range of market prices for the shares is $8.00 per share to $14.00 per share. The Black-Scholes option pricing model provides an estimate only of the fair value of the options, and the actual value of the options may differ significantly from the value set forth in this table.

 

 

The value of the restricted shares awarded under the stock benefit plans, which will not be implemented until at least six months after completion of the conversion and offering, will be based on the market value of our common stock at the time the shares are awarded. The following table presents the total value of all restricted stock that would be available for award and issuance under the new stock benefit plan, assuming the market price of our common stock ranges from $8.00 per share to $14.00 per share.

 

 

The tables presented above are provided for informational purposes only. There can be no assurance that our stock price will not trade below $10.00 per share. Before you make an investment decision, we urge you to read this prospectus carefully, including, but not limited to, the section entitled “RISK FACTORS” beginning on page 20.

The Exchange of Existing Shares of Existing Rockville Financial Common Stock

 

If you are currently a shareholder of Existing Rockville Financial, your shares will be canceled at the conclusion of the conversion and offering and become the right to receive shares of common stock of New Rockville Financial. The number of shares of common stock you receive will be based on an exchange ratio determined as of the closing of the conversion and offering, which will depend on our final appraised value. The following table shows how the exchange ratio will adjust based on the valuation of New Rockville Financial and the number of shares of common stock issued in the offering. The table also shows the number of shares of New Rockville Financial common stock a hypothetical owner of Existing Rockville Financial common stock would receive in exchange for 100 shares of Existing Rockville Financial common stock owned at the consummation of the conversion, depending on the number of shares of common stock issued in the offering.

 

 

 

 

If you own shares of Existing Rockville Financial common stock in a brokerage account in “street name,” you do not need to take any action to exchange your shares of common stock, as the exchange will occur automatically on or about the effective date of the conversion. If you own shares in the form of Existing Rockville Financial stock certificates, you will receive a transmittal form with instructions to surrender your stock certificates as soon as practicable after consummation of the conversion. New certificates of New Rockville Financial common stock will be mailed to you within five business days after our exchange agent receives your properly executed transmittal forms and your Existing Rockville Financial stock certificates.

 

You should not submit a stock certificate until you receive a transmittal form.

 

No fractional shares of New Rockville Financial common stock will be issued to any public shareholder of Existing Rockville Financial. For each fractional share that otherwise would be issued, New Rockville Financial will pay in cash an amount equal to the product obtained by multiplying the fractional share interest to which the holder otherwise would be entitled by the $10.00 per share purchase price.

 

Outstanding shares of restricted stock and options to purchase shares of Existing Rockville Financial common stock also will convert automatically into and become shares of restricted stock and options to purchase shares of New Rockville Financial common stock. The number of shares of common stock to be received upon exercise of these options and the related exercise price will be adjusted pursuant to the exchange ratio. The aggregate exercise price, duration and vesting schedule of these awards will not be affected by the conversion. Because the Connecticut Department of Banking regulations do not permit us to repurchase our shares during the first year following the completion of the conversion and offering except under limited circumstances, we may use authorized but unissued shares to fund option exercises that occur during the first

year following the conversion. If all existing options were exercised for authorized but unissued shares of common stock following the conversion, shareholders would experience dilution of     % at both the minimum and the maximum of the offering range.

 

Impact of Rockville Financial MHC’s Assets on Minority Stock Ownership

 

In the exchange, the public shareholders of Existing Rockville Financial will receive shares of common stock of New Rockville Financial in exchange for their shares of common stock of Existing Rockville Financial pursuant to an exchange ratio that ensures, subject to adjustment, that the shareholders will own the same percentage of the common stock of New Rockville Financial after the conversion as they held in Existing Rockville Financial immediately prior to the conversion, without giving effect to new shares purchased in the offering or cash paid in lieu of any fractional shares. However, in accordance with the policies of the FDIC and Federal Reserve Board, the exchange ratio must be adjusted downward to reflect the aggregate amount of Existing Rockville Financial dividends paid to Rockville Financial MHC and the initial capitalization of Rockville Financial MHC. Dividends were paid to Rockville Financial MHC because the Federal Reserve Board’s dividend policy does not permit a mutual holding company to waive dividends declared by its subsidiary. Rockville Financial MHC had assets of $7.685 million as of June 30, 2010, not including Existing Rockville Financial common stock. The adjustments described above will decrease Existing Rockville Financial’s shareholders’ ownership interest in New Rockville Financial from 43.30% to 41.81%.

 

Our Contribution to Rockville Bank Foundation, Inc.

 

In connection with the conversion and offering and in furtherance of our commitment to our community, we intend to use a portion of the proceeds from the offering to make a cash contribution to Rockville Bank Foundation, Inc. The amount to be contributed will equal 3.0% of the net proceeds of the offering.

 

The foundation was established in May 2005 in connection with Existing Rockville Financial’s minority stock issuance. The foundation, which is not a subsidiary, provides grants to individuals and not-for-profit organizations within the communities that we serve. We believe that funding the foundation will allow our community to benefit from our growth and financial success. At June 30, 2010, the foundation had assets of $4.5 million, which included Existing Rockville Financial common stock with a value of $3.8 million.

 

The cash contribution to the foundation has been approved by the Boards of Directors of Rockville Financial MHC, Existing Rockville Financial, New Rockville Financial and Rockville Bank. The contribution must also be approved by the corporators of Rockville Financial MHC at the special meeting being held to consider and vote upon the plan of conversion. If the corporators do not approve the contribution to the charitable foundation, we will proceed with the conversion without funding the foundation and will not resolicit subscribers (unless required by the Connecticut Department of Banking).

 

We considered the impact to our shareholders resulting from our contribution of cash to the foundation. We believe that if our contribution to the foundation exceeds the 10.0% annual limitation on charitable deductions described below, the excess is justified given our capital position and earnings, the substantial additional capital being raised in the offering and the potential benefits of the foundation to our community. In addition, the amount of the contribution will not adversely affect our financial condition. We therefore believe that the amount of the charitable contribution is reasonable given our pro forma capital position and that it does not raise safety and soundness concerns.

 

Without the contribution to the charitable foundation, RP Financial estimates that our pro forma valuation would be greater and, as a result, a greater number of shares of common stock would be issued in the offering. RP Financial will update its appraisal of our estimated pro forma market value at the conclusion of the offering. The pro forma market value reflected in that updated appraisal will be based on the facts and circumstances existing at that time, including, among other things, market and financial conditions, as well as whether we will make the proposed contribution to the charitable foundation.

 

We have received an opinion from our independent tax advisor that our contribution of cash to the foundation should not constitute an act of self-dealing and that we should be entitled to a deduction in the

amount of the cash contribution at the time of the contribution. We are permitted to deduct only an amount equal to 10.0% of our annual taxable income in any one year. We are permitted under the Internal Revenue Code to carry over the excess contribution for the five-year period following the contribution to the foundation. We estimate that substantially all of the contribution should be deductible over the six-year period. However, even if the contribution is deductable, we may not have sufficient earnings to be able to use the deduction in full. We do not expect to make any further contributions to the foundation within the first five years following the conversion, unless such contributions would be deductible under the Internal Revenue Code. Any such decisions would be based on an assessment of, among other factors, our financial condition at that time, the interests of our shareholders and Rockville Bank’s depositors, and the financial condition and operations of the foundation.

 

See “RISK FACTORS — The Contribution To The Charitable Foundation Will Adversely Affect Net Income” and “ROCKVILLE BANK FOUNDATION, INC.”

 

Persons Who May Order Shares of Common Stock in the Offering

 

We are offering shares of New Rockville Financial common stock in a subscription offering in the following descending order of priority:

 

(1) First, to depositors with accounts at Rockville Bank with aggregate balances of at least $50.00 at the close of business on June 30, 2009.

 

(2) Second, to our tax-qualified employee stock benefit plans (including our employee stock ownership plan and 401(k) plan), who will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10.0% of the shares of common stock sold in the offering. Our employee stock ownership plan currently intends to purchase up to 4.0% of the shares of common stock sold in the offering, with the remaining shares in this purchase priority allocated to our 401(k) plan and any other tax-qualified employee stock benefit plan.

 

(3) Third, to depositors with accounts at Rockville Bank with aggregate balances of at least $50.00 at the close of business on          .

 

We may offer for sale shares of common stock not subscribed for in the subscription offering to the general public in a community offering, with a preference given to the below groups in the following descending order of priority:

 

(1) First, to natural persons residing in Hartford, New London and Tolland Counties in Connecticut.

 

(2) Second, to Existing Rockville Financial public shareholders as of [Shareholder Record Date].

 

(3) Third, to other natural persons residing in Connecticut.

 

The community offering, if held, may begin concurrently with, during or promptly after the subscription offering as we may determine at any time. We also may offer for sale shares of our common stock not subscribed for in the subscription offering or community offering through a syndicated community offering managed by Keefe, Bruyette & Woods, Inc.

 

The syndicated community offering, if held, will begin during or promptly after the subscription offering as we may determine at any time.

 

We have the right to accept or reject, in our sole discretion, orders received in the community offering or syndicated community offering. We have not established any set criteria for determining whether to accept or reject a purchase order in the community offering or the syndicated community offering and, accordingly, any determination to accept or reject purchase orders will be based on the facts and circumstances available to management at the time of the determination.

 

If we receive orders for more shares than we are offering, we may not be able to fully or partially fill your order. Shares will be allocated first to categories in the subscription offering. A detailed description of

share allocation procedures can be found in the section of this prospectus entitled “THE CONVERSION AND OFFERING”.

 

You May Not Sell or Transfer Your Subscription Rights

 

You are prohibited by law from transferring your subscription rights. If you order stock in the subscription offering, you will be required to state that you are purchasing the stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights. We intend to take legal action, including reporting persons to federal or state regulatory agencies, against anyone who we believe sells or gives away their subscription rights. Civil suits and criminal prosecutions have been brought against individuals transferring or participating in the transfer of subscription rights in connection with other conversion transactions. We will not accept your order if we have reason to believe that you sold or transferred your subscription rights. In addition, on the order form, you may not add the name of others for joint stock registration who do not have subscription rights or who qualify only in a lower subscription offering priority than you do. You may add only those persons who were eligible to purchase shares of common stock in the subscription offering on your eligibility date. The stock order form requires that you list all deposit accounts, giving all names on each account and the account number at the applicable eligibility date. Failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation, if there is an oversubscription.

 

Limits on How Much Common Stock You May Purchase

 

In connection with the conversion and offering, our Board of Directors has established the following purchase limitations:

 

 

 

Unless we determine otherwise, persons having the same address and persons exercising subscription rights through qualifying deposit accounts registered to the same address will be subject to this overall purchase limitation of 5.0% of the shares of common stock sold in the offering.

 

In addition, no person, together with any associate or persons acting in concert may purchase shares of common stock, that when combined with any shares of common stock received in exchange for shares of Existing Rockville Financial, would exceed 5.0% of the total number of shares of New Rockville Financial outstanding after the consummation of the offering and the conversion, provided, however, that this limitation does not require a shareholder to divest any shares of New Rockville Financial received in exchange for shares of Existing Rockville Financial or otherwise limit the amount of shares to be issued to such shareholders in the exchange.

 

Subject to receipt of the Connecticut Banking Commissioner’s approval, we may increase or decrease the purchase and ownership limitations at any time. We may further increase the maximum purchase limitation to 10.0%, provided that orders for common stock exceeding 5.0% of the shares of common stock sold in the offering may not exceed in the aggregate 10.0% of the total shares of common stock sold in the offering. Our

tax-qualified employee stock benefit plans, including our stock ownership plan, are authorized to purchase up to 10.0% of the shares sold in the offering, without regard to these purchase limitations.

 

See the detailed description of “acting in concert” and “associate” in the section of this prospectus headed “THE CONVERSION AND OFFERING — Limitations on Common Stock Purchases”.

 

Steps We May Take if We Do Not Receive Orders for the Minimum Number of Shares

 

If we do not receive orders for at least 11,050,000 shares of common stock, we may take several steps in order to issue the minimum number of shares of common stock in the offering range. Specifically, we may:

 

 

How You May Purchase Shares of Common Stock:

 

To purchase shares you must deliver a properly completed and signed original stock order form, accompanied by payment or Rockville Bank deposit account withdrawal authorization, as described below. You may submit your order form in one of the following ways: by mail, using the stock order reply envelope provided, by overnight delivery to the Stock Information Center at the address indicated on the stock order form or by hand-delivery to the Stock Information Center, located at 1645 Ellington Road, South Windsor, Connecticut. Stock order forms will not be accepted by mail or by hand-delivery at any of our branch offices. We are not required to accept copies or facsimiles of order forms.

 

In the subscription offering and community offering, you may pay for your shares only by:

 

1.  Personal Check, bank check or money order.   Personal checks, bank checks and money orders, payable to New Rockville Financial will be immediately cashed and will be deposited in a separate account with Rockville Bank. Third party and Rockville Bank line of credit checks may not be remitted as payment for your order. We will pay interest in these funds at our passbook savings rate from the date payment is received until completion or termination of the conversion and offering. Wire transfers as payment for shares of common stock ordered will not be permitted or accepted as proper payment. You should not mail cash.

 

2.  Authorized account withdrawal.   The stock order form outlines the types of Rockville Bank deposit accounts that you may authorize for direct withdrawal. You may not request a direct withdrawal from any checking account. A hold will be placed on these funds when your stock order form is received, making the funds unavailable to you, provided, however, these funds will not be withdrawn from your accounts until the completion or termination of the conversion and offering and will earn interest at the applicable deposit account rate until then. The funds you authorize must be in your account at the time your stock order form is received. You may authorize funds from your certificate of deposit accounts without incurring an early withdrawal penalty, with the agreement that the withdrawal is being made for the purchase of shares in the offering. If a withdrawal results in a certificate account with a balance less than the applicable minimum balance requirement, the certificate will be canceled at the time of withdrawal without penalty and the remaining balance will earn interest at the current passbook rate subsequent to the withdrawal. You may not authorize direct withdrawals from retirement accounts held by Rockville Bank. Funds withdrawn from deposit accounts at Rockville Bank may reduce or eliminate a depositor’s liquidation rights. Please see the section of this prospectus entitled “THE CONVERSION AND OFFERING — Liquidation Rights” for further information.

 

We may not lend funds or extend a line of credit (including line of credit or overdraft checking) to anyone for the purpose of purchasing shares in the offering.

We reserve the right to waive, or permit the correction of, incomplete or improperly executed stock order forms on a case by case basis, but do not represent that we will do so. Once your order is received by us, you may not change, modify or cancel your order. Our employees and Stock Information Center staff are not responsible for correcting or completing the information provided on the stock order forms we receive, including the account information requested for the purpose of verifying subscription rights.

 

By signing the stock order form, you are acknowledging both receipt of this prospectus and that the shares of common stock are not deposits or savings accounts that are federally insured or otherwise guaranteed by Rockville Bank, New Rockville Financial or the federal government.

 

Using IRA Funds to Purchase Shares of Common Stock

 

You may be able to subscribe for shares of common stock using funds in your individual retirement account(s), or IRA. However, shares of common stock must be held in a self-directed retirement account maintained by an unaffiliated institutional trustee or custodian, such as a brokerage firm. Rockville Bank’s individual retirement accounts are not self-directed, so funds in such accounts cannot be invested in our common stock. You may transfer some or all of the funds in your Rockville Bank individual retirement account to a self-directed account maintained by an unaffiliated institutional trustee or custodian. If you do not have such an account, you will need to establish one and transfer your funds before placing your stock order. Because individual circumstances differ and processing of retirement account transactions takes additional time, we recommend that you promptly contact (preferably at least two weeks before the [Date 1] offering deadline) our Stock Information Center for assistance with purchases using your individual retirement account or other retirement account that you may have at Rockville Bank or elsewhere. Whether you may use such funds for the purchase of shares in the stock offering may depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held. See “THE CONVERSION AND OFFERING — Using IRA Funds to Purchase Shares of Common Stock”.

 

Deadline for Orders of Common Stock

 

If you wish to purchase shares of common stock, the Stock Information Center must receive (not postmarked) a properly completed and signed original stock order form, together with full payment for the shares of common stock, no later than 12:00 noon, Eastern Time, on [Date 1], unless we extend this deadline. We expect that the community offering, if held, will terminate at the same time, although it may continue until [Date 2] or longer if the Connecticut Banking Commissioner approves a later date. Once submitted, your order is irrevocable unless the offering is terminated or extended beyond [Date 2] or the number of shares of common stock to be sold is increased to more than 17,192,500 shares or decreased to fewer than 11,050,000 shares. In either of these cases, you will have the opportunity to confirm, change or cancel your order. If we do not receive a written response from you regarding your intent, we will cancel your order, promptly return to you all funds received by us with interest at Rockville Bank’s passbook savings rate, and cancel any deposit account withdrawal authorizations. No single extension may last longer than 90 days. All extensions, in the aggregate, may not last beyond [Date 3].

 

Delivery of Prospectus

 

To ensure that each purchaser in the subscription and community offering receives a prospectus at least 48 hours before the offering deadline in accordance with Rule 15c2-8 of the Securities Exchange Act of 1934, we will not mail a prospectus any later than five days prior to such date or hand-deliver a prospectus later than two days prior to that date. Stock order forms may only be delivered if accompanied or preceded by a prospectus. We are not obligated to deliver a prospectus or order form by means other than United States mail.

 

We will make reasonable attempts to deliver a prospectus and offering materials to holders of subscription rights. However, the subscription offering and all subscription rights will expire at 12:00 noon, Eastern Time, on [Date 1], 2010 whether or not we have been able to locate each person entitled to subscription rights.

Delivery of Stock Certificates

 

Certificates representing shares of common stock sold in the offering will be mailed to the persons entitled thereto at the certificate registration address noted by them on their order form, as soon as practicable following consummation of the offering and receipt of all necessary regulatory approvals. It is possible that until certificates for the common stock are delivered to purchasers, purchasers might not be able to sell the shares of common stock that they ordered, even though the common stock will have begun trading. If you are currently a shareholder of Existing Rockville Financial, see “THE CONVERSION AND OFFERING — Exchange of Existing Shareholders’ Stock Certificates”.

 

 

Conditions to Completion of the Conversion

 

We cannot complete the conversion and offering unless:

 

 

Subject to corporator and regulatory approvals, we also intend to make a cash contribution to Rockville Bank Foundation, Inc. in connection with the conversion and offering. However, corporator approval of the contribution to the foundation is not a condition to the completion of the conversion and offering.

 

Rockville Financial MHC intends to vote its ownership interest in favor of adoption of the plan of conversion and funding the charitable foundation. At September 16, 2010, our directors and executive officers and their affiliates owned 4.22% shares of Existing Rockville Financial, or 9.75% of the outstanding shares of common stock, excluding shares owned by Rockville Financial MHC. Our directors and executive officers intend to vote their shares in favor of the plan of conversion.