Connecticut
(State or Other Jurisdiction of Incorporation or Organization) |
6712
(Primary Standard Industrial Classification Code Number) |
Being Applied for
(I.R.S. Employer Identification Number) |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
Proposed Maximum
|
Proposed Maximum
|
Amount of
|
||||||||||||
Title of Each Class of
|
Amount
|
Offering
|
Aggregate
|
Registration
|
||||||||||
Securities to be Registered | to be Registered | Price per Share | Offering Price(1) | Fee | ||||||||||
Common Stock, no par value per share
|
29,545,455 shares(2) | $10.00 | $295,454,550 | $21,066.00 | ||||||||||
Participation interests
|
(2) | |||||||||||||
(1) | Estimated solely for the purpose of calculating the registration fee. |
(2) | The securities of Rockville Financial New, Inc. to be purchased by Rockville Bank 401(k) Plan are included in the amount shown for the common stock, and accordance with Rule 457(h) of the Securities Act of 1933, as amended, no separate fee is required for the registration of the participation interests. |
S-1 | ||||
S-1 | ||||
S-1 | ||||
S-2 | ||||
S-2 | ||||
S-2 | ||||
S-2 | ||||
S-3 | ||||
S-3 | ||||
S-3 | ||||
S-3 | ||||
S-3 | ||||
S-4 | ||||
S-5 | ||||
S-6 | ||||
S-13 | ||||
S-18 | ||||
S-20 | ||||
S-20 | ||||
S-21 | ||||
S-22 | ||||
S-22 | ||||
S-22 |
29
30
42
43
44
45
67
84
89
F-35
F-37
F-38
F-52
II-3
S-1
Table of Contents
S-2
Table of Contents
S-3
Table of Contents
S-4
Table of Contents
S-5
Table of Contents
S-6
Table of Contents
S-7
Table of Contents
X
Your Compensation
Total Compensation of All
Participants Eligible to
Share
$25,000
X
Or
$2,000
$250,000
including
your salary reduction contributions to any plan
or arrangement maintained by your Employer (
e.g.
,
contributions to this Plan or to a cafeteria plan); and
excluding
distributions from a plan of deferred
compensation, amounts realized from the exercise of a stock
option, or attributable to any other equity award.
S-8
Table of Contents
S-9
Table of Contents
S-10
Table of Contents
S-11
Table of Contents
December 31
2009
2008
2007
17.01
%
(34.47
)%
9.99
%
34.48
%
(39.07
)%
10.95
%
39.26
%
(38.72
)%
7.39
%
31.56
%
(40.23
)%
4.62
%
33.36
%
(39.70
)%
13.55
%
30.76
%
(42.11
)%
7.39
%
36.55
%
(38.41
)%
(1.86
)%
41.81
%
(34.56
)%
2.32
%
20.02
%
(15.42
)%
5.41
%
24.01
%
(23.54
)%
6.47
%
21.08
%
(25.73
)%
6.60
%
26.65
%
(29.94
)%
6.72
%
28.94
%
(36.14
)%
6.98
%
39.20
%
(41.03
)%
5.97
%
39.10
%
(40.53
)%
18.96
%
18.82
%
(6.03
)%
4.36
%
12.66
%
(1.26
)%
13.29
3.94
%
3.72
%
2.46
%
(24.84
)%
14.51
%
(31.65
)%
(1)
Performance results for the Metropolitan Life Stable Value Fund
represent the actual net interest rate credited to Participant
accounts.
S-12
Table of Contents
S-13
Table of Contents
S-14
Table of Contents
S-15
Table of Contents
50% of your account balance; or
$50,000 reduced by the excess, if any, of your highest
outstanding balance of loans from the Plan during the one-year
period prior to the date of the loan over your current
outstanding balance of loans.
S-16
Table of Contents
S-17
Table of Contents
The reallocation of existing account balances into or out of the
Rockville Financial, Inc. Common Stock Fund.
Volitional cash withdrawals from the Rockville Financial, Inc.
Common Stock Fund.
The resale of common stock of Rockville Financial, Inc.
delivered from the Rockville Financial, Inc. Common Stock Fund
to any such person.
S-18
Table of Contents
S-19
Table of Contents
S-20
Table of Contents
S-21
Table of Contents
S-22
Table of Contents
Table of Contents
Price: $10.00 per Share
Minimum
Midpoint
Maximum
Adjusted Maximum
11,050,000
13,000,000
14,950,000
17,192,500
$
110,500,000
$
130,000,000
$
149,500,000
$
171,925,000
$
1,748,870
$
1,748,870
$
1,748,870
$
1,748,870
$
4,095,125
$
4,791,275
$
5,487,425
$
6,287,998
$
104,656,005
$
123,460,855
$
142,263,705
$
163,888,133
$
9.47
$
9.50
$
9.52
$
9.53
(1)
Includes: (i) a management fee payable by us to Keefe,
Bruyette & Woods, Inc. of $30,000; (ii) fees
payable by us to Keefe, Bruyette & Woods, Inc. in
connection with the subscription and community offerings equal
to 0.75% of the aggregate amount of common stock sold in the
subscription and community offerings (net of insider purchases
and shares purchased by our employee stock ownership plan and
other tax-qualified employee stock benefit plans); and
(iii) a fee payable by us of 5.5% of the aggregate dollar
amount of common stock sold in the syndicated community offering
to Keefe, Bruyette & Woods, Inc., which will be
allocated to dealers in accordance with the actual number of
shares of common stock sold by such dealers, assuming that 40.0%
of the shares are sold in the subscription and community
offerings and the remaining 60.0% of the shares are sold in the
syndicated community offering. See PRO FORMA DATA
and THE CONVERSION AND OFFERING Marketing
Arrangements.
Table of Contents
Page
1
20
28
31
32
33
34
36
37
39
39
46
70
70
98
106
108
116
132
134
135
156
159
162
165
166
166
167
167
F-1
EX-1.1
EX-2.1
EX-3.1
EX-3.1.1
EX-3.2
EX-5.1
EX-10.8
EX-10.10
EX-21.1
EX-23.2
EX-23.3
EX-23.4
EX-99.1
EX-99.2
EX-99.3
Table of Contents
1
Table of Contents
remaining an independent community-oriented institution;
continuing our emphasis on one-to four family residential real
estate lending;
continuing our emphasis on commercial real estate lending;
increasing our emphasis on commercial business lending;
expanding our banking franchise; and
growing our deposit base.
2
Table of Contents
3
Table of Contents
4
Table of Contents
Adjusted
Minimum
Midpoint
Maximum
Maximum
11,050,000
13,000,000
14,950,000
17,192,500
Shares at
Shares at
Shares at
Shares at
$10.00
$10.00
$10.00
$10.00
per Share
per Share
per Share
per Share
(In thousands)
$
110,500
$
130,000
$
149,500
$
171,925
5,844
6,540
7,236
8,037
104,656
123,460
142,264
163,888
52,328
61,730
71,132
81,944
4,420
5,200
5,980
6,877
3,140
3,704
4,268
4,917
$
44,768
$
52,826
$
60,884
$
70,150
5
Table of Contents
our historical, present and projected operating results and
financial condition;
the economic, demographic and competition characteristics of our
market area;
a comparative evaluation of our operating and financial
statistics with those of other similarly-situated,
publicly-traded savings and thrift holding companies;
the effect of the capital raised in this offering on our net
worth and earnings potential; and
the trading market for our securities and comparable
institutions and general economic conditions in the market for
such securities.
Operating
Total
Strategy
Assets
(In thousands)
Provident New York Bancorp, Inc. of NY
NASDAQ
Montebello, NY
Thrift
$
2,964
Brookline Bancorp, Inc. of MA
NASDAQ
Brookline, MA
Thrift
2,660
Danvers Bancorp, Inc. of MA
NASDAQ
Danvers, MA
Thrift
2,529
OceanFirst Financial Corp of NJ
NASDAQ
Toms River, NJ
Thrift
2,220
ESB Financial Corp. of PA
NASDAQ
Ellwood City, PA
Thrift
1,948
United Financial Bancorp, Inc. of MA
NASDAQ
W. Springfield, MA
Thrift
1,545
Westfield Financial Inc. of MA
NASDAQ
Westfield, MA
Thrift
1,235
Beacon Federal Bancorp Inc. of NY
NASDAQ
East Syracuse, NY
Thrift
1,072
ESSA Bancorp, Inc. of PA
NASDAQ
Stroudsburg, PA
Thrift
1,067
New Hampshire Thrift Bancshares Inc. of NH
NASDAQ
Newport, NH
Thrift
993
Hingham Institution for Savings of MA
NASDAQ
Hingham, NH
Thrift
972
Harleysville Savings Financial Corp. of PA
NASDAQ
Harleysville, PA
Thrift
867
TF Financial Corp. of PA
NASDAQ
Newtown, PA
Thrift
721
average assets of $1.6 billion;
average non-performing assets of 0.96% of total assets;
average loans of 64.5% of total assets;
6
Table of Contents
average equity of 11.9% of total assets; and
average net income of 0.65% of average assets.
Price-to-
Price-to-
Price-to-
Earnings
Book Value
Tangible Book
Multiple
Ratio
Value Ratio
17.13
71.99
72.31
20.29
79.62
79.94
23.50
86.36
86.66
27.24
93.20
93.55
16.88
92.57
103.83
14.37
91.33
107.99
7
Table of Contents
8
Table of Contents
Maximum
Dilution
Number of Shares or Options to be Granted
Resulting
As a
from
Percentage
Issuance
Value of New Available Grants, in Thousands
At
At Adjusted
of Common
of Shares
At
At Adjusted
Minimum of
Maximum of
Stock to be
for Stock
Minimum of
Maximum of
Offering
Offering
Issued in the
Benefit
Offering
Offering
Range
Range
Offering
Plans
Range
Range
(Dollars in thousands)
442,000
687,700
4.00
%
0.00
%
$
4,420
$
6,877
442,000
687,700
4.00
2.27
4,420
6,877
1,105,000
1,719,250
10.00
5.50
4,497
6,997
1,989,000
3,094,650
18.00
%
7.53
%
$
13,337
$
20,751
(1)
For purposes of this table, fair value for stock awards is
assumed to be the same as the offering price of $10.00 per
share. The fair value of stock options has been estimated at
$4.07 per option using the Black-Scholes option pricing model,
adjusted for the exchange ratio, with the following assumptions:
a grant-date share price and option exercise price of $10.00; an
expected option life of five years; a dividend yield of 1.8%; an
interest rate of 1.79%; and a volatility rate of 47.54%. The
actual value of option grants will be determined by the
grant-date fair value of the options, which will depend on a
number of factors, including the valuation assumptions used in
the option pricing model ultimately adopted.
(2)
Represents the dilution of stock ownership interest. No dilution
is reflected for the employee stock ownership plan because such
shares are assumed to be purchased in the offering.
9
Table of Contents
Percentage of
Shares
Shares at
Outstanding
Maximum of
Estimated Value of
After the
Offering Range
Shares
Conversion
Employees
920,606
(2)
$
9,206,060
3.58
%
Employees
598,000
5,980,000
2.33
Employees
1,518,606
$
15,186,060
5.91
(3)
Directors,
Officers and
Employees
460,306
(4)
4,603,063
(5)
1.79
Directors,
598,000
5,980,000
2.33
Officers and
Employees
Directors,
1,058,306
$
10,583,063
4.12
Officers and
Employees
Directors,
Officers
and Employees
1,150,766
(6)
2,336,055
(7)
4.48
Directors,
1,495,000
3,034,850
5.82
Officers and
Employees
Directors,
2,645,766
$
5,370,905
10.30
(8)
Officers and
Employees
5,222,678
$
31,140,028
20.33
%
(1)
The number of shares indicated has been adjusted for the 1.3158
exchange ratio at the maximum of the offering range. The
valuation and ownership ratios reflect the dilutive impact of
Rockville Financial MHCs assets upon completion of the
conversion. See IMPACT OF ROCKVILLE FINANCIAL MHCS
ASSETS ON MINORITY STOCK OWNERSHIP for more information
regarding the dilutive impact of Rockville Financial MHCs
assets on the valuation and ownership ratios.
(2)
As of June 30, 2010, 904,349 shares, or
687,300 shares prior to adjustment for the exchange, have
been allocated.
(3)
As of June 30, 2010, 904,349 shares, or 687,300 shares
prior to adjustment for the exchange have been allocated, or
5.85% after the conversion.
(4)
As of June 30, 2010, 41,770 shares, or
31,745 shares prior to adjustment for the exchange have
been awarded and 41,983, or 31,907 shares prior to
adjustment for the exchange remain available for future awards.
As of June 30, 2010, 9,950 shares vested and the
shares have been distributed.
10
Table of Contents
(5)
The value of restricted stock awards is determined based on
their fair value as of the date grants are made. For purposes of
this table, the fair value of awards under the new stock benefit
plan is assumed to be the same as the offering price of $10.00
per share.
(6)
As of June 30, 2010, options to purchase
586,682 shares, or 445,875 shares prior to adjustment
for the exchange were outstanding, and 548,293 options, or
416,700 options prior to adjustment for the exchange remain
available for future grants. At June 30, 2010, 363,155
unexercised and fully vested options were outstanding under this
plan prior to adjustment for the exchange.
(7)
The weighted-average fair value of stock options has been
estimated at $4.08 per option, adjusted for the exchange rate,
using the Black-Scholes option pricing model.
(8)
The number of stock options set forth in the table would exceed
regulatory limits if a stock benefit plan was adopted within one
year of the completion of the conversion. Accordingly, the
number of new stock options set forth in the table would have to
be reduced such that the aggregate amount of stock options would
be 10.0% or less, unless we obtain a waiver from the Connecticut
Department of Banking, or we implement the plan after twelve
months following the completion of the conversion. Our current
intention is to implement a new stock benefit plan no earlier
than six months after completion of the conversion
1,719,250
1,105,000
1,300,000
1,495,000
Options at
Grant-Date
Options at
Options at
Options at
Adjusted
Fair Value per
Minimum of
Midpoint of
Maximum of
Maximum of
Option
Range
Range
Range
Range
1.62
1,790,100
2,106,000
2,421,900
2,785,185
2.03
2,243,150
2,639,000
3,034,850
3,490,078
2.44
2,696,200
3,172,000
3,647,800
4,194,970
2.84
3,138,200
3,692,000
4,245,800
4,882,670
598,000
687,700
442,000
520,000
Shares Awarded at
Shares Awarded at
Shares Awarded at
Shares Awarded at
Maximum of
Adjusted
Minimum of Range
Midpoint of Range
Range
Maximum of Range
3,536,000
4,160,000
4,784,000
5,501,600
4,420,000
5,200,000
5,980,000
6,877,000
5,304,000
6,240,000
7,176,000
8,252,400
6,188,000
7,280,000
8,372,000
9,627,800
11
Table of Contents
Total
Shares of
Common
Shares of New Rockville
Stock to be
Equivalent
Financial to be Issued
Issued in
Value of
Shares to be
Shares to be Sold in
for Shares of Existing
Conversion
Shares Based
Received for
This Offering
Rockville Financial
and
Exchange
Upon Current
100 Existing
Amount
Percent
Amount
Percent
Offering(1)
Ratio
Market Price(2)
Shares
11,050,000
58.19
%
7,939,517
41.81
%
18,989,517
0.9725
$
189,895,170
97
13,000,000
58.19
9,340,608
41.81
22,340,608
1.1441
223,406,080
114
14,950,000
58.19
10,741,700
41.81
25,691,700
1.3158
256,917,000
131
17,192,500
58.19
12,352,955
41.81
29,545,455
1.5131
295,454,550
151
(1)
Valuation and ownership ratios reflect dilutive impact of
Rockville Financial MHCs assets upon completion of the
conversion. See IMPACT OF ROCKVILLE FINANCIAL MHCS
ASSETS ON MINORITY STOCK OWNERSHIP for more information
regarding the dilutive impact of Rockville Financial MHCs
assets on the valuation and ownership ratios.
(2)
Represents the value of shares of New Rockville Financial common
stock received in the conversion by a holder of one share of
Existing Rockville Financial, at the exchange ratio, assuming
the market price of $10.00 per share.
12
Table of Contents
13
Table of Contents
14
Table of Contents
The minimum number of shares of common stock that may be
purchased is 25.
The maximum number of shares of common stock that may be
purchased by an individual or an individual, together with any
of the following persons, cannot exceed 5.0% of the shares of
common stock sold in the offering:
a person who is related by blood or marriage to you and who
lives in the same home as you;
corporations and organizations in which you are an officer or
partner or have a 10.0% or more ownership interest;
trusts or other estates in which you have a substantial
beneficial interest or for which you are a trustee or
fiduciary; or
other persons who may be your associates or persons acting in
concert with you.
15
Table of Contents
increase the purchase and ownership limitations, subject to
regulatory approval;
seek regulatory approval to extend the offering beyond the [Date
2] expiration date, provided that any such extension will
require us to resolicit subscriptions received in the offering;
and/or
increase the number of shares to be purchased by our employee
stock ownership plan.
16
Table of Contents
17
Table of Contents
18
Table of Contents
We sell at least the minimum number of shares of common stock
offered;
The plan of conversion is approved by at least 80.0% of votes
eligible to be cast by the corporators of Rockville Financial
MHC;
The plan of conversion is approved by at least a majority of the
corporators of Rockville Financial MHC who are not our
employees, officers, directors, trustees or significant
borrowers;
The plan of conversion is approved by at least a majority of the
outstanding shares of common stock of Existing Rockville
Financial as of [the shareholder record date], including shares
held by Rockville Financial MHC Because Existing Rockville
Financial MHC owns 56.7% of the outstanding shares of Existing
Rockville Financial common stock, Rockville Financial MHC will
have control over the outcome of this vote;
The plan of conversion is approved by at least a majority of the
outstanding shares of common stock of Existing Rockville
Financial as of [the shareholder record date], excluding those
shares held by Rockville Financial MHC;
We receive the final approval of the Connecticut Banking
Commissioner to complete the conversion and the offering and
receive no objection to the conversion and offering by the
FDIC; and
We receive the final approval from the Federal Reserve Board for
New Rockville Financial to become a bank holding company and own
100.0% of Rockville Banks capital stock.
19
Table of Contents
Commercial and Industrial Loans.
Repayment is
generally dependent upon the successful operation of the
borrowers business.
Commercial Real Estate Loans.
Repayment is
dependent on income being generated in amounts sufficient to
cover operating expenses and debt service.
Consumer Loans.
Consumer loans are
collateralized, if at all, with assets that may not provide an
adequate source of payment of the loan due to depreciation,
damage or loss.
20
Table of Contents
21
Table of Contents
22
Table of Contents
23
Table of Contents
24
Table of Contents
25
Table of Contents
Connecticut Banking Regulations.
Connecticut
banking regulations prohibit, for a period of three years
following the completion of a conversion, the direct or indirect
acquisition of more than 10.0% of any class of our equity
securities without the prior approval of the Connecticut Banking
Commissioner.
Certificate of Incorporation.
Provisions of
the certificate of incorporation and bylaws of
New Rockville Financial may make it more difficult and
expensive to pursue a takeover attempt that management opposes,
even if the takeover is favored by a majority of our
shareholders. These provisions also would make it more difficult
to remove our current Board of Directors or management, or to
elect new directors. Specifically, our certificate of
incorporation prohibits for a period of five years following the
completion of a conversion, subject to certain limitations, the
direct or indirect acquisition of more than 10.0% of any class
of our equity securities without the prior approval of the
Connecticut Banking Commissioner. Additional provisions include
the election of directors to staggered terms of four years, the
prohibition of cumulative voting in the election of directors
and the requirement that a director may be removed from office
only upon the affirmative vote of at least two-thirds of the
directors then in office or by the affirmative vote of the
holders of at least 80.0% of the voting power of the issued and
outstanding shares entitled to vote for the election of
directors. Our bylaws also contain provisions
26
Table of Contents
regarding the timing and content of shareholder proposals and
nominations and qualification for service on the Board of
Directors.
Issuance of stock options.
We intend to adopt
one or more stock benefit plans no earlier than six months after
the completion of the conversion and offering, pursuant to which
we will grant stock options to key employees and directors that
will require payments to these persons in the event of a change
in control of New Rockville Financial. These payments may have
the effect of increasing the costs of acquiring New Rockville
Financial, thereby discouraging future takeover attempts.
Employment and change in control
agreements.
Existing Rockville Financial has
employment agreements with certain of its executive and other
officers that will remain in effect following the stock
offering. New Rockville Financial intends to enter into an
employment agreement and change in control agreement with its
new Chief Executive Officer and new Chief Operating Officer
following the stock offering. These agreements may have the
effect of increasing the costs of acquiring New Rockville
Financial, thereby discouraging future takeover attempts.
27
Table of Contents
OF EXISTING ROCKVILLE FINANCIAL AND SUBSIDIARY
At June 30,
At December 31,
2010
2009
2008
2007
2006
2005
(Dollars in thousands)
$
1,602,014
$
1,571,134
$
1,533,073
$
1,327,012
$
1,232,836
$
1,056,169
114,047
102,751
141,250
136,372
132,467
129,049
16,747
19,074
24,138
17,007
17,007
17,007
11,168
9,836
8,498
1,383,036
1,361,019
1,291,791
1,116,327
1,033,355
859,700
19,536
19,307
14,901
23,998
22,381
23,611
1,150,379
1,129,108
1,042,508
951,038
884,511
761,396
5,175
6,385
6,077
5,568
5,320
4,794
272,501
263,802
322,882
201,741
178,110
130,867
162,384
157,428
145,777
156,373
155,064
150,905
13,144
12,539
12,553
10,620
9,827
8,675
14,366
12,046
10,435
1,569
1,493
7,177
(2)
(1)
Non-performing loans include loans for which Rockville Bank does
not accrue interest (non-accrual loans), loans 90 days past
due and still accruing interest, and loans that have gone
through troubled debt restructurings.
(2)
Balance includes a $4.9 million fully guaranteed United
States Department of Agriculture loan that was past due
90 days and still accruing as of December 31, 2005
which was repaid in full in January 2006.
28
Table of Contents
Six Months
Ended June 30,
For the Years Ended December 31,
2010
2009
2008
2007
2006
2005
(In thousands)
$
37,561
$
76,062
$
77,545
$
73,877
$
63,952
$
48,600
11,004
29,775
34,946
35,577
27,649
16,514
26,557
46,287
42,599
38,300
36,303
32,086
1,812
1,961
2,393
749
1,681
2,700
24,745
44,326
40,206
37,551
34,622
29,386
4,052
6,972
(8,987
)
5,194
4,625
4,076
19,027
36,631
33,762
30,301
29,025
24,616
3,887
9,770
14,667
(2,543
)
12,444
10,222
4,959
3,452
4,935
(956
)
4,116
3,368
1,533
$
6,318
$
9,732
$
(1,587
)
$
8,328
$
6,854
$
3,426
For the
Period
May 20,
2010 Six Months
For the Years Ended December 31,
2005 to
Ended June 30,
(Dollars in thousands except per share data)
December 31,
2010
2009
2008
2007
2006
2005
(Dollars in thousands except per share data)
$
6,318
$
9,732
$
(1,587
)
$
8,328
$
6,854
$
1,669
$
.34
$
0.53
$
(0.09
)
$
0.44
$
0.36
$
0.09
$
.34
$
0.53
$
(0.09
)
$
0.44
$
0.36
$
0.09
$
.12
$
0.20
$
0.20
$
0.16
$
0.08
$
(1)
The earnings for the period prior to the mutual holding company
reorganization which was completed on May 20, 2005, were
excluded when calculating the earnings per share since shares of
common stock were not issued until May 20, 2005.
Table of Contents
At or
for the
Six
Months
Ended
June 30,
At or for the Years Ended December 31,
2010
2009
2008
2007
2006
2005
0.80
%
0.63
%
(0.11
)%
0.65
%
0.59
%
0.36
%
7.84
6.44
(1.03
)
5.32
4.42
2.88
3.23
2.73
2.63
2.52
2.75
3.10
3.53
3.10
3.09
3.13
3.30
3.49
2.42
2.36
2.35
2.37
2.52
2.95
62.16
68.78
100.45
69.67
70.92
78.82
62.16
68.78
100.45
69.67
70.92
68.07
120.36
118.55
118.50
120.77
122.01
121.51
0.36
0.38
0.36
0.22
0.94
0.91
0.96
0.94
0.94
1.00
91.49
104.09
120.30
676.86
658.20
120.87
(5)
0.09
0.16
0.04
0.00
0.05
0.05
1.03
0.88
0.80
0.14
0.14
0.83
1.08
.96
0.68
0.12
0.12
0.68
10.1
10.0
9.5
11.8
12.6
14.3
10.3
9.7
10.8
12.3
13.5
12.4
14.0
14.1
14.2
16.6
18.0
20.4
12.9
13.0
12.9
15.5
16.9
19.3
10.3
10.1
10.4
11.7
12.8
14.3
18
18
17
16
14
13
4
4
4
4
4
4
(1)
Represents the difference between the weighted-average yield on
average interest-earning assets and the weighted-average cost of
interest-bearing liabilities.
(2)
Represents (annualized) net interest income as a percent of
average interest-earning assets.
(3)
Represents (annualized) non-interest expense divided by the sum
of net interest income and non-interest income.
(4)
Represents the amount of dividends paid as a percentage of net
income.
(5)
The ratio at December 31, 2005 is 380.48 when excluding the
$4.9 million fully guaranteed United States Department of
Agriculture loan that was past due 90 days and still
accruing as of December 31, 2005, which was repaid in full
in January, 2006.
Table of Contents
Local, regional and national business or economic conditions may
differ from those expected.
The effects of and changes in trade, monetary and fiscal
policies and laws, including the U.S. Federal Reserve
Boards interest rate policies, may adversely affect our
business.
The ability to increase market share and control expenses may be
more difficult than anticipated.
Changes in laws and regulatory requirements (including those
concerning taxes, banking, securities and insurance) may
adversely affect us or our businesses.
Changes in accounting policies and practices, as may be adopted
by regulatory agencies, the Public Company Accounting Oversight
Board or the Financial Accounting Standards Board, may affect
expected financial reporting.
Future changes in interest rates may reduce our profits which
could have a negative impact on the value of our stock.
We are subject to lending risk and could incur losses in our
loan portfolio despite our underwriting practices. Changes in
real estate values could also increase our lending risk.
Changes in demand for loan products, financial products and
deposit flow could impact our financial performance.
Our inability to recruit and retain additional high-skilled
personnel, in particular the new Chief Executive Officer, could
result in disruptions to our business or operations.
Strong competition within our market area may limit our growth
and profitability.
We may not manage the risks involved in the foregoing as well as
anticipated.
If our allowance for loan losses is not sufficient to cover
actual loan losses, our earnings could decrease.
Our stock value may be negatively affected by federal
regulations and certificate of incorporation provisions
restricting takeovers.
Further implementation of our stock benefit plans will increase
our costs, which will reduce our income.
Because we intend to continue to increase our commercial real
estate and commercial business loan originations, our lending
risk may increase, and downturns in the real estate market or
local economy could adversely affect our earnings.
The Emergency Economic Stabilization Act (EESA) of
2008 has and may continue to have a significant impact on the
banking industry. The Dodd-Frank Act was signed into law on
July 21, 2010 and is expected to result in dramatic
regulatory changes that will affect the industry in general, and
impact our competitive position in ways that cant be
predicted at this time.
31
Table of Contents
Based Upon the Sale at $10.00 per Share of
Minimum
Midpoint
Maximum
Adjusted Maximum
11,050,000 Shares
13,000,000 Shares
14,950,000 Shares
17,192,500 Shares(1)
Percent of
Percent of
Percent of
Percent of
Net
Net
Net
Net
Amount
Proceeds
Amount
Proceeds
Amount
Proceeds
Amount
Proceeds
(Dollars in thousands)
$
110,500
$
130,000
$
149,500
$
171,925
5,844
6,540
7,236
8,037
104,656
100.0
%
123,460
100.0
%
142,264
100.0
%
163,888
100.0
%
52,328
50.0
61,730
50.0
71,132
50.0
81,944
50.0
4,420
4.2
5,200
4.2
5,980
4.2
6,877
4.2
3,140
3.0
3,704
3.0
4,268
3.0
4,917
3.0
$
44,768
42.8
%
$
52.826
42.8
%
$
60,884
42.8
%
$
70,150
42.8
%
(1)
As adjusted to give effect to an increase in the number of
shares, which could occur due to a 15.0% increase in the
offering range to reflect a greater demand for the shares or
changes in market or financial conditions following the
commencement of the offering.
to pay cash dividends to shareholders;
to repurchase shares of our common stock;
to invest in securities;
32
Table of Contents
to loan or provide additional contributions to Rockville Bank;
to finance strategic growth opportunities, such as acquisitions
of other financial institutions and related banking businesses,
although we do not currently have any agreements or
understandings regarding any specific expansion or acquisition
opportunities; and
for other general corporate purposes.
to fund new loans and otherwise increase our loan portfolio;
to pay off approximately $40.0 million in Federal Home Loan
Bank advances that are scheduled to mature between January 2011
and August 2011;
to enhance existing products and services and to support the
development of new products and services;
to invest in securities;
to expand its retail banking franchise by acquiring new branches
or by acquiring other financial institutions or other banking
related companies, although we do not currently have any
agreements or understandings with respect to any specific
expansion or acquisition opportunities; and
for other general corporate purposes.
33
Table of Contents
34
Table of Contents
Price per Share
Cash
High
Low
Dividend Declared
$
[ ]
$
[ ]
[ ]
[ ]
[ ]
12.64
10.50
0.06
12.42
8.82
0.06
$
11.68
$
9.68
$
0.05
14.79
9.88
0.05
12.50
8.44
0.05
14.46
6.17
0.05
$
15.50
$
8.80
$
0.05
17.00
12.00
0.05
14.50
12.51
0.05
13.88
9.75
0.05
35
Table of Contents
Rockville Bank
Pro Forma at June 30, 2010, Based Upon the Sale in the
Offering of
Historical at
Minimum
Midpoint
Maximum
Adjusted Maximum
June 30, 2010
11,050,000 Shares
13,000,000 Shares
14,950,000 Shares
17,192,500 Shares(1)
Percent of
Percent of
Percent of
Percent of
Percent of
Amount
Assets(2)
Amount
Assets(2)
Amount
Assets(2)
Amount
Assets(2)
Amount
Assets(2)
(Dollars in thousands)
$
152,495
9.64
%
$
203,668
12.40
%
$
211,510
12.80
%
$
219,352
13.20
%
$
228,370
13.66
%
165,854
13.20
217,027
17.11
224,869
17.70
232,711
18.30
241,729
18.97
125,622
10.00
126,822
10.00
127,010
10.00
127,198
10.00
127,414
10.00
$
40,233
3.20
%
$
90,205
7.11
%
$
97,859
7.70
%
$
105,513
8.30
%
$
114,315
8.97
%
$
152,037
9.61
%
$
203,210
12.38
%
$
211,052
12.79
%
$
218,894
13.19
%
$
227,912
13.64
%
63,252
4.00
65,653
4.00
66,029
4.00
66,029
4.00
66,837
4.00
$
88,785
5.61
%
$
137,557
8.38
%
$
145,023
8.79
%
$
152,865
9.19
%
$
161,075
9.90
$
152,037
12.10
%
$
203,210
16.02
%
$
211,052
16.62
%
$
218,894
17.21
%
$
227,912
17.89
%
50,249
4.00
50,729
4.00
50,804
4.00
50,879
4.00
50,966
4.00
$
101,788
8.10
%
$
152,481
12.02
%
$
160,248
12.62
%
$
168,015
13.21
%
$
176,946
13.89
%
$
52,328
$
61,730
$
71,132
$
81,944
7,685
7,685
7,685
7,685
(4,420
)
(4,420
)
(4,420
)
(4,420
)
(4,420
)
(4,420
)
(4,420
)
(4,420
)
$
51,173
$
60,575
$
69,977
$
80,789
(1)
As adjusted to give effect to an increase in the number of
shares that could occur due to a 15.0% increase in the offering
range to reflect a greater demand for the shares or changes in
market or financial conditions following the commencement of the
offering.
(2)
Tangible and core capital levels are shown as a percentage of
total adjusted assets. Risk-based capital levels are shown as a
percentage of risk-weighted assets. Pro forma amounts and
percentages assume that funds infused into Rockville Bank are
invested in assets that carry a 20.0% risk weighting.
(3)
The current core capital requirement for financial institutions
is 4.0% of total adjusted assets for financial institutions that
receive the highest supervisory rating for safety and soundness
and a 4.0% to 5.0% core capital ratio requirement for all other
financial institutions. In addition, the FDIC requires a
Tier 1 risk-based capital ratio of 4.0% or greater.
(4)
Pro forma capital levels assume that the employee stock
ownership plan purchases 4.0% of the shares of common stock sold
in the offering with funds we lend. Pro forma GAAP and
regulatory capital have been reduced by the amount required to
fund this plan. See MANAGEMENT for a discussion of
our employee stock ownership plan.
36
Table of Contents
Pro Forma at June 30, 2010, Based Upon the Sale at
$10.00 per Share of
Existing
Rockville
Financial
Adjusted
Historical
Minimum
Midpoint
Maximum
Maximum
at June 30,
11,050,000
13,000,000
14,950,000
17,192,500
2010
Shares
Shares
Shares
Shares(1)
(Dollars in thousands)
$
1,150,379
$
1,142,673
$
1,142,673
$
1,42,673
$
1,42,673
272,501
272,501
272,501
272,501
272,501
$
1,422,880
$
1,415,174
$
1,415,174
$
1,415,174
$
1,415,174
$
$
$
$
$
85,249
4,354
190,431
209,235
228,039
249,663
87,027
87,027
87,027
87,027
87,027
(755
)
(755
)
(755
)
(755
)
(755
)
7,685
7,685
7,685
7,685
(9,663
)
(9,663
)
(9,663
)
(9,663
)
(9,663
)
(2,072
)
(2,445
)
(2,817
)
(3,245
)
(3,828
)
(4,420
)
(5,200
)
(5,980
)
(6,877
)
(4,420
)
(5,200
)
(5,980
)
(6,877
)
$
162,384
$
263,813
$
280,684
$
297,556
$
316,958
18,853,112
18,989,517
22,340,608
25,691,700
29,545,455
7,939,517
9,340,608
10,741,700
12,352,955
11,050,000
13,000,000
14,950,000
17,192,500
10.14
%
15.49
%
16.32
%
17.13
%
18.04
%
10.07
%
15.43
%
16.26
%
17.07
%
17.99
%
(1)
As adjusted to give effect to an increase in the number of
shares of common stock that could occur due to a 15.0% increase
in the offering range to reflect a greater demand for shares or
changes in market or general financial conditions following the
commencement of the offering.
37
Table of Contents
(2)
Does not reflect withdrawals from deposit accounts for the
purchase of shares of common stock in the conversion and
offering. These withdrawals would reduce pro forma deposits and
assets by the amount of the withdrawals. On a pro forma basis,
reflects elimination of $7.7 million of cash in Rockville
Financial MHC held as deposits of Rockville Bank.
(3)
Rockville Financial MHC currently has one million authorized
shares of preferred stock and 29.0 million authorized
shares of common stock, no par value. On a pro forma basis, New
Rockville Financial common stock and additional paid-in capital
have been revised to reflect the number of shares of New
Rockville Financial common stock to be outstanding, which is
18,989,517 shares, 22,340,608 shares,
25,691,700 shares and 29,545,455 shares at the
minimum, midpoint, maximum and adjusted maximum of the offering
range, respectively. On a pro forma basis, reflects transfer to
equity of $7.7 million of net assets in Rockville Financial
MHC.
(4)
No effect has been given to the issuance of additional shares of
New Rockville Financial common stock pursuant to the vesting of
restricted stock awards or the exercise of options under a stock
benefit plan. If this plan is implemented within the first year
after the closing of the offering, an amount up to 4.0% and
10.0% of the shares of New Rockville Financial common stock sold
in the offering will be reserved for issuance upon the vesting
and exercise of restricted stock and options under the plan,
respectively. No effect has been given to the restricted stock
or options currently outstanding. See MANAGEMENT.
(5)
The retained earnings of Rockville Bank will be substantially
restricted after the conversion. See THE CONVERSION AND
OFFERING Liquidation Rights and
SUPERVISION AND REGULATION Federal Banking
Regulation.
(6)
Represents the expense of contribution to the charitable
foundation based on a 34.0% tax rate. The realization of the
deferred tax benefit is limited annually to a maximum deduction
for charitable contributions equal to 10% of our annual taxable
income, subject to our ability to carry forward for federal or
state purposes any unused portion of the deduction for the five
years following the year in which the contribution is made.
(7)
Assumes that 4.0% of the shares sold in the offering will be
acquired by the employee stock ownership plan financed by a loan
from New Rockville Financial. The loan will be repaid
principally from Rockville Banks contributions to the
employee stock ownership plan. Since New Rockville Financial
will finance the employee stock ownership plan debt, this debt
will be eliminated through consolidation and no liability will
be reflected on New Rockville Financials consolidated
financial statements. Accordingly, the amount of shares of
common stock acquired by the employee stock ownership plan is
shown in this table as a reduction of total stockholders
equity.
(8)
Tangible equity ratio is a non-GAAP ratio.
38
Table of Contents
STOCK OWNERSHIP
39
Table of Contents
15% Above
Minimum
Midpoint
Maximum
Maximum
of Offering
of Offering
of Offering
of Offering
Range
Range
Range
Range
(Dollars in thousands, except per share amounts)
$
(2,072
)
$
(2,445
)
$
(2,817
)
$
(3,245
)
$
4,087
$
3,680
$
3,274
$
2,807
$
0.22
$
0.16
$
0.14
$
0.10
40
Table of Contents
withdrawals from deposit accounts for the purpose of purchasing
shares of common stock in the stock offering;
our results of operations after the stock offering; or
changes in the market price of the shares of common stock after
the stock offering.
At or for the Six Months Ended June 30, 2010
Based Upon the Sale at $10.00 per Share of
Minimum
Midpoint
Maximum
Adjusted Maximum
11,050,000
13,000,000
14,950,000
17,192,500
Shares
Shares
Shares
Shares
(Dollars in thousands, except per share amounts)
$
110,500
$
130,000
$
149,500
$
171,925
79,395
93,406
107,417
123,530
$
189,895
$
223,406
$
256,917
$
295,455
110,500
130,000
149,500
171,925
5,844
6,540
7,236
8,037
104,656
123,460
142,264
163,888
(4,420
)
(5,200
)
(5,980
)
(6,877
)
(3,140
)
(3,704
)
(4,268
)
(4,917
)
(4,420
)
(5,200
)
(5,980
)
(6,877
)
7,706
7,706
7,706
7,706
$
100,382
$
117,062
$
133,742
$
152,923
$
6,318
$
6,318
$
6,318
$
6,318
593
692
790
903
(49
)
(57
)
(66
)
(76
)
(292
)
(343
)
(395
)
(454
)
(412
)
(484
)
(557
)
(640
)
41
Table of Contents
At or for the Six Months Ended June 30, 2010
Based Upon the Sale at $10.00 per Share of
Minimum
Midpoint
Maximum
Adjusted Maximum
11,050,000
13,000,000
14,950,000
17,192,500
Shares
Shares
Shares
Shares
(Dollars in thousands, except per share amounts)
$
6,158
$
6,126
$
6,090
$
6,051
$
0.34
$
0.29
$
0.25
$
0.22
0.03
0.03
0.03
0.03
(0.02
)
(0.02
)
(0.02
)
(0.02
)
(0.02
)
(0.02
)
(0.02
)
(0.02
)
$
0.33
$
0.28
$
0.24
$
0.21
15.15
17.86
20.83
23.81
18,554,884
21,829,275
25,103,667
28,869,217
Table of Contents
At or for the Six Months Ended June 30, 2010
Based Upon the Sale at $10.00 per Share of
Minimum
Midpoint
Maximum
Adjusted Maximum
11,050,000
13,000,000
14,950,000
17,192,500
Shares
Shares
Shares
Shares
(Dollars in thousands, except per share amounts)
162,384
162,384
162,384
162,384
104,656
123,460
142,264
163,888
7,685
7,685
7,685
7,685
1,068
1,259
1,451
1,672
(4,420
)
(5,200
)
(5,980
)
(6,877
)
(4,420
)
(5,200
)
(5,980
)
(6,877
)
(3,140
)
(3,704
)
(4,268
)
(4,917
)
263,813
280,684
297,556
316,958
(1,149
)
(1,149
)
(1,149
)
(1,149
)
$
262,664
$
279,535
$
296,407
$
315,809
$
8.55
$
7.26
$
6.31
$
5.48
5.51
5.53
5.54
5.55
0.40
0.34
0.30
0.26
0.06
0.06
0.06
0.06
(0.23
)
(0.23
)
(0.23
)
(0.23
)
(0.23
)
(0.23
)
(0.23
)
(0.23
)
(0.17
)
(0.17
)
(0.17
)
(0.17
)
13.89
12.56
11.58
10.72
(0.06
)
(0.05
)
(0.04
)
(0.04
)
$
13.83
$
12.51
$
11.54
$
10.68
71.99
%
79.62
%
86.36
%
93.28
%
72.31
%
79.94
%
86.66
%
93.63
%
18,989,517
22,340,608
22,691,700
29,545,455
Table of Contents
At or for the Year Ended December 31, 2009
Based Upon the Sale at $10.00 per Share of
Minimum
Midpoint
Maximum
Adjusted Maximum
11,050,000
13,000,000
14,950,000
17,192,500
Shares
Shares
Shares
Shares
(Dollars in thousands, except per share amounts)
$
110,500
$
130,000
$
149,500
$
171,925
79,395
93,406
107,417
123,530
$
189,895
$
223,406
$
256,917
$
295,455
$
110,500
$
130,000
$
149,500
$
171,925
5.844
6,540
7,236
8,037
104,656
123,460
142,264
163,888
(4,420
)
(5,200
)
(5,980
)
(6,877
)
(3,140
)
(3,704
)
(4,268
)
(4,917
)
(4,420
)
(5,200
)
(5,980
)
(6,877
)
7,706
7,706
7,706
7,706
$
100,382
$
117,062
$
133,742
$
152,923
$
9,732
$
9,732
$
9,732
$
9,732
1,186
1,383
1,580
1,807
(97
)
(114
)
(132
)
(151
)
(583
)
(686
)
(789
)
(908
)
(823
)
(968
)
(1,113
)
(1,281
)
9,415
9,347
9,278
9,199
0.53
0.45
0.39
0.34
0.06
0.06
0.06
0.06
(0.01
)
(0.01
)
(0.01
)
(0.01
)
(0.03
)
(0.03
)
(0.03
)
(0.03
)
(0.04
)
(0.04
)
(0.04
)
(0.04
)
$
0.51
$
0.43
$
0.37
$
0.32
19.61
23.26
27.03
31.25
18,562,250
21,837,941
25,113,633
28,880,678
Table of Contents
At or for the Year Ended December 31, 2009
Based Upon the Sale at $10.00 per Share of
Minimum
Midpoint
Maximum
Adjusted Maximum
11,050,000
13,000,000
14,950,000
17,192,500
Shares
Shares
Shares
Shares
(Dollars in thousands, except per share amounts)
$
157,428
$
157,428
$
157,428
$
157,428
104,656
123,460
142,264
163,888
7,685
7,685
7,685
7,685
1,068
1,259
1,451
1,672
(4,420
)
(5,200
)
(5,980
)
(6,877
)
(4,420
)
(5,200
)
(5,980
)
(6,877
)
(3,140
)
(3,704
)
(4,268
)
(4,917
)
258,857
275,728
292,600
312,002
(1,070
)
(1,070
)
(1,070
)
(1,070
)
$
257,787
$
274,658
$
291,530
$
310,932
$
8.29
$
7.04
$
6.12
$
5.32
5.51
5.53
5.54
5.55
0.40
0.34
0.30
0.26
0.06
0.06
0.06
0.06
(0.23
)
(0.23
)
(0.23
)
(0.23
)
(0.23
)
(0.23
)
(0.23
)
(0.23
)
(0.17
)
(0.17
)
(0.17
)
(0.17
)
13.63
12.34
11.39
10.56
(0.06
)
(0.05
)
(0.04
)
(0.04
)
$
13.57
$
12.29
$
11.35
$
10.52
73.37
%
81.04
%
87.80
%
94.70
%
73.69
%
81.37
%
88.11
%
95.06
%
18,989,517
22,340,608
25,691,700
29,545,455
Table of Contents
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
46
Table of Contents
47
Table of Contents
48
Table of Contents
49
Table of Contents
50
Table of Contents
51
Table of Contents
Six Months Ended June 30,
2010
2009
Change
(In thousands)
$
26,557
$
22,564
$
3,993
1,812
603
1,209
4,052
3,573
479
19,027
18,819
208
9,770
6,715
3,055
3,452
2,205
1,247
$
6,318
$
4,510
$
1,808
52
Table of Contents
53
Table of Contents
Six Months Ended June 30,
2010
2009
$ Change
% Change
(Dollars in thousands)
$
9,621
$
9,382
$
239
2.54
%
1,986
1,972
14
0.71
2,182
2,197
(15
)
(0.67
)
758
701
57
8.01
671
618
53
8.58
801
1,499
(698
)
(46.56
)
467
467
100.00
2,541
2,450
91
3.73
$
19,027
$
18,819
$
208
1.10
%
54
Table of Contents
Six Months Ended June 30,
2010
2009
Change
(In thousands)
$
333
$
397
$
(64
)
257
190
67
110
84
26
211
190
21
156
164
(8
)
105
120
(15
)
136
153
(17
)
152
175
(23
)
(4
)
(38
)
34
154
172
(18
)
931
843
88
$
2,541
$
2,450
$
91
55
Table of Contents
56
Table of Contents
Years Ended December 31,
2009
2008
$ Change
(In thousands)
$
46,287
$
42,599
$
3,688
1,961
2,393
(432
)
6,972
(8,987
)
15,959
36,631
33,762
2,869
14,667
(2,543
)
17,210
4,935
(956
)
5,891
$
9,732
$
(1,587
)
$
11,319
57
Table of Contents
58
Table of Contents
Years Ended December 31,
2009
2008
$ Change
% Change
(Dollars in thousands)
$
18,571
$
17,150
$
1,421
8.3
%
3,872
3,808
64
1.7
4,380
4,103
277
6.8
1,131
1,484
(353
)
(23.8
)
1,156
1,315
(159
)
(12.1
)
2,222
654
1,568
239.8
5,299
5,248
51
1.0
$
36,631
$
33,762
$
2,869
8.5
%
(1)
Includes directors fees and expenses for the years ended
December 31, 2009 and 2008 of $769,000 and $829,000,
respectively.
59
Table of Contents
Years Ended December 31,
2009
2008
$ Change
% Change
(Dollars in thousands)
$
769
$
829
$
(60
)
(7.2
)%
463
29
434
1,518.9
(47
)
230
(277
)
(120.4
)
174
202
(28
)
(13.9
)
395
383
12
3.1
331
344
(13
)
(3.8
)
215
228
(13
)
(5.7
)
188
183
5
2.7
328
431
(103
)
(23.9
)
2,483
2,389
94
3.9
$
5,299
$
5,248
$
51
1.0
%
60
Table of Contents
Years Ended December 31,
2008
2007
$ Change
% Change
(Dollars in thousands)
$
42,599
$
38,300
$
4,299
11.2
%
2,393
749
1,644
219.5
(8,987
)
5,194
(14,181
)
(273.0
)
33,762
30,301
3,461
11.4
(2,543
)
12,444
(14,987
)
(120.4
)
(956
)
4,116
(5,072
)
(123.2
)
$
(1,587
)
$
8,328
$
(9,915
)
(119.1
)%
61
Table of Contents
62
Table of Contents
Years Ended December 31,
2008
2007
$ Change
% Change
(Dollars in thousands)
$
17,150
$
16,082
$
1,068
6.6
%
3,808
3,361
447
13.3
4,103
3,594
509
14.2
1,484
1,550
(66
)
(4.3
)
1,315
1,131
184
16.3
798
361
437
121.1
5,104
4,222
882
20.9
$
33,762
$
30,301
$
3,461
11.4
%
(1)
Includes directors fees and expenses for the years ended
December 31, 2008 and 2007 of $829,000 and $755,000,
respectively.
63
Table of Contents
Years Ended December 31,
2008
2007
$ Change
% Change
(Dollars in thousands)
$
829
$
755
$
74
9.8
%
202
217
(15
)
(6.9
)
383
369
14
3.8
344
302
42
13.9
228
235
(7
)
(3.0
)
183
128
55
43.0
431
392
39
9.9
2,504
1,824
680
37.3
$
5,104
$
4,222
$
882
20.9
%
64
Table of Contents
Percentage Decrease in Estimated
Net Interest Income Over 12 Months
At June 30, 2010
At December 31, 2009
1.87
%
0.17
%
0.61
3.50
65
Table of Contents
Six Months Ended June 30,
2010
2009
Average
Interest and
Yield/
Average
Interest and
Yield/
Balance
Dividends
Cost
Balance
Dividends
Cost
(Dollars in thousands)
$
1,359,526
$
34,998
5.15
%
$
1,319,911
$
34,743
5.26
%
120,860
2,560
4.24
153,957
3,695
4.80
17,007
17,007
7,316
3
0.08
711
1,504,709
37,561
4.99
1,491,586
38,438
5.15
66,684
59,501
$
1,571,393
$
1,551,087
$
346,874
793
0.46
$
296,108
1,439
0.97
156,983
274
0.35
133,518
326
0.49
483,414
4,786
1.98
529,323
8,867
3.35
987,271
5,853
1.19
958,949
10,632
2.22
262,882
5,151
3.92
310,535
5,242
3.38
1,250,153
11,004
1.76
%
1,269,484
15,874
2.50
%
160,141
133,541
1,410,294
1,403,025
161,099
148,062
$
1,571,393
$
1,551,087
$
26,557
$
22,564
3.23
%
2.65
%
$
254,556
$
222,102
3.53
%
3.03
%
120.36
%
117.50
%
(1)
Includes mortgagors and investors escrow accounts.
(2)
Net interest rate spread represents the difference between the
yield on average interest-earning assets and the cost of average
interest-bearing liabilities.
(3)
Net interest-earning assets represent total interest-earning
assets less total interest-bearing liabilities.
(4)
Net interest margin represents the annualized net interest
income divided by average total interest-earning assets.
66
Table of Contents
For the Years Ended December 31,
2009
2008
2007
Interest
Interest
Interest
Average
and
Yield/
Average
and
Yield/
Average
and
Yield/
Balance
Dividends
Cost
Balance
Dividends
Cost
Balance
Dividends
Cost
(Dollars in thousands)
$
1,333,770
$
69,517
5.21
%
$
1,193,416
$
68,458
5.74
%
$
1,076,674
$
66,995
6.22
%
140,494
6,544
4.66
168,913
8,580
5.08
135,059
6,122
4.53
17,007
0.00
13,812
473
3.42
10,248
658
6.42
931
1
0.11
2,376
34
1.43
2,443
102
4.18
1,492,202
76,062
5.10
1,378,517
77,545
5.63
1,224,424
73,877
6.03
59,606
57,255
52,460
$
1,551,808
$
1,435,772
$
1,276,884
$
312,439
2,494
0.80
$
249,038
4,728
1.90
$
191,192
3,323
1.74
136,981
607
0.44
128,467
824
0.64
130,734
835
0.64
524,041
16,270
3.10
514,222
19,517
3.80
508,672
22,923
4.51
973,461
19,371
1.99
891,727
25,069
2.81
830,598
27,081
3.26
285,258
10,404
3.65
271,545
9,877
3.64
183,219
8,496
4.64
1,258,719
29,775
2.37
%
1,163,272
34,946
3.00
%
1,013,817
35,577
3.51
%
142,017
117,983
106,398
1,400,736
1,281,255
1,120,215
151,072
154,517
156,669
$
1,551,808
$
1,435,772
$
1,276,884
$
46,287
$
42,599
$
38,300
2.73
%
2.63
%
2.52
%
$
233,483
$
215,245
$
210,607
3.10
%
3.09
%
3.13
%
118.55
%
118.50
%
120.77
%
(1)
Includes mortgagors and investors escrow accounts
(2)
Net interest rate spread represents the difference between the
yield on average interest-earning assets and the cost of average
interest-bearing liabilities.
(3)
Net interest-earning assets represent total interest-earning
assets less total interest-bearing liabilities.
(4)
Net interest margin represents the annualized net interest
income divided by average total interest-earning assets.
Table of Contents
Six Months Ended June 30, 2010 Compared to June 30,
2009
Increase (Decrease)
Total
Due to
Increase
Volume
Rate
(Decrease)
(In thousands)
$
1,011
$
(756
)
$
255
(581
)
(551
)
(1,132
)
430
(1,307
)
(877
)
214
(860
)
(646
)
51
(103
)
(52
)
(714
)
(3,367
)
(4,081
)
(449
)
(4,330
)
(4,779
)
(868
)
777
(91
)
(1,317
)
(3,553
)
(4,870
)
$
1,747
$
2,246
$
3,993
Year Ended December 31, 2009
Year Ended December 31, 2008
Compared to December 31, 2008
Compared to December 31, 2007
Increase (Decrease)
Increase (Decrease)
Due to
Due to
Volume
Rate
Net
Volume
Rate
Net
(In thousands)
$
7,637
$
(6,578
)
$
1,059
$
5,235
$
(3,772
)
$
1,463
(1,210
)
(1,332
)
(2,542
)
1,817
388
2,205
6,427
(7,910
)
(1,483
)
7,052
(3,384
)
3,668
991
(3,225
)
(2,234
)
1,076
329
1,405
52
(269
)
(217
)
(15
)
4
(11
)
367
(3,614
)
(3,247
)
253
(3,659
)
(3,406
)
1,410
(7,108
)
(5,698
)
1,314
(3,326
)
(2,012
)
500
27
527
2,498
(1,117
)
1,381
1,910
(7,081
)
(5,171
)
3,812
(4,443
)
(631
)
$
4,517
$
(829
)
$
3,688
$
3,240
$
1,059
$
4,299
68
Table of Contents
More than
More than
One
One Year
Three Years
Year or
Through
Through
Over Five
Total
Less
Three Years
Five Years
Years
(In thousands)
$
263,802
$
40,170
$
110,720
$
89,912
$
23,000
30,693
9,952
13,849
4,808
2,084
13,682
787
1,511
1,383
10,001
2,876
28
547
646
1,655
$
311,053
$
50,937
$
126,627
$
96,749
$
36,740
(1)
Secured under a blanket security agreement on qualifying assets,
principally, mortgage loans.
(2)
Represents non-cancelable operating leases for offices and
office equipment.
(3)
Consists of estimated benefit payments over the next
10 years to retirees under unfunded nonqualified pension
plans.
More than
More than
One
One Year
Three Years
Year or
Through
Through
Over Five
Total
Less
Three Years
Five Years
Years
(In thousands)
$
35,330
$
27,270
$
$
$
8,060
1,320
698
350
272
57,713
7,929
3,714
46,070
125,511
378
3,619
17,965
103,549
86,492
37,711
35,365
1,893
11,523
94
94
10,555
9,065
890
600
$
317,015
$
83,145
$
43,938
$
20,730
$
169,202
(1)
Commitments for loans are extended to customers for up to
180 days after which they expire.
(2)
Unused portions of home equity lines of credit are available to
the borrower for up to 10 years.
(3)
Unused portion of checking overdraft lines of credit are
available to customers in good standing.
69
Table of Contents
70
Table of Contents
71
Table of Contents
Market
Market
Institutions in
Share
Share Rank
Market
25.1
%
2
12
2.0
%
9
25
.36
%
16
16
Number of
Offices
13
1
8
22
72
Table of Contents
At June 30, 2010
Amount
Percent
(Dollars in thousands)
$
747,421
53.55
%
449,534
32.21
63,778
4.57
127,758
9.16
7,058
0.51
1,395,549
100.00
%
631
(13,144
)
$
1,383,036
(1)
Residential mortgage loans include
one-to-four
family mortgage loans, home equity loans, and home equity lines
of credit.
(2)
Construction loans include commercial and residential loans and
are reported net of undisbursed construction loans of
$62.7 million as of June 30, 2010.
At December 31,
2009
2008
2007
2006
2005
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in thousands)
$
754,838
54.98
%
$
746,041
57.26
%
$
666,003
59.18
%
$
640,076
61.46
%
$
557,306
64.31
%
426,028
31.03
351,474
26.97
284,460
25.28
232,550
22.33
149,006
17.19
71,078
5.18
89,099
6.84
70,617
6.27
63,902
6.14
47,105
5.44
113,240
8.25
106,684
8.19
92,869
8.25
97,234
9.34
109,099
12.59
7,742
0.56
9,629
0.74
11,469
1.02
7,607
0.73
4,119
0.47
1,372,926
100.00
%
1,302,927
100.00
%
1,125,418
100.00
%
1,041,369
100.00
%
866,635
100.00
%
632
1,417
1,529
1,813
1,740
(12,539
)
(12,553
)
(10,620
)
(9,827
)
(8,675
)
$
1,361,019
$
1,291,791
$
1,116,327
$
1,033,355
$
859,700
73
Table of Contents
(1)
Residential mortgage loans include
one-to-four
family mortgage loans, home equity loans, and home equity lines
of credit.
(2)
Construction loans include commercial and residential loans and
are reported net of undisbursed construction loans of
$86.5 million, $93.9 million, $96.8 million,
$93.6 million and $64.1 million as of
December 31, 2009, 2008, 2007, 2006 and 2005, respectively.
74
Table of Contents
75
Table of Contents
76
Table of Contents
At June 30, 2010
At December 31, 2009
Amount
Percentage
Amount
Percentage
(Dollars in thousands)
$
155,069
34.5
%
$
140,566
33.0
%
37,401
8.3
31,968
7.5
37,736
8.4
29,952
7.0
51,645
11.5
45,454
10.7
61,660
13.7
58,011
13.6
38,378
8.5
38,719
9.1
7,437
1.7
8,132
1.9
12,579
2.8
3,270
0.8
47,629
10.6
69,956
16.4
$
449,534
100.0
%
$
426,028
100.0
%
At June 30, 2010
At December 31, 2009
Amount
Percentage
Amount
Percentage
(Dollars in thousands)
$
312,849
69.6
%
$
300,334
70.5
%
51,736
11.5
52,738
12.4
4,919
1.1
2,984
0.7
35,922
8.0
42,280
9.9
29,653
6.6
21,313
5.0
14,455
3.2
6,379
1.5
$
449,534
100.0
%
$
426,028
100.0
%
77
Table of Contents
78
Table of Contents
79
Table of Contents
80
Table of Contents
Loans Maturing
After One
Within One
But Within
After Five
Year
Five Years
Years
Total
(In thousands)
$
1,329
$
27,178
$
726,331
$
754,838
8,063
76,036
341,929
426,028
11,130
21,400
38,548
71,078
2,378
33,970
76,892
113,240
228
5,603
1,911
7,742
$
23,128
$
164,187
$
1,185,611
$
1,372,926
(1)
Residential loans include
one-to-four
family mortgage loans, home equity loans, and home equity lines
of credit.
Due After December 31, 2010
Fixed
Adjustable
Total
(In thousands)
$
456,689
$
296,820
$
753,509
164,693
253,272
417,965
59,948
59,948
17,520
93,342
110,862
6,941
573
7,514
$
645,843
$
703,955
$
1,349,798
(1)
Residential loans include
one-to-four
family mortgage loans, home equity loans, and home equity lines
of credit.
81
Table of Contents
82
Table of Contents
Loans Delinquent for
60-89 Days
90 Days and Over
Total
Number
Amount
Number
Amount
Number
Amount
(Dollars in thousands)
11
$
1,228
15
$
2,122
26
$
3,350
3
1,472
5
6,164
8
7,636
7
3,208
7
3,208
4
125
7
526
11
651
1
4
1
1
2
5
19
$
2,829
35
$
12,021
54
$
14,850
11
$
2,072
17
$
1,970
28
$
4,042
1
421
5
2,242
6
2,663
7
6,630
7
6,630
3
220
3
61
6
281
15
$
2,713
32
$
10,903
47
$
13,616
9
$
1,237
14
$
1,685
23
$
2,922
2
652
2
1,202
4
1,854
4
3,021
4
3,021
3
923
2
372
5
1,295
3
47
2
11
5
58
17
$
2,859
24
$
6,291
41
$
9,150
4
$
389
6
$
407
10
$
796
2
79
1
74
3
153
1
515
1
515
2
164
2
692
4
856
2
4
2
4
11
$
1,151
9
$
1,173
20
$
2,324
(1)
Residential loans include
one-to-four
family mortgage loans, home equity loans, and home equity lines
of credit.
83
Table of Contents
At June 30,
At December 31,
2010
2009
2008
2007
2006
2005
(Dollars in thousands)
$
4,031
$
3,106
$
2,607
$
407
$
422
$
821
6,507
2,242
2,726
74
311
667
3,208
6,630
4,385
614
61
334
692
114
172
6
7
11
5
8
6
14,366
12,046
10,063
1,178
855
1,666
4,897
(3)
78
372
391
560
614
14,366
12,046
10,435
1,569
1,493
7,177
2,953
3,061
$
17,319
$
15,107
$
10,435
$
1,569
$
1,493
$
7,177
1.03
%
0.88
%
0.80
%
0.14
%
0.14
%
0.83
%(4)
.90
%
0.77
%
0.68
%
0.12
%
0.12
%
0.68
%(5)
(1)
Residential loans include
one-to-four
family mortgage loans, home equity loans, and home equity lines
of credit.
(2)
The amount of income that was contractually due but not
recognized on non-accrual loans totaled $201,000, $233,000 and
$237,000, respectively, for the six months ended June 30,
2010 and the years ended December 31, 2009 and 2008.
(3)
Balance represents a loan that was fully guaranteed by the
United States Department of Agriculture and was repaid in full
in January 2006.
(4)
The ratio is 0.26% when excluding the $4.9 million fully
guaranteed United States Department of Agriculture loan that was
past due 90 days and still accruing as of December 31,
2005 which was repaid in full in January, 2006.
(5)
The ratio is 0.22% when excluding the $4.9 million fully
guaranteed United States Department of Agriculture loan that was
past due 90 days and still accruing as of December 31,
2005 which was repaid in full in January, 2006.
Table of Contents
85
Table of Contents
86
Table of Contents
At or for the Six
Months Ended
June 30, 2010
(Dollars in thousands)
$
12,539
1,812
(1,155
)
(13
)
(51
)
(1,219
)
3
9
12
(1,207
)
$
13,144
91.49
%
0.94
%
0.09
%
(1)
Real estate loans include
one-to-four
family residential mortgage loans, home equity loans, home
equity lines of credit, commercial real estate loans and
construction loans.
At or for the Years Ended December 31,
2009
2008
2007
2006
2005
(Dollars in thousands)
$
12,553
$
10,620
$
9,827
$
8,675
$
6,371
1,961
2,393
749
1,681
2,700
(1,471
)
(257
)
(21
)
(45
)
(593
)
(314
)
(76
)
(498
)
(591
)
(49
)
(50
)
(76
)
(78
)
(55
)
(2,113
)
(621
)
(173
)
(621
)
(646
)
8
9
5
5
31
114
122
191
70
209
16
30
21
17
10
138
161
217
92
250
(1,975
)
(460
)
44
(529
)
(396
)
$
12,539
$
12,553
$
10,620
$
9,827
$
8,675
104.09
%
120.30
%
676.86
%
658.20
%
120.87
%
0.91
%
0.96
%
0.94
%
0.94
%
1.00
%
0.15
%
0.04
%
0.00
%
0.05
%
0.05
%
87
Table of Contents
(1)
Real estate loans include
one-to-four
family residential mortgage loans, home equity loans, home
equity lines of credit, commercial real estate loans and
construction loans.
At June 30, 2010
% of
% of Loans
Allowance
Allowance
in Category
for Loan
for Loan
to Total
Losses
Losses
Loans
(Dollars in thousands)
$
4,463
33.95
%
53.55
%
4,838
36.81
%
32.21
%
1,443
10.98
%
4.57
%
2,245
17.08
%
9.16
%
94
0.72
%
0.51
%
61
0.46
%
$
13,144
100
%
100
%
(1)
Residential loans include
one-to-four
family mortgage loans, home equity loans, and home equity lines
of credit.
At December 31,
2009
2008
2007
% of
% of Loans
% of
% of Loans
% of
% of Loans
Allowance
Allowance
in Category
Allowance
Allowance
in Category
Allowance
Allowance
in Category
for Loan
for Loan
to Total
for Loan
for Loan
to Total
for Loan
for Loan
to Total
Losses
Losses
Loans
Losses
Losses
Loans
Losses
Losses
Loans
(Dollars in thousands)
$
4,243
33.84
%
54.97
%
$
3,952
31.48
%
57.26
%
$
2,673
25.17
%
59.18
%
4,662
37.18
31.03
3,978
31.69
26.97
3,387
31.89
25.28
1,490
11.88
5.18
1,925
15.33
6.84
1,285
12.10
6.27
1,832
14.61
8.25
2,180
17.37
8.19
2,102
19.79
8.25
103
0.82
0.57
306
2.44
0.74
335
3.16
1.02
209
1.67
212
1.69
838
7.89
$
12,539
100.00
%
100.00
%
$
12,553
100.00
%
100.00
%
$
10,620
100.00
%
100.00
%
(1)
Residential loans include
one-to-four
family mortgage loans, home equity loans, and home equity lines
of credit.
88
Table of Contents
At December 31,
2006
2005
% of
% of Loans
% of
% of Loans
Allowance
Allowance
in Category
Allowance
Allowance
in Category
for Loan
for Loan
to Total
for Loan
for Loan
to Total
Losses
Losses
Loans
Losses
Losses
Loans
(Dollars in thousands)
$
1,051
10.70
%
61.46
%
$
1,035
11.93
%
64.31
%
4,241
43.16
22.33
3,459
39.88
17.19
959
9.76
6.14
707
8.15
5.44
1,959
19.93
9.34
1,541
17.76
12.59
55
0.56
0.73
27
0.31
0.47
1,562
15.89
1,906
21.97
$
9,827
100.00
%
100.00
%
$
8,675
100.00
%
100.00
%
(1)
Residential loans include
one-to-four
family mortgage loans, home equity loans, and home equity lines
of credit.
Table of Contents
At June 30,
At December 31,
2010
2009
2008
2007
Amortized
Fair
Amortized
Fair
Amortized
Fair
Amortized
Fair
Cost
Value
Cost
Value
Cost
Value
Cost
Value
(In thousands)
$
29,002
$
29,150
$
7,017
$
7,052
$
2,031
$
2,048
$
14,016
$
14,036
61,348
65,500
72,537
75,967
117,517
120,395
96,494
97,096
5,881
4,720
5,879
4,656
4,831
4,887
4,068
3,863
250
254
722
731
725
739
978
995
11,259
14,423
10,509
14,345
10,437
12,940
15,744
20,141
241
241
241
241
$
107,740
$
114,047
$
96,664
$
102,751
$
135,782
$
141,250
$
131,541
$
136,372
90
Table of Contents
91
Table of Contents
92
Table of Contents
More than One Year
More than Five Years
One Year or Less
Through Five Years
Through Ten Years
More than Ten Years
Total Securities
Weighted-
Weighted-
Weighted-
Weighted-
Weighted-
Fair
Average
Fair
Average
Fair
Average
Fair
Average
Fair
Average
Value
Yield
Value
Yield
Value
Yield
Value
Yield
Value
Yield
(Dollars in thousands)
$
2,009
.36
%
$
5,020
3.41
%
$
22,121
3.59
%
$
%
$
29,150
3.34
%
2,438
4.35
412
6.26
62,650
5.16
65,500
5.13
100
4.91
2,895
.40
1,725
1.09
4,720
.81
254
3.94
254
3.94
$
2,109
.58
%
$
10,353
2.79
%
$
22,787
3.64
%
$
64,375
5.05
%
99,624
4.40
%
14,423
$
114,047
More than One Year
More than Five Years
One Year or Less
Through Five Years
Through Ten Years
More than Ten Years
Total Securities
Weighted-
Weighted-
Weighted-
Weighted-
Weighted-
Fair
Average
Fair
Average
Fair
Average
Fair
Average
Fair
Average
Value
Yield
Value
Yield
Value
Yield
Value
Yield
Value
Yield
(Dollars in thousands)
$
2,018
0.36
%
$
5,035
3.41
%
$
%
$
%
$
7,053
2.53
%
1,780
4.01
1,909
5.13
72,278
5.18
75,967
5.16
2,971
0.55
1,684
0.80
4,655
0.67
731
4.49
731
4.49
$
2,018
0.36
%
$
9,786
2.65
%
$
2,640
4.95
%
$
73,962
5.08
%
88,406
4.70
%
14,345
$
102,751
93
Table of Contents
At June 30, 2010
At December 31,
2009
2008
2007
Weighted-
Weighted-
Weighted-
Weighted-
Average
Average
Average
Average
Balance
Percent
Rate
Balance
Percent
Rate
Balance
Percent
Rate
Balance
Percent
Rate
(Dollars in thousands)
$
157,377
13.7
%
0.00
%
$
150,484
13.3
%
0.00
%
$
116,113
11.1
%
0.00
%
$
99,378
10.5
%
0.00
%
111,791
9.7
0.31
108,099
9.6
0.34
86,943
8.4
0.43
85,854
9.0
0.51
159,704
13.9
0.30
143,601
12.7
0.30
121,527
11.7
0.60
121,800
12.8
0.60
240,194
20.9
0.52
234,737
20.8
0.65
188,110
18.0
1.78
120,971
12.7
3.15
834
0.1
2.04
247
0.0
2.04
227
0.0
2.04
216
0.0
2.04
669,900
58.2
0.31
637,168
56.4
0.36
512,920
49.2
0.87
428,219
45.0
1.16
480,479
41.8
1.98
491,940
43.6
2.29
529,588
50.8
3.57
522,819
55.0
4.49
$
1,150,379
100.0
%
1.01
%
$
1,129,108
100.0
%
1.20
%
$
1,042,508
100.0
%
2.24
%
$
951,038
100.0
%
2.99
%
94
Table of Contents
At
At
June 30,
December 31,
2010
2009
(In thousands)
$
34,864
$
47,890
41,976
26,563
30,940
52,149
42,318
37,537
18,711
4,338
$
168,809
$
168,477
June 30,
At December 31,
2010
2009
2008
2007
(In thousands)
$
111,932
$
56,155
$
1,987
$
1,178
193,965
204,712
632
1,002
94,531
101,412
132,356
60,161
43,025
82,360
296,257
42,480
33,047
42,259
87,475
327,519
3,978
5,042
10,881
90,479
$
480,479
$
491,940
$
529,588
$
522,819
Over Two
Over
Percentage of
Over One
Years to
Three
Over Four
Total Time
One Year
Year to Two
Three
Years to
Years to
Deposit
and Under
Years
Years
Four Years
Five Years
Thereafter
Total
Accounts
(Dollars in thousands)
$
111,175
$
757
$
$
$
$
$
111,932
23.31
%
142,437
50,272
1,462
194,171
40.41
34,257
34,339
10,892
3,275
11,479
83
94,325
19.63
5,755
2,855
8,733
3,121
22,529
32
43,025
8.95
11,197
11,379
7,044
1,742
283
1,378
33,023
6.87
1,114
1,946
706
213
24
4,003
0.83
$
305,935
$
101,548
$
28,837
$
8,351
$
34,291
$
1,517
$
480,479
100.00
%
95
Table of Contents
Over Two
Over
Percentage of
Over One
Years to
Three
Over Four
Total Time
One Year
Year to Two
Three
Years to
Years to
Deposit
and Under
Years
Years
Four Years
Five Years
Thereafter
Total
Accounts
(Dollars in thousands)
$
56,150
$
5
$
$
$
$
$
56,155
11.42
%
182,145
22,475
92
204,712
41.61
40,919
47,703
4,552
767
7,471
101,412
20.62
62,276
4,958
3,679
8,401
3,046
82,360
16.74
16,238
9,242
10,306
4,435
461
1,577
42,259
8.59
2,029
1,533
1,207
249
24
5,042
1.02
$
359,757
$
85,916
$
19,836
$
13,852
$
10,978
$
1,601
$
491,940
100.00
%
Six Months Ended
June 30,
Years Ended December 31,
2010
2009
2008
2007
(Dollars in thousands)
$
978,624
$
926,395
$
851,660
$
791,443
8,525
32,858
49,666
33,136
5,853
19,371
25,069
27,081
14,378
52,229
74,735
60,217
$
993,002
$
978,624
$
926,395
$
851,660
96
Table of Contents
97
Table of Contents
98
Table of Contents
99
Table of Contents
100
Table of Contents
101
Table of Contents
102
Table of Contents
103
Table of Contents
104
Table of Contents
105
Table of Contents
106
Table of Contents
107
Table of Contents
68
President and Chief Executive Officer
56
Executive Vice President
56
Executive Vice President
40
Senior Vice President, Chief Financial Officer and Treasurer
51
Secretary
(1)
Joseph F. Jeamel, Jr. served as Executive Vice President of
Existing Rockville Financial until his planned retirement,
effective as of June 30, 2010.
(2)
Ages presented are as of June 30, 2010.
68
President and Chief Executive Officer
56
Executive Vice President
56
Executive Vice President
40
Senior Vice President, Chief Financial Officer and Treasurer
59
Senior Vice President, Retail Banking Officer
46
Senior Vice President, Commercial Banking Officer
46
Senior Vice President, Marketing and Administrative Services
Officer
52
Senior Vice President, Operations Officer
(1)
Joseph F. Jeamel, Jr. served as Chief Operating Officer and
Treasurer of Rockville Bank until his planned retirement,
effective as of June 30, 2010.
(2)
Ages presented are as of June 30, 2010.
108
Table of Contents
109
Table of Contents
Positions Held with
Director
Current Term
62
1999
2011
70
2007
2011
44
2010
2011
66
2007
2011
Vice Chairman
54
2003
2012
47
2007
2012
70
1989
2012
70
1980
2012
Chairman
61
2003
2013
55
1995
2013
President/Chief Executive Officer
68
1981
2013
66
1998
2014
57
2007
2014
(1)
The mailing address for each person listed is 1645 Ellington
Road, South Windsor, Connecticut 06074. Each of the persons
listed as a director is also a director of Rockville Bank,
Existing Rockville Financial and Rockville Financial MHC
(2)
Ages as of June 30, 2010.
110
Table of Contents
111
Table of Contents
112
Table of Contents
113
Table of Contents
114
Table of Contents
115
Table of Contents
AND TRANSACTIONS WITH MANAGEMENT
Change in
Pension
Value and
Nonqualified
Non-Equity
Deferred
Stock
Option
Incentive Plan
Compensation
All Other
Year
Salary(4)
Bonus
Awards(5)
Awards(6)
Compensation(7)
Earnings(8)
Compensation(9)
Total
(a)
(b)
( c)$
(d)$
(e)$
(f)$
(g)$
(h)$
(i)$
(j)$
2009
432,772
0
32,109
94,855
247,600
505,387
74,546
1,387,269
2008
426,954
0
503,160
81,600
124,638
579,973
101,199
1,817,524
2007
403,471
0
0
122,400
242,676
0
77,177
845,724
2009
238,420
0
25,410
41,785
115,968
129,400
87,071
638,054
2008
234,439
0
323,460
32,640
64,373
192,856
1,589,475
2,437,243
2007
219,881
0
0
48,960
99,189
258,106
51,587
677,723
2009
197,809
0
23,100
34,313
99,148
173,984
39,091
567,445
2008
192,662
0
119,800
27,200
44,100
50,042
47,678
481,482
2007
168,318
0
0
40,800
59,129
77,466
30,562
376,275
2009
146,531
0
13,860
19,063
58,679
0
18,219
256,352
Chief Financial Officer
and Treasurer
2009
142,302
0
20,790
18,605
57,061
66,554
25,600
330,912
2008
138,531
8,058
59,900
17,680
30,456
75,797
25,613
356,035
(1)
Mr. Jeamel retired as Executive Vice President and Chief
Operating Officer of Existing Rockville Financial and Rockville
Bank as of June 30, 2010.
(2)
Mr. Lund was hired on December 8, 2008 and became a
Named Executive Officer in 2009.
(3)
Mr. Trachimowicz became a Named Executive Officer in 2008.
He was promoted to Executive Vice President from Senior Vice
President/Human Resources and Organizational Development Officer
in 2010.
(4)
Reflects actual base salary amounts paid for fiscal year 2009.
2009 base salaries are follows: Mr. McGurk: $432,772,
Mr. Jeamel: $238,420; Mr. Buchholz: $203,840;
Mr. Lund: $150,800; and Mr. Trachimowicz: $146,640.
(5)
These amounts represent the aggregate grant date fair value of
restricted stock awards made pursuant to Rockvilles 2006
Stock Incentive Award Plan determined in accordance with FASB
Topic 718. Prior years were restated in order to comply with the
new reporting requirement. For the restricted stock awarded in
December 2006, 20.0% vested on December 22, 2006, 20.0%
vested on each December 13,
2007-2009
and 20.0% will vest on December 13, 2010; for the
restricted stock awarded in February 2008, 20.0% vested on
February 20,
2008-2010
and 20.0% vest on each February 20, 2011 and 2012; for the
restricted stock awarded in March 2009, 20.0% vested on
March 16, 2009 and 2010 and 20.0% vest on each
March 16,
2011-2013.
Mr. McGurk and Mr. Jeamel reached retirement age and
unvested shares will be accelerated upon retirement; therefore,
the awards were fully expensed at grant. Assumptions made in
valuing these awards are disclosed in footnote 14,
Share-Based Compensation to Rockvilles
Consolidated Financial Statements for the year ended
December 31, 2009.
(6)
These amounts represent the aggregate grant date fair value of
stock option awards made pursuant to Rockvilles 2006 Stock
Incentive Award Plan determined in accordance with FASB Topic
718. The stock
116
Table of Contents
options awarded in December 2006 vested on December 13,
2008. The stock options awarded in August 2007 vested 20.0% on
August 14,
2007-2010
and vest 20.0% on August 14, 2011; for the stock options
awarded in February 2008, 20.0% vested on February 20,
2008-2010
and 20.0% vest on each February 20,
2011-2012;
for the stock options awarded in March 2009, 20.0% vested on
each March 16, 2009 and 2010 and 20.0% vest on each
March 16,
2011-2013.
Mr. McGurk and Mr. Jeamel reached retirement age and
unvested shares will be accelerated upon retirement; therefore,
the awards were fully expensed at grant. Assumptions made in
valuing these awards are disclosed in footnote 14,
Share-Based Compensation to Rockvilles
Consolidated Financial Statements for the year ended
December 31, 2009.
(7)
Reflects the annual incentives earned for fiscal year 2009 under
the Rockville Bank Officer Incentive Compensation (OICP) Plan.
(8)
Reflects the change in the present value of the life annuity
from fiscal year end 2008 to 2009 for both the qualified and
non-qualified defined benefit retirement plans (the Retirement
Plan of Rockville Bank, SERP, Supplemental Savings and
Retirement Plan, and Supplemental Executive Retirement
Agreement). Change in Pension Value is as follows:
Supplemental
Supplemental
Executive
Supplemental
Executive Ret.
Retirement Plan
Retirement Plan
Savings &
Agreement
(Pension)
(SERP)
Retirement Plan
(Flat $ Benefit)
Total
$
133,921
$
278,428
$
93,038
$
505,387
119,288
0
(a)
$
10,112
(b)
129,400
173,984
(c)
173,984
0
66,554
66,554
(a)
Mr. Jeamel received a lump sum payout of this benefit
during 2008. As of December 31, 2009, he is not entitled to
any future payments from this plan.
(b)
Mr. Jeamel began receiving benefits from this plan during
2008. The present value increased due to the fact that discount
rates have decreased to 5.55% from 6.40%.
(c)
Participant is vested in the benefit under this plan based on a
plan change effective April 15, 2009.
(d)
Mr. Lund is not currently eligible to participate in the
listed plans.
(9)
All Other Compensation includes 401(k) matching contributions,
allocations to our employee stock ownership plan, Bank owned
life insurance premiums, group term life insurance premiums,
dividends paid, car allowance and contributions to our
Supplemental Savings and Retirement Plan.
Employee
Bank
Supplemental
Stock
Owned
Group Term
Savings and
Ownership
Life
Life
Dividend
Car
Retirement
401(k)(1)
Plan(2)
Insurance(3)
Insurance(4)
Paid(5)
Allowance(6)
Plan
Other
Total
$
7,350
$
16,447
$
105
$
6,858
$
9,237
$
933
$
33,616
$
0
$
74,546
7,350
16,447
105
10,555
6,000
3,923
9,291
33,400
(7)
87,071
14,700
16,447
0
1,765
1,920
3,923
166
170
(8)
39,091
7,864
9,958
0
199
180
0
0
18
(9)
18,219
5,394
12,069
105
1,032
1,000
6,000
0
0
25,600
(1)
Our matching contributions to the qualified defined contribution
401(k) retirement plan.
(2)
Our contributions allocated under the employee stock ownership
plan. Vesting is as follows: 100.0% for Mr. McGurk,
Mr. Jeamel and Mr. Trachimowicz; 60.0% for
Mr. Buchholz; and 0.0% for Mr. Lund.
(3)
The cost of a $25,000 death benefit through Bank Owned Life
Insurance.
(4)
Group term life insurance premiums for coverage in excess of
$50,000.
(5)
Dividend paid for unvested restricted stock.
117
Table of Contents
(6)
Mr. McGurks car allowance reflects his personal use
of a company car. Mr. Jeamel and Mr. Buchholzs
car allowances became effective in September, 2007.
Mr. Trachimowiczs car allowance became effective in
November 2008.
(7)
Includes a life insurance premium
gross-up
reimbursement ($5,764), a payout from Mr. Jeamels
SERP ($27,636).
(8)
Flex credit to offset the cost of health/dental insurance.
(9)
Volunteer pay.
All Other
All Other
Stock
Stock
Grant
Awards:
Awards:
Exercise
Date Fair
Estimated Possible Payouts
Number of
Number of
or Base
Value of
Under Non-Equity
Shares of
Securities
Price of
Stock and
Incentive Plan Awards(2)
Stock or
Under-lying
Option
Option
Grant Date(1)
Threshold
Target
Maximum
Units
Options
Awards(3)
Awards(4)
($)
($)
($)
(# )
(#)
($/Sh)
($/Sh)
3/16/09
129,832
259,663
324,579
3,475
31,100
9.24
126,964
3/16/09
59,605
119,210
149,013
2,750
13,700
9.24
67,195
3/16/09
50,960
101,920
127,400
2,500
11,250
9.24
57,413
3/16/09
30,160
60,320
75,400
1,500
6,250
9.24
32,923
3/16/09
29,328
58,656
73,320
2,250
6,100
9.24
39,395
(1)
This column shows the date of the grant for all awards granted
in 2009.
(2)
For Mr. McGurk, the Annual Incentive Compensation Plan
target represents 60.0% of base salary. All other executives
Annual Incentive Compensation Plan target as a percentage of
base salary is as follows: Mr. Jeamel 50.0%,
Mr. Buchholz 50.0%, Mr. Lund
40.0% and Mr. Trachimowicz 40.0%. Incentive
opportunity ranges from 50.0% to 125.0% of the target.
(3)
Exercise price represents the closing price on the grant date.
(4)
For stock option awards, it reflects the grant date FASB Topic
718 fair value for awards disclosed in the column (j) the
Black-Scholes value is $3.05 per share. Assumptions made in
valuing these awards are disclosed in footnote 14,
Share-Based Compensation to Rockvilles
Consolidated Financial Statements for the year ended
December 31, 2009 as contained in Rockvilles Annual
Report on
Form 10-K,
incorporated herein by reference.
118
Table of Contents
Option Awards
Stock Awards
Equity
Incentive
Equity
Plan
Incentive
Awards:
Plan
Market or
Awards:
Payout
Equity
Number of
Value of
Number of
Number of
Incentive
Market
Unearned
Unearned
Securities
Securities
Plan Awards
Number of
Value of
Shares,
Shares,
Underlying
Underlying
Number of
Shares or
Shares or
Units or
Units or
Unexercised
Unexercised
Securities
Units of
Units of
Other
Other
Options
Options(1)
Underlying
Option
Option
Stock That
Stock That
Rights
Rights That
Exercisable
Unexercisable
Unearned
Exercise
Expiration
Have Not
Have Not
That Have
Have Not
Options
Options
Options
Price
Date
Vested(2)
Vested(3)
Not Vested
Vested
(#)
(#)
(#)
($)
(#)
($)
(#)
($)
6,220
24,880
9.24
3/16/2019
2,780
29,190
12,000
18,000
11.98
2/20/2018
25,200
264,600
18,000
12,000
14.35
8/14/2017
0
0
30,000
0
17.77
12/13/2016
8,400
88,200
2,740
10,960
9.24
3/16/2019
2,200
23,100
4,800
7,200
11.98
2/20/2018
16,200
170,100
7,200
4,800
14.35
8/14/2017
0
0
12,000
0
17.77
12/13/2016
5,400
56,700
2,250
9,000
9.24
3/16/2019
2,000
21,000
4,000
6,000
11.98
2/20/2018
6,000
63,000
6,000
4,000
14.35
8/14/2017
0
0
6,500
0
17.77
12/13/2016
800
8,400
1,250
5,000
9.24
3/16/2019
1,200
12,600
1,220
4,880
9.24
3/16/2019
1,800
18,900
2,600
3,900
11.98
2/20/2018
3,000
31,500
3,900
2,600
14.35
8/14/2017
0
0
2,000
0
17.77
12/13/2016
200
2,100
(1)
The options granted at $17.77 vested on December 13, 2008,
the options granted at $14.35 vested on each August 14,
2007-2010
and will vest on August 14, 2011, the options granted at
$11.98 vested on each February 20,
2008-2010
and will vest on each February 20, 2011 and 2012 and the
options granted at $9.24 vested on each March 16, 2009 and
2010 and will vest on each March 16,
2011-2013.
(2)
Vesting dates for the stock awards are as follows: for the
restricted stock awarded in December 2006, 20.0% vested on
December 22, 2006, and 20.0% on each December 13,
2007-2009
and 20% will vest on December 13, 2010; for the restricted
stock awarded in February 2008, 20.0% vested on
February 20,
2008-2010
and 20.0% on each February 20, 2011 and 2012; for the
restricted stock awarded in March 2009, 20.0% vested on each
March 16,
2009-2010
and 20.0% on each March 16,
2011-2013.
Vesting is accelerated upon retirement. Mr. McGurk and
Mr. Jeamel reached retirement age; therefore, unvested
shares will vest on an accelerated basis upon retirement.
(3)
Market values are based on the closing market price of Existing
Rockville Financial stock of $10.50 on December 31, 2009.
119
Table of Contents
Option Awards
Stock Awards
Number of
Number of
Shares
Value
Shares
Value
Acquired on
Realized Upon
Acquired on
Realized on
Exercise
Exercise ($)
Vesting
Vesting ($)(2)
0
0
17,495
169,550
0
0
11,350
109,950
0
0
3,300
31,112
0
0
300
2,772
0
0
1,650
15,346
(1)
Vesting is accelerated upon retirement. Mr. McGurk and
Mr. Jeamel reached retirement age; therefore, unvested
shares will vest on an accelerated basis upon retirement.
(2)
Value reflects the vested shares at the vesting price on
February 20, 2009 of $9.13, March 16, 2009 of $9.24
and December 14, 2009 of $10.29.
120
Table of Contents
Number of
Present
Payments
Years
Value of
During
Credited
Accumulated
Last Fiscal
Service
Benefit ($)
Year ($)
29.00
1,784,290
0
29.83
2,944,961
0
29.00
917,493
0
19.00
1,253,514
0
18.18
(1)
321,442
(2)
27,636
3.58
301,492
0
0
0
0
14.00
381,758
0
(1)
The Plan began paying out benefits to its incumbent; therefore,
it does not credit years of service any more. The years of
service shown are from Mr. Jeamels hiring date to
December 31, 2009.
(2)
Mr. Jeamel began receiving benefits from the Supplemental
Executive Retirement Agreement during 2008.
(3)
Mr. Buchholz is vested in the benefit under this plan based
on a plan change effective April 15, 2009.
(4)
Mr. Lund is not eligible for a benefit under this plan.
121
Table of Contents
Aggregate
Executive
Registrant
Aggregate
Aggregate
Balance at
Contributions in
Contributions in
Earnings in
Withdrawals/
December 31,
2009($)
2009 ($)(1)
2009 ($)(2)
Distributions ($)
2009 ($)
43,277
33,616
84,357
0
373,647
0
9,291
962
0
49,352
0
166
1,029
0
3,960
0
0
0
0
0
0
0
0
0
0
(1)
2009 deferred compensation match on current year deferrals.
(2)
2009 deferred compensation interest accrued on all deferrals.
122
Table of Contents
123
Table of Contents
Three times the sum of the Executive Officers Base Salary
immediately prior to termination plus an amount equal to the
greater of the portion of the Executives annual target
incentive compensation potentially payable in cash to the
Executive for the year of termination or the portion of the
Executives annual incentive compensation that became
payable in cash to the Executive for the latest year preceding
the year of termination.
A lump sum payment equal to the pro-rata portion of the
Executives annual target incentive compensation
potentially payable in cash to the Executive for the year of
termination.
The continuation of benefits, which includes health care, group
term life insurance and long-term disability benefits.
Mr. McGurk is eligible for post-retirement health care and
post retirement life insurance.
Three times the sum of the Executive Officers Base Salary
immediately prior to termination plus an amount equal to the
greater of the portion of the Executives annual target
incentive compensation potentially payable in cash to the
Executive for the year of termination or the portion of the
Executives annual incentive compensation that became
payable in cash to the Executive for the latest year preceding
the year of termination.
A lump sum payment equal to the pro-rata portion of the
Executives annual target incentive compensation
potentially payable in cash to the Executive for the year of
termination.
The continuation of benefits, which includes health care, group
term life insurance and long-term disability benefits.
124
Table of Contents
A lump-sum tax
gross-up
payment if the executive becomes subject to the 20.0% excise tax
on parachute payments.
Mr. McGurk is eligible for post-retirement health care and
post-retirement life insurance.
Mr. McGurks survivors are eligible for
post-retirement health care.
Involuntary
or Good
Reason
Involuntary
Termination
Not for
within
Voluntary
Normal
Cause
For Cause
2 Years of
Executive Benefits and
Termination
Retirement
Termination
Termination
a CIC
Death
Disability
$(b)
$(c)
$(d)
$(e)
$(f)
$(g)
$(h)
0
0
2,077,305
0
2,077,305
0
0
259,663
259,663
259,663
0
259,663
259,663
259,663
31,349
31,349
31,349
0
31,349
31,349
31,349
381,990
381,990
381,990
0
381,990
381,990
381,990
218,706
218,706
260,701
218,706
260,701
148,607
250,555
0
0
0
0
0
0
0
891,708
891,708
3,011,008
218,706
3,011,008
821,609
923,557
125
Table of Contents
(1)
The stock options granted on December 13, 2006,
August 14, 2007 and February 20, 2008 were underwater
as of December 31, 2009.
(2)
Includes post retirement health care, post retirement life
insurance, health care continuation for eligible non-spouse
dependent only, group term life benefits and long-term
disability benefits.
Involuntary
or Good
Reason
Involuntary
Termination
Not for
within
Voluntary
Normal
Cause
For Cause
2 Years of
Executive Benefits and
Termination
Retirement
Termination
Termination
a CIC
Death
Disability
$(b)
$(c)
$(d)
$(e)
$(f)
$(g)
$(h)
0
0
917,280
0
917,280
0
0
0
0
101,920
0
101,920
0
0
0
0
0
0
11,340
11,340
11,340
0
0
0
0
92,400
92,400
92,400
0
0
7,951
0
7,951
0
22,528
0
0
0
0
0
0
0
0
0
0
0
385,317
0
0
0
0
1,027,151
0
1,516,208
103,740
126,268
(1)
The stock options granted on December 13, 2006,
August 14, 2007 and February 20, 2008 were underwater
as of December 31, 2009.
(2)
Includes health care continuation, group term life benefits and
long-term disability benefits. The value represents three years
continuation of benefits grossed up for tax. For disability,
benefit is assumed to continue until the participant is eligible
for Medicare.
(3)
Mr. Buchholz is vested in the benefit under the
Supplemental Executive Retirement Agreement (Flat
$ Benefit) on a plan change effective April 15, 2009.
Therefore, there is no additional benefit upon change in control
under this plan any longer.
126
Table of Contents
Involuntary
or Good
Reason
Involuntary
Termination
Not for
within
Voluntary
Normal
Cause
For Cause
2 Years of
Executive Benefits and
Termination
Retirement
Termination
Termination
a CIC
Death
Disability
$(b)
$(c)
$(d)
$(e)
$(f)
$(g)
$(h)
0
0
633,360
0
633,360
0
0
0
0
60,320
0
60,320
0
0
0
0
0
0
6,300
6,300
6,300
0
0
0
0
12,600
12,600
12,600
0
0
102,933
0
102,933
97,175
851,353
0
0
0
0
325,821
0
0
0
0
796,613
0
1,141,334
116,075
870,253
(1)
The stock options granted on December 13, 2006,
August 14, 2007 and February 20, 2008 were underwater
as of December 31, 2009.
(2)
Includes health care continuation, group term life benefits and
long-term disability benefits. The value represents three years
continuation of benefits grossed up for tax. For disability,
benefit is assumed to continue until the participant is eligible
for Medicare.
127
Table of Contents
Involuntary
or Good
Reason
Involuntary
Termination
Not for
within
Voluntary
Normal
Cause
For Cause
2 Years of
Executive Benefits and
Termination
Retirement
Termination
Termination
a CIC
Death
Disability
$(b)
$(c)
$(d)
$(e)
$(f)
$(g)
$(h)
0
0
615,888
0
615,888
0
0
0
0
58,656
0
58,656
0
0
0
0
0
0
6,149
6,149
6,149
0
0
0
0
52,500
52,500
52,500
0
0
76,087
0
76,087
31,854
254,960
0
0
0
0
258,950
0
0
0
0
750,631
0
1,068,230
90,503
313,609
(1)
The stock options granted on December 13, 2006,
August 14, 2007 and February 20, 2008 were underwater
as of December 31, 2009.
(2)
Includes health care continuation, group term life benefits and
long-term disability benefits. The value represents three years
continuation of benefits grossed up for tax. For voluntary
termination or disability, benefit is assumed to continue until
the participant is eligible for Medicare and for his spouse
until the expiration of her COBRA continuation period.
128
Table of Contents
Change in
Pension
Value and
Fees
Nonqualified
Earned or
Non-Equity
Deferred
Paid in
Stock
Incentive Plan
Compensation
All Other
Cash(1)
Awards(2)
Option
Compensation
Earnings
Compensation(4)
Total
($)
($)
Awards(3)
($)
($)
($)
($)
55,725
0
10,675
0
0
800
67,200
32,800
0
10,675
0
0
800
44,275
42,975
0
10,675
0
0
998
54,648
26,675
0
10,675
0
0
0
37,350
60,650
0
10,675
0
0
800
72,125
37,525
0
10,675
0
0
800
49,000
40,800
0
10,675
0
0
998
52,473
26,900
0
10,675
0
0
0
37,575
40,075
0
10,675
0
0
800
51,550
32,000
0
10,675
0
0
0
42,675
(1)
Mr. Mason elected to defer 50.0% of his annual fees,
$20,400.
(2)
These amounts represent the aggregate grant date fair value of
restricted stock awards in accordance with FASB Topic 718.
Assumptions made in valuing these awards are disclosed in
footnote 14, Share-Based Compensation to
Rockvilles Consolidated Financial Statements for the year
ended December 31, 2009. As of December 31, 2009,
directors have the following unvested shares; Bars
2,000 shares; Chilberg 2,000 shares;
Engelson 2,495 shares; Lefurge
2,000 shares; Magdefrau 2,000 shares;
Mason 2,495 shares; and Olson
2,000 shares.
(3)
These amounts represent the aggregate grant date fair value of
restricted stock awards in accordance with FASB Topic 718.
Assumptions made in valuing these awards are disclosed in
footnote 14, Share-Based Compensation to
Rockvilles Consolidated Financial Statements for the year
ended December 31, 2009. As of December 31, 2009,
directors have the following unvested shares; Bars
4,900 shares; Chilberg 4,900 shares;
Engelson 4,900 shares; Guenard
4,900 shares; Lefurge 4,900 shares;
Magdefrau 4,900 shares; Mason
4,900 shares; Papa 4,900 shares;
Olson 4,900 shares; and Tkacz
4,900 shares.
(4)
Reflects dividends paid for unvested restricted stock owned by
each director in 2009.
129
Table of Contents
130
Table of Contents
131
Table of Contents
Number of Shares
Beneficially
Percent of
Owned(1)
Class(2)
10,689,250
(3)
56.69
%
Rockville, Connecticut 06066
31,500
(4)
*
48,800
(5)
*
49,779
(6)
*
4,200
(7)
*
16,734
(8)
*
46,300
(9)
*
36,500
(10)
*
29,779
(11)
*
3,708
(12)
*
56,000
(13)
*
6,593
(14)
*
197,545
(15)(20)
1.05
87,585
(16)(20)
*
38,406
(17)(20)
*
3,136
(18)(20)
*
39,514
(19)(20)
*
796,313
4.22
%
*
Less than 1.0% of the common stock issued and outstanding.
(1)
Based on information provided by the respective beneficial
owners and on filings with the Securities and Exchange
Commission made pursuant to the Securities Exchange Act of 1934.
(2)
Based on 18,853,112 shares of common stock issued and
outstanding as of August 14, 2010.
(3)
Based solely on information provided in a Schedule 13D
filed with the Securities and Exchange Commission by Rockville
Financial MHC All shares are held with sole voting and
dispositive power.
(4)
Includes 8,000 shares of restricted common stock and 8,500
exercisable options to purchase common stock.
(5)
Includes 13,605 shares held by his wife, 5,090 shares
held by adult children, 8,000 shares of restricted common
stock and 8,500 exercisable options to purchase common stock.
(6)
Includes 5,000 shares held by his wife, 10,000 shares
held jointly with his wife, 9,979 shares of restricted
common stock and 9,800 exercisable options to purchase common
stock.
(7)
Includes 200 shares held jointly with her husband and 3,500
exercisable options to purchase common stock.
132
Table of Contents
(8)
Includes 3,377 shares allocated to the account of the
Ms. Johnson under the Rockville Bank employee stock
ownership plan, all of which are vested shares.
(9)
Includes 13,000 shares held jointly with his wife,
7,000 shares held by his wife, 7,800 shares of
restricted common stock and 8,500 exercisable options to
purchase common stock.
(10)
Includes 9,000 shares held jointly with his wife,
7,000 shares of restricted common stock and
8,500 exercisable options to purchase common stock.
(11)
Includes 5,000 shares held in the Thomas S. Mason Trust, of
which Mr. Mason is the trustee, and 5,000 shares held
in the Susan C. Mason Trust, of which Mrs. Mason is the
trustee. Also includes 9,979 shares of restricted common
stock and 9,800 exercisable options to purchase common stock.
(12)
Includes 3,500 exercisable options to purchase common stock.
(13)
Includes 20,000 shares held by his wife, 7,500 shares
of restricted common stock and 8,500 exercisable options to
purchase common stock.
(14)
Includes 800 shares held by his wife and 3,500 exercisable
options to purchase common stock.
(15)
Includes 15,000 shares held jointly with his wife,
51,095 shares of restricted common stock and
84,440 exercisable options to purchase common stock.
(16)
Includes 25,000 shares of restricted common stock and
34,280 exercisable options to purchase common stock.
(17)
Includes 6,663 shares of restricted common stock and 25,000
exercisable options to purchase common stock.
(18)
Includes 200 shares held jointly with his wife,
374 shares of restricted common stock and 2,500 exercisable
options to purchase common stock.
(19)
Includes 3,100 shares held jointly with his wife,
3,025 shares of restricted common stock and
13,540 exercisable options to purchase common stock.
(20)
Includes shares allocated to the account of the individuals
under the Rockville Bank employee stock ownership plan. The
respective individuals have vested shares as follows:
Mr. McGurk 8,501 shares;
Mr. Jeamel 8,453 shares;
Mr. Buchholz 2,652 shares;
Mr. Lund 0 shares and
Mr. Trachimowicz 6,142 shares.
(21)
Joseph F. Jeamel, Jr. served as Chief Operating Officer and
Treasurer of Rockville Bank until his planned retirement,
effective as of June 30, 2010.
133
Table of Contents
Number of
Total Common Stock to be Held
Exchange
Proposed Purchases of Stock in the Offering(1)
Percentage of
Shares to be
Number of
Number of
Shares
Held(2)
Shares
Amount
Shares
Outstanding(3)
36,039
5,000
$
50,000
41,039
*
55,832
1,000
10,000
56,832
*
56,952
2,000
20,000
58,952
*
4,805
1,500
15,000
6,305
*
19,145
10,000
100,000
29,145
*
52,971
2,500
25,000
55,471
*
41,759
5,000
50,000
46,759
*
34,070
1,000
10,000
35,070
*
4,242
10,000
100,000
14,242
*
64,069
1,000
10,000
65,069
*
7,543
2,000
20,000
9,543
*
226,011
6,000
$
60,000
232,011
1.04
%
100,205
5,000
50,000
105,205
*
43,940
3,000
30,000
46,940
*
3,587
1,000
10,000
4,587
*
45,207
1,000
10,000
46,207
*
911,061
63,000
$
630,000
974,061
4.36
%
*
Less than 1.0% of the common stock issued and outstanding.
(1)
Includes proposed subscriptions, if any, by associates.
(2)
Based on information presented in BENEFICIAL OWNERSHIP OF
COMMON STOCK BY MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
assuming an exchange ratio of 1.1441 at the midpoint of the
offering range. The valuation and ownership ratios reflect the
dilutive impact of Rockville Financial MHCs assets upon
completion of the conversion and offering.
(3)
Based upon 22,340,608 total shares outstanding at the midpoint
of the offering range.
(4)
Joseph F. Jeamel, Jr. served as Chief Operating Officer and
Treasurer of Rockville Bank until his planned retirement,
effective as of June 30, 2010.
134
Table of Contents
135
Table of Contents
136
Table of Contents
Total
Shares of
Common
Shares of New Rockville
Stock to be
Equivalent
Financial to be Issued
Issued in
Value of
Shares to be
Shares to be Sold in
for Shares of Existing
Conversion
Shares Based
Received for
This Offering
Rockville Financial
and
Exchange
Upon Current
100 Existing
Amount
Percent
Amount
Percent
Offering
Ratio
Market Price(1)
Shares
11,050,000
58.19
%
7,939,517
41.81
%
18,989,517
0.9725
$
189,895,170
97
13,000,000
58.19
9,340,608
41.81
22,340,608
1.1441
223,406,080
114
14,950,000
58.19
10,741,700
41.81
25,691,700
1.3158
256,917,000
131
17,192,500
58.19
12,352,955
41.81
29,545,455
1.5131
295,454,550
151
(1)
Represents the value of shares of New Rockville Financial common
stock received in the conversion by a holder of one share of
Existing Rockville Financial, at the exchange ratio, assuming
the market price of $10.00 per share.
(2)
Valuation and ownership ratios reflect dilutive impact of
Rockville Financial MHCs assets upon completion of the
conversion. See IMPACT OF ROCKVILLE FINANCIAL MHCS
ASSETS ON MINORITY OWNERSHIP for more information
regarding the dilutive impact of Rockville Financial MHCs
assets on the valuation and ownership ratios.
137
Table of Contents
138
Table of Contents
139
Table of Contents
our historical, present and projected operating results and
financial condition;
the economic, demographic and competition characteristics of our
market area;
a comparative evaluation of our operating and financial
statistics with those of other similarly-situated,
publicly-traded savings and thrift holding companies;
the effect of the capital raised in this offering on our net
worth and earnings potential;
the trading market for our securities and comparable
institutions and general economic conditions in the market for
such securities; and
the contribution of cash to the charitable foundation.
140
Table of Contents
Existing Rockville Financials financial condition and
results of operations;
comparison of financial performance ratios of New Rockville
Financial to those of other financial institutions of similar
size;
market conditions generally and in particular for financial
institutions; and
the historical trading price of the publicly held shares of
Existing Rockville Financial common stock.
141
Table of Contents
142
Table of Contents
143
Table of Contents
144
Table of Contents
145
Table of Contents
The minimum number of shares of common stock that may be
purchased is 25.
No individual, singly or together with any associates, and no
group of persons acting in concert may purchase more than 5.0%
of the shares of common stock sold in the offering. 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.
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.
146
Table of Contents
147
Table of Contents
provide advice on the financial and securities market
implications of the plan of conversion and any related corporate
documents, including our business plan;
assist in structuring our stock offering, including developing
and assisting in implementing a marketing strategy for the
offering;
review all offering documents, including this prospectus, stock
order forms, letters, brochures and other related offering
materials (we are responsible for the preparation and filing of
such documents);
assist us in preparing for and scheduling meetings with
potential investors and broker-dealers, as necessary;
assist us in analyzing proposals from outside vendors retained
in connection with the offering, including printers, transfer
agents and appraisal firms;
assist us in the drafting and distribution of press releases as
required or appropriate in connection with the offering;
meet with the Board of Directors and management to discuss any
of these services; and
provide such other financial advisory and investment banking
services in connection with the offering as may be agreed upon
by Keefe, Bruyette & Woods, Inc. and us.
148
Table of Contents
consolidate accounts and develop a central file;
prepare proxy forms and proxy materials;
tabulate proxies and ballots;
act as inspector of election at the special meeting of members;
assist us in establishing and managing the Stock Information
Center;
assist our financial printer with labeling of stock offering
materials;
process stock order forms and certification forms and produce
daily reports and analysis;
assist our transfer agent with the generation and mailing of
stock certificates;
advise us on interest and refund calculations; and
create tax forms for interest reporting.
149
Table of Contents
150
Table of Contents
151
Table of Contents
152
Table of Contents
153
Table of Contents
154
Table of Contents
155
Table of Contents
156
Table of Contents
157
Table of Contents
158
Table of Contents
ROCKVILLE FINANCIAL AND NEW ROCKVILLE FINANCIAL
159
Table of Contents
160
Table of Contents
161
Table of Contents
162
Table of Contents
163
Table of Contents
164
Table of Contents
FOLLOWING THE CONVERSION
165
Table of Contents
166
Table of Contents
167
Page
F-2
F-3-4
F-5
F-6
F-7
F-8
F-9
F-10
F-1
Table of Contents
/s/ John T. Lund
John T. Lund
Senior Vice President, Chief Financial Officer and Treasurer
F-2
Table of Contents
F-3
Table of Contents
as to which the date is September 16, 2010
F-4
Table of Contents
F-5
Table of Contents
F-6
Table of Contents
Six Months Ended June 30,
Years Ended December 31,
2010
2009
2009
2008
2007
(Unaudited)
$
34,998
$
34,743
$
69,517
$
68,458
$
66,995
2,342
3,478
6,116
7,406
5,600
218
217
428
1,647
1,180
3
1
34
102
37,561
38,438
76,062
77,545
73,877
5,853
10,632
19,371
25,069
27,081
5,151
5,242
10,404
9,877
8,496
11,004
15,874
29,775
34,946
35,577
26,557
22,564
46,287
42,599
38,300
1,812
603
1,961
2,393
749
24,745
21,961
44,326
40,206
37,551
(357
)
(362
)
(13,315
)
(233
)
(1,566
)
(357
)
(362
)
(14,881
)
(233
)
3,234
2,479
5,221
5,131
4,551
188
936
936
381
508
523
328
782
107
187
395
382
368
4,052
3,573
6,972
(8,987
)
5,194
9,621
9,382
18,571
17,150
16,082
1,986
1,972
3,872
3,808
3,361
2,182
2,197
4,380
4,103
3,594
758
701
1,131
1,484
1,550
671
618
1,156
1,315
1,131
801
1,499
2,222
654
229
467
2,541
2,450
5,299
5,248
4,354
19,027
18,819
36,631
33,762
30,301
9,770
6,715
14,667
(2,543
)
12,444
3,452
2,205
4,935
(956
)
4,116
$
6,318
$
4,510
$
9,732
$
(1,587
)
$
8,328
$
0.34
$
0.24
$
0.53
$
(0.09
)
$
0.44
0.34
0.24
0.53
(0.09
)
0.44
18,519,002
18,451,232
18,469,092
18,428,158
18,750,935
18,530,557
18,451,232
18,473,665
18,428,158
18,750,935
F-7
Table of Contents
(In thousands, except share
data)
Accumulated
Additional
Unearned
Other
Total
Common Stock
Paid-in
Compensation
Retained
Treasury Stock
Comprehensive
Stockholders
Shares
Amount
Capital
ESOP
Earnings
Shares
Amount
Loss
Equity
19,574,640
$
85,249
$
1,854
$
(6,434
)
$
76,063
$
$
(1,668
)
$
155,064
8,328
8,328
451
451
976
976
9,755
496,730
(7,293
)
(7,293
)
(4,800
)
1,276
700
1,976
(100
)
(100
)
(1,556
)
(21
)
(21
)
(3,008
)
(3,008
)
19,568,284
85,249
3,009
(5,734
)
81,383
496,730
(7,293
)
(241
)
156,373
(1,587
)
(1,587
)
420
420
(4,272
)
(4,272
)
(5,439
)
291,082
(3,787
)
(3,787
)
1,956
699
2,655
(1,371
)
(92,559
)
1,371
(214
)
(214
)
(3,691
)
(3,691
)
(120
)
(120
)
19,568,284
85,249
3,380
(5,035
)
75,985
695,253
(9,709
)
(4,093
)
145,777
1,034
(1,034
)
9,732
9,732
1,441
1,441
2,653
2,653
13,826
20,000
(198
)
(198
)
827
827
71
857
928
(9,200
)
(152
)
(92
)
(16,427
)
244
(4,310
)
(44
)
(44
)
(3,688
)
(3,688
)
19,554,774
85,249
4,082
(4,178
)
82,971
698,826
(9,663
)
(1,033
)
157,428
6,318
6,318
83
83
195
195
6,596
254
254
48
350
398
(2,836
)
(30
)
(30
)
(2,262
)
(2,262
)
19,551,938
$
85,249
$
4,354
$
(3,828
)
$
87,027
698,826
$
(9,663
)
$
(755
)
$
162,384
F-8
Table of Contents
F-9
Table of Contents
Note 1.
MUTUAL
HOLDING COMPANY REORGANIZATION AND MINORITY STOCK
ISSUANCE
Note 2.
BASIS OF
PRESENTATION, PRINCIPLES OF CONSOLIDATION AND SIGNIFICANT
ACCOUNTING POLICIES
F-10
Table of Contents
F-11
Table of Contents
F-12
Table of Contents
F-13
Table of Contents
F-14
Table of Contents
F-15
Table of Contents
Note 3.
RECENT
ACCOUNTING PRONOUNCEMENTS
F-16
Table of Contents
Note 4.
EARNINGS
PER SHARE
Six Months Ended
June 30,
Years Ended December 31,
2010
2009
2009
2008
2007
(Unaudited)
(In thousands)
$
6,318
$
4,510
$
9,732
$
(1,587
)
$
8,328
18,519
18,451
18,469
18,428
18,751
12
5
18,531
18,451
18,474
18,428
18,751
F-17
Table of Contents
Note 5.
FAIR
VALUE MEASUREMENT
F-18
Table of Contents
Quoted
Prices in
Active
Markets for
Other
Significant
Identical
Observable
Unobservable
Total
Assets
Inputs
Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
(In thousands)
$
29,150
$
2,009
$
27,141
$
65,500
65,500
4,720
4,720
254
254
14,423
14,350
73
$
114,047
$
16,359
$
97,615
$
73
Quoted
Prices in
Active
Markets for
Other
Significant
Identical
Observable
Unobservable
Total
Assets
Inputs
Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
(In thousands)
$
7,052
$
2,018
$
5,034
$
75,967
75,967
4,656
4,656
731
731
14,345
14,272
73
$
102,751
$
16,290
$
86,388
$
73
Quoted
Prices in
Active
Markets for
Other
Significant
Identical
Observable
Unobservable
Total
Assets
Inputs
Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
(In thousands)
$
141,250
$
14,958
$
124,178
$
2,114
$
141,250
$
14,958
$
124,178
$
2,114
$
338
$
338
$
$
$
338
$
338
$
$
F-19
Table of Contents
Assets
Securities
Available
for Sale
(In thousands)
$
308
(1,073
)
446
(7
)
2,440
2,114
43
(2,084
)
73
$
73
43
1,073
F-20
Table of Contents
Quoted
Prices in
Active
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
Total Gains/
Total
(Level 1)
(Level 2)
(Level 3)
(Losses)
(In thousands)
$
2,953
$
$
$
2,953
$
7,067
7,067
$
10,020
$
$
$
10,020
$
Quoted
Prices in
Active
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
Total Gains/
Total
(Level 1)
(Level 2)
(Level 3)
(Losses)
(In thousands)
$
5,473
$
$
$
5,473
$
(381
)
$
5,473
$
$
$
5,473
$
(381
)
Quoted
Prices in
Active
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
Total
(Level 1)
(Level 2)
(Level 3)
(In thousands)
$
9,962
$
$
$
9,962
$
9,962
$
$
$
9,962
F-21
Table of Contents
June 30,
December 31,
2010
2009
2008
Carrying
Fair
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Amount
Value
(Unaudited)
$
19,536
$
19,536
$
19,307
$
19,307
$
14,901
$
14,901
114,047
114,047
102,751
102,751
141,250
141,250
16,747
18,066
19,074
20,011
24,138
25,069
1,383,036
1,393,817
1,361,019
1,360,789
1,291,791
1,286,887
17,007
17,007
17,007
17,007
17,007
17,007
4,553
4,553
4,287
4,287
4,636
4,636
159,704
159,704
143,601
143,601
121,527
121,527
240,194
240,194
234,737
234,737
188,110
188,110
269,168
269,168
258,583
258,583
203,056
203,056
834
834
247
247
227
227
480,479
487,562
491,940
498,647
529,588
538,262
5,175
5,175
6,385
6,385
6,077
6,077
272,501
289,527
263,802
276,619
322,882
335,043
Note 6.
RESTRICTIONS
ON CASH AND DUE FROM BANKS
F-22
Table of Contents
Note 7.
INVESTMENT
SECURITIES
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
(In thousands)
$
29,002
$
148
$
$
29,150
61,348
4,153
1
65,500
5,881
1,161
4,720
250
4
254
96,481
4,305
1,162
99,624
1,256
2,496
9
3,743
1,134
18
56
1,096
1,151
166
83
1,234
283
6
125
164
387
80
307
695
129
53
771
742
20
4
758
1,030
234
44
1,220
2,644
116
2,760
754
460
23
1,191
228
44
272
661
35
74
622
294
15
24
285
11,259
3,739
575
14,423
$
107,740
$
8,044
$
1,737
$
114,047
F-23
Table of Contents
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
(In thousands)
$
16,747
$
1,319
$
$
18,066
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
(In thousands)
$
7,017
$
36
$
1
$
7,052
72,537
3,431
1
75,967
5,879
1,223
4,656
722
9
731
86,155
$
3,476
1,225
88,406
1,256
2,470
173
3,553
839
40
17
862
948
158
41
1,065
284
217
501
387
3
19
371
639
134
13
760
742
69
811
1,030
263
6
1,287
2,621
62
2,683
754
353
12
1,095
342
173
515
354
15
339
313
190
503
10,509
4,132
296
14,345
$
96,664
$
7,608
$
1,521
$
102,751
F-24
Table of Contents
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
(In thousands)
$
19,074
$
937
$
$
20,011
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
(In thousands)
$
2,031
$
17
$
$
2,048
117,517
3,222
344
120,395
4,831
56
4,887
725
14
739
125,104
3,309
344
128,069
10,437
3,011
508
12,940
241
241
$
135,782
$
6,320
$
852
$
141,250
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
(In thousands)
$
24,138
$
931
$
$
25,069
F-25
Table of Contents
Available for Sale
Held to Maturity
Amortized
Fair
Amortized
Fair
Cost
Value
Cost
Value
(In thousands)
$
2,107
$
2,109
$
$
7,959
7,915
22,245
22,375
2,822
1,725
35,133
34,124
61,348
65,500
16,747
18,066
$
96,481
$
99,624
$
16,747
$
18,066
$
2,019
$
2,018
$
$
8,050
8,006
722
731
2,827
1,684
13,618
12,439
72,537
75,967
19,074
20,011
$
86,155
$
88,406
$
19,074
$
20,011
F-26
Table of Contents
Less than Twelve Months
Over Twelve Months
Total
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
Value
Losses
Value
Losses
Value
Losses
(In thousands)
$
$
$
39
$
1
$
39
$
1
4,620
1,161
4,620
1,161
4,659
1,162
4,659
1,162
2,502
404
707
171
3,209
575
$
2,502
$
404
$
5,366
$
1,333
$
7,868
$
1,737
$
2,018
$
1
$
$
$
2,018
$
1
58
1
58
1
4,556
1,223
4,556
1,223
2,018
1
4,614
1,224
6,632
1,225
1,097
184
1,099
112
2,196
296
$
3,115
$
185
$
5,713
$
1,336
$
8,828
$
1,521
$
13,188
$
331
$
368
$
13
$
13,556
$
344
13,188
331
368
13
13,556
344
4,135
460
44
48
4,179
508
$
17,323
$
791
$
412
$
61
$
17,735
$
852
F-27
Table of Contents
F-28
Table of Contents
Note 8.
LOANS AND
ALLOWANCE FOR LOAN LOSSES
June 30,
December 31,
2010
2009
2008
(Unaudited)
(In thousands)
$
747,421
$
754,838
$
746,041
449,534
426,028
351,474
63,778
71,078
89,099
1,260,733
1,251,944
1,186,614
127,758
113,240
106,684
5,036
5,783
7,704
2,022
1,959
1,925
1,395,549
1,372,926
1,302,927
631
632
1,417
(13,144
)
(12,539
)
(12,553
)
$
1,383,036
$
1,361,019
$
1,291,791
F-29
Table of Contents
At or for the Six Months Ended
June 30,
At or for the Years Ended December 31,
2010
2009
2009
2008
2007
(Unaudited)
(In thousands)
$
2,944
$
4,091
$
5,854
$
2,840
$
489
11,422
10,500
6,192
7,595
1,080
$
14,366
$
14,591
$
12,046
$
10,435
$
1,569
$
669
$
982
$
381
$
473
$
155
$
14,471
$
14,392
$
13,356
$
5,358
$
1,493
$
114
$
85
$
250
$
508
$
52
For the Six Months
For the Years Ended
Ended June 30,
December 31,
2010
2009
2009
2008
2007
(Unaudited)
(In thousands)
$
12,539
$
12,553
$
12,553
$
10,620
$
9,827
1,812
603
1,961
2,393
749
(1,219
)
(222
)
(2,113
)
(621
)
(173
)
12
126
138
161
217
$
13,144
$
13,060
$
12,539
$
12,553
$
10,620
F-30
Table of Contents
For the Six
Months
Ended
For the Years Ended
June 30,
December 31,
2010
2009
2008
(Unaudited)
(In thousands)
$
3,719
$
4,050
$
3,808
(261
)
96
285
868
3,026
(427
)
(938
)
(2,784
)
$
3,673
$
3,719
$
4,050
F-31
Table of Contents
For the Six
Months
For the Year
Ended
Ended
June 30,
December 31,
2010
2009
(Unaudited)
(In thousands)
$
475
$
68
202
446
40
39
637
475
61
61
$
576
$
475
$
576
$
481
Note 9.
OTHER
REAL ESTATE OWNED
F-32
Table of Contents
Note 10.
PREMISES
AND EQUIPMENT
June 30,
December 31,
Estimated
2010
2009
2008
Useful Lives
(In thousands)
(Unaudited)
$
440
$
236
$
236
N/A
15,371
15,675
15,029
39.5 years
9,138
9,483
9,199
3 -10 years
3,824
3,762
3,750
5 -10 years
28,773
29,156
28,214
(13,541
)
(13,293
)
(11,809
)
$
15,232
$
15,863
$
16,405
Note 11.
DEPOSITS
June 30,
December 31,
2010
2009
2008
(In thousands)
(Unaudited)
$
269,168
$
258,583
$
203,056
159,704
143,601
121,527
240,194
234,737
188,110
834
247
227
480,479
491,940
529,588
$
1,150,379
$
1,129,108
$
1,042,508
June 30, 2010
December 31, 2009
(In thousands)
(Unaudited)
$
205,538
$
359,757
164,712
85,916
48,127
19,836
21,546
13,852
11,052
10,978
29,504
1,601
$
480,479
$
491,940
F-33
Table of Contents
For the Six Months
For the Years Ended
Ended June 30,
December 31,
2010
2009
2009
2008
2007
(In thousands)
(Unaudited)
$
1,028
$
1,732
$
3,101
$
5,552
$
4,158
4,825
8,900
16,270
19,517
22,923
$
5,853
$
10,632
$
19,371
$
25,069
$
27,081
Note 12.
FEDERAL
HOME LOAN BANK BORROWINGS AND STOCK
June 30, 2010
December 31, 2009
Weighted
Weighted
Average
Average
Amount
Rate
Amount
Rate
(Dollars in thousands)
(Unaudited)
$
28,069
3.35
%
$
40,170
2.78
%
73,320
3.70
73,320
3.70
37,400
4.21
37,400
4.21
76,800
4.12
63,000
4.12
13,112
3.70
26,912
4.13
43,800
3.53
23,000
4.12
$
272,501
3.84
%
$
263,802
3.81
%
December 31,
2008
0.38%
January 02, 2009
$
66,000
3.80%
January 09, 2009
7,000
4.10%
July 09, 2009
7,000
4.18%
November 23, 2009
2,000
3.30%
May 27, 2010
5,000
4.28%
August 11, 2010
5,000
6.47%
September 08, 2010
362
4.95%
December 20, 2010
10,000
4.06%
December 21, 2010
5,000
3.57%
January 11, 2011
5,000
3.02%
February 15, 2011
5,000
3.78%
May 04, 2011
10,000
F-34
Table of Contents
December 31,
2008
3.95%
June 13, 2011
2,320
3.95%
July 07, 2011
5,000
3.78%
July 18, 2011
5,000
4.52%
August 08, 2011
5,000
3.65%
September 12, 2011
7,000
4.15%
October 03, 2011
5,000
3.95%
October 03, 2011
7,000
3.42%
November 14, 2011
5,000
3.42%
November 28, 2011
7,000
3.01%
December 05, 2011
5,000
4.57%
August 20, 2012
8,000
4.09%
September 07, 2012
7,000
4.60%
October 01, 2012
5,000
3.37%
October 03, 2012
5,400
4.75%
November 23, 2012
2,000
4.14%
December 07, 2012
10,000
3.85%
January 11, 2013
5,000
3.59%
February 01, 2013
6,000
4.99%
May 16, 2013
10,000
3.89%
May 28, 2013
5,000
4.75%
July 05, 2013
5,000
4.37%
July 08, 2013
10,000
4.15%
November 14, 2013
5,000
3.89%
November 29, 2013
7,000
3.37%
December 05, 2013
10,000
4.78%
January 13, 2014
4,400
3.92%
March 10. 2014
1,600
4.86%
March 17, 2014
7,800
4.18%
October 14, 2014
5,000
5.05%
May 18, 2015
5,000
3.69%
September 11, 2017
5,000
4.39%
November 06, 2017
8,000
3.19%
November 30, 2017
5,000
$
322,882
Table of Contents
Note 13.
PENSION
PLANS AND OTHER POST-RETIREMENT BENEFITS:
Pension Plans
Other Post-Retirement Benefits
Six Months
Six Months
Ended
Ended
June 30,
Years Ended December 31,
June 30,
Years Ended December 31,
2010
2009
2008
2010
2009
2008
(Unaudited)
(Unaudited)
(In thousands)
$
21,842
$
20,529
$
19,045
$
2,189
$
1,753
$
1,611
415
904
1,071
8
11
9
637
1,237
1,337
61
107
99
13
26
22
118
(1
)
1,533
(585
)
630
224
406
119
(178
)
(361
)
(1,554
)
(70
)
(113
)
(107
)
$
24,249
$
21,842
$
20,529
$
2,425
$
2,189
$
1,753
F-36
Table of Contents
Pension Plans
Other Post-Retirement Benefits
Six Months
Six Months
Ended
Ended
June 30,
Years Ended December 31,
June 30,
Years Ended December 31,
2010
2009
2008
2010
2009
2008
(Unaudited)
(Unaudited)
(In thousands)
$
17,385
$
13,032
$
14,388
$
$
$
(612
)
3,687
(4,968
)
913
1,027
5,166
57
88
85
13
25
22
(178
)
(361
)
(1,554
)
(70
)
(113
)
(107
)
$
17,508
$
17,385
$
13,032
$
$
$
$
(6,741
)
$
(4,457
)
$
(7,497
)
$
(2,425
)
$
(2,189
)
$
(1,753
)
$
(6,741
)
$
(4,457
)
$
(7,497
)
$
(2,425
)
$
(2,189
)
$
(1,753
)
$
(98
)
$
(116
)
$
87
$
19
$
28
$
48
9,617
7,022
11,199
911
716
336
9,519
6,906
11,286
930
744
384
(3,332
)
(2,348
)
(3,837
)
(326
)
(253
)
(131
)
$
6,187
$
4,558
$
7,449
$
604
$
491
$
253
Pension Plans
Six Months
Other Post-Retirement Benefits
Ended June 30,
Years Ended December 31,
Six Months Ended June 30,
Years Ended December 31,
2010
2009
2009
2008
2007
2010
2009
2009
2008
2007
(Unaudited)
(Unaudited)
(In thousands)
$
415
$
459
$
904
$
870
$
951
$
8
$
6
$
11
$
9
$
18
637
617
1,237
1,123
993
61
53
107
99
122
(729
)
(525
)
(1,050
)
(1,335
)
(1,052
)
279
478
956
408
485
24
19
19
(18
)
159
321
312
312
9
9
20
19
87
117
30
13
584
1,188
2,368
1,495
1,689
108
81
162
146
246
Table of Contents
Pension Plans
Six Months
Other Post-Retirement Benefits
Ended June 30,
Years Ended December 31,
Six Months Ended June 30,
Years Ended December 31,
2010
2009
2009
2008
2007
2010
2009
2009
2008
2007
(Unaudited)
(Unaudited)
(In thousands)
2,875
(1,751
)
(3,221
)
7,150
(33
)
224
283
404
120
(543
)
118
118
(1
)
(1
)
(279
)
(478
)
(956
)
(408
)
(485
)
(9
)
(9
)
(24
)
(19
)
(19
)
18
(159
)
(321
)
(312
)
(312
)
(30
)
(13
)
(19
)
(19
)
(87
)
(39
)
2,614
(2,270
)
(4,380
)
6,391
(830
)
185
260
360
82
(649
)
$
3,198
$
(1,082
)
$
(2,012
)
$
7,886
$
859
$
293
$
341
$
522
$
228
$
(403
)
Other Post-
Other Post-
Pension
Retirement
Pension
Retirement
Plans
Benefits
Plans
Benefits
June 30,
December 31,
2010
2010
2009
2009
(Unaudited)
(In thousands)
$
279
$
30
$
558
$
60
30
9
(37
)
18
$
309
$
39
$
521
$
78
At June 30,
At December 31,
2010
2009
2008
(Unaudited)
5.45% / 5.00%(1)
6.00% / 5.55%(2)
6.00% / 6.40%(3)
4.00%
4.00%
4.50%
(1)
The discount rate was 5.45% for the Pension Plan and was 5.00%
for the Supplemental and SERP plans with measurement dates of
June 30, 2010 (unaudited).
(2)
The discount rate was 6.00% for the Pension Plan and was 5.55%
for the Supplemental and SERP plans with measurement dates of
December 31, 2009.
(3)
The discount rate was 6.00% for the Pension Plan and was 6.40%
for the Supplemental and SERP plans with measurement dates of
December 31, 2008.
Table of Contents
Pension Plan
Supplemental Plans and SERPs
June 30,
December 31,
June 30,
December 31,
2010
2009
2008
2010
2009
2008
(In thousands)
(Unaudited)
$
20,178
$
17,855
$
16,542
$
4,072
$
3,987
$
3,987
17,097
14,835
13,283
3,814
3,750
3,621
17,508
17,385
13,032
For the Six Months Ended June 30,
For the Years Ended December 31,
2010
2009
2009
2008
2007
(Unaudited)
6.00%/5.55%
6.00%/6.40%
6.00% /6.40%
6.30%/6.20%
6.00%
8.25%
8.25%
8.25%
8.25%
8.25%
4.00%
4.50%
4.50%
4.50%
4.25%
(1)
The discount rate was 6.00% for the Pension Plan and was 5.55%
for the Supplemental and SERP plans with measurement dates of
June 30, 2010 (unaudited). The discount rate was 6.00% for
the Pension Plan and 6.40% for the supplemental and SERP plans
with measurement dates of December 31, 2009.
F-39
Table of Contents
1%
1%
Increase
Decrease
$
275
$
(232
)
$
9
$
(7
)
June 30, 2010
Level 1
Level 2
Level 3
Fair Value
(In thousands)
(Unaudited)
$
8,957
$
$
$
8,957
1,765
1,765
168
168
4,898
4,898
869
869
851
851
$
17,508
$
$
$
17,508
December 31, 2009
(In thousands)
Level 1
Level 2
Level 3
Fair Value
$
8,997
$
$
$
8,997
1,746
1,746
187
187
4,732
4,732
873
873
850
850
$
17,385
$
$
$
17,385
F-40
Table of Contents
Other Post-
Years Ending
Pension
Retirement
Plans
Benefits
(In thousands)
$
628
$
116
841
124
987
131
1,030
140
1,056
148
6,674
812
Note 14.
SHARE-BASED
COMPENSATION
F-41
Table of Contents
F-42
Table of Contents
Weighted
Weighted
Average
Average
Remaining
Aggregate
Stock
Exercise
Contractual
Intrinsic
Options
Price
Term
Value
(In years)
(In thousands)
342,125
$
14.74
126,250
9.24
(22,500
)
14.70
445,875
$
13.18
8.0
$
159
330,240
$
14.04
7.6
$
445,875
$
13.18
8.0
$
159
445,875
$
13.18
7.5
$
337
363,155
$
13.72
7.3
$
Weighted Average
Number of
Grant Date
Shares
Fair Value
86,300
$
3.07
126,250
3.05
(86,415
)
3.05
(10,500
)
3.30
115,635
3.04
32,915
3.68
82,720
$
2.79
F-43
Table of Contents
Years Ended December 31,
2009
2008
2007
$
3.05
$
2.72
$
4.08
2.23
%
3.24
%
4.60
%
39.85
%
22.11
%
19.06
%
2.16
%
1.67
%
0.84
%
6.0 years
6.0 years
6.5 years
F-44
Table of Contents
Option Outstanding
Exercisable Options
Weighted
Weighted
Average
Weighted
Average
Remaining
Average
Exercise
Contractual
Exercise
Shares
Life
Shares
Prices
(In years)
126,250
8.8
81,580
$
9.24
121,125
7.7
94,875
11.98
78,000
7.2
66,200
14.35
120,500
6.5
120,500
17.77
126,250
9.3
63,890
$
9.24
121,125
8.2
79,650
11.98
78,000
7.7
66,200
14.35
120,500
7.0
120,500
17.77
Weighted Average
Number of
Grant Date
Shares
Fair Value
67,580
$
15.23
16,427
9.24
(33,112
)
14.93
(9,200
)
13.57
41,695
$
13.47
(9,950
)
12.50
31,745
$
13.78
F-45
Table of Contents
Note 15.
INCOME
TAXES
For the Six Months
For the Years Ended
Ended June 30,
December 31,
2010
2009
2009
2008
2007
(Unaudited)
(In thousands)
$
3,603
$
2,723
$
6,177
$
4,572
$
3,576
(151
)
(518
)
(1,242
)
(5,528
)
540
$
3,452
$
2,205
$
4,935
$
(956
)
$
4,116
F-46
Table of Contents
June 30,
December 31,
2010
2009
2008
(Unaudited)
(In thousands)
$
4,600
$
4,389
$
4,268
5,127
5,127
5,288
2,248
2,433
3,194
490
471
352
567
606
465
13,032
13,026
13,567
(2,207
)
(2,129
)
(1,859
)
(309
)
(289
)
(232
)
(2,516
)
(2,418
)
(2,091
)
$
10,516
$
10,608
$
11,476
F-47
Table of Contents
For the Six Months
For the Year Ended
Ended June 30,
December 31,
2010
2009
2009
2008
2007
(In thousands)
(Unaudited)
$
3,420
$
2,350
$
4,986
$
(865
)
$
4,230
(69
)
(65
)
(126
)
(130
)
(125
)
(42
)
(39
)
(76
)
(234
)
(67
)
(4
)
(6
)
(11
)
(16
)
(17
)
1
(7
)
40
42
84
243
146
(28
)
122
4
11
$
3,452
$
2,205
$
4,935
$
(956
)
$
4,116
Note 16.
COMMITMENTS
AND CONTINGENCIES
June 30, 2010
December 31, 2009
(In thousands)
$
384
$
787
779
772
746
739
725
721
655
662
10,034
10,001
$
13,323
$
13,682
F-48
Table of Contents
June 30, 2010
December 31, 2009
(In thousands)
$
163
$
327
327
327
318
318
318
318
318
318
528
528
$
1,972
$
2,136
F-49
Table of Contents
June 30,
December 31,
2010
2009
2008
(In thousands)
(Unaudited)
$
70,849
$
36,650
$
48,743
62,716
86,492
93,905
135,237
125,511
113,725
57,656
57,713
58,605
10,679
10,555
12,231
95
94
112
$
337,232
$
317,015
$
327,321
Note 17.
REGULATORY
MATTERS
F-50
Table of Contents
Minimum
to Be Well
Required
Capitalized Under
Minimum
Prompt Corrective
Actual
Ratios
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
(Dollars in thousands)
$
165,854
13.2
%
$
100,518
8.0
%
$
125,647
10.0
%
152,037
12.1
50,260
4.0
75,390
6.0
152,037
9.6
63,283
4.0
79,104
5.0
$
158,870
13.1
%
$
96,976
8.0
%
$
121,220
10.0
%
145,654
12.0
48,488
4.0
72,732
6.0
145,654
9.3
62,478
4.0
78,097
5.0
$
147,898
12.8
%
$
92,436
8.0
%
$
115,545
10.0
%
134,621
11.7
46,024
4.0
69,036
6.0
134,621
8.8
61,191
4.0
76,489
5.0
$
175,743
14.0
%
$
100,496
8.0
%
N/A
N/A
161,926
12.9
50,249
4.0
N/A
N/A
161,926
10.3
62,823
4.0
N/A
N/A
F-51
Table of Contents
Minimum
to Be Well
Required
Capitalized Under
Minimum
Prompt Corrective
Actual
Ratios
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
(Dollars in thousands)
$
170,559
14.1
%
$
96,978
8.0
%
N/A
N/A
157,343
13.0
48,489
4.0
N/A
N/A
157,343
10.1
62,028
4.0
N/A
N/A
$
162,068
14.2
%
$
91,306
8.0
%
$
114,132
10.0
%
148,791
12.9
46,137
4.0
69,205
6.0
148,791
10.4
57,227
4.0
71,534
5.0
Note 18.
ACCUMULATED
OTHER COMPREHENSIVE (LOSS) INCOME
Cumulative
Effect
Unrealized
Adjustment
Gains on
of a
Accumulated
Minimum
Available-
Change in
Other
Pension
for-Sale
Accounting
Comprehensive
Liability
Securities
Principle(1)
(Loss) Income
(In thousands)
$
(4,406
)
$
2,738
$
$
(1,668
)
976
451
1,427
(3,430
)
3,189
(241
)
(4,272
)
420
(3,852
)
(7,702
)
3,609
(4,093
)
2,653
1,441
(1,034
)
3,060
(5,049
)
5,050
(1,034
)
(1,033
)
195
83
278
$
(4,854
)
$
5,133
$
(1,034
)
$
(755
)
(1)
The effect of the adoption of FSP
FAS 115-2
(ASC 320)
Table of Contents
For the Six Months Ended June 30,
For the Years Ended December 31,
2010
2009
2009
2008
2007
(In thousands)
(Unaudited)
$
6,318
$
4,510
$
9,732
$
(1,587
)
$
8,328
221
791
2,184
637
684
(138
)
(269
)
(743
)
(217
)
(233
)
83
522
1,441
420
451
300
661
4,019
(6,474
)
1,479
(105
)
(225
)
(1,366
)
2,202
(503
)
195
436
2,653
(4,272
)
976
278
958
4,094
(3,852
)
1,427
$
6,596
$
5,468
$
13,826
$
(5,439
)
$
9,755
Note 19.
PARENT
COMPANY FINANCIAL INFORMATION
June 30,
December 31,
2010
2009
2008
(In thousands)
(Unaudited)
$
2,589
$
5,129
$
7,386
1
1
5
24
23
18
152,495
145,739
131,604
5,599
5,002
4,298
1,828
1,724
2,634
$
162,536
$
157,618
$
145,945
$
152
$
190
$
168
162,384
157,428
145,777
$
162,536
$
157,618
$
145,945
F-53
Table of Contents
For the Six Months
Ended June 30,
For the Years Ended December 31,
2010
2009
2009
2008
2007
(In thousands)
(Unaudited)
$
10
$
30
$
46
$
224
$
384
10
30
46
224
384
256
277
512
568
628
256
277
512
568
628
(246
)
(247
)
(466
)
(344
)
(244
)
86
83
157
116
82
(160
)
(164
)
(309
)
(228
)
(162
)
6,478
4,674
10,041
(1,359
)
8,490
$
6,318
$
4,510
$
9,732
$
(1,587
)
$
8,328
F-54
Table of Contents
For the Six Months
Ended June 30,
For the Years Ended December 31,
2010
2009
2009
2008
2007
(In thousands)
(Unaudited)
$
6,318
$
4,510
$
9,732
$
(1,587
)
$
8,328
652
936
1,755
2,655
1,855
(6,478
)
(4,674
)
(10,041
)
1,359
(8,490
)
(1
)
(3
)
(5
)
289
441
2
4
13
7
(597
)
(854
)
(704
)
(1,457
)
(753
)
(104
)
2,164
910
594
(2,525
)
(38
)
(32
)
22
45
124
(248
)
2,049
1,673
1,911
(1,013
)
(10,000
)
(10,000
)
(198
)
(198
)
(4,119
)
(7,175
)
(30
)
(34
)
(44
)
(2,262
)
(1,886
)
(3,688
)
(3,691
)
(3,008
)
(2,292
)
(2,118
)
(3,930
)
(7,810
)
(10,183
)
(2,540
)
(69
)
(2,257
)
(15,899
)
(11,196
)
5,129
7,386
7,386
23,285
34,481
$
2,589
$
7,317
$
5,129
$
7,386
$
23,285
$
5,001
$
3,300
$
4,401
$
1,751
$
2,001
F-55
Table of Contents
Note 20.
SELECTED
QUARTERLY CONSOLIDATED INFORMATION (UNAUDITED)
2010
2009
2008
June 30,
March 31,
December 31,
September 30,
June 30,
March 31,
December 31,
September 30,
June 30,
March 31,
(In thousands, except per share data)
$
18,620
$
18,941
$
18,940
$
18,684
$
19,114
$
19,324
$
19,983
$
19,676
$
18,940
$
18,946
5,461
5,543
6,517
7,384
7,813
8,061
8,568
8,472
8,727
9,179
13,159
13,398
12,423
11,300
11,301
11,263
11,415
11,204
10,213
9,767
909
903
658
700
304
299
1,444
700
125
124
12,250
12,495
11,765
10,600
10,997
10,964
9,971
10,504
10,088
9,643
2,365
1,687
1,590
1,809
2,582
991
(786
)
(9,955
)
340
1,414
9,392
9,635
8,970
8,842
9,715
9,104
7,829
8,233
8,356
9,344
5,223
4,547
4,385
3,567
3,864
2,851
1,356
(7,684
)
2,072
1,713
1,759
1,693
1,503
1,227
1,270
935
189
(2,382
)
679
558
$
3,464
$
2,854
$
2,882
$
2,340
$
2,594
$
1,916
$
1,167
$
(5,302
)
$
1,393
$
1,155
$
0.19
$
0.15
$
0.16
$
0.13
$
0.14
$
0.10
$
0.06
$
(0.29
)
$
0.08
$
0.06
$
12.64
$
12.42
$
11.68
$
14.79
$
12.50
$
14.46
$
15.50
$
17.00
$
14.50
$
13.98
$
10.50
$
8.82
$
9.68
$
9.88
$
8.44
$
6.17
$
8.80
$
12.00
$
12.51
$
9.75
(1)
In the second quarter of 2008, non-interest income included
other-than-temporary
impairment charges of $1.2 million related to preferred
stock of Freddie Mac and Fannie Mae. In the third quarter of
2008, non-interest income included
other-than-temporary
impairment charges of $9.8 million related to preferred
stock of Freddie Mac and Fannie Mae, $1.1 million related
to one pooled trust preferred security, $395,000 related to one
mutual fund and $208,000 related to four common stocks. In the
fourth quarter of 2008, non-interest income included
other-than-temporary
impairment charges of $612,000 related to preferred stock of
Freddie Mac and Fannie Mae, $191,000 related to one mutual fund
and $914,000 related to eleven common stocks. In the first
quarter of 2009, non-interest income included other-than
temporary impairment charges of $65,000 related to one mutual
fund and $292,000 related to three equity securities. No
material charges were taken in the remainder of 2009. In the
second quarter of 2009 the Company recorded $867,000 of security
gains and $289,000 of gains on the sale of
one-to-four
family fixed rate residential loans. Refer to
Note 7 Investment Securities for
additional information on
other-than-temporary
impairments.
Note 21.
SUBSEQUENT
EVENT
F-56
Table of Contents
F-57
Table of Contents
(Subject to increase to up to 17,192,500 shares)
Table of Contents
A CONNECTICUT CORPORATION
(Proposed new holding company for
Rockville Bank)
A CONNECTICUT CORPORATION
(Current Mid-Tier Holding
Company for Rockville Bank)
Table of Contents
Table of Contents
25 Park Street
Rockville, Connecticut 06066
(860) 291-3600
1
5
8
11
14
15
15
15
15
15
15
15
15
15
15
15
15
15
16
16
16
16
16
16
16
16
16
16
16
16
Table of Contents
REGARDING THE PLAN OF CONVERSION AND REORGANIZATION
AND THE SPECIAL MEETING
Q.
WHAT ARE SHAREHOLDERS BEING ASKED TO APPROVE AT THE SPECIAL
MEETING?
A.
Existing Rockville Financial shareholders as of [shareholder
record date] are being asked to vote to approve the plan of
conversion pursuant to which Rockville Financial MHC will
convert from the mutual to the stock form of organization. As
part of the conversion, a newly formed Connecticut corporation,
New Rockville Financial, is offering its common stock to
eligible depositors of Rockville Bank and to our tax-qualified
employee stock benefit plans, and to the public, including
shareholders of Existing Rockville Financial as of [shareholder
record date]. The shares offered represent after pro forma
adjustments Rockville Financial MHCs current 56.7%
ownership interest in Existing Rockville Financial. Voting for
approval of the plan of conversion will also include approval of
the exchange ratio and the certificate of incorporation and
bylaws of New Rockville Financial.
Your vote is important.
Without sufficient votes FOR this approval, we
cannot implement the plan of conversion.
In addition, Existing Rockville Financial shareholders are being
asked to approve the adjournment of the special meeting, if
necessary, to solicit additional proxies in the event that there
are not sufficient votes at the time of the special meeting to
approve the plan of conversion.
Your vote is important. Without sufficient votes
FOR approval of the plan of conversion, we cannot
implement the plan of conversion and the related offering.
Q.
WHAT ARE THE REASONS FOR THE CONVERSION AND RELATED
OFFERING?
A.
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
Banks holding company is 100.0% publicly owned.
Although Rockville Bank is categorized as
well-capitalized and does not require additional
capital, our board of directors has determined that current
opportunities for continued growth make pursuing the conversion
and offering at this time desirable. As a fully converted stock
holding company, we will have greater flexibility in structuring
mergers and acquisitions, including the form of consideration
that we can use to pay for an acquisition. Our current mutual
holding company structure limits our ability to offer shares of
our common stock as consideration for a merger or acquisition
since Rockville Financial MHC is required to own a majority of
our shares of common stock. Our ability to compete with other
financial institutions for acquisition opportunities will be
enhanced by our ability to offer stock or cash consideration, or
a combination of stock and cash consideration in potential
business transactions. Potential sellers often want stock for at
least part of the purchase price. Our new stock holding company
structure will enable us to offer stock or cash consideration,
or a combination of stock and cash, and will therefore enhance
our ability to compete with other bidders when acquisition
opportunities arise. We do not currently have any agreement or
understanding as to any specific acquisition.
1
Table of Contents
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. Our shareholders will also
benefit from the more active and liquid trading market that will
exist when Rockville Banks holding company is 100%
publicly owned.
Q.
WHAT WILL SHAREHOLDERS RECEIVE FOR THEIR EXISTING
SHARES OF EXISTING ROCKVILLE FINANCIAL?
A.
As more fully described in Proposal 1
Approval of the Plan of Conversion and
Reorganization Share Exchange Ratio, depending
on the number of shares sold in the offering, each share of
common stock that you own at the time of the completion of the
conversion will be exchanged for between 7,939,517 shares
at the minimum and 10,741,700 shares at the maximum of the
offering range (or 12,352,955 at the adjusted maximum of the
offering range) of New Rockville Financial common stock (cash
will be paid in lieu of any fractional shares). For example, if
you own 100 shares of Existing Rockville Financial common
stock, and the exchange ratio is 1.1441 (at the midpoint of the
offering range), after the conversion you will receive
114 shares of New Rockville Financial common stock and
$4.41 in cash, the value of the fractional share, based on the
$10.00 per share purchase price of stock in the offering.
If you own shares of Existing Rockville Financial common stock
in a brokerage account in street name, your shares
will be automatically exchanged, and you do not need to take any
action to exchange your shares of common stock. If you own
shares in the form of Existing Rockville Financial stock
certificates after the completion of the conversion and
offering, our exchange agent will mail to you a transmittal form
with instructions to surrender your stock certificates. New
certificates of New Rockville Financial common stock will be
mailed to you
within
business days after the exchange agent receives properly
executed transmittal forms and your Existing Rockville Financial
stock certificates. You should not submit a stock certificate
until you receive a transmittal form.
Q.
WHY WILL THE SHARES I RECEIVE BE BASED ON A PRICE OF
$10.00 PER SHARE RATHER THAN THE TRADING PRICE OF THE COMMON
STOCK PRIOR TO COMPLETION OF THE CONVERSION?
A.
The $10.00 per share price was selected primarily because it is
a commonly selected per share price for
mutual-to-stock
conversion offerings. The amount of common stock New Rockville
Financial will issue at $10.00 per share in the offering and the
exchange 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., an appraisal firm
experienced in appraisal of financial institutions, has
estimated that, as of August 26, 2010, this market value
ranged from $189.9 million to $256.9 million, with a
midpoint of $223.4 million. Based on this valuation, the
number of shares of common stock of New Rockville Financial that
existing public shareholders of Existing Rockville Financial
will receive in exchange for their shares of Existing Rockville
Financial common stock will range from 7,939,517 shares at
the minimum and 10,741,700 shares at the maximum of the
offering range, with a value of $79.4 million at the
minimum and $107.4 million at the maximum of the offering
range. If market conditions so warrant, the appraised value can
be increased to $295.5 million, the adjusted maximum of the
appraisal, and the number of shares issued in the exchange for
existing shares of Existing Rockville Financial can be increased
to 12,352,955, with a value of $123.5 million at the
adjusted maximum of the offering range. The number of shares
received by the existing public shareholders of Existing
Rockville Financial is intended to maintain their existing
ownership in our organization (excluding any new shares
purchased by them in the offering and their receipt of cash in
lieu of fractional exchange shares). However, pursuant to FDIC
and Federal Reserve Board policies, 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 Boards 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
2
Table of Contents
adjustments described above will decrease Existing Rockville
Financials shareholders ownership interest in New
Rockville Financial from 43.30% to 41.81%.
The independent appraisal is based in part on Existing Rockville
Financials financial condition and results of operations,
the pro forma impact of the additional capital raised by the
sale of shares of common stock in the offering, and an analysis
of a peer group of 13 publicly traded savings bank and thrift
holding companies that RP Financial, LC. considered comparable
to Existing Rockville Financial. RP Financial also considered
the following factors, among others:
Q.
DOES THE EXCHANGE RATIO DEPEND ON THE TRADING PRICE OF
EXISTING ROCKVILLE FINANCIAL COMMON STOCK?
A.
No, the exchange ratio will not be based on the market price of
Existing Rockville Financial common stock. Therefore, changes in
the price of Existing Rockville Financial common stock between
now and the completion of the conversion and offering will not
affect the calculation of the exchange ratio.
Q.
SHOULD I SUBMIT MY STOCK CERTIFICATES NOW?
A.
No. If you hold stock certificate(s), instructions for
exchanging the certificates will be sent to you by our exchange
agent after completion of the conversion. If your shares are
held in street name (e.g., in a brokerage account)
rather than in certificate form, the share exchange will be
reflected automatically in your account upon completion of the
conversion.
Q.
HOW DO I VOTE?
A.
Mark your vote, sign each proxy card enclosed and return the
card(s) to us, in the enclosed proxy reply envelope. If you
prefer, you may vote by using the telephone or Internet. For
information on submitting your proxy or voting by telephone or
Internet, please refer to instructions on the enclosed proxy
card.
YOUR VOTE IS IMPORTANT. PLEASE VOTE PROMPTLY.
Q.
IF MY SHARES ARE HELD IN STREET NAME, WILL MY BROKER,
BANK OR OTHER NOMINEE AUTOMATICALLY VOTE ON THE PLAN ON MY
BEHALF?
A.
No. Your broker, bank or other nominee will not be able to
vote your shares without instructions from you. You should
instruct your broker, bank or other nominee to vote your shares,
using the directions that they provide to you.
Q.
WHAT HAPPENS IF I DONT VOTE?
A.
Your vote is very important. Not voting all the proxy card(s)
you receive will have the same effect as voting
against the plan of conversion.
Without
sufficient favorable votes for the plan of
conversion, we will not proceed with the conversion and offering.
Q.
WHAT IF I DO NOT GIVE VOTING INSTRUCTIONS TO MY BROKER,
BANK OR OTHER NOMINEE?
A.
Your vote is important. If you do not instruct your broker, bank
or other nominee to vote your shares, the unvoted proxy will
have the same effect as a vote against the plan of
conversion.
3
Table of Contents
Q.
MAY I PLACE AN ORDER TO PURCHASE SHARES IN THE OFFERING,
IN ADDITION TO THE SHARES THAT I WILL RECEIVE IN THE
EXCHANGE?
A.
Yes. If you would like to receive a prospectus and stock order
form, you must call our Stock Information Center at
1-877- , Monday through Friday
between 9:00 a.m. and 5:00 p.m., Eastern Time. The
Stock Information Center is closed weekends and bank holidays.
Eligible depositors of Rockville Bank and our tax-qualified
benefit plans have priority subscription rights allowing them to
purchase common stock in a subscription offering. Shares not
purchased in the subscription offering may be available for sale
to the public in a community offering, as described herein. In
the event orders for New Rockville Financial common stock in a
community offering exceed the number of shares available for
sale, shares may be allocated (to the extent shares remain
available) first to cover orders of natural persons residing in
Hartford, Tolland and New London Counties in Connecticut; second
to cover orders of Existing Rockville Financial shareholders as
of [voting record date]; and third to cover orders of natural
persons residing in Connecticut. If necessary, shares may also
be offered in a syndicated community offering in order to meet
the minimum sale requirements of the plan of conversion.
Shares of common stock purchased in the offering by a
shareholder and his or her associates or individuals acting in
concert with the shareholder, plus any shares a shareholder and
these individuals receive in the exchange for existing shares of
Existing Rockville Financial common stock, may not exceed 5% of
the total shares of common stock of New Rockville Financial to
be issued and outstanding after the completion of the
conversion. This limitation, however, will not require any
Existing Rockville Financial shareholder to divest an exchange
share or otherwise limit the amount of exchange shares to be
issued to such shareholder.
Q.
WILL THE CONVERSION HAVE ANY EFFECT ON DEPOSIT AND LOAN
ACCOUNTS AT ROCKVILLE BANK?
A.
No. The account number, amount, interest rate and
withdrawal rights of deposit accounts will remain unchanged.
Deposits will continue to be federally insured by the Federal
Deposit Insurance Corporation up to the legal limit. Loans and
rights of borrowers will not be affected. Only shareholders of
New Rockville Financial will have voting rights after the
conversion and offering.
Please note that properly completed and signed stock order
forms, with full payment, must be received (not postmarked) by
the Stock Information Center no later than 12:00 noon, Eastern
Time on [December 13], 2010.
4
Table of Contents
5
Table of Contents
6
Table of Contents
7
Table of Contents
8
Table of Contents
9
Table of Contents
10
Table of Contents
11
Table of Contents
12
Table of Contents
13
Table of Contents
14
Table of Contents
STOCK OWNERSHIP
AND RESULTS OF OPERATIONS
15
Table of Contents
SHAREHOLDERS OF EXISTING ROCKVILLE FINANCIAL
16
Table of Contents
Item 13.
Other
Expenses of Issuance and Distribution
Amount(1)
*
Legal Fees and Expenses
$
500,000
*
Blue Sky
5,000
*
Accounting Fees and Expenses
300,000
*
Conversion Agent and Data Processing Fees
30,000
*
Marketing Agent Expenses (including Legal Fees and Expenses)(1)
155,000
*
Marketing Agent Fees(1)
6,133,000
*
Appraisal Fees and Expenses
115,000
*
Printing, Postage, Mailing and EDGAR Fees
245,400
*
Filing Fees (Conn. Banking Commissioner, NASDAQ, FRB, FINRA and
SEC)
158,500
*
Connecticut Sec. of the State Franchise taxes
125,000
*
Transfer Fees and Expenses
150,000
*
Business Plan Fees and Expenses
50,000
*
Other
70,000
*
Total
$
8,036,900
*
Estimated
(1)
Rockville Financial New, Inc. has retained Keefe
Bruyette & Woods, Inc. to assist in the sale of common
stock on a best efforts basis in the offerings. Fees are
estimated at the adjusted maximum of the offering range and
assume that 40% of the shares are sold in the subscription and
community offerings and 60% are sold in the syndicated community
offering.
Item 14.
Indemnification
of Directors and Officers
Item 15.
Recent
Sales of Unregistered Securities
II-1
Table of Contents
Item 16.
Exhibits
and Financial Statement Schedules:
(a)
List of Exhibits
1
.1
Engagement Letters between Rockville Financial MHC, Inc.,
Rockville Financial, Inc. and Rockville Bank and Keefe, Bruyette
& Woods, Inc.
1
.2
Form of Agency Agreement between Rockville Financial MHC, Inc.,
Rockville Financial, Inc., Rockville Bank, Rockville Financial
New, Inc. and Keefe, Bruyette & Woods, Inc.*
2
.1
Plan of Conversion and Reorganization
3
.1
Certificate of Incorporation of Rockville Financial New, Inc.
3
.1.1
Amendment to Certificate of Incorporation of Rockville Financial
New, Inc. dated of September 16, 2010.
3
.2
Bylaws of Rockville Financial New, Inc.
4
.1
Form of Common Stock Certificate of Rockville Financial New,
Inc.*
5
.1
Opinion of Hinckley, Allen & Snyder LLP regarding legality
of securities being registered
8
.1
Form of Tax Opinion of Hinckley, Allen & Snyder LLP*
10
.1
Employment Agreement as amended and restated by and among
Rockville Financial, Inc., Rockville Bank and William J. McGurk,
effective January 1, 2009 (incorporated herein by reference to
Exhibit 10.1 to the Annual Report on Rockville Financial,
Inc.s Form 10-K for the year ended December 31, 2008 filed
on March 11, 2009 (File No. 000-51239))
10
.2
Employment Agreement as amended and restated by and among
Rockville Financial, Inc., Rockville Bank and Joseph F. Jeamel,
Jr., effective January 1, 2009 (incorporated herein by reference
to Exhibit 10.2 to the Annual Report on Rockville
Financial, Inc.s Form 10-K for the year ended December 31,
2008 filed on March 11, 2009 (File No. 000-51239))
10
.3
Employment Agreement by and among Rockville Financial, Inc.,
Rockville Bank and Christopher E. Buchholz, effective June 7,
2006 (incorporated herein by reference to Exhibit 10.2 to the
Current Report on Form 8-K filed for Rockville Financial, Inc.
filed on June 13, 2006)
10
.4
Change-in-Control and Restricted Covenant Agreement by and among
Rockville Financial, Inc., Rockville Bank and John T. Lund,
effective January 2, 2009 (incorporated herein by reference to
Exhibit 10.3 to the Annual Report on Rockville Financial,
Inc.s Form 10-K for the year ended December 31, 2008 filed
on March 11, 2009 (File No. 000-51239))
10
.5
Employment Agreement as amended and restated by and among
Rockville Financial, Inc., Rockville Bank and Richard J.
Trachimowicz, effective January 1, 2009 (incorporated herein by
reference to Exhibit 10.5 to the Annual Report on Rockville
Financial, Inc.s Form 10-K for the year ended December 31,
2008 filed on March 11, 2009 (File No. 000-51239))
10
.6
Supplemental Savings and Retirement Plan of Rockville Bank as
amended and restated effective December 31, 2007 (incorporated
herein by reference to Exhibit 10.5 to the Current Report on
Form 8-K filed for Rockville Financial, Inc. filed on
December 18, 2007)
10
.7
Rockville Bank Officer Incentive Compensation Plan (incorporated
herein by reference to Exhibit 10.2.3 to Rockville
Financial, Inc.s Annual Report on Form 10-K for the year
ended December 31, 2005 filed on March 31, 2006)
10
.8
Rockville Bank Supplemental Executive Retirement Agreement for
Joseph F. Jeamel, Jr. effective January 27, 2004.
10
.9
First Amendment to the Supplemental Executive Retirement
Agreement for Joseph F. Jeamel, Jr. (incorporated herein by
reference to Exhibit 10.7.1 to the Current Report on Form 8-K
filed for Rockville Financial, Inc. filed on December 18, 2007)
10
.10
Executive Split Dollar Life Insurance Agreement for Joseph F.
Jeamel, Jr. effective October 18, 1993.
10
.11
Rockville Bank Supplemental Executive Retirement Plan as amended
and restated effective December 31, 2007 (incorporated
herein by reference to Exhibit 10.9 to the Current Report on
Form 8-K filed for Rockville Financial, Inc. filed on December
18, 2007)
II-2
Table of Contents
10
.12
Rockville Financial, Inc. 2006 Stock Incentive Award Plan
(incorporated herein by reference to Appendix B in the
Definitive Proxy Statement on Form 14A for Rockville Financial,
Inc. filed on July 3, 2006)
21
.1
Subsidiaries of Rockville Financial New, Inc. and Rockville Bank
23
.1
Consent of Hinckley, Allen & Snyder LLP (contained in
Opinions included as Exhibits 5 and 8)
23
.2
Consent of Deloitte & Touche, LLP
23
.3
Consent of Wolf & Company, P.C.
23
.4
Consent of RP Financial, LC.
24
Power of Attorney (set forth on signature page)
99
.1
Appraisal Agreement between Rockville Financial MHC, Inc.,
Rockville Financial, Inc., Rockville Bank and RP Financial, LC.
99
.2
Business Plan Agreement between Rockville Bank and FinPro, Inc.
99
.3
Appraisal Report of RP Financial, LC.**
99
.4
Marketing Materials*
99
.5
Stock Order and Certification Form*
99
.6
Form of Proxy Card*
*
To be filed at a later date.
**
Supporting financial schedules filed in paper format only
pursuant to Rule 202 of
Regulation S-T.
Available for inspection during business hours at the principal
offices of the Securities and Exchange Commission in
Washington, D.C.
(b)
Financial Statement Schedules
Item 17.
Undertakings
Table of Contents
II-4
Table of Contents
II-5
Table of Contents
By:
President and Chief Executive Officer (Principal Executive
Officer)
September 16, 2010
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
September 16, 2010
Director
September 16, 2010
Director
September 16, 2010
Director
September 16, 2010
Director
September 16, 2010
II-6
Table of Contents
Director
September 16, 2010
Director
September 16, 2010
Director
September 16, 2010
Director
September 16, 2010
Director
September 16, 2010
Director
September 16, 2010
Director
September 16, 2010
Director
September 16, 2010
II-7
Table of Contents
1
.1
Engagement Letters between Rockville Financial MHC, Inc.,
Rockville Financial, Inc. and Rockville Bank and Keefe, Bruyette
& Woods, Inc.
1
.2
Form of Agency Agreement between Rockville Financial MHC, Inc.,
Rockville Financial, Inc., Rockville Bank, Rockville Financial
New, Inc. and Keefe, Bruyette & Woods, Inc.*
2
.1
Plan of Conversion and Reorganization
3
.1
Certificate of Incorporation of Rockville Financial New, Inc.
3
.1.1
Amendment of Certificate of Incorporation of Rockville Financial
New, Inc. dated as of September 16, 2010.
3
.2
Bylaws of Rockville Financial New, Inc.
4
.1
Form of Common Stock Certificate of Rockville Financial New,
Inc.*
5
.1
Opinion of Hinckley, Allen & Snyder LLP regarding legality
of securities being registered
8
.1
Form of Tax Opinion of Hinckley, Allen & Snyder LLP*
10
.1
Employment Agreement as amended and restated by and among
Rockville Financial, Inc., Rockville Bank and William J. McGurk,
effective January 1, 2009 (incorporated herein by reference to
Exhibit 10.1 to the Annual Report on Rockville Financial,
Inc.s Form 10-K for the year ended December 31, 2008 filed
on March 11, 2009 (File No. 000-51239))
10
.2
Employment Agreement as amended and restated by and among
Rockville Financial, Inc., Rockville Bank and Joseph F. Jeamel,
Jr., effective January 1, 2009 (incorporated herein by reference
to Exhibit 10.2 to the Annual Report on Rockville
Financial, Inc.s Form 10-K for the year ended December 31,
2008 filed on March 11, 2009 (File No. 000-51239))
10
.3
Employment Agreement by and among Rockville Financial, Inc.,
Rockville Bank and Christopher E. Buchholz, effective June 7,
2006 (incorporated herein by reference to Exhibit 10.2 to the
Current Report on Form 8-K filed for Rockville Financial, Inc.
filed on June 13, 2006)
10
.4
Change-in-Control and Restricted Covenant Agreement by and among
Rockville Financial, Inc., Rockville Bank and John T. Lund,
effective January 2, 2009 (incorporated herein by reference to
Exhibit 10.3 to the Annual Report on Rockville Financial,
Inc.s Form 10-K for the year ended December 31, 2008 filed
on March 11, 2009 (File No. 000-51239))
10
.5
Employment Agreement as amended and restated by and among
Rockville Financial, Inc., Rockville Bank and Richard J.
Trachimowicz, effective January 1, 2009 (incorporated herein by
reference to Exhibit 10.5 to the Annual Report on Rockville
Financial, Inc.s Form 10-K for the year ended December 31,
2008 filed on March 11, 2009 (File No. 000-51239))
10
.6
Supplemental Savings and Retirement Plan of Rockville Bank as
amended and restated effective December 31, 2007 (incorporated
herein by reference to Exhibit 10.5 to the Current Report on
Form 8-K filed for Rockville Financial, Inc. filed on
December 18, 2007)
10
.7
Rockville Bank Officer Incentive Compensation Plan (incorporated
herein by reference to Exhibit 10.2.3 to Rockville
Financial, Inc.s Annual Report on Form 10-K for the year
ended December 31, 2005 filed on March 31, 2006)
10
.8
Rockville Bank Supplemental Executive Retirement Agreement for
Joseph F. Jeamel, Jr. effective January 27, 2004.
10
.9
First Amendment to the Supplemental Executive Retirement
Agreement for Joseph F. Jeamel, Jr. (incorporated herein by
reference to Exhibit 10.7.1 to the Current Report on Form 8-K
filed for Rockville Financial, Inc. filed on December 18, 2007)
10
.10
Executive Split Dollar Life Insurance Agreement for Joseph F.
Jeamel, Jr. effective October 18, 1993.
10
.11
Rockville Bank Supplemental Executive Retirement Plan as amended
and restated effective December 31, 2007 (incorporated
herein by reference to Exhibit 10.9 to the Current Report
on Form 8-K filed for Rockville Financial, Inc. filed on
December 18, 2007)
10
.12
Rockville Financial, Inc. 2006 Stock Incentive Award Plan
(incorporated herein by reference to Appendix B in the
Definitive Proxy Statement on Form 14A for Rockville
Financial, Inc. filed on July 3, 2006)
21
.1
Subsidiaries of Rockville Financial New, Inc. and Rockville Bank
23
.1
Consent of Hinckley, Allen & Snyder LLP (contained in
Opinions included as Exhibits 5 and 8)
23
.2
Consent of Deloitte & Touche, LLP
Table of Contents
23
.3
Consent of Wolf & Company, P.C.
23
.4
Consent of RP Financial, LC.
24
Power of Attorney (set forth on signature page)
99
.1
Appraisal Agreement between Rockville Financial MHC, Inc.,
Rockville Financial, Inc., Rockville Bank and RP Financial, LC.
99
.2
Business Plan Agreement between Rockville Bank and FinPro, Inc.
99
.3
Appraisal Report of RP Financial, LC.**
99
.4
Marketing Materials*
99
.5
Stock Order and Certification Form*
99
.6
Form of Proxy Card*
*
To be filed at a later date.
**
Supporting financial schedules filed in paper format only
pursuant to Rule 202 of
Regulation S-T.
Available for inspection during business hours at the principal
offices of the Securities and Exchange Commission in
Washington, D.C.
Attention: |
William J. McGurk
President and Chief Executive Officer |
1. | Provide advice on the financial and securities market implications of the Plan of Conversion and Reorganization and any related corporate documents, including the Companys Business Plan; | ||
2. | Assist in structuring the Offerings, including developing and assisting in implementing a marketing strategy for the Offerings; | ||
3. | Reviewing all offering documents, including the Prospectus, stock order forms, letters, brochures and other related offering materials (it being understood that preparation and filing of such documents will be the responsibility of the Company and its counsel); | ||
4. | Assisting the Company in preparing for and scheduling meetings with potential investors and broker-dealers, as necessary; | ||
5. | Assist the Company in analyzing proposals from outside vendors retained in connection with the Offerings, including printers, transfer agents and appraisal firms; | ||
6. | Assist the Company in the drafting and distribution of press releases as required or appropriate in connection with the Offerings; | ||
7. | Meet with the Board of Directors and/or management of the Company to discuss any of the above services; and | ||
8. | such other financial advisory and investment banking services in connection with the Offerings as may be agreed upon by KBW and the Company. |
(a) | Management Fee: A Management Fee of $30,000 payable in four consecutive monthly installments of $7,500 commencing with the first month following the execution of this engagement letter. Such fees shall be deemed to have been earned when due. Should the Offerings be terminated for any reason not attributable to the action or inaction of KBW, KBW shall have earned and be entitled to be paid fees accruing through the stage at which point the termination occurred. | ||
(b) | Success Fee: A Success Fee of .75% shall be paid based on the aggregate Purchase Price of Common Stock sold in the Subscription Offering and Direct Community Offering, excluding shares purchased by the Companys officers, directors, or employees (or members of their immediate family) plus any ESOP, tax-qualified or stock based compensation plans (except IRAs) or similar plan created by the Company for some or all of their directors or employees, or any charitable foundation established by the Company (or any shares contributed to such a foundation). The Management Fee described in 4(a) will be credited against any Success Fee paid pursuant to this paragraph. | ||
(c) | Syndicated Community Offering : If any shares of the Companys stock remain available after the Subscription Offering and Direct Community Offering, at the request of the Company, KBW will seek to form a syndicate of registered broker-dealers to assist in the sale of such common stock on a best efforts basis, subject to the terms and conditions set forth in a selected dealers agreement to be entered into between the Company and KBW. KBW will endeavor to distribute the common stock among dealers in a fashion which best meets the distribution objectives of the Company and the Plan. KBW will be paid a fee not to exceed 5.5% of the aggregate Purchase Price of the shares of common stock sold in the Syndicated Community Offering. From this fee, KBW will pass onto selected broker-dealers, who assist in the syndicated community, an amount competitive with gross underwriting discounts charged at such time for comparable amounts of stock sold at a comparable price per share in a similar market environment. Fees with respect to purchases affected with the assistance of a broker/dealer other than KBW shall be transmitted by KBW to such broker/dealer. |
PAGE | ||||||
1.
|
Introduction | 1 | ||||
|
||||||
2.
|
Definitions | 2 | ||||
|
||||||
3.
|
General Procedure for Conversion and Reorganization | 8 | ||||
|
||||||
4.
|
Total Number of Shares and Purchase Price of Conversion Stock | 10 | ||||
|
||||||
5.
|
Subscription Rights of Eligible Account Holders (First Priority) | 10 | ||||
|
||||||
6.
|
Subscription Rights of Tax-Qualified Employee Stock Benefit Plans (Second Priority) | 11 | ||||
|
||||||
7.
|
Subscription Rights of Supplemental Eligible Account Holders (Third Priority) | 12 | ||||
|
||||||
8.
|
Community Offering, Syndicated Community Offering, Public Offering and Other Offerings | 12 | ||||
|
||||||
9.
|
Limitations on Subscriptions and Purchases of Conversion Stock | 14 | ||||
|
||||||
10.
|
Timing of Subscription Offering; Manner of Exercising Subscription Rights and Order Forms | 15 | ||||
|
||||||
11.
|
Payment for Conversion Stock | 17 | ||||
|
||||||
12.
|
Expiration of Subscription Rights; Undelivered, Defective or Late Order Forms; Insufficient Payment | 18 | ||||
|
||||||
13.
|
Participants in Nonqualified Jurisdictions or Foreign Countries | 19 | ||||
|
||||||
14.
|
Voting Rights of Shareholders | 19 | ||||
|
||||||
15.
|
Liquidation Account | 19 | ||||
|
||||||
16.
|
Transfer of Deposit Accounts | 20 | ||||
|
||||||
17.
|
Requirements Following the Conversion and Reorganization for Registration, Market Making and Stock Exchange Listing | 21 | ||||
|
||||||
18.
|
Restriction on Transfer of Conversion Stock by Officers and Directors | 21 | ||||
|
||||||
19.
|
Restriction on Acquisitions of Conversion Stock | 21 | ||||
|
||||||
20.
|
Stock Compensation Plans | 22 | ||||
|
||||||
21.
|
Dividend and Repurchase Restrictions on Stock | 22 | ||||
|
||||||
22.
|
Effective Date | 23 | ||||
|
||||||
23.
|
Certificate of Incorporation and Bylaws | 23 | ||||
|
||||||
24.
|
Contribution to the Foundation | 23 | ||||
|
||||||
25.
|
Amendment or Termination of the Plan | 24 | ||||
|
||||||
26.
|
Interpretation of the Plan | 24 |
1. | INTRODUCTION. |
1
2. | DEFINITIONS. |
2
3
4
5
6
7
3. | GENERAL PROCEDURE FOR CONVERSION AND REORGANIZATION. |
8
9
4. | TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK. |
5. | SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY). |
10
6. | SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLANS (SECOND PRIORITY). |
7. | SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY). |
11
8. | COMMUNITY OFFERING, SYNDICATED COMMUNITY OFFERING, PUBLIC OFFERING AND OTHER OFFERINGS. |
12
13
9. | LIMITATIONS ON SUBSCRIPTIONS AND PURCHASES OF CONVERSION STOCK. |
14
10. | TIMING OF SUBSCRIPTION OFFERING; MANNER OF EXERCISING SUBSCRIPTION RIGHTS AND ORDER FORMS. |
15
16
17
12. | EXPIRATION OF SUBSCRIPTION RIGHTS; UNDELIVERED, DEFECTIVE OR LATE ORDER FORMS; INSUFFICIENT PAYMENT. |
18
13. | PARTICIPANTS IN NONQUALIFIED JURISDICTIONS OR FOREIGN COUNTRIES. |
14. | VOTING RIGHTS OF SHAREHOLDERS. |
15. | LIQUIDATION ACCOUNT. |
19
16. | TRANSFER OF DEPOSIT ACCOUNTS. |
17. | REQUIREMENTS FOLLOWING THE CONVERSION AND REORGANIZATION FOR REGISTRATION, MARKET MAKING AND STOCK EXCHANGE LISTING. |
20
18. | RESTRICTION ON TRANSFER OF CONVERSION STOCK BY OFFICERS AND DIRECTORS. |
19. | RESTRICTION ON ACQUISITIONS OF CONVERSION STOCK. |
21
20. | STOCK COMPENSATION PLANS. |
21. | DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK. |
22
22. | EFFECTIVE DATE. |
23. | CERTIFICATE OF INCORPORATION AND BYLAWS. |
24. | CONTRIBUTION TO THE FOUNDATION. |
23
25. | AMENDMENT OR TERMINATION OF THE PLAN. |
26. | INTERPRETATION OF THE PLAN. |
/s/ Judy Keppner Clark | ||||
Judy Keppner Clark | ||||
Secretary | ||||
24
2
3
(1) | which such person or any of its Affiliates (as defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, as in effect on the date of filing of this Certificate of Incorporation) beneficially owns, directly or indirectly; or |
4
(2) | which such person or any of its Affiliates has: (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise, or (b) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such person nor any such Affiliate is otherwise deemed the beneficial owner); or | ||
(3) | which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates acts as a partnership, limited partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation; and |
5
6
Next Date | ||||
Name | Address | of Election | ||
C. Perry Chilberg
|
111 Debbie Drive | 2011 | ||
|
South Windsor, Connecticut | |||
|
||||
Joseph F. Jeamel, Jr.
|
121 Cliffwood Drive | 2011 | ||
|
South Windsor, Connecticut | |||
|
||||
Kristen Johnson
|
19B Folkstone Road | 2011 | ||
|
Broad Brook, Connecticut | |||
|
||||
Rosemarie Novello Papa
|
229 Bobby Lane | 2011 | ||
|
Manchester, Connecticut | |||
|
||||
Michael A. Bars
|
181 Mohegan Trail | 2012 | ||
|
South Windsor, Connecticut | |||
|
||||
Pamela J. Guenard
|
47 Ellington Avenue | 2012 | ||
|
Ellington, Connecticut | |||
|
||||
Thomas S. Mason
|
183 Reservoir Road | 2012 | ||
|
Vernon, Connecticut | |||
|
||||
Peter F. Olson
|
39 Tolland Avenue | 2012 | ||
|
Rockville, Connecticut | |||
|
||||
Raymond H. LeFurge
|
1 Boulder Crest Lane | 2013 | ||
|
Vernon, Connecticut | |||
|
||||
Stuart E. Magdefrau
|
55 Hayes Avenue | 2013 | ||
|
Ellington, Connecticut | |||
|
||||
William J. McGurk
|
21 Stillmeadow Lane | 2013 | ||
|
Somers, Connecticut | |||
|
||||
David A. Engelson
|
82 Meadowview Lane | 2014 | ||
|
Vernon, Connecticut | |||
|
||||
Richard M. Tkacz
|
111 Abbe Road | 2014 | ||
|
Enfield, Connecticut |
(a) | the long and short-term interests of the Corporation; | ||
(b) | the long and short-term interests of the Corporations shareholders; | ||
(c) | the interests of the Corporations employees, customers, creditors and suppliers; and | ||
(d) | community and societal considerations including those of any community in which the Corporation or its subsidiary, Rockville Bank, has an office. |
7
A Director may also, in his/her discretion, consider any other factors he/she considers appropriate in determining what he/she believes to be in the Corporations best interest. |
8
9
ROCKVILLE FINANCIAL, INC.
a Connecticut stock corporation, 25 Park Street Rockville, Connecticut 06066 |
||||
By: | /s/ William J. McGurk | |||
William J. McGurk | ||||
Its President | ||||
/s/ William J. McGurk | ||||
10
(1) | which such person or any of its Affiliates (as defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, as in effect on the date of filing of this Certificate of Incorporation) beneficially owns, directly or indirectly; or | ||
(2) | which such person or any of its Affiliates has: (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise, or (b) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such person nor any such Affiliate is otherwise deemed the beneficial owner); or | ||
(3) | which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates acts as a partnership, limited partnership, syndicate or other group pursuant to any agreement, |
arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation; and |
ARTICLE I OFFICE
|
|
ARTICLE II SHAREHOLDERS
|
|
Section 1. Place of Meetings
|
Section 2. Annual Meeting
|
Section 3. Special Meetings
|
Section 4. Conduct of Meetings
|
Section 5. Notice of Meetings
|
Section 6. Fixing of Record Date
|
Section 7. Voting Requirements
|
Section 8. Voting Lists
|
Section 9. Quorum
|
Section 10. Proxies
|
Section 11. Voting of Shares in the Name of Two or More Persons
|
Section 12. Voting of Shares by Certain Holders
|
Section 13. No Cumulative Voting
|
Section 14. Inspectors of Election
|
Section 15. New Business
|
|
ARTICLE III BOARD OF DIRECTORS
|
|
Section 1. General Powers
|
Section 2. Number and Election
|
Section 3. Regular Meetings
|
Section 4. Qualification
|
Section 5. Special Meetings
|
Section 6. Quorum
|
Section 7. Manner of Acting
|
Section 8. Action Without a Meeting
|
Section 9. Resignation
|
Section 10. Vacancies
|
Section 11. Compensation
|
Section 12. Presumption of Assent
|
Section 13. Removal of Directors
|
|
ARTICLE IV COMMITTEES
|
|
Section 1. Appointment
|
Section 2. Audit Committee
|
Section 3. Nominating Committee
|
Section 4. Human Resources Committee
|
Section 5. Other Committees
|
Section 6. Quorum
|
i
ARTICLE V OFFICERS
|
|
Section 1. Positions
|
Section 2. Chairman of the Board
|
Section 3. President
|
Section 4. Other Officers
|
Section 5. Appointment and Term of Office
|
Section 6. Removal
|
Section 7. Vacancies
|
Section 8. Remuneration
|
|
ARTICLE VI CONTRACTS, LOANS, CHECKS AND DEPOSITS
|
|
Section 1. Contracts
|
Section 2. Loans
|
Section 3. Checks, Drafts, etc
|
Section 4. Deposits
|
|
ARTICLE VII CERTIFICATES FOR SHARES AND THEIR TRANSFER
|
|
Section 1. Certificates for Shares
|
Section 2. Transfer of Shares
|
|
ARTICLE VIII FISCAL YEAR
|
|
ARTICLE IX DIVIDENDS
|
|
ARTICLE X CORPORATE SEAL
|
|
ARTICLE XI INDEMNIFICATION
|
|
ARTICLE XII AMENDMENTS
|
ii
1
2
3
4
5
6
7
8
9
10
/s/ Judy Keppner Clark | ||||
Judy Keppner Clark, Secretary | ||||
11
2
3
4
5
ROCKVILLE BANK | ||||||
|
||||||
|
By | /s/ William J. McGurk | ||||
|
||||||
|
Its President | |||||
|
||||||
|
/s/ Joseph F. Jeamel | |||||
|
||||||
|
Joseph F. Jeamel |
6
Primary:
|
||
|
||
|
Name | |
|
||
|
||
|
Address | |
|
||
First Contingent:
|
||
|
||
|
Name | |
|
||
|
||
|
Address | |
|
||
Second Contingent:
|
||
|
||
|
Name | |
|
||
|
||
|
Address |
Signed at
|
||||||
|
||||||
|
(City and State) | (Date) | ||||
|
||||||
|
||||||
Joseph F. Jeamel Jr. | (Signature of Witness) | |||||
|
Print Name: |
7
1. | The Parties hereto agree that the Policy shall be subject to the terms and conditions of this Agreement and of the Assignment filed with the Insurer relating to the Policy. The Employee shall be the sole and absolute owner of the Policy and may exercise all ownership rights granted to the owner thereof by the terms of the Policy, except as may be otherwise provided herein and in the Assignment. | ||
2. | Any dividend declared on the Policy shall be applied to purchase paid-up additional insurance on the life of the Employee. The Parties hereto agree that the dividend election provisions of the Policy shall conform to the provisions hereof. | ||
3. | The premium for the Policy will be paid by the Employer during the Employees employment by the Employer and will be allocated between the Employee and the Employer. The Employees share of the premium (term insurance allocation) shall be paid by the Employer as agent for the Employee and shall be charged to the Employee as cash compensation, and for all purposes, including the Assignment, shall be deemed cash compensation and not Employer paid premium. | ||
4. | The Assignment shall not be terminated, altered or amended by the Employee without the express written consent of the Employer. The Parties hereto agree to take reasonable action to cause such Assignment to conform to the provisions of this Agreement. |
5. | a. Except as otherwise provided herein, the Employee shall not sell, assign, transfer, borrow against, surrender or cancel the Policy, change the beneficiary designation provision thereof, |
or terminate the dividend election thereof without, in any such case, the express written consent of the Employer. |
6. | a. Upon the death of the Employee, the Employer shall promptly take all action necessary to obtain its share of the death benefit provided under the Policy. |
7. | The Employer shall not merge or consolidate into or with another organization, or reorganize, or sell substantially all of its assets to another organization, firm or person unless and until such succeeding or continuing organization, firm or person agrees to assume and discharge |
the obligations of the Employer under this Agreement. Upon the occurrence of such event, the term Employer as used in this Agreement shall be deemed to refer to such successor or survivor organization. The obligations continuing hereunder shall require future payments of premiums only if (a) Employees employment continues with such organization, firm or person or (b) an agreement or arrangement beyond this Agreement so requires. |
8. | This Agreement shall terminate upon the Employees death and the payment of proceeds pursuant to Section 6 of this Agreement. | ||
9. | a. If the employee ceases to be employed by the employer for whatever reason, the Employee has the right to continue to keep the Policy in force either individually or through a subsequent Employer, subject to the requirement that the Policy cash value not be reduced through loans, premium payment options, or in any other manner below the amount needed to repay the Employer the Net Premiums paid by it hereunder. |
10. | The Parties hereto agree that this Agreement shall take precedence over any provisions of the Assignment. The Employer agrees not to exercise any right possessed by it under the Assignment except in conformity with this Agreement. |
11. | This Agreement may not be amended, altered or modified except by a written instrument signed by both of the Parties hereto and may not be otherwise terminated except as provided herein. | ||
12. | a. The split-dollar arrangement contemplated herein is an exempt welfare plan under regulations promulgated under Title I of the Employee Retirement Income Security Act of 1974 (ERISA). |
(i) | the specific reason or reasons for the denial; | ||
(ii) | specific reference to pertinent plan provisions upon which the denial is based; | ||
(iii) | a description of any additional material or information necessary for the claimant to perfect the claim and an explanation as to why such material or information is necessary. |
(iv) | an explanation of the plans claim-review procedure describing the steps to be taken by a claimant who wishes to submit his claim for review. |
d. | A claimant or his authorized representative may, with respect to any denied claim, |
(i) | request a review upon written application filed within sixty (60) days after receipt by the claimant of written notice of the denial of his claim; | ||
(ii) | review pertinent documents; and | ||
(iii) | submit issues and comments in writing. |
13. | This Agreement shall be binding upon and inure to the benefit of the Employer and its successors and assignees and the Employee and his successors, assignees, heirs, executors, administrators and beneficiaries. | ||
14. | Except as may be preempted by ERISA, the Agreement, and the rights of the Parties hereunder, shall be governed by and construed in accordance with, the laws of the State of Connecticut. |
THE SAVINGS BANK OF ROCKVILLE
|
||||
By /s/ William J. McGurk | ||||
William J. McGurk | ||||
Title: | President | |||
/s/ Joseph F. Jeamel, Jr. | ||||
Joseph F. Jeamel, Jr. | ||||
Insurance Carrier | Policy No. | Face Amount | ||||||
Guardian Life Insurance Company
|
3745602 | $ | 123,950 |
RP
®
FINANCIAL, LC.
|
||
Serving the Financial Services Industry Since 1988
|
Washington Headquarters
|
||
Three Ballston Plaza
|
Telephone: (703) 528-1700 | |
1100 North Glebe Road, Suite 1100
|
Fax No.: (703) 528-1788 | |
Arlington, VA 22201
|
Toll-Free No.: (866) 723-0594 | |
www.rpfinancial.com
|
E-Mail: mail@rpfinancial.com |
Washington Headquarters | ||
Three Ballston Plaza | Direct: (703) 647-6543 | |
1100 North Glebe Road, Suite 1100 | Telephone: (703) 528-1700 | |
Arlington, VA 22201 | Fax No.: (703) 528-1788 | |
E-Mail: rriggins@rpfinancial.com | Toll-Free No.: (866) 723-0594 |
| $10,000 upon execution of this letter of agreement engaging RP Financials appraisal services; | ||
| $90,000 upon delivery of the completed original appraisal report; and | ||
| $10,000 upon delivery of each subsequent appraisal update report required in conjunction with the regulatory application and stock offering. It is anticipated that there will be at least one appraisal update report, specifically the update to be prepared in conjunction with the completion of the stock offering. |
Agreed To and Accepted By: |
Joseph F. Jeamel, Jr. _______________________
Executive Vice President |
Upon Authorization by the Board of Directors For: |
Rockville Bank, subsidiary of Rockville Financial, Inc.
Vernon Rockville, Connecticut |
Date Executed: | _________________________ |
| assess the regulatory, social, political and economic environment; | ||
| analyze the existing Bank markets from a demographic and competitive standpoint: | ||
| document the internal situation assessment; | ||
| analyze the current ALM position; | ||
| analyze the CRA position; | ||
| compile a historical trend analysis; | ||
| perform detailed peer performance and comparable analysis; | ||
| assess the Bank from a capital markets perspective including comparison to national, regional, and similar size organizations; | ||
| identify and document strengths and weaknesses; | ||
| document the objectives and goals; | ||
| document strategies; | ||
| map the Banks general ledger to FinPros planning model at a bank and consolidated level; | ||
| compile five year projections of performance; | ||
| perform multiple stress tests on the plan; and | ||
| prepare assessment of strategic alternatives to enhance value. |
| provide FinPro with all financial and other information, whether or not publicly available, necessary to familiarize FinPro with the business and operations of the Bank. | ||
| allow FinPro the opportunity, from time to time, to discuss the operation of the Bank business with bank personnel. | ||
| promptly advise FinPro of any material or contemplated material transactions which may have an effect on the day-to-day operations of the Bank. | ||
| have system download capability. | ||
| promptly review all work products of FinPro and provide necessary sign-offs on each work product so that FinPro can move on to the next phase. | ||
| provide FinPro with office space, when FinPro is on-site, to perform its daily tasks. The office space requirements consist of a table with at least two chairs along with access to electrical outlets for FinPros computers and a high speed internet connection. |
2
Strategic Business Plan
|
$ | 50,000 |
| $15,000 retainer payable at signing of this agreement; | ||
| $15,000 payable at the end of modeling sessions with management; and | ||
| Remainder of the strategic business plan and all final expenses payable upon final business plan delivery. |
1. | Out-of-Pocket All of FinPros reasonable travel and other out-of-pocket expenses incurred in connection with FinPros engagement. It is FinPro policy to itemize expenses for each project so that the client can review, by line item, each expense. | ||
2. | Data Cost There is a pass through cost for competitor financial/regulatory data which is equal to $1,000. |
3
|
||
Scott Martorana | William J. McGurk | |
Managing Director | President & CEO | |
FinPro, Inc. | Rockville Financial MHC, Inc. | |
Date | Date |
4
Washington Headquarters
|
||
Three Ballston Plaza
|
Telephone: (703) 528-1700 | |
1100 North Glebe Road, Suite 1100
|
Fax No.: (703) 528-1788 | |
Arlington, VA 22201
|
Toll-Free No.: (866) 723-0594 | |
www.rpfinancial.com
|
E-Mail: mail@rpfinancial.com |
RP ® Financial, LC. |
Valuation Conclusion |
Exchange Shares | ||||||||||||||||
Offering | Issued to the | Exchange | ||||||||||||||
Total Shares | Shares | Public Shareholders | Ratio | |||||||||||||
Shares
|
(x | ) | ||||||||||||||
Super Maximum
|
29,545,455 | 17,192,500 | 12,352,955 | 1.5131 | ||||||||||||
Maximum
|
25,691,700 | 14,950,000 | 10,741,700 | 1.3158 | ||||||||||||
Midpoint
|
22,340,608 | 13,000,000 | 9,340,608 | 1.1441 | ||||||||||||
Minimum
|
18,989,517 | 11,050,000 | 7,939,517 | 0.9725 | ||||||||||||
|
||||||||||||||||
Distribution of Shares
|
||||||||||||||||
Super Maximum
|
100.00 | % | 58.19 | % | 41.81 | % | ||||||||||
Maximum
|
100.00 | % | 58.19 | % | 41.81 | % | ||||||||||
Midpoint
|
100.00 | % | 58.19 | % | 41.81 | % | ||||||||||
Minimum
|
100.00 | % | 58.19 | % | 41.81 | % | ||||||||||
|
||||||||||||||||
Aggregate Market Value(1)
|
||||||||||||||||
Super Maximum
|
$ | 295,454,550 | $ | 171,925,000 | $ | 123,529,550 | ||||||||||
Maximum
|
$ | 256,917,000 | $ | 149,500,000 | $ | 107,417,000 | ||||||||||
Midpoint
|
$ | 223,406,080 | $ | 130,000,000 | $ | 93,406,080 | ||||||||||
Minimum
|
$ | 189,895,170 | $ | 110,500,000 | $ | 79,395,170 |
(1) | Based on offering price of $10.00 per share. | |
Note: | Valuation and ownership ratios reflect dilutive impact of MHC assets upon completion of the Second Step Conversion. |
TABLE OF CONTENTS
i
ROCKVILLE FINANCIAL, INC.
ROCKVILLE BANK
South Windsor, Connecticut
PAGE
DESCRIPTION
NUMBER
I.1
I.2
I.3
I.4
I.5
I.8
I.13
I.18
I.19
I.22
I.22
I.23
I.24
I.24
II.1
II.4
II.6
II.8
II.8
III.1
III.6
III.9
III.12
III.14
III.15
III.15
RP
®
Financial, LC.
|
TABLE OF CONTENTS | |
|
ii |
PAGE | ||||
DESCRIPTION | NUMBER | |||
CHAPTER FOUR VALUATION ANALYSIS
|
||||
Introduction
|
IV.1 | |||
Appraisal Guidelines
|
IV.1 | |||
RP Financial Approach to the Valuation
|
IV.1 | |||
Valuation Analysis
|
IV.2 | |||
1. Financial Condition
|
IV.2 | |||
2. Profitability, Growth and Viability of Earnings
|
IV.4 | |||
3. Asset Growth
|
IV.5 | |||
4. Primary Market Area
|
IV.5 | |||
5. Dividends
|
IV.6 | |||
6. Liquidity of the Shares
|
IV.7 | |||
7. Marketing of the Issue
|
IV.7 | |||
A. The Public Market
|
IV.8 | |||
B. The New Issue Market
|
IV.14 | |||
C. The Acquisition Market
|
IV.16 | |||
D Trading in Rockville Financials Stock
|
IV.16 | |||
8. Management
|
IV.18 | |||
9. Effect of Government Regulation and Regulatory Reform
|
IV.19 | |||
Summary of Adjustments
|
IV.19 | |||
Valuation Approaches
|
IV.19 | |||
1. Price-to-Earnings (P/E) IV.21
|
||||
2. Price-to-Book (P/B) IV.23
|
||||
3. Price-to-Assets (P/A)
|
IV.25 | |||
Comparison to Recent Offerings
|
IV.25 | |||
Valuation Conclusion
|
IV.26 | |||
Establishment of the Exchange Ratio
|
IV.26 |
TABLE OF CONTENTS
iii
ROCKVILLE FINANCIAL, INC
ROCKVILLE BANK
South Windsor, Connecticut
TABLE
Number
DESCRIPTION
PAGE
1.1
I.9
1.2
I.14
2.1
II.2
2.2
II.5
2.3
II.7
2.4
II.8
2.5
II.9
3.1
III.3
3.2
III.7
3.3
III.10
3.4
III.13
3.5
III.14
3.6
III.16
4.1
IV.15
4.2
IV.17
4.3
IV.24
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.1 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.2 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.3 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.4 |
| The Company. The Company is expected to retain up to 50% of the net conversion proceeds. At present, Company funds, net of the loan to the ESOP, are expected to be invested initially into high quality investment securities with short- to intermediate-term maturities, generally consistent with the current investment mix. Over time, Company funds are anticipated to be utilized for various corporate purposes, possibly including acquisitions, infusing additional equity into the Bank, repurchases of common stock, and the payment of regular and/or special cash dividends. | ||
| The Bank. The balance of the net conversion proceeds will be infused into the Bank. Cash proceeds (i.e., net proceeds less deposits withdrawn to fund stock purchases) infused into the Bank are anticipated to become part of general operating funds, and are expected to initially be invested in short-term investments pending longer-term deployment, i.e., funding lending activities, general corporate purposes and/or expansion and diversification. To the extent that the net proceeds generate excess investable funds, the Company may also utilize its portion of the net proceeds to pay down borrowed funds. |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.5 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.6 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.7 |
| Expand Market Coverage. Expanding the Companys retail banking presence in the current markets in Connecticut by establishing new branches to enhance coverage in existing markets or expanding into nearby contiguous markets. The effort to expand the market presence will be accomplished largely through the establishment of new branches, but may also be accomplished through acquisition of branches or whole institutions. Management believes that notwithstanding the recessionary economy, it has the ability to grow as some competitors have retrenched owing to deteriorating asset quality and as a result of recent merger and acquisition activity in the market (i.e., acquisition of local community banks by out-of-market competitors), which will provide it with a competitive advantage to expand. | ||
| Control Operating Expenses. The Company is seeking to maximize efficiency and will seek to undertake asset growth to leverage the existing overhead infrastructure. Additionally, Rockville Financial is continually evaluating its branches for profitability and is seeking to grow all of its branches to a profitable size. The Company has sought to develop a sales culture within its front-line branch staff such that the ability to grow is enhanced, both in terms of the dollar amount of the customer relationship and the number of products and services per relationship. Additionally, the Company will continue to utilize technology (both developed and emerging), to the extent it can enhance the Companys efficiency and ability to meet the customers needs and preference, as noted below. | ||
| Effective Utilization of Technology. The Company recognizes the impact of the digital revolution as it impacts consumer preferences and is prepared to respond with a strategic objective of allowing customers to choose how they maintain their relationship with Rockville Financial. In this regard, the Company plans to continue to enhance its e-banking platform by enhancing their online banking capabilities including optimizing all web pages for (i) searches and (ii) Smartphone/PDA compatibility. At present, the Company does not use social networking to promote its services or service clients, but it will be seeking to |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.8 |
develop this capability over the long term, particularly as it seeks to expand its share of the youth market. | |||
| Build Community Bank Franchise. The Company will seek to continue to offer products and services consistent with its efforts to more fully develop a strong community bank franchise. In this regard, Rockville Financial will continue its emphasis on residential mortgage lending activities which comprise a majority of the loan portfolio and will also seek to take advantage of the recent acquisition of Family Choice Mortgage Company, which was acquired to expand the Companys mortgage origination business. Similarly, the Company will continue to expand commercial real estate and commercial business lending activities, thereby continuing to emphasize the marketing and development of commercial account relationships. As noted earlier, the Companys approach will be to develop comprehensive customer relationships to the extent possible, including both loan and deposit relationships. An additional benefit of the additional capital raised in the Second Step Conversion will be that Rockville Financial will be able to accommodate larger account relationships (this benefit is not a primary driver for the effort to complete the Offering). | ||
| Control the Companys Exposure to Risk Factors. Rockville Financial seeks to control its exposure to various risk factors, including interest rate risk, liquidity risk, credit risk, reputational risk, and compliance risk among other risk factors. In this regard, the Company has expanded its management and staff infrastructure with the objective of managing the foregoing risks. Additionally, the Company has bolstered management information systems and management structure, including the applicable management and board committee structures, such that the various risk factors can be monitored and measured, and risk exposure minimized accordingly. |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.9 |
At Fiscal Year Ended December 31, | As of | Annual | ||||||||||||||||||||||||||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | June 30, 2010 | Growth Rate | ||||||||||||||||||||||||||||||||||||||||||||||
Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Pct | ||||||||||||||||||||||||||||||||||||||||
($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | (%) | ||||||||||||||||||||||||||||||||||||||||
Total Amount of:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Assets
|
$ | 1,056,169 | 100.00 | % | $ | 1,232,836 | 100.00 | % | $ | 1,327,012 | 100.00 | % | $ | 1,533,073 | 100.00 | % | $ | 1,571,134 | 100.00 | % | $ | 1,602,014 | 100.00 | % | 9.70 | % | ||||||||||||||||||||||||||
Available for Sale Securities
|
129,049 | 12.22 | % | 132,467 | 10.74 | % | 136,372 | 10.28 | % | 141,250 | 9.21 | % | 102,751 | 6.54 | % | 114,047 | 7.12 | % | -2.71 | % | ||||||||||||||||||||||||||||||||
Held to Maturity Securities
|
0 | 0.00 | % | 0 | 0.00 | % | 0 | 0.00 | % | 24,138 | 1.57 | % | 19,074 | 1.21 | % | 16,747 | 1.05 | % | NM | |||||||||||||||||||||||||||||||||
FHLB Stock
|
8,498 | 0.80 | % | 9,836 | 0.80 | % | 11,168 | 0.84 | % | 17,007 | 1.11 | % | 17,007 | 1.08 | % | 17,007 | 1.06 | % | 16.67 | % | ||||||||||||||||||||||||||||||||
Loans Receivable, net
|
859,700 | 81.40 | % | 1,033,355 | 83.82 | % | 1,116,327 | 84.12 | % | 1,291,791 | 84.26 | % | 1,361,019 | 86.63 | % | 1,383,036 | 86.33 | % | 11.14 | % | ||||||||||||||||||||||||||||||||
Cash and Cash Equivalents
|
23,611 | 2.24 | % | 22,381 | 1.82 | % | 23,998 | 1.81 | % | 14,901 | 0.97 | % | 19,307 | 1.23 | % | 19,536 | 1.22 | % | -4.12 | % | ||||||||||||||||||||||||||||||||
Goodwill
|
1,070 | 0.10 | % | 1,070 | 0.09 | % | 1,070 | 0.08 | % | 1,070 | 0.07 | % | 1,070 | 0.07 | % | 1,149 | 0.07 | % | 1.60 | % | ||||||||||||||||||||||||||||||||
Deposits
|
761,396 | 72.09 | % | 884,511 | 71.75 | % | 951,038 | 71.67 | % | 1,042,508 | 68.00 | % | 1,129,108 | 71.87 | % | 1,150,379 | 71.81 | % | 9.60 | % | ||||||||||||||||||||||||||||||||
Mortgagors and Investors Escrow Accounts
|
4,794 | 0.45 | % | 5,320 | 0.43 | % | 5,568 | 0.42 | % | 6,077 | 0.40 | % | 6,385 | 0.41 | % | 5,175 | 0.32 | % | 1.71 | % | ||||||||||||||||||||||||||||||||
FHLB Advances
|
130,867 | 12.39 | % | 178,110 | 14.45 | % | 201,741 | 15.20 | % | 322,882 | 21.06 | % | 263,802 | 16.79 | % | 272,501 | 17.01 | % | 17.70 | % | ||||||||||||||||||||||||||||||||
Total Stockholders Equity
|
150,905 | 14.29 | % | 155,064 | 12.58 | % | 156,373 | 11.78 | % | 145,777 | 9.51 | % | 157,428 | 10.02 | % | 162,384 | 10.14 | % | 1.64 | % | ||||||||||||||||||||||||||||||||
Total Tangible Stockholders Equity
|
149,835 | 14.19 | % | 153,994 | 12.49 | % | 155,303 | 11.70 | % | 144,707 | 9.44 | % | 156,358 | 9.95 | % | 161,235 | 10.06 | % | 1.64 | % | ||||||||||||||||||||||||||||||||
Allowance for Loan Losses
|
8,675 | 0.82 | % | 9,827 | 0.80 | % | 10,620 | 0.80 | % | 12,553 | 0.82 | % | 12,539 | 0.80 | % | 13,144 | 0.82 | % | 9.67 | % | ||||||||||||||||||||||||||||||||
Non-Performing Loans
|
7,177 | 0.68 | % | 1,493 | 0.12 | % | 1,569 | 0.12 | % | 10,435 | 0.68 | % | 12,046 | 0.77 | % | 14,366 | 0.90 | % | 16.67 | % | ||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans/Deposits
|
112.91 | % | 116.83 | % | 117.38 | % | 123.91 | % | 120.54 | % | 120.22 | % | ||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Full Service Offices
|
13 | 14 | 16 | 17 | 18 | 22 |
(1) | Ratios are as a percent of ending assets. |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.10 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.11 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.12 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.13 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.14 |
As of the Fiscal Year Ended December 31, | 12 Months End. | |||||||||||||||||||||||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | June 30, 2010 | |||||||||||||||||||||||||||||||||||||||||||
Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | |||||||||||||||||||||||||||||||||||||
($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | |||||||||||||||||||||||||||||||||||||
Interest Income
|
$ | 48,600 | 5.11 | % | $ | 63,952 | 5.51 | % | $ | 73,877 | 5.77 | % | $ | 77,545 | 5.37 | % | $ | 76,062 | 4.92 | % | $ | 75,185 | 4.80 | % | ||||||||||||||||||||||||
Interest Expense
|
$ | (16,514 | ) | -1.74 | % | $ | (27,649 | ) | -2.38 | % | $ | (35,577 | ) | -2.78 | % | $ | (34,946 | ) | -2.42 | % | $ | (29,775 | ) | -1.93 | % | $ | (24,905 | ) | -1.59 | % | ||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Net Interest Income
|
$ | 32,086 | 3.37 | % | $ | 36,303 | 3.13 | % | $ | 38,300 | 2.99 | % | $ | 42,599 | 2.95 | % | $ | 46,287 | 3.00 | % | $ | 50,280 | 3.21 | % | ||||||||||||||||||||||||
Provision for Loan Losses
|
$ | (2,700 | ) | -0.28 | % | $ | (1,681 | ) | -0.14 | % | $ | (749 | ) | -0.06 | % | $ | (2,393 | ) | -0.17 | % | $ | (1,961 | ) | -0.13 | % | $ | (3,170 | ) | -0.20 | % | ||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Net Interest Income after Provisions
|
$ | 29,386 | 3.09 | % | $ | 34,622 | 2.98 | % | $ | 37,551 | 2.93 | % | $ | 40,206 | 2.79 | % | $ | 44,326 | 2.87 | % | $ | 47,110 | 3.01 | % | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Other Operating Income
|
$ | 4,076 | 0.43 | % | $ | 4,625 | 0.40 | % | $ | 5,427 | 0.42 | % | $ | 5,513 | 0.38 | % | $ | 5,616 | 0.36 | % | $ | 6,291 | 0.40 | % | ||||||||||||||||||||||||
Operating Expense
|
$ | (24,616 | ) | -2.59 | % | $ | (29,025 | ) | -2.50 | % | $ | (30,301 | ) | -2.36 | % | $ | (33,762 | ) | -2.34 | % | $ | (36,631 | ) | -2.37 | % | $ | (36,839 | ) | -2.35 | % | ||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Net Operating Income
|
$ | 8,846 | 0.93 | % | $ | 10,222 | 0.88 | % | $ | 12,677 | 0.99 | % | $ | 11,957 | 0.83 | % | $ | 13,311 | 0.86 | % | $ | 16,562 | 1.06 | % | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Net Gain(Loss) on Sale of Loans
|
$ | | 0.00 | % | $ | | 0.00 | % | $ | | 0.00 | % | $ | | 0.00 | % | $ | 782 | 0.05 | % | $ | 977 | 0.06 | % | ||||||||||||||||||||||||
Net Gain(Loss) on Sale of Securities
|
$ | | 0.00 | % | $ | | 0.00 | % | $ | | 0.00 | % | $ | 381 | 0.03 | % | $ | 936 | 0.06 | % | $ | 188 | 0.01 | % | ||||||||||||||||||||||||
Contribution to Rockville Community Foundation
|
$ | (3,887 | ) | -0.41 | % | $ | | 0.00 | % | $ | | 0.00 | % | $ | | 0.00 | % | $ | | 0.00 | % | $ | | 0.00 | % | |||||||||||||||||||||||
OTTI Charge on Securities (net)
|
$ | | 0.00 | % | $ | | 0.00 | % | $ | (233 | ) | -0.02 | % | $ | (14,881 | ) | -1.03 | % | $ | (362 | ) | -0.02 | % | $ | (5 | ) | 0.00 | % | ||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Total Non-Operating Income/(Expense)
|
$ | (3,887 | ) | -0.41 | % | $ | | 0.00 | % | $ | (233 | ) | -0.02 | % | $ | (14,500 | ) | -1.01 | % | $ | 1,356 | 0.09 | % | $ | 1,160 | 0.07 | % | |||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Before Tax
|
$ | 4,959 | 0.52 | % | $ | 10,222 | 0.88 | % | $ | 12,444 | 0.97 | % | $ | (2,543 | ) | -0.18 | % | $ | 14,667 | 0.95 | % | $ | 17,722 | 1.13 | % | |||||||||||||||||||||||
Income Taxes
|
$ | (1,533 | ) | -0.16 | % | $ | (3,368 | ) | -0.29 | % | $ | (4,116 | ) | -0.32 | % | $ | 956 | 0.07 | % | $ | (4,935 | ) | -0.32 | % | $ | (6,182 | ) | -0.39 | % | |||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Before Extraord. Items
|
$ | 3,426 | 0.36 | % | $ | 6,854 | 0.59 | % | $ | 8,328 | 0.65 | % | $ | (1,587 | ) | -0.11 | % | $ | 9,732 | 0.63 | % | $ | 11,540 | 0.74 | % | |||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Core Net Income
|
||||||||||||||||||||||||||||||||||||||||||||||||
Net Income
|
$ | 3,426 | 0.36 | % | $ | 6,854 | 0.59 | % | $ | 8,328 | 0.65 | % | $ | (1,587 | ) | -0.11 | % | $ | 9,732 | 0.63 | % | $ | 11,540 | 0.74 | % | |||||||||||||||||||||||
Addback(Deduct): Non-Recurring (Inc)/Exp
|
$ | 3,887 | 0.41 | % | $ | | 0.00 | % | $ | 233 | 0.02 | % | $ | 14,500 | 1.01 | % | $ | (1,356 | ) | -0.09 | % | $ | (1,160 | ) | -0.07 | % | ||||||||||||||||||||||
Tax Effect (2)
|
$ | (1,322 | ) | -0.14 | % | $ | | 0.00 | % | $ | (79 | ) | -0.01 | % | $ | (4,930 | ) | -0.34 | % | $ | 461 | 0.03 | % | $ | 394 | 0.03 | % | |||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Core Net Income
|
$ | 5,991 | 0.63 | % | $ | 6,854 | 0.59 | % | $ | 8,482 | 0.66 | % | $ | 7,983 | 0.55 | % | $ | 8,837 | 0.57 | % | $ | 10,774 | 0.69 | % | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
Memo:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Expense Coverage Ratio
|
130.35 | % | 125.07 | % | 126.40 | % | 126.17 | % | 126.36 | % | 136.49 | % | ||||||||||||||||||||||||||||||||||||
Efficiency Ratio
|
68.07 | % | 70.92 | % | 69.30 | % | 70.17 | % | 70.58 | % | 65.12 | % | ||||||||||||||||||||||||||||||||||||
Effective Tax Rate
|
30.91 | % | 32.95 | % | 33.08 | % | 37.59 | % | 33.65 | % | 34.88 | % |
(1) | Ratios are a percent of average assets. | |
(2) | Tax effected at a 34% rate. |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.15 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.16 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.17 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.18 |
Ø | Diversifying portfolio loans into other types of shorter-term or adjustable rate lending, primarily focused on commercial lending; | ||
Ø | Maintaining an investment portfolio, comprised of high quality, liquid securities and maintaining an ample balance of securities classified as available for sale; | ||
Ø | Promoting transaction accounts and, when appropriate, longer term CDs; | ||
Ø | Utilizing longer-term borrowings when such funds are attractively priced relative to deposits and prevailing reinvestment opportunities; | ||
Ø | Maintaining a strong capital level; | ||
Ø | Increasing non-interest income; | ||
Ø | Limiting investment in fixed assets and other non-earning assets; and | ||
Ø | Selling a portion of the fixed rate mortgage loans originated based on risk and profitability considerations. |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.19 |
| Permanent first mortgage loans secured by residential properties totaled $747.4 million, or 53.6% of total loans; | ||
| Commercial mortgages totaled $449.5 million, or 32.2% of total loans; and | ||
| Commercial business loans totaled $127.8 million, or 9.2% of total loans. |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.20 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.21 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.22 |
Origination, Purchasing, and Servicing of Loans |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.23 |
RP ® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS | |
I.24 |
RP ® Financial, LC. | MARKET AREA ANALYSIS | |
II.1 |
RP ® Financial, LC. | MARKET AREA ANALYSIS | |
II.2 |
Company | Headquarters | Branches | Deposits | |||||||||||||
($000) | (%) | |||||||||||||||
Rockville Financial Inc.
|
South Windsor | CT | 22 | $ | 1,121,983 | 3.9 | % | |||||||||
|
||||||||||||||||
Deposit Competitors (1)
|
||||||||||||||||
Bank of America Corp.
|
Charlotte | NC | 61 | $ | 12,229,887 | 42.0 | % | |||||||||
Webster Financial Corp.
|
Waterbury | CT | 43 | $ | 2,977,991 | 10.2 | % | |||||||||
First Niagara Finl Group
|
Buffalo | NY | 36 | $ | 2,082,029 | 7.2 | % | |||||||||
Peoples United Financial Inc.
|
Bridgeport | CT | 35 | $ | 1,484,711 | 5.1 | % | |||||||||
Toronto-Dominion Bank
|
Toronto | | 31 | $ | 2,592,057 | 8.9 | % | |||||||||
Banco Santander S.A.
|
Boadilla del Monte | | 21 | $ | 1,654,059 | 5.7 | % | |||||||||
Royal Bank of Scotland Group
|
Edinburgh | | 20 | $ | 876,623 | 3.0 | % | |||||||||
Liberty Bank
|
Middletown | CT | 19 | $ | 1,370,163 | 4.7 | % | |||||||||
American Eagle FCU
|
East Hartford | CT | 13 | $ | 1,045,648 | 3.6 | % | |||||||||
United Financial Bancorp
|
West Springfield | MA | 9 | $ | 523,409 | 1.8 | % | |||||||||
SI Financial Group Inc. (MHC)
|
Willimantic | CT | 9 | $ | 259,729 | 0.9 | % | |||||||||
New England Bancshares
|
Enfield | CT | 8 | $ | 237,416 | 0.8 | % | |||||||||
Connecticut Bank and Trust Co.
|
Hartford | CT | 8 | $ | 184,691 | 0.6 | % | |||||||||
Peoplesbancorp MHC
|
Holyoke | MA | 8 | $ | 230,727 | 0.8 | % | |||||||||
Berkshire Hills Bancorp Inc.
|
Pittsfield | MA | 7 | $ | 245,355 | 0.8 | % | |||||||||
|
||||||||||||||||
Total for All Competitors
|
328 | $ | 29,116,478 | 100.0 | % | |||||||||||
|
(1) | Defined for purposes of this presentation as institutions maintaining a branch office within 10 miles of a Rockville Bank branch. |
RP ® Financial, LC. | MARKET AREA ANALYSIS | |
II.3 |
RP ® Financial, LC. | MARKET AREA ANALYSIS | |
II.4 |
RP ® Financial, LC. | MARKET AREA ANALYSIS | |
II.5 |
Year | Annual Growth Rate | |||||||||||||||||||
2000 | 2010 | 2015 | 2000-2010 | 2010-2015 | ||||||||||||||||
Population (000)
|
||||||||||||||||||||
United States
|
281,422 | 311,213 | 323,209 | 1.0 | % | 0.8 | % | |||||||||||||
Connecticut
|
3,406 | 3,536 | 3,569 | 0.4 | % | 0.2 | % | |||||||||||||
New London County
|
259 | 266 | 266 | 0.3 | % | 0.0 | % | |||||||||||||
Tolland County
|
136 | 150 | 153 | 1.0 | % | 0.4 | % | |||||||||||||
Hartford County
|
857 | 885 | 894 | 0.3 | % | 0.2 | % | |||||||||||||
|
||||||||||||||||||||
Households (000)
|
||||||||||||||||||||
United States
|
105,480 | 116,761 | 121,360 | 1.0 | % | 0.8 | % | |||||||||||||
Connecticut
|
1,302 | 1,353 | 1,366 | 0.4 | % | 0.2 | % | |||||||||||||
New London County
|
100 | 104 | 105 | 0.4 | % | 0.1 | % | |||||||||||||
Tolland County
|
49 | 55 | 56 | 1.0 | % | 0.5 | % | |||||||||||||
Hartford County
|
335 | 345 | 348 | 0.3 | % | 0.2 | % | |||||||||||||
|
||||||||||||||||||||
Median Household Income ($)
|
||||||||||||||||||||
United States
|
42,164 | 54,442 | 61,189 | 2.6 | % | 2.4 | % | |||||||||||||
Connecticut
|
53,915 | 70,340 | 80,697 | 2.7 | % | 2.5 | % | |||||||||||||
New London County
|
50,659 | 64,743 | 73,341 | 2.5 | % | 2.8 | % | |||||||||||||
Tolland County
|
59,035 | 78,072 | 90,158 | 2.8 | % | 2.6 | % | |||||||||||||
Hartford County
|
50,777 | 64,279 | 73,953 | 2.4 | % | 2.2 | % | |||||||||||||
|
||||||||||||||||||||
Per Capita Income ($)
|
||||||||||||||||||||
United States
|
21,587 | 26,739 | 30,241 | 2.2 | % | 2.5 | % | |||||||||||||
Connecticut
|
28,766 | 36,065 | 41,464 | 2.3 | % | 2.8 | % | |||||||||||||
New London County
|
24,678 | 30,787 | 34,926 | 2.2 | % | 2.6 | % | |||||||||||||
Tolland County
|
25,474 | 36,149 | 40,219 | 3.6 | % | 2.2 | % | |||||||||||||
Hartford County
|
26,047 | 32,159 | 36,863 | 2.1 | % | 2.8 | % | |||||||||||||
|
||||||||||||||||||||
|
Less Than $25,000 |
$25,000 to
49,999 |
$50,000 to
$99,999 |
$ | 100,000+ | |||||||||||||||
|
||||||||||||||||||||
2010 HH Income Dist. (%)
|
||||||||||||||||||||
United States
|
20.8 | % | 24.7 | % | 35.7 | % | 18.8 | % | ||||||||||||
Connecticut
|
14.9 | % | 18.0 | % | 38.4 | % | 28.8 | % | ||||||||||||
New London County
|
13.9 | % | 20.7 | % | 45.6 | % | 19.7 | % | ||||||||||||
Tolland County
|
10.6 | % | 12.9 | % | 39.2 | % | 37.4 | % | ||||||||||||
Hartford County
|
16.7 | % | 20.6 | % | 39.6 | % | 23.2 | % |
RP ® Financial, LC. | MARKET AREA ANALYSIS | |
II.6 |
RP ® Financial, LC. | MARKET AREA ANALYSIS | |
II.7 |
Employment Sector | Connecticut | New London | Tolland | Hartford | |||||||||||||
(% of Total Employment) | |||||||||||||||||
Services
|
38.7 | % | 32.6 | % | 34.1 | % | 36.8 | % | |||||||||
Government
|
12.0 | % | 27.3 | % | 23.4 | % | 11.8 | % | |||||||||
Wholesale/Retail Trade
|
13.9 | % | 12.4 | % | 10.8 | % | 13.6 | % | |||||||||
Construction
|
5.9 | % | 5.0 | % | 8.0 | % | NA | ||||||||||
Finance/Insurance/Real Esate
|
11.9 | % | 5.3 | % | 7.4 | % | 14.4 | % | |||||||||
Manufacturing
|
8.9 | % | 9.3 | % | 6.4 | % | 9.8 | % | |||||||||
Transportation/Utility
|
2.7 | % | 3.0 | % | 2.1 | % | 2.8 | % | |||||||||
Arts/Entertainment/Rec.
|
2.1 | % | 2.2 | % | 2.5 | % | 1.7 | % | |||||||||
Agriculture
|
0.4 | % | 1.0 | % | 1.1 | % | 0.4 | % | |||||||||
Other
|
3.5 | % | 1.9 | % | 4.2 | % | 8.7 | % | |||||||||
|
|||||||||||||||||
Total
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
RP ® Financial, LC. | MARKET AREA ANALYSIS | |
II.8 |
July 2009 | July 2010 | |||||||
United States
|
9.4 | % | 9.5 | % | ||||
Connecticut
|
8.5 | % | 8.9 | % | ||||
Hartford County
|
9.1 | % | 9.9 | % | ||||
New London County
|
7.8 | % | 8.8 | % | ||||
Tolland County
|
7.5 | % | 8.3 | % |
RP ® Financial, LC. | MARKET AREA ANALYSIS | |
II.9 |
As of June 30, | ||||||||||||||||||||||||||||
2005 | 2009 | Deposit | ||||||||||||||||||||||||||
Market | No. of | Market | No. of | Growth Rate | ||||||||||||||||||||||||
Deposits | Share | Branches | Deposits | Share | Branches | 2005-2009 | ||||||||||||||||||||||
(Dollars In Thousands) | (%) | |||||||||||||||||||||||||||
Deposit Summary
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
State of Connecticut
|
$ | 76,936,000 | 100.0 | % | 1,197 | $ | 90,638,000 | 100.0 | % | 1,216 | 4.2 | % | ||||||||||||||||
Commercial Banks
|
44,120,000 | 57.3 | % | 598 | 56,216,000 | 90.7 | % | 708 | 6.2 | % | ||||||||||||||||||
Savings Institutions
|
32,816,000 | 42.7 | % | 599 | 34,422,000 | 9.3 | % | 508 | 1.2 | % | ||||||||||||||||||
|
||||||||||||||||||||||||||||
New London County
|
$ | 3,937,567 | 100.0 | % | 87 | $ | 4,557,810 | 100.0 | % | 94 | 3.7 | % | ||||||||||||||||
Commercial Banks
|
580,633 | 14.7 | % | 19 | 1,966,919 | 43.2 | % | 33 | 35.7 | % | ||||||||||||||||||
Savings Institutions
|
3,356,934 | 85.3 | % | 68 | 2,590,891 | 56.8 | % | 61 | -6.3 | % | ||||||||||||||||||
Rockville Financial
|
0 | 0.0 | % | 0 | 16,557 | 0.4 | % | 1 | NA | |||||||||||||||||||
|
||||||||||||||||||||||||||||
Tolland County
|
$ | 1,851,201 | 100.0 | % | 39 | $ | 2,123,009 | 100.0 | % | 42 | 3.5 | % | ||||||||||||||||
Commercial Banks
|
314,653 | 17.0 | % | 8 | 398,184 | 18.8 | % | 10 | 6.1 | % | ||||||||||||||||||
Savings Institutions
|
1,536,548 | 83.0 | % | 31 | 1,724,825 | 81.2 | % | 32 | 2.9 | % | ||||||||||||||||||
Rockville Financial
|
432,374 | 23.4 | % | 7 | 532,009 | 25.1 | % | 8 | 5.3 | % | ||||||||||||||||||
|
||||||||||||||||||||||||||||
Hartford County
|
$ | 23,998,452 | 100.0 | % | 271 | $ | 28,198,226 | 100.0 | % | 281 | 4.1 | % | ||||||||||||||||
Commercial Banks
|
17,487,073 | 72.9 | % | 142 | 19,771,105 | 70.1 | % | 161 | 3.1 | % | ||||||||||||||||||
Savings Institutions
|
6,511,379 | 27.1 | % | 129 | 8,427,121 | 29.9 | % | 120 | 6.7 | % | ||||||||||||||||||
Rockville Financial
|
327,558 | 1.4 | % | 9 | 573,417 | 2.0 | % | 12 | 15.0 | % |
RP ® Financial, LC. |
PEER GROUP ANALYSIS
III.1 |
Peer Group Selection |
RP ® Financial, LC. |
PEER GROUP ANALYSIS
III.2 |
o | Screen #1 Northeast thrifts with assets between $700 million and $3.0 billion, tangible equity-to-assets ratios of greater than 6.0% and positive core earnings. | ||
Six thrifts met the criteria for Screen #1 and all were included in the Peer Group: Brookline Bancorp, Inc. of Massachusetts, Danvers Bancorp, Inc. of Massachusetts, Hingham Institution for Savings of Massachusetts, New Hampshire Thrift Bancshares of New Hampshire, United Financial Bancorp of Massachusetts and Westfield Financial of Massachusetts. Exhibit III-2 provides financial and public market pricing characteristics of all publicly-traded Northeast thrifts. | |||
o | Screen #2 Mid-Atlantic thrifts with assets between $700 million and $3.0 billion, tangible equity-to-assets ratios of greater than 6.0% and positive core earnings. | ||
Nine thrifts met the criteria for Screen #2 and seven were included in the Peer Group: Beacon Federal Bancorp of New York, ESB Financial Corp. of Pennsylvania, ESSA Bancorp of Pennsylvania, Harleysville Savings Financial of Pennsylvania, OceanFirst Financial Corp of New Jersey, Provident NY Bancorp, Inc. of New York, and TF Financial Corp. of Pennsylvania. The other two thrifts were excluded since they completed their conversions within the past year: Ocean Shore Holding of New Jersey (completed December 21, 2009) and Oritani Financial Corp. of New Jersey (completed June 24, 2010). Exhibit III-3 provides financial and public market pricing characteristics of all publicly-traded Mid-Atlantic thrifts. |
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.3
Peer Group of Publicly-Traded Thrifts August
26, 2010
Operating
Total
Fiscal
Conv.
Stock
Market
Ticker
Financial Institution
Exchange
Primary Market
Strategy(1)
Assets(2)
Offices
Year
Date
Price
Value
($)
($Mil)
Provident NY Bncrp, Inc. of NY
NASDAQ
Montebello, NY
Thrift
$
2,964
35
9-30
01/04
$
7.95
$
307
Brookline Bancorp, Inc. of MA
NASDAQ
Brookline, MA
Thrift
$
2,660
18
12-31
07/02
$
9.20
$
543
Danvers Bancorp, Inc. of MA
NASDAQ
Danvers, MA
Thrift
$
2,529
26
12-31
01/08
$
15.11
$
323
OceanFirst Fin. Corp of NJ
NASDAQ
Toms River, NJ
Thrift
$
2,220
23
12-31
07/96
$
11.49
$
216
ESB Financial Corp. of PA
NASDAQ
Ellwood City, PA
Thrift
$
1,948
24
12-31
06/90
$
12.86
$
155
United Financial Bancorp of MA
NASDAQ
W. Springfield, MA
Thrift
$
1,545
24
12-31
12/07
$
13.66
$
223
Westfield Financial Inc. of MA
NASDAQ
Westfield, MA
Thrift
$
1,235
11
12-31
01/07
$
7.48
$
219
Beacon Federal Bancorp of NY
NASDAQ
East Syracuse, NY
Thrift
$
1,072
8
12-31
10/07
$
10.00
$
65
ESSA Bancorp, Inc. of PA
NASDAQ
Stroudsburg, PA
Thrift
$
1,067
14
09-30
04/07
$
11.00
$
149
NH Thrift Bancshares of NH
NASDAQ
Newport, NH
Thrift
$
993
27
12-31
05/86
$
10.00
$
58
Hingham Institute for Savings of MA
NASDAQ
Hingham, MA
Thrift
$
972
10
12-31
12/88
$
38.47
$
82
Harleysville Savings Financial Corp. of PA
NASDAQ
Harleysville, PA
Thrift
$
867
7
09-30
08/87
$
15.39
$
57
TF Financial Corp. of Newtown PA
NASDAQ
Newtown, PA
Thrift
$
721
14
12-31
07/94
$
21.40
$
57
NOTES:
(1) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage Banker, R.E.=Real
Estate Developer,
Div.=Diversified and Ret.=Retail Banking.
(2) Most recent quarter end available (E=Estimated and P=Pro Forma).
Source:
SNL Financial, LC.
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.4
Beacon Federal Bancorp of NY (BFED).
BFED operates through a total of 8
offices including 3 branches in upstate New York as well as branches in Massachusetts,
Tennessee and Texas, reflecting its legacy as a converted credit union. Also reflecting its
status as a former credit union, BFEDs loan portfolio has the second largest proportion of
consumer loan in comparison to the Peer Group companies, although permanent 1-4 family
mortgage loans comprise the largest segment of lending. Asset quality ratios are less
favorable in relation to the Peer Group average. At June 30, 2010, BFED had total assets of
$1.1 billion, a tangible equity-to-assets ratio of 9.9% and reported a ROA of 0.48% for the
twelve months ended June 30, 2010.
Brookline Bancorp, Inc. of Massachusetts (BRKL).
BRKL operates through 20
branches in Massachusetts. BRKL has the highest tangible equity to assets ratio of 17.2%
among the Peer Group members, reflecting the continuing impact of its completion of a second
step conversion in July 2002. BRKL has the highest concentration of commercial real estate
loans among the Peer Group members, which results in its higher risk weighted assets. At June
30, 2010, BRKL had total assets of $1.6 billion and for the twelve months ended June 30, 2010,
BRKL reported a ROA of 0.96%.
Danvers Bancorp, Inc. of Massachusetts (DNBK).
DNBK operates through its
headquarters office in Danvers, Massachusetts and through 26 other branch offices throughout
Massachusetts. DNBK has the highest operating expense ratio among the Peer Group members due
to their diversified operations into wealth management and trust services. DNBK is also
diversified in its lending strategy. As of June 30, 2010, DNBK reported $2.5 billion in
assets, 10.4% of tangible equity to assets, as well as a ROA of 0.58% for the twelve months
ended June 30, 2010.
ESB Financial Corp. of Pennsylvania (ESBF).
ESBF operates 24 offices through
three counties in southwestern Pennsylvania. ESBF operates with a lower tangible equity to
assets ratio as compared to the Peer Group average, at 6.8%, but ESBF maintained comparatively
lower NPAs to assets ratio, due to its less diversified loan portfolio and high portion of
assets in MBS. ESBF reported assets of $1.9 billion as of June 30, 2010 and a ROA of 0.66%
for the latest twelve month period.
ESSA Bancorp, Inc. of PA (ESSA).
ESSA operates 14 branch offices in
northeastern Pennsylvania. ESSA maintains a high proportion of residential mortgage loans and
a low proportion of higher risk-weight construction and commercial mortgage loans relative to
the Peer Group average. Earnings approximate the Peer Groups average, notwithstanding ESSAs
high capital ratio (the result of the completion of its standard conversion transaction in
April 2007). At June 30, 2010, ESSA had total assets of $1.1 billion and a tangible
equity-to-assets ratio of 16.6%, as well as a ROA of 0.46%, for the twelve months ended June
30, 2010.
Harleysville Savings Financial Corporation of PA (HARL).
HARL operates 7
offices in the Philadelphia MSA. HARLs balance sheet structure partially reflects a
wholesale leveraging strategy based on its relatively high proportion of investment securities
and borrowings to assets in comparison to loans and deposits, respectively.
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.5
HARLs ROE is slightly higher than the Peer Group while NPAs were much lower. At June 30,
2010, HARL had a tangible equity-to-assets ratio of 6.1%, more leverage than the Peer Group
average. As of June 30, 2010 HARL reported $844 million of assets and a ROA of 0.59% for
the latest twelve months period.
Hingham Institution for Savings of Massachusetts (HIFS).
HIFS operates through
10 offices in the Boston MSA. HIFS maintained an inflated ratio of NPAs to assets relative to
the Peer Group average. At June 30, 2010, HIFS reported total assets of $972 million, a
tangible equity/assets ratio of 7.1% and ROA of 0.99% for the last twelve months, which were
below and above the Peer Group averages.
New Hampshire Thrift Bancshares of New Hampshire (NHTB).
NHTB operates through
27 branch offices in central New Hampshire. NHTBs balance sheet included a similar
loans-to-assets ratio to the Peer Group and NHTBs tangible equity/assets ratio reflects
greater leverage (6.57% ratio) than Rockville on a pro forma basis. As of June 30, 2010 NHTB
reported total assets of $939 million and a ROAA of 0.74% for the latest twelve month period,
which was modestly above the Peer Group average.
OceanFirst Financial Corp of New Jersey (OCFC).
OCFC operates through a total
of 23 branches in eastern New Jersey. OCFC maintained a less diversified loan portfolio than
compared to the Peer Group. At June 30, 2010, OCFC reported total assets of $2.2 billion, a
tangible equity-to-assets ratio of 8.8% and reported a ROA of 0.75% for the twelve months
ended June 30, 2010, which was the highest ROA among the Peer Group members.
Provident NY Bancorp, Inc. of New York (PBNY).
PBNY operates through 35 retail
banking offices in the Hudson Valley region of New York. NPAs are slightly higher then the
Peer Group average and PBNYs ROA approximates the Peer Group average. At June 30, 2010, PBNY
reported total assets of $3.0 billion, the highest in the Peer Group, reported a tangible
equity-to-assets ratio of 9.4% and an ROA of 0.68% for the twelve months ended June 30, 2010.
TF Financial Corporation of PA (THRD).
THRD operates 14 branches in the
Philadelphia metropolitan area. THRD maintained a ratio of NPAs to assets which was well
above the average for the Peer Group. At June 30, 2010 THRD reported total assets of $721
million, a tangible equity-to-assets ratio of 9.5% and a 12 month ROA of 0.55%, both of which
were slightly lower than the Peer Group average.
United Financial Bancorp of Massachusetts (UBNK).
UBNK operates through 24
offices throughout western Massachusetts. UBNKs NPAs to assets ratio was above the Peer
Group average, due to its diversified loan portfolio and high risk weighted assets ratio.
UBNK also reported a tangible equity-to-assets ratio of 14.0% that was also above the Peer
Group average. UBNK reported total assets of $1.5 billion and a ROA of 0.55% for the twelve
months ended June 30, 2010.
Westfield Financial, Inc. of MA (WFD).
WFD operates through a total of 11
offices in western Massachusetts. The ratio of NPAs/Assets is below the Peer Group average.
WFDs ROA was also below the Peer Group average, reporting the lowest ROA of the Peer Group.
WFD reported the highest tangible equity-to-assets ratio of 19.4% among the Peer Group
members, due to their recent conversion in January 2007. As of June 30, 2010, WFD reported
total assets of $1.2 billion and a ROA of 0.34% for the latest twelve month period.
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.6
All
Public-Thrifts (1)
Peer Group
$
2,930
$
1,599
$
311
$
189
10.56
%
10.91
%
(0.23
%)
0.59
%
(0.63
%)
5.82
%
17.69
x
18.15
x
77.62
%
103.83
%
8.10
%
10.94
%
(1)
Based on market prices as of August 26, 2010.
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III. 7
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of June 30, 2010
Balance Sheet as a Percent of Assets
Balance Sheet Annual Growth Rates
Regulatory Capital
Cash &
MBS &
Borrowed
Subd.
Net
Goodwill
Tng Net
MBS, Cash &
Borrows.
Net
Tng Net
Equivalents
Invest
BOLI
Loans
Deposits
Funds
Debt
Worth
& Intang
Worth
Assets
Investments
Loans
Deposits
& Subdebt
Worth
Worth
Tangible
Core
Reg.Cap.
Rockville Financial, Inc.
1.2
%
9.2
%
0.7
%
86.3
%
71.8
%
17.0
%
0.0
%
10.1
%
0.1
%
10.1
%
4.00
%
1.95
%
3.84
%
3.71
%
5.71
%
8.21
%
8.22
%
10.30
%
10.30
%
14.00
%
All Public Companies
5.9
%
20.5
%
1.4
%
67.2
%
72.3
%
14.2
%
0.5
%
11.7
%
0.9
%
10.9
%
4.44
%
14.82
%
1.12
%
8.49
%
-14.36
%
2.36
%
2.14
%
10.93
%
10.87
%
18.26
%
4.6
%
18.4
%
1.4
%
68.6
%
73.4
%
12.6
%
0.0
%
10.3
%
0.0
%
9.4
%
2.32
%
7.69
%
-0.76
%
5.64
%
-12.33
%
1.97
%
1.49
%
9.57
%
9.54
%
15.71
%
State of CT
4.7
%
21.5
%
1.1
%
66.3
%
69.0
%
15.3
%
0.4
%
13.9
%
3.3
%
10.6
%
3.34
%
7.68
%
1.06
%
5.46
%
-6.55
%
9.78
%
11.10
%
9.86
%
9.86
%
16.17
%
5.2
%
21.4
%
1.2
%
68.4
%
71.8
%
17.0
%
0.2
%
10.1
%
1.5
%
10.1
%
3.78
%
4.65
%
0.67
%
5.40
%
-8.54
%
7.54
%
8.12
%
9.86
%
9.86
%
15.30
%
Comparable Group
2.8
%
27.3
%
1.6
%
64.5
%
65.2
%
21.3
%
0.6
%
11.9
%
1.1
%
10.8
%
9.36
%
13.20
%
6.13
%
16.17
%
-1.44
%
7.63
%
7.20
%
13.36
%
12.11
%
18.12
%
2.6
%
24.3
%
1.5
%
68.4
%
66.2
%
19.9
%
0.0
%
10.2
%
0.5
%
9.5
%
5.09
%
10.31
%
1.18
%
12.85
%
2.04
%
6.29
%
6.29
%
12.52
%
9.44
%
12.69
%
Comparable Group
Beacon Federal Bancorp of NY
2.1
%
17.9
%
1.0
%
76.2
%
64.8
%
24.9
%
0.0
%
9.9
%
0.0
%
9.9
%
2.45
%
6.06
%
1.34
%
5.50
%
-4.31
%
9.55
%
9.55
%
8.92
%
8.92
%
12.69
%
Brookline Bancorp, Inc. of MA
3.3
%
12.9
%
0.0
%
80.5
%
64.0
%
16.5
%
0.0
%
18.6
%
1.7
%
16.9
%
0.69
%
-2.00
%
1.18
%
13.44
%
-30.14
%
1.46
%
1.92
%
15.60
%
15.60
%
NA
Danvers Bancorp, Inc. of MA
3.9
%
25.3
%
1.3
%
64.7
%
76.4
%
9.8
%
1.2
%
11.6
%
1.3
%
10.3
%
39.94
%
33.50
%
38.96
%
48.67
%
3.92
%
30.54
%
15.60
%
NA
NA
16.70
%
ESB Financial Corp. of PA
1.6
%
57.2
%
1.5
%
34.3
%
51.0
%
36.3
%
2.4
%
8.9
%
2.2
%
6.7
%
-0.80
%
-1.49
%
1.11
%
10.26
%
-14.74
%
13.16
%
18.74
%
NA
NA
NA
ESSA Bancorp, Inc. of PA
2.6
%
24.9
%
1.5
%
68.4
%
48.3
%
33.9
%
0.0
%
16.6
%
0.0
%
16.6
%
1.35
%
5.90
%
-0.89
%
28.57
%
-20.32
%
-4.57
%
-4.57
%
NA
NA
NA
Harleysville Savings Fin. Corp. of PA
1.7
%
35.0
%
1.6
%
59.5
%
60.3
%
32.7
%
0.0
%
6.1
%
0.0
%
6.1
%
5.09
%
1.84
%
6.77
%
15.91
%
-10.24
%
6.29
%
6.29
%
NA
NA
11.73
%
Hingham Institute for Savings of MA
8.4
%
11.2
%
1.4
%
76.6
%
70.2
%
22.2
%
0.0
%
7.1
%
0.0
%
7.1
%
12.74
%
31.47
%
7.53
%
16.50
%
3.37
%
10.42
%
10.42
%
NA
7.10
%
12.61
%
NH Thrift Bancshares of NH
2.6
%
24.3
%
1.0
%
65.6
%
73.4
%
14.0
%
2.1
%
9.3
%
2.9
%
6.4
%
8.87
%
29.17
%
2.58
%
6.64
%
22.22
%
7.21
%
11.86
%
NA
NA
NA
OceanFirst Fin. Corp of NJ
1.4
%
18.9
%
1.8
%
75.3
%
69.4
%
19.9
%
1.2
%
8.8
%
0.0
%
8.8
%
16.24
%
NM
0.80
%
12.85
%
29.55
%
20.33
%
20.33
%
NA
NA
NA
Provident NY Bncrp, Inc. of NY
1.4
%
31.8
%
1.7
%
56.6
%
66.2
%
17.8
%
0.0
%
14.5
%
5.6
%
8.9
%
4.93
%
15.69
%
-0.62
%
4.70
%
7.92
%
1.98
%
4.04
%
9.44
%
9.44
%
NA
TF Financial Corp. of New tow n PA
2.8
%
19.7
%
2.4
%
72.2
%
77.6
%
11.1
%
0.0
%
10.2
%
0.6
%
9.5
%
-0.51
%
8.31
%
-4.14
%
5.33
%
-28.08
%
5.24
%
5.60
%
NA
NA
NA
United Financial Bancorp of MA
3.7
%
20.4
%
1.8
%
70.4
%
71.7
%
12.7
%
0.5
%
14.4
%
0.5
%
13.9
%
24.72
%
17.68
%
26.52
%
35.82
%
2.04
%
4.44
%
0.66
%
NA
NA
NA
Westfield Financial Inc. of MA
1.3
%
55.2
%
3.2
%
38.1
%
54.3
%
25.7
%
0.0
%
19.4
%
0.0
%
19.4
%
6.03
%
12.32
%
-1.45
%
6.05
%
20.05
%
-6.90
%
-6.90
%
19.48
%
19.48
%
36.86
%
Source:
SNL Financial, LC. and RP
®
Financial, LC. calculations. The information
provided in this table has been obtained from sources w e believe are reliable, but w e cannot
guarantee the accuracy or completeness of such information.
Copyright (c) 2010 by RP
®
Financial, LC.
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.8
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.9
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.10
Income as Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the 12 Months Ended June 30, 2010
Net Interest Income
Other Income
G&A/Other Exp.
Non-Op. Items
Yields, Costs, and Spreads
Loss
NII
Total
MEMO:
MEMO:
Net
Provis.
After
Loan
R.E.
Other
Other
G&A
Goodwill
Net
Extrao.
Yield
Cost
Yld-Cost
Assets/
Effective
Income
Income
Expense
NII
on IEA
Provis.
Fees
Oper.
Income
Income
Expense
Amort.
Gains
Items
On Assets
Of Funds
Spread
FTE Emp.
Tax Rate
0.74
%
4.80
%
1.59
%
3.21
%
0.20
%
3.01
%
0.00
%
-0.03
%
0.40
%
0.37
%
2.32
%
0.00
%
0.07
%
0.00
%
5.02
%
1.97
%
3.05
%
$
7,416
34.88
%
-0.07
%
4.74
%
1.75
%
3.00
%
0.95
%
2.04
%
0.03
%
-0.07
%
0.77
%
0.73
%
2.78
%
0.05
%
0.03
%
0.01
%
5.07
%
2.00
%
3.06
%
$
6,014
32.57
%
0.27
%
4.80
%
1.75
%
3.04
%
0.53
%
2.37
%
0.00
%
-0.01
%
0.56
%
0.51
%
2.64
%
0.00
%
0.04
%
0.00
%
5.06
%
2.00
%
3.13
%
$
4,901
32.49
%
0.22
%
4.43
%
1.61
%
2.82
%
0.21
%
2.61
%
0.00
%
-0.02
%
0.89
%
0.87
%
2.72
%
0.05
%
-0.42
%
0.00
%
4.78
%
1.86
%
2.92
%
$
5,870
33.95
%
0.38
%
4.68
%
1.62
%
2.83
%
0.20
%
2.65
%
0.00
%
0.00
%
0.79
%
0.71
%
2.46
%
0.04
%
0.01
%
0.00
%
4.93
%
1.98
%
2.87
%
$
5,062
34.88
%
0.65
%
4.71
%
1.72
%
2.99
%
0.32
%
2.67
%
0.01
%
-0.02
%
0.46
%
0.44
%
2.19
%
0.02
%
0.07
%
0.00
%
4.98
%
1.98
%
3.00
%
$
7,019
28.01
%
0.59
%
4.80
%
1.60
%
3.15
%
0.27
%
2.74
%
0.00
%
0.00
%
0.47
%
0.45
%
2.46
%
0.00
%
0.07
%
0.00
%
5.04
%
1.90
%
3.24
%
$
6,799
27.57
%
0.49
%
5.20
%
2.36
%
2.84
%
0.61
%
2.23
%
0.00
%
0.00
%
0.47
%
0.47
%
1.85
%
0.00
%
-0.08
%
0.00
%
5.41
%
2.63
%
2.78
%
$
7,998
36.82
%
0.96
%
5.06
%
1.60
%
3.46
%
0.27
%
3.19
%
0.00
%
0.00
%
0.05
%
0.05
%
1.68
%
0.05
%
0.09
%
0.00
%
5.23
%
1.99
%
3.24
%
$
11,317
40.40
%
0.58
%
4.89
%
1.52
%
3.37
%
0.25
%
3.11
%
0.01
%
-0.04
%
0.48
%
0.45
%
2.89
%
0.07
%
0.07
%
0.00
%
5.18
%
1.75
%
3.43
%
$
6,799
14.29
%
0.66
%
4.54
%
2.42
%
2.12
%
0.05
%
2.07
%
0.00
%
0.00
%
0.14
%
0.14
%
1.34
%
0.02
%
-0.05
%
0.00
%
4.89
%
2.68
%
2.21
%
$
7,434
18.90
%
0.47
%
4.77
%
2.06
%
2.71
%
0.19
%
2.52
%
0.04
%
-0.11
%
0.68
%
0.61
%
2.57
%
0.00
%
0.09
%
0.00
%
4.97
%
2.52
%
2.45
%
$
5,995
27.57
%
0.59
%
4.79
%
2.69
%
2.10
%
0.07
%
2.03
%
0.00
%
-0.02
%
0.28
%
0.26
%
1.49
%
0.00
%
0.00
%
0.00
%
4.98
%
2.89
%
2.09
%
$
9,225
26.01
%
0.99
%
4.94
%
1.75
%
3.18
%
0.15
%
3.03
%
0.00
%
-0.09
%
0.34
%
0.26
%
1.68
%
0.00
%
0.01
%
0.00
%
5.11
%
1.90
%
3.21
%
$
9,916
39.21
%
0.78
%
4.22
%
1.10
%
3.12
%
0.54
%
2.57
%
0.00
%
0.01
%
0.68
%
0.69
%
2.59
%
0.05
%
0.52
%
0.00
%
4.57
%
1.24
%
3.34
%
$
4,244
32.04
%
0.85
%
4.80
%
1.26
%
3.53
%
0.40
%
3.14
%
0.02
%
0.00
%
0.62
%
0.64
%
2.46
%
0.00
%
0.09
%
0.00
%
5.03
%
1.40
%
3.63
%
$
5,648
35.19
%
0.69
%
4.12
%
0.97
%
3.15
%
0.42
%
2.74
%
0.00
%
0.00
%
0.68
%
0.68
%
2.70
%
0.07
%
0.23
%
0.00
%
4.59
%
1.15
%
3.43
%
$
5,529
24.11
%
0.55
%
4.91
%
1.67
%
3.24
%
0.45
%
2.79
%
0.01
%
-0.01
%
0.37
%
0.37
%
2.55
%
0.00
%
0.12
%
0.00
%
5.17
%
1.89
%
3.28
%
$
4,072
23.67
%
0.55
%
4.89
%
1.49
%
3.39
%
0.21
%
3.18
%
0.00
%
0.00
%
0.80
%
0.80
%
2.71
%
0.01
%
-0.20
%
0.00
%
5.16
%
1.78
%
3.37
%
$
5,722
29.58
%
0.34
%
4.13
%
1.50
%
2.63
%
0.56
%
2.07
%
0.00
%
-0.03
%
0.36
%
0.33
%
2.02
%
0.00
%
0.03
%
0.00
%
4.43
%
1.94
%
2.49
%
$
7,351
16.40
%
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.11
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.12
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.13
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of June 30, 2010
Portfolio Composition as a Percent of Assets
1-4
Constr.
5+Unit
Commerc.
RWA/
Serviced
Servicing
Institution
MBS
Family
& Land
Comm RE
Business
Consumer
Assets
For Others
Assets
(%)
(%)
(%)
(%)
(%)
(%)
(%)
($000)
($000)
5.13
%
47.12
%
4.44
%
26.59
%
7.97
%
0.44
%
78.36
%
$
81,400
$
576
11.93
%
34.49
%
4.61
%
22.07
%
4.63
%
2.17
%
64.70
%
$
636,079
$
5,351
10.03
%
35.18
%
3.29
%
21.41
%
3.52
%
0.50
%
63.96
%
$
45,215
$
202
13.85
%
36.40
%
2.89
%
19.01
%
7.99
%
0.47
%
63.97
%
$
148,322
$
621
12.69
%
37.60
%
3.28
%
22.03
%
4.85
%
0.39
%
62.11
%
$
134,430
$
576
17.40
%
34.58
%
2.69
%
17.90
%
6.10
%
3.47
%
62.59
%
$
155,154
$
883
16.21
%
35.63
%
2.20
%
16.63
%
7.01
%
0.37
%
60.48
%
$
84,650
$
397
15.23
%
35.63
%
2.20
%
14.21
%
9.53
%
16.21
%
76.62
%
$
134,540
$
855
5.06
%
13.90
%
0.57
%
34.57
%
11.45
%
21.19
%
81.93
%
$
34,980
$
137
11.19
%
16.59
%
4.21
%
24.93
%
14.72
%
0.15
%
70.49
%
$
112,390
$
397
38.81
%
20.55
%
2.36
%
5.93
%
0.90
%
3.47
%
51.18
%
$
8,340
$
23
16.82
%
60.97
%
0.73
%
4.94
%
2.26
%
0.18
%
46.37
%
$
45,570
$
336
16.63
%
50.19
%
1.26
%
6.11
%
1.99
%
0.13
%
54.00
%
$
1,940
$
0
0.03
%
42.71
%
2.86
%
31.59
%
0.03
%
0.07
%
61.26
%
$
23,770
$
0
17.83
%
41.80
%
2.05
%
14.70
%
7.01
%
0.94
%
60.48
%
$
356,250
$
1,751
16.22
%
53.64
%
1.99
%
16.61
%
3.50
%
0.03
%
58.88
%
$
933,650
$
5,794
12.17
%
22.11
%
7.76
%
19.12
%
8.19
%
0.45
%
64.05
%
$
172,000
$
1,089
11.40
%
48.85
%
4.88
%
17.97
%
0.84
%
0.37
%
58.03
%
$
98,600
$
597
17.36
%
33.35
%
3.28
%
25.35
%
7.33
%
1.70
%
75.93
%
$
84,650
$
500
47.39
%
9.31
%
0.80
%
16.63
%
11.58
%
0.25
%
54.47
%
$
10,320
$
0
Source:
SNL Financial LC. and RP
®
Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee
the accuracy or completeness of such information.
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.14
Interest Rate Risk Measures and Net Interest Income Volatility
Comparable Institution Analysis
As of June 30, 2010 or Most Recent Date Available
Balance Sheet Measures
Non-Earn.
Quarterly Change in Net Interest Income
Equity/
IEA/
Assets/
Institution
Assets
IBL
Assets
6/30/2010
3/31/2010
12/31/2009
9/30/2009
6/30/2009
3/31/2009
(%)
(%)
(%)
(change in net interest income is annualized in basis points)
10.1
%
108.9
%
3.3
%
-9
25
26
0
0
-10
10.9
%
107.8
%
6.4
%
1
5
6
8
0
-1
10.6
%
109.5
%
7.5
%
5
16
-1
4
0
-9
10.8
%
108.8
%
5.4
%
-1
4
8
6
2
-1
9.5
%
107.0
%
5.4
%
1
5
5
9
6
0
9.9
%
107.1
%
3.9
%
-1
4
14
5
5
10
16.9
%
120.1
%
3.2
%
6
8
14
-2
40
-16
10.3
%
107.4
%
6.1
%
4
-14
44
12
6
-6
6.7
%
103.8
%
6.9
%
1
12
11
10
10
6
16.6
%
116.5
%
4.1
%
-24
-5
0
-2
6
6
6.1
%
103.4
%
3.8
%
3
5
13
9
-25
10
7.1
%
104.1
%
3.8
%
2
1
-7
7
18
0
6.4
%
103.3
%
7.5
%
-4
9
5
10
-12
-25
8.8
%
105.6
%
4.4
%
-2
12
-6
15
6
12
8.9
%
107.0
%
10.1
%
15
5
1
-7
-7
-21
9.5
%
106.7
%
5.4
%
2
2
5
12
6
14
13.9
%
111.4
%
5.4
%
-6
29
4
13
-17
-3
19.4
%
118.3
%
5.4
%
-13
-18
4
-1
-14
-1
Source:
SNL Financial LC. and RP
®
Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are reliable, but w e cannot
guarantee the accuracy or completeness of such information.
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.15
RP
®
Financial, LC.
PEER GROUP ANALYSIS
III.16
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of June 30, 2010 or Most Recent Date Available
NPAs &
Rsrves/
REO/
90+Del/
NPLs/
Rsrves/
Rsrves/
NPAs &
Net Loan
NLCs/
Institution
Assets
Assets
Loans
Loans
NPLs
90+Del
Chargoffs
Loans
(%)
(%)
(%)
(%)
(%)
(%)
($000)
(%)
0.18
%
1.08
%
1.03
%
0.94
%
91.49
%
75.89
%
$
2,414
(1)
0.17
%
0.51
%
4.25
%
4.92
%
1.69
%
65.87
%
52.38
%
$
1,552
0.72
%
0.20
%
2.56
%
3.33
%
1.39
%
45.65
%
40.24
%
$
642
0.32
%
0.19
%
1.56
%
1.43
%
0.98
%
68.55
%
50.40
%
$
1,532
0.23
%
0.20
%
1.08
%
1.12
%
0.94
%
71.31
%
56.81
%
$
675
0.11
%
0.13
%
0.96
%
1.29
%
1.23
%
134.38
%
128.42
%
$
779
0.41
%
0.07
%
0.93
%
1.24
%
1.02
%
105.74
%
90.54
%
$
565
0.14
%
0.07
%
1.56
%
1.79
%
2.17
%
121.24
%
107.87
%
$
580
0.28
%
0.03
%
0.61
%
0.56
%
1.41
%
253.47
%
187.53
%
$
874
0.16
%
0.04
%
0.81
%
1.17
%
0.98
%
83.76
%
79.58
%
$
565
0.14
%
0.03
%
0.30
%
0.76
%
0.93
%
121.59
%
107.90
%
$
77
0.05
%
0.20
%
1.05
%
1.61
%
0.95
%
59.10
%
63.83
%
$
73
0.04
%
0.00
%
0.06
%
0.11
%
0.47
%
441.49
%
441.49
%
$
43
0.03
%
0.76
%
1.57
%
1.05
%
0.86
%
81.26
%
42.00
%
$
1
0.00
%
0.03
%
0.37
%
1.05
%
1.52
%
130.20
%
244.32
%
$
852
0.52
%
0.12
%
NA
NA
1.02
%
NA
NA
$
686
0.17
%
0.11
%
1.11
%
1.31
%
1.82
%
138.49
%
94.66
%
$
2,173
0.52
%
0.20
%
2.21
%
3.04
%
1.28
%
32.98
%
32.98
%
$
16
0.01
%
0.13
%
1.20
%
1.51
%
0.89
%
58.79
%
52.43
%
$
338
0.12
%
0.03
%
0.63
%
1.56
%
1.64
%
90.24
%
86.42
%
$
3,844
3.26
%
(1)
Annualized for six months ended June 30, 2010.
Source:
Audited and unaudited financial statements, corporate reports and offering circulars,
and RP
®
Financial, LC. calculations. The information provided in this table has been
obtained from sources we believe are reliable, but w e cannot guarantee the accuracy or
completeness of such information.
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.1
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.2
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.3
§
Overall A/L Composition
. In comparison to the Peer Group, the Companys IEA
composition showed a moderately higher concentration of loans and a lower concentration
of cash and investments. Lending diversification into higher risk and higher yielding
types of loans was more significant for the Company, which is shown in the higher risk
weighted assets-to-assets ratio in comparison to the Peer Groups ratio. Overall, in
comparison to the Peer Group, the Companys IEA composition provided for a similar
yield earned on IEA. The Companys IBL cost was also similar to the Peer Groups cost
of funds, even though the Company maintained a higher level of deposits and a lower
level of borrowings. Overall, as a percent of assets, the Company maintained a broadly
similar level of IEA and IBL compared to the Peer Groups ratios, which resulted in a
similar IEA/IBL ratio for the Company. After factoring in the impact of the net stock
proceeds, the Companys IEA/IBL ratio should exceed the Peer Groups ratio. On
balance, RP Financial concluded that asset/liability composition was a favorable factor
in our adjustment for financial condition.
§
Credit Quality.
The Companys ratio for non-performing assets was slightly
higher than the Peer Group, while non-performing loans were more favorable than the
comparable Peer Group ratio. Loss reserves as a percent of non-performing loans were
lower for the Company and the Peer Group also maintained higher loss reserves as a
percent of loans. Net loan charge-offs were a comparable factor for the Company and
the Peer Group. As noted above, the Companys risk weighted assets-to-assets ratio was
higher than the Peer Groups ratio. Overall, RP Financial concluded that credit
quality was a slightly negative factor in our adjustment for financial condition.
§
Balance Sheet Liquidity
. The Company operated with a lower level of cash
and investment securities relative to the Peer Group. Following the infusion of stock
proceeds, the Companys cash and investments ratio is expected to increase as the
proceeds retained at the holding company level will be initially deployed into
investments. The Companys future borrowing capacity was considered to be slightly
greater than the Peer Groups, given the lower level of borrowings currently funding
the Companys assets. Overall, RP Financial concludes that pro forma balance sheet
liquidity was a neutral factor in our adjustment for financial condition.
§
Funding Liabilities
. The Companys IBL composition reflected a higher
concentration of deposits and a lower concentration of borrowings relative to the
comparable Peer Group ratios, which provided for a slightly lower cost of funds for the
Company than the Peer Group. Total IBL as a percent of assets were slightly lower for
the Company compared to the Peer Groups ratio, which was attributable to Rockville
Financials lower equity position. Following the stock offering, the increase in the
Companys capital position will reduce the level of IBL funding the Companys assets to
a ratio that is comparable to or lower than the Peer Groups ratio. Overall, RP
Financial concluded that funding liabilities were a neutral factor in our adjustment
for financial condition.
§
Tangible Equity
. The Company currently operates with a lower tangible
equity-to-assets ratio than the Peer Group. However, following the stock offering,
Rockville Financials pro forma tangible equity position is expected to exceed the Peer
Group, which will result in greater leverage potential. At the same time, the
Companys more significant capital surplus will likely result in a lower ROE. On
balance, RP Financial concluded that capital strength was a slightly positive factor in
our adjustment for financial condition.
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.4
§
Reported Profitability
. The Company reported higher profitability than the
Peer Group. The Companys higher return was attributable to a higher level of net
interest income and lower level of loan loss provisions, which was partially offset by
the Companys lower level of non-interest operating income and higher level of
operating expenses based on the Peer Group averages. Reinvestment into IEA and
leveraging of the pro forma equity position will serve to increase the Companys
earnings, with the benefit of reinvesting proceeds expected to be somewhat offset by
implementation of additional stock benefit plans in connection with the second-step
offering. On balance, RP Financial concluded that the Companys reported earnings were
a positive factor in our adjustment for profitability, growth and viability of
earnings.
§
Core Profitability
. Net interest income, operating expenses, non-interest
operating income and loan loss provisions were reviewed in assessing the relative
strengths and weaknesses of core profitability. The Company operated with a higher net
interest income ratio, a higher operating expense ratio and a lower level of
non-interest operating income, based on the Peer Group averages. The Companys ratios
for net interest income and operating expenses translated into a similar expense
coverage ratio in comparison to the Peer Groups ratio, but the Company had a slight
efficiency ratio disadvantage. Loan loss provisions had a larger impact on the Peer
Groups earnings. Overall, these measures, as well as the expected earnings benefits
the Company should realize from the redeployment of stock proceeds into IEA and
leveraging of post-conversion capital, which will be somewhat negated by expenses
associated with the stock benefit plans, as well as incremental costs associated with
the growth oriented business plan, indicate that the Companys pro forma core
profitability will be more favorable than the Peer Group average. Therefore, RP
Financial concluded that this was a slightly positive factor in our adjustment for
profitability, growth and viability of earnings.
§
Interest Rate Risk
. Quarterly changes in the net interest income ratio for
the Company indicated a higher degree of volatility. Other measures of interest rate
risk, such as capital and IEA/IBL ratios were similar to the Peer Group. On a pro
forma basis, the infusion of stock proceeds can be expected to provide the Company with
equity-to-assets and IEA/IBL ratios that will be comparable to or exceed the Peer Group
ratios, as well as enhance the stability of the Companys net interest margin through
the reinvestment of stock proceeds into IEA. On balance, RP Financial
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.5
concluded that interest rate risk was a neutral factor in our adjustment for
profitability, growth and viability of earnings.
§
Credit Risk
. Loan loss provisions were a larger factor in the Peer Groups
profitability. In terms of future exposure to credit quality related losses, the
Company maintained a higher concentration of assets in loans and lending
diversification into higher credit risk loans. NPAs to assets were higher and NPLs
were lower for the Company compared to the Peer Group. Loss reserves were less
favorable for the Company, both with respect to total loans and reserves to NPLs. Net
loan charge-offs as a percent of loans were higher for the Peer Group. Overall, RP
Financial concluded that credit risk was a slightly negative factor in the adjustment
for profitability, growth and viability of earnings.
§
Earnings Growth Potential
. Both, the Company and the Peer Group maintained
similar interest rate spreads, but the Companys net interest income has been slightly
more volatile. The infusion of stock proceeds will provide the Company with greater
leverage potential, and historical growth has been similar to the Peer Group based on
the median. The Companys higher operating expense ratio will come under pressure with
the additional stock benefit plans expense. Overall, no adjustment was warranted for
earnings growth for profitability, growth and viability of earnings.
§
Return on Equity
. While, the Companys core ROE is slightly higher than the
Peer Groups core ROE, on a pro forma basis, the Companys earnings increase will be
limited whereas the equity will increase considerably, thus resulting in a less
favorable pro forma ROE relative to the Peer Group. Accordingly, this was a slightly
negative factor in the adjustment for profitability, growth and viability of earnings.
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.6
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.7
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.8
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.9
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.10
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.11
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.12
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.13
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.14
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.15
Pricing Characteristics and After-Market Trends
Recent Conversions Completed (Last Three Months)
Institutional Information
Pre-Conversion Data
Offering Information
Contribution to
Insider Purchases
Pro Forma Data
Post-IPO Pricing Trends
Financial Info.
Asset Quality
Charitable Found.
% Off Incl. Fdn.
Pricing Ratios(3)
Financial Charac.
Closing Price:
Benefit Plans
Initial
First
After
After
Conver.
Equity/
NPAs/
Res.
Gross
%
% of
Exp./
% of
Recog.
Stk
Mgmt.&
Dividend
Core
Core
Core
IPO
Trading
%
First
%
First
%
Thru
%
Institution
Date
Ticker
Assets
Assets
Assets
Cov.
Proc.
Offered
Mid.
Proc.
Form
Offering
ESOP
Plans
Option
Dirs.
Yield
P/TB
P/E
P/A
ROA
TE/A
ROE
Price
Day
Change
Week(4)
Change
Month(5)
Change
8/26/10
Change
($Mil)
(%)
(%)
(%)
($Mil.)
(%)
(%)
(%)
(%)
(%)
(%)
(%)
(%)(2)
(%)
(%)
(x)
(%)
(%)
(%)
(%)
($)
($)
(%)
($)
(%)
($)
(%)
($)
(%)
7/7/10
PEOP-NASDAQ
$
488
10.77
%
0.32
%
199
%
$
66.1
100
%
132
%
2.8
%
Stock
8.0
%
8.0
%
4.0
%
10.0
%
3.3
%
0.00
%
64.7
%
45.5
13.1
%
0.3
%
20.2
%
1.4
%
$
10.00
$
10.40
4.0
%
$
10.69
6.9
%
$
10.42
4.2
%
$
10.19
1.9
%
6/3/10
FMTB-OTCBB
$
67
10.57
%
0.40
%
152
%
$
4.4
100
%
89
%
15.8
%
N.A.
N.A.
8.0
%
4.0
%
10.0
%
14.6
%
0.00
%
43.9
%
11.4
6.5
%
0.6
%
14.8
%
0.6
%
$
10.00
$
11.00
10.0
%
$
12.00
20.0
%
$
11.00
10.0
%
$
11.75
17.5
%
Averages Standard Conversions:
$
278
10.67
%
0.36
%
176
%
$
35.3
100
%
111
%
9.3
%
N.A.
8.0
%
8.0
%
4.0
%
10.0
%
9.0
%
0.00
%
54.3
%
28.5x
9.8
%
0.5
%
17.5
%
1.0
%
$
10.00
$
10.70
7.0
%
$
11.35
13.45
%
$
10.71
7.10
%
$
10.97
9.70
%
Medians Standard Conversions:
$
278
10.67
%
0.36
%
176
%
$
35.3
100
%
111
%
9.3
%
N.A.
8.0
%
8.0
%
4.0
%
10.0
%
9.0
%
0.00
%
54.3
%
28.5x
9.8
%
0.5
%
17.5
%
1.0
%
$
10.00
$
10.70
7.0
%
$
11.35
13.45
%
$
10.71
7.10
%
$
10.97
9.70
%
7/15/10
JXSB-NASDAQ
$
290
9.12
%
1.02
%
111
%
$
10.4
54
%
89
%
12.0
%
N.A.
N.A.
4.0
%
0.0
%
10.0
%
9.6
%
3.00
%
59.3
%
19.07
6.5
%
0.3
%
11.0
%
2.9
%
$
10.00
$
10.65
6.5
%
$
10.58
5.8
%
$
10.13
1.3
%
$
10.43
4.3
%
7/13/10
COBK-NASDAQ
$
568
8.20
%
0.43
%
124
%
$
23.0
55
%
85
%
8.0
%
N.A.
N.A.
4.0
%
4.0
%
10.0
%
1.6
%
0.00
%
63.4
%
14.01
7.1
%
0.5
%
11.2
%
4.5
%
$
10.00
$
10.05
0.5
%
$
9.65
-3.5
%
$
9.80
-2.0
%
$
9.60
-4.0
%
7/7/10
ONFC-NASDAQ
$
596
9.61
%
0.90
%
1041
%
$
31.5
55
%
100
%
8.0
%
N.A.
N.A.
4.0
%
4.0
%
10.0
%
4.2
%
6.00
%
97.3
%
15.12
9.2
%
0.6
%
9.9
%
4.5
%
$
8.00
$
7.50
-6.3
%
$
7.50
-6.3
%
$
7.90
-1.3
%
$
7.70
-3.8
%
7/7/10
VPFG-NASDAQ
$
2,477
8.42
%
0.61
%
108
%
$
198.6
57
%
99
%
4.0
%
N.A.
N.A.
4.0
%
4.0
%
10.0
%
0.2
%
0.00
%
93.2
%
28.61
13.2
%
0.5
%
14.2
%
3.3
%
$
10.00
$
9.50
-5.0
%
$
9.55
-4.5
%
$
9.70
-3.0
%
$
9.09
-9.1
%
6/29/10
FXCB-NASDAQ
$
1,156
10.83
%
2.91
%
38
%
$
87.1
60
%
85
%
5.0
%
N.A.
N.A.
4.0
%
3.1
%
7.9
%
0.7
%
0.00
%
72.1
%
NM
11.8
%
-0.1
%
16.4
%
-0.6
%
$
10.00
$
9.59
-4.1
%
$
9.60
-4.0
%
$
9.68
-3.2
%
$
9.53
-4.7
%
6/24/10
ORIT-NASDAQ
$
2,054
12.38
%
2.03
%
60
%
$
413.6
74
%
106
%
2.8
%
N.A.
N.A.
4.0
%
4.0
%
10.0
%
0.5
%
3.00
%
89.4
%
38.03
23.0
%
0.6
%
25.7
%
2.4
%
$
10.00
$
10.31
3.1
%
$
9.86
-1.4
%
$
9.91
-0.9
%
$
9.42
-5.8
%
Averages Second Step Conversions:
$
1,190
9.76
%
1.32
%
247
%
$
127.4
59
%
94
%
6.6
%
N.A.
N.A.
4.0
%
3.2
%
9.7
%
2.8
%
2.00
%
79.1
%
23.0x
11.8
%
0.4
%
14.7
%
2.8
%
$
9.67
$
9.60
-0.9
%
$
9.46
-2.3
%
$
9.52
-1.5
%
$
9.30
-3.8
%
Medians Second Step Conversions:
$
876
9.37
%
0.96
%
110
%
$
59.3
56
%
94
%
6.5
%
N.A.
N.A.
4.0
%
4.0
%
10.0
%
1.2
%
1.50
%
80.8
%
19.1x
10.5
%
0.5
%
12.7
%
3.1
%
$
10.00
$
9.82
-1.8
%
$
9.63
-3.8
%
$
9.75
-1.6
%
$
9.48
-4.4
%
Averages Mutual Holding Company Conversions:
Medians Mutual Holding Company Conversions:
Averages All Conversions:
$
962
9.99
%
1.08
%
229
%
$
104.3
69
%
98
%
7.3
%
NA
8.0
%
5.0
%
3.4
%
9.7
%
4.3
%
1.50
%
72.9
%
24.5x
11.3
%
0.4
%
15.4
%
2.4
%
$
9.75
$
9.88
1.1
%
$
9.93
1.6
%
$
9.82
0.6
%
$
9.71
-0.5
%
Medians All Conversions:
$
582
10.09
%
0.76
%
118
%
$
48.8
59
%
94
%
6.5
%
NA
8.0
%
4.0
%
4.0
%
10.0
%
2.5
%
0.00
%
68.4
%
19.1x
10.5
%
0.5
%
14.5
%
2.6
%
$
10.00
$
10.18
1.8
%
$
9.76
-2.5
%
$
9.86
-1.1
%
$
9.57
-3.9
%
Note: * Appraisal performed by RP Financial; BOLD=RP Financial did the Conversion
Business Plan. NT Not Traded; NA Not Applicable, Not Available; C/S-Cash/Stock.
(1)
Non-OTS regulated thrift.
(2)
As a percent of MHC offering for MHC transactions.
(3)
Does not take into account the adoption of SOP 93-6.
(4)
Latest price if offering is less than one week old.
(5)
Latest price if offering is more than one week but less than one month old.
(6)
Mutual holding company pro forma data on full conversion basis.
(7)
Simultaneously completed acquisition of another financial institution.
(8)
Simultaneously converted to a commercial bank charter.
(9)
Former credit union.
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.16
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.17
Market Pricing Comparatives
Prices As of August 26, 2010
Market
Per Share Data
Capitalization
Core
Book
Dividends(4)
Financial Characteristics(6)
Price/
Market
12 Month
Value/
Pricing Ratios(3)
Amount/
Payout
Total
Equity/
Tang Eq/
NPAs/
Reported
Core
Financial Institution
Share(1)
Value
EPS(2)
Share
P/E
P/B
P/A
P/TB
P/Core
Share
Yield
Ratio(5)
Assets
Assets
Assets
Assets
ROA
ROE
ROA
ROE
($)
($Mil)
($)
($)
(x)
(%)
(%)
(%)
(x)
($)
(%)
(%)
($Mil)
(%)
(%)
(%)
(%)
(%)
(%)
(%)
$
9.55
$
270.27
$
(0.12
)
$
12.77
18.46x
75.64
%
9.12
%
83.11
%
18.15x
$
0.23
2.01
%
30.41
%
$
2,698
11.65
%
10.89
%
4.15
%
-0.10
%
0.67
%
-0.14
%
-0.02
%
$
9.42
$
167.58
$
0.34
$
13.94
21.10x
69.09
%
11.47
%
73.79
%
18.52x
$
0.18
2.10
%
12.66
%
$
1,202
11.20
%
10.54
%
0.85
%
0.33
%
3.50
%
0.35
%
3.87
%
$
9.60
$
40.06
$
0.71
$
15.78
20.00x
60.84
%
6.82
%
60.84
%
13.52x
$
0.00
0.00
%
0.00
%
$
587
7.46
%
7.46
%
NA
0.34
%
4.58
%
0.50
%
6.77
%
$
9.53
$
138.63
$
(0.13
)
$
14.19
NM
67.16
%
11.15
%
67.16
%
NM
$
0.00
0.00
%
NM
$
1,243
16.61
%
16.61
%
NA
-0.06
%
-0.51
%
-0.16
%
-1.34
%
$
10.43
$
20.07
$
0.52
$
18.27
13.20x
57.09
%
6.72
%
61.90
%
20.06x
$
0.30
2.88
%
37.97
%
$
298
8.59
%
7.67
%
NA
0.51
%
5.93
%
0.34
%
3.90
%
$
7.70
$
55.17
$
0.53
$
11.69
14.81x
65.87
%
8.86
%
93.67
%
14.53x
$
0.53
6.88
%
NM
$
623
8.74
%
5.11
%
NA
0.60
%
6.84
%
0.61
%
6.97
%
$
9.42
$
529.42
$
0.16
$
11.45
NM
82.27
%
21.37
%
82.27
%
NM
$
0.30
3.18
%
NM
$
2,477
25.98
%
25.98
%
NA
0.40
%
2.59
%
0.43
%
2.76
%
$
10.19
$
72.78
$
0.22
$
15.45
36.39x
65.95
%
13.34
%
65.95
%
NM
$
0.00
0.00
%
0.00
%
$
546
0.00
%
0.00
%
NA
0.37
%
NM
0.29
%
NM
$
9.09
$
316.92
$
0.35
$
10.76
NM
84.48
%
12.00
%
84.72
%
25.97x
$
0.16
1.76
%
NM
$
2,642
11.05
%
10.98
%
0.85
%
0.17
%
1.55
%
0.46
%
4.18
%
(1)
Average of High/Low or Bid/Ask price per share.
(2)
EPS (estimate core basis) is based on actual trailing 12 month
data, adjusted to omit non-operating items on a tax-effected basis.
(3)
P/E = Price to earnings; P/B = Price to book; P/A = Price to
assets; P/TB = Price to tangible book value; and P/Core = Price to core
earnings.
(4)
Indicated 12 month dividend, based on last quarterly dividend
declared.
(5)
Indicated 12 month dividend as a percent of trailing 12 month estimated core earnings.
(6)
ROA (return on assets) and ROE (return on equity) are indicated ratios based on
trailing 12 month common earnings and average common equity and total assets balances.
(7)
Excludes from averages and medians those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.18
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.19
Key Valuation Parameters:
Valuation Adjustment
Slight Upward
Slight Upward
No Adjustment
No Adjustment
No Adjustment
No Adjustment
Slight Downward
No Adjustment
No Adjustment
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.20
P/E Approach
. The P/E approach is generally the best indicator of long-term
value for a stock and we have given it the most significant weight among the valuation
approaches. Given certain similarities between the Companys and the Peer Groups
earnings composition and overall financial condition, the P/E approach was carefully
considered in this valuation. At the same time, recognizing that (1) the earnings
multiples will be evaluated on a pro forma basis for the Company; and (2) the Peer
Group companies have had the opportunity to realize the benefit of reinvesting and
leveraging the offering proceeds, we also gave weight to the other valuation
approaches.
P/B Approach
. P/B ratios have generally served as a useful benchmark in the
valuation of thrift stocks, particularly in the context of a conversion offering, as
the earnings approach involves assumptions regarding the use of proceeds. RP Financial
considered the P/B approach to be a valuable indicator of pro forma value, taking into
account the pricing ratios under the P/E and P/A approaches. We have also modified the
P/B approach to exclude the impact of intangible assets (i.e., price/tangible book
value or P/TB), in that the investment community frequently makes this adjustment in
its evaluation of this pricing approach.
P/A Approach
. P/A ratios are generally a less reliable indicator of market
value, as investors typically assign less weight to assets and attribute greater weight
to book value and earnings. Furthermore, this approach as set forth in the regulatory
valuation guidelines does not take into account the amount of stock purchases funded by
deposit withdrawals, thus understating the pro forma P/A ratio. At the same time, the
P/A ratio is an indicator of franchise value, and, in the case of highly capitalized
institutions, high P/A ratios may limit the investment communitys willingness to pay
market multiples for earnings or book value when ROE is expected to be low.
Trading of RCKB stock
. Converting institutions generally do not have stock
outstanding. Rockville Financial, however, has public shares outstanding due to the
mutual holding company form of ownership. Since Rockville Financial is currently
traded on NASDAQ, it is an indicator of investor interest in the Companys conversion
stock and therefore received some weight in our valuation. Based on the August 26,
2010, stock price of $11.43 per share and the 18,853,112 shares of Rockville Financial
stock outstanding, the Companys implied market value of $215.5 million was considered
in the valuation process. However, since the conversion stock will have different
characteristics than the minority shares, and since pro forma information has not been
publicly disseminated to date, the current trading price of Rockville Financials stock
was somewhat discounted herein but will become more important towards the closing of
the offering.
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.21
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.22
Impact of MHC Assets & Waived Dividends on Minority Ownership In 2nd Step
Financial and Stock Ownership Data as of June 30, 2010
Reflects Appraised Pro Forma Market Value as of August 26, 2010
=
(BOOK WAIVED DIVIDENDS) x PCT
BOOK
=
43.30
%
=
(VALUE MHC ASSETS) x Step 1
VALUE
=
41.81% (rounded)
10,689,250
56.70
%
8,163,862
43.30
%
18,853,112
100.00
%
Appraised Midpoint Value
Per Share
Aggregate
13,000,000
58.19
% (5)
$
10.00
$
130,000,000
9,340,608
41.81
% (5)
$
10.00
$
93,406,080
22,340,608
100.00
%
$
10.00
$
223,406,080
(1)
Net assets at MHC level, less aggregate dividends paid to MHC
(2)
Adjusted for exchange ratio reflecting offering of $10.00 per
share
(3)
Incorporates adjustment in ownership ratio for MHC assets and waived dividends
(4)
Reflects pro forma shares outstanding
(5)
Rounded to two decimal points.
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.23
Amount
($000)
$
11,540
(977
)
(188
)
5
394
$
10,774
(1)
Tax effected at 34.0%.
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.24
Public Market Pricing
Rockville Financial, Inc. and the Comparables
As of August 26, 2010
Market
Per Share Data
Capitalization
Core
Book
Dividends(4)
Financial Characteristics(6)
2nd Step
Price/
Market
12 Month
Value/
Pricing Ratios(3)
Amount/
Payout
Total
Equity/
Tang Eq/
NPAs/
Reported
Core
Exchange
Offering
Share(1)
Value
EPS(2)
Share
P/E
P/B
P/A
P/TB
P/Core
Share
Yield
Ratio(5)
Assets
Assets
Assets
Assets
ROA
ROE
ROA
ROE
Ratio
Amount
($)
($Mil)
($)
($)
(x)
(%)
(%)
(%)
(x)
($)
(%)
(%)
($Mil)
(%)
(%)
(%)
(%)
(%)
(%)
(%)
($Mil)
$
10.00
$
295.45
$
0.34
$
10.73
27.24x
93.20
%
16.82
%
93.55
%
29.31x
$
0.16
1.60
%
46.90
%
$
1,757
18.04
%
17.99
%
0.99
%
0.62
%
3.42
%
0.57
%
3.18
%
1.5131
$
171.93
$
10.00
$
256.92
$
0.40
$
11.58
23.50x
86.36
%
14.79
%
86.66
%
25.27x
$
0.18
1.80
%
45.49
%
$
1,737
17.13
%
17.07
%
1.00
%
0.63
%
3.67
%
0.59
%
3.42
%
1.3158
$
149.50
$
10.00
$
223.41
$
0.46
$
12.56
20.29x
79.62
%
12.99
%
79.94
%
21.81x
$
0.21
2.10
%
45.80
%
$
1,720
16.32
%
16.26
%
1.01
%
0.64
%
3.92
%
0.60
%
3.65
%
1.1441
$
130.00
$
10.00
$
189.90
$
0.54
$
13.89
17.13x
71.99
%
11.15
%
72.31
%
18.40x
$
0.25
2.50
%
46.00
%
$
1,703
15.49
%
15.43
%
1.02
%
0.65
%
4.20
%
0.61
%
3.91
%
0.9725
$
110.50
$
9.96
$
310.56
$
(0.20
)
$
13.92
18.32x
69.82
%
8.10
%
77.62
%
17.69x
$
0.24
2.03
%
31.90
%
$
2,930
11.35
%
10.56
%
3.93
%
-0.17
%
0.36
%
-0.23
%
-0.63
%
$
9.60
$
60.84
$
0.19
$
13.56
15.19x
67.16
%
6.77
%
73.61
%
16.20x
$
0.20
1.79
%
0.00
%
$
967
9.85
%
8.97
%
2.62
%
0.22
%
2.45
%
0.17
%
1.61
%
$
12.65
$
2,992.43
$
0.39
$
14.33
22.95x
88.33
%
18.22
%
137.26
%
23.37x
$
0.45
3.56
%
50.91
%
$
15,332
20.73
%
14.57
%
0.00
%
0.53
%
2.78
%
0.53
%
2.78
%
$
12.65
$
2,992.43
$
0.39
$
14.33
22.95x
88.33
%
18.22
%
137.26
%
23.37x
$
0.45
3.56
%
51.85
%
$
15,332
20.73
%
14.57
%
0.00
%
0.53
%
2.78
%
0.53
%
2.78
%
$
14.15
$
188.76
$
0.98
$
15.20
16.88x
92.57
%
10.94
%
103.83
%
18.15x
$
0.42
3.09
%
43.53
%
$
1,599
11.95
%
10.91
%
0.96
%
0.64
%
6.24
%
0.59
%
5.82
%
$
11.49
$
154.82
$
0.64
$
13.76
14.37x
91.33
%
9.74
%
107.99
%
16.24x
$
0.34
3.11
%
46.15
%
$
1,235
10.17
%
9.60
%
0.93
%
0.59
%
5.17
%
0.54
%
4.75
%
$
10.00
$
65.21
$
0.88
$
16.31
12.66x
61.31
%
6.08
%
61.31
%
11.36x
$
0.20
2.00
%
25.32
%
$
1,072
9.92
%
9.92
%
1.56
%
0.48
%
5.06
%
0.54
%
5.63
%
$
9.20
$
543.15
$
0.40
$
8.34
21.40x
110.31
%
20.42
%
121.53
%
23.00x
$
0.34
3.70
%
NM
$
2,660
18.60
%
17.17
%
0.61
%
0.96
%
5.17
%
0.89
%
4.81
%
$
15.11
$
322.98
$
0.56
$
13.76
24.77x
109.81
%
12.77
%
124.16
%
26.98x
$
0.08
0.53
%
13.11
%
$
2,529
11.63
%
10.42
%
0.81
%
0.58
%
4.94
%
0.54
%
4.53
%
$
12.86
$
154.82
$
1.12
$
14.41
12.02x
89.24
%
7.95
%
118.31
%
11.48x
$
0.40
3.11
%
37.38
%
$
1,948
8.89
%
6.84
%
0.30
%
0.66
%
7.79
%
0.69
%
8.16
%
$
11.00
$
148.75
$
0.32
$
13.06
30.56x
84.23
%
13.94
%
84.23
%
34.38x
$
0.20
1.82
%
55.56
%
$
1,067
16.55
%
16.55
%
1.05
%
0.46
%
2.68
%
0.41
%
2.38
%
$
15.39
$
56.54
$
1.36
$
14.29
11.40x
107.70
%
6.52
%
107.70
%
11.32x
$
0.76
4.94
%
56.30
%
$
867
6.05
%
6.05
%
0.06
%
0.59
%
9.74
%
0.59
%
9.81
%
$
38.47
$
81.71
$
4.28
$
32.47
8.91x
118.48
%
8.41
%
118.48
%
8.99x
$
0.92
2.39
%
21.30
%
$
972
7.10
%
7.10
%
1.57
%
0.99
%
13.99
%
0.98
%
13.86
%
$
10.00
$
57.72
$
0.64
$
14.30
8.33x
69.93
%
5.81
%
107.99
%
15.63x
$
0.52
5.20
%
43.33
%
$
993
9.31
%
6.57
%
0.37
%
0.74
%
7.80
%
0.39
%
4.16
%
$
11.49
$
216.28
$
0.75
$
10.35
14.19x
111.01
%
9.74
%
111.01
%
15.32x
$
0.48
4.18
%
59.26
%
$
2,220
8.78
%
8.78
%
NA
0.75
%
8.53
%
0.69
%
7.89
%
$
7.95
$
307.09
$
0.41
$
11.11
15.29x
71.56
%
10.36
%
116.23
%
19.39x
$
0.24
3.02
%
46.15
%
$
2,964
14.48
%
9.44
%
1.11
%
0.68
%
4.74
%
0.54
%
3.73
%
$
21.40
$
57.46
$
1.27
$
27.31
14.56x
78.36
%
7.97
%
83.53
%
16.85x
$
0.80
3.74
%
54.42
%
$
721
10.17
%
9.60
%
2.21
%
0.55
%
5.50
%
0.48
%
4.75
%
$
13.66
$
223.46
$
0.59
$
13.64
28.46x
100.15
%
14.46
%
104.04
%
23.15x
$
0.32
2.34
%
66.67
%
$
1,545
14.44
%
13.98
%
1.20
%
0.55
%
3.56
%
0.68
%
4.38
%
$
7.48
$
218.75
$
0.13
$
8.19
NM
91.33
%
17.71
%
91.33
%
NM
$
0.24
3.21
%
NM
$
1,235
19.39
%
19.39
%
0.63
%
0.34
%
1.64
%
0.31
%
1.52
%
(1)
Average of High/Low or Bid/Ask price per share.
(2)
EPS (estimate core basis) is based on actual trailing 12 month data, adjusted to omit non-operating items on a tax-effected basis, and is shown on a pro forma basis where appropriate.
(3)
P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible
book value; and P/Core = Price to core earnings.
(4)
Indicated 12 month dividend, based on last quarterly dividend declared.
(5)
Indicated 12 month dividend as a percent of trailing 12 month estimated core earnings.
(6)
ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing 12
month common earnings and average common equity and total assets balances.
(7)
Excludes from
averages and medians those companies the subject of actual or rumored acquisition activities or
unusual operating characteristics.
Source: SNL Financial, LC. and RP
®
Financial, LC.
calculations. The information provided in this table has been obtained from sources we believe
are reliable, but we cannot guarantee the accuracy or completeness of such information.
Copyright
(c) 2010 by RP
®
Financial, LC.
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.25
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.26
RP
®
Financial, LC.
VALUATION ANALYSIS
IV.27
Exchange Shares
Offering
Issued to the
Exchange
Total Shares
Shares
Public Shareholders
Ratio
(x)
29,545,455
17,192,500
12,352,955
1.5131
25,691,700
14,950,000
10,741,700
1.3158
22,340,608
13,000,000
9,340,608
1.1441
18,989,517
11,050,000
7,939,517
0.9725
100.00
%
58.19
%
41.81
%
100.00
%
58.19
%
41.81
%
100.00
%
58.19
%
41.81
%
100.00
%
58.19
%
41.81
%
$
295,454,550
$
171,925,000
$
123,529,550
$
256,917,000
$
149,500,000
$
107,417,000
$
223,406,080
$
130,000,000
$
93,406,080
$
189,895,170
$
110,500,000
$
79,395,170
(1)
Based on offering price of $10.00 per share.
Note:
Valuation and ownership ratios reflect dilutive impact of MHC assets upon completion of the
Second Step Conversion.