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Section 1: 424B3 (424B3)

424B3
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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-192930

 

Proxy Statement

  Prospectus

LOGO

  LOGO

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Stockholder:

On November 14, 2013, United Financial Bancorp, Inc., or United, and Rockville Financial, Inc., or Rockville, entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”) that provides for the combination of the two companies. Under the merger agreement, United will merge with and into Rockville, with Rockville as the surviving corporation (which we refer to as the “merger”). Rockville’s certificate of incorporation will be amended at the effective time of the merger to change its name to “United Financial Bancorp, Inc.” The merger will create the largest community bank headquartered in the Hartford-Springfield market with approximately $4.8 billion in assets, over 50 branches and a top five deposit market share in each of the Hartford and Springfield metropolitan statistical areas.

In the merger, each share of United common stock (except for specified shares of United common stock held by United or Rockville) will be converted into the right to receive 1.3472 shares of Rockville common stock (which we refer to as the “exchange ratio”). Although the number of shares of Rockville common stock that United stockholders will receive is fixed, the market value of the merger consideration will fluctuate with the market price of Rockville common stock and will not be known at the time United stockholders vote on the merger. Based on the closing price of Rockville’s common stock on the NASDAQ Global Select Market on November 14, 2013, the last trading day before public announcement of the merger, the exchange ratio represented approximately $18.35 in value for each share of United common stock and on February 4, 2014, the latest practicable trading day before the date of this document, the exchange ratio represented approximately $17.51 in value for each share of United common stock. The closing price of United common stock on the NASDAQ Global Select Market on November 14, 2013 was $16.04 per share. We urge you to obtain current market quotations for Rockville (trading symbol “RCKB”) and United (trading symbol “UBNK”).

Based on the current number of shares of United common stock outstanding and reserved for issuance under employee benefit plans, Rockville expects to issue approximately 28.4 million shares of common stock to United stockholders in the aggregate upon completion of the merger. The United stockholders as a group will own approximately 51% of the combined company following the merger.

United and Rockville will each hold a special meeting of its stockholders in connection with the merger. Each company’s stockholders will be asked to vote to approve the merger agreement and related matters, as described in the attached joint proxy statement/prospectus. Approval of the merger agreement requires the affirmative vote of at least two-thirds of the outstanding shares of Rockville common stock and the affirmative vote of a majority of the outstanding shares of United common stock.

The special meeting of United stockholders will be held on Tuesday, April 8, 2014 at the Springfield Marriott, 6th Floor, 2 Boland Way, Springfield, Massachusetts 01115, at 2:00 p.m. local time. The special meeting of Rockville stockholders will be held on Tuesday, April 8, 2014 at Maneeley’s Banquet, Catering & Conference Center, 65 Rye Street, South Windsor, Connecticut 06074, at 10:00 a.m. local time.

United’s board of directors recommends a vote “FOR” the approval of the merger agreement and “FOR” the other matters to be considered at the United special meeting.

Rockville’s board of directors unanimously recommends a vote “FOR” the approval of the merger agreement and “FOR” the other matters to be considered at the Rockville special meeting.

This joint proxy statement/prospectus describes the special meetings of United and Rockville, the merger, the documents related to the merger and other related matters. Please carefully read this entire joint proxy statement/prospectus, including “Risk Factors,” beginning on page 36, for a discussion of the risks relating to the proposed merger. You also can obtain information about Rockville and United from documents that each has filed with the Securities and Exchange Commission.

 

LOGO

   LOGO

William H. W. Crawford, IV

President and Chief Executive Officer

Rockville Financial, Inc.

  

Richard B. Collins

Chairman, President and Chief Executive Officer

United Financial Bancorp, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the merger or passed upon the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The securities to be issued in the merger are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either Rockville or United, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this joint proxy statement/prospectus is February 5, 2014, and it is first being mailed or otherwise delivered to the stockholders of Rockville and United on or about February 7, 2014.


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LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the Stockholders of Rockville Financial, Inc.:

Rockville Financial, Inc. will hold a special meeting of stockholders at 10:00 a.m. local time, on Tuesday, April 8, 2014, at Maneeley’s Banquet, Catering & Conference Center, 65 Rye Street, South Windsor, Connecticut 06074 to consider and vote upon the following matters:

 

    a proposal to approve the Agreement and Plan of Merger, dated as of November 14, 2013, by and between United Financial Bancorp, Inc. and Rockville Financial, Inc., pursuant to which United will merge with and into Rockville, as more fully described in the attached joint proxy statement/prospectus (which we refer to as the “Rockville merger proposal”);

 

    a proposal to adjourn the Rockville special meeting, if necessary or appropriate, to solicit additional proxies in favor of the Rockville merger proposal (which we refer to as the “Rockville adjournment proposal”);

 

    a proposal to approve, on an advisory (non-binding) basis, the compensation that certain executive officers of Rockville may receive in connection with the merger pursuant to existing agreements or arrangements with Rockville (which we refer to as the “Rockville compensation proposal”);

 

    a proposal to approve an amendment to Rockville’s certificate of incorporation that (1) sets the number of directors of Rockville, as the surviving corporation in the merger, in accordance with Rockville’s bylaws and (2) reclassifies the Rockville board of directors from a board with four classes of directors serving staggered four-year terms to a board with three classes of directors serving staggered three-year terms (which we refer to as the “Rockville certificate amendment proposal”); and

 

    to transact such other business as may properly come before the meeting or any adjournment thereof.

We have fixed the close of business on January 31, 2014 as the record date for the special meeting. Only Rockville common stockholders of record at that time are entitled to notice of, and to vote at, the Rockville special meeting, or any adjournment or postponement of the Rockville special meeting. Approval of the Rockville merger proposal requires the affirmative vote of at least two-thirds of the outstanding shares of Rockville common stock. Approval of each of the Rockville adjournment proposal and the Rockville compensation proposal requires the affirmative vote of a majority of the shares present or represented at the special meeting and entitled to vote on the matter. Approval of the Rockville certificate amendment proposal requires the affirmative vote of not less than 80% of the outstanding shares of Rockville common stock.

Rockville’s board of directors has unanimously adopted the merger agreement, has determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Rockville and its stockholders, and unanimously recommends that Rockville stockholders vote “FOR” the Rockville merger proposal, “FOR” the Rockville adjournment proposal, “FOR” the Rockville compensation proposal and “FOR” the Rockville certificate amendment proposal.

Your vote is very important. We cannot complete the merger unless Rockville’s common stockholders approve the merger agreement. If you fail to vote, mark “ABSTAIN” on your proxy or fail to instruct your bank or broker with respect to the Rockville merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

Regardless of whether you plan to attend the Rockville special meeting, please vote as soon as possible. If you hold stock in your name as a stockholder of record of Rockville, please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid return envelope or vote via telephone or the internet. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by the record holder.


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The enclosed joint proxy statement/prospectus provides a detailed description of the special meeting, the merger, the documents related to the merger and other related matters. We urge you to read the joint proxy statement/prospectus, including any documents incorporated in the joint proxy statement/prospectus by reference, and its annexes carefully and in their entirety.

If you have any questions or need assistance voting your shares, please contact our proxy solicitor, Morrow & Co., LLC, at (855) 264-1296.

 

BY ORDER OF THE BOARD OF DIRECTORS,
LOGO
William H. W. Crawford, IV
President and Chief Executive Officer

February 5, 2014


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LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the Stockholders of United Financial Bancorp, Inc.:

United Financial Bancorp, Inc. will hold a special meeting of stockholders at 2:00 p.m. local time, on Tuesday, April 8, 2014, at the Springfield Marriott, 6th Floor, 2 Boland Way, Springfield, Massachusetts 01115 to consider and vote upon the following matters:

 

    a proposal to approve the Agreement and Plan of Merger, dated as of November 14, 2013, by and between United Financial Bancorp, Inc. and Rockville Financial, Inc., pursuant to which United will merge with and into Rockville, as more fully described in the attached joint proxy statement/prospectus (which we refer to as the “United merger proposal”);

 

    a proposal to adjourn the United special meeting, if necessary or appropriate, to solicit additional proxies in favor of the United merger proposal (which we refer to as the “United adjournment proposal”);

 

    a proposal to approve, on an advisory (non-binding) basis, the compensation that certain executive officers of United may receive in connection with the merger pursuant to existing agreements or arrangements with United (which we refer to as the “United compensation proposal”); and

 

    to transact such other business as may properly come before the meeting or any adjournment thereof.

We have fixed the close of business on January 31, 2014 as the record date for the special meeting. Only United common stockholders of record at that time are entitled to notice of, and to vote at, the United special meeting, or any adjournment or postponement of the United special meeting.

United’s board of directors has adopted the merger agreement, has determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of United and its stockholders, and recommends a vote “FOR” the United merger proposal, “FOR” the United adjournment proposal and “FOR” the United compensation proposal.

Your vote is very important. We cannot complete the merger unless United’s common stockholders approve the merger agreement. If you fail to vote, mark “ABSTAIN” on your proxy or fail to instruct your bank or broker with respect to the United merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

Regardless of whether you plan to attend the United special meeting, please vote as soon as possible. If you hold stock in your name as a stockholder of record of United, please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid return envelope or vote via telephone or the internet. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by the record holder.

If you have any questions or need assistance voting your shares, please contact our proxy solicitor, AST Phoenix Advisory Partners, toll-free at (800) 833-2175.

 

By Order of the Board of Directors
LOGO
Richard B. Collins
Chairman, President and Chief Executive Officer

February 5, 2014


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REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about Rockville and United from documents filed with the Securities and Exchange Commission, or the SEC, that are not included in or delivered with this joint proxy statement/prospectus. You can obtain any of the documents filed with or furnished to the SEC by Rockville and/or United at no cost from the SEC’s website at http://www.sec.gov. You may also request copies of these documents, including documents incorporated by reference in this joint proxy statement/prospectus, at no cost by contacting the appropriate company at the following address:

 

Rockville Financial, Inc.

45 Glastonbury Boulevard, Suite 200

Glastonbury, CT 06033

Attention: Marliese L. Shaw

Senior Vice President, Investor Relations Officer

Telephone: (860) 291-3622

  

United Financial Bancorp, Inc.

95 Elm Street

West Springfield, MA 01089

Attention: Dena Hall

Senior Vice President, Marketing

Telephone: (413) 787-1292

To obtain timely delivery of these documents, you must request them no later than five business days before the date of your meeting. This means that Rockville and United stockholders requesting documents must do so by April 1, 2014, to receive them before their respective special meetings.

You should rely only on the information contained in, or incorporated by reference into, this document. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated February 5, 2014, and you should assume that the information in this document is accurate only as of such date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document. Neither the mailing of this document to United stockholders or Rockville stockholders nor the issuance by Rockville of shares of Rockville common stock in connection with the merger will create any implication to the contrary.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this document regarding United has been provided by United and information contained in this document regarding Rockville has been provided by Rockville.

See “Where You Can Find More Information” for more details.

 

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TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS

     v   

SUMMARY

     1   

RECENT DEVELOPMENTS

     15   

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF ROCKVILLE

     18   

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF UNITED

     21   

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL DATA

     23   

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

     25   

COMPARATIVE PER SHARE DATA

     34   

RISK FACTORS

     36   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     40   

THE UNITED SPECIAL MEETING

     41   

Date, Time and Place of Meeting

     41   

Matters to Be Considered

     41   

Recommendation of United’s Board of Directors

     41   

United Record Date and Quorum

     41   

Vote Required; Treatment of Abstentions and Failure to Vote

     42   

Shares Held by Officers and Directors

     42   

Voting of Proxies; Incomplete Proxies

     42   

Shares Held in “Street Name”

     42   

Revocability of Proxies and Changes to a United Stockholder’s Vote

     43   

Participants in Certain Benefit Plans

     43   

Solicitation of Proxies

     43   

Attending and Voting at the United Special Meeting

     44   

Delivery of Proxy Materials to Stockholders Sharing an Address

     44   

Assistance

     44   

UNITED PROPOSALS

     45   

PROPOSAL NO. 1—UNITED MERGER PROPOSAL

     45   

PROPOSAL NO. 2—UNITED ADJOURNMENT PROPOSAL

     45   

PROPOSAL NO. 3—UNITED COMPENSATION PROPOSAL

     45   

THE ROCKVILLE SPECIAL MEETING

     47   

Date, Time and Place of Meeting

     47   

Matters to Be Considered

     47   

Recommendation of Rockville’s Board of Directors

     47   

Rockville Record Date and Quorum

     47   

Vote Required; Treatment of Abstentions and Failure to Vote

     48   

Shares Held by Officers and Directors

     48   

Voting of Proxies; Incomplete Proxies

     48   

Shares Held in “Street Name”

     49   

 

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Revocability of Proxies and Changes to a Rockville Stockholder’s Vote

     49   

Participants in the Rockville Bank 401(k) Plan

     49   

Solicitation of Proxies

     50   

Attending and Voting at the Rockville Special Meeting

     50   

Delivery of Proxy Materials to Stockholders Sharing an Address

     50   

Assistance

     50   

ROCKVILLE PROPOSALS

     50   

PROPOSAL NO. 1—ROCKVILLE MERGER PROPOSAL

     50   

PROPOSAL NO. 2—ROCKVILLE ADJOURNMENT PROPOSAL

     51   

PROPOSAL NO. 3—ROCKVILLE COMPENSATION PROPOSAL

     51   

PROPOSAL NO. 4—ROCKVILLE CERTIFICATE AMENDMENT PROPOSAL

     52   

INFORMATION ABOUT ROCKVILLE

     53   

INFORMATION ABOUT UNITED

     53   

THE MERGER

     54   

Terms of the Merger

     54   

Background of the Merger

     54   

United’s Reasons for the Merger; Recommendation of United’s Board of Directors

     59   

Opinion of Sterne Agee

     62   

Prospective Financial Information Regarding United

     71   

Rockville’s Reasons for the Merger; Recommendation of Rockville’s Board of Directors

     73   

Opinion of RBCCM

     74   

Opinion of Sandler O’Neill

     80   

Prospective Financial Information Regarding Rockville

     89   

Interests of Rockville’s Directors and Executive Officers in the Merger

     90   

Interests of United’s Directors and Executive Officers in the Merger

     99   

Amendment to Rockville’s Certificate of Incorporation

     105   

Amendment to Rockville’s Bylaws

     105   

Public Trading Markets

     106   

Dividend Policy

     107   

Dissenters’ Rights in the Merger

     107   

Regulatory Approvals Required for the Merger

     107   

THE MERGER AGREEMENT

     110   

Structure of the Merger

     110   

Treatment of United Stock Options and Other Equity-Based Awards

     111   

Closing and Effective Time of the Merger

     111   

Conversion of Shares; Exchange of Certificates

     111   

Representations and Warranties

     112   

Covenants and Agreements

     114   

Stockholder Meetings and Recommendation of United’s and Rockville’s Boards of Directors

     119   

 

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Agreement Not to Solicit Other Offers

     119   

Conditions to Complete the Merger

     120   

Termination of the Merger Agreement

     121   

Effect of Termination

     122   

Termination Fee

     122   

Expenses and Fees

     124   

Amendment, Waiver and Extension of the Merger Agreement

     124   

ACCOUNTING TREATMENT

     125   

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     125   

DESCRIPTION OF CAPITAL STOCK OF ROCKVILLE

     128   

Authorized Capital Stock

     128   

Common Stock

     128   

Preferred Stock

     129   

COMPARISON OF STOCKHOLDERS’ RIGHTS

     130   

COMPARATIVE MARKET PRICES AND DIVIDENDS

     138   

LEGAL MATTERS

     139   

EXPERTS

     139   

Rockville

     139   

United

     139   

DEADLINES FOR SUBMITTING STOCKHOLDER PROPOSALS

     140   

Rockville

     140   

United

     140   

WHERE YOU CAN FIND MORE INFORMATION

     142   

Annex A—Merger Agreement

  

Annex B—Fairness Opinion of Sterne, Agee & Leach, Inc.

  

Annex C—Fairness Opinion of RBC Capital Markets, LLC

  

Annex D—Fairness Opinion of Sandler O’Neill + Partners, L.P.

  

Annex E—Form of Certificate of Amendment to Rockville Restated Certificate of Incorporation

  

Annex F—Form of Bylaw Amendment to Rockville Amended and Restated Bylaws

  

 

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QUESTIONS AND ANSWERS

The following are some questions that you may have about the merger and the Rockville and United special meetings, and brief answers to those questions. We urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger and the special meetings. Additional important information is also contained in the documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

Unless the context otherwise requires, references in this joint proxy statement/prospectus to “Rockville” refer to Rockville Financial, Inc., a Connecticut corporation, and its affiliates, and references to “United” refer to United Financial Bancorp, Inc., a Maryland corporation, and its affiliates.

 

Q: What is the merger?

 

A: Rockville and United have entered into an Agreement and Plan of Merger, dated as of November 14, 2013 (which we refer to as the “merger agreement”). The merger will create the largest community bank headquartered in the Hartford-Springfield market with approximately $4.8 billion in assets, over 50 branches and a top five deposit market share in each of the Hartford and Springfield metropolitan statistical areas.

Under the merger agreement, the two holding companies will merge, with United merging into Rockville. Immediately following this merger, United Bank, a federal savings bank and a wholly owned subsidiary of United, will merge into Rockville Bank, a state chartered savings bank and a wholly owned subsidiary of Rockville. We refer to this as the “bank merger.” Although the Rockville entities will be the “surviving entities” following the mergers, the name of the merged holding company will be “United Financial Bancorp, Inc.” and the name of the merged bank will be “United Bank.” A copy of the merger agreement is included in this joint proxy statement/prospectus as Annex A.

 

Q: What will United stockholders receive in the merger?

 

A: If the merger is completed, United stockholders will receive 1.3472 shares of Rockville common stock, which we refer to as the “exchange ratio”, for each share of United common stock held immediately prior to the merger. Rockville will not issue any fractional shares of Rockville common stock in the merger. United stockholders who would otherwise be entitled to a fractional share of Rockville common stock upon the completion of the merger will instead receive an amount in cash based on the average closing price per share of Rockville common stock for the five trading days ending on the third day preceding the day on which the merger is completed (which we refer to as the “Rockville closing share value”).

 

Q: What will Rockville stockholders receive in the merger?

 

A: If the merger is completed, Rockville stockholders will not receive any merger consideration and will continue to hold the shares of Rockville common stock that they currently hold. Following the merger, shares of Rockville common stock will continue to be traded on the NASDAQ Global Select Market, or NASDAQ, but, because the name of the surviving corporation will be United Financial Bancorp, Inc., Rockville will change its symbol to “UBNK.”

 

Q: Will the value of the merger consideration change between the date of this joint proxy statement/prospectus and the time the merger is completed?

 

A:

Although the number of shares of Rockville common stock that United stockholders will receive is fixed, the value of the merger consideration will fluctuate between the date of this joint proxy statement/prospectus and the completion of the merger based upon the market value for Rockville common stock. Any

 

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  fluctuation in the market price of Rockville common stock after the date of this joint proxy statement/prospectus will change the value of the shares of Rockville common stock that United stockholders will receive.

 

Q: Why am I receiving this joint proxy statement/prospectus?

 

A: We are delivering this document to solicit your proxy in connection with approval of the merger agreement and related matters.

To approve the merger agreement and related matters, each of the boards of directors of Rockville and United has called a special meeting of its respective stockholders. This document serves as the proxy statement for the Rockville special meeting and the United special meeting and describes the proposals to be presented at both special meetings.

This document is also a prospectus that is being delivered to United stockholders because Rockville is offering shares of its common stock to United stockholders in connection with the merger.

This joint proxy statement/prospectus contains important information about the merger and the other proposals being voted on at the special meetings. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares voted by proxy without attending your meeting. Your vote is important. We encourage you to submit your proxy as soon as possible.

 

Q: In addition to the merger proposal, what else are Rockville stockholders being asked to vote on?

 

A: In addition to the merger proposal, Rockville is soliciting proxies from its stockholders with respect to three additional proposals:

 

    to adjourn the Rockville special meeting, if necessary or appropriate, to solicit additional proxies in favor of the Rockville merger proposal (which we refer to as the “Rockville adjournment proposal”);

 

    to approve, on an advisory (non-binding) basis, the compensation that certain executive officers of Rockville may receive in connection with the merger pursuant to existing agreements or arrangements with Rockville (which we refer to as the “Rockville compensation proposal”); and

 

    to approve an amendment to Rockville’s certificate of incorporation that (1) sets the number of directors of Rockville, as the surviving corporation in the merger, in accordance with Rockville’s bylaws (effectively raising the number from 16 to 20 directors) and (2) reclassifies the Rockville board of directors from a board with four classes of directors serving staggered four-year terms to a board with three classes of directors serving staggered three-year terms (which we refer to as the “Rockville certificate amendment proposal”).

Completion of the merger is not conditioned upon approval of these proposals.

 

Q: In addition to the merger proposal, what else are United stockholders being asked to vote on?

 

A: In addition to the merger proposal, United is soliciting proxies from its stockholders with respect to two additional proposals:

 

    to adjourn the United special meeting, if necessary or appropriate, to solicit additional proxies in favor of the United merger proposal (which we refer to as the “United adjournment proposal”); and

 

    to approve, on an advisory (non-binding) basis, the compensation that certain executive officers of United may receive in connection with the merger pursuant to agreements or arrangements with United (which we refer to as the “United compensation proposal”).

Completion of the merger is not conditioned upon approval of these proposals.

 

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Q: How does Rockville’s board of directors recommend that I vote at the special meeting?

 

A: Rockville’s board of directors unanimously recommends that you vote “FOR” the Rockville merger proposal, “FOR” the Rockville adjournment proposal, “FOR” the Rockville compensation proposal and “FOR” the Rockville certificate amendment proposal.

 

Q: How does United’s board of directors recommend that I vote at the special meeting?

 

A: United’s board of directors recommends that you vote “FOR” the United merger proposal, “FOR” the United adjournment proposal and “FOR” the United compensation proposal.

 

Q: When and where are the meetings?

 

A: The Rockville special meeting will be held at Maneeley’s Banquet, Catering & Conference Center, 65 Rye Street, South Windsor, Connecticut 06074 on Tuesday, April 8, 2014, at 10:00 a.m. local time.

The United special meeting will be held at the Springfield Marriott, 6th Floor, 2 Boland Way, Springfield, Massachusetts 01115 on Tuesday, April 8, 2014, at 2:00 p.m. local time.

 

Q: What do I need to do now?

 

A: After you have carefully read this joint proxy statement/prospectus and have decided how you wish to vote your shares, please vote your shares promptly so that your shares are represented and voted at the applicable special meeting. If you are the stockholder of record, you must complete, sign, date and mail your proxy card in the enclosed postage-paid return envelope as soon as possible. Alternatively, you may vote through the internet or by telephone. Information and applicable deadlines for voting through the internet or by telephone are set forth in the enclosed proxy card instructions. If you hold your shares in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received from your bank or broker. “Street name” stockholders who wish to vote in person at the special meeting will need to obtain a legal proxy from the institution that holds their shares.

 

Q: Why is my vote important?

 

A: If you do not vote, it will be more difficult for Rockville or United to obtain the necessary quorum to hold its special meeting. In addition, your failure to submit a proxy or vote in person, failure to instruct your bank or broker how to vote, or abstention will have the same effect as a vote “AGAINST” approval of the merger agreement. The merger agreement must be approved by the affirmative vote of at least two-thirds of the outstanding shares of Rockville common stock entitled to vote on the merger agreement and by the affirmative vote of a majority of the outstanding shares of United common stock entitled to vote on the merger agreement. The Rockville board of directors and the United board of directors recommend that you vote “FOR” the Rockville merger proposal and the United merger proposal, respectively.

 

Q: If my shares of common stock are held in “street name” by my bank or broker, will my bank or broker automatically vote my shares for me?

 

A: Rockville stockholders: No. Your bank or broker cannot vote your shares without instructions from you. You should instruct your bank or broker how to vote your shares in accordance with the instructions provided to you. Please check the voting form used by your bank or broker.

United stockholders: No. Your bank or broker cannot vote your shares without instructions from you. You should instruct your bank or broker how to vote your shares in accordance with the instructions provided to you. Please check the voting form used by your bank or broker.

 

Q: Can I attend the meeting and vote my shares in person?

 

A:

Yes. All stockholders of Rockville and United, including stockholders of record and stockholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend their

 

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  respective meetings. If you plan to attend your meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you to be admitted. Rockville and United reserve the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the special meetings is prohibited without Rockville’s or United’s express written consent, as applicable.

Holders of record of Rockville and United common stock can vote in person at their respective meetings. If you are not a stockholder of record, you must obtain a proxy card, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the meetings.

 

Q: Can I change my vote?

 

A: Rockville stockholders: Yes. If you are a holder of record of Rockville common stock, you may revoke your proxy at any time before it is voted at the special meeting by (1) voting at a later date, (2) advising Rockville’s corporate secretary in writing or (3) voting at the special meeting. Attendance at the special meeting by itself will not automatically revoke your proxy. Rockville’s corporate secretary’s mailing address is: Corporate Secretary, Rockville Financial, Inc., 45 Glastonbury Boulevard, Suite 200, Glastonbury, Connecticut 06033. If you hold your shares in “street name” through a bank or broker, you should contact your bank or broker to revoke your proxy.

United stockholders: Yes. If you are a holder of record of United common stock, you may revoke your proxy at any time before it is voted at the special meeting by (1) voting at a later date, (2) advising United’s corporate secretary in writing or (3) voting at the special meeting. Attendance at the special meeting by itself will not automatically revoke your proxy. United’s corporate secretary’s mailing address is: Corporate Secretary, United Financial Bancorp, Inc., 95 Elm Street, West Springfield, Massachusetts 01089. If you hold your shares in “street name” through a bank or broker, you should contact your bank or broker to revoke your proxy.

 

Q: If I am a United stockholder, should I send in my United stock certificates now?

 

A: No. Please do not send in your United stock certificates with your proxy. After the merger, an exchange agent will send you instructions for exchanging United stock certificates for the merger consideration. See “The Merger Agreement—Conversion of Shares; Exchange of Certificates.”

 

Q: What should I do if I hold my shares of United common stock in book-entry form?

 

A: You are not required to take any special additional actions if your shares of United common stock are held in book-entry form. After the completion of the merger, shares of United common stock held in book-entry form automatically will be exchanged for the merger consideration, including shares of Rockville common stock in book-entry form and any cash to be paid in exchange for fractional shares in the merger.

 

Q: Whom may I contact if I cannot locate my United stock certificate(s)?

 

A: If you are unable to locate your original United stock certificate(s), you should contact Registrar and Transfer Company, United’s transfer agent, at (800) 368-5948.

 

Q: What should I do if I receive more than one set of voting materials?

 

A:

Rockville and United stockholders may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold shares of Rockville and/or United common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such

 

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  shares. If you are a holder of record of Rockville common stock or United common stock and your shares are registered in more than one name, you will receive more than one proxy card. In addition, if you are a holder of both Rockville common stock and United common stock, you will receive one or more separate proxy cards or voting instruction cards for each company. Please complete, sign, date and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this joint proxy statement/prospectus to ensure that you vote every share of Rockville common stock and/or United common stock that you own.

 

Q: When do you expect to complete the merger?

 

A: Rockville and United expect to complete the merger in the first half of 2014. However, neither Rockville nor United can assure you of when or if the merger will be completed. Rockville and United must first obtain stockholder and regulatory approval of the merger agreement and satisfy certain other closing conditions.

 

Q: Whom should I call with questions?

 

A: Rockville stockholders: If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus or need help voting your shares of Rockville common stock, please contact Rockville’s proxy solicitor, Morrow & Co., LLC, at the following address or phone number: 470 West Avenue, Stamford, Connecticut 06902, (855) 264-1296.

United stockholders: If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus or need help voting your shares of United common stock, please contact United’s proxy solicitor, AST Phoenix Advisory Partners, at the following address or phone number: 110 Wall Street, 27th Floor, New York, New York 10015, (800) 833-2175.

 

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SUMMARY

This summary highlights selected information from this joint proxy statement/prospectus. It may not contain all of the information that is important to you. We urge you to read carefully the entire joint proxy statement/prospectus, including the annexes, and the other documents to which we refer to fully understand the merger. See “Where You Can Find More Information.” Each item in this summary refers to the page of this joint proxy statement/prospectus on which that subject is discussed in more detail.

The merger agreement governs the merger. The merger agreement is included in this joint proxy statement/prospectus as Annex A. All descriptions in this summary and elsewhere in this joint proxy statement/prospectus of the terms and conditions of the merger are qualified by reference to the merger agreement. Please read the merger agreement carefully for a more complete understanding of the merger.

Information About the Companies (page 53)

Rockville Financial, Inc.

Rockville Financial, Inc. is a Connecticut corporation that owns all of the outstanding shares of common stock of Rockville Bank. At September 30, 2013, Rockville had, on a consolidated basis, assets of $2.22 billion, deposits of $1.69 billion and stockholders’ equity of $295.2 million. Rockville Bank, which is headquartered in Rockville, Connecticut, is a 22-branch community bank serving Tolland, Hartford and New London counties in Connecticut. Rockville Bank established a New Haven County Commercial Banking Office in Hamden, Connecticut, opened a full service Banking Center in West Hartford, Connecticut in January 2013 and opened a full service branch in Hamden, Connecticut in December 2013.

Rockville’s stock is traded on NASDAQ under the symbol “RCKB.”

Rockville’s principal office is located at 45 Glastonbury Boulevard, Suite 200, Glastonbury, Connecticut 06033, and its telephone number at that location is (860) 291-3600. Additional information about Rockville and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information,” beginning on page 142.

United Financial Bancorp, Inc.

United Financial Bancorp, Inc. is a Maryland corporation that owns all of the outstanding shares of common stock of United Bank. At September 30, 2013, United had, on a consolidated basis, assets of $2.49 billion, deposits of $1.95 billion and stockholders’ equity of $302.8 million. United Bank, a federal savings bank headquartered in West Springfield, Massachusetts, provides an array of financial products and services through its 16 branch offices and two express drive-up branches in the Springfield region of Western Massachusetts; seven branches in the Worcester region of Central Massachusetts; and 12 branches in Connecticut’s Hartford, Tolland and New Haven counties. United Bank also operates loan production offices located in Beverly, Massachusetts and Glastonbury, Connecticut. Through its Wealth Management Group, United Bank offers access to a wide range of investment and insurance products and services, as well as financial, estate and retirement strategies and products.

United’s stock is traded on NASDAQ under the symbol “UBNK.”

United’s principal office is located at 95 Elm Street, West Springfield, Massachusetts 01089, and its telephone number at that location is (413) 787-1700. Additional information about United and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information,” beginning on page 142.

 

 

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In the Merger, United Common Stockholders Will Receive Shares of Rockville Common Stock (page 110)

Rockville and United are proposing a strategic merger. If the merger is completed, United common stockholders will receive 1.3472 shares of Rockville common stock for each share of United common stock they hold immediately prior to the merger. Rockville will not issue any fractional shares of Rockville common stock in the merger. United stockholders who would otherwise be entitled to a fraction of a share of Rockville common stock upon the completion of the merger will instead receive, for the fraction of a share, an amount in cash based on the Rockville closing share value. For example, if you hold 100 shares of United common stock, you will receive 134 shares of Rockville common stock and a cash payment instead of the 0.72 shares of Rockville common stock that you otherwise would have received (100 shares × 1.3472 = 134.72 shares).

Rockville common stock is listed on NASDAQ under the symbol “RCKB,” and United common stock is listed on NASDAQ under the symbol “UBNK.” The following table shows the closing sale prices of Rockville common stock and United common stock as reported on NASDAQ on November 14, 2013, the last trading day before the public announcement of the merger agreement, and on February 4, 2014, the last practicable trading day before the date of this joint proxy statement/prospectus. This table also shows the implied value of the merger consideration payable for each share of United common stock, which we calculated by multiplying the closing price of Rockville common stock on those dates by the exchange ratio of 1.3472.

 

     Rockville
Common Stock
     United Common
Stock
     Implied Value of One
Share of United
Common Stock
 

November 14, 2013

   $ 13.62       $ 16.04       $ 18.35   

February 4, 2014

   $ 13.00       $ 17.61       $ 17.51   

Rockville’s Board of Directors Unanimously Recommends that Rockville Stockholders Vote “FOR” the Approval of the Merger Agreement and the Other Proposals Presented at the Rockville Special Meeting (page 73)

Rockville’s board of directors has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Rockville and its stockholders and has unanimously adopted the merger agreement. Rockville’s board of directors unanimously recommends that Rockville stockholders vote “FOR” the approval of the merger agreement and “FOR” the other proposals presented at the Rockville special meeting.

Rockville’s board of directors believes that United’s business and operations complement those of Rockville and that the merger would result in one of the premier community banks in New England, with approximately $4.8 billion in assets and over 50 banking locations from New Haven County, Connecticut to Springfield and Worcester, Massachusetts. The Rockville board considered that the combined company would have the scale and ability to deliver new and existing customers the best banking products and services, offer customers advanced banking technology solutions and provide them with more locations to do their banking. For additional factors considered by Rockville’s board of directors in reaching its decision to adopt the merger agreement, see “The Merger—Rockville’s Reasons for the Merger; Recommendation of Rockville’s Board of Directors.”

United’s Board of Directors Recommends that United Stockholders Vote “FOR” the Approval of the Merger Agreement and the Other Proposals Presented at the United Special meeting (page 59)

United’s board of directors has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of United and its stockholders and the directors in attendance at the November 14, 2013 board meeting voted unanimously to adopt the merger agreement. United’s board of directors recommends that United stockholders vote “FOR” the approval of the merger agreement and “FOR” the other proposals presented at the United special meeting.

 

 

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United’s board of directors believes that the merger will provide value to United stockholders and create a larger and more diversified financial institution that is both better equipped to respond to economic and industry developments and better positioned to develop and build on its existing market position throughout Massachusetts and Connecticut. For additional factors considered by United’s board of directors in reaching its decision to adopt the merger agreement, see “The Merger—United’s Reasons for the Merger; Recommendation of United’s Board of Directors.”

Opinion of United’s Financial Advisor (page 62 and Annex B)

Opinion of Sterne, Agee & Leach, Inc.

In connection with its consideration of the merger, on November 14, 2013, the United board of directors received from Sterne, Agee & Leach, Inc., United’s financial advisor (which we refer to as “Sterne Agee”), its oral opinion, which opinion was confirmed by delivery of a written opinion, dated November 14, 2013, as to the fairness to United, from a financial point of view and as of the date of the opinion, of the exchange ratio provided for in the merger. The full text of Sterne Agee’s written opinion is attached as Annex B to this joint proxy statement/prospectus. You are urged to read the opinion in its entirety for a description of the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Sterne Agee. The description of the opinion set forth herein is qualified in its entirety by reference to the full text of such opinion. Sterne Agee’s opinion speaks only as of the date of the opinion. The opinion is directed to the United board of directors and addresses only the fairness, from a financial point of view, of the exchange ratio offered to the United stockholders. It does not address the underlying business decision to proceed with the merger and does not constitute a recommendation to any United stockholder as to how the stockholder should vote at the United special meeting on the merger or any related matter.

For further information, see “The Merger—Opinion of Sterne Agee.”

Opinion of Rockville’s Financial Advisors (pages 74 and 80 and Annexes C and D)

Opinion of RBC Capital Markets, LLC

In connection with the merger, RBC Capital Markets, LLC (which we refer to as “RBCCM”), Rockville’s financial advisor, delivered to Rockville’s board of directors its oral opinion, which opinion was confirmed by delivery of a written opinion, dated November 14, 2013, as to the fairness to Rockville, from a financial point of view and as of the date of the opinion, of the exchange ratio provided for in the merger. The full text of RBCCM’s written opinion is attached as Annex C to this joint proxy statement/prospectus. You should read the entire opinion for a discussion of, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by RBCCM in rendering its opinion. RBCCM’s opinion speaks only as of the date of the opinion. RBCCM delivered its opinion to Rockville’s board of directors for the benefit and use of Rockville’s board of directors (in its capacity as such) in connection with and for purposes of its evaluation of the merger. RBCCM’s opinion addressed only the exchange ratio from a financial point of view and did not address any other aspect of the merger and no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to Rockville or in which Rockville might engage or as to the underlying business decision of Rockville to proceed with or effect the merger. RBCCM’s opinion should not be construed as creating any fiduciary duty on the part of RBCCM to any party and does not address any other aspect of the merger and does not constitute a recommendation to any stockholder as to how to vote or act in connection with the proposed merger or any related matter.

 

 

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Opinion of Sandler O’Neill + Partners, L.P.

In connection with the merger, Sandler O’Neill + Partners, L.P. (which we refer to as “Sandler O’Neill”) delivered a written opinion, dated November 14, 2013, to the Rockville board of directors as to the fairness, from a financial point of view and as of the date of such opinion, to Rockville of the merger consideration. The full text of Sandler O’Neill’s written opinion is attached as Annex D to this joint proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O’Neill in rendering its opinion. The description of the opinion is qualified in its entirety by reference to the opinion. Rockville stockholders are urged to read the entire opinion carefully in connection with their consideration of the proposed merger. Sandler O’Neill’s opinion speaks only as of the date of the opinion. The opinion was directed to the Rockville board of directors and is directed only to the fairness of the merger consideration to Rockville from a financial point of view. It does not address the underlying business decision of Rockville to engage in the merger or any other aspect of the merger and is not a recommendation to any Rockville stockholder as to how such stockholder should vote at the special meeting with respect to the merger or any other matter.

For further information, see “The Merger—Opinion of RBCCM” and “The Merger—Opinion of Sandler O’Neill.”

What Holders of United Stock Options and Other Equity-Based Awards Will Receive (page 111)

Restricted Stock. As of the effective time of the merger, the restrictions on each United restricted stock award will lapse, and the shares of United common stock underlying such awards will be treated as issued and outstanding shares of United common stock for all purposes under the merger agreement, including the payment of merger consideration.

Stock Options. At the effective time of the merger, each outstanding option to purchase shares of United common stock will become fully exercisable and be converted into an option to purchase Rockville common stock on the same terms and conditions as were applicable prior to the merger, except that (1) the number of shares of Rockville common stock subject to the new option will be equal to the product of the number of shares of United common stock subject to the existing option and the exchange ratio (rounding fractional shares down to the nearest whole share), and (2) the exercise price per share of Rockville common stock under the new option will be equal to the exercise price per share of United common stock of the existing option divided by the exchange ratio (rounded up to the nearest whole cent).

Rockville Will Hold its Special Meeting on April 8, 2014 (page 47)

The special meeting of Rockville stockholders will be held on Tuesday, April 8, 2014, at 10:00 a.m. local time, at Maneeley’s Banquet, Catering & Conference Center, 65 Rye Street, South Windsor, Connecticut 06074. At the special meeting, Rockville stockholders will be asked to approve:

 

    the Rockville merger proposal;

 

    the Rockville adjournment proposal;

 

    the Rockville compensation proposal; and

 

    the Rockville certificate amendment proposal.

Only holders of record at the close of business on January 31, 2014 will be entitled to vote at the special meeting. Each share of Rockville common stock is entitled to one vote on each proposal to be considered at the Rockville special meeting. As of the record date, there were 25,979,020 shares of Rockville common stock entitled to vote at the special meeting. As of the record date, the directors and executive officers of Rockville and their affiliates beneficially owned and were entitled to vote approximately 880,602 shares of Rockville common stock representing approximately 3.4% of the shares of Rockville common stock outstanding on that date.

 

 

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United Will Hold its Special Meeting on April 8, 2014 (page 41)

The special meeting of United stockholders will be held on Tuesday, April 8, 2014, at 2:00 p.m. local time, at the Springfield Marriott, 6th Floor, 2 Boland Way, Springfield, Massachusetts 01115. At the special meeting, United stockholders will be asked to approve:

 

    the United merger proposal;

 

    the United adjournment proposal; and

 

    the United compensation proposal.

Only holders of record at the close of business on January 31, 2014 will be entitled to vote at the special meeting. Each share of United common stock is entitled to one vote on each proposal to be considered at the United special meeting. As of the record date, there were 19,784,428 shares of United common stock entitled to vote at the special meeting. As of the record date, the directors and executive officers of United and their affiliates beneficially owned and were entitled to vote approximately 698,169 shares of United common stock representing approximately 3.5% of the shares of United common stock outstanding on that date.

Required Vote; Treatment of Abstentions and Failure to Vote

Rockville merger proposal:

 

    Standard: Approval of the Rockville merger proposal requires the affirmative vote of at least two-thirds of the outstanding shares of Rockville common stock entitled to vote on the proposal.

 

    Effect of failure to vote, abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker how to vote with respect to the Rockville merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

Rockville adjournment proposal and Rockville compensation proposal:

 

    Standard: Approval of each of the Rockville adjournment proposal and the Rockville compensation proposal requires the affirmative vote of a majority of the shares present or represented at the special meeting and entitled to vote on the matter.

 

    Effect of failure to vote, abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card with respect to the Rockville adjournment proposal or the Rockville compensation proposal, it will have the same effect as a vote “AGAINST” the proposal. If you fail to submit a proxy card or vote in person at the Rockville special meeting or fail to instruct your bank or broker how to vote with respect to such proposals, it will have no effect on such proposals.

Rockville certificate amendment proposal:

 

    Standard: Approval of the Rockville certificate amendment proposal requires the affirmative vote of not less than 80% of the outstanding shares of Rockville common stock entitled to vote on the proposal.

 

    Effect of failure to vote, abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker how to vote with respect to the Rockville certificate amendment proposal, it will have the same effect as a vote “AGAINST” the proposal.

United merger proposal:

 

    Standard: Approval of the United merger proposal requires the affirmative vote of a majority of the outstanding shares of United common stock entitled to vote on the proposal.

 

 

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    Effect of failure to vote, abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker how to vote with respect to the United merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

United adjournment proposal and United compensation proposal:

 

    Standard: Approval of each of the United adjournment proposal and the United compensation proposal requires the affirmative vote of a majority of votes cast (in person or by proxy) at the United special meeting and entitled to vote on such proposals.

 

    Effect of failure to vote, abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker how to vote with respect to the United adjournment proposal or the United compensation proposal, it will have no effect on such proposals.

The Merger Is Generally Tax-Free to Holders of United Common Stock as to the Shares of Rockville Common Stock They Receive (page 125)

The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (which we refer to as the “Code”), and tax counsel for each of Rockville and United has provided a legal opinion to that effect. Such opinions have been filed as exhibits to the registration statement of which this joint proxy statement/prospectus is a part. Accordingly, unless the holder is subject to special treatment under the tax laws, the merger will be tax-free to a holder of United common stock for U.S. federal income tax purposes as to the shares of Rockville common stock he or she receives in the merger, except for any gain or loss that may result from the receipt of cash instead of fractional shares of Rockville common stock that such holder of United common stock would otherwise be entitled to receive.

For further information, see “Material U.S. Federal Income Tax Consequences of the Merger.”

The U.S. federal income tax consequences described above may not apply to all holders of United common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your independent tax advisor for a full understanding of the particular tax consequences of the merger to you.

Rockville’s Officers and Directors Have Interests in the Merger that Differ from Your Interests (page 90)

Rockville stockholders should be aware that some of Rockville’s directors and executive officers have interests in the merger and have arrangements that are different from, or in addition to, those of Rockville stockholders generally. Rockville’s board of directors was aware of these interests and considered these interests, among other matters, when making its decision to adopt the merger agreement, and in recommending that Rockville stockholders vote in favor of approving the merger agreement.

These interests include the following:

 

    As of the effective time of the merger, the restrictions on all outstanding Rockville restricted stock awards, including those held by directors and executive officers, will lapse, and all outstanding options to purchase Rockville common stock, including those held by directors and executive officers, will become fully exercisable.

 

   

Rockville has entered into a new employment agreement with William H. W. Crawford, IV, Rockville’s current President and Chief Executive Officer, which will be effective as of and subject to the completion of the merger. Under the new employment agreement, which extends the terms of Mr. Crawford’s employment until the third anniversary of the effective time of the merger,

 

 

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Mr. Crawford will serve as Chief Executive Officer of both the surviving corporation and the surviving bank. When effective, the new employment agreement will supersede and replace any prior employment, retention, change of control or other similar agreement with Mr. Crawford.

 

    Under the merger agreement, Mr. Crawford will be placed in the class of directors of the surviving corporation whose term will expire at the first annual meeting following the closing of the merger and will be nominated to a full term at such annual meeting. During the period beginning immediately following the effective time of the merger and extending through the point in time immediately prior to the later of the surviving corporation’s third annual meeting of stockholders following the effective time or the 2017 annual meeting of stockholders (which period we refer to as the “three-year period”), the removal of Mr. Crawford from the Chief Executive Officer position (or any determination not to nominate him as a director) will require the affirmative vote of at least two-thirds of the full board of directors (excluding Mr. Crawford).

 

    As of the effective time of the merger, the board of directors of the surviving corporation will consist of 20 members (16 if Rockville stockholders do not approve the Rockville certificate amendment proposal), and half of the board of directors will consist of current directors of Rockville. Under the bylaws of the surviving corporation, the number of directors of the surviving corporation board will be determined by a two-thirds vote of the entire board; provided, however that, during the three-year period, the board will consist of an equal number of former members of the board of directors of Rockville (or their designees) (which we refer to as the “former Rockville directors”), including Mr. Crawford, and an equal number of former members of the board of directors of United (or their designees) (which we refer to as “former United directors”). Subject to the satisfaction of the surviving corporation’s then-existing re-nomination policies and criteria applicable to incumbent directors, all former Rockville directors whose terms expire at the first and second annual meetings following the effective time of the merger will be nominated for full terms. In addition, during the three-year period, no former Rockville director serving as of the effective time of the merger will be ineligible for re-election as a director of the surviving corporation by virtue of being 70 years of age or more at the time of re-election.

 

    During the three-year period, Raymond H. Lefurge, Jr., the current Chairman of the Board of both Rockville and Rockville Bank, will serve as Vice Chairman of the Board of both the surviving corporation and the surviving bank. During the three-year period, the board committees of the surviving corporation will consist of an equal number of former Rockville directors and former United directors. In addition, as of the effective time of the merger, former Rockville directors will be appointed as chairs of the compensation and risk committees.

 

    Rockville previously entered into employment agreements with certain executive officers that entitle the executives to payments and benefits if the executive’s employment is terminated without cause or the executive resigns for good reason within two years of a change in control.

 

    Rockville Bank previously established supplemental executive retirement benefits with certain executive officers that provide the executives with full vesting in their SERP benefits if the executive’s employment is terminated without cause or the executive resigns for good reason within two years of a change in control.

 

 

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The following table sets forth the aggregate consideration payable to each of Rockville’s directors and executive officers in connection with the merger, assuming: (1) the effective time of the merger occurred on December 31, 2013, (2) a per share price of Rockville’s common stock of $14.72, and (3) in the case of executive officers, their employment is terminated without cause on December 31, 2013. However, Rockville anticipates that the executive officer payments will not be triggered in all cases except for Messrs. Koniecki, Lund and Trachimowicz. The amounts shown are based on multiple assumptions that may or may not occur, including assumptions described in this joint proxy statement/prospectus, and do not reflect certain compensation actions that may occur before the completion of the merger.

 

Name

   Total  

Executive Officers of Rockville and/or Rockville Bank

  

Scott C. Bechtle

   $ 1,719,906   

William H. W. Crawford

   $ 3,485,262   

Stanley S. Koniecki

   $ 1,547,885   

Mark A. Kucia

   $ 2,175,838   

Brandon C. Lorey

   $ 1,430,522   

John T. Lund

   $ 2,138,273   

Eric R. Newell

   $ 1,538,530   

Marino J. Santarelli

   $ 2,043,823   

Richard J. Trachimowicz

   $ 1,918,829   

Non-Employee Directors

  

Michael A. Bars

   $ 37,263   

C. Perry Chilberg

   $ 37,263   

David A. Engelson

   $ 37,263   

Joseph F. Jeamel, Jr.

   $ 39,466   

Kristen A. Johnson

   $ 37,263   

Raymond H. Lefurge, Jr.

   $ 37,263   

Stuart E. Magdefrau

   $ 37,263   

Rosemarie Novello Papa

   $ 37,263   

Richard M. Tkacz

   $ 37,263   

All Directors and Executive Officers as a Group (18 persons)

  

$

18,336,438

  

The amounts shown for non-employee directors above reflect the value of acceleration of the vesting of restricted stock and stock options to each director. For a more complete description of these interests, see “The Merger—Interests of Rockville’s Directors and Executive Officers in the Merger.”

United’s Officers and Directors Have Interests in the Merger that Differ from Your Interests (page 99)

United stockholders should be aware that some of United’s directors and executive officers have interests in the merger and have arrangements that are different from, or in addition to, those of United stockholders generally. United’s board of directors was aware of these interests and considered these interests, among other matters, when making its decision to adopt the merger agreement, and in recommending that United stockholders vote in favor of approving the merger agreement.

These interests include the following:

 

    As of the effective time of the merger, the restrictions on all outstanding United restricted stock awards, including those held by directors and executive officers, will lapse, and all outstanding options to purchase United common stock, including those held by directors and executive officers, will become fully exercisable.

 

 

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    Rockville has entered into an employment agreement with J. Jeffrey Sullivan, United’s current Executive Vice President and Chief Operating Officer, which will be effective as of and subject to the completion of the merger. Under the employment agreement, which provides for Mr. Sullivan’s employment until the third anniversary of the effective time of the merger, Mr. Sullivan will serve as President of both the surviving corporation and the surviving bank. When effective, the employment agreement will supersede and replace any prior employment, retention, change of control or other similar agreement between United and Mr. Sullivan.

 

    Under the merger agreement, Mr. Sullivan will be placed in the class of directors of the surviving corporation whose term will expire at the first annual meeting following the closing of the merger and will be nominated to a full term at such annual meeting. During the three-year period, the removal of Mr. Sullivan from the President position (or any determination not to nominate him as a director) will require the affirmative vote of at least two-thirds of the full board of directors (excluding Mr. Sullivan).

 

    Rockville has entered into an advisory agreement with Richard B. Collins, United’s current Chairman, President and Chief Executive Officer, which will be effective as of and subject to the completion of the merger. Under the advisory agreement, which is for a period of one year following the effective time of the merger and which contains a two-year non-competition covenant, Mr. Collins will provide advisory services to the surviving corporation.

 

    As of the effective time of the merger, the board of directors of the surviving corporation will consist of 20 members (16 if Rockville stockholders do not approve the Rockville certificate amendment proposal), and half of the board of directors will consist of current directors of United (excluding Mr. Collins who will be replaced by Mr. Sullivan). Under the bylaws of the surviving corporation, the number of directors of the surviving corporation board will be determined by a two-thirds vote of the entire board; provided, however that, during the three-year period, the board will consist of an equal number of former United directors, including Mr. Sullivan but excluding Mr. Collins, and an equal number of former Rockville directors. Subject to the satisfaction of the surviving corporation’s then-existing re-nomination policies and criteria applicable to incumbent directors, all former United directors whose terms expire at the first and second annual meetings following the effective time of the merger will be nominated for full terms. In addition, during the three-year period, no former United director serving as of the effective time of the merger will be ineligible for re-election as a director of the surviving corporation by virtue of being 70 years of age or more at the time of re-election.

 

    During the three-year period, Robert A. Stewart, Jr., United’s current lead director, will serve as Chairman of the Board of both the surviving corporation and the surviving bank as well as chair of the executive committee of the surviving corporation. During the three-year period, the board committees of the surviving corporation will consist of an equal number of former United directors and former Rockville directors. In addition, as of the effective time of the merger, former United directors will be appointed as chairs of the executive, audit and governance and nominating committees.

 

    United previously entered into an employment agreement, a change of control or severance agreement with several of its officers, which entitle each of them to certain payments and benefits upon a termination in connection with a change in control such as the merger. The United change in control agreements with Charles R. Valade, Executive Vice President of United, and Mark Roberts, Chief Financial Officer of United, provide for severance payments upon certain qualifying terminations in connection with a change in control equal to $540,168 and $577,329, respectively. The change in control agreements also provide for the continuation of health benefits for a twenty-four month period. The employment agreement with Mr. Collins provides severance upon certain qualifying terminations in connection with a change in control equal to approximately $1,856,410.

 

 

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    The continued indemnification of current directors and officers of United and United Bank pursuant to the terms of the merger agreement and providing these individuals with director’s and officer’s liability insurance.

 

    The terms of the restricted stock and stock option awards held by United directors and officers provide for accelerated vesting of the awards upon a change in control such as the merger. The value of the acceleration of equity awards to United’s executive officers in the aggregate would be $64,400 and to United’s non-employee directors in the aggregate would be $87,166, based on a per share price of United common stock of $19.38.

The following table sets forth the amount of payments and benefits that may be paid or become payable to each of the named executive officers and directors of United in connection with the merger, assuming: (1) the effective time of the merger occurred on December 31, 2013 and (2) a per share price of United common stock of $19.38, the average closing price per share over the first five business days following the announcement of the merger agreement. The amounts shown below are estimates based on multiple assumptions that may or may not actually occur, including assumptions described in this joint proxy statement/prospectus, and do not reflect certain compensation actions that may occur before the completion of the merger. As a result, the actual amounts to be received by a named executive officer or director may differ materially from the amounts set forth below.

The amounts set forth below assume that employment of each of Messrs. Collins and Roberts is terminated without cause following the closing of the merger. However, United anticipates that the change in control benefits, other than the acceleration of “single trigger” restricted stock awards and options and SERP benefits, for Messrs. Sullivan and Valade will not be triggered as each will continue to be employed with the resulting company following the merger.

 

Name

   Cash      Equity      Pension/
NQDC
     Perquisites/
Benefits
     Total  

Executive Officers

              

Richard B. Collins

   $ 1,856,410       $ —         $ 2,971,383       $ —         $ 4,827,793   

Mark A. Roberts

     577,329         —           822,810         24,400         1,424,539   

J. Jeffrey Sullivan

     —           —           2,267,897         —           2,267,897   

Charles R. Valade

     —           64,400         489,285         —           553,685   

Directors

              

Paula A. Aiello

     —           13,202         —           —           13,202   

Thomas P. O’Brien

     —           36,982         —           —           36,982   

David J. O’Connor

     —           36,982         —           —           36,982   

For a more complete description of these interests, see “The Merger—Interests of United’s Directors and Executive Officers in the Merger.”

United Stockholders Are NOT Entitled To Assert Dissenters’ Rights (page 107)

Under the Maryland General Corporation Law (which we refer to as the “MGCL”), which is the law under which United is incorporated, the holders of United common stock will not be entitled to any appraisal rights or dissenters’ rights in connection with the merger. For more information, see “The Merger—Dissenters’ Rights in the Merger.”

 

 

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Conditions that Must Be Satisfied or Waived for the Merger To Occur (page 120)

Currently, United and Rockville expect to complete the merger in the first half of 2014. As more fully described in this joint proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include:

 

    approval of the merger agreement by United’s stockholders and by Rockville’s stockholders;

 

    authorization for listing on NASDAQ of the shares of Rockville common stock to be issued in the merger;

 

    the receipt of required regulatory approvals from, or the provision of notice to, a number of regulatory bodies, including the Board of Governors of the Federal Reserve System (which we refer to as the “Federal Reserve Board”), the Federal Deposit Insurance Corporation (which we refer to as the “FDIC”), the Office of the Comptroller of the Currency (which we refer to as the “OCC”), the Connecticut Banking Commissioner (which we refer to as the “Connecticut Banking Commissioner”) and the Massachusetts Board of Bank Incorporation (which we refer to as the “BBI”);

 

    effectiveness of the registration statement of which this joint proxy statement/prospectus is a part;

 

    the absence of any order, injunction or other legal restraint preventing the completion of the merger or making the completion of the merger illegal;

 

    subject to the materiality standards provided in the merger agreement, the accuracy of the representations and warranties of Rockville and United;

 

    performance in all material respects by each of Rockville and United of its obligations under the merger agreement; and

 

    receipt by each of Rockville and United of an opinion from its counsel as to certain tax matters.

Neither United nor Rockville can be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.

Termination of the Merger Agreement (page 121)

The merger agreement can be terminated at any time prior to completion of the merger in the following circumstances:

 

    by mutual written consent;

 

    by either party if (1) a required regulatory approval has been denied or a governmental authority enjoins or prohibits the merger or (2) any requisite regulatory approval has been granted but such requisite regulatory approval contains a materially burdensome condition;

 

    by either party if the merger has not been completed on or before September 14, 2014 (which we refer to as the “termination date”);

 

    by either party if the other party breaches any of the covenants or agreements or any of the representations or warranties set forth in the merger agreement so that the conditions to closing the merger cannot be satisfied and the breach is not cured within 30 days following written notice to the party committing such breach, or by its nature or timing cannot be cured during such period;

 

   

by either United or Rockville, if the board of directors of the other party (1) fails to recommend in this joint proxy statement/prospectus that its stockholders approve the merger agreement (or, in the case of Rockville, that its stockholders approve the Rockville certificate amendment proposal) or withdraws,

 

 

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modifies or qualifies such recommendation, or fails to recommend against acceptance of a tender offer or exchange offer for its outstanding common stock that has been publicly disclosed within ten business days after the commencement of such tender or exchange offer, (2) (A) recommends or endorses an acquisition proposal, or (B) fails to issue a press release announcing its opposition to such acquisition proposal within ten business days after an acquisition proposal is publicly announced, or (3) materially breaches certain obligations, including with respect to the non-solicitation of acquisition proposals or calling a meeting of its stockholders and recommending that they approve the merger agreement; or

 

    by either party, if either party fails to obtain stockholder approval of the merger agreement.

Termination Fee (page 122)

If the merger agreement is terminated under certain circumstances involving a competing offer, United or Rockville may be required to pay to the other party a termination fee equal to $15,000,000.

Amendments to Rockville’s Certificate of Incorporation (page 105 and Annex E)

In connection with the merger, Rockville’s certificate of incorporation will be amended at the effective time of the merger to change the name of the surviving corporation to “United Financial Bancorp, Inc.” Approval of the merger agreement by Rockville stockholders also constitutes approval of the foregoing amendment to Rockville’s certificate of incorporation, which we refer to as the “name change amendment.”

In addition, the merger agreement requires Rockville to submit to its stockholders the Rockville certificate amendment proposal, which would set the number of directors of the surviving corporation in accordance with the surviving corporation’s bylaws (effectively raising the number from 16 to 20) and reclassify the surviving corporation board of directors from a four-class board with staggered four-year terms to a three-class board with staggered three-year terms. Although Rockville agrees to use its reasonable best efforts to obtain stockholder approval of the Rockville certificate amendment proposal (which requires the approval of not less than 80% of the outstanding shares of Rockville common stock), stockholder approval of the Rockville certificate amendment proposal is not a condition to the closing of the merger.

A copy of the proposed amendment of the certificate of incorporation is attached hereto as Annex E to this joint proxy statement/prospectus.

Corporate Governance Agreements and Amendment to Rockville’s Bylaws (page 105 and Annex F)

On November 14, 2013, the board of directors of Rockville adopted a resolution amending Rockville’s bylaws, effective as of the effective time of the merger. We refer to this amendment as the “bylaw amendment,” a copy of which is attached as Annex F to this joint proxy statement/prospectus. The bylaw amendment provides:

 

    Upon the effective time of the merger, the board of directors of the surviving corporation will consist of an equal number of former Rockville directors, including Mr. Crawford, and former United directors, excluding Mr. Collins, but including Mr. Sullivan.

 

    During the three-year period:

 

    the number of directors of the surviving corporation will be determined by a two-thirds vote of the entire board of directors; provided the board of directors will consist of an equal number of former Rockville directors and former United directors and, subject to the satisfaction of the surviving corporation’s then-existing re-nomination policies and criteria applicable to incumbent directors, all former Rockville directors and former United directors whose terms expire at the first and second annual meetings following the effective time will be nominated for full terms;

 

 

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    the committees of the board of directors will consist of an equal number of former Rockville directors and former United directors;

 

    the governance and nominating committee will nominate for election to the full board, by majority vote of the former Rockville directors on the committee (with respect to the election of a successor to a former Rockville director) or majority vote of the former United directors on the committee (with respect to the election of a successor to a former United director), as the case may be, board nominees for election and/or re-election to the board of directors and candidates to fill vacancies;

 

    the board of directors will consider for election to the board of directors only nominees recommended by the governance and nominating committee;

 

    the removal of Mr. Crawford from the Chief Executive Officer position (or any determination not to nominate him as a director) or the removal of Mr. Sullivan from the President position (or any determination not to nominate him as a director) will require the affirmative vote of at least two-thirds of the full board of directors (excluding the officer at issue);

 

    the surviving corporation’s revised bylaws relating to board size and composition (half former Rockville directors and half former United directors), the Chairman and Vice Chairman positions, and committee powers and composition can be amended only by an affirmative vote of at least two-thirds of the full board of directors; and

 

    no former Rockville director or former United director who served as a director of Rockville or United as of the effective time will be ineligible for re-election as a director by virtue of being 70 years or more at the time of re-election.

 

    As of the effective time of the merger, the following individuals will be appointed to the following positions:

 

    Robert A. Stewart, Jr., United’s lead director, will serve as Chairman of the Board of the surviving corporation and chairman of the executive committee;

 

    Raymond H. Lefurge, Jr., the current Chairman of Rockville and Rockville Bank, will serve as Vice Chairman of the surviving corporation;

 

    the chairman of the audit committee will be a former United director;

 

    the chairman of the compensation committee will be a former Rockville director;

 

    the chairman of the governance and nominating committee will be a former United director; and

 

    the chairman of the risk committee will be a former Rockville director.

Under the merger agreement, the board of directors of the surviving bank at the effective time will be constituted in the same manner and with the same individuals as the board of directors of the surviving corporation and subject to the same requirements set forth in the bylaw amendment. However, the board of directors of the surviving bank will consist of 20 members equally divided between the parties whereas the surviving corporation will have 20 members only if the Rockville certificate amendment proposal passes. If the Rockville certificate amendment proposal does not pass, the board of directors of the surviving corporation will consist of 16 members equally divided between the parties.

Employment and Advisory Agreements (pages 92, 101 and 102)

Simultaneous with the execution of the merger agreement, Rockville entered into employment agreements with each of Messrs. Crawford and Sullivan, to be effective as of and subject to the completion of the merger. These agreements set forth the terms and conditions of each such individual’s employment relationship with

 

 

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Rockville following the effective time of the merger and, when effective, supersede and replace any prior employment, retention, change of control or other similar agreement with such individual. Also, simultaneous with the execution of the merger agreement, Rockville entered into an advisory agreement with Mr. Collins, which advisory agreement is effective as of and subject to the completion of the merger.

For more detail on the terms of these employment and advisory agreements, see “The Merger—Interests of Rockville’s Directors and Executive Officers in the Merger” and “The Merger—Interests of United’s Directors and Executive Officers in the Merger.”

Regulatory Approvals Required for the Merger (page 107)

To complete the transactions contemplated by the merger agreement, Rockville and United must receive approvals from, among others, the Federal Reserve Board, the FDIC, the Connecticut Banking Commissioner and the BBI. Notice to the OCC of the merger of United Bank with and into Rockville Bank is also required, although no approval is required in connection with such notice. Rockville and United have filed applications and notifications to obtain the required regulatory approvals.

Although neither Rockville nor United knows of any reason why it cannot obtain these regulatory approvals in a timely manner, Rockville and United cannot be certain when or if they will be obtained.

The Rights of United Stockholders Will Change as a Result of the Merger (page 130)

The rights of United stockholders will change as a result of the merger due to differences in Rockville’s and United’s governing documents and states of incorporation. The rights of United stockholders are governed by Maryland law and by United’s articles of incorporation and bylaws, each as amended to date. Upon the completion of the merger, United stockholders will become stockholders of Rockville, as the continuing legal entity in the merger, and the rights of United stockholders will therefore be governed by Connecticut law and Rockville’s certificate of incorporation and bylaws.

See “Comparison of Stockholders’ Rights” for a description of the material differences in stockholders’ rights under each of the Rockville and United governing documents.

Risk Factors (page 36)

You should consider all the information contained in or incorporated by reference into this joint proxy statement/prospectus in deciding how to vote for the proposals presented in the joint proxy statement/prospectus. In particular, you should consider the factors described under “Risk Factors.”

 

 

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RECENT DEVELOPMENTS

Rockville

The following presents a summary of Rockville’s financial results for the three months and years ended December 31, 2013 and 2012.

Rockville Financial, Inc.

Condensed Consolidated Statements of Net Income

(Unaudited)

 

(In thousands, except share data)    For the Three Months
Ended December 31,
     For the Years
Ended December 31,
 
     2013      2012      2013      2012  

Net interest income

   $ 16,976       $ 17,027       $ 67,057       $ 67,008   

Provision for loan losses

     720         909         2,046         3,587   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income after provision for loan losses

     16,256         16,118         65,011         63,421   

Total non-interest income

     2,959         5,164         17,051         14,707   

Total non-interest expense

     17,175         15,028         62,466         55,696   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

     2,040         6,254         19,596         22,432   

Provision for income taxes

     283         1,929         5,369         6,635   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 1,757       $ 4,325       $ 14,227       $ 15,797   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted-average shares—basic

     25,444,330         27,510,100         26,061,942         27,796,116   

Weighted-average shares—diluted

     25,872,666         27,901,498         26,426,220         28,025,610   

Net income per share:

           

Basic

   $ 0.07       $ 0.16       $ 0.55       $ 0.57   

Diluted

     0.07         0.16         0.54         0.56   

Dividends declared

     0.10         0.26         0.40         0.52   

The highlights as of and for the three months and year ended December 31, 2013 included the following:

 

    Net income was $1.8 million, or $0.07 per diluted share, for the quarter ended December 31, 2013 compared to $4.3 million, or $0.16 per diluted share, for the quarter ended December 31, 2012. Included in the fourth quarter of 2013 are merger and acquisition related expenses totaling $2.1 million, which is the primary driver for the decrease from the fourth quarter of 2012.

 

    The tax-equivalent net interest margin for the quarter ended December 31, 2013 decreased 47 basis points to 3.23% from 3.70% for the comparable 2012 period. The tax-equivalent net interest margin for the year ended December 31, 2013 was 3.37%, a decline of 40 basis points from 3.77% for the year ended December 31, 2012.

 

    Earning assets grew by 15% in 2013.

 

    Net loans increased $110.0 million, or 7%, to $1.70 billion at December 31, 2013 from $1.59 billion at December 31, 2012. Growth was experienced primarily in commercial real estate and commercial business loans.

 

    Deposits increased $230.5 million, or 15%, to $1.74 billion at December 31, 2013 compared to $1.50 billion at December 31, 2012, reflecting a 12% increase in non-interest bearing deposits. Total core deposits increased 20% from December 31, 2012 to December 31, 2013.

 

    The allowance for loan losses to non-performing loans ratio was 140.55% at December 31, 2013 compared to 115.08% compared to December 31, 2012.

 

 

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    Non-performing assets to total assets was 0.66% at December 31, 2013 compared to 0.95% at December 31, 2012.

 

    Operating expenses for the three months ended December 31, 2013 were flat compared to the three months ended December 31, 2012 when excluding the $2.1 million in merger and acquisition expenses.

 

    Residential mortgage originations were $282 million in 2013 compared to $293.5 million in 2012.

United

The following presents a summary of United’s financial results for the three months and years ended December 31, 2013 and 2012.

United Financial Bancorp, Inc.

Condensed Consolidated Statements of Net Income

(Unaudited)

 

(In thousands, except share data)    For the Three Months
Ended December 31,
    For the Years
Ended December 31,
 
     2013      2012     2013      2012  

Net interest income

   $ 19,352       $ 16,235      $ 78,890       $ 56,179   

Provision for loan losses

     1,125         689        4,092         3,139   
  

 

 

    

 

 

   

 

 

    

 

 

 

Net interest income after provision for loan losses

     18,227         15,546        74,798         53,040   

Total non-interest income

     3,239         2,969        12,028         10,623   

Total non-interest expense

     16,007         22,305        62,962         56,240   
  

 

 

    

 

 

   

 

 

    

 

 

 

Income (loss) before income taxes

     5,459         (3,790     23,864         7,423   

Provision for income taxes

     1,454         942        6,462         3,795   
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income (loss)

   $ 4,005       $ (4,732   $ 17,402       $ 3,628   
  

 

 

    

 

 

   

 

 

    

 

 

 

Weighted-average shares—basic

     19,717,679         17,190,744        19,779,667         15,234,896   

Weighted-average shares—diluted

     20,056,963         17,190,744        20,073,219         15,421,777   

Net income (loss) per share:

          

Basic

   $ 0.20       $ (0.28   $ 0.88       $ 0.24   

Diluted

     0.20         (0.28     0.87         0.24   

Dividends declared

     0.11         0.10        0.43         0.38   

The highlights as of and for the three months and year ended December 31, 2013 included the following:

 

    Net income was $4.0 million, or $0.20 per diluted share, for the quarter ended December 31, 2013 compared to a net of loss of $4.7 million, or $0.28 per diluted share, for the quarter ended December 31, 2012. The fourth quarter 2013 results included merger-related expenses totaling $598,000. The net loss for the 2012 period was primarily attributable to a $4.5 million expense related to the termination of United’s employee stock ownership plan and merger-related expenses totaling $4.0 million associated with the acquisition of New England Bancshares, Inc.

 

    Return on average assets was 0.65% and return on average equity was 5.27% for the quarter ended December 31, 2013.

 

    Net interest income of $19.4 million for the quarter ended December 31, 2013 increased 19.2% compared to the quarter ended December 31, 2012, primarily due to an increase in average interest-earning assets due to the acquisition of New England Bancshares in the fourth quarter of 2012 and solid organic loan growth, offset in part by net interest margin compression.

 

 

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    Net interest margin declined six basis points to 3.37% for the quarter ended December 31, 2013 from 3.43% for the comparable 2012 period.

 

    Loans increased by $65.8 million, or 3.6%, to $1.88 billion at December 31, 2013 from $1.82 billion at December 31, 2012, primarily due to growth in the commercial mortgage, residential mortgage and construction loan portfolios.

 

    Deposits increased by $98.3 million, or 5.3%, to $1.95 billion at December 31, 2013 compared to $1.85 billion at December 31, 2012 reflecting growth of $71.7 million, or 6.3%, in core account balances and an increase of $26.6 million, or 3.8%, in certificates of deposit.

 

    The non-performing loans to total loans ratio was 0.87% at December 31, 2013 and the net charge-offs to average loans ratio was 0.15% for the year ended December 31, 2013.

 

    The allowance for loan losses to non-performing loans ratio was 82% at December 31, 2013, essentially flat compared to the prior year end.

 

 

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF ROCKVILLE

The following selected consolidated financial information for the years ended December 31, 2008 through December 31, 2012 is derived from audited financial statements of Rockville. The financial information as of and for the nine months ended September 30, 2013 and 2012 is derived from unaudited financial statements and, in the opinion of Rockville’s management, reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data for those dates. The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2013. You should not assume the results of operations for any past periods indicate results for any future period. You should read this information in conjunction with Rockville’s consolidated financial statements and related notes thereto included in Rockville’s Annual Report on Form 10-K for the year ended December 31, 2012, in Rockville’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 and in other prior filings made with the SEC, which are incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

 

    For the Nine
Months Ended
September 30,
    For the Years Ended December 31,  
    2013     2012     2012     2011     2010(1)     2009(1)     2008(1)  

(Dollars in thousands, except per share amounts)

                                         

Selected Operating Data:

             

Interest and dividend income

  $ 57,769      $ 58,296      $ 77,952      $ 75,580      $ 75,699      $ 76,062      $ 77,545   

Interest expense

    7,688        8,315        10,944        17,471        22,161        29,775        34,946   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

    50,081        49,981        67,008        58,109        53,538        46,287        42,599   

Provision for loan losses

    1,326        2,678        3,587        3,021        4,109        1,961        2,393   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan losses

    48,755        47,303        63,421        55,088        49,429        44,326        40,206   

Non-interest income (loss)

    14,092        9,543        14,707        14,759        9,404        6,972        (8,987

Non-interest expense

    45,291        40,668        55,696        59,016        39,850        36,631        33,762   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

    17,556        16,178        22,432        10,831        18,983        14,667        (2,543

Income tax provision (benefit)

    5,086        4,706        6,635        3,739        6,732        4,935        (956
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ 12,470      $ 11,472      $ 15,797      $ 7,092      $ 12,251      $ 9,732      $ (1,587
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share:

             

Basic

  $ 0.47      $ 0.41      $ 0.57      $ 0.25      $ 0.44      $ 0.35      $ (0.06
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

  $ 0.47      $ 0.41      $ 0.56      $ 0.25      $ 0.44      $ 0.35      $ (0.06
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dividends per share

  $ 0.30      $ 0.26      $ 0.52      $ 0.27      $ 0.162      $ 0.132      $ 0.132   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) On March 3, 2011, Rockville completed a second-step conversion of the Bank from a mutual holding company structure to a stock holding company structure. As a result, earnings and dividends per share data related to years ended prior to the date of completion of the conversion have been restated to give retroactive recognition to the exchange ratio applied in the conversion (1.5167).

 

 

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(In thousands)   At September 30,     At December 31,  
    2013     2012     2012     2011     2010     2009     2008  

Selected Financial Condition Data:

             

Total assets

  $ 2,219,080      $ 1,949,187      $ 1,998,799        1,749,872      $ 1,678,073      $ 1,571,134      $ 1,533,073   

Available for sale securities

    370,127        245,952        241,389        151,237        125,447        102,751        141,250   

Held to maturity securities

    14,141        6,935        6,084        9,506        13,679        19,074        24,138   

Federal Home Loan Bank stock

    15,053        15,867        15,867        17,007        17,007        17,007        17,007   

Loans receivable, net

    1,637,325        1,530,617        1,586,985        1,457,398        1,410,498        1,361,019        1,291,791   

Cash and cash equivalents

    54,471        38,365        35,315        40,985        60,708        19,307        14,901   

Deposits

    1,692,072        1,477,130        1,504,680        1,326,766        1,219,260        1,129,108        1,042,508   

Mortgagors’ and investors’ escrow accounts

    3,635        3,364        6,776        5,852        6,131        6,385        6,077   

Advances from the Federal Home Loan Bank and other borrowings

    196,246        118,865        143,106        65,882        261,423        263,802        322,882   

Total stockholders’ equity

    295,173        327,289        320,611        333,471        166,428        157,428        145,777   

Allowance for loan losses

    18,703        18,079        18,477        16,025        14,312        12,539        12,553   

Non-performing loans(1)

    12,514        14,023        16,056        12,610        12,360        12,046        10,435   

 

(1) Non-performing loans include loans for which Rockville 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 and are not accruing interest.

 

    At or For the
Nine Months Ended
September 30,
    At or and For the Years Ended
December 31,
 
        2013             2012         2012     2011     2010     2009     2008  

Selected Financial Ratios and Other Data:

             

Performance Ratios:

             

Return on average assets

    0.79     0.82     0.84     0.39     0.76     0.63     (0.11 )% 

Return on average equity

    5.40        4.66        4.83        2.30        7.48        6.44        (1.03

Tax equivalent net interest rate spread(1)

    3.26        3.58        3.61        3.04        3.19        2.73        2.63   

Tax equivalent net interest margin(2)

    3.43        3.80        3.81        3.40        3.49        3.10        3.09   

Non-interest expense to average assets

    2.88        2.90        2.94        3.28        2.48        2.36        2.35   

Efficiency ratio(3)

    70.58        68.32        68.16        80.99        63.31        68.78        100.45   

Average interest-earning assets to average interest-bearing liabilities

    129.69        135.48        133.85        134.88        120.68        118.55        118.50   

Dividend payout ratio

    65.77        65.44        91.00        99.13        37.01        37.89        —     

Capital Ratios:

             

Stockholders’ equity to total assets

    13.30        16.79        16.04        19.06        9.92        10.02        9.51   

Average stockholders’ equity to average assets

    14.71        17.57        17.30        17.12        10.21        9.74        10.76   

Total capital to risk-weighted assets

    18.35        22.73        21.86        25.43        13.73        14.07        14.16   

Tier I capital to risk-weighted assets

    17.25        21.51        20.64        24.26        12.62        12.98        12.88   

Tier I capital to total average assets

    13.92        17.10        16.51        19.51        10.39        10.15        10.43   

Asset Quality Ratios:

             

Allowance for loan losses as a percent of total loans

    1.13        1.17        1.15        1.09        1.00        0.91        0.96   

Allowance for loan losses as a percent of non-performing loans

    149.45        128.93        115.08        127.08        115.79        104.09        120.30   

Net charge-offs to average outstanding loans during the period(4)

    0.09        0.06        0.07        0.09        0.17        0.16        0.04   

Non-performing loans as a percent of total loans

    0.76        0.91        1.00        0.86        0.87        0.88        0.80   

Non-performing loans as a percent of total assets

    0.56        0.72        0.80        0.72        0.74        0.77        0.68   

Other Data:

             

Number of full service offices

    17        17        18        18        18        18        17   

Number of limited service offices

    4        4        5        4        4        4        4   

 

 

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(1) Represents the difference between the tax equivalent weighted-average yield on average interest-earning assets and the weighted-average cost of interest-bearing liabilities.
(2) Represents tax equivalent net interest income as a percent of average interest-earning assets.
(3) Represents non-interest expense divided by the sum of net interest income and non-interest income.
(4) For the nine months ended September 30, 2013 and 2012, calculated based on year to date net charge-offs annualized.

 

 

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF UNITED

The following selected consolidated financial information for the years ended December 31, 2008 through December 31, 2012 is derived from audited financial statements of United. The financial information as of and for the nine months ended September 30, 2013 and 2012 is derived from unaudited financial statements and, in the opinion of United’s management, reflects all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of this data for those dates. The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2013. You should not assume the results of operations for any past periods indicate results for any future period. You should read this information in conjunction with United’s consolidated financial statements and related notes thereto included in United’s Annual Report on Form 10-K for the year ended December 31, 2012, in United’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 and in other prior filings made with the SEC, which are incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

 

    Nine Months Ended
September 30,
    Years Ended December 31,  
    2013     2012     2012     2011     2010     2009     2008  
    (Dollars in thousands, except per share amounts)  

Selected Operating Data:

           

Interest and dividend income

  $ 71,162      $ 51,040      $ 71,171      $ 71,074      $ 73,858      $ 62,986      $ 64,814   

Interest expense

    11,624        11,096        14,992        18,261        20,947        21,986        25,003   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income before provision for loan losses

    59,538        39,944        56,179        52,813        52,911        41,000        39,811   

Provision for loan losses

    2,967        2,450        3,139        3,242        2,285        2,998        1,846   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan losses

    56,571        37,494        53,040        49,571        50,626        38,002        37,965   

Non-interest income

    8,789        7,654        10,623        9,353        8,716        8,676        5,220   

Non-interest expense

    46,955        33,935        56,240        44,062        43,841        36,858        30,690   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

    18,405        11,213        7,423        14,862        15,501        9,820        12,495   

Income tax expense

    5,008        2,853        3,795        3,678        5,469        4,014        5,197   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 13,397      $ 8,360      $ 3,628      $ 11,184      $ 10,032      $ 5,806      $ 7,298   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share

  $ 0.68      $ 0.57      $ 0.24      $ 0.75      $ 0.66      $ 0.38      $ 0.44   

Diluted earnings per share

  $ 0.67      $ 0.56      $ 0.24      $ 0.74      $ 0.65      $ 0.38      $ 0.44   

Dividends per share

  $ 0.32      $ 0.28      $ 0.38      $ 0.34      $ 0.30      $ 0.28      $ 0.27   

Number of shares outstanding:

           

Basic

    19,800,557        14,578,253        15,234,896        14,929,714        15,302,505        15,265,192        16,445,388   

Diluted

    20,078,865        14,827,428        15,421,777        15,198,702        15,394,761        15,273,375        16,445,388   

 

    At September 30,     At December 31,  
    2013     2012     2012     2011     2010     2009     2008  
    (Dollars in thousands)  

Selected Financial Condition Data:

           

Total assets

  $ 2,490,737      $ 1,683,684      $ 2,402,303      $ 1,623,752      $ 1,584,877      $ 1,541,040      $ 1,263,134   

Cash and cash equivalents

    58,960        28,344        30,679        61,518        83,069        21,877        13,572   

Investment securities available-for-sale

    264,423        238,842        294,322        221,813        205,852        243,304        313,506   

Investment securities held-to-maturity

    97,991        91,469        82,986        115,897        132,475        63,174        3,191   

Loans, net(1)

    1,882,508        1,207,902        1,807,401        1,112,941        1,066,197        1,115,416        864,421   

Deposits

    1,946,398        1,275,160        1,848,175        1,229,975        1,143,301        1,038,927        782,663   

Short-term borrowings

    60,446        14,579        79,229        17,260        21,029        57,303        73,042   

Long-term debt

    153,662        140,287        133,969        126,857        173,307        198,173        163,564   

Subordinated debentures

    5,933        5,608        9,630        5,539        5,448        5,357        —     

Stockholders’ equity

    302,758        230,163        307,189        227,361        222,576        225,246        227,714   

Non-performing assets(2)

    14,586        10,353        17,340        10,577        10,970        17,832        5,795   

 

 

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     At or For the Nine
Months Ended
September 30,
    At or For the Years Ended December 31,  
         2013             2012         2012     2011     2010     2009     2008  

Selected Financial Ratios and Other Data:

              

Performance Ratios(3):

              

Return on average assets

     0.74     0.68     0.21     0.70     0.65     0.46     0.62

Return on average equity

     5.88        4.88        1.52        4.94        4.49        2.67        3.23   

Average equity to average assets

     12.56        13.90        13.70        14.15        14.56        17.17        19.06   

Interest rate spread(4)

     3.36        3.17        3.18        3.17        3.25        2.83        2.69   

Net interest margin(5)

     3.54        3.46        3.45        3.51        3.65        3.39        3.47   

Average interest-earning assets to average interest-bearing liabilities

     125.55        129.79        129.12        128.20        127.83        130.87        135.95   

Total non-interest expense to average total assets

     2.59        2.75        3.22        2.75        2.85        2.91        2.59   

Efficiency ratio

     68.89        71.72        85.08        71.08        71.42        75.45        66.16   

Dividend payout ratio

     47.26        48.77        152.18        45.31        45.74        72.99        60.78   

Regulatory Capital Ratios(3, 6):

              

Tier I risk-based capital

     12.26        13.85        12.98        16.17        15.49        15.73        17.76   

Tier I (core) capital

     10.04        11.35        10.69        12.23        11.53        12.14        12.31   

Tangible Equity Ratio

     10.04        11.35        10.69        12.23        11.53        12.14        12.31   

Total risk-based capital

     12.94        14.77        13.61        17.09        16.34        16.53        18.71   

Asset Quality Ratios(3):

              

Non-performing assets as a percent of total assets(2)

     0.59        0.61        0.72        0.65        0.69        1.16        0.46   

Non-performing loans as a percent of total loans(2)

     0.65        0.73        0.81        0.75        0.88        1.45        0.55   

Allowance for loan losses as a percent of total loans

     0.72        1.03        0.67        0.99        0.93        0.82        0.95   

Allowance for loan losses as a percent of non-performing loans(2)

     111.04        140.49        82.20        131.68        105.86        56.36        171.98   

Number of full service customer facilities

     35        22        38        22        22        22        15   

 

(1) The allowance for loan losses at September 30, 2013 and 2012 and December 31, 2012, 2011, 2010, 2009 and 2008 was $13.6 million, $12.6 million, $12.1 million, $11.1 million, $10.0 million, $9.2 million and $8.3 million, respectively.
(2) Non-performing assets consist of non-performing loans, foreclosed other real estate owned (“OREO”) and other non-performing assets. Non-performing loans consist of non-accrual and accruing loans 90 days or more overdue, while OREO consists of real estate acquired through foreclosure and real estate acquired by acceptance of a deed-in-lieu of foreclosure.
(3) Asset Quality Ratios and Regulatory Capital Ratios are end-of-period ratios. With the exception of end-of-period ratios, all ratios are based on average monthly balances during the indicated periods and are annualized where appropriate.
(4) The interest rate spread represents the difference between weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities.
(5) The net interest margin represents net interest income as a percent of average interest-earning assets.
(6) Regulatory Capital Ratios are reported for United Bank only.

 

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL DATA

The following table shows selected unaudited pro forma condensed combined consolidated financial information about the financial condition and results of operations of Rockville giving effect to the merger with United. The selected unaudited pro forma condensed combined consolidated financial information assumes that the merger is accounted for under the acquisition method of accounting with Rockville treated as the acquirer. Under the acquisition method of accounting, the assets and liabilities of United, as of the effective date of the merger, will be recorded by Rockville at their respective estimated fair values and the excess of the merger consideration over the fair value of United’s net assets will be allocated to goodwill.

The table sets forth the information as if the merger had become effective on September 30, 2013, with respect to financial condition data, and on January 1, 2012 and January 1, 2013, with respect to the results of operations data. The selected unaudited pro forma condensed combined consolidated financial data has been derived from and should be read in conjunction with the unaudited pro forma condensed combined consolidated financial information, including the notes thereto, which is included in this joint proxy statement/prospectus under “Unaudited Pro Forma Condensed Combined Consolidated Financial Statements.”

The selected unaudited pro forma condensed combined consolidated financial information is presented for illustrative purposes only and does not necessarily indicate the financial results of the combined companies had the companies actually been combined at the beginning of the periods presented. The selected unaudited pro forma condensed combined consolidated financial information also does not consider any potential impacts of current market conditions on revenues, potential revenue enhancements, anticipated cost savings and expense efficiencies, among other factors. Further, as explained in more detail in the notes accompanying the more detailed unaudited pro forma condensed combined consolidated financial information included under “Unaudited Pro Forma Condensed Combined Consolidated Financial Statements,” the pro forma allocation of purchase price reflected in the selected unaudited pro forma condensed combined consolidated financial information is subject to adjustment and may vary from the actual purchase price allocation that will be recorded at the time the merger is completed. Additionally, the adjustments made in the unaudited pro forma condensed combined consolidated financial information, which are described in those notes, are preliminary and may be revised.

Selected Unaudited Pro Forma Condensed Combined Consolidated Financial Data

(Dollars in thousands, except per share amounts)

 

     For the Nine Months
Ended September 30, 2013
     For the Year Ended
December 31, 2012
 

Pro Forma Net Income Information:

     

Net interest income

   $ 112,527       $ 127,063   

Provision for loan losses

     4,293         6,726   

Income before income taxes

     36,787         30,955   

Net income

     26,404         20,140   

 

    At September 30, 2013  

Pro Forma Balance Sheet Information:

 

Loans receivable, net

  $ 3,508,783   

Total assets

    4,784,283   

Deposits

    3,643,323   

Federal Home Loan Bank advances and other borrowings

    419,485   

Total stockholders’ equity

    664,346   

 

 

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    For the Nine Months
Ended September 30, 2013
    For the Year Ended
December 31, 2012
 

Per Common Share:

   

Earnings—basic

  $ 0.50      $ 0.42   

Earnings—diluted

    0.49        0.41   

Cash dividends declared per common share

    0.30        0.52   

 

 

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UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined consolidated financial information and explanatory notes show the impact on the historical financial positions and results of operations of Rockville and United and have been prepared to illustrate the effects of the merger involving Rockville and United under the acquisition method of accounting with Rockville treated as the acquirer. Under the acquisition method of accounting, the assets and liabilities of United, as of the effective date of the merger, will be recorded by Rockville at their respective fair values and the excess of the merger consideration over the fair value of United’s net assets will be allocated to goodwill. The unaudited pro forma condensed combined consolidated balance sheet as of September 30, 2013 is presented as if the merger with United had occurred on September 30, 2013. The unaudited pro forma condensed combined consolidated net income statements for the year ended December 31, 2012 and the nine months ended September 30, 2013 are presented as if the merger had occurred on January 1, 2012 and January 1, 2013. The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the merger and, with respect to the net income statements only, expected to have a continuing impact on consolidated results of operations.

The unaudited pro forma condensed combined consolidated financial information is presented for illustrative purposes only and does not necessarily indicate the financial results of the combined companies had the companies actually been combined at the beginning of the periods presented. The adjustments included in these unaudited pro forma condensed combined consolidated financial statements are preliminary and may be revised. The unaudited pro forma condensed combined consolidated financial information also does not consider any potential impacts of potential revenue enhancements, anticipated cost savings and expense efficiencies, among other factors.

As explained in more detail in the accompanying notes to the unaudited pro forma condensed combined consolidated financial information, the pro forma allocation of purchase price reflected in the unaudited pro forma condensed combined consolidated financial information is subject to adjustment and may vary from the actual purchase price allocation that will be recorded at the time the merger is completed. Adjustments may include, but not be limited to, changes in (1) United’s balance sheet through the effective time of the merger; (2) the aggregate value of the merger consideration paid if the price of Rockville’s stock varies from the assumed $13.62 per share; (3) total merger-related expenses if consummation and/or implementation costs vary from currently estimated amounts; and (4) the underlying values of assets and liabilities if market conditions differ from current assumptions.

The unaudited pro forma condensed combined consolidated financial information is provided for informational purposes only. The unaudited pro forma condensed combined consolidated financial information is not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the transaction been completed as of the dates indicated or that may be achieved in the future. The preparation of the unaudited pro forma condensed combined consolidated financial information and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma condensed combined consolidated financial statements should be read together with:

 

    The accompanying notes to the unaudited pro forma condensed combined consolidated financial information;

 

    Rockville’s separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2012, included in Rockville’s Annual Report on Form 10-K for the year ended December 31, 2012;

 

    United’s separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2012 included in United’s Annual Report on Form 10-K for the year ended December 31, 2012;

 

 

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    Rockville’s separate unaudited historical consolidated financial statements and accompanying notes as of and for the nine months ended September 30, 2013 included in Rockville’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013;

 

    United’s separate unaudited historical consolidated financial statements and accompanying notes as of and for the nine months ended September 30, 2013 included in United’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013; and

 

    Other information pertaining to Rockville and United contained in or incorporated by reference into this joint proxy statement/prospectus.

 

 

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Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet

as of September 30, 2013

 

(In thousands)   Rockville
Financial, Inc.
    United
Financial
Bancorp, Inc.
    Pro Forma
Merger
Adjustments
          Pro Forma
Combined
 

ASSETS:

         

Cash and cash equivalents

  $ 54,471      $ 58,960        —          $ 113,431   

Securities

    384,268        362,414      $ 1,402        (A     748,084   

Loans held for sale

    2,904        —          —            2,904   

Loans receivable

    1,656,028        1,896,150        (24,692     (B     3,527,486   

Allowance for loan losses

    (18,703     (13,642     13,642        (C     (18,703
 

 

 

   

 

 

   

 

 

     

 

 

 

Loans receivable, net

    1,637,325        1,882,508        (11,050       3,508,783   

Federal Home Loan Bank stock

    15,053        17,334        —            32,387   

Accrued interest receivable

    5,879        6,355        —            12,234   

Deferred tax asset, net

    14,056        21,226        (4,508     (D     30,774   

Premises and equipment, net

    22,848        25,474        4,000        (E     52,322   

Goodwill

    1,070        40,992        74,144        (F     116,206   

Core deposit intangible

    —          3,322        10,478        (G     13,800   

Cash surrender value of bank-owned life insurance

    63,949        54,157        —            118,106   

Other real estate owned

    2,129        2,206        —            4,335   

Other assets

    15,128        15,789        —            30,917   
 

 

 

   

 

 

   

 

 

     

 

 

 

Total assets

  $ 2,219,080      $ 2,490,737      $ 74,466        $ 4,784,283   
 

 

 

   

 

 

   

 

 

     

 

 

 

LIABILITIES AND CAPITAL

         

LIABILITIES:

         

Deposits

  $ 1,692,072      $ 1,946,398      $ 4,853        (H   $ 3,643,323   

Mortgagors’ and investors’ escrow accounts

    3,635        3,375        —            7,010   

Federal Home Loan Bank and other borrowings

    196,246        220,041        3,198        (I     419,485   

Accrued expenses and other liabilities

    31,954        18,165        —            50,119   
 

 

 

   

 

 

   

 

 

     

 

 

 

Total liabilities

    1,923,907        2,187,979        8,051          4,119,937   
 

 

 

   

 

 

   

 

 

     

 

 

 

CAPITAL:

         

Common stock and paid-in capital

    258,493        273,364        95,809        (J     627,666   

Unearned compensation—ESOP

    (7,442     —          —            (7,442

Treasury stock, at cost

    (43,201     (65,506     65,506        (K     (43,201

Retained earnings

    96,573        94,219        (94,219     (L     96,573   

Accumulated other comprehensive (loss) income, net of tax

    (9,250     681        (681     (M     (9,250
 

 

 

   

 

 

   

 

 

     

 

 

 

Total stockholders’ equity

    295,173        302,758        66,415          664,346   
 

 

 

   

 

 

   

 

 

     

 

 

 

Total liabilities and stockholders’ equity

  $ 2,219,080      $ 2,490,737      $ 74,466        $ 4,784,283   
 

 

 

   

 

 

   

 

 

     

 

 

 

 

 

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Unaudited Pro Forma Condensed Combined Consolidated Statement of Net Income for the Nine Months Ended September 30, 2013

 

(In thousands)    Rockville
Financial, Inc.
     United
Financial
Bancorp, Inc.
    Pro Forma
Merger
Adjustments
          Pro Forma
Combined
 

INTEREST AND DIVIDEND INCOME:

           

Loans

   $ 50,854       $ 64,307      $ (779     (N   $ 114,382   

Investments

     6,855         6,787        (203     (O     13,439   

Other earning assets

     60         68        —            128   
  

 

 

    

 

 

   

 

 

     

 

 

 

Total interest and dividend income

     57,769         71,162        (982       127,949   
  

 

 

    

 

 

   

 

 

     

 

 

 

INTEREST EXPENSE:

           

Deposits

     5,862         8,552        (3,033     (P     11,381   

Borrowed funds

     1,826         3,072        (857     (Q     4,041   
  

 

 

    

 

 

   

 

 

     

 

 

 

Total interest expense

     7,688         11,624        (3,890       15,422   
  

 

 

    

 

 

   

 

 

     

 

 

 

Net interest income

     50,081         59,538        2,908          112,527   

PROVISION FOR LOAN LOSSES

     1,326         2,967        —            4,293   
  

 

 

    

 

 

   

 

 

     

 

 

 

Net interest income after provision for loan losses

     48,755         56,571        2,908          108,234   
  

 

 

    

 

 

   

 

 

     

 

 

 

NON-INTEREST INCOME:

           

Service charges and fees

     6,125         5,456        —            11,581   

Net gain (loss) from sale of securities

     585         (50     —            535   

Net gain from sales of loans

     4,797         213        —            5,010   

BOLI income

     1,578         1,541        —            3,119   

Other income

     1,007         1,629        —            2,636   
  

 

 

    

 

 

   

 

 

     

 

 

 

Total non-interest income

     14,092         8,789        —            22,881   
           

NON-INTEREST EXPENSE:

           

Salaries and employee benefits

     26,748         24,733        —            51,481   

Service bureau fees

     2,624         4,243        —            6,867   

Occupancy and equipment

     5,160         4,317        200        (R     9,677   

Professional fees

     1,948         1,914        —            3,862   

Other

     8,811         11,748        1,882        (S     22,441   
  

 

 

    

 

 

   

 

 

     

 

 

 

Total non-interest expense

     45,291         46,955        2,082          94,328   
  

 

 

    

 

 

   

 

 

     

 

 

 

INCOME BEFORE INCOME TAXES

     17,556         18,405        826          36,787   

PROVISION FOR INCOME TAXES

     5,086         5,008        289        (T     10,383   
  

 

 

    

 

 

   

 

 

     

 

 

 

NET INCOME

   $ 12,470       $ 13,397      $ 537        $ 26,404   
  

 

 

    

 

 

   

 

 

     

 

 

 

NET INCOME PER SHARE:

           

Basic

   $ 0.47       $ 0.68        —          $ 0.50   

Diluted

     0.47         0.67        —            0.49   

WEIGHTED AVERAGE SHARES OUTSTANDING:

           

Basic

     26,339,942         19,800,557        —            53,015,252   

Diluted

     26,680,762         20,078,865        —            53,731,009   

 

 

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Unaudited Pro Forma Condensed Combined Consolidated Statement of Net Income for the Year Ended December 31, 2012

 

(In thousands)    Rockville
Financial, Inc.
     United
Financial
Bancorp, Inc.
     Pro Forma
Merger
Adjustments
          Pro Forma
Combined
 

INTEREST AND DIVIDEND INCOME:

            

Loans

   $ 71,201       $ 60,401       $ (1,041     (N   $ 130,561   

Investments

     6,676         10,544         (270     (O     16,950   

Other earning assets

     75         226         —            301   
  

 

 

    

 

 

    

 

 

     

 

 

 

Total interest and dividend income

     77,952         71,171         (1,310       147,813   
  

 

 

    

 

 

    

 

 

     

 

 

 

INTEREST EXPENSE:

            

Deposits

     8,734         10,466         (4,044     (P     15,156   

Borrowed funds

     2,210         4,526         (1,142     (Q     5,594   
  

 

 

    

 

 

    

 

 

     

 

 

 

Total interest expense

     10,944         14,992         (5,186       20,750   
  

 

 

    

 

 

    

 

 

     

 

 

 

Net interest income

     67,008         56,179         3,876          127,063   

PROVISION FOR LOAN LOSSES

     3,587         3,139         —            6,726   
  

 

 

    

 

 

    

 

 

     

 

 

 

Net interest income after provision for loan losses

     63,421         53,040         3,876          120,337   
  

 

 

    

 

 

    

 

 

     

 

 

 

NON-INTEREST INCOME:

            

Service charges and fees

     6,480         6,948         —            13,428   

Net gain from sale of securities

     914         254         —            1,168   

Net gain from sales of loans

     4,417         645         —            5,062   

BOLI income

     1,920         1,825         —            3,745   

Other income

     976         951         —            1,927   
  

 

 

    

 

 

    

 

 

     

 

 

 

Total non-interest income

     14,707         10,623         —            25,330   
            

NON-INTEREST EXPENSE:

            

Salaries and employee benefits

     33,186         26,533         —            59,719   

Service bureau fees

     4,036         4,600         —            8,636   

Occupancy and equipment

     4,653         3,771         267        (R     8,691   

Professional fees

     3,233         1,886         —            5,119   

Acquisition related expenses

     —           4,952         —            4,952   

ESOP plan termination expense

     —           4,482         —            4,482   

Other

     10,588         10,016         2,509        (S     25,113   
  

 

 

    

 

 

    

 

 

     

 

 

 

Total non-interest expense

     55,696         56,240         2,776          114,712   
  

 

 

    

 

 

    

 

 

     

 

 

 

INCOME BEFORE INCOME TAXES

     22,432         7,423         1,100          30,955   

PROVISION FOR INCOME TAXES

     6,635         3,795         385        (T     10,815   
  

 

 

    

 

 

    

 

 

     

 

 

 

NET INCOME

   $ 15,797       $ 3,628       $ 715        $ 20,140   
  

 

 

    

 

 

    

 

 

     

 

 

 

NET INCOME PER SHARE:

            

Basic

   $ 0.57       $ 0.24         —          $ 0.42   

Diluted

     0.56         0.24         —            0.41   

WEIGHTED AVERAGE SHARES OUTSTANDING:

            

Basic

     27,796,116         15,234,896         —            48,320,568   

Diluted

     28,025,610         15,421,777         —            48,801,828   

 

 

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Notes to Unaudited Pro Forma Condensed Combined Consolidated Financial Statements

Note 1—Basis of Presentation

The unaudited pro forma condensed combined consolidated financial information has been prepared using the acquisition method of accounting giving effect to the merger involving Rockville and United, with Rockville as the acquiror. The unaudited pro forma condensed combined consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the financial position had the merger been consummated at September 30, 2013 or the results of operations had the merger been consummated at January 1, 2012 or January 1, 2013, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined entities. The merger, which is currently expected to be completed in the first half of 2014, provides for the issuance of 26,510,247 shares of Rockville common based on the number of outstanding shares of United at September 30, 2013, and the 1.3472 exchange ratio. Based on Rockville’s closing stock price on November 14, 2013, the value of the aggregate merger consideration would be approximately $369.2 million.

Under the acquisition method of accounting, the assets and liabilities of United will be recorded at the respective fair values on the merger date. The fair value on the merger date represents management’s best estimates based on available information and facts and circumstances in existence on the merger date. The pro forma allocation of purchase price reflected in the unaudited pro forma condensed combined consolidated financial information is subject to adjustment and may vary from the actual purchase price allocation that will be recorded at the time the merger is completed. Adjustments may include, but not be limited to, changes in (1) United’s balance sheet through the effective time of the merger; (2) the aggregate value of the merger consideration paid if the price of Rockville’s stock varies from the assumed $13.62 per share; (3) total merger-related expenses if consummation and/or implementation costs vary from currently estimated amounts; and (4) the underlying values of assets and liabilities if market conditions differ from current assumptions.

The accounting policies of both Rockville and United are in the process of being reviewed in detail. Upon completion of such review, conforming adjustments or financial statement reclassification may be determined.

Note 2—Estimated Merger and Integration Costs

The plan to integrate Rockville’s and United’s operations is still being developed. Over the next several months, the specific details of these plans will continue to be refined. Rockville and United are currently in the process of assessing the two companies’ personnel, benefit plans, premises, equipment, computer systems, and service contracts to determine where they may take advantage of redundancies or where it will be beneficial or necessary to convert to one system. Certain decisions arising from these assessments may involve involuntary termination of Rockville’s and United’s employees, vacating Rockville’s and United’s leased premises, changing information systems, canceling contracts between Rockville or United and certain service providers and selling or otherwise disposing of certain premises, furniture and equipment owned by Rockville or United. Rockville expects to incur merger-related expenses including system conversion costs, employee retention and severance agreements, communications to customers, and others. To the extent there are costs associated with these actions, the costs will be recorded based on the nature and timing of these integration actions. Most acquisition and restructuring costs are recognized separately from a business combination and generally will be expensed as incurred. We estimate the merger-related costs to be approximately $34.0 million and expect they will be incurred in fiscal years 2013, 2014 and 2015, which are not reflected in the accompanying pro forma financial information.

Note 3—Estimated Annual Cost Savings

Rockville and United expect to realize approximately $17.6 million in annual pre-tax cost savings following the merger, which management expects to be phased-in over a two-year period, but there is no assurance that the anticipated cost savings will be realized on the anticipated time schedule or at all. These cost savings are not reflected in the presented pro forma financial information.

 

 

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Table of Contents

Note 4—Pro Forma Merger Adjustments

The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined consolidated financial information. All taxable adjustments were calculated using a 35% tax rate to arrive at deferred tax asset or liability adjustments. All adjustments are based on current assumptions and valuations, which are subject to change.

 

Balance Sheet       
(In thousands)       

(A)   Adjustments to investment portfolio

      

To reflect the mark up on the fair value of United’s held-to-maturity investment securities portfolio:

  

Amortized cost

   $ 99,393   

Fair value

     97,991   
  

 

 

 

Adjustment

   $ 1,402   
  

 

 

 

(B)   Adjustment to loans

      

To reflect the probable credit loss in United’s loan portfolio, estimated at 1.6% of loans outstanding.

   $ (30,000

To reflect the interest rate mark up on the fair value of United’s loan portfolio

     5,308   
  

 

 

 
   $ (24,692
  

 

 

 

(C)   Adjustment to allowance for loan losses

      

To remove United’s allowance at merger date as the credit risk is contemplated in the fair value adjustment in adjustment B above

   $ 13,642   
  

 

 

 

(D)   Adjustments to deferred tax assets

      

To reflect reduction in the deferred tax asset as a result of the merger fair value adjustments:

  

Adjustments to investment securities

   $ (1,402

Adjustment to loans—expected credit losses

     30,000   

Adjustment to loans—interest rate mark

     (5,308

Adjustment to allowance for loan losses

     (13,642

Adjustment to properties and equipment, net

     (4,000

Adjustments to core deposit intangible, net

     (10,478

Adjustment to deposits

     (4,853

Adjustment to borrowed funds

     (3,198
  

 

 

 

Subtotal for fair value adjustments

     (12,881
  

 

 

 

Calculated deferred taxes at Rockville’s estimated statutory rate of 35%

   $ (4,508
  

 

 

 

(E)   Adjustment to properties and equipment, net

  

To reflect the fair value of United’s property and equipment at the merger date

   $ 4,000   
  

 

 

 

(F)   Adjustments to Goodwill, net

      

To reflect the elimination of the carrying value of United’s goodwill at the merger date

   $ (40,992

To reflect goodwill created by the merger with United

     115,136   
  

 

 

 
   $ 74,144   
  

 

 

 

(G)   Adjustments to core deposit intangible, net

      

To reflect the elimination of the carrying value of United’s core deposit intangible at the merger date

   $ (3,322

To record the estimated fair value of United’s core deposit intangible. It will be amortized over 10 years using the sum-of-the-years-digits method

     13,800   
  

 

 

 
   $ 10,478   
  

 

 

 

 

 

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Table of Contents
Balance Sheet       
(In thousands)       

(H)   Adjustment to deposits

      

To reflect the fair value at the merger date based on current market rates for similar deposit products

   $ 4,853   
  

 

 

 

(I)    Adjustment to borrowed funds

       

To reflect the fair value at the merger date of borrowed funds

   $ 3,198   
  

 

 

 

(J)    Adjustments to stockholders’ equity

       

To eliminate United common stock

   $ (273,364

To replace United stock with Rockville stock

     369,173   
  

 

 

 
   $ 95,809   
  

 

 

 

(K)   Adjustment to treasury stock, at cost

      

To eliminate United’s treasury stock, at cost

   $ 65,506   
  

 

 

 

(L)   Adjustment to retained earnings

      

To eliminate United’s retained earnings

   $ (94,219
  

 

 

 

(M)  Adjustment to accumulated other comprehensive income

     

To eliminate United’s accumulated other comprehensive income

   $ (681
  

 

 

 

 

   
   

Statements of Net Income

(In thousands)

   Nine
Months
Ended
9/30/2013
    Year
Ended
12/31/2012
 

(N)   Adjustment to loan interest income

    

To reflect the amortization of loan premium from interest rate fair value adjustment; amortization based on estimated weighted average life of 5.1 years

   $ (779   $ (1,041
  

 

 

   

 

 

 

(O)   Adjustment to investment securities interest income

    

To reflect amortization of investment securities premium from fair value adjustment. Amortization based on estimated life of 5.2 years

   $ (203   $ (270
  

 

 

   

 

 

 

(P)   Adjustment to deposit interest expense

    

To reflect amortization of deposit premium resulting from deposit fair value adjustment. Amortization based on estimated life of 1.2 years

   $ (3,033   $ (4,044
  

 

 

   

 

 

 

(Q)   Adjustment to borrowing interest expense

    

To reflect amortization of borrowing premium resulting from borrowing fair value adjustment; amortization based on estimated life of 2.8 years

   $ (857   $ (1,142
  

 

 

   

 

 

 

(R)   Adjustment to occupancy and equipment

    

To reflect additional depreciation expense resulting from fair value adjustments to premises and equipment. Amortization based on an estimated average life of 15 years

   $ 200      $ 267   
  

 

 

   

 

 

 

(S)    Adjustments to other non-interest expense

    

To reflect the amortization of acquired identifiable intangible assets using a 10-year amortization period and using the sum-of-the-years- digits method of amortization

   $ 1,882      $ 2,509   
  

 

 

   

 

 

 

(T)   Adjustment to income tax provision

    

To reflect the income tax effect of pro forma adjustments at 35%

   $ 289      $ 385   
  

 

 

   

 

 

 

 

 

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Table of Contents

Note 5—Preliminary Purchase Accounting Allocation

The unaudited pro forma condensed combined consolidated financial information reflects the issuance of 26,510,247 shares of Rockville common stock totaling approximately $369.2 million. The merger will be accounted for using the acquisition method of accounting. Rockville’s cost to acquire United will be allocated to the assets (including identifiable intangible assets) and liabilities of United at their respective estimated fair values as of the merger date. Accordingly, the pro forma purchase price was preliminarily allocated to the assets acquired and the liabilities assumed based on their estimated fair values as summarized in the following table.

 

Preliminary Purchase Accounting Allocation       
(In thousands)    September 30, 2013  

Total pro forma purchase price

   $ 369,173   

Fair value of assets acquired:

  

Cash and cash equivalents

     58,960   

Securities

     363,816   

Loans receivable, net

     1,871,458   

Federal Home Loan Bank stock, at cost

     17,334   

Accrued interest receivable

     6,355   

Deferred tax asset

     16,718   

Premises and equipment, net

     29,474   

Core deposit intangible

     13,800   

Cash surrender value of bank-owned life insurance

     54,157   

Other assets

     17,995   
  

 

 

 

Total

     2,450,067   
  

 

 

 

Fair value of liabilities assumed:

  

Deposits

     1,951,251   

Mortgagors’ and investors’ escrow accounts

     3,375   

Advances from Federal Home Loan Bank and other borrowings

     223,239   

Capitalized lease obligations

     4,583   

Accrued expenses and other liabilities

     13,582   
  

 

 

 

Total

     2,196,030   
  

 

 

 

Fair value of net assets acquired

     254,037   
  

 

 

 

Goodwill

   $ 115,136   
  

 

 

 

 

 

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Table of Contents

COMPARATIVE PER SHARE DATA

(Unaudited)

Presented below for Rockville and United are historical, unaudited pro forma combined and pro forma equivalent per share financial data as of and for the year ended December 31, 2012 and as of and for the nine months ended September 30, 2013. The information presented below should be read together with the historical consolidated financial statements of Rockville and United, including the related notes, filed by Rockville and United, as applicable, with the SEC and incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

The unaudited pro forma and pro forma per equivalent share information gives effect to the merger as if the merger had been effective on December 31, 2012 or September 30, 2013 in the case of the book value data, and as if the merger had been effective as of January 1, 2012 or January 1, 2013 in the case of the earnings per share and the cash dividends data. The unaudited pro forma data combines the historical results of United into Rockville’s consolidated statement of net income. While certain adjustments were made for the estimated impact of fair value adjustments and other acquisition-related activity, they are not indicative of what could have occurred had the acquisition taken place on January 1, 2012 or January 1, 2013.

The unaudited pro forma adjustments are based upon available information and certain assumptions that Rockville and United management believe are reasonable. The unaudited pro forma data, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the impact of factors that may result as a consequence of the merger or consider any potential impacts of current market conditions or the merger on revenues, expense efficiencies or asset dispositions, among other factors, nor the impact of possible business model changes. As a result, unaudited pro forma data are presented for illustrative purposes only and do not represent an attempt to predict or suggest future results. Upon completion of the merger, the operating results of United will be reflected in the consolidated financial statements of Rockville on a prospective basis.

 

     Rockville
Historical
     United
Historical
     Pro Forma
Combined
     Per
Equivalent
United
Share(1)
 

For the year ended December 31, 2012:

           

Basic earnings per share(2)

   $ 0.57       $ 0.24       $ 0.42       $ 0.56   

Diluted earnings per share(2)

     0.56         0.24         0.41         0.56   

Cash dividends declared(3)

     0.52         0.38         0.52         0.70   

Weighted average shares outstanding:

           

Basic

     27,796,116         15,234,896         48,320,568      

Diluted

     28,025,610         15,421,777         48,801,828      

Book value per share as of December 31, 2012

   $ 11.39       $ 15.24       $ 12.55       $ 16.91   

For the nine months ended September 30, 2013:

           

Basic earnings per share(2)

   $ 0.47       $ 0.68       $ 0.50       $ 0.67   

Diluted earnings per share(2)

     0.47         0.67         0.49         0.66   

Cash dividends declared(3)

     0.30         0.32         0.30         0.40   

Weighted average shares outstanding:

           

Basic

     26,339,942         19,800,557         53,015,252      

Diluted

     26,680,762         20,078,865         53,731,009      

Book value per share as of September 30, 2013

   $ 11.33       $ 15.39       $ 12.64       $ 17.03   

 

 

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(1) Calculated by multiplying pro forma combined per share amounts by the exchange ratio of 1.3472.
(2) Pro forma combined earnings per share data excludes the impact of anticipated cost savings and potential revenue enhancements that may be realized through the merger.
(3) Pro forma combined cash dividends declared are based upon Rockville’s historical amounts.

 

 

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RISK FACTORS

In addition to general investment risks and the other information contained in or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed under the section “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risk factors in deciding how to vote for the proposals presented in this joint proxy statement/prospectus. You should also consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

Because the market price of Rockville common stock will fluctuate, United stockholders cannot be certain of the market value of the merger consideration they will receive.

Upon completion of the merger, each share of United common stock will be converted into 1.3472 shares of Rockville common stock. The market value of the merger consideration may vary from the closing price of Rockville common stock on the date Rockville and United announced the merger, on the date that this joint proxy statement/prospectus is mailed to United stockholders, on the date of the special meeting of the United stockholders and on the date the merger is completed and thereafter. Any change in the market price of Rockville common stock prior to the completion of the merger will affect the market value of the merger consideration that United stockholders will receive upon completion of the merger. The exchange ratio is fixed in the merger agreement, and there will be no adjustment to the merger consideration for changes in the market price of either shares of Rockville common stock or shares of United common stock. Stock price changes may result from a variety of factors, including, but not limited to, general market and economic conditions, changes in our respective businesses, operations and prospects and regulatory considerations. Therefore, at the time of the United special meeting you will not know the precise market value of the consideration you will receive at the effective time of the merger. You should obtain current market quotations for shares of Rockville common stock and for shares of United common stock.

The market price of Rockville common stock after the merger may be affected by factors different from those affecting the shares of United or Rockville currently.

Upon completion of the merger, holders of United common stock will become holders of Rockville common stock. Rockville’s business differs in important respects from that of United, and, accordingly, the results of operations of the combined company and the market price of Rockville common stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Rockville and United. For a discussion of the businesses of Rockville and United and of some important factors to consider in connection with those businesses, see the documents incorporated by reference in this joint proxy statement/prospectus and referred to under “Where You Can Find More Information.”

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the merger.

Before the merger and the bank merger may be completed, Rockville and United must obtain approvals from, or provide notice to, the Federal Reserve Board, the FDIC, the OCC, the Connecticut Banking Commissioner and the BBI. Other approvals, waivers or consents from regulators may also be required. In determining whether to grant these approvals the regulators consider a variety of factors, including the regulatory standing of each party and the factors described under “The Merger—Regulatory Approvals Required for the Merger.” An adverse development in either party’s regulatory standing or these factors could result in an inability to obtain approval or delay their receipt. These regulators may impose conditions on the completion of the merger or the bank merger or require changes to the terms of the merger or the bank merger. Such conditions or changes could have the effect of delaying or preventing completion of the merger or the bank merger or imposing additional costs on or limiting the revenues of the combined company following the merger and the

 

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bank merger, any of which might have an adverse effect on the combined company following the merger. See “The Merger—Regulatory Approvals Required for the Merger.” Regulatory approvals could also be impacted based on the status of any ongoing investigation of either party or its customers, including subpoenas to provide information or investigations, by a federal, state or local governmental agency.

Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized.

Rockville and United have operated and, until the completion of the merger, will continue to operate, independently. The success of the merger, including anticipated benefits and cost savings, will depend, in part, on Rockville’s ability to successfully combine and integrate the businesses of Rockville and United in a manner that permits growth opportunities and does not materially disrupt the existing customer relations nor result in decreased revenues due to loss of customers. It is possible that the integration process could result in the loss of key employees, the disruption of either company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger. The loss of key employees could adversely affect Rockville’s ability to successfully conduct its business, which could have an adverse effect on Rockville’s financial results and the value of its common stock. If Rockville experiences difficulties with the integration process, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected. There also may be business disruptions that cause Rockville and/or United to lose customers or cause customers to remove their accounts from Rockville and/or United and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of United and Rockville during this transition period and for an undetermined period after completion of the merger on the combined company.

Additionally, Rockville may not be able to successfully achieve the level of cost savings, revenue enhancements and other synergies that it expects, and may not be able to capitalize upon the existing customer relationships of United to the extent anticipated, or it may take longer, or be more difficult or expensive than expected, to achieve these goals. This could have an adverse effect on Rockville’s business, results of operation and stock price.

The unaudited pro forma condensed combined consolidated financial statements included in this document are preliminary, and the actual financial condition and results of operations after the merger may differ materially.

The unaudited pro forma condensed combined consolidated financial statements in this document are presented for illustrative purposes only and are not necessarily indicative of what Rockville’s actual financial condition or results of operations would have been had the merger been completed on the dates indicated. The unaudited pro forma condensed combined consolidated financial statements reflect adjustments, which are based upon preliminary estimates, to record the United identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in this document is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of United as of the date of the completion of the merger. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this document. For more information, see “Unaudited Pro Forma Condensed Combined Consolidated Financial Statements” beginning on page 25.

Certain of Rockville’s directors and executive officers have interests in the merger that may differ from the interests of Rockville’s stockholders.

Certain of Rockville’s directors and executive officers have interests in the merger and have arrangements that are different from, or in addition to, those of Rockville stockholders generally. Rockville’s board of directors

 

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was aware of these interests and considered these interests, among other matters, when making its decision to approve the merger agreement, and in recommending that Rockville stockholders vote in favor of adopting the merger agreement. For a description of these interests, see “The Merger—Interests of Rockville’s Directors and Executive Officers in the Merger.”

Certain of United’s directors and executive officers have interests in the merger that may differ from the interests of United’s stockholders.

Certain of United’s directors and executive officers have interests in the merger and have arrangements that are different from, or in addition to, those of United’s stockholders generally. These interests and arrangements may create potential conflicts of interest. United’s board of directors was aware of these interests and considered these interests, among other matters, when making its decision to approve the merger agreement, and in recommending that United’s stockholders vote in favor of adopting the merger agreement. For a description of these interests, see “The Merger—Interests of United’s Directors and Executive Officers in the Merger.”

Termination of the merger agreement could negatively affect United or Rockville.

If the merger agreement is terminated, there may be various consequences. For example, United’s or Rockville’s businesses may have been affected adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated, the market price of United’s or Rockville’s common stock could decline to the extent that the current market prices reflect a market assumption that the merger will be completed. If the merger agreement is terminated under certain circumstances, United or Rockville may be required to pay to the other party a termination fee of $15,000,000.

United and Rockville will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on United or Rockville. These uncertainties may impair United’s or Rockville’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with United or Rockville to seek to change existing business relationships with United or Rockville. Retention of certain employees by United or Rockville may be challenging while the merger is pending, as certain employees may experience uncertainty about their future roles with United or Rockville. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with United or Rockville, United’s business or Rockville’s business could be harmed. In addition, subject to certain exceptions, each of United and Rockville has agreed to operate its business in the ordinary course prior to closing. See “The Merger Agreement—Covenants and Agreements” for a description of the restrictive covenants applicable to United and Rockville.

If the merger is not completed, Rockville and United will have incurred substantial expenses without realizing the expected benefits of the merger.

Each of Rockville and United has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs and expenses of filing, printing and mailing this joint proxy statement/prospectus and all filing and other fees paid to the SEC and regulatory authorities in connection with the merger. If the merger is not completed, Rockville and United would have to recognize these expenses without realizing the expected benefits of the merger.

The termination fee and other restrictions on solicitation contained in the merger agreement may deter potential acquirers.

The merger agreement prohibits Rockville and United from initiating, soliciting, knowingly encouraging or knowingly facilitating certain third-party acquisition proposals. See “The Merger Agreement—Agreement Not to

 

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Solicit Other Offers.” The merger agreement also provides that Rockville or United must pay a termination fee of $15,000,000 if the merger agreement is terminated under certain circumstances, including involving such party’s failure to abide by certain obligations not to solicit acquisition proposals. See “The Merger Agreement—Termination Fee.” These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of United or Rockville from considering or proposing such an acquisition.

The shares of Rockville common stock to be received by United stockholders as a result of the merger will have different rights from the shares of United common stock.

Upon completion of the merger, United stockholders will become Rockville stockholders and their rights as stockholders will be governed by the Connecticut Business Corporation Act (which we refer to as the “CBCA”) and the Rockville certificate of incorporation and bylaws. The rights associated with United common stock are different from the rights associated with Rockville common stock. Please see “Comparison of Stockholders’ Rights” beginning on page 130 for a discussion of the different rights associated with Rockville common stock.

Holders of United and Rockville common stock will have a reduced ownership and voting interest after the merger and will exercise less influence over management.

Holders of United and Rockville common stock currently have the right to vote in the election of the board of directors and on other matters affecting United and Rockville, respectively. Upon the completion of the merger, each United stockholder who receives shares of Rockville common stock will become a stockholder of Rockville with a percentage ownership of Rockville that is smaller than the stockholder’s percentage ownership of United. It is currently expected that the former stockholders of United as a group will receive shares in the merger constituting approximately 51% of the outstanding shares of Rockville common stock immediately after the merger. As a result, current stockholders of Rockville as a group will own approximately 49% of the outstanding shares of Rockville common stock immediately after the merger. Because of this, Rockville and United stockholders will have less influence on the management and policies of the surviving corporation than they now have on the management and policies of Rockville and United, respectively.

United stockholders do not have dissenters’ or appraisal rights in the merger.

Dissenters’ rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. Under the MGCL, a stockholder may not dissent from a merger as to shares that are listed on a national securities exchange. Thus, holders of United common stock will not be entitled to dissenters’ or appraisal rights in the merger with respect to their shares of United common stock.

The fairness opinions delivered in connection with the merger will not reflect changes in circumstances subsequent to the date of such opinions.

Each of RBCCM and Sandler O’Neill delivered a fairness opinion to Rockville dated as of November 14, 2013. Sterne Agee delivered a fairness opinion to United dated as of November 14, 2013. The opinions of the respective financial advisors stated that as of such date, and based on and subject to the factors and assumptions set forth therein, the exchange ratio in the merger (or merger consideration, as the case may be), was fair from a financial point of view. The opinions do not reflect changes that may occur or may have occurred after the date of such opinions, including changes to the operations and prospects of Rockville and United, changes in general market and economic conditions or regulatory or other factors. Any such changes, or changes in other factors on which each opinion is based, may materially alter or affect the estimated valuation conclusions reached in such opinions for Rockville and United.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained or incorporated by reference in this joint proxy statement/prospectus are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 giving Rockville’s or United’s expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. Such forward-looking statements include, but are not limited to, statements about the benefits of the business combination transaction involving United and Rockville, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions and other statements that are not historical facts.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time. In addition to factors previously disclosed in Rockville’s and United’s reports filed with the SEC, the following factors, among others, could cause actual results to differ materially from forward-looking statements: ability to obtain regulatory approvals and meet other closing conditions to the merger, including approval by Rockville and United stockholders, on the expected terms and schedule; delay in closing the merger; difficulties and delays in integrating the Rockville and United businesses; business disruption following the proposed transaction; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; changes in Rockville’s stock price before closing; the reaction to the transaction of the companies’ customers, employees and counterparties; and the impact, extent and timing of technological changes, capital management activities, legislative and regulatory actions and other actions of various regulatory bodies, including without limitation the Federal Reserve Board, the FDIC, the OCC, the Connecticut Banking Commissioner and the BBI.

For any forward-looking statements made in this joint proxy statement/prospectus or in any documents incorporated by reference into this joint proxy statement/prospectus, Rockville and United claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this joint proxy statement/prospectus or the date of the applicable document incorporated by reference in this joint proxy statement/prospectus. Rockville and United do not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this joint proxy statement/prospectus and attributable to Rockville, United or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this joint proxy statement/prospectus.

 

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THE UNITED SPECIAL MEETING

This section contains information for United stockholders about the special meeting that United has called to allow its stockholders to consider and vote on the merger agreement and other matters. United is mailing this joint proxy statement/prospectus to you, as a United stockholder, on or about February 7, 2014. This joint proxy statement/prospectus is accompanied by a notice of the special meeting of United stockholders and a form of proxy card that United’s board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

Date, Time and Place of Meeting

The special meeting of United stockholders will be held at the Springfield Marriott, 6th Floor, 2 Boland Way, Springfield, Massachusetts 01115 at 2:00 p.m. local time, on Tuesday, April 8, 2014.

Matters to Be Considered

At the United special meeting, United stockholders will be asked to consider and vote upon the following matters:

 

    the United merger proposal;

 

    the United adjournment proposal;

 

    the United compensation proposal; and

 

    any other business as may properly come before the meeting or any adjournment thereof.

Recommendation of United’s Board of Directors

United’s board of directors has determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of United and its stockholders, has adopted the merger agreement and recommends that United stockholders vote “FOR” the United merger proposal, “FOR” the United adjournment proposal and “FOR” the United compensation proposal. See “The Merger—United’s Reasons for the Merger; Recommendation of United’s Board of Directors” for a more detailed discussion of United’s board of directors’ recommendation.

United Record Date and Quorum

The United board of directors has fixed the close of business on January 31, 2014 as the record date for determining the holders of United common stock entitled to receive notice of and to vote at the United special meeting.

As of the United record date, there were 19,784,428 shares of United common stock outstanding and entitled to vote at the United special meeting held by 3,697 holders of record. Each share of United common stock entitles the holder to one vote at the United special meeting on each proposal to be considered at the United special meeting.

The presence at the special meeting, in person or by proxy, of a majority of the outstanding shares of United common stock entitled to vote at the special meeting will constitute a quorum for the transaction of business. All shares of United common stock present in person or represented by proxy, including abstentions, will be treated as present for determining the presence or absence of a quorum for all matters voted on at the United special meeting. Broker non-votes will be counted for determining the presence of a quorum at the meeting only if the beneficial owner of such shares has instructed the bank or broker how to vote with respect to at least one matter before the meeting.

 

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Vote Required; Treatment of Abstentions and Failure to Vote

United merger proposal:

 

    Standard: Approval of the United merger proposal requires the affirmative vote of a majority of the outstanding shares of United common stock entitled to vote on the proposal.

 

    Effect of failure to vote, abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker how to vote with respect to the United merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

United adjournment proposal and United compensation proposal:

 

    Standard: Approval of each of the United adjournment proposal and United compensation proposal requires the affirmative vote of a majority of votes cast (in person or by proxy) at the United special meeting and entitled to vote on such proposals.

 

    Effect of failure to vote, abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker how to vote with respect to the United adjournment proposal or the United compensation proposal, it will have no effect on such proposals.

Shares Held By Officers and Directors

As of the record date, the directors and executive officers of United and their affiliates owned and were entitled to vote 698,169 shares of United common stock, representing approximately 3.5% of the shares of United common stock outstanding on that date. United currently expects that United’s directors and executive officers will vote their shares in favor of the United merger proposal, the United adjournment proposal and the United compensation proposal, although none of them has entered into any agreements obligating them to do so. As of the record date, Rockville beneficially held no shares of United common stock.

Voting of Proxies; Incomplete Proxies

You may vote by proxy or in person at the United special meeting. If you hold your shares of United common stock in your name as a stockholder of record, to submit a proxy, you must complete and return the proxy card in the enclosed postage-paid envelope. The envelope requires no additional postage if mailed in the United States. When the accompanying proxy card is returned properly executed, the shares of United stock represented by it will be voted at the United special meeting in accordance with the instructions contained on the proxy card. If any proxy card is returned signed and dated without indication as to how to vote, the shares of United common stock represented by the proxy card will be voted as recommended by the United board of directors. You may also vote your shares through the Internet or by telephone. Information and applicable deadlines for voting through the Internet or by telephone are set forth in the enclosed proxy card instructions.

If your shares are held in “street name” by a broker, bank or other nominee, the stockholder should check the voting form used by that firm to determine whether it may vote by telephone or the Internet.

Every United stockholder’s vote is important. Accordingly, you should sign, date and return the enclosed proxy card, whether or not you plan to attend the United special meeting in person. Sending in your proxy card will not prevent you from voting your shares personally at the meeting, since you may revoke your proxy at any time before it is voted.

Shares Held in “Street Name”

If you are a United stockholder and your shares are held in “street name” through a bank, broker or other holder of record, you must provide the record holder of your shares with instructions on how to vote the shares. Please follow the voting instructions provided by the bank or broker. You may not vote shares held in street

 

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name by returning a proxy card directly to United or by voting in person at the United special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. Further, brokers, banks or other nominees who hold shares of United common stock on behalf of their customers may not give a proxy to United to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks and other nominees do not have discretionary voting power on these matters.

Revocability of Proxies and Changes to a United Stockholder’s Vote

If you hold stock in your name as a stockholder of record, you may revoke any proxy at any time before it is voted by (1) voting at a later date, (2) delivering a written revocation letter to United’s corporate secretary or (3) attending the special meeting in person, notifying the corporate secretary and voting by ballot at the special meeting.

Any stockholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying United’s corporate secretary) of a stockholder at the special meeting will not constitute revocation of a previously given proxy.

Written notices of revocation and other communications about revoking your proxy card should be addressed to:

United Financial Bancorp, Inc.

95 Elm Street

West Springfield, Massachusetts 01089

Attention: Corporate Secretary

If your shares are held in “street name” by a bank or broker, you should follow the instructions of your bank or broker regarding the revocation of proxies.

Participants in Certain Benefit Plans

If you participate in either the United Bank or the New England Bank Employee Stock Ownership Plan, you will receive a vote authorization form that reflects the shares you may direct the trustee to vote on your behalf under the respective plan. Under the terms of each plan, all allocated shares of United common stock held by the plan are voted by the plan trustee, as directed by plan participants. All allocated shares for which no timely voting instructions are received are voted by the plan trustee in the same proportion as shares for which the trustee has received timely voting instructions, subject to the exercise of its fiduciary duties. The plan trustee will vote all shares held in the trust for which it does not receive timely voting instructions as directed by United Bank.

If you hold shares through New England Bank’s Employees’ Savings & Profit Sharing Plan, you will receive a vote authorization form that reflects all the shares that you may direct the plan trustee to vote on your behalf under the plan. Under the terms of the plan, you are entitled to direct the trustee how to vote the shares of United common stock credited to your account in the plan. The trustee will vote all shares of United common stock for which no directions are given or for which timely instructions were not received in the same proportion as shares for which the trustee received voting instructions.

Solicitation of Proxies

In addition to solicitation of proxies by mail, United will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of United common stock and secure their voting instructions. United will reimburse the record holders for their reasonable expenses in taking those actions. If necessary, United may use its directors and several of its regular employees, who will not be specially compensated,

 

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to solicit proxies from the United stockholders, either personally or by telephone, facsimile, letter or electronic means. United has also made arrangements with AST Phoenix Advisory Partners to assist it in soliciting proxies and has agreed to pay AST $7,000 plus reasonable expenses for these services. United will bear the entire cost of soliciting proxies from you.

Attending and Voting at the United Special Meeting

All holders of United common stock, including holders of record and stockholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Stockholders of record can vote in person at the special meeting. If you are not a stockholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you to be admitted. United reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the special meeting is prohibited without United’s express written consent.

Delivery of Proxy Materials to Stockholders Sharing an Address

As permitted by applicable law, only one copy of this joint proxy statement/prospectus is being delivered to multiple stockholders of United sharing an address unless United has previously received contrary instructions from one or more such stockholders. This is referred to as “householding.” Stockholders who hold their shares in “street name” can request further information on householding through their banks, brokers or other holders of record. On written or oral request to Dena Hall, Senior Vice President, Marketing, at United’s corporate offices, 95 Elm Street, West Springfield, Massachusetts 01089 or by telephone at (413) 787-1292, or to United’s proxy solicitor, AST Phoenix Advisory Partners, at 110 Wall Street, 27th Floor, New York, New York 10015, or toll-free at (800) 833-2175, United will deliver promptly a separate copy of this document to a stockholder at a shared address to which a single copy of the document was delivered.

Assistance

If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus or need help voting your shares of United common stock, please contact Dena Hall, Senior Vice President, Marketing, 95 Elm Street, West Springfield, Massachusetts 01089 ((413) 787-1292) or United’s proxy solicitor, AST Phoenix Advisory Partners, at 110 Wall Street, 27th Floor, New York, New York 10015, or toll-free at (800) 833-2175.

 

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UNITED PROPOSALS

PROPOSAL NO. 1—UNITED MERGER PROPOSAL

United is asking its stockholders to approve the merger agreement and the transactions contemplated thereby. Holders of United common stock should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

After careful consideration, the United board of directors adopted the merger agreement and declared the merger agreement and the transactions contemplated thereby, including the merger, to be advisable and in the best interest of United and the stockholders of United. See “The Merger—United’s Reasons for the Merger; Recommendation of United’s Board of Directors” included elsewhere in this joint proxy statement/prospectus for a more detailed discussion of the United board of directors’ recommendation.

The United board of directors recommends a vote “FOR” the United merger proposal.

PROPOSAL NO. 2—UNITED ADJOURNMENT PROPOSAL

The United special meeting may be adjourned to another time or place, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the United special meeting to adopt the United merger proposal.

If, at the United special meeting, the number of shares of United common stock present or represented and voting in favor of the United merger proposal is insufficient to approve such proposal, United intends to move to adjourn the United special meeting to solicit additional proxies for approval of the merger agreement. In that event, United will ask its stockholders to vote upon the United adjournment proposal, but not the United merger proposal.

In this proposal, United is asking its stockholders to authorize the holder of any proxy solicited by the United board of directors on a discretionary basis to vote in favor of adjourning the United special meeting to another time and place to solicit additional proxies, including the solicitation of proxies from United stockholders who have previously voted.

The United board of directors recommends a vote “FOR” the United adjournment proposal.

PROPOSAL NO. 3—UNITED COMPENSATION PROPOSAL

Pursuant to the Dodd-Frank Act and the rules of the SEC thereunder, United is seeking non-binding, advisory stockholder approval of the agreements or understandings and compensation of United’s named executive officers that is based on or otherwise relates to the merger as disclosed in “The Merger—Interests of United’s Directors and Executive Officers in the Merger” beginning on page 99. The proposal gives United’s stockholders the opportunity to express their views on the merger-related agreements or understandings and compensation of United’s named executive officers.

Accordingly, United is requesting stockholders to adopt the following resolution, on a non-binding, advisory basis:

“RESOLVED, that the compensation that may be paid or become payable to United’s named executive officers in connection with the merger and the agreements or understandings pursuant to which such compensation may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in “The Merger—Interests of United’s Directors and Executive Officers in the Merger,” are hereby APPROVED.”

 

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Approval of this proposal is not a condition to completion of the merger, and the vote with respect to this proposal is advisory only and will not be binding on Rockville or United. If the merger is completed, the merger-related compensation may be paid to United’s named executive officers to the extent payable in accordance with the terms of the compensation agreements and arrangements even if United stockholders fail to approve the advisory vote regarding merger-related compensation.

The United board of directors recommends a vote “FOR,” on an advisory basis, the United compensation proposal.

 

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THE ROCKVILLE SPECIAL MEETING

This section contains information for Rockville stockholders about the special meeting that Rockville has called to allow its stockholders to consider and vote on the merger agreement and other related matters. Rockville is mailing this joint proxy statement/prospectus to you, as a Rockville stockholder, on or about February 7, 2014. This joint proxy statement/prospectus is accompanied by a notice of the special meeting of Rockville stockholders and a form of proxy card that Rockville’s board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

Date, Time and Place of Meeting

The special meeting will be held on at Maneeley’s Banquet, Catering & Conference Center, 65 Rye Street, South Windsor, Connecticut 06074 at 10:00 a.m. local time, on Tuesday, April 8, 2014.

Matters to Be Considered

At the special meeting of stockholders, you will be asked to consider and vote upon the following matters:

 

    the Rockville merger proposal;

 

    the Rockville adjournment proposal;

 

    the Rockville compensation proposal;

 

    the Rockville certificate amendment proposal; and

 

    such other business as may properly come before the meeting or any adjournment thereof.

Recommendation of Rockville’s Board of Directors

Rockville’s board of directors has determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Rockville and its stockholders, has unanimously adopted the merger agreement and unanimously recommends that Rockville stockholders vote “FOR” the Rockville merger proposal, “FOR” the Rockville adjournment proposal, “FOR” the Rockville compensation proposal and “FOR” the Rockville certificate amendment proposal. See “The Merger—Rockville’s Reasons for the Merger; Recommendation of Rockville’s Board of Directors” for a more detailed discussion of Rockville’s board of directors’ recommendation.

Rockville Record Date and Quorum

Rockville’s board of directors has fixed the close of business on January 31, 2014 as the record date for determining the holders of Rockville common stock entitled to receive notice of and to vote at the Rockville special meeting.

As of the record date, there were 25,979,020 shares of Rockville common stock outstanding and entitled to vote at the Rockville special meeting held by approximately 4,499 holders of record. Each share of Rockville common stock entitles the holder to one vote at the Rockville special meeting on each proposal to be considered at the Rockville special meeting.

The presence at the special meeting, in person or by proxy, of a majority of the outstanding shares of Rockville common stock entitled to vote at the special meeting will constitute a quorum for the transaction of business. All shares of Rockville common stock present in person or represented by proxy, including abstentions, will be treated as present for determining the presence or absence of a quorum for all matters voted on at the Rockville special meeting. Broker non-votes will be counted for determining the presence of a quorum at the

 

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meeting only if the beneficial owner of such shares has instructed the bank or broker how to vote with respect to at least one matter before the meeting.

Vote Required; Treatment of Abstentions and Failure to Vote

Rockville merger proposal:

 

    Standard: Approval of the Rockville merger proposal requires the affirmative vote of at least two-thirds of the outstanding shares of Rockville common stock entitled to vote on the proposal.

 

    Effect of failure to vote, abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker with respect to the Rockville merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

Rockville adjournment proposal and Rockville compensation proposal:

 

    Standard: Approval of each of the Rockville adjournment proposal and the Rockville compensation proposal requires the affirmative vote of a majority of the shares present or represented at the special meeting and entitled to vote on the matter.

 

    Effect of failure to vote, abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card with respect to the Rockville adjournment proposal or the Rockville compensation proposal, it will have the same effect as a vote “AGAINST” the proposal. If you fail to submit a proxy card or vote in person at the Rockville special meeting or fail to instruct your bank or broker how to vote with respect to such proposals, it will have no effect on such proposals.

Rockville certificate amendment proposal:

 

    Standard: Approval of the Rockville certificate amendment proposal requires the affirmative vote of not less than 80% of the outstanding shares of Rockville common stock entitled to vote on the proposal.

 

    Effect of failure to vote, abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker how to vote with respect to the Rockville certificate amendment proposal, it will have the same effect as a vote “AGAINST” the proposal.

Shares Held by Officers and Directors

As of the record date, the directors and executive officers of Rockville and their affiliates beneficially owned and were entitled to vote approximately 880,602 shares of Rockville common stock representing approximately 3.4% of the shares of Rockville common stock outstanding on that date. We currently expect that each of these individuals will vote their shares of Rockville common stock in favor of each of the proposals to be considered and voted upon at the Rockville special meeting, although no director or executive officer has entered into any agreement obligating him or her to do so. As of the record date, United beneficially held no shares of Rockville common stock.

Voting of Proxies; Incomplete Proxies

Each copy of this joint proxy statement/prospectus mailed to holders of Rockville common stock is accompanied by a form of proxy card with instructions for voting. If you hold stock in your name as a stockholder of record, you should complete and return the proxy card accompanying this joint proxy statement/prospectus, regardless of whether you plan to attend the special meeting. You may also vote your shares through the Internet or by telephone. Information and applicable deadlines for voting through the Internet or by telephone are set forth in the enclosed proxy card instructions.

If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received from your bank or broker.

 

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All shares represented by valid proxies that Rockville receives through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the Rockville merger proposal, “FOR” the Rockville adjournment proposal, “FOR” the Rockville compensation proposal and “FOR” the Rockville certificate amendment proposal. No matters other than the matters described in this joint proxy statement/prospectus are anticipated to be presented for action at the special meeting or at any adjournment or postponement of the special meeting. However, if other business properly comes before the special meeting, the proxy agents will, in their discretion, vote upon such matters in their best judgment.

Shares Held in “Street Name”

If you are a Rockville stockholder and your shares are held in “street name” through a bank, broker or other holder of record, you must provide the record holder of your shares with instructions on how to vote the shares. Please follow the voting instructions provided by the bank or broker. You may not vote shares held in street name by returning a proxy card directly to Rockville or by voting in person at the Rockville special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. Further, brokers, banks or other nominees who hold shares of Rockville common stock on behalf of their customers may not give a proxy to Rockville to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks and other nominees do not have discretionary voting power on these matters.

Revocability of Proxies and Changes to a Rockville Stockholder’s Vote

If you hold stock in your name as a stockholder of record, you may revoke any proxy at any time before it is voted by (1) voting at a later date, (2) delivering a written revocation letter to Rockville’s corporate secretary or (3) attending the special meeting in person, notifying the corporate secretary and voting by ballot at the special meeting.

Any stockholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying Rockville’s corporate secretary) of a stockholder at the special meeting will not constitute revocation of a previously given proxy.

Written notices of revocation and other communications about revoking your proxy card should be addressed to:

Rockville Financial, Inc.

45 Glastonbury Boulevard, Suite 200

Glastonbury, Connecticut 06033

Attention: Corporate Secretary

If your shares are held in “street name” by a bank or broker, you should follow the instructions of your bank or broker regarding the revocation of proxies.

Participants in the Rockville Bank 401(k) Plan

Effective January 1, 2014, the Rockville Bank Employee Stock Ownership Plan was merged with and into the Rockville Bank 401(k) Plan. The merged plan is referred to as the Rockville Bank 401(k) Plan (which we refer to herein as the “Rockville 401(k)”). If you are a participant in the Rockville 401(k) Plan, you will receive information about how to vote shares held in your account. The trustee of the fund(s) established under the Rockville 401(k) holds in trust shares of Rockville common stock. Pursuant to the Rockville 401(k), the trustee votes the shares allocated to participants in accordance with their instructions. The trustee also votes the

 

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combined fractional shares allocated to all participants’ accounts, to the extent possible, to reflect the direction of the participants. When no voting instructions have been received, the trustee will vote the shares allocated to your account in the same proportion as the shares for which the trustee received voting instructions.

Solicitation of Proxies

In addition to solicitation of proxies by mail, Rockville will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of Rockville common stock and secure their voting instructions. Rockville will reimburse the record holders for their reasonable expenses in taking those actions. If necessary, Rockville may use its directors and several of its regular employees, who will not be specially compensated, to solicit proxies from the Rockville stockholders, either personally or by telephone, facsimile, letter or electronic means. Rockville has also made arrangements with Morrow & Co., LLC to assist it in soliciting proxies and has agreed to pay Morrow $10,000 plus reasonable expenses for these services. Rockville will bear the entire cost of soliciting proxies from you.

Attending and Voting at the Rockville Special Meeting

All holders of Rockville common stock, including holders of record and stockholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Stockholders of record can vote in person at the special meeting. If you are not a stockholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you to be admitted. Rockville reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the special meeting is prohibited without Rockville’s express written consent.

Delivery of Proxy Materials to Stockholders Sharing an Address

As permitted by applicable law, only one copy of this joint proxy statement/prospectus is being delivered to multiple stockholders of Rockville sharing an address unless Rockville has previously received contrary instructions from one or more such stockholders. This is referred to as “householding.” Stockholders who hold their shares in “street name” can request further information on householding through their banks, brokers or other holders of record. On written or oral request to Marliese L. Shaw, Senior Vice President, Investor Relations Officer at Rockville’s corporate offices, 45 Glastonbury Boulevard, Suite 200, Glastonbury, Connecticut 06033 or by telephone at (860) 291-3622, or to Rockville’s proxy solicitor, Morrow & Co., LLC, at 470 West Avenue, Stamford, Connecticut 06902, or toll-free at (855) 264-1296, Rockville will deliver promptly a separate copy of this document to a stockholder at a shared address to which a single copy of the document was delivered.

Assistance

If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus or need help voting your shares of Rockville common stock, please contact Marliese L. Shaw, Senior Vice President, Investor Relations Officer, 45 Glastonbury Boulevard, Suite 200, Glastonbury, Connecticut 06033 ((860) 291-3622), or Rockville’s proxy solicitor, Morrow & Co., LLC, at 470 West Avenue, Stamford, Connecticut 06902, toll-free at (855) 264-1296.

ROCKVILLE PROPOSALS

PROPOSAL NO. 1—ROCKVILLE MERGER PROPOSAL

Rockville is asking its stockholders to approve the merger agreement and the transactions contemplated thereby (including the issuance of Rockville common stock in the merger pursuant to the merger agreement). Holders of Rockville common stock should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

 

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After careful consideration, the Rockville board of directors, by a unanimous vote of all directors, adopted the merger agreement and declared the merger agreement and the transactions contemplated thereby, including the merger, to be advisable and in the best interests of Rockville and the stockholders of Rockville. See “The Merger—Rockville’s Reasons for the Merger; Recommendation of Rockville’s Board of Directors” included elsewhere in this joint proxy statement/prospectus for a more detailed discussion of the Rockville board of directors’ recommendation.

The Rockville board of directors unanimously recommends a vote “FOR” the Rockville merger proposal.

PROPOSAL NO. 2—ROCKVILLE ADJOURNMENT PROPOSAL

The Rockville special meeting may be adjourned to another time or place, if necessary or appropriate, to permit, among other things, further solicitation of proxies if necessary to obtain additional votes in favor of the Rockville merger proposal.

If, at the Rockville special meeting, the number of shares of Rockville common stock present or represented and voting in favor of the Rockville merger proposal is insufficient to approve such proposal, Rockville intends to move to adjourn the Rockville special meeting to solicit additional proxies for the approval of the merger agreement. In that event, Rockville will ask its stockholders to vote upon the Rockville adjournment proposal, but not the Rockville merger proposal.

In this proposal, Rockville is asking its stockholders to authorize the holder of any proxy solicited by the Rockville board of directors on a discretionary basis to vote in favor of adjourning the Rockville special meeting to another time and place to solicit additional proxies, including the solicitation of proxies from Rockville stockholders who have previously voted.

The Rockville board of directors unanimously recommends a vote “FOR” the Rockville adjournment proposal.

PROPOSAL NO. 3—ROCKVILLE COMPENSATION PROPOSAL

Pursuant to the Dodd-Frank Act and the rules of the SEC thereunder, Rockville is seeking non-binding, advisory stockholder approval of the agreements or understandings and compensation of Rockville’s named executive officers that is based on or otherwise relates to the merger as disclosed in “The Merger—Interests of Rockville’s Directors and Executive Officers in the Merger” beginning on page 90. The proposal gives Rockville’s stockholders the opportunity to express their views on the merger-related agreements or understandings and compensation of Rockville’s named executive officers.

Accordingly, Rockville is requesting stockholders to adopt the following resolution, on a non-binding, advisory basis:

“RESOLVED, that the compensation that may be paid or become payable to Rockville’s named executive officers in connection with the merger and the agreements or understandings pursuant to which such compensation may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in “The Merger—Interests of Rockville’s Directors and Executive Officers in the Merger,” are hereby APPROVED.”

Approval of this proposal is not a condition to completion of the merger, and the vote with respect to this proposal is advisory only and will not be binding on Rockville or United. If the merger is completed, the

 

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merger-related compensation may be paid to Rockville’s named executive officers to the extent payable in accordance with the terms of the compensation agreements and arrangements even if Rockville stockholders fail to approve the advisory vote regarding merger-related compensation.

The Rockville board of directors unanimously recommends a vote “FOR,” on an advisory basis, the Rockville compensation proposal.

PROPOSAL NO. 4—ROCKVILLE CERTIFICATE AMENDMENT PROPOSAL

Rockville is asking its stockholders to approve the Rockville certificate amendment proposal. This proposal would set the number of directors of the surviving corporation in accordance with the surviving corporation’s bylaws (effectively raising the number from 16 to 20) and reclassify the surviving corporation board of directors from a four-class board with staggered four-year terms to a three-class board with staggered three-year terms. A copy of the Rockville certificate amendment proposal is attached to this joint proxy statement/prospectus as Annex E.

After careful consideration, the Rockville board of directors, by a unanimous vote of all directors, adopted the Rockville certificate amendment proposal. The proposal would reclassify the surviving corporation’s board as a three-class board, which is United’s current board classification, and effectively increase the size of the board of the surviving corporation from 16 to 20 members. The larger board size will allow all former Rockville directors and all former United directors (with Mr. Sullivan replacing Mr. Collins) to serve on the board of directors of the surviving corporation as of the effective time. If Rockville stockholders do not approve the Rockville certificate amendment proposal (but otherwise approve the Rockville merger proposal), the surviving corporation will be allowed to have no more than 16 directors, which will prevent two former Rockville directors and two former United directors from serving on the board of the surviving corporation. Stockholder approval of the Rockville certificate amendment proposal is NOT a condition to the closing of the merger, and Rockville stockholders may approve the Rockville certificate amendment proposal even if they do not approve the Rockville merger proposal.

The Rockville board of directors unanimously recommends a vote “FOR” the Rockville certificate amendment proposal.

 

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INFORMATION ABOUT ROCKVILLE

Rockville Financial, Inc. is a Connecticut corporation that owns all of the outstanding shares of common stock of Rockville Bank. At September 30, 2013, Rockville had, on a consolidated basis, assets of $2.22 billion, deposits of $1.69 billion and stockholders’ equity of $295.2 million. Rockville Bank, which is headquartered in Rockville, Connecticut, is a 22-branch community bank serving Tolland, Hartford and New London counties in Connecticut. Rockville Bank established a New Haven County Commercial Banking Office in Hamden, Connecticut, opened a full service Banking Center in West Hartford, Connecticut in January 2013 and opened a full service branch in Hamden, Connecticut in December 2013.

Rockville’s stock is traded on NASDAQ under the symbol “RCKB.”

Rockville’s principal office is located at 45 Glastonbury Boulevard, Suite 200, Glastonbury, Connecticut 06033, and its telephone number at that location is (860) 291-3600. Additional information about Rockville and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information,” beginning on page 142.

INFORMATION ABOUT UNITED

United Financial Bancorp, Inc. is a Maryland corporation that owns all of the outstanding shares of common stock of United Bank. At September 30, 2013, United had, on a consolidated basis, assets of $2.49 billion, deposits of $1.95 billion and stockholders’ equity of $302.8 million. United Bank, a federal savings bank headquartered in West Springfield, Massachusetts, provides an array of financial products and services through its 16 branch offices and two express drive-up branches in the Springfield region of Western Massachusetts; seven branches in the Worcester region of Central Massachusetts; and 12 branches in Connecticut’s Hartford, Tolland and New Haven counties. United Bank also operates loan production offices located in Beverly, Massachusetts and Glastonbury, Connecticut. Through its Wealth Management Group, United Bank offers access to a wide range of investment and insurance products and services, as well as financial, estate and retirement strategies and products.

United’s stock is traded on NASDAQ under the symbol “UBNK.”

United’s principal office is located at 95 Elm Street, West Springfield, Massachusetts 01089, and its telephone number at that location is (413) 787-1700. Additional information about United and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information,” beginning on page 142.

 

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THE MERGER

The following discussion contains certain information about the merger. The discussion is subject, and qualified in its entirety by reference, to the merger agreement attached as Annex A to this joint proxy statement/prospectus and incorporated herein by reference. We urge you to read carefully this entire joint proxy statement/prospectus, including the merger agreement attached as Annex A, for a more complete understanding of the merger.

Terms of the Merger

Each of Rockville’s and United’s respective boards of directors has approved the merger agreement. The merger agreement provides for the merger of United with and into Rockville, with Rockville continuing as the surviving corporation. Rockville’s certificate of incorporation will be amended at the effective time of the merger to change its name to “United Financial Bancorp, Inc.” Immediately following the completion of the merger, United Bank, a wholly owned bank subsidiary of United, will merge with and into Rockville Bank, a wholly owned bank subsidiary of Rockville. Rockville Bank will be the surviving bank in the bank merger and will change its name to “United Bank.”

In the merger, each share of United common stock, par value $0.01 per share, issued and outstanding immediately prior to the completion of the merger, except for specified shares of United common stock held by United or Rockville, will be converted into the right to receive 1.3472 shares of Rockville common stock, no par value per share. No fractional shares of Rockville common stock will be issued in connection with the merger, and holders of United common stock will be entitled to receive cash in lieu thereof.

United stockholders and Rockville stockholders are being asked to approve the merger agreement. See “The Merger Agreement” for additional and more detailed information regarding the legal documents that govern the merger, including information about the conditions to the completion of the merger and the provisions for terminating or amending the merger agreement.

Background of the Merger

As part of their ongoing consideration and evaluation of their respective long-term prospects and strategies, each of United and Rockville’s board of directors and senior management have regularly reviewed and assessed their respective businesses and objectives, including strategic opportunities and challenges, and have considered various strategic options potentially available to them, with the goal of enhancing value for their respective stockholders. The strategic discussions have focused on, among other things, the business and regulatory environment facing financial institutions generally and United and Rockville, in particular, as well as conditions and ongoing consolidation in the financial services industry.

In the fall of 2010, Richard B. Collins, Chairman of the Board, President and Chief Executive Officer of United, met with William J. McGurk, the former President and Chief Executive Officer of Rockville, and two directors of Rockville. The purpose of the meeting was for the parties to get to know each other and discuss each company’s business and the industry in general. At that time, United was in the stock holding company structure and Rockville was in the mutual holding company structure. Thus, there was not any possibility of a strategic combination because of the limitations on the ability of a company in the mutual holding company structure to merge with a company in the stock holding company structure.

Rockville completed its conversion from the mutual holding company form of organization to the fully stock form of organization in March 2011. William H.W. Crawford, IV succeeded Mr. McGurk as the President and Chief Executive Officer in April 2011. Messrs. Collins and Crawford met a couple of times in 2012. The nature of the meetings was informal, and no specifics regarding a transaction were discussed.

In April 2013, Mr. Collins and J. Jeffrey Sullivan, Executive Vice President and Chief Operating Officer of United, met with Mr. Crawford, who discussed the advantages of a merger of their two companies. Later in the

 

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month, representatives of RBCCM, Rockville’s financial advisor, and Sterne Agee, United’s financial advisor, discussed possible transaction structures, including a merger of equals and various methodologies for pricing. They also discussed social issues such as the name of the resulting company, number of directors and the board and management structure. The boards of Rockville and United were apprised of these discussions.

Also, in April 2013, Mr. Collins was approached by the Chief Executive Officer of a large regional bank holding company (which we refer to as “Company A”), who expressed interest in acquiring United. Representatives of United and Company A continued to discuss a proposed transaction throughout the month.

On May 1, 2013, Mr. Collins, Mark A. Roberts, Chief Financial Officer of United, and representatives of Sterne Agee met with the President and Chief Executive Officer of Company A and Company A’s financial advisors to review a presentation that had been prepared by Company A’s financial advisors. The materials reflected input from Sterne Agee based on a previous conversation between the financial advisors. The materials included an analysis of the current market, the potential synergies that could be achieved through a business combination, a summary of the pro forma company and Company A’s history and pricing multiples. The presentation included a pro forma analysis of the transaction, which consisted of all-stock consideration and a fixed exchange ratio.

Messrs. Collins and Roberts and a representative from Sterne Agee met with the President and Chief Executive Officer of Company A twice in early May to discuss the financial and social aspects of the proposal in greater detail.

On May 13, 2013, the United board held a special meeting to discuss the proposal from Company A. Representatives of Kilpatrick Townsend & Stockton LLP, United’s legal counsel, and United’s financial advisors were also present. Mr. Collins provided a summary of his recent discussions with Company A. Sterne Agee presented an analysis of the banking market, the bank merger market, United’s and Company A’s franchise, a summary of the pro forma company and Company A’s history and pricing multiples. The presentation included a pro forma analysis of the transaction, which consisted of all-stock consideration and a fixed exchange ratio, which indicated a value of $19.95 per share of United common stock. At this meeting the board requested time to review the materials and more analysis on the achievability of the cost savings that had been projected.

Over the course of the following weeks, management of United met with representatives of Company A to further explore the proposed business combination, and the United board met again to consider the transaction and to review management’s analysis on the projected level of cost savings. Kilpatrick Townsend explained to the board its fiduciary duties. Representatives of Sterne Agee were also present at the meeting.

On June 17, 2013, the United board held another special meeting to further consider the proposal from Company A. The President and Chief Executive of Company A made a presentation and answered questions from the board. Following his departure, presentations were made by management and representatives from United’s financial advisor regarding United’s strategic plan, the banking market, the bank merger market, United’s franchise, Company A’s franchise, the proposed expression of interest by Company A (which indicated a value of $20.22) and a pro forma analysis of the business combination, the United board was unable to reach a consensus about proceeding with the business combination with Company A. Representatives of Kilpatrick Townsend also discussed in detail with the board the legal standards applicable to its decisions and actions with respect to the proposed transaction. The members of the board who determined that the transaction was not in the best interests of its stockholders reached their conclusion primarily because: (1) they did not believe the resulting institution could achieve the level of cost savings and synergies necessary to make the transaction financially compelling; (2) of reservations about the companies’ differing cultures; and (3) they questioned Company A’s ability to maintain its stock price, which was then at a higher level than it had historically traded.

On September 13, 2013, Messrs. Collins and Crawford resumed exploratory discussions regarding a potential strategic business combination involving their respective companies and the benefits for each company that could result from such a transaction. The two executives continued the discussion at a meeting on September 17, 2013.

 

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On September 19, 2013, at a regular meeting of the United board of directors, Mr. Collins informed the board of directors about the discussions that had transpired to date with Mr. Crawford. Details of certain characteristics of the pro forma company, such as a list and map of branches and pro forma market share, were provided to the board.

On September 22, 2013, Mr. Sullivan met with Mr. Crawford, where they spoke of the long-term vision that they had for their organizations and what could potentially be gained by combining the two organizations.

On September 24, 2013, Mr. Crawford reviewed the current status of discussions with members of Rockville’s executive committee.

On September 26, 2013, Messrs. Collins and Crawford began to discuss specifics of the structure of the transaction, including potential cost savings and the resulting management and corporate governance structure. They also discussed the potential strategic fit and the benefits of a business combination, including synergies from such a transaction. Mr. Crawford emphasized that the proposed terms were preliminary and had not been approved or discussed with the full Rockville board of directors. Mr. Collins indicated that the terms were attractive and requested that Mr. Crawford review the terms with the Rockville board of directors.

The Rockville board of directors held a special meeting on October 1, 2013. The board reviewed with RBCCM and Hinckley Allen, its legal counsel, the potential terms of a transaction with United and related analytics. The board authorized Rockville to enter into a non-disclosure agreement with United and to conduct due diligence.

On October 2, 2013, several members of the management team and of the board of directors of Rockville, as well as representatives of each company’s financial advisors, were present at a special meeting of the United board. The Rockville representatives discussed Rockville’s history, the process that resulted in Mr. Crawford’s hiring and the infrastructure that the institution has established and continues to build and the specifics of the transaction. Following questions from the United board, the Rockville representatives left, at which point, Sterne Agee made a presentation that provided a summary of each company, including a listing of each company’s management team and directors, a financial analysis of recent merger of equal transactions, a summary of the financial and strategic rationale for the transaction, including a financial analysis of the pro forma company, proposed cost savings and the effect of the transaction on each company’s stockholder base. The presentation outlined the terms of the transaction, including that 1.3472 shares of Rockville common stock would be exchanged for each share of United common stock resulting in each party’s stockholders owning approximately 50% of the combined company. The exchange ratio also reflected negotiation between the parties based on the relative values of the respective companies, including then current and historical market values and the expected contribution of each company to the combined organization. The discussions also included the effects of the proposed transaction on tangible book value and earnings per share to each company. The presentation outlined the corporate governance aspects of the proposal, including that the resulting company would be governed by a twenty-person board with equal representation from each company, the potential committee structure and a proposed management organizational chart for the combined company. The presentation identified the headquarters for the resulting company and specified that the new company would adopt United’s name.

United did not want to proceed with diligence until there had been further refinement of the corporate governance issues. To facilitate those discussions, the United board formed an ad hoc committee, consisting of Michael Crowley, Carol A. Leary, Kevin Ross and Robert A. Stewart, Jr., who would assist in evaluating the transaction and negotiating the corporate governance issues with a similarly formed committee of Rockville directors.

On October 4, 2013, Messrs. Collins, Crawford and Sullivan met to discuss topics raised by the United directors at the October 2, 2013 board meeting, which included clarifying positions and roles for the proposed senior management team, board governance issues, cost savings, the exchange ratio and the potential timeline for moving forward.

 

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On October 6, 2013, Mr. Crawford met with Mr. Sullivan to discuss Mr. Sullivan’s prospective role in a combined institution.

On October 9, 2013, Mr. Sullivan met with Mark A. Kucia, Executive Vice President and Commercial Banking Officer for Rockville, and discussed each company’s lending philosophy and the historical and projected areas of focus and growth. The executives also discussed each company’s loan approval process, the role of the credit department and the risk oversight function, and the concentrations and specialty lending niches in each loan portfolio.

On October 10, 2013, several members of the Rockville senior management team met with Messrs. Collins and Sullivan and the United ad hoc director committee. Mr. Crawford explained his background and his long-term strategy for Rockville. The United representatives then interviewed Mr. Kucia, Brandon Lorey, Senior Vice President, Head of Consumer Lending, and Eric R. Newell, Executive Vice President, Head of Treasury.

On October 15, 2013, the United ad hoc committee met with the Rockville ad hoc committee, which consisted of Michael A. Bars, Joseph F. Jeamel, Jr., Kristen A. Johnson and Raymond H. Lefurge, Jr. Messrs. Collins, Crawford and Sullivan were also in attendance. The purpose of the meeting was for the directors to meet each other and gain comfort about their philosophies and ability to work together going forward. The committees confirmed their understanding of many of the terms of the transaction. The discussion centered on governance issues, including the compensation to be paid to the directors, and the size and composition of the board, including that the Chairman of the Board would be a United director. The committees also discussed the proposed committee structure for the resulting company, agreeing that each committee would be equally represented by United and Rockville directors and that the chairs of the committees would be divided between the two companies. The committees also discussed the pricing of the transaction and agreed to revisit the appropriateness of the exchange ratio following more detailed analysis of the expected cost savings following the due diligence process.

On October 16, 2013, the Rockville board of directors met in executive session to discuss the transaction. After a discussion of proposed governance terms, the board of directors approved a resolution to move forward with execution of a non-disclosure agreement and due diligence.

On October 16, 2013, the parties entered into a mutual non-disclosure agreement.

Over the next week, discussions between Messrs. Collins and Crawford and between Messrs. Lefurge and Stewart continued about the governance issues, including United’s desire that the governance structure agreed to by the parties remain in place for at least a three-year period to ensure adequate time for an effective integration of the two companies.

Once the parties had determined that the governance issues were close to resolution, beginning on October 22, 2013, representatives of each party began their due diligence examination of the other party. As part of the diligence process, senior management of Rockville and United contacted representatives of the Connecticut Department of Banking, the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency to brief the regulators on the potential transaction.

On October 30, 2013, the ad hoc director committees met to further discuss governance issues.

On November 1, 2013, Rockville’s legal counsel provided United’s legal counsel with a draft of the merger agreement.

Meetings of the two parties’ management teams continued into early November. On November 2 and 3, 2013, each of the parties conducted a comprehensive loan review on the other party. Both parties utilized a third-party loan review firm to assist them with that analysis.

On November 5, 2013, management of both parties met along with representatives of Rockville and United’s financial advisors to discuss the budgets, projections and asset liability management of both companies.

 

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On November 6, 2013, each party, along with representatives of their respective legal and financial advisors, conducted interviews of the senior management of each of United and Rockville.

Also on November 6, 2013, the United board held a special meeting. Representatives of Kilpatrick Townsend were also in attendance and discussed in detail the governance matters included in the merger agreement. The representatives from Kilpatrick Townsend discussed that to implement the changes to the board structure that had been negotiated by the parties (namely, a board size of twenty members as opposed to the existing board size of sixteen members and a board divided into three classes with three-year terms as opposed to the existing structure of four classes with four-year terms), Rockville would need to obtain the affirmative vote of 80% of the outstanding shares to vote in favor of the proposal to amend the company’s certificate of incorporation. The representatives from Kilpatrick Townsend explained that the vote to amend the certificate of incorporation would be a separate proposal from the proposal to approve the merger (which required the affirmative vote of two-thirds of the outstanding shares of Rockville) and, thus, it was possible that the merger could proceed without the ability to implement the board changes that required the amendment of the certificate of incorporation. The board discussed strategies on how to structure the transaction if the vote to amend the certificate of incorporation was not obtained. Representatives of the ad hoc committees also summarized their meetings to date and provided a draft of the proposed committee assignments and compensation structure for each of the directors.

On November 11, 2013, the Rockville board of directors held a meeting to consider, based on presentations from Rockville’s senior management and outside legal and financial advisors, the status of a potential business combination transaction with United. Rockville’s management further reviewed the background of discussions with United and the progress of negotiations, and reported on Rockville’s due diligence investigations of United. RBCCM reviewed with the Rockville board of directors additional information, including financial information regarding Rockville, United and the transaction. In addition, Hinckley Allen reviewed the most recent draft of the proposed merger agreement and related agreements as well as the legal standards applicable to the board’s decisions and actions with respect to the proposed transaction. Following questions and discussions among those in attendance, Rockville’s board of directors authorized Rockville’s senior management to continue negotiations with United and finalize definitive documentation regarding the potential transaction for further board consideration.

On November 12, 2013, United convened a special meeting of its board of directors. Legal counsel and representatives of Sterne Agee were also present at the meeting. A copy of the draft merger agreement that had been negotiated to date, as well as certain ancillary documents, had been sent to each director on November 8, 2013. Legal counsel summarized to the board of directors its fiduciary duties and reviewed in detail the terms of the merger agreement and ancillary documents, including the employment agreement to be entered into by Mr. Sullivan and the advisory agreement to be entered into by Mr. Collins. A summary of the results of the due diligence review of Rockville was also provided to the board of directors. The board of directors was also informed that the parties had confidential discussions with the bank regulators about the potential transaction. Sterne Agee made a presentation, a copy of which had been sent in advance to the directors, in which it summarized the diligence conducted and the transaction terms, including the composition of the board, the committee structure and proposed management organizational chart. Sterne Agee discussed the pro forma franchise and the pro forma impact of the transaction.

On November 13, 2013, counsel from both Rockville and United contacted the Connecticut Banking Commissioner to review certain legal aspects of the proposed merger.

On November 13, 2013, the ad hoc director committees met. The parties discussed the anticipated composition of the board both after the closing of the transaction and in the long-term. The parties discussed the classification of the directors and the composition and role of the director committees, especially the executive committee. The committees also discussed the potential compensation to be paid to the board members.

On November 14, 2013, United convened a special meeting of the board of directors. Director David O’Connor was unable to attend the meeting. Legal counsel noted the changes to the agreement since the draft of

 

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the agreement distributed on November 8, 2013 and also summarized the results of the call with the Connecticut Banking Commissioner. Sterne Agee made a presentation regarding the fairness of the proposed exchange ratio to United’s stockholders from a financial point of view and delivered its written opinion that, as of November 14, 2013, and subject to the limitations and qualifications set forth in the opinion, the proposed exchange ratio was fair to United’s stockholders from a financial point of view.

Following these presentations and discussions and review and discussion among the members of the United board of directors, including consideration of the factors described under “—United’s Reasons for the Merger; Recommendation of United’s Board of Directors,” the United board of directors determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of United and its stockholders, its customers, communities and other constituencies, and the directors in attendance unanimously voted to adopt the merger agreement, the transactions contemplated thereby and recommended that United’s stockholders approve the merger agreement.

On November 14, 2013, at the special meeting, the Rockville board of directors received an update from Rockville’s management on the status of negotiations with United. Also at this meeting, RBCCM reviewed with Rockville’s board of directors its financial analysis of the exchange ratio and delivered to Rockville’s board of directors both an oral opinion and a written opinion dated November 14, 2013, to the effect that, as of that date and based on and subject to various assumptions and limitations described in its opinion, the exchange ratio provided for in the merger was fair, from a financial point of view, to Rockville. During the meeting, the Rockville board of directors discussed whether receiving a fairness opinion from a second investment banking firm would be advisable. Mr. Crawford stated that he had previous discussions with representatives of Sandler O’Neill about Sandler O’Neill potentially rendering a fairness opinion for the transaction. Mr. Crawford believed, on the basis of his prior discussions, that Sandler O’Neill would be available to quickly take on this assignment if requested. Mr. Crawford and counsel confirmed Sandler O’Neill’s availability, and Sandler O’Neill subsequently completed its procedures in respect of rendering a fairness opinion and issued its written opinion as of November 14, 2013.

Hinckley Allen reviewed changes to the draft merger agreement at the November 14, 2013 board meeting, and again discussed with the Rockville board of directors the legal standards applicable to its decisions and actions with respect to the proposed transaction. They reviewed the proposed merger agreement and related agreements, including the amendment to Mr. Crawford’s employment agreement, Mr. Sullivan’s employment agreement and Mr. Collins’ advisory services agreement. Ms. Johnson, Chair of Rockville’s compensation committee, confirmed that she and the committee were in support of the two employment agreements and the advisory agreement as negotiated to the time of the meeting.

Following these discussions, and review and discussion among the members of the Rockville board of directors, including consideration of the factors described under “—Rockville’s Reasons for the Merger; Recommendation of Rockville’s Board of Directors,” the Rockville board of directors determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Rockville and its stockholders, its customers, communities and other constituencies, and the directors voted unanimously to adopt the merger agreement, the transactions contemplated thereby, the two employment agreements and the advisory agreement, and recommended that Rockville’s stockholders approve the merger agreement.

Following completion of the November 14, 2013 board meetings, the merger agreement and related agreements were executed and delivered. Before the opening of the stock market on November 15, 2013, United and Rockville issued a joint press release announcing the execution of the merger agreement.

United’s Reasons for the Merger; Recommendation of United’s Board of Directors

After careful consideration, the United board, at a meeting held on November 14, 2013, determined that the merger agreement was in the best interests of United and its stockholders. Accordingly, the United board approved and adopted the merger agreement and recommends that United stockholders vote “FOR” the approval of the merger proposal, “FOR” the approval of the United adjournment proposal and “FOR” the approval of the United compensation proposal.

 

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In reaching its decision to approve and adopt the merger agreement and recommend that United stockholders approve the merger agreement, the United board consulted with United’s management, received advice from its legal and financial advisors, and considered a number of factors, including the following material factors:

 

    the value that the transaction is expected to provide to United’s stockholders, including that:

 

    the transaction is expected to be approximately 22% accretive from an earnings per share perspective in 2014 and 28% accretive in 2015;

 

    the transaction is expected to be immediately 1.3% accretive from a tangible book value per share perspective;

 

    pro forma return on tangible equity is expected to be meaningfully higher and commensurate with peer institutions and implies a potential stock price well above United’s current stock price;

 

    the transaction is expected to result in an estimated $17.6 million of annual cost savings and a significantly improved efficiency ratio and return on average assets;

 

    assuming continuation of Rockville’s current dividend, the transaction provides a 22.5% increase in the dividend to United stockholders;

 

    while revenue enhancements were not included in the forecasted synergies, the transaction will create meaningful potential revenue opportunities, including opportunities to cross-sell expanded products and services to a larger combined customer base;

 

    the anticipated continued participation of United’s directors and management in the combined company, which enhances the likelihood that the expected benefits of the merger will be realized and that the benefits and talents that United brings to the combined company will be appropriately valued and effectively utilized; in particular, the United board considered the following:

 

    that United’s current Executive Vice President and Chief Operating Officer would become President of the combined company;

 

    that the board of directors of the combined company would consist of an equal number of Rockville and United directors, including all of the current United directors (with Mr. Sullivan replacing Mr. Collins);

 

    that the Chairman of the Board would be a current United director;

 

    that the board committees would consist of an equal number of United and Rockville directors; and

 

    that United directors will chair three board committees;

 

    the continuation of the United name and brand for the combined company;

 

    the belief that combining the two companies would create a larger and more diversified financial institution that is both better equipped to respond to economic and industry developments and better positioned to develop and build on its existing market position throughout Massachusetts and Connecticut;

 

    the complementary aspects of United’s and Rockville’s businesses, including customer focus, geographic coverage, business orientation and compatibility of the companies’ cultures and management and operating styles, and the potential cost savings and revenue synergies in connection with the merger and the related potential impact on the combined company’s earnings;

 

    the complementary skills and expertise of the senior management teams and employees of United and Rockville and the potential advantages of a larger institution when pursuing, or seeking to retain, talent;

 

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    United’s and Rockville’s business, operations, financial condition, asset quality, earnings and prospects, taking into account the presentations made by United senior management, the results of United’s due diligence review of Rockville, and information provided by United’s financial advisor;

 

    the strong capital position of the combined company;

 

    that, based on an analysis of the current stock ownership of each company, no stockholder would own a significant percentage of stock of the combined company;

 

    the current environment in the financial services industry, including national, regional and local economic conditions and the interest rate environment, continued consolidation, the uncertainties in the regulatory climate for financial institutions, increased operating costs resulting from regulatory initiatives and compliance mandates, increasing competition, the current environment for community banks, particularly in New England, and current financial market conditions and the likely effects of these factors on the two companies’ potential growth, development, productivity and strategic options;

 

    the historical market prices of United and Rockville common stock;

 

    that the merger consideration consists solely of Rockville common stock, giving former United stockholders the opportunity to participate as Rockville stockholders in the benefits of the combination and the future performance of the combined company generally;

 

    the likelihood that the merger would be completed in a timely manner and that the management team of the combined company would be able to successfully integrate and operate the businesses of the combined company after the merger;

 

    that the United board is permitted to change its recommendation that the United stockholders approve the merger agreement in certain circumstances;

 

    the financial analysis presented by Sterne Agee to the United board, and the opinion delivered to the United board by Sterne Agee to the effect that, as of the date of the opinion, and subject to and based on the qualifications and assumptions set forth in the opinion, the exchange ratio to be received by the holders of United common stock in the merger is fair, from a financial point of view, to such stockholders;

 

    the greater market capitalization and anticipated trading liquidity of the common stock of the combined company after the transaction;

 

    the expectation that the merger of United with and into Rockville, with Rockville continuing as the surviving corporation, would qualify as a “reorganization” for United States federal income tax purposes;

 

    the terms of the merger agreement, including the fixed exchange ratio, expected tax treatment, reciprocal deal protection and termination fee provisions and the reciprocal restrictions on the conduct of the business of both companies between the date of the merger agreement and the date of consummation of the merger, which it reviewed with its outside financial and legal advisors, which terms are described more fully under “The Merger Agreement”;

 

    the need to obtain approval by stockholders of United and Rockville, as well as regulatory approvals, to complete the transaction and the risk that those or other conditions will not be satisfied;

 

    the potential risks associated with achieving anticipated costs savings and successfully integrating United’s business, operations and workforce with that of Rockville;

 

    the transaction-related restructuring charges and other merger-related costs;

 

    the nature of the payments to be received by United’s management in connection with the transaction;

 

    the potential risk of diverting management attention and resources from the operation of United’s business and toward the completion of the merger; and

 

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    the regulatory approvals required in connection with the transaction and the expectation that such regulatory approvals will be received in a timely manner and without the imposition of unacceptable conditions.

The foregoing discussion of the factors considered by the United board is not intended to be exhaustive, but rather a summary of the material factors considered by the United board. In reaching its decision to approve and adopt the merger agreement, including the merger and the other transactions contemplated by the merger agreement, the United board did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The United board considered the various factors as a whole, including discussions with, and questioning of, United management and United’s financial and legal advisors, and overall considered the factors to be favorable to, and to support, its determination.

The foregoing discussion of the information and factors considered by the United board is forward-looking in nature. This information should be read in light of the factors described under the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

The United board of directors recommends a vote “FOR” the approval of the merger proposal and other merger-related proposals.

Opinion of Sterne Agee

United retained Sterne Agee to act as its financial advisor in connection with the proposed merger with Rockville. Sterne Agee agreed to assist United in analyzing, structuring, and negotiating the merger and was also engaged to render a written opinion to United’s board of directors as to whether the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to United’s stockholders. United selected Sterne Agee because Sterne Agee is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger and is familiar with United and its business. As part of its investment banking business, Sterne Agee is continually engaged in the valuation of financial services companies and their securities in connection with mergers and acquisitions.

As part of its engagement, representatives of Sterne Agee attended the meeting of the United board of directors, held on November 14, 2013, at which the United board of directors evaluated the proposed merger with Rockville. At this meeting, Sterne Agee reviewed the financial aspects of the proposed merger and rendered an opinion that, as of such date and based upon and subject to the various factors, assumptions and limitations set forth in its opinion, the exchange ratio offered to United stockholders in the merger was fair from a financial point of view. Following extensive review and discussion, the United board of directors approved the merger agreement at this meeting.

The full text of Sterne Agee’s written opinion is attached as Annex B to this document and is incorporated herein by reference. United stockholders are urged to read the opinion in its entirety for a description of the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Sterne Agee. The description of the opinion set forth herein is qualified in its entirety by reference to the full text of such opinion. The issuance of Sterne Agee’s opinion was approved by a fairness opinion committee of Sterne Agee. Sterne Agee provided its opinion to the United board of directors in connection with and for the purposes of its evaluation of the merger. Sterne Agee has reviewed and consented to the inclusion herein of the disclosure relating to its fairness opinion.

Sterne Agee’s opinion speaks only as of the date of the opinion. The opinion is directed to the United board of directors and addresses only the fairness, from a financial point of view, of the exchange ratio offered to the United stockholders. It does not address the underlying business decision to proceed with the merger and does not constitute a recommendation to any United stockholder as to how the stockholder should vote at the United special meeting on the merger or any related matter.

 

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In rendering its opinion, Sterne Agee reviewed, among other things:

 

    certain publicly-available financial and business information of United, Rockville and their affiliates which Sterne Agee deemed to be relevant;

 

    certain information, including financial forecasts, relating to the business, earnings, cash flow, assets, liabilities, liquidity and prospects of United and Rockville;

 

    certain information detailing the merger prepared by United, Rockville and their affiliates and by their legal and accounting advisors including the estimated amount and timing of restructuring charges and the cost savings and synergies expected to result from the merger (the “synergies”);

 

    the comparison of certain financial metrics of United, Rockville and the combined company to other selected banks and thrifts that Sterne Agee deemed to be relevant;

 

    the potential pro forma financial impact of the merger on the future financial performance of the combined company, including the potential effect on United’s and Rockville’s estimated earnings per share and tangible book value per share after giving effect to the exchange ratio;

 

    the relative contributions of United and Rockville to the future financial performance of the combined company on a pro forma basis;

 

    the relative ownership percentages of stockholders of United on a pro forma basis following the closing of the merger;

 

    the recent publicly reported trading prices of United and Rockville;

 

    the overall environment for depository institutions in the United States;

 

    the merger agreement dated November 14, 2013; and

 

    such other financial studies, analyses and investigations and such other matters as Sterne Agee deemed appropriate for purposes of Sterne Agee’s opinion, including its assessment of general economic, market and monetary conditions.

Sterne Agee also held several discussions with members of senior management and representatives of both United and Rockville with respect to certain aspects of the merger, as well as their respective businesses and prospects before and after giving effect to the merger and certain other matters Sterne Agee believed necessary or appropriate to its inquiry.

Sterne Agee, in conducting its review and arriving at its opinion, relied upon the accuracy and completeness of the information provided to it by United, Rockville and their affiliates. In addition, where appropriate, Sterne Agee relied upon publicly available information, without independent verification, that Sterne Agee believes to be reliable, accurate, and complete; however, Sterne Agee cannot guarantee the reliability, accuracy, or completeness of any such publicly available information. Sterne Agee was not engaged to express, and is not expressing, any opinion with respect to any other transaction, including any alternative transaction between United and Rockville. Sterne Agee prepared its opinion using publicly available earnings estimates by research analysts covering Rockville, as discussed with senior management of Rockville, and internal projections for United provided by and discussed with senior management of United. With respect to the financial forecasts, including the synergies and restructuring charges, supplied to Sterne Agee, Sterne Agee assumed, with United’s consent, that they were reasonably prepared and reflected, as of the date of Sterne Agee’s opinion, the best currently available estimates and judgments of United and Rockville as to future operating and financial performance of United, Rockville and the combined company.

Sterne Agee did not make an independent evaluation of the assets or liabilities (contingent or otherwise) of United, Rockville or their affiliates, including, but not limited to, any derivative or off-balance sheet assets or liabilities nor did Sterne Agee conduct any review of individual credit files of United or Rockville, evaluate the adequacy of the loan or lease loss reserves of United or Rockville or evaluate the solvency of United or Rockville under any state or federal laws relating to bankruptcy, insolvency or similar matters. Sterne Agee rendered no

 

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opinion or evaluation on the collectability of any asset or the future performance of any loan of United or Rockville. Sterne Agee is not experts in the evaluation of loan or lease portfolios for assessing the adequacy of the allowances for losses with respect thereto and, accordingly, Sterne Agee did not make an independent evaluation of the adequacy of the allowance for loan and lease losses of United or Rockville or on the credit mark assumed taken in the merger, and Sterne Agee has assumed, with United’s consent, that the respective allowances for loan and lease losses for both United and Rockville, respectively, as well as the credit mark are adequate to cover such losses and will be adequate on a pro forma basis for the combined company. Sterne Agee has relied upon and assumed, without assuming any responsibility for independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by Sterne Agee.

For purposes of rendering its opinion, Sterne Agee assumed that, in all respects material to its analyses:

 

    the merger will be completed substantially in accordance with the terms set forth in the merger agreement with no additional payments or adjustments to the merger consideration;

 

    the representations and warranties of each party in the merger agreement and in all related documents and instruments referred to in the merger agreement are true and correct;

 

    each party to the merger agreement and all related documents will perform all of the covenants and agreements required to be performed by such party under such documents;

 

    all conditions to the completion of the merger will be satisfied without any waiver; and

 

    in the course of obtaining the necessary regulatory, contractual, or other consents or approvals for the merger, no restrictions, including any divestiture requirements, termination or other payments or amendments or modifications, will be imposed that will have a material adverse effect on the future results of operations or financial condition of the combined entity or the contemplated benefits of the merger, including the synergies and restructuring charges expected to result from the merger.

Sterne Agee further assumed, without assuming any responsibility for independent verification, that the merger will be accounted for as a purchase transaction under GAAP, and that the merger will qualify as a tax-free reorganization for United States federal income tax purposes. Sterne Agee’s opinion is not an expression of an opinion as to the prices at which shares of United common stock or shares of Rockville common stock will trade following the announcement of the merger or the actual value of the shares of common stock of the combined company when issued pursuant to the merger, or the price at which the shares of common stock of the combined company will trade following the completion of the merger.

The exchange ratio was determined through negotiations between United and Rockville and was approved by United’s board of directors. Sterne Agee provided advice to United during these negotiations, Sterne Agee did not recommend that any specific exchange ratio constituted the only appropriate exchange ratio for the merger.

Summary of Analyses by Sterne Agee

In accordance with customary investment banking practice, Sterne Agee employed generally accepted valuation methods in reaching its opinion. The following is a summary of the material financial analyses undertaken by Sterne Agee in connection with rendering its opinion to the United board of directors on November 14, 2013. The summary is not a complete description of the analyses underlying the Sterne Agee opinion or the presentation made by Sterne Agee to the United board of directors, but summarizes the material analyses performed and presented in connection with such opinion. The preparation of a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. In arriving at its opinion, Sterne Agee did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. The financial analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the financial analyses. Accordingly, Sterne Agee believes that its analyses and the summary of its

 

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analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying its analyses and opinion.

Summary of Proposal

Pursuant to the terms of the merger agreement, each outstanding share of United common stock not owned by United or Rockville other than shares owned in a fiduciary or agency capacity or as a result of debts previously contracted, will be converted into the right to receive 1.3472 shares of Rockville common stock (the “exchange ratio”). Based on Rockville’s closing price on November 8, 2013, of $13.74, the exchange ratio represented a price of $18.51 per share to United’s stockholders.

Demographic and Branch Analysis

Sterne Agee reviewed and compared selected demographic information on United’s and Rockville’s markets where they have one or more active branch offices and conduct business. On a weighted average basis, based on data provided by a nationally recognized consolidator of this information, SNL financial, Rockville’s franchise was found to have a projected population change from 2012 to 2017 of 0.78%, 2012 median household income of $67,702, and a projected household income change from 2012 to 2017 of 16.8%. United’s franchise was found to have a projected population change from 2012 to 2017 of 0.71%, 2012 median household income of $52,986, and a projected household income change from 2012 to 2017 of 16.0%. Sterne Agee also prepared a pro forma map combining United branch offices with Rockville’s branch offices. The map revealed the complementary nature of each institution’s branch footprint, with a total of 34,418 businesses with less than 500 employees, based on the latest U.S Census Bureau data, operating in the combined Hartford and Springfield Metropolitan Statistical Areas.

Selected Publicly Traded Companies Analyses

Using publicly available information, Sterne Agee compared the financial performance, financial condition and market performance of United and Rockville to the following publicly traded banks and bank holding companies and thrifts and thrift holding companies headquartered in New England, excluding mutual holding companies and pending merger targets, with assets between $1.4 billion and $6.0 billion. Companies in this group were:

 

•   Independent Bank Corp.

  

•   First Connecticut Bancorp, Inc.

•   Berkshire Hills Bancorp, Inc.

  

•   Enterprise Bancorp, Inc.

•   Brookline Bancorp, Inc.

  

•   Merchants Bancshares, Inc.

•   Century Bancorp, Inc.

  

•   First Bancorp, Inc.

•   Washington Trust Bancorp, Inc.

  

•   Cambridge Bancorp

•   Camden National Corporation

  

To perform this analysis, Sterne Agee used financial information for the three months ended September 30, 2013 (or as of the most recently available quarter) and market price information as of November 8, 2013. Earnings estimates for 2014 and 2015 were taken from a nationally recognized earnings estimate consolidator, SNL Financial, for the selected companies. Certain financial data prepared by Sterne Agee, and as referenced in the tables presented below, may not correspond to the data presented in United’s and Rockville’s historical financial statements, or to the data prepared by RBCCM or Sandler O’Neill, presented under the sections “Opinion of RBCCM” and “Opinion of Sandler” as a result of the different periods, assumptions and methods used by Sterne Agee to compute the financial data presented. No company used as a comparison in the analysis below is identical to United or Rockville. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies.

 

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The following table summarizes the relevant data items for United, Rockville, and the peer group.

 

                 United / Rockville Peer Group  
     United     Rockville     Minimum     Median     Mean     Maximum  

Balance Sheet (Most Recent Quarter)

            

Total Assets ($ millions)

   $ 2,491      $ 2,219      $ 1,450      $ 2,597      $ 3,098      $ 5,895   

Loans/ Deposits

     97.4     97.9     45.8     89.0     89.0     115.0

Securities/ Assets

     15.2     18.0     6.6     14.6     22.5     56.2

Tangible Common Equity/ Tangible Assets

     10.5     13.1     4.9     7.7     7.8     11.4

Tier 1 Capital Ratio

     12.3     17.3     10.1     12.5     12.8     15.2

Total Risk Based Capital Ratio

     12.9     18.4     11.4     13.7     14.2     16.3

Income Analysis (Most Recent Quarter)

            

Return on Average Assets

     0.76     0.85     0.19     0.88     0.83     1.29

Return on Average Equity

     6.2     6.3     1.6     10.6     9.7     14.6

Return on Average Tangible Common Equity

     7.4     6.3     1.6     12.9     11.6     16.3

Net Interest Margin

     3.40     3.34     2.23     3.32     3.30     4.02

Efficiency Ratio

     65.6     65.7     53.1     63.4     64.9     92.7

Asset Quality (Most Recent Quarter)

            

Non-Performing Assets/ Total Assets

     0.59     0.66     0.10     1.09     0.94     2.10

Loan Loss Reserves/ Total Loans

     0.7     1.1     0.8     1.2     1.3     1.8

Net Charge-Offs/ Total Loans

     0.12     0.04     0.00     0.07     0.14     0.47

Trading Multiples & Market Statistics(1)

            

Stock Price/ Tangible Book Value

     124.1     123.3     110.2     155.0     154.9     216.1

Stock Price/ Core Tangible Book Value(2)

     130.0     137.4     110.2     155.0     156.4     222.9

Stock Price/ Last Quarter Annualized EPS

     17.7x        19.1x        8.2x        13.8x        18.2x        64.9x   

Stock Price/ 2014 Estimated EPS

     15.9x        18.3x        12.2x        14.5x        19.4x        45.8x   

Stock Price/ 2015 Estimated EPS

     15.0x        16.5x        11.2x        13.7x        15.5x        27.3x   

Stock Price/ Core Deposit Premium(3)

     3.8     4.4     0.7     5.3     6.2     14.5

Current Dividend Yield

     2.7     2.9     0.8     2.8     2.9     4.6

 

(1) As of 11/8/2013
(2) Calculated to represent the premium to core tangible book, assumed to be 8% of tangible common equity, and excess capital matched dollar for dollar
(3) Core deposits defined as total deposits less time deposits over $100,000. The core deposit premium is calculated by taking the market capitalization less tangible book value, divided by core deposits

Sterne Agee reviewed, among other things, peer equity values as multiples of calendar years 2014 and 2015 estimated EPS, tangible book value per share and core deposits as of September 30, 2013. Sterne Agee then applied these peer multiples, on a median basis, to the corresponding data of United and Rockville to arrive at their implied equity values per share. Based on the implied per share equity values for United and Rockville as described above, the following table lists what the implied exchange ratio these analyses indicated and compares the percentage difference to the merger exchange ratio of 1.3472.

 

     Implied
Exchange
Ratio
     Difference
to Merger
Exchange
Ratio,
1.3472x
 

United / Rockville Peer Group Trading Multiple Analysis(1)

     

Peer Median Stock Price/ Tangible Book Value Per Share

     1.1798x         14.2

Peer Median Stock Price/ Core Tangible Book Value Per Share

     1.2473x         8.0

Peer Median Stock Price/ 2014 Estimated EPS

     1.3600x         (0.9 %) 

Peer Median Stock Price/ 2015 Estimated EPS

     1.2934x         4.2

Peer Median Core Deposit Premium

     1.2166x         10.7

 

(1) As of 11/8/2013

 

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United and Rockville Stock Price Performance

Sterne Agee reviewed the history of the publicly reported trading prices of United’s and Rockville’s common stock year-to-date and for the one year period ended November 8, 2013. Sterne Agee then compared the relationship between the movements in the price of United’s and Rockville’s common stock in relation to each other and against the movements in the prices of its peer group and the NASDAQ Bank Index.

 

     Year-to-Date
Price Performance
    Last Twelve Months
Price Performance
 

United

     3.4     14.0

Rockville

     6.5     8.4

United / Rockville Peer Group

     9.5     16.9

NASDAQ Bank Index

     32.8     38.9

Historical Stock Market Exchange Ratio Analysis

Sterne Agee performed an implied exchange ratio analysis by comparing the historical relationship between the publicly reported trading prices of United’s and Rockville’s common stock. The following table lists what the implied exchange ratio would have been, based on average stock prices over the periods shown, and compares the percentage difference to the merger exchange ratio of 1.3472.

 

     Implied
Exchange
Ratio
     Difference
to Merger
Exchange
Ratio,
1.3472x
 

Historical Stock Market Exchange Ratio Analysis(1)

     

November 8, 2013

     1.1827x         13.9

30 Trading Day Average

     1.2335x         9.2

60 Trading Day Average

     1.2297x         9.6

90 Trading Day Average

     1.2236x         10.1

250 Trading Day Average

     1.1904x         13.2

 

(1) As of 11/8/2013

Implied Exchange Ratio Based on Research Analyst Price Targets

Sterne Agee also performed an implied exchange ratio analysis by comparing the public price targets of research analysts covering United and Rockville as provided by a nationally recognized research price target consolidator, Bloomberg. Sterne Agee calculated the ratio implied by dividing the median research analyst price target of United by the median research analyst price target of Rockville. Sterne Agee also calculated the ratio implied by dividing the lowest research analyst price target of United by the highest research analyst price target of Rockville. Further, Sterne Agee calculated the ratio implied by dividing the highest research analyst price target of United by the lowest research analyst price target of Rockville. The following table lists the implied exchange ratio these analyses indicated and compares the percentage difference to the merger exchange ratio of 1.3472.

 

     Implied
Exchange
Ratio
     Difference
to Merger
Exchange
Ratio,
1.3472x
 

Research Analyst Price Target Analysis(1)

     

United Maximum Stock Price Target / Rockville Minimum Stock Price Target

     1.2857x         4.8

United Median Stock Price Target / Rockville Median Stock Price Target

     1.1864x         13.6

United Minimum Stock Price Target / Rockville Maximum Stock Price Target

     1.0968x         22.8

 

(1) Research Analyst price targets as of 11/8/2013.

 

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Stand Alone United Dividend Discount Analysis

Sterne Agee performed a dividend discount analysis for the purpose of determining a range of implied equity values per share for United’s common stock. A dividend discount analysis is a method of evaluating the equity value of a company using estimates of future dividends to stockholders generated by United and taking into consideration the time value of money with respect to those future dividends by calculating their present value. In performing this analysis, Sterne Agee used earnings estimates for United for fourth quarter 2013 and full years 2014 and 2015 and a growth rate of 8.0% thereafter provided by United’s management, and assumed discount rates ranging from 11.0% to 13.0% (based on a capital asset pricing model, and certain stock market estimated return information as calculated by Ibbotson Associates, a financial research firm). The range of values was determined by adding (1) the present value of projected dividends to United stockholders from 2014 to 2018 and (2) the present value of the terminal value of United’s common stock. In determining dividends available to stockholders, Sterne Agee assumed balance sheet growth provided by United management and assumed that United would maintain a tangible common equity/tangible asset ratio of 8.0% and would retain sufficient earnings to maintain these levels. Any earnings in excess of what would need to be retained represented dividendable cash flows for United. In calculating the terminal value of United, Sterne Agee applied multiples ranging from 12.0 times to 14.0 times 2019 forecasted earnings. This resulted in a range of values of United from $15.23 to $17.92 per share.

 

     Terminal Earnings Multiple  

Discount Rate

   12.0x      13.0x      14.0x  

11.0%

   $ 16.19       $ 17.06       $ 17.92   

12.0%

   $ 15.70       $ 16.53       $ 17.36   

13.0%

   $ 15.23       $ 16.03       $ 16.82   

Stand Alone Rockville Dividend Discount Analysis

Sterne Agee also performed the same dividend discount analysis for the purpose of determining a range of implied equity values per share for Rockville’s common stock. In performing this analysis, Sterne Agee used publicly available earnings estimates by research analysts covering Rockville, as discussed with senior management of Rockville, for fourth quarter 2013 and full years 2014 and 2015 and a growth rate of 8.0% thereafter provided by Rockville’s management and assumed discount rates ranging from 11.0% to 13.0% (based on a capital asset pricing model, and certain stock market estimated return information as calculated by Ibbotson Associates, a financial research firm). The range of values was determined by adding (1) the present value of projected dividends to Rockville stockholders from 2014 to 2018 and (2) the present value of the terminal value of Rockville’s common stock. In determining dividends available to stockholders, Sterne Agee assumed balance sheet growth provided by Rockville management and assumed that Rockville would maintain a tangible common equity/tangible asset ratio of 8.0% and would retain sufficient earnings to maintain these levels. Any earnings in excess of what would need to be retained represented dividendable cash flows for Rockville. In calculating the terminal value of Rockville, Sterne Agee applied multiples ranging from 12.0 times to 14.0 times 2019 forecasted earnings. This resulted in a range of values of Rockville from $12.14 to $13.99 per share.

 

     Terminal Earnings Multiple  

Discount Rate

   12.0x      13.0x      14.0x  

11.0%

   $ 12.80       $ 13.39       $ 13.99   

12.0%

   $ 12.46       $ 13.03       $ 13.60   

13.0%

   $ 12.14       $ 12.69       $ 13.23   

The dividend discount analysis is a widely used valuation methodology that relies on numerous assumptions, including asset and earnings growth rates, terminal values and discount rates. The analysis did not purport to be indicative of the actual values or expected values of United or Rockville.

Based upon the implied valuations for each of United and Rockville, pursuant to the stand alone dividend discount analyses described above, Sterne Agee calculated a range of implied exchange ratios of a share of

 

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United common stock to a share of Rockville common stock. Sterne Agee calculated the ratio implied by dividing the median implied equity value of United by the median implied equity value of Rockville. Sterne Agee also calculated the ratio implied by dividing the low end of implied equity value of United by the high end of implied equity value of Rockville. Further, Sterne Agee calculated the ratio implied by dividing the high end of implied equity value of United by the low end of implied equity value of Rockville. The following table lists the implied exchange ratio these analyses indicated and compares the percentage difference to the merger exchange ratio of 1.3472.

 

     Implied
Exchange
Ratio
     Difference
to Merger
Exchange
Ratio,
1.3472x
 

Dividend Discount Analysis

     

United Maximum Equity Value Per Share / Rockville Minimum Equity Value Per Share

     1.4765x         (8.76 %) 

United Median Equity Value Per Share / Rockville Median Equity Value Per Share

     1.2685x         6.20

United Minimum Equity Value Per Share / Rockville Maximum Equity Value Per Share

     1.0889x         23.72

Relative Contribution Analysis

Sterne Agee analyzed the relative contribution of United and Rockville to the pro forma market capitalization, balance sheet and income statement items of the combined entity, including pro forma ownership, assets, loans, deposits, tangible common equity, and projected 2014 and 2015 earnings estimates. This analysis excluded all purchase accounting adjustments and was based on United’s and Rockville’s closing prices on November 8, 2013 of $16.25 and $13.74, respectively. Sterne Agee calculated the implied exchange ratio under the various contribution percentages and showed what the implied exchange ratio these analyses indicated and compared the percentage difference to the merger exchange ratio of 1.3472.

 

     Contribution     Implied
Exchange
Ratio
     Difference to
Merger
Exchange
Ratio, 1.3472x
 
     UBNK     RCKB       

Ownership

         

100% stock (1.3472x merger exchange ratio)

     51     49     

Market Capitalization

     47     53     1.1827x         13.9

Balance Sheet

         

Total Assets

     53     47     1.4517x         (7.2 %) 

Net Loans

     53     47     1.4844x         (9.2 %) 

Total Deposits

     53     47     1.4878x         (9.5 %) 

Tangible Common Equity

     47     53     1.1474x         17.4

Earnings

         

Estimated 2014 Earnings

     52     48     1.3967x         (3.5 %) 

Assuming Rockville Leverages to United Tangible Common Equity in 2014(1)

     49     51     1.2364x         9.0

Estimated 2015 Earnings

     52     48     1.3975x         (3.6 %) 

Assuming Rockville Leverages to United Tangible Common Equity in 2015(1)

     49     51     1.2625x         6.7

 

(1) Assumes Rockville leverages tangible common equity level at respective year, incremental assets invested in securities with a net pre-tax spread of 1.00% for the respective periods

Financial Impact Analysis

Sterne Agee performed pro forma merger analyses that combined the projected income statement and balance sheet information of United and Rockville. In performing this analysis, Sterne Agee used publicly available earnings estimates by research analysts covering Rockville for fourth quarter 2013 and full years 2014

 

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and 2015, as discussed with Rockville management, and used internal management earnings estimates for United for fourth quarter 2013 and full years 2014 and 2015 provided by United management. Sterne Agee also used synergies estimates, purchase accounting adjustments, and restructuring charges provided by United and Rockville management to calculate the financial impact that the merger would have on certain projected financial results of Rockville and United. This analysis indicated that the merger is expected to be accretive to Rockville’s and United’s estimated earnings per share in 2014 and 2015. The analysis also indicated that the merger is expected to be dilutive to tangible book value per share for Rockville; however, Rockville is estimated to earn back its tangible book value dilution in under 5 years and maintain well capitalized capital ratios. The analysis also indicated that the merger is expected to be accretive to tangible book value per share for United as well as to United’s most recently announced common stock dividend as of the fairness opinion date. For all of the above analyses, the actual results achieved by United and Rockville, following the merger, will vary from the projected results and the variations may be material.

Value Creation Analysis

In addition, Sterne Agee performed a dividend discount analysis to estimate a range of the present values of after-tax cash flows that Rockville (pro forma for the merger) could provide to equity holders through December 31, 2018 and the implied pass-through value to United utilizing the merger exchange ratio of 1.3472. In performing this analysis, Sterne Agee used earnings estimates, synergies estimates, purchase accounting adjustments, and restructuring charges provided by United’s and Rockville’s management. To approximate the terminal value of Rockville’s common stock (pro forma for the merger) at December 31, 2019, Sterne Agee applied earnings multiples ranging from 12.0x to 14.0x. The income stream and terminal value was then discounted to present value using a 12% discount rate (based on a capital asset pricing model and certain stock market estimated return information as calculated by Ibbotson Associates, a financial research firm). Based on these assumptions, the following table sets forth the respective valuation ranges for the combined company on a pro forma basis and the implied pass-through value to United, utilizing the exchange ratio of 1.3472.

 

     Terminal Earnings Multiple  

Discount Rate of 12%

   12.0x      13.0x      14.0x