Rockville Financial, Inc. Announces Record Earnings and Dividend Increase

Rockville Financial, Inc. Announces Record Earnings and Dividend Increase  ROCKVILLE, Conn., Oct. 25, 2012 (GLOBE NEWSWIRE) -- Rockville Financial, Inc. ("Rockville Financial" or the "Company") (Nasdaq:RCKB), the holding company for Rockville Bank (the "Bank"), today announced net income of $4.7 million, or $0.17 per diluted share, for the quarter ended September 30, 2012.  "I am pleased to announce that Rockville Financial, Inc. reported its highest quarterly earnings in the Company's 154 year history, and its fourth consecutive quarter of record core earnings. The quarter's results were in part driven by the recognition of $2.5 million of gains on sales of loans due to the expansion of our mortgage banking business. This is a 101% increase over our next highest quarter. Asset quality remains strong and Rockville continues to enjoy organic growth," stated William (Bill) H. W. Crawford, IV, President and Chief Executive Officer (CEO) of Rockville Financial, Inc. and Rockville Bank. "The Company's organic growth strategy is positively reflected in its increase in deposit market share. During the twelve months ending June 30, 2012, Rockville moved up in rank in the State of Connecticut to 12^th position from 14^th position and increased market share in all but one of its branch locations. I would like to personally thank our employees for their continued focus on superior customer service."  Third Quarter Highlights (revenue and expense comparisons are to prior year third quarter results, unless noted otherwise)    *58.3% increase in operating earnings on a linked quarter basis, 14.3%     increase in operating earnings year-over-year.   *12.7% growth in operating revenue on a linked quarter basis, 22.8% growth     in operating revenue year-over-year.   *5.0% increase in operating expense on a linked quarter basis, 36.9%     increase in operating expense year-over-year.   *240.6% increase in residential mortgage production year-over-year to $82.8     million in the third quarter of 2012 from $24.3 million in the prior year,     and a 3.5% increase in residential mortgage production from $80.0 million     in the linked quarter.   *1.0% linked quarter net commercial loan growth, after approximately $10     million of commercial loan payoffs in the third quarter.   *10.4% net interest income growth due to average loan growth and decreased     funding costs.   *3.80% tax equivalent net interest margin, compared to 3.70% in the prior     year and 3.87% in the linked quarter.   *0.79% cost of interest-bearing liabilities, decreased 44 basis points from     prior year and 6 basis points from the linked quarter.   *0.68% total cost of funds, decreased 40 basis points from prior year and 5     basis points from the linked quarter.   *Efficiency ratio increased to 67.25% from 60.29% in the prior year and     decreased from 72.14% in the linked quarter.   *3.00% non-interest expense as a percentage of average assets, increased     from 2.44% in the prior year and increased from 2.93% in the linked     quarter.   *0.00% net loan charge-offs to average loans for the quarter, 0.04% for the     year-to-date.  Operating Results  The Company reported third quarter 2012 net income and core operating earnings of $4.7 million, or $0.17 per diluted share, compared to the linked quarter net income of $2.9 million, or $0.11 per diluted share. Core operating earnings for the second quarter of 2012 were $3.8 million (Non-GAAP, see attached table), or $0.14 per diluted share excluding the accelerated stock award grant expense. For the third quarter 2011, the Company recorded net income and core operating earnings of $4.1 million, or $0.14 per diluted share. This 14.3% operating earnings increase year-over-year, was attributable to strong mortgage banking revenue as a result of especially favorable market spreads and the expansion of the residential mortgage business program, and continued organic growth in both commercial loans and low cost core deposits during the third quarter 2012. Operating revenue of $21.6 million in the third quarter 2012 was an increase from $19.2 million in the second quarter and from $17.6 million in the prior year period.  Net Interest Income Increases  Net interest income of $17.0 million for the third quarter of 2012 increased by $73,000, or 0.4%, from $16.9 million for the second quarter of 2012 and by $1.6 million, or 10.4%, from the comparable 2011 period. This increase is due to both the growth in average earning assets and the continued reduction in the cost of funds. The tax equivalent net interest margin for the third quarter of 2012 was 3.80%, compared to 3.87% for the second quarter of 2012 and 3.70% for the comparable period in 2011.  The Company's tax equivalent yield on interest-earning assets decreased 11 basis points during the quarter ending September 30, 2012 to 4.39% from 4.50% during the second quarter 2012, and decreased by 22 basis points from 4.61% during the third quarter of 2011. The reduction in the average yield during the third quarter from both a linked quarter and year-over-year basis, was primarily attributable to the impact that the extended low interest rate environment has had on the yields of new loan originations and adjustable rate mortgage repricings. The tax equivalent yield on investment securities has benefited from the inclusion of $67.7 million of municipal bonds during the year-to-date 2012.  The cost of interest-bearing deposits decreased across all comparable periods as a result of the Company's continued focus on growing low cost core deposits and on reducing the cost of funds as well as the continued migration out of time deposits to other interest bearing deposit types. The cost of interest-bearing deposits decreased 5 basis points to 0.69% in the third quarter of 2012 from 0.74% in the second quarter of 2012, and decreased by 34 basis points from 1.03% in the comparable 2011 period. The cost of interest-bearing liabilities decreased 6 basis points to 0.79% in the third quarter of 2012 from 0.85% in the second quarter of 2012, and decreased by 44 basis points from 1.23% during the third quarter of 2011.  Provision For Loan Losses Increases  The provision for loan losses increased $39,000, or 5.2%, to $793,000 for the three months ended September 30, 2012 compared to $754,000 for the comparable 2011 period due to growth in the loan portfolio during this time period. Net charge-offs for the third quarter were $17,000, or 0.00% of average loans outstanding, a decrease from $555,000, or 0.04% of average loans outstanding, in the prior year period. Provision expense continues to be assessed in correlation with the Company's loan growth and risk profile.  Non-Interest Income  Non-interest income totaled $4.6 million for the third quarter 2012, an increase of $2.4 million, or 104.3%, on a linked quarter basis and up $2.4 million, or 108.6%, from the third quarter 2011. The linked quarter and year-over-year change in non-interest income is primarily attributable to the varying levels of net gains from sales of loans which totaled $2.5 million for the third quarter 2012, $44,000 in the second quarter 2012 and $405,000 in the third quarter 2011. The Company sold residential mortgage loans totaling $63.6 million in the third quarter 2012 compared to $1.0 million in the second quarter 2012 due to timing of the application process. In the third quarter 2011 the Company sold $20.2 million of residential mortgage loans. Loans held for sale totaled $5.8 million and $2.1 million at September 30, 2012 and 2011, respectively.  As the results reflect, the advantageous market spreads and the expansion of the Company's mortgage banking business in 2012 were significant drivers to its financial performance in the third quarter. Over the course of the year, the Company hired twelve mortgage loan officers and sixteen mortgage underwriters and processors which contributed to both the significant increase in production and the mix of that production. The Company continues to evolve this business and develop efficiencies. During the third quarter 2012 the Company originated 413 loans totaling $82.8 million, an increase of 222.7% and 240.6%, respectively, from 128 loans totaling $24.3 million in the third quarter 2011. Additionally, the inclusion of mortgage loan officers in the business model allows the Company to cultivate purchase mortgage production with local realtors and has increased the volume of purchase mortgages to $32.4 million in the third quarter 2012 as compared to $8.7 million in the prior year period, a 272.4% increase in that production source.  Service charges and fee income totaled $1.6 million for the third quarter 2012, an increase of $47,000, or 3.1%, on a linked quarter basis and an increase of $64,000, or 4.2%, from the same period in the prior year. Other income totaled $301,000 for the third quarter 2012, a decrease of $258,000, or 46.2%, on a linked quarter basis and an increase of $89,000, or 42.0%, from the same period in the prior year.  Non-Interest Expense  Non-interest expense as a percentage of average assets increased to 3.00% in the third quarter of 2012 from 2.93% in the second quarter of 2012, and increased from 2.44% in the third quarter 2011.  Non-interest expense totaled $14.5 million for the third quarter of 2012, up $695,000, or 5.0%, on a linked quarter basis and up $3.9 million, or 36.9%, from the third quarter 2011. The linked quarter change in non-interest expense is primarily attributable to a $604,000, or 31.9%, increase in other expense as a result of a $275,000 increase in directors stock award expense related to the June 2012 restricted stock and stock option grant, a $244,000 increase in other public company expenses and a $179,000 increase in electronic banking operational losses related largely to debit card losses. The debit card losses are the result of charge backs at large independent third-party servicers used by merchants for standard processing of customer debit card transactions.  On a year-over-year basis, the $3.9 million increase in non-interest expense is primarily attributable to a $2.3 million, or 38.0%, increase in salaries and employee benefits costs and a $1.0 million, or 70.5%, increase in other expense. The increase in salaries and employee benefits costs is attributable to the human capital infrastructure investment, significantly in 2011 and continued to a lesser extent in 2012, and is also inclusive of a $455,000 increase in officer stock award expense related to the June 2012 restricted stock and stock option grant and a $236,000 increase in pension expense. Full-time equivalent employees increased to 306 at September 30, 2012 from 261 at September 30, 2011. The increase in other expense is primarily due to a $303,000 increase in directors stock award expense related to the June 2012 restricted stock and stock option grant, a $188,000 increase in other public company expenses, a $162,000 increase in electronic banking operational losses related largely to debit card losses, and a $153,000 increase in telephone expense as a result of a new system installation.  Organic Loan and Deposit Growth Continues; Securities, BOLI and Borrowings Increase  Rockville Financial's total assets increased $199.3 million, or 11.4%, to $1.95 billion at September 30, 2012 from December 31, 2011. During the nine month period, net loans grew by $73.2 million, or 5.0%, with an increase of $47.0 million, or 7.9%, in the commercial real estate portfolio, an increase of $26.6 million, or 18.5%, in the commercial business portfolio and an increase of $2.9 million, or 0.4%, in the residential mortgage portfolio.  The available for sale securities portfolio increased $94.7 million, or 62.6%, to $246.0 million at September 30, 2012 from $151.2 million at December 31, 2011. The increase includes the Company's net purchase of $67.7 million of AA or better rated municipal bonds, $11.8 million of A and AA rated floating rate corporate bonds, $9.2 million of government sponsored multi-family mortgage-backed bonds and $8.0 million of variable rate investment grade collateralized loan obligations. The municipal bonds represent a wide geographic diversification and consist of both general obligation and revenue bonds.  Bank Owned Life Insurance ("BOLI") increased $26.8 million during the nine months ended September 30, 2012, primarily due to the purchase of $25.0 million of new life insurance policies during the first quarter. As a result of both the BOLI and municipal bond purchases during the year-to-date, the Company's effective tax rate has decreased to 25.6% in the third quarter 2012 from 34.5% during the prior year period.  During the three months ended September 30, 2012, the Company entered into its second interest rate swap to hedge the variable cash flows associated with a forecasted adjustable rate wholesale funding. The total notional value of two outstanding interest rate derivatives was $75 million, and both were designated as cash flow hedges of interest rate risk.  Deposits totaled $1.48 billion at September 30, 2012 and increased $150.4 million, or 11.3% from $1.33 billion at December 31, 2011, reflecting a $17.1 million, or 8.3%, increase in non-interest bearing deposits and a $133.3 million, or 11.9%, increase in interest bearing deposits. The increase in interest bearing deposits included the purchase of $41.7 million of brokered time deposits. The balance was comprised of $20.0 million and $21.7 million of six month and 4 year callable time deposits at the Company's option, respectively. The weighted average cost of brokered deposits was 0.64% at September 30, 2012, with balances representing 2.8% of total deposits. Federal Home Loan Bank of Boston advances increased $53.0 million, or 80.4%, year-to-date to $118.9 million at September 30, 2012 due to the addition of advances with terms of three months or less with a cost ranging from 0.20% to 0.27%.  Average net loans increased $41.5 million to $1.540 billion for the quarter ended September 30, 2012 from $1.499 billion for the quarter ended June 30, 2012. Average available for sale securities increased $14.4 million to $233.1 million for the quarter ended September 30, 2012 from $218.7 million for the quarter ended June 30, 2012, while average other earning assets decreased $11.9 million to $23.4 million during the same time period.  Average total deposits increased $35.7 million to $1.469 billion for the quarter ended September 30, 2012 from $1.433 billion for the quarter ended June 30, 2012. Average core deposits increased $32.2 million to $934.0 million for the quarter ended September 30, 2012 from $901.8 million for the quarter ended June 30, 2012, while average time deposits decreased $5.5 million during the same time period.  Asset Quality  Non-performing assets increased $1.0 million to $16.6 million at September 30, 2012 from $15.6 million at December 31, 2011. The ratio of non-performing assets to total assets decreased 4 basis points to 0.85% at September 30, 2012 from 0.89% at December 31, 2011. Loans on non-accrual increased $1.4 million to $14.0 million at September 30, 2012 from $12.6 million at December 31, 2011. Included in non-accrual loans are non-accruing troubled debt restructurings. Non-accruing troubled debt restructurings (TDR) decreased $402,000 to $3.0 million at September 30, 2012 from $3.4 million at December 31, 2011. The ratio of non-performing loans to total loans increased 5 basis points to 0.91% at September 30, 2012 from 0.86% at December 31, 2011. At September 30, 2012, the allowance for loan losses as a percentage of non-performing loans and of total loans outstanding was 128.93% and 1.17%, compared to 127.08% and 1.09% at December 31, 2011, respectively.  Dividend Increase  The Board of Directors voted to increase the cash dividend on the Company's common stock, declaring a dividend of $0.10 per share to shareholders of record at the close of business on November 5, 2012 and payable on November 13, 2012. The dividend is being increased by 11% from the prior dividend of $0.09 per share, and has increased by 54% since the Company's second-step conversion in May 2011. This dividend equates to a 3.37% annualized yield based on the $11.88 average closing price of the Company's common stock in the third quarter of 2012. The Company has paid dividends for 26 consecutive quarters. The dividend payout ratio for the quarter ended September 30, 2012 was 55%. Of note, 49% of the Company's certificate holders have committed to purchasing additional shares of the Company's stock on a quarterly basis since implementation of its dividend reinvestment program in April 2012.  Stock Repurchase Program  In accordance with State of Connecticut Department of Banking mutual conversion banking regulations the Company was eligible to adopt a stock repurchase program at the one year anniversary of its March 3, 2011 stock conversion. As such, the Company's Board of Directors approved a buyback plan on March 2, 2012 and commenced the plan upon receiving satisfactory response from the Company's regulator, the Federal Reserve Bank of Boston, on March 13, 2012. Under this plan, the Company may repurchase up to 2,951,250 shares, or 10% of the outstanding shares at the time the plan was approved. As of September 30, 2012, the Company had repurchased 1,356,379 shares at an average cost of $11.61 per share. The average closing price of the Company's common stock over this time period was $11.69 per share.  The Company repurchased 28,000 shares during the quarter ended September 30, 2012, at an average price of $11.72, which was 104% of the Company's tangible book value of $11.24. The closing price on the first business day of the quarter was $11.60, or 103% of the Company's tangible book value, while the closing price on the last business day of the quarter was $12.27, or 109% of the Company's tangible book value. The average closing price during the third quarter was $11.88, or 106% of the Company's tangible book value.  Management Comments  "Rockville reported record quarterly earnings and has made significant progress in decreasing funding costs, accelerating commercial loan growth and mortgage loan production, protecting asset quality, and efficiently returning capital to shareholders via increased dividends and our 10% stock buyback program," stated William (Bill) H. W. Crawford, IV, President and Chief Executive Officer (CEO). "Our total shareholder return year-over-year is 33.4% compared to the SNL thrift index of 30.0%. At Rockville, we remain focused on creating prosperity for our customers andcommunities and wealth for our shareholders."  About Rockville Financial, Inc.  Rockville Financial, Inc. is the parent of Rockville Bank, which is a 21-branch community bank serving Tolland, Hartford and New London counties in Connecticut. Rockville Bank has established a New Haven County Commercial Banking Office in Hamden, Conn., and will be opening a full service branch in West Hartford, Conn., in the coming months. For more information about Rockville Bank's services and products, call (860) 291-3600 or visit www.rockvillebank.com. For more information about Rockville Financial, Inc., visit www.rockvillefinancialinc.com.  The Rockville Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10954  Investor Call  Rockville Financial, Inc. is hosting a conference call on Friday, October 26, 2012 at 10:00 a.m. Eastern Time (ET) to discuss the Company's third quarter financial results. Those wishing to participate in the call may dial toll-free 1-877-317-6789. A replay of the call will be available on October 26, 2012 by dialing 1-877-344-7529, Conference ID # 10019061, and will be available until 9:00 a.m. ET on November 12, 2012.  Forward Looking Statements  This press release may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.  Rockville Financial, Inc. and Subsidiaries Consolidated Statements of Income (In Thousands, Except Share Data) (Unaudited)                                                                                                       For the Three Months For the Nine Months                                      Ended September 30,  Ended September 30,                                      2012       2011      2012      2011 INTEREST AND DIVIDEND INCOME:                                      Loans                                 $17,883  $17,828 $53,377 $52,844 Securities-interest                   1,733      1,244     4,742     3,579 Securities-dividends                  42         45        127       324 Interest-bearing deposits             13         8         50        39 Total interest and dividend income    19,671     19,125    58,296    56,786 INTEREST EXPENSE:                                                  Deposits                              2,149      2,862     6,646     8,670 Borrowed funds                        558        899       1,669     5,587 Total interest expense                2,707      3,761     8,315     14,257 Net interest income                   16,964     15,364    49,981    42,529 PROVISION FOR LOAN LOSSES             793        754       2,678     2,260 Net interest income after             16,171     14,610    47,303    40,269 provisionfor loan losses NON-INTEREST INCOME:                                               Total other-than-temporary impairmentlosses on equity           –         –        –        (29) securities Service charges and fees              1,585      1,521     4,949     4,799 Net gain from sales of securities     214        74        335       6,275 Net gain from sales of loans          2,514      405       3,083     464 Other income                         301        212       1,176     210 Total non-interest income             4,614      2,212     9,543     11,719 NON-INTEREST EXPENSE:                                              Salaries and employee benefits        8,314      6,023     23,905    18,307 Service bureau fees                   946        1,110     3,234     3,297 Occupancy and equipment               1,254      1,097     3,355     3,363 Professional fees                     1,049      725       2,595     1,907 Marketing and promotions              70         202       287       967 FDIC assessments                      268        (29)      774       991 Other real estate owned               110        2         444       76 Contribution to Rockville Bank        –         –        –        5,043 Foundation, Inc. Loss on extinguishment of debt        –         –        –        8,914 Other                                 2,499      1,466     6,074     4,383 Total non-interest expense            14,510     10,596    40,668    47,248 INCOME BEFORE INCOME TAXES            6,275      6,226     16,178    4,740 Income tax provision                  1,607      2,143     4,706     1,636 NET INCOME                            $4,668   $4,083  $11,472 $3,104    Rockville Financial, Inc. and Subsidiaries Consolidated Statements of Income - Concluded (In Thousands, Except Share Data) (Unaudited)                                                                                                    For the Three Months  For the Nine Months                                   Ended September 30,   Ended September 30,                                   2012       2011       2012       2011                                                                                                                                   Net income per share:                                             Basic                              $0.17      $0.14      $0.41      $0.11 Diluted                            $0.17      $0.14      $0.41      $0.11                                                                  Weighted-average shares                                           outstanding: Basic                              27,659,996 28,913,173 27,892,886 28,952,796 Diluted                            27,847,021 29,035,511 28,067,129 29,036,136    Rockville Financial, Inc. and Subsidiaries Consolidated Statements of Income (In Thousands) (Unaudited)                                                                                             For the Three Months Ended                            September June 30,  March 31, December   September                             30,                           31,        30,                            2012      2012      2012      2011       2011 INTEREST AND DIVIDEND                                             INCOME: Loans                       $17,883 $17,930 $17,564 $17,619 $17,828 Securities-interest         1,733     1,703     1,306     1,100      1,244 Securities-dividends        42        41        44        43         45 Interest-bearing deposits   13        26        11        32         8 Total interest and dividend 19,671    19,700    18,925    18,794     19,125 income INTEREST EXPENSE:                                                 Deposits                    2,149     2,246     2,251     2,582      2,862 Borrowed funds              558       563       548       632        899 Total interest expense      2,707     2,809     2,799     3,214      3,761 Net interest income         16,964    16,891    16,126    15,580     15,364 PROVISION FOR LOAN LOSSES   793       1,181     704       761        754 Net interest income after   16,171    15,710    15,422    14,819     14,610 provisionfor loan losses NON-INTEREST INCOME:                                              Service charges and fees    1,585     1,538     1,826     1,565      1,521 Net gain from sales of      214       118       3         2          74 securities Net gain from sales of      2,514     44       525       1,251      405 loans Other income               301       559      316       222        212 Total non-interest income   4,614     2,259    2,670     3,040      2,212 NON-INTEREST EXPENSE:                                             Salaries and employee       8,314     8,468    7,123     5,938      6,023 benefits Service bureau fees         946       1,231    1,057     1,041      1,110 Occupancy and equipment     1,254     1,036    1,065     1,038      1,097 Professional fees           1,049     828      718       630        725 Marketing and promotions    70        103      114       204        202 FDIC assessments            268       201      305       256        (29) Other real estate owned     110       53       281       601        2 Other                       2,499     1,895     1,680     2,060      1,466 Total non-interest expense  14,510    13,815    12,343    11,768     10,596 INCOME BEFORE INCOME TAXES  6,275     4,154     5,749     6,091      6,226 Income Tax Provision        1,607     1,205     1,894     2,103      2,143 NET INCOME                  $4,668  $2,949  $3,855  $3,988   $4,083    Rockville Financial, Inc. and Subsidiaries Consolidated Statements of Condition (In Thousands) (Unaudited)                                                                                          September    June 30,     March 30,    December 30, September                      30,                                                 30, ASSETS               2012         2012         2012         2011         2011 CASH AND CASH                                                         EQUIVALENTS: Cash and due from    $14,000   $20,151    $15,303    $40,677    $68,487 banks Short-term           24,365       13,739       24,549       308          312 investments Total cash and cash  38,365       33,890       39,852       40,985       68,799 equivalents AVAILABLE FOR SALE SECURITIES-At fair   245,952      221,714      195,501      151,237      134,642 value HELD TO MATURITY SECURITIES-At        6,935        7,692        8,603        9,506        10,504 amortized cost TOTAL LOANS HELD FOR 5,786        598          –           –           2,081 SALE LOANS RECEIVABLE     1,548,696    1,562,553    1,512,813    1,473,423    1,461,016 Less allowance for   (18,079)     (17,303)     (16,527)     (16,025)     (15,524) loan losses Total Net Loans      1,530,617    1,545,250    1,496,286    1,457,398    1,445,492 FEDERAL HOME LOAN    15,867       15,867       15,867       17,007       17,007 BANK STOCK, at cost ACCRUED INTEREST     5,521        5,070        4,624        4,089        4,084 RECEIVABLE DEFERRED TAX         9,843        10,492       10,590       10,368       7,494 ASSET-Net PREMISES AND         18,965       17,331       16,082       15,502       15,500 EQUIPMENT-Net GOODWILL             1,070        1,070        1,070        1,149        1,149 CASH SURRENDER VALUE OF BANK-OWNED LIFE   57,838       56,912       56,388       31,082       30,790 INSURANCE OTHER REAL ESTATE    2,618        2,084        2,746        3,008        303 OWNED PREPAID FDIC         2,334        2,569        2,805        3,034        5,378 ASSESSMENTS CURRENT INCOME TAX   1,316        3,121        612          2,848        3,260 RECEIVABLE OTHER ASSETS         6,160        4,739        4,128        2,659        3,696                     $1,949,187 $1,928,399 $1,855,154 $1,749,872 $1,750,179 LIABILITIES AND                                                       STOCKHOLDERS' EQUITY LIABILITIES:                                                          DEPOSITS:                                                             Non-interest-bearing $223,525   $220,924   $216,567   $206,416   $181,637 Interest-bearing     1,253,605    1,234,750    1,165,702    1,120,350    1,115,926 Total deposits       1,477,130    1,455,674    1,382,269    1,326,766    1,297,563 MORTGAGORS' AND INVESTORS' ESCROW    3,364        6,556        3,217        5,852        3,106 ACCOUNTS ADVANCES FROM THE FEDERAL HOME LOAN    118,865      125,871      125,876      65,882       94,887 BANK ACCRUED EXPENSES AND 22,539       17,593       16,142       17,901       19,267 OTHER LIABILITIES TOTAL LIABILITIES    1,621,898    1,605,694    1,527,504    1,416,401    1,414,823 COMMITMENTS AND                                                       CONTINGENCIES STOCKHOLDERS' EQUITY 327,289      322,705      327,650      333,471      335,356                     $1,949,187 $1,928,399 $1,855,154 $1,749,872 $1,750,179    Rockville Financial, Inc. and Subsidiaries Selected Financial Highlights (Dollars In Thousands, Except Share Data) (Unaudited)                                                                                              For the Three Months Ended                             September June 30,  March 31, December  September                              30,                           31,       30,                             2012      2012      2012      2011      2011 Share Data:                                                       Basic net income per share   $0.17   $0.11   $0.13   $0.14   $0.14 common Diluted net income per share 0.17      0.11      0.13      0.14      0.14 common Dividends declared per share 0.09      0.09      0.08      0.075     0.075                                                                  Operating Data:                                                   Total operating revenue      $21,578 $19,150 $18,796 $18,620 $17,576 Total operating expense      14,510    13,815    12,343    11,768    10,596                                                                  Key Ratios:                                                       Return on average assets     0.97%     0.63%     0.86%     0.92%     0.94% Return on average equity     5.73%     3.63%     4.62%     4.73%     4.88% Tax-equivalent net interest  3.80%     3.87%     3.83%     3.77%     3.70% margin                                                                  Non-performing Assets:                                            Residential real estate      $6,911  $8,087 $6,730  $6,332  $5,670 Commercial real estate       $1,609    1,624     1,274     750       1,941 Construction                 $1,221    1,235     1,006     1,099     2,886 Commercial business          $1,285    1,200     1,445     1,033     1,046 Installment and collateral   32        33        34        29        25 Total non-accrual loans      11,058    12,179    10,489    9,243     11,568 Troubled debt restructured - 2,965     3,071     3,166     3,367     0 non-accruing Total non-performing loans   14,023    15,250    13,655    12,610    11,568 Other real estate owned      2,618     2,074     2,746     3,008     303 Total non-performing assets  $16,641 $17,324 $16,401 $15,618 $11,871                                                                  Non-performing loans to      0.91%     0.98%     0.90%     0.86%     0.79% total loans Non-performing assets to     0.85%     0.90%     0.88%     0.89%     0.66% total assets Allowance for loan losses to 128.93%   113.47%   121.03%   127.08%   111.43% non-performing loans Allowance for loan losses to 1.17%     1.11%     1.09%     1.09%     1.06% total loans                                                                  Non-GAAP Ratios:                                                  Non-interest expense to      3.00%     2.93%     2.77%     2.70%     2.43% average assets Efficiency ratio             67.25%    72.14%    65.67%    63.20%    60.29% Cost of interest-bearing     0.69%     0.74%     0.79%     1.02%     1.03% deposits                                                                                         Rockville Financial, Inc. and Subsidiaries                                              Average Balance Sheets, Interest and Yields/Costs                                       (Dollars In Thousands)                                                                  (Unaudited)                                                                                                                                                                                        Three Months Ended September 30,                                                       2012                             2011                                                             Interest                       Interest                                 Average     and                 Average     and                                      Balance     Dividends Yield/Cost Balance     Dividends Yield/Cost  Loans receivable,    $1,540,280 $17,883 4.64%      $1,445,825 $17,828 4.93%       net Investment           233,104    1,991    3.42       161,817    1,278    3.16        securities Federal Home Loan    15,867     21       0.53       17,007     11       0.26        Bank stock Other earning assets 23,385     12       0.22       35,039     8        0.09        Total interest-earning     1,812,636  19,907   4.39%      1,659,688  19,125   4.61%       assets Noninterest-earning  122,068                       81,687                         assets Total assets         $1,934,704                    $1,741,375                                                                                                      Interest-bearing                                                                  liabilities: NOW and money market $518,176  381     0.29%      $372,542  351      0.38%       accounts Savings accounts     209,197    47       0.09       182,068    106      0.23        Certificates of      525,799    1,721    1.31       557,636    2,405    1.73        deposit Total interest-bearing     1,253,172  2,149    0.69       1,112,246  2,862    1.03        deposits Advances from the Federal Home Loan    119,802    558      1.86       108,324    899     3.32        Bank Total interest-bearing     1,372,974  2,707    0.79%      1,220,570  3,761    1.23%       liabilities Non-interest-bearing 236,068                       186,235                        liabilities Total liabilities    1,609,042                     1,406,805                      Stockholders' equity 325,662                       334,570                        Total liabilities and Stockholders'    $1,934,704                    $1,741,375                     Equity                                                                                  Net interest-earning $439,662                     $439,118                      assets Tax equivalent net              17,200                        15,364              interest income Tax equivalent net                       3.60%                          3.38%       interest rate spread Tax equivalent net                       3.80%                          3.70%       interest margin                                                                                  Average interest-earning assets to average                        132.02%                        135.98%     interest-bearing liabilities                                                                                  Less tax equivalent             236                           --                  adjustment Net Interest Income             $16,964                      $15,364                                                                                                                                                                                           Rockville Financial, Inc. and Subsidiaries                                              Average Balance Sheets, Interest and Yields/Costs                                       (Dollars In Thousands)                                                                  (Unaudited)                                                                                                                                                                                        Nine Months Ended September 30,                                                        2012                             2011                                                             Interest                       Interest                                 Average     and                 Average     and                                      Balance     Dividends Yield/Cost Balance     Dividends Yield/Cost  Interest-earning                                                                  assets: Loans receivable,    $1,504,986 $53,377 4.73%     $1,428,073 $52,844 4.93%      net Investment           209,359    5,308    3.38      162,173    3,866    3.18       securities Federal Home Loan    16,150     63       0.52      17,007     37       0.29       Bank stock Other earning assets 26,047     50       0.26      118,129    39       0.05      Total interest-earning     1,756,542  58,798   4.46%     1,725,382  56,786   4.39%      assets Non-interest-earning 111,740                       90,454                         assets Total assets         $1,868,282                    $1,815,836                                                                                                      Interest-bearing                                                                  liabilities: NOW and money market $475,036  $1,015  0.28%     $359,101  $1,043  0.39%      accounts Savings accounts     204,575    199      0.13      177,433    342      0.26       Certificates of      523,627    5,432    1.38      556,854    7,285    1.74       deposit Total interest-bearing     1,203,238  6,646    0.74      1,093,388  8,670    1.06       deposits Advances from the Federal Home Loan    105,852    1,669    2.10      198,950    5,587   3.74       Bank Total interest-bearing     1,309,090  8,315    0.85%     1,292,338  14,257   1.47%      liabilities Non-interest-bearing 230,963                       225,713                        liabilities Total liabilities    1,540,053                     1,518,051                      Stockholders' equity 328,229                       297,785                        Total liabilities and Stockholders'    $1,868,282                    $1,815,836                     Equity                                                                                                                                                                   Net interest-earning $447,452                     $433,044                      assets Tax equivalent net              50,483                        42,529              interest income Tax equivalent net                       3.61%                         2.92%      interest rate spread Tax equivalent net                       3.83%                         3.29%      interest margin                                                                                  Average interest-earning assets to average                        134.18%                        133.51%     interest-bearing liabilities                                                                                  Less tax equivalent             502                          --                  adjustment Net Interest Income.            $49,981                      $42,529                                                                                          Rockville Financial, Inc. and Subsidiaries                          Reconciliation of Non-GAAP Financial Measures                          (In Thousands)                          (Unaudited)                                                                                           For the Three Months Ended                          September 30, June 30,  March 31, December September                           2012          2012      2012      31, 2011 30, 2011                                                                                                                                   Income before income      $6,275      $4,154  $5,749  $6,091 $6,226 taxes                                                                  Stock-based compensation  –           1,167    –       –      –                                                                                                                                   Core operating earnings   6,275        5,321    5,749   6,091   6,226 before taxes                                                                  Income taxes              1,607         1,543     1,894     2,103    2,143                                                                  Core operating earnings   $4,668      $3,778 $3,855  $3,988 $4,083 after taxes  CONTACT: Investor Relations Contact:          Marliese L. Shaw          Senior Vice President, Investor Relations Officer          860-291-3622          mshaw@rockvillebank.com                   Media Relations Contact:          Adam J. Jeamel          Vice President, Corporate Communications          860-291-3765          ajeamel@rockvillebank.com  Rockville Financial, Inc. Logo  
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