Stock Buyback Plan: Rockville Financial, Inc. (“Rockville Financial”
or the “Company”) (NASDAQ Global Select Stock Market: “RCKB”), the holding
company for Rockville Bank (the “Bank”), announced on March 2, 2012 that the
Company’s Board of Directors adopted a stock repurchase program. Under this
plan, the Company may repurchase up to 2,951,250 shares, or 10% of the current
outstanding shares. The program was eligible to commence on March 12, 2012, after receiving satisfactory response from the Company’s regulator, the Federal Reserve Bank of Boston.
Repurchases may be made from time to time in open-market or negotiated transactions as deemed appropriate by the Company and will depend on market conditions. Open market purchases will be conducted in accordance with the limitations set forth in Rule 10b-18 of the Securities and Exchange Commission and other applicable legal requirements. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes, including the funding of the Company’s equity incentive plan, if approved by shareholders at the Company’s 2012 Annual Meeting of Shareholders on May 17, 2012.
Employee Stock Ownership Plan: As part of the reorganization and stock offering completed in 2005, the Company established an ESOP for eligible employees of the Bank, and authorized the Company to lend the funds to the ESOP to purchase 699,659 or 3.6% of the shares issued in the initial public offering. Upon completion of the reorganization, the ESOP borrowed $4.4 million from the Company to purchase 437,287 shares of common stock. Additional shares of 59,300 and 203,072 were subsequently purchased by the ESOP in the open market at a total cost of $817,000 and $2.7 million in 2006 and 2005, respectively, with additional funds borrowed from the Company. The Bank intends to make annual contributions to the ESOP that will be adequate to fund the payment of regular debt service requirements attributable to the indebtedness of the ESOP. The interest rate for the ESOP loan is the prime rate plus one percent, or 4.25% as of December 31, 2010. As the loan is repaid to the Company, shares will be released from collateral and will be allocated to the accounts of the participants. As of December 31, 2010, the outstanding principal and interest due was $3.6 million and principal payments of $4.2 million have been made on the loan since inception. Dividends paid in 2010 totaling $86,000 on unallocated ESOP shares were offset to the interest payable on the note owed by the Company.
As of December 31, 2010, there were 216 participants receiving an ESOP allocation with an aggregate eligible compensation of $11.9 million. The shares were allocated among the participants in proportion to each individual’s compensation as a percentage of the total aggregate compensation. Compensation was capped at $245,000 for 2010, as prescribed by law. The 2011 compensation cap is $245,000.
ESOP expense was $803,000, $928,000 and $912,000 for the years ended December 31, 2010, 2009 and 2008, respectively. At December 31, 2010, there were 419,795 allocated and 279,864 unallocated ESOP shares and the unallocated shares had an aggregate fair value of $3.4 million.
During the first quarter, Rockville Financial, Inc. utilized $7.1 million of the proceeds from the 2011 stock offering to purchase 684,395 shares of common stock in the open market for the Employee Stock Ownership Plan (“ESOP”).
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