##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for
the quarterly period ended June 30, 2008.
 Commission File Number: 000-51239
 ROCKVILLE FINANCIAL, INC.
 (Exact name of registrant as specified in its charter)
 Connecticut
(State or other jurisdiction of incorporation or organization)
    
    30-0288470
(I.R.S. Employer Identification No.)25 Park Street, Rockville, Connecticut
(Address of principal executive officers)
    
    06066
(Zip Code)
 (860) 291-3600
(Registrants telephone number, including area code)
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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Table of Contents
  
 PagePart I  FINANCIAL INFORMATIONItem 1. Interim Financial StatementsCondensed Consolidated Statements of Condition as of June 30, 2008
and December 31, 2007 (unaudited)
    
    
    3Condensed Consolidated Statements of Income for the three and six months ended
June 30, 2008 and 2007 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 2008 and 2007 (unaudited)
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    40Item 4. Controls and Procedures
    
    
    41Part II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    42Item 1A. Risk Factors
    
    
    42Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    42Item 3. Defaults Upon Senior Securities
    
    
    42Item 4. Submission of Matters to a Vote of Security Holders
    
    
    43Item 5. Other Information
    
    
    43Item 6. Exhibits
    
    
    44SIGNATURES
    
    
    46EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32: CERTIFICATION
   Rockville Financial, Inc.
    
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Part I  FINANCIAL INFORMATION
 
 Item 1. Interim Financial Statements:
 Rockville Financial, Inc.
 
 Condensed Consolidated Statements of Condition
 (In Thousands, Except Share Amounts)
 (Unaudited)
 June 30,
    
    
    December 31,2008
    
    
    2007ASSETSCASH AND CASH EQUIVALENTSCash and due from banks
    
    $
    21,388
    
    
    $
    18,616Short-term investments
    
    
    3,019
    
    
    
    5,382Total cash and cash equivalents
    
    
    24,407
    
    
    
    23,998AVAILABLE FOR SALE SECURITIES-At fair value
    
    
    163,037
    
    
    
    136,372HELD TO MATURITY SECURITIES-At amortized cost
    
    
    25,123
    
    
    
    LOANS RECEIVABLE (Net of allowance for loan
losses of $10,915 in 2008 and $10,620 in 2007)
    
    
    1,190,993
    
    
    
    1,116,327FEDERAL HOME LOAN BANK STOCK
    
    
    13,114
    
    
    
    11,168ACCRUED INTEREST RECEIVABLE
    
    
    4,764
    
    
    
    4,156DEFERRED TAX ASSET-Net
    
    
    4,760
    
    
    
    3,963BANK PREMISES AND EQUIPMENT-Net
    
    
    15,313
    
    
    
    14,352GOODWILL
    
    
    1,070
    
    
    
    1,070CASH SURRENDER VALUE OF BANK OWNED LIFE INSURANCE
    
    
    9,514
    
    
    
    9,322OTHER ASSETS
    
    
    5,452
    
    
    
    6,284TOTAL
    
    $
    1,457,547
    
    
    $
    1,327,012LIABILITIES AND CAPITALLIABILITIESDEPOSITSNoninterest bearing
    
    $
    111,834
    
    
    $
    99,378Interest bearing
    
    
    913,670
    
    
    
    851,660Total deposits
    
    
    1,025,504
    
    
    
    951,038MORTGAGORS AND INVESTORS ESCROW ACCOUNTS
    
    
    5,958
    
    
    
    5,568ADVANCES FROM THE FEDERAL HOME LOAN BANK
    
    
    256,373
    
    
    
    201,741PAYABLE FOR SECURITIES PURCHASED
    
    
    5,093
    
    
    
    118ACCRUED EXPENSES AND OTHER LIABILITIES
    
    
    10,526
    
    
    
    12,174Total liabilities
    
    
    1,303,454
    
    
    
    1,170,639COMMITMENTS
AND CONTINGENCIES (Note 11)STOCKHOLDERS EQUITYPreferred stock (no par value; 1,000,000 shares authorized;
no shares issued and outstanding)
    
    
    
    
    
    
    Common stock (no par value; 29,000,000 shares authorized;
19,568,284 shares and 19,568,284 shares issued and outstanding (includes 198,170
shares and 110,970 shares of unvested restricted stock) at June 30, 2008 and
December 31, 2007, respectively
    
    
    85,249
    
    
    
    85,249Additional paid-in capital
    
    
    2,998
    
    
    
    3,009Unallocated stock held by ESOP
    
    
    (5,385
    )
    
    
    (5,734
    )Treasury stock, at cost (654,853 shares and 496,730 shares at June 30, 2008 and
December 31, 2007, respectively)
    
    
    (9,197
    )
    
    
    (7,293
    )Retained earnings
    
    
    82,021
    
    
    
    81,383Accumulated other comprehensive loss, net of tax
    
    
    (1,593
    )
    
    
    (241
    )Total stockholders equity
    
    
    154,093
    
    
    
    156,373TOTAL
    
    $
    1,457,547
    
    
    $
    1,327,012
   Rockville Financial, Inc.
    
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Rockville Financial, Inc.
 
 Condensed Consolidated Statements of Income
 (In Thousands, Except Share and Per Share Amounts)
 (Unaudited)
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007INTEREST AND DIVIDEND INCOME:Loans
    
    $
    16,624
    
    
    $
    16,541
    
    
    $
    33,396
    
    
    $
    32,418Securities-interest
    
    
    1,823
    
    
    
    1,312
    
    
    
    3,377
    
    
    
    2,656Interest bearing deposits
    
    
    12
    
    
    
    27
    
    
    
    32
    
    
    
    52Securities-dividends
    
    
    481
    
    
    
    278
    
    
    
    1,081
    
    
    
    558Total interest and dividend income
    
    
    18,940
    
    
    
    18,158
    
    
    
    37,886
    
    
    
    35,684INTEREST EXPENSEDeposits
    
    
    6,526
    
    
    
    6,600
    
    
    
    13,486
    
    
    
    12,990Borrowed funds
    
    
    2,201
    
    
    
    1,907
    
    
    
    4,420
    
    
    
    3,993Total interest expense
    
    
    8,727
    
    
    
    8,507
    
    
    
    17,906
    
    
    
    16,983Net interest income
    
    
    10,213
    
    
    
    9,651
    
    
    
    19,980
    
    
    
    18,701PROVISION FOR LOAN LOSSES
    
    
    125
    
    
    
    207
    
    
    
    249
    
    
    
    433Net interest income after provision
for loan losses
    
    
    10,088
    
    
    
    9,444
    
    
    
    19,731
    
    
    
    18,268NONINTEREST INCOME:Service charges and fees
    
    
    1,414
    
    
    
    1,217
    
    
    
    2,638
    
    
    
    2,354Net gain from sale of securities
    
    
    82
    
    
    
    140
    
    
    
    272
    
    
    
    305Other than temporary impairment of
securities
    
    
    (1,156
    )
    
    
    
    
    
    
    (1,156
    )
    
    
    Total noninterest income
    
    
    340
    
    
    
    1,357
    
    
    
    1,754
    
    
    
    2,659NONINTEREST EXPENSE:Salaries and employee benefits
    
    
    4,195
    
    
    
    3,976
    
    
    
    9,566
    
    
    
    7,920Service bureau fees
    
    
    910
    
    
    
    819
    
    
    
    1,867
    
    
    
    1,608Occupancy and equipment
    
    
    989
    
    
    
    827
    
    
    
    2,033
    
    
    
    1,674Professional fees
    
    
    271
    
    
    
    324
    
    
    
    765
    
    
    
    773Marketing and promotions
    
    
    471
    
    
    
    385
    
    
    
    747
    
    
    
    617Insurance and FDIC assessments
    
    
    231
    
    
    
    52
    
    
    
    344
    
    
    
    100Other
    
    
    1,289
    
    
    
    1,050
    
    
    
    2,378
    
    
    
    2,006Total noninterest expense
    
    
    8,356
    
    
    
    7,433
    
    
    
    17,700
    
    
    
    14,698INCOME BEFORE INCOME TAXES
    
    
    2,072
    
    
    
    3,368
    
    
    
    3,785
    
    
    
    6,229PROVISION FOR INCOME TAXES
    
    
    679
    
    
    
    1,114
    
    
    
    1,237
    
    
    
    2,063NET INCOME
    
    $
    1,393
    
    
    $
    2,254
    
    
    $
    2,548
    
    
    $
    4,166
   Rockville Financial, Inc.
    
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Rockville Financial, Inc.
Condensed Consolidated Statements of Income  Continued
(Unaudited)
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income per share(see Note 2):Basic
    
    $
    0.08
    
    
    $
    0.12
    
    
    $
    0.14
    
    
    $
    0.22Diluted
    
    
    0.08
    
    
    
    0.12
    
    
    
    0.14
    
    
    
    0.22Weighted average shares outstanding:Basic
    
    
    18,479,471
    
    
    
    18,816,556
    
    
    
    18,507,293
    
    
    
    18,864,433Diluted
    
    
    18,485,755
    
    
    
    18,816,556
    
    
    
    18,510,637
    
    
    
    18,864,433
   Rockville Financial, Inc.
    
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Rockville Financial, Inc. and Subsidiaries
 
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 (In Thousands)
 For the Six MonthsEnded June 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    2,548
    
    
    $
    4,166Adjustments to reconcile net income to net cash
provided by operating activities:Amortization and accretion of premiums and discounts
on investments, net
    
    
    (15
    )
    
    
    33Stock compensation expense
    
    
    1,709
    
    
    
    834Provision for loan losses
    
    
    249
    
    
    
    433Net gain from sale of securities
    
    
    (272
    )
    
    
    (305
    )Other than temporary impairment of securities
    
    
    1,156
    
    
    
    Depreciation and amortization
    
    
    731
    
    
    
    676Deferred income taxes
    
    
    (101
    )
    
    
    (351
    )Increase in cash surrender value of bank owned life insurance
    
    
    (192
    )
    
    
    (179
    )Change in assets and liabilities:Deferred loan fees and premiums
    
    
    197
    
    
    
    203Accrued interest receivable
    
    
    (598
    )
    
    
    173Other assets
    
    
    909
    
    
    
    1,253Accrued expenses and other liabilities
    
    
    (1,081
    )
    
    
    174Net cash provided by operating activities
    
    
    5,240
    
    
    
    7,110CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales of available for sale securities
    
    
    3,663
    
    
    
    2,752Proceeds from calls and maturities of available for sale securities
    
    
    5,000
    
    
    
    8,600Principal payments on available for sale mortgage-backed securities
    
    
    10,034
    
    
    
    5,851Principal payments on held to maturity mortgage-backed securities
    
    
    836
    
    
    
    Purchase of available for sale securities
    
    
    (44,008
    )
    
    
    (14,884
    )Purchase of held to maturity securities
    
    
    (25,949
    )
    
    
    Purchase of Federal Home Loan Bank stock
    
    
    (1,946
    )
    
    
    Proceeds from sales of loans
    
    
    8,125
    
    
    
    Net increase in loans
    
    
    (83,237
    )
    
    
    (34,653
    )Purchases of bank premises and equipment
    
    
    (1,692
    )
    
    
    (1,576
    )Net cash used in investing activities
    
    
    (129,174
    )
    
    
    (33,910
    )CASH FLOWS FROM FINANCING ACTIVITIES:Common stock repurchased
    
    
    (3,235
    )
    
    
    (3,247
    )Net increase in noninterest bearing deposits
    
    
    12,456
    
    
    
    7,252Net increase in interest bearing deposits
    
    
    62,010
    
    
    
    53,545Net increase in mortgagors and investors escrow accounts
    
    
    390
    
    
    
    370Net short-term advances from Federal Home Loan Bank
    
    
    36,000
    
    
    
    (51,000
    )Proceeds from Federal Home Loan Bank advances
    
    
    28,720
    
    
    
    22,800Repayments of Federal Home Loan Bank advances
    
    
    (10,088
    )
    
    
    (83
    )Cash dividends paid on common stock
    
    
    (1,910
    )
    
    
    (1,562
    )Net cash provided by financing activities
    
    
    124,343
    
    
    
    28,075NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    409
    
    
    
    1,275CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    23,998
    
    
    
    22,381CASH AND CASH EQUIVALENTS  End of period
    
    $
    24,407
    
    
    $
    23,656SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid during the period for:Interest
    
    $
    17,789
    
    
    $
    16,851Income taxes
    
    
    751
    
    
    
    1,501
   Rockville Financial, Inc.
    
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Rockville Financial, Inc. and Subsidiaries
 
 Notes to Unaudited Condensed Consolidated Financial Statements
 1.
    
    Basis of Presentation and Principles of ConsolidationThe condensed consolidated interim financial statements and the accompanying notes
presented in this report include the accounts of Rockville Financial, Inc., its
wholly-owned subsidiary Rockville Bank, and the Banks wholly-owned subsidiaries, The SBR
Mortgage Company, The SBR Investment Corp. and Rockville Financial Services, Inc.The condensed consolidated interim financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America (GAAP) for
interim financial information and with the instructions to SEC Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all the information and footnotes required
by GAAP for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included in the condensed financial
statements. The results of operations for the three and six months ended June 30, 2008 are
not necessarily indicative of the results that may be expected for the year ending December
31, 2008. These condensed consolidated financial statements should be read in conjunction
with the Companys 2007 consolidated financial statements and notes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2007.Certain reclassifications have been made in the 2007 repayments of Federal Home Loan Bank
advances in the condensed consolidated statements of cash flows in order to conform to the
2008 classifications. Previously, Federal Home Loan Bank net short-term borrowings were
presented net against long-term advances from the Federal Home Loan Bank. This
reclassification to Federal Home Loan Bank advances did not have any effect to the 2007 net
cash provided by financing activities in the condensed consolidated statements of cash
flows.The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the dates of the condensed financial
statements and the reported amounts of income and expenses during the reporting periods.
Operating results in the future could vary from the amounts derived from managements
estimates and assumptions. Material estimates that are particularly susceptible to
significant change in the near term relate to the determination of the allowance for loan
losses, pension assumptions, stock compensation expense, uncertain tax positions, deferred
tax assets and the evaluation of available for sale securities for other than temporary
impairment.2.
    
    Earnings Per ShareThe following table set forth the calculation of basic and diluted earnings per share for
the three and six months ended June 30, 2008 and 2007 (In thousands except share and per
share information):
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    1,393
    
    
    $
    2,254
    
    
    $
    2,548
    
    
    $
    4,166Weighted-average
basic shares
outstanding
    
    
    18,479,471
    
    
    
    18,816,556
    
    
    
    18,507,293
    
    
    
    18,864,433Diluted effect of
stock options and
unvested restricted
stock awards
    
    
    6,284
    
    
    
    
    
    
    
    3,344
    
    
    
    Weighted-average
diluted shares
    
    
    18,485,755
    
    
    
    18,816,556
    
    
    
    18,510,637
    
    
    
    18,864,433Earnings per share:Basic
    
    $
    0.08
    
    
    $
    0.12
    
    
    $
    0.14
    
    
    $
    0.22Diluted
    
    $
    0.08
    
    
    $
    0.12
    
    
    $
    0.14
    
    
    $
    0.22
  Rockville Financial, Inc.
    
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Treasury shares and unallocated common shares held by the ESOP are not included in the
weighted-average number of common shares outstanding for either basic or diluted earnings
per share calculations. Unvested restricted shares are not included in the weighted-average
number of common shares outstanding for basic earnings per share calculations but are
included in the weighted-average diluted share calculation. The Companys common stock
equivalents relate solely to stock options issued and outstanding and unvested restricted
stock awards. At June 30, 2008 and 2007, options to purchase 213,500 and 171,900 of common
stock at exercise prices ranging from $14.35 to $17.77 and $17.77, respectively, were not
considered in the computation of potential common shares for the purpose of diluted EPS,
since the exercise prices of the options were greater than the average market price of the
Companys stock for the respective periods.3.
    
    Recent Accounting PronouncementsIn December 2007, the FASB issued SFAS No. 141 (SFAS 141)(revised 2007), Business
Combinations. The Statement requires that all business combinations be accounted for under
the acquisition method. The Statement requires that the assets, liabilities and
noncontrolling interests of a business combination be measured at fair value at the
acquisition date. The acquisition date is defined as the date an acquirer obtains control
of the entity, which is typically the closing date. The Statement requires that all
acquisition and restructuring related costs be expensed as incurred and that any contingent
consideration be measured at fair value and recorded as either equity or a liability with
the liability remeasured at fair value in subsequent periods. The Statement is effective
January 1, 2009. An entity may not apply it before that date. The Company does not expect
the adoption of SFAS 141 to have a material effect on its consolidated financial
statements.In December 2007, the FASB issued SFAS No. 160 (SFAS 160), Noncontrolling Interests in
Consolidated Financial Statementsan amendment to ARB No. 51. The Statement requires that a
noncontrolling interest (formerly minority interest) be measured at fair value at the
acquisition date and be presented in the equity section on the balance sheet. The Statement
requires that purchases or sales of equity interests that do not result in a change in
control be accounted for as equity transactions with no resulting gain or loss. If control
is lost, the noncontrolling interest is remeasured to fair value and a gain or loss is
recorded. The Statement is effective January 1, 2009. The Company does not expect the
adoption of SFAS 160 to have a material effect on its consolidated financial statements.In March 2008, the FASB issued SFAS No. 161 (SFAS 161), Disclosures about Derivative
Instruments and Hedging Activities  an amendment of FASB Statement No. 133. The Statement
requires enhanced disclosures about an entitys derivative and hedging activities and
thereby improves the transparency of financial reporting. Entities are required to provide
enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under Statement 133 and
its related interpretations, and (c) how derivative instruments and related hedged items
affect an entitys financial position, financial performance, and cash flows. The Statement
is effective January 1, 2009. The Company does not expect the adoption of SFAS 161 to have
a material effect on its consolidated financial statements.4.
    
    Other-Than-Temporary Impairment of InvestmentsDebt and equity securities are classified as available for sale and recorded at fair
value, with unrealized gains or losses excluded from earnings and recorded as other
comprehensive income, net of tax in the Condensed Consolidated Statements of Condition. On
a quarterly basis, securities with unrealized depreciation for twelve or more consecutive
months and other securities with unrealized losses are reviewed as deemed appropriate to
assess whether the decline in fair value is temporary or other than temporary. It is
assessed whether the decline in value is from company-specific events, industry
developments, general economic conditions or other reasons. After the reasons for the
decline are identified, further judgments are required as to whether those conditions are
likely to reverse and, if so, whether that reversal is likely to result in a recovery of
the fair value of the investment in the near term. If it is judged not to be near term, a
charge is taken which results in a new cost basis. Declines in the fair value of available
for sale securities below their cost that are deemed to be other than temporary are
reflected in earnings. Management can designate securities as held to maturity. Held to
maturity securities are debt securities that management has the positive intent and
ability to hold to maturity. As of June 30, 2008, management has classified $25.1 million
of securities as held to maturity on the balance sheet with a market value of $24.7
million.
  Rockville Financial, Inc.
    
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During the quarter ended June 30, 2008, we recorded an other than temporary impairment
charge of $1.2 million related to the preferred stock of Freddie Mac and Fannie Mae. The
charge for the impairment was computed using the closing price of the security as of the
date of the impairment. The Companys remaining investment in these securities was $10.7
million with no unrealized gain or loss at June 30, 2008. The Company will continue to
review its entire portfolio for other than temporarily impaired securities with additional
attention being given to high risk securities such the preferred stock of Freddie Mac and
Fannie Mae and one pooled trust preferred security that the Company owns.Management believes the policy for evaluating securities for other than temporary
impairment is critical because it involves significant judgments by management and could
have a material impact on our net income. The aggregate unrealized loss for securities in
an unrealized loss position for 12 or more consecutive months as of June 30, 2008 consisted
of securities that management believes are not other than temporarily impaired as
management has the intent and ability to hold these investments until their fair value
recovers, which may be maturity in the case of debt securities.The following table summarizes gross unrealized losses and fair value, aggregated by
investment category and length of time the investments have been in a continuous unrealized
loss position, at June 30, 2008:
 Less than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    Loss(In Thousands)Available for sale:Mortgage-backed
securities
    
    $
    66,094
    
    
    $
    883
    
    
    $
    4,322
    
    
    $
    133
    
    
    $
    70,416
    
    
    $
    1,016Pooled trust preferred
securities
    
    
    2,440
    
    
    
    429
    
    
    
    
    
    
    
    
    
    
    
    2,440
    
    
    
    429Corporate debt securities
    
    
    2,896
    
    
    
    33
    
    
    
    100
    
    
    
    
    
    
    
    2,996
    
    
    
    33Total debt securities
    
    
    71,430
    
    
    
    1,345
    
    
    
    4,422
    
    
    
    133
    
    
    
    75,852
    
    
    
    1,478Marketable equity
securities
    
    
    18,845
    
    
    
    714
    
    
    
    60
    
    
    
    7
    
    
    
    18,905
    
    
    
    721Total
    
    $
    90,275
    
    
    $
    2,059
    
    
    $
    4,482
    
    
    $
    140
    
    
    $
    94,757
    
    
    $
    2,199
 The Companys investment portfolio contained no mortgage-backed securities that are subject
to the risk of sub-prime lending as of June 30, 2008. Although the Company has not been
adversely impacted by recent events affecting the mortgage industry, continuing shifts in
the markets perception of credit quality on securities backed by residential mortgage
loans may result in increased volatility of market price and periods of illiquidity that
can negatively impact the valuation of certain issuers held by the Company.5.
    
    Fair Value MeasurementsEffective January 1, 2008, the Company adopted SFAS 157 (SFAS 157), Fair Value
Measurements. SFAS 157 defines fair value, establishes a framework for measuring the fair
value of assets and liabilities based upon a three-tier hierarchy, and expands disclosures
about fair value measurements but does not expand the use of fair value in any new
circumstances. The fair value hierarchy is as follows:
 Level 1:
    
    Unadjusted quoted prices for identical assets or liabilities in active
markets that are accessible as of the measurement date.Level 2:
    
    Inputs other than those quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly. These include
quoted prices for similar assets and liabilities in active markets, inputs other than
quoted prices that are observable for the asset or liability (e.g., interest rates and
yield curves observable at commonly quoted intervals), or inputs that are derived
primarily from or corroborated by observable market data by correlations or other
means.Level 3:
    
    Unobservable inputs that reflect the Companys assumptions about the
assumptions that market participants would use in pricing the assets or liabilities.
  Rockville Financial, Inc.
    
    9




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##### Table of Contents



The following valuation methodologies are used for assets and liabilities
recorded at fair value:Investment Securities Available for Sale: Investment securities available for sale
are recorded at fair value on a recurring basis. Fair value measurement is based upon
quoted prices, if available. If quoted prices are not available, fair values are measured
using independent pricing models. Level 1 securities are those traded on active markets for
identical securities including U.S. treasury debt securities, equity securities and mutual
funds. Level 2 securities include U.S. government agency obligations, U.S. government
sponsored enterprises, mortgage-backed securities and corporate debt securities. Level 3
securities include private placement securities and thinly traded equity securities.Impaired Loans: SFAS 114, Accounting by Creditors for an Impairment of a Loan
requires that a creditor recognize the impairment of a loan if the present value of
expected future cash flows discounted at the loans effective interest rate (or,
alternatively, the observable market price of the loan or the fair value of the collateral)
is less than the recorded investment in the impaired loan. Non-recurring fair value
adjustments to collateral dependent loans are recorded, when necessary, to reflect partial
write-downs based upon observable market price or current appraised value of the
collateral. The Company records impaired loans as non-recurring Level 3 fair value
measurements.Loan Servicing Rights: SFAS 140, Accounting for the Transfer and Servicing of
Financial Assets and Liabilities requires servicing assets to be assessed for impairment
or increased obligation based on its fair value. The Company classifies loan serving rights
subjected to nonrecurring level 3 fair value measurements.Goodwill: In connection with a branch acquisition, the Company recorded goodwill,
which represents the excess of the fair value of deposit liabilities assumed over the
assets received. Goodwill is not amortized and is evaluated for impairment annually. The
Company classifies goodwill subjected to nonrecurring fair value adjustments as Level 3.Other Liabilities: The Company records deferred director compensation and
supplemental savings and retirement plans at fair value based upon Level 1 quoted market
prices.Assets and Liabilities Recorded at Fair Value on a Recurring Basis:
 Fair Value MeasurementsAt June 30, 2008, Using:(in thousands)Quoted Pricesin ActiveMarkets for
    
    Other
    
    SignificantFair Value
    
    Identical
    
    Observable
    
    UnobservableJune 30,
    
    Assets
    
    Inputs
    
    InputsDescription
    
    2008
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Available-for-Sale Securities
    
    $
    163,037
    
    
    $
    29,649
    
    
    $
    130,647
    
    
    $
    2,741Total Assets Measured at Fair Value
    
    $
    163,037
    
    
    $
    29,649
    
    
    $
    130,647
    
    
    $
    2,741Other Liabilities(1)
    
    $
    327
    
    
    $
    327
    
    
    $
    
    
    
    $
    Total Liabilities Measured at Fair Value
    
    $
    327
    
    
    $
    327
    
    
    $
    
    
    
    $
    
 (1)
    
    Deferred directors compensation and supplemental savings and retirement plans.
  Rockville Financial, Inc.
    
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##### Table of Contents



InvestmentSecuritiesAvailable-for-Sale(in millions)Balance of recurring Level 3 assets at January 1, 2008
    
    $
    308Total gains or losses (realized/unrealized):Included in earnings-realized
    
    
    Included in earnings-unrealized
    
    
    Included in other comprehensive income
    
    
    (7
    )Purchases, sales, issuances and settlements, net
    
    
    Transfers in and/or out of Level 3
    
    
    2,440Balance of recurring Level 3 assets at June 30, 2008
    
    $
    2,741
 Assets Recorded at Fair Value on a Nonrecurring Basis:
 Fair Value MeasurementsAt June 30, 2008, Using:(in thousands)Quoted Pricesin ActiveMarkets for
    
    
    Other
    
    
    SignificantFair Value
    
    
    Identical
    
    
    Observable
    
    
    UnobservableJune 30,
    
    
    Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired Loans
    
    $
    2,492
    
    
    $
    
    
    
    $
    
    
    
    $
    2,492Loan Servicing Rights
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    81Goodwill
    
    
    1,070
    
    
    
    
    
    
    
    
    
    
    
    1,070Total Assets Measured at Fair Value
    
    $
    3,643
    
    
    $
    
    
    
    $
    
    
    
    $
    3,643Other Liabilities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total Liabilities Measured at Fair Value
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 The adoption of SFAS 157 did not have a material impact on the consolidated financial
statements or results of operations of the Company.SFAS No. 159 (SFAS 159) provides entities with an option to report selected financial
assets and liabilities at fair value, with the objective to reduce the complexity in
accounting for financial instruments and the volatility in earnings caused by measuring
related assets and liabilities differently. The Company adopted SFAS 159 on January 1, 2008
and has not elected the fair value option for any financial assets and liabilities at June
30, 2008. As such, its adoption did not have a material impact on the consolidated
financial statements or results of operations of the Company.
  Rockville Financial, Inc.
    
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6.
    
    Loans Receivable and Allowance for Loan LossesA summary of the Companys loan portfolio at June 30, 2008 and December 31, 2007 is as
follows:
 June 30, 2008
    
    
    December 31, 2007Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in Thousands)Real estate loans:Residential
    
    $
    697,647
    
    
    
    58.11
    %
    
    $
    666,003
    
    
    
    59.18
    %Commercial
    
    
    302,092
    
    
    
    25.16
    
    
    
    284,460
    
    
    
    25.28Construction
    
    
    88,286
    
    
    
    7.35
    
    
    
    70,617
    
    
    
    6.27Commercial business loans
    
    
    101,879
    
    
    
    8.49
    
    
    
    92,869
    
    
    
    8.25Installment, collateral
and other loans
    
    
    10,672
    
    
    
    0.89
    
    
    
    11,469
    
    
    
    1.02Total loans
    
    
    1,200,576
    
    
    
    100.00
    %
    
    
    1,125,418
    
    
    
    100.00
    %Net deferred loan fees
and premiums
    
    
    1,332
    
    
    
    
    
    
    
    1,529Allowance for loan losses
    
    
    (10,915
    )
    
    
    
    
    
    
    (10,620
    )Loans, net
    
    $
    1,190,993
    
    
    
    
    
    
    $
    1,116,327
 Changes in the allowance for loan losses for the three and six months ended June 30, 2008
and 2007 are as follows:
 For the Three Months
    
    
    For the Six Months EndedEnded June 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In Thousands)Balance, beginning of period
    
    $
    10,748
    
    
    $
    10,120
    
    
    $
    10,620
    
    
    $
    9,827Provision for loan losses
    
    
    125
    
    
    
    207
    
    
    
    249
    
    
    
    433Loans charged-off
    
    
    (66
    )
    
    
    (20
    )
    
    
    (93
    )
    
    
    (30
    )Recoveries of loans
previously charged-off
    
    
    108
    
    
    
    60
    
    
    
    139
    
    
    
    137Balance, end of period
    
    $
    10,915
    
    
    $
    10,367
    
    
    $
    10,915
    
    
    $
    10,367
 7.
    
    Benefit PlansThe Company sponsors a noncontributory defined benefit pension plan (the Pension Plan)
covering all full-time employees hired before January 1, 2005. Participants become 100%
vested after five years of employment. The Companys funding policy is to contribute
annually the maximum amount that can be deducted for Federal income tax purposes, while
meeting the minimum funding standards established by the ERISA.The Company entered into a supplemental retirement agreement with three executive officers
of the Bank.Effective December 1, 2004 and restated December 17, 2007, the Bank adopted the
Supplemental Executive Retirement Plan (the SERP) covering two executive officers of the
Company. The SERP was established to provide two executive officers with a retirement
benefit equal to 70% of their respective average annual earnings over the 12-month period
during the last 120 months of employment producing the highest average or, if higher, the
executives current annual earnings, which include base salary plus annual incentive
compensation. The SERP benefit is offset by the executives benefits under the
tax-qualified Retirement Plan, the Supplemental Savings and Retirement Plan, Supplemental
Executive Retirement Agreement and any split dollar insurance policy benefits. On March 31,
2008 a lump sum settlement payment of $1.2 million was elected by one of the executive
officers.The Company also has supplemental retirement plans (the Supplemental Plans) that provide
benefits for certain key executive officers. The Supplemental Plans provide restorative
payments to certain
  Rockville Financial, Inc.
    
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executives who are prevented from receiving the full benefits contemplated by the
tax-qualified Retirement Plan, 401(k) Plan and Employee Stock Ownership Plan. Benefits
under the Supplemental Plans are based on a predetermined formula. The benefits under the
Supplemental Plans are reduced by other employee benefits. The liability arising from the
Supplemental Plans is being accrued over the participants remaining periods of service so
that at the expected retirement dates, the present value of the annual payments will have
been expensed.The Company also provides an unfunded post-retirement medical, health and life insurance
benefit plan for retirees and employees hired prior to March 1, 1993.The amounts related to the Pension Plan, Supplemental Plans and the SERPs are reflected in
the tables that follow as Pension Plans:
 Components of Net Periodic Benefit Cost
 Pension Plans
    
    
    Post-retirement BenefitsThree Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Service cost
    
    $
    217
    
    
    $
    238
    
    
    $
    3
    
    
    $
    4Interest cost
    
    
    276
    
    
    
    248
    
    
    
    25
    
    
    
    31Expected return on
plan assets
    
    
    (334
    )
    
    
    (263
    )
    
    
    
    
    
    
    Amortization of net
actuarial losses
    
    
    92
    
    
    
    122
    
    
    
    4
    
    
    
    22Amortization of prior
service cost
    
    
    78
    
    
    
    78
    
    
    
    5
    
    
    
    4Amount recognized due to settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    329
    
    
    $
    423
    
    
    $
    37
    
    
    $
    61
 Pension Plans
    
    
    Post-retirement BenefitsSix Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Service cost
    
    $
    434
    
    
    $
    476
    
    
    $
    5
    
    
    $
    9Interest cost
    
    
    571
    
    
    
    496
    
    
    
    49
    
    
    
    61Expected return on
plan assets
    
    
    (668
    )
    
    
    (526
    )
    
    
    
    
    
    
    Amortization of net
actuarial losses
    
    
    224
    
    
    
    243
    
    
    
    9
    
    
    
    44Amortization of prior
service cost
    
    
    156
    
    
    
    156
    
    
    
    10
    
    
    
    9Amount recognized due to settlement
    
    
    118
    
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    835
    
    
    $
    845
    
    
    $
    73
    
    
    $
    123
 No contributions have been made to the pension plan for the six months ended June 30, 2008.
During the six months ended June 30, 2008 the Company contributed $44,000 to the
post-retirement benefit plan. The Company anticipates contributing an additional $57,000
during the year ended December 31, 2008 to the post-retirement benefit plan. The Company
plans to contribute $601,000 to the pension plan for the 2008 plan year.The Company has a tax-qualified 401(k) plan for the benefit of its eligible employees.
Beginning January 1, 2005, the 401(k) Plan was amended to pay all employees, even those who
do not contribute to the 401(k) Plan, an automatic 3% of pay safe harbor contribution
that is fully vested instead of the matching contribution previously provided to
participants of the 401(k) Plan. For employees hired on or after January 1, 2005, a
discretionary matching contribution equal to a uniform percentage of the amount of the
salary reduction the employee elected to defer, which percentage will be determined
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each year by the Company. The 401(k) expense for the six months ended June 30, 2008 and
2007 was $162,000 and $127,000, respectively.The Company adopted the provisions of Statement of Financial Accounting Standards (SFAS)
No. 158 (SFAS 158), Employers Accounting for Defined Benefit Pension and Other
Post-retirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)
requiring the recognition of the funded status of defined benefit plans as of December 31,
2006. The statement requires the Company to measure plan assets and benefit obligations as
of the date of the Companys fiscal year-end statement of financial position and is
effective for the Company on January 1, 2008. The Company offers a defined benefit pension
plan whose measurement date of the pension plan assets and benefit obligations is
presently October 1 and will be changed in accordance with the provisions of SFAS 158 to
the Companys year-end of December 31, effective December 31, 2008.8.
    
    Stock Based CompensationThe Board of Directors and stockholders of the Company approved the Rockville Financial,
Inc. 2006 Stock Incentive Award Plan (the Plan) in 2006. The Plan allows the Company to
use stock options, stock awards, stock appreciation rights and performance awards to
attract, retain and reward performance of qualified employees and others who contribute to
the success of the Company. The Plan allowed for the issuance of a maximum of 349,830
restricted stock shares and 874,575 stock options in connection with Awards under the Plan.
As of June 30, 2008, there were 40,682 restricted stock shares and 532,450 stock options
that remain available for future grants under the Plan.The Company accounts for stock-based compensation in accordance with SFAS 123R, Share-Based
Payment. Under SFAS 123R, the fair value of stock option and restricted stock awards,
measured at grant date, is amortized to compensation expense on a straight-line basis over
the vesting period. The Company accelerates the recognition of compensation costs for
stock-based awards granted to retirement-eligible employees and employees who become
retirement-eligible prior to full vesting of the award because the Companys incentive
compensation plans allow for vesting at the time an employee retires. Stock-based
compensation granted to non-retirement-eligible individuals is expensed over the normal
vesting period.Total employee and director share-based compensation expense recognized for stock options
and restricted stock for the three and six months ended June 30, 2008 was $227,000 and $1.5
million, with a related tax benefit recorded of $77,000 and $499,000, respectively, of
which director share-based compensation expense recognized (in the consolidated statement
of income as other noninterest expense) was $98,000 and $214,000, respectively and officer
share-based compensation expense recognized (in the consolidated statement of income as
salaries and benefit noninterest expense) was $130,000 and $1.3 million, respectively. The
total charge of $1.5 million for the six months ended June 30, 2008 includes $197,000
related to 16,441 vested restricted shares used for income tax withholding payments on
behalf of certain executives which occurred in the first quarter of 2008.On February 20, 2008, the Board of Directors Stock Award Committee awarded 92,559 shares of
restricted stock to executive officers (net of 16,441 shares which were used by the
executives for income tax withholding as described above) with a fair value of $1.3
million, net of estimated forfeitures, as measured on the grant date. The Board of
Directors Stock Award Committee also awarded stock options to purchase 128,625 shares of
the Companys stock with a grant date fair value of $350,000, net of estimated forfeitures,
to both executive officers and directors of the Company. The stock options were granted
with an exercise price of $11.98 per share and the right to exercise the stock options
expires February 20, 2018. Twenty percent of the restricted stock and stock options vested
immediately with the remaining award vesting twenty percent annually over the next four
years.
  Rockville Financial, Inc.
    
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Stock Options:The following table presents the activity related to stock options under the Plan for the
three months ended June 30, 2008:
 Weighted Average
    
    
    AggregateWeighted
    
    
    Remaining
    
    
    IntrinsicStock
    
    
    Average
    
    
    Contractual Term
    
    
    ValueOptions
    
    
    Exercise Price
    
    
    (in years)
    
    
    (in thousands)Stock options outstanding at April 1, 2008
    
    
    342,125
    
    
    $
    14.74Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    Stock options outstanding at June 30, 2008
    
    
    342,125
    
    
    $
    14.74
    
    
    
    9.0
    
    
    $
    75Options exercisable at June 30, 2008
    
    
    180,625
    
    
    $
    14.64
    
    
    
    8.9
    
    
    $
    37
  Weighted Average
    
    
    AggregateWeighted
    
    
    Remaining
    
    
    IntrinsicStock
    
    
    Average
    
    
    Contractual Term
    
    
    ValueOptions
    
    
    Exercise Price
    
    
    (in years)
    
    
    (in thousands)Stock options outstanding at January 1, 2008
    
    
    213,500
    
    
    $
    16.40Granted
    
    
    128,625
    
    
    
    11.98Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    Stock options outstanding at June 30, 2008
    
    
    342,125
    
    
    $
    14.74
    
    
    
    9.0
    
    
    $
    75
 The following table presents the unvested Stock Option activity for the three months ended
June 30, 2008:
 Weighted AverageNumberof Shares
    
    
    Grant-
Date Fair ValueUnvested as of April 1, 2008
    
    
    174,900
    
    
    $
    3.64Granted
    
    
    
    
    
    
    Vested
    
    
    (13,400
    )
    
    
    3.61Forfeited, expired or canceled
    
    
    
    
    
    
    Unvested as of June 30, 2008
    
    
    161,500
    
    
    $
    3.65
 The following table presents the unvested Stock Option activity for the six months ended
June 30, 2008:
 Weighted AverageNumberof Shares
    
    
    Grant-
Date Fair ValueUnvested as of January 1, 2008
    
    
    105,600
    
    
    $
    4.25Granted
    
    
    128,625
    
    
    
    2.72Vested
    
    
    (72,725
    )
    
    
    2.88Forfeited, expired or canceled
    
    
    
    
    
    
    Unvested as of June 30, 2008
    
    
    161,500
    
    
    $
    3.65
 The aggregate fair value of vested options was $49,000 and $0 for the three months ended
June 30, 2008 and 2007, respectively, and $210,000 and $0 for the six months ended June 30,
2008 and 2007, respectively.As of June 30, 2008, the unrecognized cost related to the stock options awarded of $325,000
will be recognized over a weighted-average period of 1.8 years.
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For share-based compensation recognized for the six months ended June 30, 2008, the Company
used the Black-Scholes option pricing model for estimating the fair value of stock options
granted Additional options were granted during February 2008. The weighted average
estimated fair values of stock option grants and the assumptions that were used in
calculating such fair values were based on estimates at the date of grant as follows:
 2008
    
    2007Weighted per share average fair value of
options granted
    
    $
    2.72
    
    
    $
    4.34Assumptions:Risk free interest rate
    
    
    3.24
    %
    
    
    4.55
    %Expected volatility
    
    
    22.11
    %
    
    
    15.83
    %Expected dividend yield
    
    
    1.67
    %
    
    
    .90
    %Expected life of options granted
    
    6 years
    
    6 years
 The expected volatility was determined using both the Companys historical trading
volatility as well as the historical volatility of an index published by SNL Financial for
mutual holding companys common stock over the expected average life of the options. The
index was used as the Companys stock has only been publicly traded since May 23, 2005.The Company estimates option forfeitures using historical data on employee terminations.The expected life of stock options granted is derived using the simplified method and
represents the period of time that stock options granted are expected to be outstanding.The risk-free interest rate for periods within the contractual life of the stock option is
based on the average five and seven U.S. Treasury Note yield curve in effect at the date of
grant.The expected dividend yield reflects an estimate of the dividends the Company expects to
declare over the expected life of the options granted.Stock options provide grantees the option to purchase shares of common stock at a specified
exercise price and expire ten years from the date of grant.The Company plans to use Treasury stock to satisfy future stock option exercises.Additional information regarding stock options outstanding as of June 30, 2008, is as
follows:
 Options Outstanding
    
    Exercisable OptionsWeighted-AverageRange
    
    
    
    
    
    
    Remaining
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-of
    
    
    
    
    
    
    Contractual
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Life
    
    
    Exercise
    
    
    
    
    
    
    ExercisePrices
    
    
    Shares
    
    
    (Years)
    
    
    Price
    
    
    Shares
    
    
    Price$
    11.98
    
    
    
    128,625
    
    
    
    9.6
    
    
    $
    11.98
    
    
    
    64,525
    
    
    $
    11.98$
    14.35
    
    
    
    85,500
    
    
    
    9.1
    
    
    $
    14.35
    
    
    
    55,900
    
    
    $
    14.35$
    17.77
    
    
    
    128,000
    
    
    
    8.5
    
    
    $
    17.77
    
    
    
    60,200
    
    
    $
    17.77
 Restricted Stock:Restricted stock provides grantees with rights to shares of common stock upon completion of
a service period. During the restriction period, all shares are considered outstanding and
dividends are paid on the restricted stock.The following table presents the activity for Restricted Stock for the three months ended
June 30, 2008:
 Weighted AverageNumberof Shares
    
    
    Grant-
Date Fair ValueUnvested as of April 1, 2008
    
    
    91,970
    
    
    $
    15.66Granted
    
    
    
    
    
    
    Vested
    
    
    (5,000
    )
    
    
    13.87Forfeited
    
    
    
    
    
    
    Unvested as of June 30, 2008
    
    
    86,970
    
    
    $
    15.77
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The following table presents the activity for Restricted Stock for the six months ended
June 30, 2008:
 Weighted AverageNumberof Shares
    
    
    Grant-
Date Fair ValueUnvested as of January 1, 2008
    
    
    59,970
    
    
    $
    17.63Granted
    
    
    92,559
    
    
    
    11.98Vested
    
    
    (65,559
    )
    
    
    12.12Forfeited
    
    
    
    
    
    
    Unvested as of June 30, 2008
    
    
    86,970
    
    
    $
    15.77
 The fair value of restricted shares that vested during the three and six months ended June
30, 2008 was $64,000 and $986,000, respectively, with no shares vesting during the three
and six months ended June 30, 2007. The weighted average grant date fair value of
restricted stock granted during the six months ended June 30, 2008 was $11.98. There were
no restricted stock shares granted during the six months ended June 30, 2007.As of June 30, 2008, there was $925,000 of total unrecognized compensation cost related to
unvested restricted stock which is expected to be recognized over a weighted-average period
of 2.5 years.Twenty-two percent, or 19,390, of the remaining unvested restricted stock shares will vest
in 2008, 29,085 shares in 2009, 24,095 shares in 2010, 7,200 in 2011 and 7,200 will vest in
2012. All unvested restricted stock shares are expected to vest.Employee Stock Ownership Plan:As part of the reorganization and stock offering completed
in May 2005, the Company established an Employee Stock Ownership Plan (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 6.00% at June
30, 2008. 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 June 30, 2008, the outstanding
principal and interest due was $6.1 million, and principal payments of $2.0 million have
been made on the loan since inception.ESOP expense for the six months ended June 30, 2008 and 2007 was $439,000 and $535,000,
respectively. At June 30, 2008, there were 209,898 allocated and 489,761 unreleased ESOP
shares; and the unreleased shares had an aggregate fair value of $6.2 million.9.
    
    Income TaxesEffective January 1, 2007, the Company has adopted the provisions of FASB issued
Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes  An
Interpretation of FASB Statement No. 109and there was no material effect on the
consolidated condensed financial statements. As a result, there was no cumulative effect
related to adopting FIN 48. As of June 30, 2008 and December 31, 2007, there were no
unrecognized tax benefits related to federal and state income tax matters. The Company is
currently open to audit under the statute of limitations by the Internal Revenue Service
and state taxing authorities for the years ended December 31, 2004 through 2007.As of December 31, 2007 and June 30, 2008, the Company has not accrued any interest related
to uncertain tax positions.
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10.
    
    Accumulated Other Comprehensive (Loss) IncomeComponents of accumulated other comprehensive (loss) income, net of taxes, consist of the
following:
 UnrealizedIncome (Loss)
    
    
    Accumulatedon Available-
    
    
    OtherUnamortized
    
    
    For-Sale
    
    
    ComprehensiveBenefit Plans
    
    
    Securities
    
    
    (Loss) Income(In Thousands)January 1, 2008
    
    $
    (3,430
    )
    
    $
    3,189
    
    
    $
    (241
    )Change
    
    
    307
    
    
    
    (685
    )
    
    
    (378
    )March 31, 2008
    
    
    (3,123
    )
    
    
    2,504
    
    
    
    (619
    )Change
    
    
    118
    
    
    
    (1,092
    )
    
    
    (974
    )June 30, 2008
    
    $
    (3,005
    )
    
    $
    1,412
    
    
    $
    (1,593
    )
 The following table summarizes other comprehensive income and the related tax effects for
the three and six months ended June 30, 2008 and 2007:
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Net income as reported
    
    $
    1,393
    
    
    $
    2,254
    
    
    $
    2,548
    
    
    $
    4,166Unrealized loss on securities available
for sale
    
    
    (1,655
    )
    
    
    (532
    )
    
    
    (2,692
    )
    
    
    (100
    )Tax benefit
    
    
    563
    
    
    
    181
    
    
    
    915
    
    
    
    34Net unrealized loss on securities
available for sale
    
    
    (1,092
    )
    
    
    (351
    )
    
    
    (1,777
    )
    
    
    (66
    )Amortization of unamortized benefit plans
    
    
    179
    
    
    
    226
    
    
    
    644
    
    
    
    452Tax provision
    
    
    (61
    )
    
    
    (77
    )
    
    
    (219
    )
    
    
    (154
    )Net amortization of unamortized benefit
plans
    
    
    118
    
    
    
    149
    
    
    
    425
    
    
    
    298Other comprehensive (loss) income, net
of tax
    
    
    (974
    )
    
    
    (202
    )
    
    
    (1,352
    )
    
    
    232Total comprehensive income
    
    $
    419
    
    
    $
    2,052
    
    
    $
    1,196
    
    
    $
    4,398
 11.
    
    Commitments and ContingenciesFinancial Instruments With Off-Balance Sheet RiskIn the normal course of business, the Company is a party to financial instruments with
off-balance sheet risk to meet the financing needs of its customers. These financial
instruments include commitments to extend credit, undisbursed portions of construction
loans, unused commercial and consumer lines of credit and standby letters of credit.
Commitments generally have fixed expiration dates or other termination clauses and may
require payment of a fee by the customer. Standby letters of credit are conditional
commitments issued by the Company to guarantee the performance of a customer to a third
party. Since these commitments could expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. These commitments involve,
to varying degrees, elements of credit and interest rate risk in excess of the amounts
recognized in the statements of financial condition. The contractual amounts of commitments
to extend credit represent the amounts of potential accounting loss should the contract be
fully drawn upon, the customer default, and the value of any existing collateral
obligations become worthless as it may for on-balance sheet instruments. The Company
evaluates each customers creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Company upon extension of credit, is based
on managements credit evaluation.
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Financial instruments whose contract amounts represent credit risk are as follows at June
30, 2008 and December 31, 2007:
 June 30,
    
    
    December 31,2008
    
    
    2007(In thousands)Commitments to extend credit:Future loan commitments
    
    $
    67,244
    
    
    $
    70,993Undisbursed construction loans
    
    
    103,269
    
    
    
    96,788Undisbursed home equity lines of credit
    
    
    109,221
    
    
    
    104,769Undisbursed commercial lines of credit
    
    
    50,895
    
    
    
    49,037Standby letters of credit
    
    
    15,605
    
    
    
    12,312Unused checking overdraft lines of credit
    
    
    114
    
    
    
    104$
    346,348
    
    
    $
    334,003
 12.
    
    Legal MattersThe Company is involved in various legal proceedings which have arisen in the normal course
of business. Management believes that resolution of these matters will not have a material
effect on the Companys financial condition or results of operations.13.
    
    Regulatory MattersThe Company and the Bank are subject to various regulatory capital requirements
administered by Federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory, and possibly additional discretionary, actions by regulators
that, if undertaken, could have a direct material effect on the Companys financial
statements. The regulations require the Company and the Bank meet specific capital
guidelines that involve quantitative measures of the Companys and the Banks assets,
liabilities, and certain off-balance sheet items, as calculated under regulatory accounting
practices. The Companys and the Banks capital amounts and classification are also subject
to qualitative judgments by the regulators about components, risk weightings, and other
factors. The Bank was classified at its most recent notification as well capitalized. At
June 30, 2008, the Company and the Bank exceeded all regulatory capital requirements and
are considered well capitalized under regulatory guidelines.
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The following is a summary of the Companys and the Banks regulatory capital amounts and
ratios as of June 30, 2008 and December 31, 2007 compared to the Federal Deposit Insurance
Corporations requirements for classification as a well-capitalized institution and for
minimum capital adequacy:
 To Be WellFor Capital
    
    Capitalized UnderAdequacy
    
    Prompt CorrectiveActual
    
    Purposes
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in Thousands)Rockville Bank:June 30, 2008Total capital to risk weighted assets
    
    $
    140,234
    
    
    
    12.8
    %
    
    $
    87,646
    
    
    
    8.0
    %
    
    $
    109,558
    
    
    
    10.0
    %Tier I capital to risk weighted assets
    
    
    128,753
    
    
    
    11.8
    
    
    
    43,645
    
    
    
    4.0
    
    
    
    65,468
    
    
    
    6.0Tier I capital to total average assets
    
    
    128,753
    
    
    
    9.2
    
    
    
    55,980
    
    
    
    4.0
    
    
    
    69,974
    
    
    
    5.0Rockville Bank:December 31, 2007Total capital to risk weighted assets
    
    $
    137,212
    
    
    
    13.7
    %
    
    $
    80,124
    
    
    
    8.0
    %
    
    $
    100,155
    
    
    
    10.0
    %Tier I capital to risk weighted assets
    
    
    126,099
    
    
    
    12.6
    
    
    
    40,031
    
    
    
    4.0
    
    
    
    60,047
    
    
    
    6.0Tier I capital to total average assets
    
    
    126,099
    
    
    
    9.5
    
    
    
    53,094
    
    
    
    4.0
    
    
    
    66,368
    
    
    
    5.0Rockville Financial, Inc.:June 30, 2008Total capital to risk weighted assets
    
    $
    166,088
    
    
    
    15.2
    %
    
    $
    87,415
    
    
    
    8.0
    %
    
    $
    109,268
    
    
    
    10.0
    %Tier I capital to risk weighted assets
    
    
    154,607
    
    
    
    14.1
    
    
    
    43,860
    
    
    
    4.0
    
    
    
    65,790
    
    
    
    6.0Tier I capital to total average assets
    
    
    154,607
    
    
    
    11.0
    
    
    
    56,221
    
    
    
    4.0
    
    
    
    70,276
    
    
    
    5.0Rockville Financial, Inc.:December 31, 2007Total capital to risk weighted assets
    
    $
    166,647
    
    
    
    16.6
    %
    
    $
    80,312
    
    
    
    8.0
    %
    
    $
    100,390
    
    
    
    10.0
    %Tier I capital to risk weighted assets
    
    
    155,534
    
    
    
    15.5
    
    
    
    40,138
    
    
    
    4.0
    
    
    
    60,207
    
    
    
    6.0Tier I capital to total average assets
    
    
    155,534
    
    
    
    11.7
    
    
    
    53,174
    
    
    
    4.0
    
    
    
    66,468
    
    
    
    5.0
 The Company is also considered to be well capitalized under the regulatory framework
specified by the Federal Reserve.Connecticut law restricts the amount of dividends that the Bank can pay based on earnings
for the current year and the preceding two years.
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking StatementsThis Form 10-Q contains forward-looking statements that are within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are based upon the
current beliefs and expectations of our management and are subject to significant risks and
uncertainties. These risks and uncertainties could cause our results to differ materially
from those set forth in such forward-looking statements.Forward-looking statements can be identified by the fact that they do not relate strictly
to historical or current facts. Words such as believes, anticipates, expects,
intends, plans, estimates, targeted and similar expressions, and future or
conditional verbs, such as will, would, should, could or may, are intended to
identify forward-looking statements but are not the only means to identify these
statements.Forward-looking statements involve risks and uncertainties. Actual conditions, events or
results may differ materially from those contemplated by a forward-looking statement.Factors that could cause this difference  many of which are beyond our control  include
without limitation the following:
 
    
    Local, regional and national business or economic conditions may differ from
those expected.
    
    The effects of and changes in trade, monetary and fiscal policies and laws,
including the U.S. Federal Reserve Boards interest rate policies, may adversely
affect our business.
    
    The ability to increase market share and control expenses may be more difficult
than anticipated.
    
    Changes in laws and regulatory requirements (including those concerning taxes,
banking, securities and insurance) may adversely affect us or our businesses.
    
    Changes in accounting policies and practices, as may be adopted by regulatory
agencies, the Public Company Accounting Oversight Board or the Financial
Accounting Standards Board, may affect expected financial reporting.
    
    Future changes in interest rates may reduce our profits which could have a
negative impact on the value of our stock.
    
    We are subject to lending risk and could incur losses in our loan portfolio
despite our underwriting practices. Changes in real estate values could also
increase our lending risk.
    
    Changes in demand for loan products, financial products and deposit flow could
impact our financial performance.
    
    Strong competition within our market area may limit our growth and
profitability.
    
    We may not manage the risks involved in the foregoing as well as anticipated.
    
    We recently opened new branches which may not become profitable as soon as
anticipated, if at all.
 Any forward-looking statements made by or on behalf of us in this Form 10-Q speak only as
of the date of this Form 10-Q. We do not undertake to update forward-looking statements to
reflect the impact of circumstances or events that arise after the date the forward-looking
statement was made. The reader should, however, consider any further disclosures of a
forward-looking nature we may make in future filings.
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OverviewRockville Financial, Inc. (the Company) is a state-chartered mid-tier stock holding
company formed in 2004. The Reorganization and Minority Stock Issuance Plan (the Plan)
adopted by the Companys and Rockville Banks Boards of Directors was completed in 2005.
Pursuant to the Plan, the Company became a mid-tier holding company. Rockville Financial
MHC, Inc. holds fifty-five percent of the Companys common stock, and the Company holds all
the common stock of Rockville Bank (the Bank). The Bank provides a full range of banking
services to consumer and commercial customers through its main office in Rockville and
twenty branches located in Hartford, Tolland and New London counties in Connecticut. The
Banks deposits are insured under the Deposit Insurance Fund, which is administered by the
Federal Deposit Insurance Corporation.The Company strives to remain a leader in meeting the financial service needs of the local
community and to provide quality service to the individuals and businesses in the market
areas that it has served since 1858. Rockville Bank is a community-oriented provider of
traditional banking products and services to business organizations and individuals,
offering products such as residential and commercial real estate loans, consumer loans and
a variety of deposit products. Our business philosophy is to remain a community-oriented
franchise and to continue to focus on providing superior customer service to meet the
financial needs of the communities in which we operate. Current strategies include
expanding our banking network by pursuing new branch locations and branch acquisition
opportunities in our market area, continuing our residential mortgage lending activities
which comprise a majority of our loan portfolio and expanding our commercial real estate
and commercial business lending activities.Critical Accounting PoliciesThe accounting policies followed by the Company and its subsidiaries conform with
accounting principles generally accepted in the United States of America and with general
practices within the banking industry.Critical accounting policies are defined as those that are reflective of significant
judgments and uncertainties, and could potentially result in materially different results
under different assumptions and conditions. We believe that our most critical accounting
policies, which involve the most complex subjective decisions or assessments, relate to
allowance for loan losses, other than temporary impairment of investment securities, income
taxes, pension and other post-retirement benefits and stock compensation.Allowance for Loan Losses:The allowance for loan losses is the amount estimated by
management as necessary to cover probable credit losses inherent in the loan portfolio at
the balance sheet date. The allowance is established through the provision for loan losses
which is charged against income. Management believes the policy is critical because
determination of the amount of the allowance involves significant judgments and
assumptions.Management performs a quarterly evaluation of the adequacy of the allowance for loan losses
and presents the evaluation to both the Board Lending Committee and the Board of Directors.
In addition, the credit area of the Bank is responsible for the accuracy of loan risk
ratings and prepares an Asset Quality Report on a quarterly basis and provides summary
reports to the Board Lending Committee on a monthly basis. A variety of factors are
considered in establishing this estimate including, but not limited to, historical loss and
charge off data, current economic conditions, historical and current delinquency
statistics, geographic and industry concentrations, the adequacy of the underlying
collateral, the financial strength of our borrowers, results of internal and external loan
reviews and other relevant factors. This evaluation is inherently subjective as it requires
material estimates by management that may be susceptible to significant change.The analysis has two broad components: specific and unallocated allowances. The specific
allowance is comprised of two components. The first component is made for loans for which
recovery of the Banks principal investment is uncertain. In such cases, the size of the
specific allowance is measured by determining an expected collection or, for
collateral-dependent loans, the fair value of the collateral adjusted for market conditions
and selling expenses. The second component of the specific allowance is determined by
segregating the remaining loans by type of loan, risk weighting (if applicable) and payment
history. Historical loss experience, delinquency trends, general economic conditions and
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geographic and industry concentrations are also considered. This analysis establishes
factors that are applied to the loan groups to determine the amount of this component of
the allowance. The unallocated allowance represents the results of an analysis that
measures the probable losses inherent in each portfolio. If the allowance for loan losses
is too low, the Company may incur higher provisions for loan losses in the future resulting
in lower net income. If an estimate of the allowance for loan losses is too high, we may
experience lower provisions for loan losses resulting in higher net income.Other than Temporary Impairment of Securities:Debt and equity securities are classified
as available for sale and recorded at fair value, with unrealized gains or losses
excluded from earnings and recorded as other comprehensive income, net of tax in the
Condensed Consolidated Statements of Condition. On a quarterly basis, securities with
unrealized depreciation for twelve or more consecutive months and other securities with
unrealized losses are reviewed as deemed appropriate to assess whether the decline in fair
value is temporary or other than temporary. It is assessed whether the decline in value is
from company-specific events, industry developments, general economic conditions or other
reasons. After the reasons for the decline are identified, further judgments are required
as to whether those conditions are likely to reverse and, if so, whether that reversal is
likely to result in a recovery of the fair value of the investment in the near term. If it
is judged not to be near term, a charge is taken which results in a new cost basis.
Declines in the fair value of available for sale securities below their cost that are
deemed to be other than temporary are reflected in earnings. Management can designate
securities as held to maturity. Held to maturity securities are debt securities that
management has the positive intent and ability to hold to maturity. As of June 30, 2008,
management has classified $25.1 million of securities as held to maturity on the balance
sheet with a market value of $24.7 million.During the quarter ended June 30, 2008, we recorded a pre-tax other than temporary
impairment charge of $1.2 million related to the preferred stock of Freddie Mac and Fannie
Mae. The charge for the impairment was computed using the closing price of the security as
of the date of the impairment. The Companys remaining investment in these securities was
$10.7 million with no unrealized gain or loss at June 30, 2008. The Company will continue
to review its entire portfolio for other than temporarily impaired securities with
additional attention being given to high risk securities such as the preferred stock of
Freddie Mac and Fannie Mae and one AAA rated pooled trust preferred security that the
Company owns.Management believes the policy for evaluating securities for other than temporary
impairment is critical because it involves significant judgments by management and could
have a material impact on our net income. The aggregate unrealized loss for securities in
an unrealized loss position for 12 or more consecutive months as of June 30, 2008 consisted
of securities that management believes are not other than temporarily impaired as
management has the intent and ability to hold these investments until their fair value
recovers, which may be maturity in the case of debt securities.The following table summarizes gross unrealized losses and fair value, aggregated by
investment category and length of time the investments have been in a continuous unrealized
loss position, at June 30, 2008:
 Less than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    Loss(In Thousands)Available for sale:Mortgage-backed
securities
    
    $
    66,094
    
    
    $
    883
    
    
    $
    4,322
    
    
    $
    133
    
    
    $
    70,416
    
    
    $
    1,016Pooled trust preferred
securities
    
    
    2,440
    
    
    
    429
    
    
    
    
    
    
    
    
    
    
    
    2,440
    
    
    
    429Corporate debt securities
    
    
    2,896
    
    
    
    33
    
    
    
    100
    
    
    
    
    
    
    
    2,996
    
    
    
    33Total debt securities
    
    
    71,430
    
    
    
    1,345
    
    
    
    4,422
    
    
    
    133
    
    
    
    75,852
    
    
    
    1,478Marketable equity
securities
    
    
    18,845
    
    
    
    714
    
    
    
    60
    
    
    
    7
    
    
    
    18,905
    
    
    
    721Total
    
    $
    90,275
    
    
    $
    2,059
    
    
    $
    4,482
    
    
    $
    140
    
    
    $
    94,757
    
    
    $
    2,199
 The Companys investment portfolio contained no mortgage-backed securities that are subject
to the risk of sub-prime lending as of June 30, 2008. Although the Company has not been
adversely
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impacted by recent events affecting the mortgage industry, continuing shifts in the
markets perception of credit quality on securities backed by residential mortgage loans
may result in increased volatility of market price and periods of illiquidity that can
negatively impact the valuation of certain issuers held by the Company.Income Taxes:We recognize income taxes under the asset and liability method. Under this
method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. Deferred tax assets are reduced by a loan loss
allowance when, in the opinion of management, it is more likely than not that all or some
portion of the deferred tax assets will not be realized. The Company has not provided for
Connecticut state income taxes since December 31, 1998 because it has created and
maintained a passive investment company (PIC), as permitted by Connecticut law. The
Company believes it is in compliance with the state PIC requirements and that no state
taxes are due from December 31, 1999 through June 30, 2008; however, the Company has not
been audited by the Department of Revenue Services for such periods. If the state were to
determine that the PIC was not in compliance with statutory requirements, a material amount
of taxes could be due. As of June 30, 2008, management believes it is more likely than not
that the deferred tax assets will be realized through future reversals of existing taxable
temporary differences. As of June 30, 2008, our net deferred tax asset was $4.8 million and
there was no valuation allowance.On January 1, 2007, the Company changed its accounting policy related to accounting for tax
contingencies in connection with the adoption of FIN 48, an interpretation of Financial
Accounting Standards Board (FASB) Statement 109. See Note 8  Income Taxes for additional
information.Pension and Other Post-retirement Benefits:We have a noncontributory defined benefit
pension plan that provides benefits for substantially all employees hired before January 1,
2005 who meet certain requirements as to age and length of service. The benefits are based
on years of service and average compensation, as defined. Our funding policy is to
contribute annually in order to meet at least the minimum funding standards established by
the ERISA.In addition to providing pension benefits, we provide certain health care and life
insurance benefits for retired employees. Participants or eligible employees hired before
March 1993 become eligible for the benefits if they retire after reaching age 62 with five
or more years of service. A fixed percent of annual costs are paid depending on length of
service at retirement. We accrue for the estimated costs of these other post-retirement
benefits through charges to expense during the years that employees render service. The
Company makes contributions to cover its current benefits paid under this plan.Management believes the policy for determining pension and other post-retirement benefit
expenses is critical because judgments are required with respect to the appropriate
discount rate, rate of return on assets, salary increases and other items. Management
reviews and updates the assumptions annually. If our estimate of pension and
post-retirement expense is too low we may experience higher expenses in the future reducing
our net income. If our estimate is too high, we may experience lower expenses in the future
increasing our net income.While management believes the assumptions used to estimate expenses related to pension and
other post-retirement benefits are reasonable and appropriate, actual experience may
significantly differ. The pension expense is calculated based upon a number of actuarial
assumptions, including an expected long-term rate of return on our Pension Plan assets. In
developing our expected long-term rate of return assumption, we evaluated input from our
actuary and investment consultant, including their review of asset class return
expectations as well as long-term inflation assumptions, and their review of historical
returns based on target asset allocations. The Company adopted the provisions of Statement
of Financial Accounting Standards (SFAS) No. 158 (SFAS 158), Employers Accounting for
Defined Benefit Pension and Other Post-retirement Plans, an amendment of FASB Statements
No. 87, 88, 106, and 132(R)requiring the recognition of the funded status of defined
benefit plans as of December 31, 2006. The statement requires the Company to measure plan
assets and benefit obligations as of the date of the Companys fiscal year-end statement of
financial position and is effective for the Company on January 1, 2008. The Company offers
a defined benefit pension plan whose measurement date of the
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Stock Compensation: Share-Based Payments (revised 2004)
 Comparison of Operating Results for the Three and Six Months Ended June 30, 2008 and 2007
  Income Statement Summary
 For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    Change(In thousands)Net interest income
    
    $
    10,213
    
    
    $
    9,651
    
    
    $
    562
    
    
    $
    19,980
    
    
    $
    18,701
    
    
    $
    1,279Provision for loan losses
    
    
    125
    
    
    
    207
    
    
    
    (82
    )
    
    
    249
    
    
    
    433
    
    
    
    (184
    )Noninterest income
    
    
    340
    
    
    
    1,357
    
    
    
    (1,017
    )
    
    
    1,754
    
    
    
    2,659
    
    
    
    (905
    )Noninterest expense
    
    
    8,356
    
    
    
    7,433
    
    
    
    923
    
    
    
    17,700
    
    
    
    14,698
    
    
    
    3,002Income before income taxes
    
    
    2,072
    
    
    
    3,368
    
    
    
    (1,296
    )
    
    
    3,785
    
    
    
    6,229
    
    
    
    (2,444
    )Provision for income taxes
    
    
    (679
    )
    
    
    (1,114
    )
    
    
    435
    
    
    
    (1,237
    )
    
    
    (2,063
    )
    
    
    826Net income
    
    $
    1,393
    
    
    $
    2,254
    
    
    $
    (861
    )
    
    $
    2,548
    
    
    $
    4,166
    
    
    $
    (1,618
    )
  Rockville Financial, Inc.
    
    25




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Rockville Financial, Inc.
    
    26




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##### Table of Contents



Net Interest Income Analysis
 Average Balance Sheets, Interest and Yields/Costs:
 Rockville Financial, Inc.
    
    27




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##### Table of Contents



Three Months Ended June 30,2008
    
    
    2007Average
    
    
    Interest and
    
    
    Yield/
    
    
    Average
    
    
    Interest andBalance
    
    
    Dividends
    
    
    Cost
    
    
    Balance
    
    
    Dividends
    
    
    Yield/ Cost(Dollars in thousands)Interest-earning assets:Loans receivable, net
    
    $
    1,154,096
    
    
    $
    16,624
    
    
    
    5.76
    %
    
    $
    1,059,698
    
    
    $
    16,541
    
    
    
    6.24
    %Total investment securities
    
    
    175,536
    
    
    
    2,188
    
    
    
    4.99
    
    
    
    128,925
    
    
    
    1,426
    
    
    
    4.42Federal Home Loan Bank stock
    
    
    12,203
    
    
    
    116
    
    
    
    3.80
    
    
    
    9,836
    
    
    
    164
    
    
    
    6.67Other earning assets
    
    
    3,200
    
    
    
    12
    
    
    
    1.50
    
    
    
    2,330
    
    
    
    27
    
    
    
    4.64Total interest-earning assets
    
    
    1,345,035
    
    
    
    18,940
    
    
    
    5.63
    
    
    
    1,200,789
    
    
    
    18,158
    
    
    
    6.05Noninterest-earning assets
    
    
    56,594
    
    
    
    
    
    
    
    
    
    
    
    50,759Total assets
    
    $
    1,401,629
    
    
    
    
    
    
    
    
    
    
    $
    1,251,548Interest-bearing liabilities:NOW and money market accounts
    
    $
    253,806
    
    
    
    1,341
    
    
    
    2.11
    
    
    $
    188,938
    
    
    
    738
    
    
    
    1.56Savings accounts
    
    
    126,999
    
    
    
    194
    
    
    
    0.61
    
    
    
    131,192
    
    
    
    200
    
    
    
    0.61Time deposits
    
    
    522,457
    
    
    
    4,972
    
    
    
    3.81
    
    
    
    499,699
    
    
    
    5,644
    
    
    
    4.52Total interest-bearing deposits
    
    
    903,262
    
    
    
    6,507
    
    
    
    2.88
    
    
    
    819,829
    
    
    
    6,582
    
    
    
    3.21Mortgagors and investors escrow accounts
    
    4,736
    
    
    
    19
    
    
    
    1.60
    
    
    
    4,456
    
    
    
    18
    
    
    
    1.62Advances from the Federal Home Loan Bank
    
    218,947
    
    
    
    2,201
    
    
    
    4.02
    
    
    
    164,754
    
    
    
    1,907
    
    
    
    4.63Total interest-bearing liabilities
    
    
    1,126,945
    
    
    
    8,727
    
    
    
    3.10
    %
    
    
    989,039
    
    
    
    8,507
    
    
    
    3.44
    %Noninterest-bearing liabilities
    
    
    117,716
    
    
    
    
    
    
    
    
    
    
    
    105,811Total liabilities
    
    
    1,244,661
    
    
    
    
    
    
    
    
    
    
    
    1,094,850Capital
    
    
    156,968
    
    
    
    
    
    
    
    
    
    
    
    156,698Total liabilities and capital
    
    $
    1,401,629
    
    
    
    
    
    
    
    
    
    
    $
    1,251,548Net interest income
    
    
    
    
    
    $
    10,213
    
    
    
    
    
    
    
    
    
    
    $
    9,651Net interest rate spread (1)
    
    
    
    
    
    
    
    
    
    
    2.53
    %
    
    
    
    
    
    
    
    
    
    
    2.61
    %Net interest-earning assets (2)
    
    $
    218,090
    
    
    
    
    
    
    
    
    
    
    $
    211,750Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    3.04
    %
    
    
    
    
    
    
    
    
    
    
    3.21
    %Average interest-earning assets to
average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    119.35
    %
    
    
    
    
    
    
    
    
    
    
    121.41
    %
 
 (1)
    
    Net interest rate spread represents the difference between the yield on
average interest-earning assets and the cost of average interest-bearing liabilities.(2)
    
    Net interest-earning assets represent total interest-earning assets less
total interest-bearing liabilities.(3)
    
    Net interest margin represents the annualized net interest income divided by
average total interest-earning assets. Rockville Financial, Inc.
    
    28




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##### Table of Contents



Six Months Ended June 30,2008
    
    
    2007Average
    
    
    Interest and
    
    
    Yield/
    
    
    Average
    
    
    Interest andBalance
    
    
    Dividends
    
    
    Cost
    
    
    Balance
    
    
    Dividends
    
    
    Yield/ Cost(Dollars in thousands)Interest-earning assets:Loans receivable, net
    
    $
    1,138,992
    
    
    $
    33,396
    
    
    
    5.86
    %
    
    $
    1,048,807
    
    
    $
    32,418
    
    
    
    6.18
    %Total investment securities
    
    
    161,232
    
    
    
    4,174
    
    
    
    5.18
    
    
    
    130,307
    
    
    
    2,883
    
    
    
    4.42Federal Home Loan Bank stock
    
    
    11,918
    
    
    
    284
    
    
    
    4.77
    
    
    
    9,836
    
    
    
    331
    
    
    
    6.73Other earning assets
    
    
    3,256
    
    
    
    32
    
    
    
    1.97
    
    
    
    2,235
    
    
    
    52
    
    
    
    4.65Total interest-earning assets
    
    
    1,315,398
    
    
    
    37,886
    
    
    
    5.76
    
    
    
    1,191,185
    
    
    
    35,684
    
    
    
    5.99Noninterest-earning assets
    
    
    56,792
    
    
    
    
    
    
    
    
    
    
    
    50,854Total assets
    
    $
    1,372,190
    
    
    
    
    
    
    
    
    
    
    $
    1,242,039Interest-bearing liabilities:NOW and money market accounts
    
    $
    232,309
    
    
    
    2,363
    
    
    
    2.03
    
    
    $
    183,563
    
    
    
    1,437
    
    
    
    1.57Savings accounts
    
    
    124,640
    
    
    
    380
    
    
    
    0.61
    
    
    
    129,804
    
    
    
    394
    
    
    
    0.61Time deposits
    
    
    526,317
    
    
    
    10,713
    
    
    
    4.07
    
    
    
    495,294
    
    
    
    11,131
    
    
    
    4.49Total interest-bearing deposits
    
    
    883,266
    
    
    
    13,456
    
    
    
    3.05
    
    
    
    808,661
    
    
    
    12,962
    
    
    
    3.21Mortgagors and investors escrow accounts
    
    3,653
    
    
    
    30
    
    
    
    1.64
    
    
    
    3,327
    
    
    
    28
    
    
    
    1.68Advances from the Federal Home Loan Bank
    
    214,157
    
    
    
    4,420
    
    
    
    4.13
    
    
    
    171,446
    
    
    
    3,993
    
    
    
    4.66Total interest-bearing liabilities
    
    
    1,101,076
    
    
    
    17,906
    
    
    
    3.25
    %
    
    
    983,434
    
    
    
    16,983
    
    
    
    3.45
    %Noninterest-bearing liabilities
    
    
    113,724
    
    
    
    
    
    
    
    
    
    
    
    102,185Total liabilities
    
    
    1,214,800
    
    
    
    
    
    
    
    
    
    
    
    1,085,619Capital
    
    
    157,390
    
    
    
    
    
    
    
    
    
    
    
    156,420Total liabilities and capital
    
    $
    1,372,190
    
    
    
    
    
    
    
    
    
    
    $
    1,242,039Net interest income
    
    
    
    
    
    $
    19,980
    
    
    
    
    
    
    
    
    
    
    $
    18,701Net interest rate spread (1)
    
    
    
    
    
    
    
    
    
    
    2.51
    %
    
    
    
    
    
    
    
    
    
    
    2.54
    %Net interest-earning assets (2)
    
    $
    214,322
    
    
    
    
    
    
    
    
    
    
    $
    207,751Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    3.04
    %
    
    
    
    
    
    
    
    
    
    
    3.14
    %Average interest-earning assets to
average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    119.46
    %
    
    
    
    
    
    
    
    
    
    
    121.13
    %
 
 (1)
    
    Net interest rate spread represents the difference between the yield on
average interest-earning assets and the cost of average interest-bearing liabilities.(2)
    
    Net interest-earning assets represent total interest-earning assets less
total interest-bearing liabilities.(3)
    
    Net interest margin represents the annualized net interest income divided by
average total interest-earning assets. Rockville Financial, Inc.
    
    29




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##### Table of Contents



Rate Volume Analysis
  Three Months Ended
    
    
    Six Months EndedJune 30, 2008
    
    
    June 30, 2008Compared to
    
    
    Compared toJune 30, 2007
    
    
    June 30, 2007Increase (Decrease)
    
    
    
    
    
    
    Increase (Decrease)Due To
    
    
    
    
    
    
    Due ToVolume
    
    
    Rate
    
    
    Net
    
    
    Volume
    
    
    Rate
    
    
    Net(In thousands)Interest and dividend income:Loans receivable
    
    $
    622
    
    
    $
    (539
    )
    
    $
    83
    
    
    $
    2,432
    
    
    $
    (1,454
    )
    
    $
    978Securities interest, dividends &
income from other assets
    
    
    600
    
    
    
    99
    
    
    
    699
    
    
    
    839
    
    
    
    385
    
    
    
    1,224Total earning assets
    
    
    1,222
    
    
    
    (440
    )
    
    
    782
    
    
    
    3,271
    
    
    
    (1,069
    )
    
    
    2,202Interest expense:NOW and money market accounts
    
    
    298
    
    
    
    305
    
    
    
    603
    
    
    
    435
    
    
    
    491
    
    
    
    926Savings accounts
    
    
    (6
    )
    
    
    1
    
    
    
    (5
    )
    
    
    (16
    )
    
    
    4
    
    
    
    (12
    )Time deposits
    
    
    273
    
    
    
    (945
    )
    
    
    (672
    )
    
    
    827
    
    
    
    (1,245
    )
    
    
    (418
    )Total interest-bearing deposits
    
    
    565
    
    
    
    (639
    )
    
    
    (74
    )
    
    
    1,246
    
    
    
    (750
    )
    
    
    496FHLB Advances
    
    
    490
    
    
    
    (196
    )
    
    
    294
    
    
    
    786
    
    
    
    (359
    )
    
    
    427Total interest bearing liabilities
    
    
    1,055
    
    
    
    (835
    )
    
    
    220
    
    
    
    2,032
    
    
    
    (1,109
    )
    
    
    923Change in net interest income
    
    $
    167
    
    
    $
    395
    
    
    $
    562
    
    
    $
    1,239
    
    
    $
    40
    
    
    $
    1,279
 Net Interest Income:
  Rockville Financial, Inc.
    
    30




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##### Table of Contents



Interest and Dividend Income:
  Interest Expense:
  Rockville Financial, Inc.
    
    31




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##### Table of Contents



Provision for Loan Losses:
 Noninterest Income:
   Noninterest Expense:
 Rockville Financial, Inc.
    
    32




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    Change(In thousands)Salaries and employee benefits
    
    $
    4,195
    
    
    $
    3,976
    
    
    $
    219
    
    
    $
    9,566
    
    
    $
    7,920
    
    
    $
    1,646Service bureau fees
    
    
    910
    
    
    
    819
    
    
    
    91
    
    
    
    1,867
    
    
    
    1,608
    
    
    
    259Occupancy and equipment
    
    
    989
    
    
    
    827
    
    
    
    162
    
    
    
    2,033
    
    
    
    1,674
    
    
    
    359Professional fees
    
    
    271
    
    
    
    324
    
    
    
    (53
    )
    
    
    765
    
    
    
    773
    
    
    
    (8
    )Marketing and promotions
    
    
    471
    
    
    
    385
    
    
    
    86
    
    
    
    747
    
    
    
    617
    
    
    
    130Insurance and FDIC
Assessments
    
    
    231
    
    
    
    52
    
    
    
    179
    
    
    
    344
    
    
    
    100
    
    
    
    244Other
    
    
    1,289
    
    
    
    1,050
    
    
    
    239
    
    
    
    2,378
    
    
    
    2,006
    
    
    
    372Total noninterest expense
    
    $
    8,356
    
    
    $
    7,433
    
    
    $
    923
    
    
    $
    17,700
    
    
    $
    14,698
    
    
    $
    3,002
    Rockville Financial, Inc.
    
    33




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    Change(In thousands)Directors fees
    
    $
    194
    
    
    $
    196
    
    
    $
    (2
    )
    
    $
    422
    
    
    $
    372
    
    
    $
    50Telephone
    
    
    50
    
    
    
    54
    
    
    
    (4
    )
    
    
    101
    
    
    
    125
    
    
    
    (24
    )Postage
    
    
    88
    
    
    
    89
    
    
    
    (1
    )
    
    
    181
    
    
    
    195
    
    
    
    (14
    )Courier
    
    
    101
    
    
    
    74
    
    
    
    27
    
    
    
    183
    
    
    
    145
    
    
    
    38Dues and subscriptions
    
    
    41
    
    
    
    70
    
    
    
    (29
    )
    
    
    120
    
    
    
    124
    
    
    
    (4
    )Service charges
    
    
    43
    
    
    
    31
    
    
    
    12
    
    
    
    80
    
    
    
    62
    
    
    
    18Printing and forms
    
    
    96
    
    
    
    77
    
    
    
    19
    
    
    
    221
    
    
    
    121
    
    
    
    100Other
    
    
    676
    
    
    
    459
    
    
    
    217
    
    
    
    1,070
    
    
    
    862
    
    
    
    208Total other noninterest expense
    
    $
    1,289
    
    
    $
    1,050
    
    
    $
    239
    
    
    $
    2,378
    
    
    $
    2,006
    
    
    $
    372
   Income Tax Expense:
 Comparison of Financial Condition at June 30, 2008 and December 31, 2007
 Summary:
  Rockville Financial, Inc.
    
    34




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##### Table of Contents



Investment Securities:
 Lending Activities:
 Rockville Financial, Inc.
    
    35




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##### Table of Contents



Non-performing Assets:
 June 30,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Nonaccrual loans:Residential(1)
    
    $
    1,324
    
    
    $
    407Commercial
    
    
    
    
    
    
    74Commercial business loans
    
    
    774
    
    
    
    692Installment, collateral and other loans
    
    
    13
    
    
    
    5Total nonaccrual loans(2)
    
    
    2,111
    
    
    
    1,178Accruing loan past due 90 days or more
    
    
    
    
    
    
    Other accruing loans
    
    
    
    
    
    
    Troubled debt restructurings
    
    
    381
    
    
    
    391Total non-performing loans
    
    
    2,492
    
    
    
    1,569Real estate owned
    
    
    
    
    
    
    Total non-performing assets
    
    $
    2,492
    
    
    $
    1,569Total non-performing loans to total loans
    
    
    0.21
    %
    
    
    0.14
    %Total non-performing loans to total assets
    
    
    0.17
    %
    
    
    0.12
    %Allowance for loan losses as a percent of total loans
    
    
    0.91
    %
    
    
    0.94
    %Allowance for loan losses as a percent of
non-performing loans
    
    
    438
    %
    
    
    677
    %
 
 (1)
    
    Residential mortgage loans include one-to-four family mortgage loans, home
equity loans, and home equity lines of credit.(2)
    
    The amount of income that was contractually due but not recognized on
nonaccrual loans totaled $96,000 and $53,000 at June 30, 2008 and December 31, 2007,
respectively. Allowance for Loan Losses:
   Rockville Financial, Inc.
    
    36




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##### Table of Contents



Accounting by Creditors for Impairment of a Loan Accounting by Creditors for Impairment for
Loan-Income Recognition and Disclosures
     Rockville Financial, Inc.
    
    37




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##### Table of Contents



Deposits:
 Liquidity and Capital Resources:
       Rockville Financial, Inc.
    
    38




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##### Table of Contents



Rockville Financial, Inc.
    
    39




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
 General:
  Quantitative Analysis
 Income Simulation:
 PercentageIncrease (Decrease) inEstimated NetInterest IncomeOver 12 Months300 basis point increase in rates
    
    
    1.75100 basis point decrease in rates
    
    
    1.22
 Rockville Financial, Inc.
    
    40




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures:
 Changes in Internal Controls:
 Rockville Financial, Inc.
    
    41




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##### Table of Contents



Part II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (c)
    
    The following table provides information about repurchases of common stock by the
Company during the quarter ended June 30, 2008:
 Issuer Purchases of Equity SecuritiesMaximumNumber ofTotal Number of
    
    
    Shares thatShares
    
    
    May Yet BeTotal
    
    
    
    
    
    
    Purchased as
    
    
    PurchasedNumber of
    
    
    Average
    
    
    Part of Publicly
    
    
    Under theShares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    Plans orPeriod
    
    Purchased
    
    
    per Share
    
    
    or Programs
    
    
    Programs(1)4/1/08  4/30/08
    
    
    41,430
    
    
    $
    13.44
    
    
    
    41,430
    
    
    
    890,5185/1/08  5/31/08
    
    
    29,400
    
    
    
    13.43
    
    
    
    29,400
    
    
    
    861,1186/1/08  6/30/08
    
    
    126,000
    
    
    
    13.38
    
    
    
    126,000
    
    
    
    735,118Total
    
    
    196,830
    
    
    $
    13.40
    
    
    
    196,830
    
    
    
    735,118
 
 (1)
    
    Effective January 2008, the Company adopted a plan to repurchase of up to
978,400 of our outstanding shares of common stock on the open market. At March 31,
2008, there were 931,948 shares available to be purchased under this program. 
 Item 3. Defaults Upon Senior Securities
  Rockville Financial, Inc.
    
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Item 4. Submission of Matters to a Vote of Security Holders
 (a)
    
    The Company held its annual meeting of shareholders on April 29, 2008
(Annual Meeting).(b)
    
    Michael A. Bars, Thomas S. Mason and Peter F. Olson were re-elected as
directors with a four-year term at the Annual Meeting. The other continuing directors
are: C. Perry Chilberg, David A. Engelson, Pamela J. Guenard, Joseph F. Jeamel, Jr.,
Raymond H. Lefurge, Jr., Stuart E. Magdefrau, William J. McGurk, Rosemarie Novello
Papa and Richard M. Tkacz. In accordance with the Companys bylaws, Raymond H.
Lefurge, Jr. remained the Chairman of the Board.(c)
    
    There were 19,122,261 shares of Common Stock eligible to be voted at the
Annual Meeting and 16,345,028 shares were represented at the meeting by the holders
thereof, which constituted a quorum. The items voted upon at the Annual Meeting were
as follows:
 1.
    
    Election of directors (Proposal 1):
 Director:
    
    
    For:
    
    
    Withheld:Michael A. Bars
    
    
    16,125,040
    
    
    
    219,988Thomas S. Mason
    
    
    16,125,107
    
    
    
    219,921Peter F. Olson
    
    
    16,116,850
    
    
    
    228,178
 There were no abstentions or broker non-votes for any of these nominees.
 2.
    
    Ratification of Appointment of Deloitte & Touche LLP as
independent auditors of the Company for fiscal year ending December 31, 2008 (Proposal 2):
 For:
    
    
    Against:
    
    
    Abstain:16,080,020
    
    
    236,190
    
    
    
    28,818
 
 Item 5. Other Information
  Rockville Financial, Inc.
    
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Item 6. Exhibits
 3.1
    
    Certificate of Incorporation of Rockville Financial, Inc.
(incorporated herein by reference to Exhibit 3.1 to the Registration Statement on
the Form S-1 filed for Rockville Financial Inc., as amended, initially filed on
December 17, 2004 (File No. 333-121421))3.2
    
    Bylaws of Rockville Financial, Inc. (incorporated herein by reference
to Exhibit 3.2 to the Quarterly Report on Form 10-Q filed for Rockville Financial,
Inc. on May 13, 2005)3.2.1
    
    Amendment dated December 12, 2007 to the Bylaws of Rockville
Financial, Inc. (incorporated herein by reference to Exhibit 3.2 to the Current
Report on the Companys Form 8-K filed on December 12, 2007)3.2.2
    
    Amendment dated February 13, 2008 to the Bylaws of Rockville
Financial, Inc. (incorporated herein by reference to Exhibit 3.2 to the Current
Report on the Companys Form 8-K filed on February 14, 2008)3.3
    
    Form of Common Stock Certificate of Rockville Financial, Inc.
(incorporated herein by reference to Exhibit 4 to the Registration Statement on
the Form S-1 filed for Rockville Financial, Inc., as amended, initially filed on
December 17, 2004 (File No. 333-121421))10.1
    
    Employment Agreement by and among Rockville Financial, Inc.,
Rockville Bank and William J. McGurk, effective May 20, 2005 (incorporated herein
by reference to Exhibit 10.4 to the Post Effective Amendment No. 1 to the
Registration Statement on Form S-1 of Rockville Financial, Inc. filed on April 22,
2005)10.1.1
    
    Amendment dated December 22, 2006 to the Employment Agreement dated as of May
20, 2005 between Rockville Financial, Inc., Rockville Bank and William J. McGurk
(incorporated herein by reference to Exhibit 10.1.1 to the Companys Annual Report
on Form 10-K for the year ended December 31, 2006 filed on March 16, 2007)10.2
    
    Employment Agreement by and among Rockville Financial, Inc.,
Rockville Bank and Joseph F. Jeamel, Jr., effective May 20, 2005 (incorporated
herein by reference to Exhibit 10.4.1 to the Post Effective Amendment No. 1 to the
Registration Statement on Form S-1 filed for Rockville Financial, Inc. filed on
April 22, 2005)10.2.1
    
    Amendment dated December 22, 2006 to the Employment Agreement dated as of May
20, 2005 between Rockville Financial, Inc., Rockville Bank and Joseph F. Jeamel,
Jr. (incorporated herein by reference to Exhibit 10.2.1 to the Companys Annual
Report on Form 10-K for the year ended December 31, 2006 filed on March 16, 2007)10.3
    
    Employment Agreement by and among Rockville Financial, Inc.,
Rockville Bank and Gregory A. White effective May 20, 2005 (incorporated herein by
reference to Exhibit 10.4.2 to the Post Effective Amendment No. 1 to the
Registration Statement filed on Form S-1 filed for Rockville Financial, Inc. filed
on April 22, 2005)10.3.1
    
    Amendment dated December 22, 2006 to the Employment Agreement dated as of May
20, 2005 between Rockville Financial, Inc., Rockville Bank and Gregory A. White
(incorporated herein by reference to Exhibit 10.3.1 to the Companys Annual Report
on Form 10-K for the year ended December 31, 2006 filed on March 16, 2007)10.4
    
    Employment Agreement by and among Rockville Financial, Inc.,
Rockville Bank and Charles J. DeSimone, Jr., effective May 20, 2005 (incorporated
herein by reference to Exhibit 10.4.2 to the Post Effective Amendment No. 1 to the
Registration Statement filed on Form S-1 filed for Rockville Financial, Inc. filed
on April 22, 2005)10.4.1
    
    Amendment dated December 22, 2006 to the Employment Agreement dated as of May
20, 2005 between Rockville Financial, Inc., Rockville Bank and Charles J.
DeSimone, Jr. (incorporated herein by reference to Exhibit 10.5.1 to the Companys
Annual Report on Form 10-K for the year ended December 31, 2006 filed on March 16,
2007)
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10.5
    
    Employment Agreement by and among Rockville Financial, Inc.,
Rockville Bank and Christopher E. Buchholz, effective June 7, 2006 (incorporated
herein by reference to Exhibit 10.2 to the Current Report on Form 8-K filed for
Rockville Financial, Inc. filed on June 13, 2006)10.6
    
    Supplemental Savings and Retirement Plan of Rockville Bank as amended
and restated effective December 31, 2007 (incorporated herein by reference to
Exhibit 10.5 to the Current Report on Form 8-K filed for Rockville Financial, Inc.
filed on December 18, 2007)10.7
    
    Rockville Bank Officer Incentive Compensation Plan (incorporated
herein by reference to Exhibit 10.2.3 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2005 filed on March 31, 2006)10.8
    
    Rockville Bank Supplemental Executive Retirement Agreement for Joseph
F. Jeamel, Jr. (incorporated herein by reference to Exhibit 10.9 to the
Registration Statement filed on Form S-1 filed for Rockville Financial, Inc. filed
on December 17, 2004)10.8.1
    
    First Amendment to the Supplemental Executive Retirement Agreement for Joseph
F. Jeamel, Jr. (incorporated herein by reference to Exhibit 10.7.1 to the Current
Report on Form 8-K filed for Rockville Financial, Inc. filed on December 18, 2007)10.9
    
    Executive Split Dollar Life Insurance Agreement for Joseph F. Jeamel,
Jr. (incorporated herein by reference to Exhibit 10.11 to the Registration
Statement filed on Form S-1 filed for Rockville Financial, Inc. filed on December
17, 2004)10.10
    
    Rockville Bank Supplemental Executive Retirement Plan (incorporated
herein by reference to Exhibit 10.12 to the Registration Statement filed on Form
S-1 filed for Rockville Financial, Inc. filed on December 17, 2004)10.11
    
    Rockville Financial, Inc. 2006 Stock Incentive Award Plan
(incorporated herein by reference to Appendix B in the Definitive Proxy Statement
on Form 14A for Rockville Financial, Inc. filed on July 3, 2006)31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer
filed herewith.31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
filed herewith.32.0
    
    Section 1350 Certification of the Chief Executive Officer and Chief
Financial Officer attached hereto.
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SIGNATURES
  Rockville Financial, Inc.By:
    
    /s/ Gregory A. WhiteGregory A. WhiteSVP, Chief Financial Officer and TreasurerDate: August 11, 2008
 Rockville Financial, Inc.
    
    46