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Rockville Financial, Inc. (“Rockville Financial” or the “Petitioner”), Rockville, Connecticut has petitioned the Board of Bank Incorporation (“Board”) pursuant to Massachusetts General Laws chapter 167A, sections 2 and 4 for approval to acquire United Financial Bancorp, Inc. (“United Financial”), West Springfield, Massachusetts, and its subsidiary bank, United Bank, West Springfield, Massachusetts. The Petitioner is the bank holding company for Rockville Bank, Rockville, Connecticut. The Petitioner’s application before the Board is part of a multi-step transaction in which United Financial will merge with and into the Petitioner. Rockville Financial will amend its certificate of incorporation at the effective time of the merger to reflect that the continuing corporation will change its name to United Financial Bancorp, Inc. The subsequent merger of the subsidiary banks, resulting in United Bank merging with and into Rockville Bank, will not require the approval of either the Board or the Division of Banks (“Division”).
Notice of the application was published and posted as directed by the Board, thereby affording opportunity for interested parties to submit comments. Other standard procedures informing the public of this matter before the Board were implemented. The Board held a public hearing on the petition of Rockville Financial on February 11, 2014. Representatives of both the Petitioner and United Financial offered testimony at the public hearing and responded to questions from members of the Board. The comment period on the proposed transaction remained open until February 20, 2014 to permit interested parties to submit any additional comments.
Rockville Financial is a financial holding company headquartered in Rockville, Connecticut. Rockville Financial’s core business, which it conducts through the operations of Rockville Bank and Rockville Bank’s subsidiaries, is providing consumer banking and commercial lending services. Rockville Bank maintains a branch network of nineteen branch offices located in fourteen Connecticut communities. As of September 30, 2013, Rockville Financial had total consolidated assets of approximately $2 billion.
United Financial is a Maryland corporation headquartered in West Springfield, Massachusetts. The current corporate structure of United Financial consists of ownership of United Bank and United Bank’s subsidiaries. United Bank maintains branch offices in seventeen Massachusetts communities located in Hampden, Hampshire, and Worcester counties. United Bank also maintains branch offices located in ten Connecticut communities. United Bank and Rockville Bank currently both maintain branch offices in the following Connecticut municipalities: Ellington; Enfield; Manchester; and Suffield. As of September 30, 2013, United Financial’s total consolidated assets were $2.4 billion.
Prior to approving an application under Massachusetts General Laws chapter 167A, the Board must have received notice from the Massachusetts Housing Partnership Fund (“MHPF”) that satisfactory arrangements have been made by the Petitioner consistent with statute and the MHPF's various affordable housing loan programs. The Board received notice from the MHPF that arrangements satisfactory to it had been made for this transaction in a letter dated February 19, 2014.
The Board’s review focused on the statutory and administrative criteria applicable to such transactions which include, among other things, whether competition among banking institutions will be unreasonably affected; whether public convenience and advantage would be promoted; and the record of performance under the Community Reinvestment Act ("CRA") by the subsidiary banks of the holding companies. In determining whether the public convenience and advantage are promoted by the transaction, the Board considers, among other things, whether there has been a showing of “net new benefits.” Net new benefits are defined as initial capital investments, job creation plans, consumer and business services, commitment to maintain and open branch offices within a bank’s delineated local community, and such other matters as the Board may deem necessary or advisable. The Board also considers any relevant testimony received at the public hearing or submitted during the public comment period.
The Petitioner has submitted information to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. It is the position of this Board to consider a transaction in light of its impact upon citizens, communities, and banking structure in the Commonwealth on a community by community basis. The Board notes that there are four communities in Connecticut in which Rockville Bank and United Bank both maintain branch offices. There are no communities in Massachusetts in which the two banks both maintain branch offices. The Board is satisfied that consumers in the impacted communities will continue to have access to competitive products and services offered by a number of diverse financial institutions in the banking market served by the continuing institution.
The Board has considered whether public convenience and advantage will be promoted by the proposed transaction. The Petitioner states that the enhanced financial strength of the combined banks will ensure that the resulting institution will be able to offer financial products and services at competitive rates. The proposed transaction will permit United Financial and Rockville Financial to pool their financial resources, to reduce costs, to diversify risk, and to better serve their communities by offering a broader array of products and services to consumers and businesses. The continuing bank will offer all of the products and services currently offered by Rockville Bank and a limited number of additional accounts currently offered by United Bank.
The merger is expected to produce a larger and more diversified financial institution that is both better equipped to respond to economic and industry developments and better positioned to develop and to build upon its respective market positions in the Massachusetts and Connecticut service areas. The merger is also expected to enhance the complementary aspects of Rockville Bank’s and United Bank’s business activities, including customer focus, geographic coverage, business orientation, compatibility of corporate culture, management, and operating styles, all of which is expected to effectuate cost savings and revenue efficiencies.
The Board has considered the Petitioner's analysis of “net new benefits” related to the transaction with respect to the statutory criteria. The term includes initial capital investments, job creation plans, consumer and business services, and commitments to maintain and open branch offices, among other factors. Testimony by the Petitioner, and responses provided to questions presented by the Board, indicated that following the closing of the Merger, the combined institution will have approximately $4.4 billion in combined assets with a branch office network spanning across Central and Western Massachusetts and into Connecticut. Accordingly, customers of both banks will be able to conduct their banking business at a greater number of locations over a much larger geographic area.
The continuing institution represents that it has no plans to close any Massachusetts branches in connection with the merger. The continuing institution will apply to the Connecticut Department of Banking and the Federal Deposit Insurance Corporation shortly after the consummation of this transaction to close branches located in Ellington, Enfield, Manchester, and Suffield, Connecticut.
The Petitioner disclosed in its application that there would be a reduction of approximately 17 employee positions due to these branch closings. Testimony of the Petitioner at the public hearing in response to questions by the Board indicated that additional, non-branch positions would be eliminated to reduce merger-related redundancies. The Petitioner represented that the greater financial resources of the continuing institution are anticipated to permit the development of innovative products and services for consumers in the future and to produce a more competitive institution capable of expansion in both the Massachusetts and Connecticut markets. The Petitioner also projects that the continuing institution will benefit from the geographic diversification to be achieved through the proposed transaction.
The financial aspects of any transaction are a significant consideration of the Board as they may affect the continuing holding company's ability to serve the banking public and to actively compete with other financial institutions as well as to maintain its capital ratio standards for a safe and sound institution. The acquisition of the holding company will be accomplished by the merger of the two holding companies in a transaction whereby United Financial’s stockholders will have the right to receive 1.3472 shares (the exchange ratio) of common stock, no par value per share, of Rockville Financial common stock for each share of common stock, par value $0.01 per share, of United Financial common stock. Upon consummation of the transaction, the resulting institution will remain a well capitalized holding company under applicable bank regulatory guidelines. The Board of Directors after the merger will consist of an equal number of former members of the board of directors of Rockville Financial and of former members of the board of directors of United Financial. The Merger agreement provides that the current President and Chief Executive Officer of Rockville Financial will serve as Chief Executive Officer of the continuing corporation and the continuing bank, and the current Executive Vice President and Chief Operating Officer of United Financial will serve as President of the continuing corporation and the continuing bank. Management factors reviewed were found supportive of approval.
The Board’s review of this transaction includes an assessment of the subsidiary banks’ performance under the CRA. Such review included an examination by the Board of publicly available descriptive ratings and evaluations by federal and state bank regulatory agencies. The Board has noted that the Petitioner’s subsidiary bank, Rockville Bank, received a “Satisfactory” rating in its most recent examination of performance under CRA by the FDIC in August 2010. United Bank received a “Satisfactory” rating at its most recent CRA examination conducted by the Office of the Comptroller of the Currency in January 2012.
The application, supporting documents, as well as the testimony received at the public hearing have established a comprehensive record on this petition, which has been reviewed consistent with statutory provisions and the policies of the Board. Based on the record of this matter considered in light of all relevant statutory and administrative requirements, the Board finds that public convenience and advantage will be promoted and that competition among banking institutions will not be unreasonably affected and that the record of performance under CRA by the subsidiary banks involved in this transaction are consistent with its approval. Having considered the record established on this application, the Board has found that the applicable statutory and administrative criteria have been met.
In accordance with the findings expressed herein and pursuant to statute, the Board hereby approves the petition and authorizes Rockville Financial, Inc. to acquire United Financial Bancorp, Inc. and its subsidiary bank, United Bank. The approval granted herein is subject to the condition that all related transactions are completed within one year of the date of this Decision.
David J. Cotney
Commissioner of Banks
Treasurer and Receiver-General
Commissioner of Revenue