Restructuring the Balance Sheet, Management Lineup Drags Down Rockville Bank's 2Q Numbers

Rockville Financial Inc., the parent company of Rockville Bank, released its earnings results for the second quarter on Tuesday.

The quarter ended on June 30.

Here are some highlights:

• The bank had year-over-year interest income growth of 1.7 percent to $18.9 million due to growth in average loan balances.
 
• Balance sheet restructuring during the second quarter paid down $122.2 million of Federal Home Loan Bank Advances with a weighted average cost of 4.17 percent and substantially liquidated the entire common and preferred stock portfolios.

• The management team had to be ''strengthened''  across a number of lines and responsibilities ''to better position the bank for balance sheet growth'' and to meet ''evolving regulatory requirements.''

• Net income was $43,000 for the three-month period ended June 30 compared to net income of $3.5 million, or 12 cents per diluted share, for the three-month period ended June 30, 2010. 

• Lower net income for the second quarter included securities gains of $6.2 million, or $4.1 million net of taxes, a Federal Home Loan Bank of Boston prepayment penalty of $8.9 million, or $5.9 million net of taxes, and the increase in salary and benefits expenses related to contractual obligations of $1.2 million, or $798,000 net of taxes. Without those factors earnings would have been $2.6 million, or 9 cents per share on a diluted basis.

For the six-month period ended June 30, the bank posted a net loss of $979,000. Net income in 2011 declined $7.3 million as compared to the year-to-date period ended June 30, 2010.

The numbers were dragged down because of the balance sheet restructure, an increase in salary and benefits expense from additions to the bank's management roster and a one-time contribution to the Rockville Bank Charitable Foundation, Inc. of $5.0 million, pre-tax.