January 15, 2004

People's Bank Reports Fourth Quarter Earnings Of $17 Million, Or $0.28 per Share;Full-Year Earnings Up 14 Percent From 2002

PBCT Total Return for 2003 Tops 35 Percent

Click here to see our fourth quarter 2003 Financial Schedules.

BRIDGEPORT, CONN. - People's Bank (NASDAQ: PBCT), a $12 billion financial services company, today announced net income of $17.4 million, or $0.28 per share, for the fourth quarter of 2003, compared to $17.1 million, or $0.28 per share, for the fourth quarter of 2002. For the twelve months ended Dec. 31, 2003, net income totaled $63.8 million, or $1.03 per share, compared to $55.4 million, or $0.90 per share, for the year-ago period, a 14 percent increase.

People's Board of Directors declared a $0.39 per share quarterly dividend on People's common stock, payable Feb. 15, 2004, to stockholders of record on Feb. 1, 2004. People's Mutual Holdings, which owns 36.5 million shares of People's Bank common stock, will accept dividends on only 3 percent of its shares. Based on the closing stock price on Jan. 14, 2004, the dividend yield on People's common stock is 4.6 percent. Dividends paid in 2003 totaled $1.53 per share, an 8 percent increase compared to 2002.

''The year 2003 was rewarding for our shareholders, as People's common stock generated a total return for the year of 35 percent,'' said John A. Klein, president and chief executive officer.

''We are pleased to close out 2003 with our strongest quarter of the year, with fourth quarter earnings up 17 percent from the third quarter and full year earnings up 14 percent over 2002,'' said Klein. ''We generated strong growth across our lending businesses and in core deposits, while reporting continued progress in our Credit Card Services business.''

Average managed loans increased $748 million, or 9 percent, compared to the fourth quarter of 2002. The loan growth reflects increases of $334 million, or 17 percent, in managed credit card receivables, $217 million, or 8 percent, in residential mortgage, $196 million, or 7 percent, in commercial banking, and $128 million, or 20 percent, in home equity lending. People's record level of residential mortgage originations surpassed $3 billion for the full year, further demonstrating the strength of People's Connecticut franchise.

People's grew average consumer checking balances $126 million, or 14 percent, and average commercial checking balances $79 million, or 9 percent, both compared to the fourth quarter of 2002. Additionally, combined average savings, money market and interest-bearing checking increased $458 million, or 13 percent, on a year-over-year basis.

Klein continued, ''The Credit Card Services business reported a second consecutive profitable quarter, characterized by 17 percent year-over-year growth in average managed credit card receivables and continued improvement in asset quality.'' Managed credit card net charge-offs improved by $8.5 million compared to the fourth quarter of 2002 and the net charge-off rate declined by 250 basis points to 4.42 percent for the fourth quarter of 2003. Managed credit card delinquencies showed similar results with a decrease of $26.8 million on a year-over-year basis and an improvement in the delinquency rate of 170 basis points to 2.75 percent at Dec. 31, 2003.

''Other key drivers of the bank's performance for the quarter were an increase in the net interest margin for the first time since the third quarter of 2001 and continued expense control,'' said Philip R. Sherringham, executive vice president and chief financial officer. ''Our managed net interest margin increased 17 basis points from the third quarter level of 3.24 percent, leading to a $5 million increase in managed net interest income. On the expense front, total non-interest expense was flat compared to the third quarter and reduced by $8.3 million or 7 percent compared to the fourth quarter of 2002.''

Commenting on asset quality, Sherringham said, ''Bankwide asset quality was strong, with fourth quarter net loan charge-offs of $11.1 million, a 31 percent improvement from the fourth quarter of 2002. Annualized net charge-offs as a percent of average loans for the quarter were 0.54 percent, compared to 0.87 percent a year ago. Non-performing assets for the owned portfolio equaled 0.50 percent of total loans and REO at year-end.

''With respect to balance sheet management, the combined average securities and short-term investments portfolio was $751 million lower than fourth quarter of 2002 levels, essentially offsetting the $748 million growth in managed loans discussed above,'' added Sherringham. ''The securities portfolio was reduced earlier in the year in response to historically low levels of interest rates. While 2003 earnings were reduced, we believe the bank is better positioned for longer-term earnings growth in a rising interest rate environment.''

Selected Financial Terms
In addition to presenting financial information in accordance with generally accepted accounting principles (''GAAP''), certain non-GAAP information is also presented. Items presented on a ''managed'' basis are one such example. Managed basis results include information relating to People's off-balance-sheet credit card securitization activities. This presentation is consistent with the manner in which management conducts operations and measures People's business performance;it also presents more complete information about the assets, revenues and expenses attributed to the Credit Card Services division. Financial information presented on a managed basis includes off-balance-sheet securitized and sold credit card receivables, and the related securities sold to third-party investors. Please refer to the page headed ''Impact of Credit Card Securitizations'' in the accompanying materials for more information.

Other non-GAAP measures are core deposits and purchased funds. Core deposits, a measure of stable funding sources, equal total deposits, other than brokered certificates of deposit (acquired in the wholesale market) and municipal deposits (which are seasonally variable by nature). Purchased funds include borrowings, brokered certificates of deposit and municipal deposits.

Finally, this release includes information about People's operating revenue (a non-GAAP measure) and its efficiency ratio, which is derived in part from operating revenue. Operating revenue consists of the sum of net interest income and total non-interest income reduced by gains and losses other than from the sale of residential mortgage loans. Management considers this measure to be more representative of People's ongoing ability to generate revenues, as the excluded items are generally related to external market conditions and non-routine transactions. The efficiency ratio, which represents an approximate measure of how much it costs People's to generate a dollar of revenue, is the ratio of total adjusted non-interest expense to operating revenue. Total adjusted non-interest expense equals People's total non-interest expense, excluding amortization of acquisition-related intangibles and losses on real estate assets. In calculating the efficiency ratio on a managed basis, credit losses reflected in credit card securitization income are excluded from operating revenue.

Conference Call
On Jan. 16, 2004, at 11 a.m., Eastern Time, People's will host a conference call to discuss this earnings announcement. The call may be heard through www.peoples.com by selecting Investor Relations, News and Events, Conference Calls. Additional materials relating to the call may also be accessed at People's Web site. The call will be archived on the Web site and available for approximately 90 days.

4Q Financial Highlights (4Q 2003 compared with 4Q 2002 unless otherwise indicated)

Summary

• Net income totaled $17.4 million, or $0.28 per share.
• Provision for loan losses decreased $4.4 million.
• Managed net interest income decreased $14.8 million.

• Managed net interest margin improved 17 basis points from 3Q03 and decreased 49 basis points from 4Q02 to 3.41%.

• Non-interest income decreased $6.2 million.

• Credit card fees increased $1.8 million.
• Net gains on sales of residential mortgage loans decreased $1.9 million.
• Credit card securitization income declined $4.7 million.

• Non-interest expense declined $8.3 million.

• Compensation and benefits decreased $3.7 million.
• Advertising and promotion expense decreased $4.2 million.

• Average managed loans increased $748 million, or 9%.
• Average total core deposits increased $415 million, or 5%.

Commercial Banking

• Average commercial banking loans grew $196 million, or 7%.
• Average commercial non-interest-bearing deposits increased $79 million, or 9%.
• The ratio of non-performing loans to total loans was 0.66% at Dec. 31, 2003 compared to 0.74% at Sept. 30, 2003.

• Non-performing assets decreased $1.5 million, or 7%, from Sept. 30, 2003.

• Net loan charge-offs as a percentage of average loans equaled 0.15% (annualized).

Consumer Financial Services

• Average residential mortgage loans increased $217 million, or 8%.

• Adjustable-rate mortgages purchased during the first quarter of 2003 contributed $159 million to the increase.

• Average consumer non-interest-bearing deposits grew $126 million, or 14%.
• Supermarket branch deposits totaled $1.8 billion at year-end, averaging $28 million per branch.
• Residential mortgage originations surpassed $3 billion for the full year of 2003.

Credit Card Services

• Average managed loans for Credit Card Services increased $348 million, or 12%.
• Managed credit card receivables at Dec. 31, 2003 totaled $2.3 billion, a decrease of $65 million, or 3%, from Sept. 30, 2003.
• The yield on average managed credit card receivables was 7.43% for 4Q03, compared to 7.22% for 3Q03 and 10.55% for 4Q02.
• Net charge-offs (annualized as a percentage of average managed loans) for Credit Card Services were 3.47%, compared to 3.79% for 3Q03 and 5.26% for 4Q02.
• Net charge-offs totaled $29 million in 4Q03, $31 million in 3Q03 and $39 million in 4Q02.
• Credit Card Services' delinquencies as a percentage of quarter-end managed loans were 2.18%, compared to 2.15% for 3Q03 and 3.41% for 4Q02.

Capital Markets

• Securities and short-term investments totaled $2.6 billion at Dec. 31, 2003, a $185 million decrease from Sept. 30, 2003.
• Debt securities decreased $148 million.
• Exchange Traded Funds totaling $45 million were sold during the quarter.

People's Bank is a diversified financial services company providing consumer, commercial, insurance and financial advisory services. The bank is a leader in supermarket banking, with 64 of its 154 branches located in Super Stop & Shop stores. Through its subsidiaries, People's provides brokerage and financial advisory services, asset management, equipment leasing and financing, and insurance services. Nationally, People's is the 20th-largest issuer of MasterCard and Visa credit cards.

Certain statements contained in this release are forward-looking in nature. These include all statements about our plans, objectives, expectations and other statements that are not historical facts, and usually use words such as ''expect,'' ''anticipate,'' ''believe'' and similar expressions. Such statements represent management's current beliefs, based upon information available at the time the statements are made, with regard to the matters addressed. All forward-looking statements are subject to risks and uncertainties that could cause People's actual results or financial condition to differ materially from those expressed in or implied by such statements. Factors of particular importance to People's include (1) changes in general economic conditions, including interest rates;(2) potential improvements or deterioration in credit quality;(3) competition among providers of financial services;(4) residential mortgage and secondary market activity;(5) price levels and conditions in the public securities markets generally;and (6) changes in regulatory guidance applicable to banks. People's does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.