January 20, 2005

PEOPLE'S BANK REPORTS 4Q EARNINGS INCREASED 61% to $28 MILLION or $0.30 PER SHARE

PBCT Total Return for 2004 Tops 86%

Click here to see our fourth quarter 2004 Financial Schedules.

BRIDGEPORT, CONN. - People's Bank (NASDAQ: PBCT), an $11 billion financial services company, today announced net income of $28.0 million, or $0.30 per share, for the fourth quarter of 2004, compared to $17.4 million, or $0.19 per share, for the fourth quarter of 2003. For the year ended December 31, 2004, net income totaled $199.7 million, or $2.13 per share, compared to $63.8 million, or $0.69 per share, for the prior year. Prior period per share information has been restated to reflect the three-for-two stock split completed in May 2004.

For the fourth quarter of 2004, return on average assets (ROA) was 1.06 percent compared to 0.60 percent for the year-ago quarter and return on average stockholders' equity (ROE) was 9.4 percent compared to 7.1 percent for the year-ago quarter. For 2004, ROA was 1.86 percent and ROE was 17.6 percent, compared to 0.54 percent and 6.6 percent, respectively, for 2003.

People's Board of Directors declared a $0.29 per share quarterly dividend on People's common stock, payable Feb. 15, 2005, to stockholders of record on Feb. 1, 2005. People's Mutual Holdings, which owns 54.7 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. 19, 2005, the dividend yield on People's Bank common stock is 3.1 percent.

''2004 was a transformational year for People's Bank and a very rewarding one for our shareholders,'' said John A. Klein, president and chief executive officer. ''We continue to build momentum with strong growth in our core commercial and consumer banking businesses. Combined with the sale of our credit card business and balance sheet restructuring earlier in the year, we generated record full-year results. In addition, People's common stock generated a total return for the year of 86 percent.''

''We continue to generate solid loan growth across our lending businesses. Our average commercial banking, home equity and residential mortgage loan portfolios increased a combined $808 million, or 12 percent, since the fourth quarter of 2003,'' added Klein. ''The home equity loan portfolios surpassed the $1 billion milestone during the fourth quarter. Commercial Banking ended the year with over $3.5 billion in outstandings, a 16-percent increase from year-end 2003. In the fourth quarter, Commercial Banking loans grew $210 million, or 25 percent on an annualized basis.'' Klein continued, ''On the deposit front, we are also pleased by the growth in average core demand deposits, which increased by $163 million, or 8 percent on a year-over-year basis.''

Klein stated, ''These results continue to demonstrate the significant value of the bank's franchise in Connecticut, one of the most attractive banking markets in the nation. People's is the only major bank in the state that is uniquely focused on Connecticut's consumers and businesses.''

''Other key drivers of the bank's performance this quarter were an increase in the net interest margin and continued expense control,'' said Philip R. Sherringham, executive vice president and chief financial officer. ''The 10 basis point improvement in the net interest margin to 3.57 percent from last quarter reflects a combination of the bank's slightly asset sensitive position and the continued displacement of securities with higher-yielding loans.'' Sherringham continued, ''Expense control continues to be a significant area of focus, as evidenced by the fact that non-interest expenses have remained essentially flat over the past three quarters.''

Commenting on asset quality, Sherringham added, ''Bankwide asset quality remains strong. Fourth quarter net loan charge-offs totaled $4.5 million, or 0.23 percent of average loans on an annualized basis, compared to $4.0 million and 0.23 percent, respectively, in the fourth quarter of last year.'' Non-performing assets equaled 0.36 percent of total loans, REO and other assets at Dec. 31, 2004 compared to 0.48 percent a year ago. The allowance for loan losses as a percentage of non-performing loans was 265 percent at Dec. 31, 2004, compared to 208 percent at Dec. 31, 2003.

''Given the continued decline in the national personal installment loan portfolio, which decreased 67 percent since Dec. 31, 2003, as well as significant reductions in this portfolio's net charge-off rate, we reduced the allowance for loan losses by $2.5 million this quarter,'' stated Sherringham. The allowance for loan losses as a percent of total loans was 0.91 percent at Dec. 31, 2004 compared to 0.99 percent at Sept. 30, 2004.

Selected Financial Terms
Due to the sale of the credit card business in the first quarter of 2004, information related to that business for all periods presented is now reported in discontinued operations.

In addition to presenting financial information in accordance with generally accepted accounting principles (''GAAP''), certain non-GAAP information is also presented, such as operating revenue and the efficiency ratio. 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 and excluding other items that may recur from time to time but that are deemed to occur irregularly or infrequently. 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 is derived in part from operating revenue and 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, losses on real estate assets and other items that may recur from time to time but that are deemed to occur irregularly or infrequently.

This release contains information about People's core deposits and purchased funds (both non-GAAP measures). Core deposits, a measure of stable funding sources, equal total deposits, other than brokered certificates of deposit (acquired in the wholesale market), municipal deposits (which are seasonally variable by nature) and certain other non-interest-bearing deposits. Purchased funds include borrowings, brokered certificates of deposit and municipal deposits.

Conference Call
On Jan. 21, 2005, 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.

Other News Highlights
The American Banker, the daily newspaper of record for the banking industry, reported that People's Bank was the top market performer in terms of stock price appreciation among regional banks in the nation in 2004 with its shares rising almost 80 percent for the year. The American Banker reported that shares of banks and thrift companies with assets of between $10 billion and $25 billion rose an average of 18 percent.

4Q Financial Highlights (4Q 2004 compared with 4Q 2003 unless otherwise indicated)

Summary

•  Net income totaled $28.0 million, or $0.30 per share.
• Income from continuing operations increased $12.8 million after-tax.
• Provision for loan losses decreased $2.0 million.
• The allowance for loan losses decreased $2.5 million from September 30, 2004.
• Net loan charge-offs increased $0.5 million from 4Q03 and included a $3.2 million charge-off related to one commercial real estate loan that had been classified as non-performing since the fourth quarter of 2002.
• Net interest income increased $16.0 million.
• Net interest margin improved 10 basis points from 3Q04 and increased 56 basis points from 4Q03 to 3.57%.
• Non-interest income decreased $1.0 million.
• Net gains on sales of residential mortgage loans decreased $0.7 million.
• Net security gains of $0.5 million in 4Q03 (none in 4Q04).
• Non-interest expense decreased $3.0 million.
• Compensation and benefits decreased $1.2 million.
• Occupancy and equipment decreased $2.5 million.
• Professional and outside service fees increased $1.2 million and includes $0.6 million of costs related to Sarbanes-Oxley compliance.
• Average total loans increased $699 million, or 10%.

Commercial Banking

• Average commercial banking loans grew $400 million, or 13%.
• Average commercial non-interest-bearing deposits increased $80 million, or 9%.
• The ratio of non-performing commercial banking loans to total commercial banking loans was 0.54% at December 31, 2004 compared to 0.76% at Sept. 30, 2004.
• Non-performing loans decreased $6.2 million, or 25%, from Sept. 30, 2004.
• Net loan charge-offs totaled $3.9 million or 0.46% of average commercial banking loans.
• Excluding the $3.2 million charge-off, the net loan charge-off ratio would have been 0.08%.

Consumer Financial Services

• Average home equity loan portfolios surpassed $1.0 billion this quarter and increased $254 million, or 33%.
• Average residential mortgage loans increased $154 million, or 5%.
• Average consumer non-interest-bearing deposits grew $82 million, or 8%.
  

Treasury

• Securities and short-term investments totaled $2.1 billion at December 31, 2004, a $382 million decrease from December 31, 2003.
• Debt securities decreased $233 million.
• Other equity securities decreased $95 million.
• Short-term investments decreased $48 million.

People's Bank is a diversified financial services company providing consumer and commercial banking services, in addition to insurance and financial advisory services. The bank is a leader in supermarket banking, with 66 of its 155 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.

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Certain statements contained in this release are forward-looking in nature. These include all statements about People's 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) changes in accounting and regulatory guidance applicable to banks;and (6) price levels and conditions in the public securities markets generally. 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.

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