April 21, 2005

People's Bank Reports Earnings of $31 Million, or $0.33 Per Share;Raises Dividend 14%

Click here to see our first quarter 2005 Financial Schedules.

BRIDGEPORT, CONN. - People's Bank (NASDAQ: PBCT), an $11 billion financial services company, today announced net income of $31.4 million, or $0.33 per share, for the first quarter of 2005, compared to $119.2 million, or $1.27 per share, for the first quarter of 2004. The year-ago quarter's results included the one-time net gain on sale of People's credit card business, balance sheet restructuring costs and other nonrecurring charges. Excluding such items from the first quarter of 2004, income from continuing operations would have increased 65 percent, from $18.1 million, or $0.19 per share, to $29.8 million, or $0.32 per share, for the first quarter of 2005.

For the first quarter of 2005, return on average assets was 1.17 percent and return on average stockholders' equity was 10.4 percent.

People's Board of Directors voted to increase the quarterly dividend on its common stock by $0.04 per share, or 14 percent, to $0.33 per share. The dividend is payable on May 15, 2005, to shareholders of record on May 1, 2005. In addition, as announced yesterday, the Board of Directors authorized a 3-for-2 stock split effective on May 15, 2005 for shareholders of record as of May 1, 2005. On a split-adjusted basis, the new quarterly dividend rate will be $0.22 per share. People's Mutual Holdings, which owns 54.7 million shares (82.0 million on a split-adjusted basis) of People's Bank common stock, will accept dividends on only 3 percent of its shares. Based on the closing stock price on April 20, 2005, the dividend yield on People's Bank common stock is 3.3 percent.

President and Chief Executive Officer John A. Klein stated, ''We are pleased to reward our shareholders with a 13th consecutive annual dividend increase which, combined with the decision to authorize a stock split, reflects management's positive outlook for People's future.''

Klein continued, ''People's has delivered another quarter of strengthening earnings through a focus on the fundamentals. We generated double-digit loan growth this quarter across our commercial and consumer businesses. Our average commercial banking, home equity and residential mortgage loan portfolios increased a combined $928 million, or 13 percent, since the first quarter of 2004. On the deposit front, we are also pleased by the growth in average core demand deposits, which increased by $152 million, or 8 percent, on a year-over-year basis.''

Klein concluded, ''Investing in our valuable banking franchise in Connecticut, one of the most attractive banking markets in the nation, continues to bear fruit.''

''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 5 basis point improvement in the net interest margin to 3.62 percent from the fourth quarter of last year reflects a combination of the bank's slightly asset-sensitive position and the continued substitution of securities with higher-yielding loans.'' Sherringham continued, ''Expense control continues to be a significant area of focus, as evidenced by a $3.4 million reduction in operating expenses from the year-ago quarter. The combination of reduced expenses and revenue growth led to a significant improvement in our efficiency ratio this quarter.''

Commenting on asset quality, Sherringham added, ''Bankwide asset quality remains strong, with first quarter 2005 net loan charge-offs of $0.8 million, a 61 percent improvement from the first quarter of last year. Annualized net loan charge-offs as a percent of average loans for the first quarter were only 4 basis points.''

Non-performing assets equaled 0.33 percent of total loans, REO and repossessed assets at March 31, 2005 compared to 0.46 percent a year ago. The allowance for loan losses as a percentage of non-performing loans was 280 percent at March 31, 2005, compared to 209 percent at March 31, 2004.

Selected Financial Terms
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 is based on income from continuing operations 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 profitability, 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 the cost required by People's to generate a dollar of revenue, is the ratio of operating expense to operating revenue. Operating 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 non-interest-bearing deposits utilized for the operation of People's businesses. Purchased funds include borrowings, brokered certificates of deposit and municipal deposits.

Conference Call
On April 22, 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.

1Q Financial Highlights
(1Q 2005 compared with 1Q 2004 unless otherwise indicated)

Summary

• Net income totaled $31.4 million, or $0.33 per share.
  
• Provision for loan losses increased $1.4 million.
  
• The allowance for loan losses increased $0.5 million from December 31, 2004.
  
• Net loan charge-offs decreased $1.3 million.
  
• The allowance for loan losses decreased $2.2 million in 1Q04.
  
• Net interest income increased $17.9 million.
  
• Net interest margin increased 59 basis points from 1Q04 and improved 5 basis points from 4Q04 to 3.62%.
  
• Non-interest income, excluding net security losses, declined $2.0 million.
  
• Total fee-based revenues declined $1.5 million.
  
• Net gains on sales of residential mortgage loans decreased $0.4 million.
  
• Non-interest expense, excluding liability restructuring costs of $133.4 million and nonrecurring expenses of $9.3 million in 1Q04, decreased $3.4 million.
  
• Compensation and benefits decreased $1.0 million, after excluding $6.7 million of nonrecurring expenses in 1Q04.
  
• Occupancy and equipment decreased $1.8 million.
  
• Total loans at March 31, 2005 surpassed $8 billion.

Commercial Banking

• Average commercial banking loans grew $486 million, or 16%.
  
• Average commercial non-interest-bearing deposits increased $70 million, or 8%.
  
• The ratio of non-performing commercial banking loans to total commercial banking loans was 0.53% at March 31, 2005 compared to 0.54% at December 31, 2004.
  
• Net loan charge-offs totaled $0.3 million, or 0.03% of average commercial banking loans.

Consumer Financial Services

• Average home equity loan portfolios increased $254 million, or 31%.
• Average residential mortgage loans increased $188 million, or 6%.
• Average consumer non-interest-bearing deposits grew $82 million, or 8%.

Treasury

• Securities and short-term investments totaled $2.1 billion at March 31, 2005, a $682 million decrease from March 31, 2004.
  
• Short-term investments decreased $588 million.
  
• FHLB stock decreased $63 million.
  
• Debt securities decreased $15 million.
  
• Net security losses of $0.1 million in 1Q05 and $4.8 million in 1Q04.

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 67 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.

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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, but are not limited to: (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.