October 20, 2005

People's Bank Third Quarter Earnings Increased 22 Percent To $34 Million Or $0.24 Per Share

Click hereto see our third quarter 2005 Financial Schedules.

BRIDGEPORT, CONN. - People's Bank (NASDAQ: PBCT), an $11 billion financial services company, today announced net income increased 22 percent to $33.5 million, or $0.24 per share, for the third quarter of 2005, compared to $27.5 million, or $0.19 per share, for the third quarter of 2004. Income from continuing operations increased 38 percent to $32.4 million, or $0.23 per share, from $23.5 million, or $0.16 per share, for the year-ago quarter. Prior period per share information has been restated to reflect the three-for-two stock split completed in May 2005.

For the third quarter of 2005, return on average assets was 1.24 percent and return on average stockholders' equity was 10.7 percent, compared to 1.04 percent and 9.5 percent, respectively, for the year-ago quarter.

People's Board of Directors declared a $0.22 per share quarterly dividend on People's common stock, payable November 15, 2005, to shareholders of record on November 1, 2005. People's Mutual Holdings, which owns 82.0 million shares of People's Bank common stock, will accept dividends on only 2.5 percent of its shares. Based on the closing stock price on October 19, 2005, the dividend yield on People's Bank common stock is 2.7 percent.

"People's delivered another quarter of significant earnings improvement through our continuing focus on the fundamentals, including strong growth in our core lending businesses, the ongoing investment in our banking franchise and further improvement in the net interest margin," stated President and Chief Executive Officer, John A. Klein.

"We continue to generate healthy loan growth across our commercial and consumer businesses," said Klein. "Our average commercial banking, home equity and residential mortgage loan portfolios increased a combined $912 million, or 12 percent, since the third quarter of 2004."

Klein concluded, "The continued growth of our Stop & Shop franchise in Connecticut;the opening of our first loan production office in Massachusetts;the expansion of our wholesale mortgage origination efforts in Westchester County, New York;and the continued growth of the geographic reach of People's Capital and Leasing Corp., our equipment financing subsidiary, now doing business in 45 states, afford us the opportunity to further broaden our retail and commercial customer base."

"Other key drivers of the bank's performance this quarter were another increase in the net interest margin and continuing strong asset quality," said Philip R. Sherringham, Executive Vice President and Chief Financial Officer. "The 23 basis point improvement in the net interest margin from the third quarter of last year reflects a combination of the bank's asset-sensitive position and the ongoing substitution of securities with higher-yielding loans."

Commenting on asset quality, Sherringham added, "Net loan charge-offs totaled $1.1 million for the third quarter of 2005, a 52 percent improvement from the third quarter of last year. Annualized net loan charge-offs as a percent of average loans were only 5 basis points, compared to 12 basis points in the year-ago quarter."

At September 30, 2005, non-performing assets totaled $20.1 million, a $14.3 million, or 42 percent, decrease from September 30, 2004 and equaled 0.24 percent of total loans, REO and repossessed assets, compared to 0.45 percent a year ago. The allowance for loan losses as a percentage of non-performing loans was 380 percent at September 30, 2005, compared to 225 percent at September 30, 2004. The allowance for loan losses as a percentage of total loans was 0.87 percent at September 30, 2005, compared to 0.99 percent a year ago.

Sherringham continued, "Our efficiency ratio was 62.5 percent in the third quarter of 2005, compared to 66.7 percent in the third quarter of 2004 and 63.3 percent last quarter. The 420 basis point improvement from the year-ago quarter reflects a significant increase in revenue, including an 8 percent increase in net interest income and a 14 percent increase in non-interest income."

Other News Highlights

• On October 5, 2005, Moody's Investors Service announced an upgrade on all of its ratings of People's and a stable outlook.
• On August 16, 2005, Fitch Ratings upgraded its individual rating of People's.
• On July 21, 2005, Standard & Poor's Rating Services announced that it had revised its outlook to positive from stable on People's ratings.

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 goodwill impairment, amortization of acquisition-related intangibles, losses on real estate assets, and nonrecurring expenses. People's considers an expense to be "nonrecurring" if it is not similar to an expense of a type incurred within the last two years, and is not similar to an expense of a type reasonably expected to be incurred within the following two years.

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 October 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.comby selecting "Investor Relations" in the "About People's" section on the home page, and then selecting "Conference Calls" in the "News and Events" section. 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.

3Q Financial Highlights (3Q 2005 compared with 3Q 2004 unless otherwise indicated)

Summary

• Net income totaled $33.5 million, or $0.24 per share.
• Income from continuing operations increased $8.9 million.
• Net interest income increased $6.8 million.
• Net interest margin increased 23 basis points from 3Q04 and improved 4 basis points from 2Q05 to 3.70%.
• Provision for loan losses decreased $3.2 million.
• Net loan charge-offs decreased $1.2 million.
• The allowance for loan losses was increased $2.0 million in 3Q04.
• Non-interest income increased $5.4 million, or 14%.
• Total fee-based revenues increased $4.6 million.
• Net gains on sales of residential mortgages increased $0.8 million.
• Included in 3Q05 is $1.6 million of earnings related to the bank's investment in bank-owned life insurance, while 3Q04 included $1.8 million of credit card-related servicing income.
• Non-interest expense increased $2.0 million, or 2%.
• Compensation and benefits increased $3.2 million.
• Occupancy and equipment decreased $2.2 million.

Commercial Banking

• Average commercial banking loans grew $409 million, or 13%.
• Average commercial non-interest-bearing deposits increased $30 million, or 3%.
• The ratio of non-performing commercial banking loans to total commercial banking loans was 0.39% at September 30, 2005, compared to 0.54% at December 31, 2004.
• Net loan charge-offs were 0.05% of average commercial banking loans.

Consumer Financial Services

• Average home equity loan portfolios increased $225 million, or 24%.
• Average residential mortgage loans increased $277 million, or 9%.
• Average consumer non-interest-bearing deposits grew $44 million, or 4%.

Treasury

• Average securities and short-term investments declined $750 million, or 31%.
• Securities made up 16% of average earning assets compared to 24% in 3Q04.
• The debt securities portfolio totaled $1.4 billion at September 30, 2005, a $721 million, or 33%, decrease from a year ago.

People's Bank is a diversified financial services company providing consumer and commercial banking services, in addition to insurance, trust and financial advisory services. The bank is a leader in supermarket banking, with 68 of its 152 branches located in Super Stop & Shop stores. Through its subsidiaries, People's provides brokerage and financial advisory services, asset management, equipment financing, and insurance services.

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.