JULY 20, 2006

PEOPLE'S BANK REPORTS SECOND QUARTER EARNINGS
OF $33 MILLION OR $0.23 PER SHARE
Income from Continuing Operations Increases 10 Percent

Click here to see the second quarter Financial Schedule.

BRIDGEPORT, CONN. –People's Bank (NASDAQ: PBCT), an $11 billion financial services company, today announced net income of $32.9 million, or $0.23 per share, for the second quarter of 2006, compared to $37.0 million, or $0.26 per share, for the second quarter of 2005. The current quarter's results include a previously-disclosed $4.0 million pre-tax loss from the sale of securities, while the 2005 quarter's results include pre-tax income of $9.7 million from the resolution of a significant contingency related to the sale of People's credit card portfolio (reported in income from discontinued operations) and a $2.0 million goodwill impairment charge.

Income from continuing operations for the second quarter of 2006 increased 10 percent to $32.2 million, or $0.23 per share, from $29.4 million, or $0.21 per share, for the year-ago quarter. Income from continuing operations excluding security losses and the goodwill impairment charge would have been $34.8 million, or $0.25 per share, compared to $31.4 million, or $0.22 per share, for the year-ago period, a 14 percent increase.

For the second quarter of 2006, return on average assets was 1.20 percent and return on average stockholders' equity was 10.1 percent, compared to 1.36 percent and 12.0 percent, respectively, for the year-ago quarter. Return on average assets would have been 1.30 percent for the second quarter of 2006 excluding the loss on sale of securities.

People's Board of Directors declared a $0.25 per share quarterly dividend on People's common stock, payable August 15, 2006, to shareholders of record on August 1, 2006. People's Mutual Holdings, which owns 82.0 million shares of People's Bank common stock, will accept dividends on only 2.2 percent of its shares. Based on the closing stock price on July 19, 2006, the dividend yield on People's Bank common stock is 3.0 percent.

President and Chief Executive Officer John A. Klein stated, "Our results for the second quarter demonstrate our continuing earnings momentum. The consecutive double digit quarterly improvement in earnings from continuing operations in 2006, when compared to the corresponding 2005 quarters, highlights the strength of the bank's franchise."

Klein added, "We continue to generate significant loan growth across our commercial and consumer businesses. For example, our average commercial banking loan portfolio increased $105 million, or 11 percent annualized, from the first quarter of 2006."

Klein concluded, "As reported in a recent regulatory filing, we received approval from the Office of Thrift Supervision regarding our plans to convert to a federal savings bank charter. We are optimistic that all necessary regulatory approvals will be received in time to complete the charter conversion prior to the end of the third quarter. A special meeting of People's Bank shareholders to vote on approving the charter conversion is scheduled for August 15, 2006. And regarding our announced expansion plans into Westchester County, New York, we are on track to have 7 branches opened by the end of 2007."

"Key drivers of the bank's performance this quarter were another increase in the net interest margin and ongoing strong asset quality,"said Philip R. Sherringham, Executive Vice President and Chief Financial Officer. "The year-over-year 16 basis point improvement in the net interest margin reflects the bank's asset-sensitive position, the ongoing substitution of securities with higher-yielding loans and a partial benefit from the sale of securities during the second quarter. Average loans increased $714 million, or 9 percent, year-over-year, while average securities declined $838 million, or 44 percent."

Commenting on asset quality, Sherringham added, "Second quarter net loan charge-offs totaled $0.2 million, or 0.01 percent of average loans on an annualized basis, compared to $0.9 million, or 0.04 percent, respectively, in the second quarter of last year."

At June 30, 2006, non-performing assets totaled $28.1 million, a $3.8 million, or 16 percent, increase from March 31, 2006. One commercial loan totaling $4.9 million was classified as non-performing in the second quarter of 2006. Non-performing assets equaled 0.31 percent of total loans, REO and repossessed assets, compared to 0.29 percent at June 30, 2005. The allowance for loan losses as a percentage of non-performing loans was 267 percent at June 30, 2006, compared to 312 percent at June 30, 2005. The allowance for loan losses as a percentage of total loans was 0.82 percent at June 30, 2006, compared to 0.88 percent a year ago.

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 generally 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 and municipal deposits.

Conference Call
On July 21, 2006, 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"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.

2Q Financial Highlights(2Q 2006 compared with 2Q 2005 unless otherwise indicated)

Summary

• Net income totaled $32.9 million, or $0.23 per share.
• Income from continuing operations increased $2.8 million, or 10%.
• Net interest income increased $3.4 million, or 4%.
• Net interest margin increased 16 basis points from 2Q05 and improved 5 basis points
  from 1Q06 to 3.82%.
• 2Q06 margin negatively affected by 2 basis points due to the Federal Home Loan Bank of Boston changing the timing on declaring dividends on its stock.
• Provision for loan losses decreased $0.7 million.
• Net loan charge-offs decreased $0.7 million.
• Non-interest income, excluding net security gains and losses, increased $4.3 million, or 11%.
• Included in 2Q06 is $2.2 million ($3.4 million on a taxable-equivalent basis) related to the bank's investment in bank-owned life insurance.
• Other non-interest income in 2Q06 included $0.7 million from the redemption of MasterCard Incorporated Class B Common Stock.
• Non-interest expense, excluding the goodwill impairment charge from 2Q05, increased
  $2.6 million, or 3%.

Commercial Banking

• Average commercial banking loans grew $263 million, or 7%.
• Average commercial non-interest-bearing deposits totaled $948 million.
• The ratio of non-performing commercial banking loans to total commercial banking loans
  was 0.55% at June 30, 2006, compared to 0.42% at June 30, 2005.
• Non-performing loans increased $6.4 million, or 42%, from June 30, 2005.
• Net loan recoveries totaled $0.2 million, or 0.03% of average commercial banking loans.

Consumer Financial Services

• Average residential mortgage loans increased $356 million, or 10%.
• People's purchased $170 million of residential mortgage loans towards the end of 1Q06.
• Average home equity loan portfolios increased $119 million, or 10%.
• Average consumer non-interest-bearing deposits totaled $1.2 billion.

Treasury

• Average securities and short-term investments declined $835 million, or 42%.
• Sold $266 million of securities in 2Q06, resulting in a $4.0 million loss.
• Securities made up 11% of average earning assets compared to 19% in 2Q05.
• The debt securities portfolio totaled $847 million at June 30, 2006, a $744 million, or 47%, 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 73 of its 156 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.

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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.

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