October 17, 2007

People's United Financial Reports Third Quarter Earnings Of $58 Million Or $0.20 Per Share

BRIDGEPORT, CT. –People's United Financial, Inc. (NASDAQ: PBCT), a $14 billion diversified financial services company, today announced net income of $57.6 million, or $0.20 per share, for the third quarter of 2007, compared to $17.0 million, or $0.06 per share, for the third quarter of 2006. The prior year quarter's results included an after-tax loss of $15.7 million, or $0.05 per share, from the sale of securities.

For the third quarter of 2007, return on average assets was 1.70 percent and return on average stockholders' equity was 5.1 percent, compared to 0.63 percent and 5.1 percent, respectively, for the year-ago quarter.

President and Chief Executive Officer, John A. Klein stated, "Our performance this quarter continues to reflect the benefits from our focused commercial and consumer banking strategy, including strong asset quality, particularly noteworthy in today's environment."

"Our average commercial banking loan portfolio increased over $300 million, or 8 percent, since the third quarter of 2006, including a $205 million, or 29 percent, increase in our equipment financing portfolio,"added Klein. "In addition, our balance sheet continues to be funded by core deposits and stockholders' equity."

Klein added, "Given the many challenges of today's environment, the strength of our asset quality, capital, liquidity and earnings clearly sets us apart from most in the industry."

Klein concluded, "At current levels, we feel strongly that our stock is undervalued and we remain committed to begin a stock buyback program as soon as possible following the closing of the Chittenden acquisition."

"Key drivers of the company's performance this quarter were yet another significant 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 39 basis point improvement in the net interest margin reflects the benefits from the investment of the net proceeds from our second-step conversion in April and the balance sheet restructuring activities completed during 2006."

Sherringham continued, "Average earning assets increased $2.7 billion on a year-over-year basis, reflecting a $3.4 billion increase in average short-term investments as a result of the second-step conversion, while average loans decreased $148 million, or 2 percent, and average securities declined $600 million, or 90 percent. While average commercial banking loans increased 8 percent on a year-over-year basis, average residential mortgage loans actually declined 11 percent as a result of our decision in the fourth quarter of last year to sell all newly-originated residential mortgage loans in the current environment."

Commenting on asset quality, Sherringham stated, "As we have said many times in the past, our loan portfolio has absolutely no sub-prime or Alt-A exposure. Our asset quality remains very strong. Third quarter net loan charge-offs totaled $1.5 million compared to $4.1 million in the year-ago quarter. Net loan charge-offs as a percent of average loans on an annualized basis were 0.07 percent in the third quarter of 2007, compared to 0.18 percent in the third quarter of last year."

At September 30, 2007, non-performing assets totaled $26.2 million, a $3.3 million increase from the prior year. Non-performing assets equaled 0.29 percent of total loans, REO and repossessed assets, compared to 0.25 percent at September 30, 2006. The allowance for loan losses as a percentage of non-performing loans was 318 percent at September 30, 2007, compared to 355 percent at September 30, 2006. The allowance for loan losses as a percentage of total loans was 0.82 percent at September 30, 2007, compared to 0.81 percent a year ago.

Selected Financial Terms
In addition to evaluating People's United Financial's results of operations in accordance with generally accepted accounting principles ("GAAP"), management routinely supplements this evaluation with an analysis of certain non-GAAP financial measures, such as core deposits, purchased funds and the efficiency ratio. Management believes these non-GAAP financial measures provide information useful to investors in understanding People's United Financial's underlying operating performance and trends, and facilitates comparisons with the performance of other banks and thrifts.

Core deposits is a measure of stable funding sources and is defined as total deposits, other than brokered certificates of deposit (acquired in the wholesale market), municipal deposits (which are seasonally variable by nature) and escrow funds from People's United Financial's stock offering. Purchased funds include borrowings, brokered certificates of deposit and municipal deposits.

The efficiency ratio, which represents an approximate measure of the cost required by People's United Financial to generate a dollar of revenue, is the ratio of total non-interest expense (excluding goodwill impairment charges, amortization of acquisition-related intangibles, losses on real estate assets and nonrecurring expenses) to net interest income plus total non-interest income (including the fully taxable equivalent adjustment on bank-owned life insurance income, and excluding gains and losses on sales of assets, other than residential mortgage loans, and nonrecurring income). People's United Financial generally considers an income or expense to be nonrecurring if it is not similar to an income or expense of a type incurred within the last two years and is not similar to an income or expense of a type reasonably expected to be incurred within the following two years. Management considers the efficiency ratio to be more representative of People's United Financial's ongoing operating efficiency, as the excluded items are generally related to external market conditions and non-routine transactions.

Conference Call
On October 18, 2007, at 3 p.m., Eastern Time, People's United Financial 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 United Bank's Web site. The call will be archived on the Web site and available for approximately 90 days.

3Q Financial Highlights(3Q 2007 compared with 3Q 2006 unless otherwise indicated)

Summary

• Net income totaled $57.6 million, or $0.20 per share.
• Net interest income increased $38.1 million, or 40%.
  • Reflects the investment of $3.3 billion in net proceeds from the second-step conversion.
  • Net interest margin increased 39 basis points from 3Q06 and increased 5 basis points
    from 2Q07 to 4.28%.
• Provision for loan losses decreased $1.6 million.
  • Net loan charge-offs in 3Q07 totaled $1.5 million compared to $4.1 million in 3Q06 (which included a $4.0 million charge-off related to one commercial banking loan).
  • The allowance for loan losses was increased by $1.0 million in 3Q07 from 2Q07 levels.
• Non-interest income, excluding net security gains and losses, increased $1.0 million, or 2%.
  • Security gains in 3Q07 reflect the sale of the Bank's entire holdings of MasterCard Incorporated Class B Common Stock.
• Non-interest expense increased $8.4 million, or 10%.
  • Compensation and benefits increased $1.8 million (3Q07 included $2.0 million of amortization expense related to the employee stock ownership plan).
  • Occupancy and equipment increased $1.7 million, reflecting higher rent and utility expenses.
  • Professional and outside service fees increased $1.6 million primarily due to higher costs for information technology-related projects.
  • Other non-interest expense increased $3.3 million, including $1.0 million relating to expenses tied to the rebranding of the bank.

Commercial Banking

• Average commercial banking loans grew $306 million, or 8%.
• Average commercial non-interest-bearing deposits totaled $885 million.
• Non-performing commercial banking assets totaled $16.6 million, a $2.8 million increase.
• The ratio of non-performing commercial banking loans to total commercial banking loans was 0.32% at September 30, 2007, compared to 0.29% at both June 30, 2007 and
  September 30, 2006.
• Net loan charge-offs totaled $1.0 million, or 0.09% annualized, of average commercial banking loans.

Consumer Financial Services

• Average residential mortgage loans decreased $404 million, or 11%.
• Average consumer non-interest-bearing deposits totaled $1.1 billion.

Treasury

• Average securities declined $600 million, or 90%.
• Average securities made up 1% of average earning assets compared to 7% in 3Q06.
• Average short-term investments increased $3.4 billion, reflecting the investment of the net proceeds from the second-step conversion.

People's United Financial is a diversified financial services company providing consumer and commercial banking services, in addition to insurance, trust and financial advisory services. Its principal subsidiary, People's United Bank, is a leader in supermarket banking, with 75 of its 160 branches located in Super Stop &Shop stores. Through its subsidiaries, People's United Financial 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 United Financial'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 United Financial'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 United Financial include, but are not limited to: (1) changes in general, national or regional economic conditions;(2) changes in interest rates;(3) changes in loan default and charge-off rates;(4) changes in deposit levels;(5) changes in levels of income and expense in non-interest income and expense related activities;(6) residential mortgage and secondary market activity;(7) changes in accounting and regulatory guidance applicable to banks;(8) price levels and conditions in the public securities markets generally;(9) competition and its effect on pricing, spending, third-party relationships and revenues;and (10) the successful integration of Chittenden Corporation. People's United Financial does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.