July 15, 1999 People's Bank Earns $29 Million or $0.47 Per Share; Managed Operating Revenues Increase 13 Percent

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BRIDGEPORT, CT -- People's Bank (NASDAQ: PBCT) today announced net income of $29.0 million or $0.47 per share for the quarter ended June 30, 1999, up four percent on a per share basis compared to $28.7 million or $0.45 per share for the second quarter of 1998. Earnings per share increased 18 percent compared to the second quarter of 1998 excluding a $5.3 million ($0.05 per share) non-recurring gain on the sale of $107 million in credit card balances in the 1998 quarter.

David E. A. Carson, chairman and chief executive officer, stated, "We are pleased to report 13 percent growth in managed operating revenues, demonstrating the continued strength of our core operating results. This strong revenue growth was driven by a 17 percent increase in managed net interest income and a 13 percent increase in managed fee-based revenues."

John A. Klein, president, noted, "Our Commercial Banking division generated strong growth, with average commercial loans up 15 percent and average commercial real estate loans up 10 percent compared to the second quarter of 1998. These results reflect the strength of our franchise in Connecticut, particularly our continued focus on building and expanding customer relationships. We were also pleased with double-digit growth in average commercial and consumer checking deposits, reflecting the continued success of our Stop & Shop supermarket banking program."

Results for the second quarter also reflect a $1.2 billion or 11 percent increase in average managed assets, led by growth of $733 million or nine percent in average managed loans. The loan growth was led by an increase of $527 million or 16 percent in average managed credit card receivables, including strong contributions from the U.K.

Additionally, People’s announced an expansion of its U.K. credit card operation. Having achieved profitability in late 1998, the business is entering its next phase by adding a "relationship call center" which will triple staffing to 150 people. This move will bring the collections process in house and enhance the overall ability to manage customer relationships.

George W. Morriss, executive vice president and chief financial officer, also noted, "We recently announced the completion of our first stock repurchase program initiated in November 1998, repurchasing 3.2 million shares in the open market at an average price of $29.30 per share. The swift and successful completion of this program demonstrates our continued commitment to providing fundamental value for our shareholders," said Morriss.

People’s Board of Directors declared a $0.26 quarterly dividend on its common stock, payable August 15, 1999, to stockholders of record on August 1, 1999. People's Mutual Holdings, which owns 36.5 million shares of People's Bank common stock, will accept $275,000 in dividends, representing payment on only three percent of its shares.

Regarding its Year 2000 project, People’s said it has met all FDIC target dates in compliance with FDIC guidelines. The bank has completed testing of all its mission-critical systems and all of those systems are now operating in production. This means the systems that support savings, checking, teller transactions, ATMs, telephone banking, PC/Internet banking, PC/Internet trading and credit cards are all Year 2000 ready.

For the first half of 1999, net income totaled $56.9 million or $0.91 per share compared to $54.1 million or $0.85 per share for the 1998 period.

The largest bank headquartered in Connecticut, People’s Bank is a diversified financial services company providing consumer, commercial, insurance and investment services. The bank is a leader in supermarket banking, with 44 of its 130 branches located in Super Stop & Shop stores. Through its subsidiaries, People’s provides brokerage services through People’s Securities, Inc., money management through Olson, Mobeck & Associates, Inc., equipment leasing through People’s Capital and Leasing Corp., and insurance through R.C. Knox and Company. Nationally, People’s Bank is the 17^th largest issuer of MasterCard and Visa credit cards. The bank also has an international credit card operation headquartered in Northampton, England.

Certain statements contained in this release are forward-looking in nature. These 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 changes in general economic conditions, and price levels and conditions in the public securities markets generally.

SECOND QUARTER EARNINGS PER SHARE UP 4% YEAR-OVER-YEAR

• Earnings per share increased 18% compared to the second quarter of 1998 excluding a $5.3 million ($0.05 per share) non-recurring gain on the sale of $107 million in credit card receivables in the 1998 quarter.
• Higher net income was primarily driven by an $18 million increase in managed net interest income combined with a $6.0 million increase in managed fee-based revenues.
• Revenue increases more than offset a $10 million reduction in gains from sales of securities ($4.7 million) and credit card receivables ($5.3 million; associated with an expired affinity relationship).
• Completion of the share repurchase program reduced outstanding shares by 5% or 3.2 million shares, improving the return on average stockholders' equity by 100 basis points and earnings per share by $0.02 per share.
• Return on average stockholders' equity increased 70 basis points to 14.2% compared to 13.5% for the second quarter of 1998.
• Cash earnings per share (which excludes the amortization of goodwill and acquisition-related intangible assets) increased 6% to $0.50 from $0.47 for the second quarter of 1998.

MANAGED OPERATING REVENUES INCREASED $20 MILLION OR 13% FROM SECOND QUARTER 1998

• Managed net interest income increased $18 million or 17% as a result of $1.1 billion growth in average earning assets coupled with a 15 basis point expansion in managed net interest margin.
• Managed credit card fees increased 15%, service charges on deposit accounts were up 10% and net brokerage commissions increased 30%.
• Insurance revenue of $2.6 million was generated from R.C. Knox and Company, which was acquired on July 1, 1998.
• Managed efficiency ratio improved to 55.2% from 57.5% in the second quarter of 1998 reflecting the 13% growth in managed operating revenues, which exceeded an 8% increase in operating expenses (excludes the amortization of goodwill and acquisition-related intangible assets).

• Total managed funding costs declined 33 basis points due to the favorable impact of reduced domestic and LIBOR rates.
• The yield on total managed earning assets declined 14 basis points, also reflecting the impact of a low interest rate environment.
• Compared to the first quarter of 1999, the managed credit card yield increased 53 basis points primarily due to higher retention of credit card receivables and scheduled repricings.

AVERAGE MANAGED ASSETS INCREASED $1.2 BILLION YEAR-OVER-YEAR

• Loan growth was led by an increase of $527 million, or 16%, in average managed credit card receivables.
• Average UK credit card balances increased $82 million, or 45%, to $267 million.
• Average commercial real estate finance loans and average commercial loans each grew $108 million, or 10% and 15%, respectively.
• Average securities increased $473 million reflecting the decision to deploy capital.

TOTAL AVERAGE DEPOSITS INCREASED $342 MILLION WITH A 32 BASIS POINT REDUCTION IN COST

• At June 30, 1999, the 44 Super Stop & Shop branches had total deposits of $1.1 billion ($25 million per branch), representing a $329 million increase from June 30, 1998; non-interest bearing deposits accounted for 11% of total supermarket deposits.
• Same-store deposits for the 40 Super Stop & Shop branches open more than 12 months grew an average of $7.5 million per store.
• Average commercial and consumer non-interest bearing deposits increased 10% from the second quarter of 1998 and represented 19% of average total deposits for the current quarter.
• Average savings, interest-bearing checking and money market balances increased 9%, while the average cost decreased 23 basis points compared to the year-ago quarter.
• The average cost of time deposits declined 39 basis points.

CREDIT CARD ASSET QUALITY REMAINS STRONG

• Credit card net charge-offs (as a percentage of average managed receivables) equaled 4.00%, representing a decrease of 11 basis points compared to the second quarter of 1998 and an increase of three basis points compared to the first quarter of 1999.
• Delinquencies as a percentage of quarter-end managed receivables declined 61 basis points to 2.58% from 3.19% at June 30, 1998 and decreased eight basis points from 2.66% at March 31, 1999.
• The $4.7 million increase in provision for loan losses, compared to the second quarter of 1998, reflects growth in average owned credit card receivables.

NET SECURITY GAINS REDUCED $4.7 MILLION FROM SECOND QUARTER 1998

• At June 30, 1999, the common stock portfolio totaled $173 million, with $13.9 million in net unrealized gains.

Contacts: Vincent J Calabrese, first vice president, comptroller, at 203-338-4114 or vjcalab@peoples.com
Roberta Burns-Howard, vice president, Corporate Communications, at 203-338-2378 or rjburns@peoples.com