Forward-Looking Statements

Periodic and other filings made by People's United Financial with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") may from time to time contain information and statements that are forward-looking in nature. Such filings include the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and may include other forms such as proxy statements. Other written or oral statements made by People's United Financial or its representatives from time to time may also contain forward-looking statements.

In general, forward-looking statements usually use words such as "expect," "anticipate," "believe," "should," and similar expressions, and include all statements about People's United Financial's operating results or financial position for future periods. Forward-looking statements represent management's beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance.

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 completion of the integration of Chittenden Corporation.

All forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. 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.

Recent Market Developments

In response to the unprecedented challenges currently affecting the banking system, the Federal government recently announced several programs designed to address a variety of issues facing the financial sector.

Emergency Economic Stabilization Act of 2008

Troubled Asset Relief Program

On October 3, 2008, the Emergency Economic Stabilization Act of 2008 (the "EESA") was signed into law. The EESA, which is intended to stabilize and provide liquidity to the U.S. financial markets, authorized the U.S. Treasury, acting in accordance with the provisions of the Troubled Asset Relief Program (the "TARP"), to (i) purchase up to $700 billion of mortgages, mortgage-backed securities, and certain other financial instruments from financial institutions, and (ii) establish a program to guarantee certain assets issued by financial institutions prior to March 14, 2008. The company has decided not to sell any of its assets pursuant to the TARP or to participate in the asset guarantee program.

On October 14, 2008, the U.S. Treasury announced a plan to employ a portion of its purchasing authority, as provided for by the EESA, in making direct equity investments in qualifying banks and thrifts. Under this program, known as the Troubled Asset Relief Program Capital Purchase Program (the "TARP CPP"), the U.S. Treasury will utilize up to $250 billion of the $700 billion authorized by the EESA to purchase preferred stock in qualifying institutions that request such investments. The preferred stock TARP CPP contains a number of provisions, some of which could reduce investment returns to participating banks' shareholders by restricting dividends to common shareholders, diluting existing shareholders' interests, and restricting capital management practices. People's United Bank currently exceeds all applicable regulatory capital requirements and remains well capitalized. The company did not apply for equity capital under the TARP CPP.

FDIC Insurance Coverage / Assessments

The Federal Deposit Insurance Corporation (the "FDIC") insures deposits at FDIC insured financial institutions up to certain limits, charging premiums to maintain the Deposit Insurance Fund (the "DIF") at specified levels. Such premiums may vary based on the risk profile of the insured institution. Current economic conditions have resulted in an increased number of bank failures and, consequently, greater use of DIF resources. In response, the FDIC has proposed higher premium assessments for 2009 pursuant to a restoration plan designed to increase the DIF reserve ratio to required levels. Under the FDIC's proposed restoration plan, the premium assessment rate was raised by seven basis points beginning on January 1, 2009 resulting in a 2009 initial base assessment rate of 12 basis points for People's United Bank. In addition, on February 27, 2009, the FDIC approved an additional one-time special assessment of 20 basis points on deposits interim rule that would impose an for the second quarter 2009 assessment period. The FDIC's interim rule also provides that the FDIC may impose additional special assessments of up to 10 basis points in future quarters if the reserve ratio of the DIF is estimated to fall to a level that the FDIC believes would adversely affect public confidence or a level of close to zero or negative. The FDIC has indicated that it may reduce the amount of the 20 basis point special assessment under certain circumstances, including expansion of the FDIC's borrowing authority. Legislation is pending in Congress that would expand the FDIC's borrowing authority. Further changes in assessment rates are anticipated later in 2009.

The EESA increased the FDIC deposit insurance limit from $100,000 to $250,000 per depositor through December 31, 2009. In addition, on October 14, 2008, the FDIC announced the Temporary Liquidity Guarantee Program, which consists of two components: temporary unlimited deposit insurance on funds in non-interest-bearing transaction deposit accounts not otherwise covered by the increased $250,000 deposit insurance limit (the "Transaction Account Guarantee Program") and a temporary guarantee of certain newly-issued unsecured debt (the "Debt Guarantee Program"). All eligible institutions were covered under both programs for the first 30 days without incurring any costs. After the initial 30 day period, institutions participating in the Transaction Account Guarantee Program are assessed a 10 basis point surcharge on the additional insured deposits and institutions participating in the Debt Guarantee Program are subject to an annualized charge equal to 75 basis points. The company has elected to participate in the Transaction Account Guarantee Program as it participates in all other FDIC deposit insurance programs. While People's United Financial has retained its right to do so, the company does not, at this time, intend to issue senior unsecured debt securities under the Debt Guarantee Program.

Based on the FDIC's proposal to increase the premium assessment rate, the special assessment announced in February 2009, and the company's participation in the Transaction Account Guarantee Program, the company's cost of deposit insurance is expected to increase significantly in 2009. The actual amount of the increase will be dependent on several factors, including: (i) deposit levels; (ii) the company's risk profile; (iii) whether the FDIC's restoration plan is adopted as proposed or amended; (iv) the amount of the special assessment for second assessment period in 2009; and (v) whether additional special assessments are imposed in future periods.

The actions described above, together with additional actions announced by the U.S. Treasury and other regulatory agencies continue to develop. It is not clear at this time what impact the EESA, the TARP, the TARP CPP, or other liquidity and funding programs of the U.S. Treasury and bank regulatory agencies, whether previously announced or initiated in the future, will have on the capital markets and the financial services industry. The extreme levels of market volatility and limited credit availability currently being experienced could continue to adversely affect the U.S. banking industry and the broader U.S. and global economies for the foreseeable future, which will have an effect on all financial institutions, including People's United Financial.

Selected Consolidated Financial Data





                                                                    Three Months Ended
                                                        March 31,        Dec. 31,        March 31,
(dollars in millions, except per share data)              2009             2008            2008
Operating Data:
Net interest income                                    $     142.8      $    153.3      $     166.3
Provision for loan losses (1)                                  7.9             8.7              8.3
Non-interest income                                           72.2            73.7             82.3
Non-interest expense (2)                                     167.6           165.5            219.2
Income before income tax expense                              39.5            52.8             21.1
Net income                                                    26.7            35.4             15.1


Selected Statistical Data:
Net interest margin (3)                                       3.25 %          3.55 %           3.67 %
Return on average assets (3)                                  0.53            0.71             0.29
Return on average tangible assets (3)                         0.57            0.76             0.31
Return on average stockholders' equity (3)                     2.1             2.7              1.2
Return on average tangible stockholders' equity (3)            2.9             3.8              1.6
Efficiency ratio                                              73.4            69.0             65.0


Per Common Share Data:
Basic and diluted earnings per share                   $      0.08      $     0.11      $      0.05
Dividends paid per share                                      0.15            0.15             0.13
Dividend payout ratio                                        188.4 %         141.8 %          293.0 %
Book value (end of period)                             $     15.39      $    15.45      $     15.70
Tangible book value (end of period)                          10.83           10.87            11.08
Stock price:
High                                                         18.18           20.15            18.25
Low                                                          15.61           14.75            14.29
Close (end of period)                                        17.97           17.83            17.31

(1) Includes a $4.5 million provision for the three months ended March 31, 2008 to align allowance for loan losses methodologies across the combined organization following the acquisition of Chittenden Corporation.

(2) Includes $51.3 million of merger-related expenses and other one-time charges for the three months ended March 31, 2008.

(3) Annualized.

                                                           As of and for the Three Months Ended
                                           March 31,      Dec. 31,       Sept. 30,      June 30,       March 31,
(dollars in millions)                        2009           2008           2008           2008           2008
Financial Condition Data:
Total assets                              $    20,681     $  20,168     $    20,042     $  20,392     $    21,107
Loans                                          14,648        14,566          14,331        14,366          14,492
Short-term investments (1)                      2,756         1,139           2,534         2,265           2,756
Securities                                        806         1,902             428           866             976
Allowance for loan losses                         159           158             155           152             152
Goodwill and other acquisition-related
intangibles                                     1,531         1,536           1,537         1,541           1,536
Deposits                                       14,846        14,269          14,152        14,532          15,160
Borrowings                                        185           188             152           144             148
Subordinated notes                                181           181             180           180             180
Stockholders' equity                            5,160         5,176           5,239         5,211           5,219
Non-performing assets                             142            94              91            86              67
Net loan charge-offs                              6.4           5.7             4.0           2.4             2.8


Average Balances:
Loans                                     $    14,603     $  14,371     $    14,310     $  14,425     $    14,537
Short-term investments (1)                      1,824         1,610           2,325         2,433           2,666
Securities                                      1,275         1,393             715           907           1,020
Total earning assets                           17,702        17,374          17,350        17,765          18,223
Total assets                                   20,258        20,057          20,057        20,492          20,893
Deposits                                       14,346        14,117          14,193        14,613          14,952
Total funding liabilities                      14,721        14,479          14,520        14,939          15,296
Stockholders' equity                            5,164         5,230           5,204         5,202           5,214


Ratios:
Net loan charge-offs to average loans
(annualized)                                     0.18 %        0.16 %          0.11 %        0.07 %          0.08 %
Non-performing assets to total loans,
real estate owned and repossessed
assets                                           0.97          0.64            0.64          0.60            0.46
Allowance for loan losses to
non-performing loans                            126.1         186.8           181.6         182.6           244.3
Allowance for loan losses to total
loans                                            1.09          1.08            1.08          1.06            1.05
Average stockholders' equity to average
total assets                                     25.5          26.1            25.9          25.4            25.0
Stockholders' equity to total assets             25.0          25.7            26.1          25.6            24.7
Tangible stockholders' equity to
tangible assets                                  19.0          19.5            20.0          19.5            18.8
Total risk-based capital (2)                     13.5          13.4            16.2          17.8            24.7

(1) Includes securities purchased under agreements to resell.

(2) Total risk-based capital ratios presented are for People's United Bank and, as such, do not reflect the additional capital residing at People's United Financial, Inc. See Regulatory Capital Requirements.

Non-GAAP Financial Measures and Reconciliation to GAAP

In addition to evaluating People's United Financial's results of operations in accordance with U.S. generally accepted accounting principles ("GAAP"), management routinely supplements this evaluation with an analysis of certain non-GAAP financial measures, such as the efficiency ratio. Management believes this non-GAAP financial measure provides 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. Further, the efficiency ratio is used by management in its assessment of financial performance specifically as it relates to non-interest expense control.

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 and fair value adjustments, losses on real estate assets and nonrecurring expenses) (the numerator) to net interest income on a fully taxable equivalent basis (excluding fair value adjustments) 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) (the denominator). People's United Financial generally considers an item of income or expense to be nonrecurring if it is not similar to an item of income or expense of a type incurred within the last two years and is not similar to an item of income or expense of a type reasonably expected to be incurred within the following two years.

The following table summarizes People's United Financial's efficiency ratio derived from amounts reported in the Consolidated Statements of Income:

                                                                      Three Months Ended
                                                          March 31,        Dec. 31,        March 31,
(dollars in millions)                                       2009             2008            2008
Total non-interest expense                               $     167.6      $    165.5      $     219.2
Less:
Amortization of other acquisition-related intangibles            5.2             5.5              5.2
Merger-related expenses and other one-time charges                -               -              51.3
Fair value adjustments                                           0.8             0.8              0.8
REO expense                                                      0.3             0.4              1.4
Other                                                            5.1             2.0              0.9

Total                                                    $     156.2      $    156.8      $     159.6


Net interest income (1)                                  $     143.7      $    154.3      $     167.3
Total non-interest income                                       72.2            73.7             82.3
Add:
Fair value adjustments                                           1.6             2.6              2.6
BOLI FTE adjustment (1)                                          0.9             0.9              1.6
Other                                                             -              0.2               -
Less:
Net security gains                                               5.4             0.2              8.5
Gain on sale of assets                                           0.3             4.3               -

Total                                                    $     212.7      $    227.2      $     245.3

Efficiency ratio                                                73.4 %          69.0 %           65.0 %

(1) Fully taxable equivalent.

Acquisition

On January 1, 2008, People's United Financial completed its acquisition of Chittenden Corporation ("Chittenden"), a multi-bank holding company headquartered in Burlington, Vermont for total consideration of approximately $1.8 billion. The acquisition was accounted for using the purchase method of accounting and accordingly, Chittenden's assets and liabilities were recorded by People's United Financial at their estimated fair values as of January 1, 2008. The six former Chittenden banks, which continue to do business under their existing names as divisions of People's United Bank, are: Chittenden Trust Company based in Burlington, Vermont; Flagship Bank and Trust Company based in Worcester, Massachusetts; Maine Bank & Trust based in Portland, Maine; Merrill Merchants Bank based in Bangor, Maine; Ocean Bank based in Portsmouth, New Hampshire; and The Bank of Western Massachusetts based in Springfield, Massachusetts. See Note 2 to the Consolidated Financial Statements for a further discussion of the acquisition.

Financial Overview

People's United Financial reported net income of $26.7 million, or $0.08 per diluted share, for the three months ended March 31, 2009, compared to $15.1 million, or $0.05 per diluted share, for the year-ago period. Included in the year-ago quarter results were merger-related expenses of $41.0 million ($36.5 million included in non-interest expense and $4.5 million included in provision for loan losses), other one-time charges totaling $14.8 million, and a $6.9 million gain related to the Visa, Inc. initial public offering ("IPO"). The net impact of these items reduced first quarter 2008 net income by $33.2 million, or $0.10 per diluted share. First quarter 2009 earnings reflect margin pressure associated with the historically low interest rate environment and reduced fee income stemming from continued uncertainty in the equity markets and broader economic weakness.

People's United Financial's return on average tangible assets was 0.57% and return on average tangible stockholders' equity was 2.9%, compared to 0.31% and 1.6%, respectively, in the year-ago quarter.

Net interest income decreased $23.5 million from the year-ago quarter while the net interest margin declined 42 basis points to 3.25%. The lower net interest margin reflects the interest rate cuts initiated by the Federal Reserve Board throughout 2008, and the company's asset sensitive balance sheet, including its significant excess capital position, which continues to be temporarily invested in low-yielding short-term investments.

Compared to the first quarter of 2008, average earning assets decreased $521 million, reflecting increases of $66 million in average loans and $255 million in average securities, which were more than offset by a decrease of $842 million in average short-term investments. Average funding liabilities decreased $575 million compared to the first quarter of 2008, primarily reflecting a $606 million decrease in average total deposits.

Compared to the year-ago quarter, total non-interest income decreased $10.1 million and total non-interest expense decreased $51.6 million (see Non-Interest Income and Non-Interest Expense). The efficiency ratio was 73.4% in the first quarter of 2009 compared to 65.0% in the year-ago period.

The provision for loan losses in the first quarter of 2009 was $7.9 million compared to $8.3 million in the year-ago period. The provision for loan losses in the first quarter of 2009 reflected net loan charge-offs of $6.4 million and a $1.5 million increase in the allowance for loan losses. The provision for loan losses in the first quarter of 2008 reflected a $5.5 million increase in the allowance for loan losses, including a $4.5 million increase resulting from aligning the former Chittenden reserve methodology with that of People's United Financial, and net loan charge-offs of $2.8 million. Net loan charge-offs as a percentage of average total loans on an annualized basis were 0.18% in the first quarter of 2009 compared to 0.08% in the year-ago quarter.

The allowance for loan losses totaled $159.0 million at March 31, 2009. Non-performing assets totaled $142.0 million at March 31, 2009, a $48.3 million increase from December 31, 2008. At March 31, 2009, the allowance for loan losses as a percentage of total loans was 1.09% and as a percent of non-performing loans was 126%.

People's United Financial's total stockholders' equity was $5.2 billion at both March 31, 2009 and December 31, 2008 and as a percentage of total assets, stockholders' equity was 25.0% and 25.7%, respectively. Tangible stockholders' equity as a percentage of tangible assets was 19.0% at March 31, 2009 compared to 19.5% at December 31, 2008.

People's United Bank's total risk-based capital ratio was 13.5% at March 31, 2009 compared to 13.4% at December 31, 2008 (see Regulatory Capital Requirements).

Business Segment Results

People's United Financial's operations are divided into three primary business segments that represent its core businesses, Commercial Banking, Retail Banking and Small Business, and Wealth Management. In addition, the Treasury area is responsible for managing People's United Financial's securities portfolio, short-term investments, wholesale funding activities, such as borrowings, and the funding center.

People's United Financial uses an internal profitability reporting system to generate information by operating segment, which is based on a series of management estimates and allocations regarding funds transfer pricing ("FTP"), the provision for loan losses, non-interest expense and income taxes. These estimates and allocations, some of which can be subjective in nature, are continually being reviewed and refined. Any changes in estimates and allocations that may affect the reported results of any business segment will not affect the consolidated financial position or results of operations of People's United Financial as a whole.

FTP is used in the calculation of each operating segment's net interest income, and measures the value of funds used in and provided by an operating segment. The difference between the interest income on earning assets and the interest expense on funding liabilities, and the corresponding FTP charge for interest income or credit for interest expense, results in net spread income. A five-year rolling average net charge-off rate is used as the basis for the provision for loan losses for the respective segment.

People's United Financial allocates a majority of non-interest expenses to each business segment using a full-absorption costing process. Direct and indirect costs are analyzed and pooled by process and assigned to the appropriate business segment and corporate overhead costs are allocated to the business segments. Income tax expense is allocated to each business segment using a constant rate, based on an estimate of the consolidated effective income tax rate for the year. Total average assets and total average liabilities are reported for each business segment due to management's reliance, in part, on such average balances for purposes of assessing business segment performance. . . .