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 affecting the banking system, the Federal government began implementing several programs in late 2008 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 issued under the 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 has not applied 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 authorized higher premium assessments for 2009 pursuant to a restoration plan designed to increase the DIF reserve ratio to required levels. Under the FDIC's restoration plan, the premium assessment rate was raised uniformly by seven basis points beginning on January 1, 2009 resulting in an initial base assessment rate of 12 basis points for People's United Bank. Furthermore, the premium assessment rate in effect beginning April 1, 2009 is subject to adjustments that are based on each institution's risk profile and may affect its initial base assessment rate.

In addition, on May 22, 2009, the FDIC adopted a final rule that imposed a special assessment of 5 basis points on each insured financial institution's total assets less Tier 1 capital as of June 30, 2009. The FDIC's rule also provided that the FDIC may impose additional special assessments on September 30, 2009 (no such assessment occurred) and December 31, 2009 of up to 5 basis points on each insured financial institution's total assets less Tier 1 capital 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.

On September 29, 2009, the FDIC approved a proposed rule extending the DIF restoration plan from seven years to eight years and requiring financial institutions to prepay their estimated deposit insurance premiums for 2010, 2011 and 2012 on December 30, 2009. The proposed rule, which does not include any additional special assessments, assumes a 5% annual growth rate in each institution's insured deposits (the assessment base) and increases each institution's premium assessment rate by three basis points beginning in 2011.

The EESA increased the FDIC deposit insurance limit from $100,000 to $250,000 per depositor through December 31, 2009, and subsequent amendments extended the increased coverage through December 31, 2013. 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.

On August 26, 2009, the FDIC adopted a final rule extending the Transaction Account Guarantee Program from December 31, 2009 through June 30, 2010. Institutions that remain in the Transaction Account Guarantee Program will be charged an assessment rate of either 15 basis points, 20 basis points or 25 basis points on the additional insured deposits, depending on the institution's risk category as assigned by the FDIC.

The company is participating 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 increase in the premium assessment rate, the special assessment announced in May 2009, and the company's participation in the Transaction Account Guarantee Program, the company's cost of deposit insurance increased significantly in the first nine months of 2009, and further increases may occur. The actual amount of further increases will be dependent on several factors, including: (i) deposit levels; (ii) People's United Bank's risk profile;
(iii) changes resulting from the FDIC's September 2009 proposed rule; and
(iv) whether additional special assessments are imposed in future periods and the manner in which such assessments are determined.

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                          Nine Months Ended
                                                           Sept. 30,         June 30,         Sept. 30,        Sept. 30,         Sept. 30,
(dollars in millions, except per share data)                 2009            2009 (1)           2008            2009 (1)           2008
Operating Data:
Net interest income                                       $     145.3       $    141.2       $     159.8       $    429.3       $     483.1
Provision for loan losses                                        21.5             14.0               6.8             43.4              17.5
Non-interest income (2)                                          80.2             85.0              74.2            237.4             229.9
Non-interest expense (3)                                        165.1            176.2             158.7            512.4             540.8
Income before income tax expense                                 38.9             36.0              68.5            110.9             154.7
Net income                                                       26.8             25.3              46.0             76.3             104.1

Selected Statistical Data:
Net interest margin (4)                                          3.19 %           3.12 %            3.71 %           3.18 %            3.65 %
Return on average assets (4)                                     0.51             0.49              0.92             0.49              0.68
Return on average tangible assets (4)                            0.55             0.53              0.99             0.53              0.73
Return on average stockholders' equity (4)                        2.1              2.0               3.5              2.0               2.7
Return on average tangible stockholders' equity (4)               3.0              2.8               5.0              2.8               3.8
Efficiency ratio                                                 71.1             73.7              64.9             73.3              65.4

Per Common Share Data:
Basic and diluted earnings per share                      $      0.08       $     0.08       $      0.14       $     0.23       $      0.32
Dividends paid per share                                         0.15             0.15              0.15             0.45              0.43
Dividend payout ratio                                           191.3 %          202.0 %           108.7 %          199.9 %           138.6 %
Book value (end of period)                                $     15.24       $    15.29       $     15.65       $    15.24       $     15.65
Tangible book value (end of period)                             10.71            10.75             11.06            10.71             11.06
Stock price:
High                                                            17.41            18.54             21.76            18.54             21.76
Low                                                             14.84            14.72             13.92            14.72             13.92
Close (end of period)                                           15.56            15.07             19.25            15.56             19.25

(1) Previously reported amounts for the three months ended June 30, 2009 and March 31, 2009 have been revised to reflect the recognition of additional non-interest expense, which, after taxes, reduced net income by $2.1 million and $2.5 million, respectively. Basic and diluted earnings per share were reduced by $0.01 in the three months ended March 31, 2009 (no impact on the three months ended June 30, 2009). Certain statistical information and other per common share data have been revised as necessary. See Note 13 to the Consolidated Financial Statements.

(2) Includes net security gains of $4.7 million and $12.0 million for the three months ended September 30, 2009 and June 30, 2009, respectively, and $22.1 million and $8.1 million for the nine months ended September 30, 2009 and 2008, respectively. See Note 3 to the Consolidated Financial Statements.

(3) Includes an FDIC special assessment charge of $8.4 million for the three months ended June 30, 2009 and nine months ended September 30, 2009, and $51.3 million of merger-related expenses and other one-time charges for the nine months ended September 30, 2008.

(4) Annualized.

                                                           As of and for the Three Months Ended
                                         Sept. 30,       June 30,        March 31,       Dec. 31,        Sept. 30,
(dollars in millions)                      2009            2009            2009            2008            2008
Financial Condition Data:
Total assets                            $    20,810      $  20,812      $    20,681      $  20,168      $    20,042
Loans                                        14,302         14,553           14,648         14,566           14,331
Short-term investments (1)                    3,077          3,073            2,756          1,139            2,534
Securities                                      550            491              806          1,902              428
Allowance for loan losses                       173            167              159            158              155
Goodwill and other
acquisition-related intangibles               1,520          1,525            1,531          1,536            1,537
Deposits                                     15,050         15,023           14,846         14,269           14,152
Borrowings                                      154            160              185            188              152
Subordinated notes                              182            181              181            181              180
Stockholders' equity                          5,115          5,130            5,156          5,174            5,239
Non-performing assets                           193            182              142             94               91
Net loan charge-offs                           16.0            6.0              6.4            5.7              4.0

Average Balances:
Loans                                   $    14,454      $  14,595      $    14,603      $  14,371      $    14,310
Short-term investments (1)                    3,105          2,816            1,824          1,610            2,325
Securities                                      782            799            1,275          1,393              715
Total earning assets                         18,341         18,210           17,702         17,374           17,350
Total assets                                 20,870         20,759           20,258         20,057           20,057
Deposits                                     15,037         14,886           14,346         14,117           14,193
Total funding liabilities                    15,365         15,237           14,721         14,479           14,520
Stockholders' equity                          5,135          5,162            5,164          5,230            5,204

Ratios:
Net loan charge-offs to average loans
(annualized)                                   0.44 %         0.16 %           0.18 %         0.16 %           0.11 %
Non-performing assets to total loans,
real estate owned and repossessed
assets                                         1.35           1.25             0.97           0.64             0.64
Allowance for loan losses to
non-performing loans                           98.2           99.4            126.1          186.8            181.6
Allowance for loan losses to total
loans                                          1.21           1.15             1.09           1.08             1.08
Average stockholders' equity to
average total assets                           24.6           24.9             25.5           26.1             25.9
Stockholders' equity to total assets           24.6           24.7             24.9           25.7             26.1
Tangible stockholders' equity to
tangible assets                                18.6           18.7             18.9           19.5             20.0
Total risk-based capital (2)                   14.0           13.7             13.5           13.4             16.2

(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 and tangible equity ratios, and tangible book value per share. 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. Further, the efficiency ratio is used by management in its assessment of financial performance specifically as it relates to non-interest expense control, while the tangible equity ratio and tangible book value per share are used to analyze the relative strength of People's United Financial's capital position.

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 (i) 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
(ii) 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 tangible equity ratio is the ratio of (i) tangible stockholders' equity (total stockholders' equity less goodwill and other acquisition-related intangibles) (the numerator) to (ii) tangible assets (total assets less goodwill and other acquisition-related intangibles) (the denominator). Tangible book value per share is calculated by dividing tangible stockholders' equity by common shares outstanding (total common shares issued, less common shares classified as treasury shares and unallocated ESOP common shares).

In light of diversity in presentation among financial institutions, the methodologies for determining the non-GAAP financial measures discussed above may vary significantly.

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

                                                       Three Months Ended                        Nine Months Ended
                                           Sept. 30,        June 30,        Sept. 30,       Sept. 30,        Sept. 30,
(dollars in millions)                        2009             2009            2008             2009            2008
Total non-interest expense                $     165.1      $    176.2      $     158.7      $    512.4      $     540.8
Less:
Amortization of other
acquisition-related intangibles                   5.1             5.3              5.3            15.6             15.8
FDIC special assessment                            -              8.4               -              8.4               -
Merger-related expenses and other
one-time charges                                   -               -                -               -              51.3
Fair value adjustments                            0.8             0.8              0.8             2.4              2.4
REO expense                                       0.7             0.6              0.3             1.6              2.1
Other                                            (0.8 )           1.2             (2.7 )           5.5             (1.1 )

Total                                     $     159.3      $    159.9      $     155.0      $    478.9      $     470.3


Net interest income (1)                   $     146.1      $    142.1      $     160.8      $    431.9      $     486.0
Total non-interest income                        80.2            85.0             74.2           237.4            229.9
Add:
Fair value adjustments                            1.6             1.6              2.6             4.8              7.8
BOLI FTE adjustment (1)                           1.1             1.5              1.1             3.5              3.6
Net security losses                                -               -               0.2              -                -
Less:
Net security gains                                4.7            12.0               -             22.1              8.1
Gain on sale of assets                            0.1             1.3              0.2             1.7              0.2
Other                                             0.3              -                -              0.3               -

Total                                     $     223.9      $    216.9      $     238.7      $    653.5      $     719.0

Efficiency ratio                                 71.1 %          73.7 %           64.9 %          73.3 %           65.4 %

(1) Fully taxable equivalent.

The following table summarizes People's United Financial's tangible equity ratio and tangible book value per share derived from amounts reported in the Consolidated Statements of Condition:

                                                   Sept. 30,       June 30,        March 31,       Dec. 31,        Sept. 30,
(in millions, except per share data)                 2009            2009            2009            2008            2008
Total stockholders' equity                        $     5,115      $   5,130      $     5,156      $   5,174      $     5,239
Less: Goodwill and other acquisition-related
intangibles                                             1,520          1,525            1,531          1,536            1,537

Tangible stockholders' equity                     $     3,595      $   3,605      $     3,625      $   3,638      $     3,702


Total assets                                      $    20,810      $  20,812      $    20,681      $  20,168      $    20,042
Less: Goodwill and other acquisition-related
intangibles                                             1,520          1,525            1,531          1,536            1,537

Tangible assets                                   $    19,290      $  19,287      $    19,150      $  18,632      $    18,505

Tangible equity ratio                                    18.6 %         18.7 %           18.9 %         19.5 %           20.0 %


Common shares outstanding                               335.6          335.5            335.3          335.0            334.8

Tangible book value per share                     $     10.71      $   10.75      $     10.81      $   10.86      $     11.06

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 $26.8 million, or $0.08 per diluted share, for the three months ended September 30, 2009, compared to $46.0 million, or $0.14 per diluted share, for the year-ago period. Third quarter 2009 . . .