People's United Financial, Inc. (Form: 10-Q, Received: 11/09/2007 14:39:13)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

Commission File Number 001-33326

PEOPLE’S UNITED FINANCIAL, INC.

(Exact name of registrant as specified in its charter)


Delaware		20-8447891
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


850 Main Street, Bridgeport, Connecticut		06604
(Address of principal executive offices)		(Zip Code)

(203) 338-7171

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exhange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of October 31, 2007, there were 297,269,213 shares of the registrant’s common stock outstanding.

Table of Contents


		Page
Part I – Financial Information

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Condition at September 30, 2007 and December 31, 2006	1

	Consolidated Statements of Income for the Three and Nine months ended September 30, 2007 and 2006	2

	Consolidated Statements of Changes in Stockholders’ Equity for the Nine months ended September 30, 2007 and 2006	3

	Consolidated Statements of Cash Flows for the Nine months ended September 30, 2007 and 2006	4

	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	50

Part II – Other Information

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 3.	Defaults Upon Senior Securities	51

Item 4.	Submission of Matters to a Vote of Security Holders	51

Item 5.	Other Information	51

Item 6.	Exhibits	51

Signatures		52

Item 1 - Financial Statements

People’s United Financial, Inc.

Consolidated Statements of Condition - (Unaudited)


(in millions)	September 30, 2007			December 31, 2006
Assets
Cash and due from banks	$	304.2		$	344.1
Short-term investments		2,120.1			224.6

Total cash and cash equivalents		2,424.3			568.7

Securities (note 3):
Trading account securities, at fair value		22.5			29.6
Securities available for sale, at fair value		42.1			46.8
Securities held to maturity, at amortized cost (fair value of $1.1 at each date)		1.1			1.1

Total securities		65.7			77.5

Securities purchased under agreements to resell		1,430.0			—

Loans (note 4):
Residential mortgage		3,347.7			3,900.1
Commercial		2,518.0			2,363.6
Commercial real estate		1,822.7			1,786.7
Consumer		1,247.2			1,321.3

Total loans		8,935.6			9,371.7
Less allowance for loan losses		(73.5	)		(74.0	)

Total loans, net		8,862.1			9,297.7

Bank-owned life insurance (note 1)		219.4			212.6
Premises and equipment, net		151.4			136.8
Goodwill (note 7)		101.5			101.5
Other acquisition-related intangibles (note 7)		2.7			3.5
Other assets		293.4			288.6

Total assets	$	13,550.5		$	10,686.9

Liabilities
Deposits:
Non-interest-bearing	$	2,081.0		$	2,294.4
Savings, interest-bearing checking and money market		3,003.5			3,205.2
Time		3,697.3			3,583.0

Total deposits		8,781.8			9,082.6

Borrowings:
Federal funds purchased		—			4.1

Total borrowings		—			4.1

Subordinated notes		65.3			65.3
Other liabilities		169.7			195.4

Total liabilities		9,016.8			9,347.4

Stockholders’ Equity (note 2)
Common stock ($0.01 par value; 1.95 billion shares authorized; 300.9 million shares issued and outstanding)		3.0			—
Common stock (without par value; 450.0 million shares authorized; 142.2 million shares issued and outstanding)		—			142.2
Additional paid-in capital		3,710.4			182.9
Retained earnings		1,073.7			1,062.4
Unallocated common stock of Employee Stock Ownership Plan		(212.0	)		—
Accumulated other comprehensive loss (note 5)		(41.4	)		(48.0	)

Total stockholders’ equity		4,533.7			1,339.5

Total liabilities and stockholders’ equity	$	13,550.5		$	10,686.9

See accompanying notes to consolidated financial statements.

People’s United Financial, Inc.

Consolidated Statements of Income - (Unaudited)


	Three Months Ended					Nine Months Ended
(in millions, except per share data)	Sept. 30, 2007		Sept. 30, 2006			Sept. 30, 2007		Sept. 30, 2006
Interest and dividend income:
Residential mortgage	$	44.6	$	47.7		$	140.7	$	135.2
Commercial		42.7		38.0			125.3		107.3
Commercial real estate		32.0		32.2			95.9		92.5
Consumer		22.5		23.0			67.9		64.8

Total interest on loans		141.8		140.9			429.8		399.8
Short-term investments		28.6		1.6			60.7		3.1
Securities purchased under agreements to resell		18.1		0.2			32.8		0.8
Securities		0.9		6.7			3.0		27.8

Total interest and dividend income		189.4		149.4			526.3		431.5

Interest expense:
Deposits		53.5		47.1			159.6		128.0
Borrowings		—		3.7			0.2		9.8
Subordinated notes		1.6		2.4			4.9		7.4

Total interest expense		55.1		53.2			164.7		145.2

Net interest income		134.3		96.2			361.6		286.3
Provision for loan losses		2.5		4.1			5.1		2.0

Net interest income after provision for loan losses		131.8		92.1			356.5		284.3

Non-interest income:
Fee-based revenues:
Service charges on deposit accounts		19.4		20.1			56.9		58.4
Insurance revenue		7.1		6.6			20.6		20.2
Brokerage commissions		3.2		2.9			10.2		9.2
Other fees		9.0		8.6			27.3		25.7

Total fee-based revenues		38.7		38.2			115.0		113.5
Net security gains (losses)		5.5		(23.2	)		5.5		(27.2	)
Bank-owned life insurance (note 1)		2.3		2.2			7.4		6.3
Net gains on sales of residential mortgage loans		0.8		0.5			2.4		1.5
Other non-interest income		2.9		2.8			9.0		8.0

Total non-interest income		50.2		20.5			139.3		102.1

Non-interest expense:
Compensation and benefits		53.1		51.3			159.3		153.5
Occupancy and equipment		17.3		15.6			50.0		46.8
Contribution to The People’s United Community Foundation (note 2)		—		—			60.0		—
Other non-interest expense		25.1		20.2			70.0		61.0

Total non-interest expense		95.5		87.1			339.3		261.3

Income from continuing operations before income tax expense		86.5		25.5			156.5		125.1
Income tax expense		29.2		8.6			53.0		42.1

Income from continuing operations		57.3		16.9			103.5		83.0

Discontinued operations (note 10) :
Income from discontinued operations, net of tax		0.3		0.1			1.2		1.7

Income from discontinued operations		0.3		0.1			1.2		1.7

Net income	$	57.6	$	17.0		$	104.7	$	84.7

Earnings per common share (notes 2 and 6)
Basic:
Income from continuing operations	$	0.20	$	0.05		$	0.36	$	0.27
Net income		0.20		0.06			0.36		0.28
Diluted:
Income from continuing operations		0.20		0.05			0.36		0.27
Net income		0.20		0.06			0.36		0.28

See accompanying notes to consolidated financial statements.

People’s United Financial, Inc.

Consolidated Statements of Changes in Stockholders’ Equity - (Unaudited)


For the nine months ended September 30, 2007 (in millions, except per share data)	Common Stock			Additional Paid-In Capital		Retained Earnings			Unallocated ESOP Common Stock			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance at December 31, 2006	$	142.2		$	182.9	$	1,062.4		$	—		$	(48.0	)	$	1,339.5
Comprehensive income:
Net income		—			—		104.7			—			—			104.7
Other comprehensive income, net of tax:
Net unrealized gain on derivatives		—			—		—			—			4.2			4.2
Reclassification of net actuarial loss		—			—		—			—			2.4			2.4

Total comprehensive income																111.3

Exchange of common stock pursuant to second-step conversion		(59.0	)		59.0		—			—			—			—
Net proceeds from issuance of common stock pursuant to second-step conversion		1.7			3,333.1		—			—			—			3,334.8
Common stock issued and donated to The People’s United Community Foundation		—			40.0		—			—			—			40.0
Cancellation of common stock owned by People’s Mutual Holdings		(82.0	)		82.0		—			—			—			—
Capital contribution pursuant to dissolution of People’s Mutual Holdings		—			8.1		—			—			—			8.1
Cash dividends on common stock ($0.38 per share)		—			—		(92.9	)		—			—			(92.9	)
Purchase of common stock for ESOP		—			—		—			(216.8	)		—			(216.8	)
ESOP common stock committed to be released		—			—		(0.5	)		4.8			—			4.3
Stock options and related tax benefits		0.1			5.3		—			—			—			5.4

Balance at September 30, 2007	$	3.0		$	3,710.4	$	1,073.7		$	(212.0	)	$	(41.4	)	$	4,533.7


For the nine months ended September 30, 2006 (in millions, except per share data)	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance at December 31, 2005	$	141.6	$	172.0	$	998.4		$	(23.4	)	$	1,288.6
Comprehensive income:
Net income		—		—		84.7			—			84.7
Other comprehensive income, net of tax		—		—		—			16.3			16.3

Total comprehensive income												101.0

Cash dividends on common stock ($0.34 per share)		—		—		(44.5	)		—			(44.5	)
Stock options and related tax benefits		0.5		5.8		—			—			6.3

Balance at September 30, 2006	$	142.1	$	177.8	$	1,038.6		$	(7.1	)	$	1,351.4

See accompanying notes to consolidated financial statements.

People’s United Financial, Inc.

Consolidated Statements of Cash Flows - (Unaudited)


	Nine Months Ended
(in millions)	Sept. 30, 2007			Sept. 30, 2006
Cash Flows from Operating Activities:
Net income	$	104.7		$	84.7
Income from discontinued operations, net of tax		(1.2	)		(1.7	)

Income from continuing operations		103.5			83.0
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Contribution of common stock to The People’s United Community Foundation		40.0			—
Provision for loan losses		5.1			2.0
Depreciation and amortization of premises and equipment		13.7			14.5
Amortization of leased equipment		4.4			2.3
Amortization of other acquisition-related intangibles		0.8			0.8
Net security (gains) losses		(5.5	)		27.2
Net gains on sales of residential mortgage loans		(2.4	)		(1.5	)
Allocation of ESOP common stock		4.3			—
Originations of loans held-for-sale		(315.6	)		(138.4	)
Proceeds from sales of loans held-for-sale		274.4			140.4
Net decrease (increase) in trading account securities		7.1			(2.2	)
Pension plan contributions		(0.8	)		(92.3	)
Net changes in other assets and liabilities		(7.8	)		7.6

Net cash provided by operating activities of continuing operations		121.2			43.4

Cash Flows from Investing Activities:
Net purchases of securities purchased under agreements to resell		(1,430.0	)		—
Proceeds from sale of securities purchased under agreements to resell		—			24.7
Proceeds from sales of securities available for sale		5.4			1,234.2
Proceeds from principal repayments of securities available for sale		90.2			223.9
Proceeds from principal repayments of securities held to maturity		—			0.3
Purchases of securities available for sale		(85.5	)		(293.3	)
Proceeds from sales of loans		4.3			—
Net loan principal collections (disbursements)		462.8			(451.7	)
Purchase of loans		—			(170.8	)
Purchase of bank-owned life insurance		(0.4	)		(50.0	)
Return of premium on bank-owned life insurance		0.5			—
Purchases of premises and equipment		(28.3	)		(8.5	)
Purchases of leased equipment		(16.9	)		(15.6	)

Net cash (used in) provided by investing activities		(997.9	)		493.2

Cash Flows from Financing Activities:
Net decrease in deposits		(300.8	)		(104.0	)
Net decrease in borrowings with terms of three months or less		(4.1	)		(281.3	)
Cash dividends paid on common stock		(92.9	)		(44.5	)
Net proceeds from issuance of common stock pursuant to second-step conversion		3,334.8			—
Capital contribution pursuant to dissolution of
People’s Mutual Holdings		8.1			—
Purchase of common stock by ESOP		(216.8	)		—
Proceeds from stock options exercised, including excess income tax benefits		2.8			3.4

Net cash provided by (used in) financing activities		2,731.1			(426.4	)

Cash Flows from Discontinued Operations:
Operating activities		1.2			1.7

Net cash provided by discontinued operations		1.2			1.7

Net increase in cash and cash equivalents		1,855.6			111.9
Cash and cash equivalents at beginning of period		568.7			423.5

Cash and cash equivalents at end of period	$	2,424.3		$	535.4

Supplemental Information:
Interest payments	$	166.0		$	145.9
Income tax payments		59.1			42.5
Real estate properties acquired by foreclosure		0.1			0.4

See accompanying notes to consolidated financial statements.

PEOPLE’S UNITED FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)

NOTE 1. GENERAL

People’s United Financial, Inc. is a Delaware corporation and the holding company for People’s United Bank. On April 16, 2007, People’s United Financial, People’s United Bank and People’s Mutual Holdings completed their second-step conversion from a mutual holding company structure to a fully-public stock holding company structure. See Note 2 for a further discussion of the second-step conversion. People’s United Financial had not engaged in any business through March 31, 2007; accordingly, the financial information for periods prior to March 31, 2007 appearing in this Form 10-Q is that of People’s United Bank. On June 6, 2007, People’s Bank changed its name to People’s United Bank. The name “People’s United Bank” is used throughout this Form 10-Q to refer to the Bank both before and after the name change.

In the opinion of management, the accompanying unaudited consolidated financial statements of People’s United Financial have been prepared to reflect all adjustments necessary to present fairly the financial position and results of operations as of the dates and for the periods shown. All significant intercompany transactions and balances are eliminated in consolidation. In preparing the consolidated financial statements, management is required to make significant estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, including the classification of revenues and expenses to discontinued operations.

Note 1 in People’s United Bank’s audited consolidated financial statements included in People’s United Financial’s Annual Report on Form 10-K for the year ended December 31, 2006, as supplemented by the Quarterly Report on Form 10-Q for the periods ended March 31, 2007 and June 30, 2007 and this report for the period ended September 30, 2007, includes a statement on People’s United Financial’s significant accounting policies. Several estimates are particularly critical and are susceptible to significant near-term change, including the allowance for loan losses, the valuation of derivative financial instruments, and asset impairment judgments including other-than-temporary declines in the value of securities and the recoverability of goodwill and other intangible assets. These significant accounting policies and critical estimates are reviewed with the Audit Committee of the Board of Directors.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been omitted or condensed. These statements should be read in conjunction with People’s United Financial’s Annual Report on Form 10-K for the year ended December 31, 2006. The results of operations for the nine months ended September 30, 2007 are not necessarily indicative of the results of operations that may be expected for the entire year or any other interim period. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

Bank-Owned Life Insurance

Bank-owned life insurance (“BOLI”) represents the cash surrender value of life insurance policies purchased on certain management-level employees. Increases in the cash surrender value of these policies and death benefits in excess of the related invested premiums are included in non-interest income in the Consolidated Statements of Income, while insurance proceeds received are recorded as a reduction in the cash surrender value.

Employee Benefit Plans

People’s United Financial maintains a noncontributory defined benefit pension plan that covers substantially all full-time and part-time employees who meet certain age and length of service requirements and who were employed by People’s United Bank prior to August 14, 2006. Benefits are based upon the employee’s years of credited service and either the average compensation for the last five years or the average compensation for the five consecutive years of the last ten years that produce the highest average. People’s United Financial’s funding policy is to contribute the amounts required by applicable regulations, although additional amounts may be contributed from time to time. In addition, People’s United Financial maintains unfunded and nonqualified supplemental plans to provide pension benefits to certain senior officers.

New employees starting on or after August 14, 2006 are not eligible to participate in the defined benefit pension plan. People’s United Financial will make contributions on behalf of these employees to a qualified defined contribution plan in an annual amount equal to 3% of the covered employee’s eligible compensation. Employee participation in this plan is restricted to employees who are at least 21 years of age and worked at least 1,000 hours in a year. Both full-time and part-time employees are eligible to participate as long as they meet these requirements.

People’s United Financial also maintains an unfunded plan that provides retirees with optional medical, dental and life insurance benefits (“other postretirement benefits”). People’s United Financial accrues the cost of these benefits over the employees’ years of service to the date of their eligibility for such benefits.

Components of the net periodic benefit cost for these plans are as follows:


For the three months ended September 30 (in millions)	Pension Benefits						Other Postretirement Benefits
	2007			2006			2007			2006
Service cost	$	2.1		$	1.9		$	—		$	—
Interest cost		3.3			3.1			0.2			0.2
Expected return on plan assets		(5.6	)		(3.5	)		—			—
Amortization of unrecognized net transition obligation		—			—			0.1			0.1
Recognized net actuarial loss		1.2			1.6			—			—
Recognized prior service cost		—			—			(0.1	)		—

Net periodic benefit cost	$	1.0		$	3.1		$	0.2		$	0.3


For the nine months ended September 30 (in millions)	Pension Benefits						Other Postretirement Benefits
	2007			2006			2007			2006
Service cost	$	6.3		$	5.9		$	0.1		$	0.1
Interest cost		10.1			9.1			0.5			0.5
Expected return on plan assets		(16.8	)		(10.5	)		—			—
Amortization of unrecognized net transition obligation		—			—			0.3			0.3
Recognized net actuarial loss		3.4			4.7			—			—
Recognized prior service cost		—			0.1			(0.2	)		(0.1	)

Net periodic benefit cost	$	3.0		$	9.3		$	0.7		$	0.8

People’s United Financial established an Employee Stock Ownership Plan (“the ESOP”) in connection with the second-step conversion (see below). The ESOP purchased approximately 10.5 million shares of People’s United Financial common stock in the open market. Compensation expense related to the ESOP is recognized monthly at an amount equal to the number of common shares committed to be allocated by the ESOP to participants’ accounts multiplied by the average fair value of People’s United Financial’s common stock during the reporting period. The difference between the fair value of the shares of People’s United Financial’s common stock committed to be allocated by the ESOP to participants’ accounts for the period and the cost of those common shares is recorded as an adjustment to either additional paid-in capital or retained earnings.

NOTE 2. SECOND-STEP CONVERSION

On April 16, 2007, People’s United Financial, People’s United Bank and People’s Mutual Holdings completed their second-step conversion from a mutual holding company structure to a fully-public stock holding company structure. People’s Mutual Holdings merged with and into People’s United Bank, with People’s United Bank as the surviving entity, and People’s United Bank became a wholly-owned subsidiary of People’s United Financial, Inc.

People’s United Financial sold 172.2 million shares of common stock in a public offering at a price of $20 per share. Net proceeds from the stock offering totaled approximately $3.33 billion, after deducting approximately $110 million in offering costs. People’s United Financial also exchanged 2.1 shares of its common stock for each share of People’s United Bank common stock outstanding, except for those shares owned by People’s Mutual Holdings and, accordingly, common share data for prior periods has been adjusted to reflect this exchange.

In April 2007, People’s United Financial contributed 2.0 million shares of its common stock, with a fair market value of $40 million, and $20 million in cash to The People’s United Community Foundation (included in non-interest expense in the Consolidated Statements of Income). People’s United Financial contributed approximately $1.7 billion from the net proceeds of the stock offering to People’s United Bank in the form of a capital contribution.

NOTE 3. SECURITIES

The amortized cost and fair value of People’s United Financial’s securities are as follows:


	September 30, 2007				December 31, 2006
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Trading account securities	$	22.5	$	22.5	$	29.6	$	29.6

Securities available for sale:
Debt securities:
U.S. Treasury and agency		21.9		21.9		25.9		25.9

Total debt securities		21.9		21.9		25.9		25.9

Equity securities:
FHLB stock		19.5		19.5		20.1		20.1
Other securities		0.5		0.7		0.6		0.8

Total equity securities		20.0		20.2		20.7		20.9

Total securities available for sale		41.9		42.1		46.6		46.8
Net unrealized gain on securities available for sale		0.2		—		0.2		—

Total securities available for sale, at fair value		42.1		42.1		46.8		46.8

Securities held to maturity:
Corporate and other		1.1		1.1		1.1		1.1

Total securities held to maturity		1.1		1.1		1.1		1.1

Total securities	$	65.7	$	65.7	$	77.5	$	77.5

NOTE 4. LOANS

The components of People’s United Financial’s loan portfolio are summarized as follows:


(in millions)	September 30, 2007		December 31, 2006
Residential mortgage:
Adjustable rate	$	3,257.8	$	3,805.6
Fixed rate		89.9		94.5

Total residential mortgage		3,347.7		3,900.1

Commercial real estate:
Residential		524.1		513.6
Retail		415.2		390.7
Office buildings		406.7		360.0
Industrial/manufacturing		172.6		184.8
Self storage/industrial		96.9		97.8
Land		55.1		61.4
Special use		48.8		47.4
Health care		46.9		53.9
Hospitality and entertainment		45.9		61.8
Other properties		10.5		15.3

Total commercial real estate		1,822.7		1,786.7

Commercial and industrial lending:
Manufacturing		401.7		412.1
Finance, insurance and real estate		355.7		354.7
Service		276.6		230.2
Wholesale distribution		156.7		119.9
Health services		118.3		108.5
Retail sales		111.5		113.6
Arts/entertainment/recreation		59.4		61.8
Transportation/utility		27.7		26.4
Other		61.8		66.6

Total commercial		1,569.4		1,493.8

People’s Capital and Leasing Corp.:
Printing		326.1		308.9
Transportation/utility		264.3		209.5
General manufacturing		143.9		141.6
Retail sales		93.0		85.7
Packaging		73.0		76.7
Service		27.7		28.2
Wholesale distribution		13.3		12.4
Health services		7.3		6.8

Total PCLC loans		948.6		869.8

Consumer:
Home equity credit lines		931.3		1,010.8
Second mortgages		289.5		279.8
Personal installment loans		11.4		14.1
Other loans		15.0		16.6

Total consumer loans		1,247.2		1,321.3

Total loans	$	8,935.6	$	9,371.7

Residential mortgage loans at September 30, 2007 and December 31, 2006 included loans held for sale (servicing released) of $20.6 million and $25.0 million, respectively, which approximate fair value.

NOTE 5. COMPREHENSIVE INCOME

Comprehensive income represents the sum of net income and items of “other comprehensive income or loss” that are reported directly in stockholders’ equity on an after-tax basis. These items include net actuarial losses, prior service costs and transition obligations related to People’s United Financial’s pension and other postretirement benefit plans, and net unrealized gains or losses on securities available for sale and derivatives accounted for as cash flow hedges. People’s United Financial’s total comprehensive income for the nine months ended September 30, 2007 and 2006 is reported in the Consolidated Statements of Changes in Stockholders’ Equity.

The components of accumulated other comprehensive loss, which is included in People’s United Financial’s period-end stockholders’ equity on an after-tax basis, are as follows:


(in millions)	September 30, 2007			December 31, 2006
Net actuarial loss, prior service costs and transition obligation on pension and other postretirement benefit plans	$	(41.7	)	$	(44.1	)
Net unrealized gain (loss) on derivatives accounted for as cash flow hedges		0.2			(4.0	)
Net unrealized gain on securities available for sale		0.1			0.1

Total accumulated other comprehensive loss	$	(41.4	)	$	(48.0	)

Other comprehensive income, net of tax, totaled $6.6 million for the nine months ended September 30, 2007. The change in total accumulated other comprehensive loss from December 31, 2006 consisted of after-tax reductions of $4.2 million in the net unrealized gain (loss) on derivatives accounted for as cash flow hedges and $2.4 million in the net actuarial loss, prior service costs and transition obligation on pension and other postretirement benefit plans.

NOTE 6. EARNINGS PER COMMON SHARE

The following is an analysis of People’s United Financial’s basic and diluted earnings per share (“EPS”):


	Three Months Ended				Nine Months Ended
(in millions, except per share data)	Sept. 30, 2007		Sept. 30, 2006		Sept. 30, 2007		Sept. 30, 2006
Income from continuing operations	$	57.3	$	16.9	$	103.5	$	83.0
Income from discontinued operations		0.3		0.1		1.2		1.7
Net income		57.6		17.0		104.7		84.7

Average common shares outstanding for basic EPS		289.7		297.5		292.7		297.3
Effect of dilutive stock options and unvested stock awards		1.1		1.4		1.4		1.3

Average common and common-equivalent shares for dilutive EPS		290.8		298.9		294.1		298.6

Basic EPS:
Income from continuing operations	$	0.20	$	0.05	$	0.36	$	0.27
Income from discontinued operations		—		0.01		—		0.01
Net income		0.20		0.06		0.36		0.28
Diluted EPS:
Income from continuing operations	$	0.20	$	0.05	$	0.36	$	0.27
Income from discontinued operations		—		0.01		—		0.01
Net income		0.20		0.06		0.36		0.28

Approximately 10.2 million unallocated ESOP common shares have been excluded from the calculation of earnings per share for the three and nine months ended September 30, 2007.

In mid-October 2007, 7.0 million shares of People’s United Financial common stock were purchased in the open market for the purpose of using these shares to grant restricted stock awards pursuant to the 2007 Recognition and Retention Plan (the “Plan”). Awards encompassing approximately 3.3 million of these shares were made pursuant to the Plan on October 25, 2007. Shares held by the Plan that have not been made the subject of awards will be accounted for as treasury shares, and will therefore be excluded from the earnings per share calculation.

Based on the number of shares of People’s United Financial common stock outstanding on October 31, 2007, and assuming no additional grants are made pursuant to the Plan, and no significant change in the number of shares outstanding due to the exercise of stock options or cancellation of stock awards previously granted under all equity-based plans, and assuming no significant change to the number of dilutive stock options and unvested stock awards outstanding, the average common and common-equivalent shares used in the calculation of diluted earnings per share is expected to be approximately 287 million for the fourth quarter of this year.

NOTE 7. GOODWILL AND OTHER ACQUISITION-RELATED INTANGIBLE ASSETS

People’s United Financial’s goodwill totaled $101.5 million at both September 30, 2007 and December 31, 2006. At September 30, 2007, goodwill was allocated to the Consumer Financial Services and Commercial Banking segments in the amounts of $96.8 million and $4.7 million, respectively.

People’s United Financial’s other acquisition-related intangible assets totaled $2.7 million and $3.5 million; gross carrying amounts totaled $28.1 million and $28.1 million; and accumulated amortization totaled $25.4 million and $24.6 million, each at September 30, 2007 and December 31, 2006, respectively. Amortization expense of other acquisition-related intangible assets totaled $0.8 million for both the nine months ended September 30, 2007 and 2006. The estimated aggregate amortization expense for the full-year of 2007 and each of the next three years for other acquisition-related intangible assets is as follows: $1.1 million in 2007; $1.0 million in 2008 and 2009; and $0.4 million in 2010. This estimate does not include the potential impact of additional amortization expense that may result from the pending acquisition of the Chittenden Corporation (see note 12).

NOTE 8. COMMITMENTS AND CONTINGENCIES

In the normal course of business, People’s United Financial has various outstanding commitments and contingent liabilities that are not required to be and therefore, have not been reflected in the consolidated financial statements. In addition, in the normal course of business, there are various outstanding legal proceedings to which People’s United Financial is a party. Management has discussed the nature of these legal proceedings with legal counsel. In the opinion of management, People’s United Financial does not expect its financial condition to be affected materially as a result of the outcome of such commitments, contingent liabilities and legal proceedings.

NOTE 9. BUSINESS SEGMENT INFORMATION

See “Business Segment Results” beginning on page 21 for segment information for the three and nine months ended September 30, 2007 and 2006.

NOTE 10. DISCONTINUED OPERATIONS

On March 5, 2004, People’s United Bank completed the sale of its credit card business. People’s United Financial continues to generate recoveries from collection efforts on previously charged-off credit card accounts that were not included in the sale of the credit card business in 2004. These recoveries are included in income from discontinued operations in the Consolidated Statements of Income for periods subsequent to the sale. Recoveries, net of collection costs, totaled $0.5 million and $1.9 million for the three and nine months ended September 30, 2007, respectively, and $1.0 million and $3.4 million for the three and nine months ended September 30, 2006, respectively.

NOTE 11. NEW ACCOUNTING STANDARDS

People’s United Financial adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” effective January 1, 2007. As of the date of adoption, People’s United Financial’s unrecognized income tax benefits totaled $1.0 million, which if recognized would minimally affect its annualized income tax rate. Additionally, People’s United Financial had accrued interest expense related to the unrecognized income tax benefits of $0.1 million. People’s United Financial recognizes accrued interest related to unrecognized income tax benefits in interest expense in the Consolidated Statement of Income. Penalties, if incurred, would be recognized as a component of income tax expense.

People’s United Financial files a consolidated U.S. Federal income tax return and files income tax returns in several states. People’s United Financial does not have any foreign operations and therefore is not subject to income taxes in any foreign jurisdictions.

People’s United Financial is no longer subject to either federal or state income tax examinations through 2003. The Internal Revenue Service (“IRS”) commenced examinations of People’s United Bank’s U.S. Federal income tax returns for the years ended December 31, 2004 and 2005 during the fourth quarter of 2006. People’s United Financial anticipates that the IRS will complete this examination by the end of the first quarter of 2008. To date, the IRS has not proposed any adjustments that would have a material impact on People’s United Financial’s Consolidated Financial Statements.

People’s United Financial does not anticipate that total unrecognized income tax benefits will change significantly due to the outcome of IRS audits and the expiration of statutes of limitations prior to March 31, 2008.

In September 2006, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements,” which establishes a definition and measurement date for fair value and expands the disclosures regarding fair-value measurement. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. People’s United Financial is currently evaluating SFAS No. 157 to determine if it will have a material impact on its Consolidated Financial Statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115,” which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. People’s United Financial is currently evaluating SFAS No. 159 to determine if it will have a material impact on its Consolidated Financial Statements.

NOTE 12. PENDING ACQUISITION

On June 27, 2007, People’s United Financial announced it had signed a definitive agreement to acquire Chittenden Corporation, a multi-bank holding company with headquarters in Burlington, Vermont. At September 30, 2007, Chittenden Corporation had total assets of $6.9 billion, total loans of $5.2 billion and total deposits of $5.8 billion. Under the terms of the merger agreement, each share of Chittenden Corporation common stock will be converted into the right to receive either People’s United Financial common stock, cash or a combination of both, with a total transaction value of approximately $1.8 billion as of September 30, 2007. The transaction, which is expected to close early in the first quarter of 2008, is subject to the approval of Chittenden Corporation’s shareholders (a special meeting is scheduled for November 28, 2007) and the receipt of various regulatory approvals.

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Selected Consolidated Financial Data


	Three Months Ended									Nine Months Ended
(dollars in millions, except per share data)	Sept. 30, 2007			June 30, 2007			Sept. 30, 2006			Sept. 30, 2007			Sept. 30, 2006
Operating Data:
Net interest income	$	134.3		$	132.0		$	96.2		$	361.6		$	286.3
Provision for loan losses		2.5			1.8			4.1			5.1			2.0
Fee-based revenues		38.7			38.5			38.2			115.0			113.5
Net security gains (losses)		5.5			—			(23.2	)		5.5			(27.2	)
All other non-interest income		6.0			7.0			5.5			18.8			15.8
Non-interest expense (1)		95.5			155.7			87.1			339.3			261.3
Income from continuing operations		57.3			13.1			16.9			103.5			83.0
Income from discontinued operations		0.3			0.4			0.1			1.2			1.7
Net income		57.6			13.5			17.0			104.7			84.7

Selected Statistical Data:
Net interest margin (2)		4.28	%		4.23	%		3.89	%		4.16	%		3.83	%
Return on average assets (2)		1.70			0.40			0.63			1.12			1.04
Return on average stockholders’ equity (2)		5.1			1.4			5.1			4.2			8.6
Efficiency ratio		52.8			53.3			61.5			55.7			61.9

Per Common Share Data: (3)
Basic earnings per share	$	0.20		$	0.05		$	0.06		$	0.36		$	0.28
Diluted earnings per share		0.20			0.05			0.06			0.36			0.28
Dividends paid per share		0.13			0.13			0.12			0.38			0.34
Dividend payout ratio		67.2	%		286.4	%		91.0	%		88.7	%		52.5	%
Book value (end of period)	$	15.60		$	15.50		$	4.53		$	15.60		$	4.53
Tangible book value (end of period)		15.24			15.14			4.17			15.24			4.17
Stock price:
High		18.62			21.38			19.60			22.81			19.60
Low		14.78			17.56			15.19			14.78			14.29
Close (end of period)		17.28			17.73			18.86			17.28			18.86

(1)	Includes a $60.0 million contribution to The People’s United Community Foundation for the three months ended June 30, 2007 and the nine months ended September 30, 2007.

(2)	Annualized.

(3)	Common share data has been adjusted (except dividend payout ratio) to reflect the exchange of shares of People’s United Bank common stock for 2.1 shares of People’s United Financial, Inc. common stock upon completing the second-step conversion.

Selected Consolidated Financial Data – continued


	As of and for the Three Months Ended
(dollars in millions)	Sept. 30, 2007			June 30, 2007			March 31, 2007			Dec. 31, 2006			Sept. 30, 2006
Financial Condition Data:
Total assets (1)	$	13,551		$	13,822		$	11,602		$	10,687		$	10,612
Loans		8,936			9,046			9,310			9,372			9,185
Securities, net		66			70			73			77			202
Allowance for loan losses		74			73			74			74			74
Deposits		8,782			9,091			9,968			9,083			8,979
Core deposits		8,728			9,054			9,281			9,040			8,932
Borrowings		—			—			8			4			14
Purchased funds		54			37			52			47			61
Subordinated notes		65			65			65			65			109
Stockholders’ equity (1)		4,534			4,504			1,359			1,340			1,351
Non-performing assets		26			18			19			23			23
Net loan charge-offs		1.5			3.7			0.4			1.4			4.1

Average Balances:
Loans	$	8,935		$	9,169		$	9,305		$	9,247		$	9,083
Short-term investments (1)		3,536			3,236			305			173			137
Securities		69			70			74			166			669
Earning assets (1)		12,540			12,475			9,684			9,586			9,889
Total assets (1)		13,516			13,399			10,601			10,553			10,778
Deposits		8,781			9,195			9,022			8,923			8,897
Funding liabilities		8,846			9,268			9,094			9,030			9,275
Stockholders’ equity (1)		4,507			3,975			1,338			1,355			1,331

Ratios:
Net loan charge-offs to average loans (annualized)		0.07	%		0.16	%		0.01	%		0.06	%		0.18	%
Non-performing assets to total loans, real estate owned and repossessed assets		0.29			0.20			0.21			0.24			0.25
Allowance for loan losses to non-performing loans		318.2			404.8			389.4			327.9			354.9
Allowance for loan losses to total loans		0.82			0.80			0.80			0.79			0.81
Average stockholders’ equity to average total assets (1)		33.3			29.7			12.6			12.8			12.3
Stockholders’ equity to total assets (1)		33.5			32.6			11.7			12.5			12.7
Tangible stockholders’ equity to total tangible assets (1)		32.9			32.1			10.9			11.7			11.9
Leverage capital		25.0			24.3			11.2			12.0			11.8
Tier 1 risk-based capital		34.0			33.9			14.7			14.8			14.7
Total risk-based capital		35.3			35.1			16.0			16.1			16.2

(1)	The increases from March 31, 2007 primarily reflect net proceeds of $3.3 billion from the sale of 172.2 million shares of People’s United Financial, Inc. common stock in connection with the second-step conversion completed on April 16, 2007.

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 core deposits, purchased funds and the efficiency ratio. Management believes such non-GAAP financial measures provide information useful to investors in understanding People’s United Financial’s underlying operating performance and trends, and facilitate comparisons with the performance of other banks and thrifts.

Management utilizes core deposits and purchased funds as non-GAAP financial measures to supplement its analysis of People’s United Financial’s business performance. Core deposits is a measure of stable funding sources and is defined as total deposits, other than municipal deposits (which are seasonally variable by nature) and escrow funds from People’s United Financial’s stock offering. Purchased funds include borrowings and municipal deposits.

Although management believes that the above-mentioned non-GAAP financial measures enhance investors’ understanding of People’s United Financial’s operating performance, these non-GAAP financial measures should not be considered an alternative to GAAP. The reconciliation of these non-GAAP financial measures from GAAP to non-GAAP is presented below.

The following tables provide reconciliations between GAAP and non-GAAP financial measures:


As of (in millions)	Sept. 30, 2007		June 30, 2007		March 31, 2007		Dec. 31, 2006		Sept. 30, 2006
Deposits	$	8,782	$	9,091	$	9,968	$	9,083	$	8,979
Less:
Municipal deposits		54		37		44		43		47
Escrow funds from stock offering		—		—		643		—		—

Core deposits	$	8,728	$	9,054	$	9,281	$	9,040	$	8,932


As of (in millions)	Sept. 30, 2007		June 30, 2007		March 31, 2007		Dec. 31, 2006		Sept. 30, 2006
Borrowings	$	—	$	—	$	8	$	4	$	14
Plus:
Municipal deposits		54		37		44		43		47

Purchased funds	$	54	$	37	$	52	$	47	$	61

In addition to the above non-GAAP financial measures, management uses the efficiency ratio to monitor its operating efficiency compared to its peers. 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) (the numerator) 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) (the denominator). 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.

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
(dollars in millions)	Sept. 30, 2007			June 30, 2007			Sept. 30, 2006			Sept. 30, 2007			Sept. 30, 2006
Total non-interest expense	$	95.5		$	155.7		$	87.1		$	339.3		$	261.3
Less:
Contribution to The People’s United Community Foundation		—			60.0			—			60.0			—
Amortization of other acquisition-related intangibles		0.3			0.3			0.2			0.8			0.8
Loss on sale of reverse repurchase agreements		—			—			0.3			—			0.3
Severance-related charges		—			—			—			—			1.2
RC Knox settlement		—			—			—			—			0.9
Other		0.1			—			0.2			0.3			0.3

Total	$	95.1		$	95.4		$	86.4		$	278.2		$	257.8

Net interest income (1)	$	134.3		$	132.0		$	96.2		$	361.6		$	286.3
Total non-interest income		50.2			45.5			20.5			139.3			102.1
Add:
BOLI FTE adjustment (1)		1.3			1.4			1.1			4.0			3.2
Net security losses		—			—			23.2			—			27.2
Less:
Interest from completed IRS audit		—			—			—			—			0.6
MasterCard common stock redemption		—			—			—			—			0.7
Net security gains		5.5			—			—			5.5			—
Gain on asset sale		—			—			0.7			—			0.7

Total	$	180.3		$	178.9		$	140.3		$	499.4		$	416.8

Efficiency ratio		52.8	%		53.3	%		61.5	%		55.7	%		61.9	%

(1)	Fully taxable equivalent.

Second-Step Conversion and Name Change

On June 6, 2007, People’s Bank changed its name to People’s United Bank. The name “People’s United Bank” is used throughout this Form 10-Q to refer to the Bank both before and after the name change.

Financial Overview

People’s United Financial reported net income of $57.6 million, or $0.20 per diluted share, for the three months ended September 30, 2007, compared to $17.0 million, or $0.06 per diluted share, for the year-ago period. The prior year quarter’s results included an after-tax loss of $15.7 million, or $0.05 per diluted share, from the sale of securities. Net income totaled $104.7 million, or $0.36 per diluted share, compared to $84.7 million, or $0.28 per diluted share, for the nine months ended September 30, 2007 and 2006, respectively. Results for the nine months ended September 30, 2007 included a $60 million contribution to The People’s United Community Foundation (included in non-interest expense), which had the effect of reducing net income by $39.6 million, or $0.13 per diluted share. Results for the nine months ended September 30, 2006 included an after-tax loss of $18.2 million, or $0.06 per diluted share, from the sale of securities.

Net interest income increased $38.1 million, or 40%, from the year-ago quarter and the net interest margin improved 39 basis points to 4.28%. These improvements reflect the investment of $3.3 billion in net proceeds from the second-step conversion (completed on April 16, 2007) in short-term investments, as well as the benefits from balance sheet restructuring activities completed during 2006. Compared to the third quarter of 2006, average earning assets increased $2.7 billion, reflecting an increase of $3.4 billion in average short-term investments, partially offset by decreases of $600 million in average securities and $148 million in average loans. Average funding liabilities decreased $429 million compared to the third quarter of 2006, reflecting decreases of $117 million in average total deposits, $269 million in average borrowings and $43 million in average subordinated notes. The net interest margin increased 5 basis points compared to the second quarter of 2007.

Total non-interest income increased $29.7 million compared to the year-ago quarter. Included in total non-interest income are net security gains of $5.5 million and net security losses of $23.2 million in the third quarter of 2007 and 2006, respectively. Non-interest expense increased $8.4 million, or 10%, compared to the third quarter of 2006, reflecting increases in compensation and benefits, occupancy and equipment, professional and outside service fees and other non-interest expense, including costs of approximately $1 million related to the rebranding of the Bank. The efficiency ratio improved to 52.8% in the third quarter of 2007 compared to 61.5% in the year-ago period.

The provision for loan losses in the third quarter of 2007 was $2.5 million compared to $4.1 million in the year-ago period. The provision for loan losses in the third quarter of 2007 reflected net loan charge-offs of $1.5 million and a $1.0 million increase in the allowance for loan losses. The provision for loan losses in the third quarter of 2006 reflected net loan charge-offs of $4.1 million (including a $4.0 million charge-off relating to one commercial banking loan that was placed on non-accrual status in the second quarter of 2006). The allowance for loan losses as a percentage of total loans was 0.82% at September 30, 2007, compared to 0.81% at September 30, 2006. Net loan charge-offs as a percentage of average total loans on an annualized basis were 0.07% in the third quarter of 2007 compared to 0.18% in the year-ago quarter.

People’s United Financial’s total stockholders’ equity was $4.5 billion at September 30, 2007, a $3.2 billion increase from December 31, 2006, and as a percentage of total assets, stockholders’ equity was 33.5% at September 30, 2007, compared to 12.5% at December 31, 2006. The increases from December 31, 2006 reflect the net proceeds of $3.3 billion from the second-step conversion.

People’s United Bank’s total risk-based capital ratio was 35.3% at September 30, 2007, compared to 16.1% at December 31, 2006. The improvement from December 31, 2006 primarily reflects the $1.7 billion capital contribution from People’s United Financial with a portion of the net proceeds from the second-step conversion.

Business Segment Results

People’s United Financial’s operations are divided into two primary business segments that represent its core businesses, Commercial Banking and Consumer Financial Services. 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. The income or loss for the funding center, which includes the impact of derivative financial instruments used for risk management purposes, represents the interest rate risk component of People’s United Financial’s net interest income as calculated by People’s United Financial’s funds transfer pricing model (“FTP”), to derive each operating segment’s net interest income.

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, 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. The provision for loan losses for the Commercial Banking and Consumer Financial Services segments is generally based on a five-year rolling average net charge-off rate 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.

Commercial Banking consists principally of commercial lending, commercial real estate lending and commercial deposit gathering activities. This segment also includes the equipment financing operations of People’s Capital and Leasing Corp. (“PCLC”), as well as cash management, correspondent banking and municipal banking.


	Three Months Ended				Nine Months Ended
(in millions)	Sept. 30, 2007		Sept. 30, 2006		Sept. 30, 2007		Sept. 30, 2006
Net interest income	$	32.9	$	32.7	$	97.9	$	96.6
Provision for loan losses		2.7		2.6		8.0		7.7
Non-interest income:
Fee-based revenues		4.6		4.3		13.8		12.1
Other non-interest income		2.1		1.3		5.9		3.3

Total non-interest income		6.7		5.6		19.7		15.4
Non-interest expense		22.6		19.6		65.7		57.9

Income before income tax expense		14.3		16.1		43.9		46.4
Income tax expense		5.0		5.7		15.4		16.3

Income from continuing operations	$	9.3	$	10.4	$	28.5	$	30.1

Average earning assets	$	4,252.3	$	3,949.7	$	4,221.5	$	3,864.3
Average liabilities		1,017.1		1,095.1		1,017.6		1,206.7
Period end assets		4,345.4		4,001.5		4,345.4		4,001.5

Commercial Banking income from continuing operations declined $1.1 million, or 11%, compared to the third quarter of 2006, reflecting an increase in non-interest expense, partially offset by increases in net interest income, fee-based revenues and other non-interest income. Net interest income increased $0.2 million, or 1%, reflecting a $303 million, or 8%, increase in average earning assets, essentially offset by narrower net spreads and a decline in commercial non-interest-bearing deposits. The $0.3 million increase in fee-based revenues reflects higher lending-related charges and fees. The increase in other non-interest income primarily reflects a $0.9 million increase in rental income on leased equipment. The $3.0 million, or 15%, increase in non-interest expense reflects increases in direct expenses, due to continued growth in this business and a $0.7 million increase in amortization expense for leased equipment, as well as allocated expenses primarily related to costs associated with ongoing infrastructure upgrades.

The increase in average earning assets compared to the third quarter of 2006 reflects increases of $205 million, or 29%, in PCLC loans and $109 million, or 8%, in commercial loans, partially offset by a decrease of $8 million, or less than 1%, in commercial real estate loans. Average commercial non-interest-bearing deposits totaled $885 million in the third quarter of 2007, a $53 million, or 6%, decrease compared to the year-ago quarter, reflecting the current interest rate environment.

Consumer Financial Services includes, as its principal business lines, consumer deposit gathering activities, residential mortgage, home equity and other consumer lending (excluding the national consumer loan portfolio, which is reported in Other). In addition to trust services, this segment also includes brokerage, financial advisory services, investment management services and life insurance provided by People’s Securities, Inc. (“PSI”), and other insurance services provided through R. C. Knox and Company, Inc. (“RC Knox”).


	Three Months Ended				Nine Months Ended
(in millions)	Sept. 30, 2007		Sept. 30, 2006		Sept. 30, 2007		Sept. 30, 2006
Net interest income	$	61.9	$	63.5	$	186.9	$	194.2
Provision for loan losses		0.8		0.8		2.4		2.3
Non-interest income:
Fee-based revenues		34.1		33.7		101.2		100.9
Net gains on sales of residential mortgage loans		0.8		0.5		2.4		1.5
Net security gains		0.1		0.2		0.1		0.2
Other non-interest income		0.5		1.3		1.7		2.7

Total non-interest income		35.5		35.7		105.4		105.3
Non-interest expense		70.8		64.7		208.2		196.5

Income before income tax expense		25.8		33.7		81.7		100.7
Income tax expense		9.1		11.9		28.8		35.6

Income from continuing operations	$	16.7	$	21.8	$	52.9	$	65.1

Average earning assets	$	4,731.3	$	5,179.5	$	4,961.8	$	5,024.4
Average liabilities		7,680.8		7,741.2		7,905.2		7,817.5
Period end assets		4,736.5		5,333.1		4,736.5		5,333.1

Consumer Financial Services income from continuing operations declined $5.1 million, or 23%, compared to the third quarter of 2006, reflecting an increase in non-interest expense and a decline in net interest income.

The $1.6 million decrease in net interest income reflects a reduction in residential mortgage loan net spread interest income, and a shift from wider net spread deposits to time deposits with narrower net spreads, partially offset by the widening net spread on money market accounts. In the third quarter of 2007, average earning assets decreased $448 million, or 9%, reflecting decreases of $403 million, or 11%, in average residential mortgage loans and $41 million, or 3%, in average home equity loans. The decrease in average residential mortgage loans reflects People’s United Bank’s decision in the fourth quarter of 2006 to sell essentially all of its newly-originated residential mortgage loans. As a result, residential mortgage loan balances are expected to continue to decline in the future until People’s United Bank resumes adding such loans to its portfolio to an extent that more than offsets repayments. Average consumer deposits totaled $7.7 billion in third quarter of 2007, a $60 million, or 1%, decrease compared to the third quarter of 2006.

Net gains on sales of residential mortgage loans increased $0.3 million, or 60%, in the third quarter of 2007, due to a 72% increase in residential mortgage loan sales volume compared to the third quarter of 2006, reflecting People’s United Bank’s decision to sell essentially all of its newly originated fixed- and adjustable-rate residential mortgage loans due to the low spreads on such loans in the current interest rate environment. The increase in non-interest expense reflects a $6.4 million increase in allocated expenses primarily due to the costs associated with ongoing infrastructure upgrades relating to deposit gathering activities.

Treasury encompasses the securities portfolio, short-term investments, wholesale funding activities, such as borrowings, and the funding center, which includes the impact of derivative financial instruments used for risk management purposes.


	Three Months Ended						Nine Months Ended
(in millions)	Sept. 30, 2007			Sept. 30, 2006			Sept. 30, 2007			Sept. 30, 2006
Net interest income	$	(6.6	)	$	(6.9	)	$	(15.4	)	$	(21.1	)
Fee-based revenues		—			0.2			—			0.4
Bank-owned life insurance		2.3			2.2			7.4			6.3
Net security losses		—			(23.4	)		—			(27.4	)
Other non-interest income		0.2			—			0.2			0.1
Non-interest expense		0.3			0.4			0.3			1.1

Loss before income tax benefit		(4.4	)		(28.3	)		(8.1	)		(42.8	)
Income tax benefit		(2.4	)		(10.7	)		(5.4	)		(17.3	)

Loss from continuing operations	$	(2.0	)	$	(17.6	)	$	(2.7	)	$	(25.5	)

Average earning assets	$	3,556.5		$	756.5		$	2,393.5		$	1,077.4
Average liabilities		82.7			360.1			79.3			277.1
Period end assets		3,793.1			546.1			3,793.1			546.1

The reduction in Treasury’s loss from continuing operations in the third quarter of 2007 compared to the 2006 period reflects a $0.3 million improvement in net interest income, a $0.1 million increase in bank-owned life insurance (“BOLI”) income, and $23.4 million in net security losses in the third quarter of 2006.

Average earning assets increased $2.8 billion from the year-ago quarter. Average short-term investments increased $3.4 billion, reflecting the investment of $3.3 billion in net proceeds from the second-step conversion, while average securities declined $600 million resulting from the sale of $835 million and $266 million of securities during the third and second quarters of 2006, respectively. The debt securities portfolio totaled $23 million at September 30, 2007, compared to $23 million at June 30, 2007 and $147 million at September 30, 2006.

Average short-term investments comprised 28% of average earning assets in the third quarter of 2007 compared to 1% in the year-ago quarter. Average securities comprised 1% of average earning assets in the third quarter of 2007 compared to 7% in the year-ago quarter.

Other includes the residual financial impact from the allocation of revenues and expenses, certain revenues and expenses not attributable to a particular segment, and the FTP impact from excess capital. This category also includes: revenue and expenses relating to the national consumer loan portfolio; certain nonrecurring items, including security gains of $5.4 million from the sale of People’s United Financial’s entire holdings of MasterCard Incorporated Class B Common Stock (included in non-interest income for the three and nine months ended September 30, 2007) and the $60 million contribution to The People’s United Community Foundation (included in non-interest expense for the nine months ended September 30, 2007); and income from discontinued operations. Included in period-end assets are cash, national consumer loans, premises and equipment, and other assets. The increase in net interest income for the three and nine months ended September 30, 2007 reflects the FTP credit generated by the significant increase in excess capital from the second-step conversion.


	Three Months Ended					Nine Months Ended
(in millions)	Sept. 30, 2007			Sept. 30, 2006		Sept. 30, 2007			Sept. 30, 2006
Net interest income	$	46.1		$	6.9	$	92.2		$	16.6
Provision for loan losses		(1.0	)		0.7		(5.3	)		(8.0	)
Non-interest income		5.5			0.2		6.6			2.0
Non-interest expense		1.8			2.4		65.1			5.8

Income before income tax expense		50.8			4.0		39.0			20.8
Income tax expense		17.5			1.7		14.2			7.5

Income from continuing operations		33.3			2.3		24.8			13.3

Income from discontinued operations, net of tax		0.3			0.1		1.2			1.7

Net income	$	33.6		$	2.4	$	26.0		$	15.0

Average liabilities	$	228.1		$	251.0	$	228.8		$	249.0
Period end assets		675.5			731.4		675.5			731.4

Net Interest Income

Net interest income and net interest margin are affected by many factors, including changes in average balances; interest rate fluctuations and the slope of the yield curve; sales of loans and securities; residential mortgage loan and mortgage-backed security prepayment rates; product pricing; competitive forces; the relative mix, repricing characteristics and maturity of earning assets and interest-bearing liabilities; non-interest-bearing sources of funds; hedging activities; and asset quality.

In response to the disruptions in the capital markets caused by the sub-prime mortgage crisis and the potential for a contracting U.S. economy, the Federal Reserve Board decreased the targeted federal funds rate by 50 basis points in September 2007 and by an additional 25 basis points in October, bringing the rate to 4.50%. Given the asset sensitive position of the balance sheet, the net interest margin may compress approximately 3% to 5% in the fourth quarter of 2007.

Third Quarter 2007 Compared to Third Quarter 2006

The net interest margin improved 39 basis points to 4.28% compared to the third quarter of 2006. The increase in net interest margin reflects the investment of $3.3 billion in net proceeds from the second-step conversion in short-term investments, as well as the benefits from balance sheet restructuring activities completed during 2006. Net interest income increased $38.1 million, or 40%, reflecting a $40.0 million, or 27%, increase in total interest and dividend income, partially offset by a $1.9 million, or 4%, increase in total interest expense.

Average earning assets totaled $12.5 billion in the third quarter of 2007, a $2.7 billion, or 27%, increase from the third quarter of 2006, while the asset mix continued to shift. Average short-term investments increased $3.4 billion, reflecting the investment of $3.3 billion in net proceeds from the second-step conversion; average loans decreased $148 million, or 2%; and average securities declined $600 million, reflecting the sale of $810 million and $266 million of debt securities during the third and second quarters of 2006, respectively. As a result, average loans, average securities and average short-term investments comprised 71%, 1% and 28%, respectively, of average earning assets in the third quarter of 2007, compared to 92%, 7% and 1%, respectively, in the 2006 period. The yield earned on the total loan portfolio was 6.35% this quarter, while the yield earned on securities and short-term investments was 5.29%, compared to 6.21% and 4.22%, respectively, in the year-ago quarter. Excluding adjustable-rate residential mortgage loans, which are mostly of the hybrid variety, approximately 30% of the loan portfolio has floating interest rates compared to 29% in the year-ago quarter.

The total average commercial banking loan portfolio increased $306 million, or 8%, reflecting increases of $205 million, or 29%, in PCLC loans and $109 million, or 8%, in commercial loans, partially offset by a decrease of $8 million, or less than 1%, in commercial real estate loans. Included in average commercial loans and average commercial real estate loans were increases of $78 million, or 24%, and $66 million, or 30%, in the respective national credits portfolios.

Average residential mortgage loans decreased $403 million, or 11%, and average home equity loans decreased $41 million, or 3%. The decrease in average residential mortgage loans reflects People’s United Bank’s decision in the fourth quarter of 2006 to sell essentially all of its newly-originated residential mortgage loans. As a result, residential mortgage loan balances are expected to continue to decline in the future until People’s United Bank resumes adding such loans to its portfolio to an extent that more than offsets repayments. The decline in average home equity loans follows a nationwide pattern.

Average funding liabilities totaled $8.8 billion in the third quarter of 2007, a $429 million, or 5%, decrease compared to the year-ago quarter. Average core deposits decreased $117 million, or 1%, reflective of People’s United Financial’s recent strategy of funding loan growth with proceeds from the repayment of securities. Average core deposits comprised 99% of average funding liabilities in the third quarter of 2007 compared to 96% in the year-ago period. Average non-interest-bearing core deposits decreased $38 million, or 2%, and average interest-bearing core deposits decreased $79 million, or 1% (see below).

The 20 basis point increase to 2.49% from 2.29% in the rate paid on average funding liabilities primarily reflects the increase in market interest rates and the ongoing shift in deposit mix. The rates paid on average core deposits increased 33 basis points from the third quarter of 2006, reflecting increases of 55 basis points in time deposits and 7 basis points in savings and money market deposits in response to rising deposit interest rates. The change in the mix of average interest-bearing core deposits reflects a $223 million, or 7%, increase in higher-paying time deposits, offset by a $302 million, or 9%, decline in savings and money market deposits, reflecting customers’ preferences for deposit products with higher interest rates. Average time deposits comprised 41% of average total deposits in the third quarter of 2007 compared to 38% in the 2006 period.

Third Quarter 2007 Compared to Second Quarter 2007

The net interest margin increased 5 basis points and net interest income increased $2.3 million compared to the second quarter of 2007. Total interest and dividend income increased $1.9 million and total interest expense decreased $0.4 million.

Average earning assets increased $65 million, or 2% annualized, reflecting a $300 million increase in average short-term investments, primarily due to the investment of the net proceeds from the second-step conversion for a full quarter, partially offset by decreases in average loans of $234 million, or 10% annualized, and average securities of $1 million. The decrease in average loans included decreases of: $232 million, or 25% annualized, in residential mortgage loans; $19 million, or 6% annualized, in home equity loans; $29 million, or 6% annualized, in commercial real estate loans, partially offset by increases of $25 million, or 7% annualized, in commercial loans and $21 million, or 9% annualized, in PCLC loans.

Average funding liabilities decreased $422 million, or 18% annualized, reflecting decreases of $250 million, or 11% annualized, in average core deposits and $164 million in average non-core deposits. The decrease in average non-core deposits reflects a $169 million decrease in average escrow funds related to the stock offering (none at June 30, 2007 and September 30, 2007).

The tables on the following pages present average balance sheets, interest income, interest expense and the corresponding average yields earned and rates paid for the three months ended September 30, 2007, June 30, 2007 and September 30, 2006, and the nine months ended September 30, 2007 and 2006. The average balances are principally daily averages and, for loans, include both performing and non-performing balances. Interest income on loans includes the effect of deferred loan fees and costs accounted for as yield adjustments, but does not include interest on loans for which People’s United Financial has ceased to accrue interest. The impact of People’s United Financial’s use of derivative instruments in managing interest rate risk is also reflected in the tables, classified according to the instrument hedged and the risk management objective.

Average Balance, Interest and Yield/Rate Analysis (1)


	September 30, 2007						June 30, 2007						September 30, 2006
Three months ended (dollars in millions)	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate
Earning assets:
Short-term investments	$	2,157.6	$	28.6	5.30	%	$	2,121.4	$	28.1	5.30	%	$	120.5	$	1.6	5.30	%
Securities purchased under agreements to resell		1,378.8		18.1	5.25			1,115.0		14.7	5.29			16.9		0.2	5.03
Securities (2)		68.8		0.9	5.55			70.1		1.0	5.59			668.5		6.7	4.00
Loans:
Residential mortgage		3,434.7		44.6	5.20			3,666.5		47.1	5.14			3,838.3		47.7	4.98
Commercial		2,471.2		42.7	6.92			2,425.1		42.0	6.93			2,157.0		38.0	7.03
Commercial real estate		1,777.2		32.0	7.20			1,806.1		32.1	7.11			1,785.1		32.2	7.22
Consumer		1,251.8		22.5	7.17			1,271.2		22.5	7.08			1,302.5		23.0	7.08

Total loans		8,934.9		141.8	6.35			9,168.9		143.7	6.27			9,082.9		140.9	6.21

Total earning assets	$	12,540.1	$	189.4	6.04	%	$	12,475.4	$	187.5	6.01	%	$	9,888.8	$	149.4	6.04	%

Funding liabilities:
Deposits:
Non-interest-bearing	$	2,098.2	$	—	—	%	$	2,171.6	$	—	—	%	$	2,136.5	$	—	—	%
Savings, interest-bearing checking and money market		3,075.1		11.9	1.55			3,214.3		12.0	1.49			3,376.9		12.5	1.48
Time		3,590.3		41.5	4.62			3,627.9		41.4	4.57			3,367.7		34.3	4.07

Total core deposits		8,763.6		53.4	2.44			9,013.8		53.4	2.37			8,881.1		46.8	2.11
Non-core deposits (3)		17.3		0.1	3.07			181.3		0.4	0.82			16.4		0.3	8.28

Total deposits		8,780.9		53.5	2.44			9,195.1		53.8	2.34			8,897.5		47.1	2.12

Borrowings:
Federal funds purchased		—		—	—			7.7		0.1	5.17			147.0		2.0	5.37
FHLB advances		—		—	—			—		—	—			121.5		1.7	5.39

Total borrowings		—		—	—			7.7		0.1	5.17			268.5		3.7	5.38

Subordinated notes		65.3		1.6	10.15			65.3		1.6	10.15			108.7		2.4	9.03

Total funding liabilities	$	8,846.2	$	55.1	2.49	%	$	9,268.1	$	55.5	2.40	%	$	9,274.7	$	53.2	2.29	%

Excess of earning assets over funding liabilities	$	3,693.9					$	3,207.3					$	614.1

Net interest income/spread			$	134.3	3.55	%			$	132.0	3.61	%			$	96.2	3.75	%

Net interest margin					4.28	%					4.23	%					3.89	%

(1)	Average yields earned and rates paid are annualized.

(2)	Average balances and yields for securities available for sale are based on amortized cost.

(3)	The average balance for the three months ended June 30, 2007 included $168.9 million in escrow funds related to People’s United Financial’s stock offering (none at June 30, 2007 and September 30, 2007).

Average Balance, Interest and Yield/Rate Analysis (1)


	September 30, 2007						September 30, 2006
Nine months ended (dollars in millions)	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate
Earning assets:
Short-term investments	$	1,534.8	$	60.7	5.27	%	$	84.1	$	3.1	4.87	%
Securities purchased under agreements to resell		836.3		32.8	5.24			22.2		0.8	4.97
Securities (2)		70.9		3.0	5.62			1,018.7		27.8	3.64
Loans:
Residential mortgage		3,641.7		140.7	5.15			3,708.2		135.2	4.86
Commercial		2,420.4		125.3	6.90			2,104.6		107.3	6.80
Commercial real estate		1,797.0		95.9	7.11			1,755.9		92.5	7.02
Consumer		1,275.9		67.9	7.09			1,278.5		64.8	6.76

Total loans		9,135.0		429.8	6.27			8,847.2		399.8	6.03

Total earning assets	$	11,577.0	$	526.3	6.06	%	$	9,972.2	$	431.5	5.77	%

Funding liabilities:
Deposits:
Non-interest-bearing	$	2,131.7	$	—	—	%	$	2,187.4	$	—	—	%
Savings, interest-bearing checking and money market		3,157.0		35.7	1.51			3,549.8		36.8	1.38
Time		3,612.0		123.2	4.54			3,215.3		89.2	3.70

Total core deposits		8,900.7		158.9	2.38			8,952.5		126.0	1.88
Non-core deposits (3)		97.8		0.7	0.99			49.4		2.0	5.53

Total deposits		8,998.5		159.6	2.36			9,001.9		128.0	1.90

Borrowings:
Federal funds purchased		4.4		0.2	5.19			207.2		7.4	4.76
FHLB advances		0.2		—	5.02			63.2		2.4	5.13

Total borrowings		4.6		0.2	5.19			270.4		9.8	4.84

Subordinated notes		65.3		4.9	10.15			108.7		7.4	9.04

Total funding liabilities	$	9,068.4	$	164.7	2.42	%	$	9,381.0	$	145.2	2.06	%

Excess of earning assets over funding liabilities	$	2,508.6					$	591.2

Net interest income/spread			$	361.6	3.64	%			$	286.3	3.71	%

Net interest margin					4.16	%					3.83	%

(1)	Average yields earned and rates paid are annualized.

(2)	Average balances and yields for securities available for sale are based on amortized cost.

(3)	The average balance for the nine months ended September 30, 2007 includes $84.0 million in escrow funds related to People’s United Financial’s stock offering (none at September 30, 2007).

Changes in Net Interest Income


	Three Months Ended September 30, 2007 Compared To
	September 30, 2006 Increase (Decrease)									June 30, 2007 Increase (Decrease)
(in millions)	Volume			Rate			Total			Volume			Rate			Total
Interest and dividend income:
Short-term investments	$	27.0		$	—		$	27.0		$	0.5		$	—		$	0.5
Securities purchased under agreements to resell		17.9			—			17.9			3.5			(0.1	)		3.4
Securities		(7.6	)		1.8			(5.8	)		—			(0.1	)		(0.1	)
Loans:
Residential mortgage		(5.2	)		2.1			(3.1	)		(3.0	)		0.5			(2.5	)
Commercial		5.4			(0.7	)		4.7			0.8			(0.1	)		0.7
Commercial real estate		(0.1	)		(0.1	)		(0.2	)		(0.5	)		0.4			(0.1	)
Consumer		(0.9	)		0.4			(0.5	)		(0.3	)		0.3			—

Total loans		(0.8	)		1.7			0.9			(3.0	)		1.1			(1.9	)

Total change in interest and dividend income		36.5			3.5			40.0			1.0			0.9			1.9

Interest expense:
Deposits:
Savings, interest-bearing checking and money market		(1.2	)		0.6			(0.6	)		(0.5	)		0.4			(0.1	)
Time		2.4			4.8			7.2			(0.4	)		0.5			0.1

Total core deposits		1.2			5.4			6.6			(0.9	)		0.9			—
Non-core deposits		—			(0.2	)		(0.2	)		(0.6	)		0.3			(0.3	)

Total deposits		1.2			5.2			6.4			(1.5	)		1.2			(0.3	)

Borrowings:
FHLB advances		(1.7	)		—			(1.7	)		—			—			—
Federal funds purchased		(2.0	)		—			(2.0	)		(0.1	)		—			(0.1	)

Total borrowings		(3.7	)		—			(3.7	)		(0.1	)		—			(0.1	)

Subordinated notes		(1.1	)		0.3			(0.8	)		—			—			—

Total change in interest expense		(3.6	)		5.5			1.9			(1.6	)		1.2			(0.4	)

Change in net interest income	$	40.1		$	(2.0	)	$	38.1		$	2.6		$	(0.3	)	$	2.3

Changes in Net Interest Income


	Nine Months Ended September 30, 2007 Compared To September 30, 2006 Increase (Decrease)
(in millions)	Volume			Rate			Total
Interest and dividend income:
Short-term investments	$	57.4		$	0.2		$	57.6
Securities purchased under agreements to resell		32.0			—			32.0
Securities		(34.7	)		9.9			(24.8	)
Loans:
Residential mortgage		(2.5	)		8.0			5.5
Commercial		16.3			1.7			18.0
Commercial real estate		2.2			1.2			3.4
Consumer		(0.1	)		3.2			3.1

Total loans		15.9			14.1			30.0

Total change in interest and dividend income		70.6			24.2			94.8

Interest expense:
Deposits:
Savings, interest-bearing checking and money market		(4.3	)		3.2			(1.1	)
Time		11.9			22.1			34.0

Total core deposits		7.6			25.3			32.9
Non-core deposits		1.1			(2.4	)		(1.3	)

Total deposits		8.7			22.9			31.6

Borrowings:
FHLB advances		(2.4	)		—			(2.4	)
Federal funds purchased		(7.8	)		0.6			(7.2	)

Total borrowings		(10.2	)		0.6			(9.6	)

Subordinated notes		(3.2	)		0.7			(2.5	)

Total change in interest expense		(4.7	)		24.2			19.5

Change in net interest income	$	75.3		$	—		$	75.3

Non-Interest Income


	Three Months Ended							Nine Months Ended
(in millions)	Sept. 30, 2007		June 30, 2007		Sept. 30, 2006			Sept. 30, 2007		Sept. 30, 2006
Fee-based revenues:
Service charges on deposit accounts	$	19.4	$	19.5	$	20.1		$	56.9	$	58.4
Insurance revenue		7.1		6.2		6.6			20.6		20.2
Brokerage commissions		3.2		3.6		2.9			10.2		9.2
Other fee-based revenues:
Other banking service charges and fees		4.3		4.2		4.0			12.6		11.9
Investment management fees		3.0		3.0		2.7			8.9		8.1
Other fees		1.7		2.0		1.9			5.8		5.7

Total other fee-based revenues		9.0		9.2		8.6			27.3		25.7

Total fee-based revenues		38.7		38.5		38.2			115.0		113.5

Net security gains (losses):
Debt securities held for sale		—		—		(23.4	)		—		(27.4	)
Trading account securities		0.1		—		0.1			0.1		0.1
Equity securities available for sale		5.4		—		0.1			5.4		0.1

Total net security gains (losses)		5.5		—		(23.2	)		5.5		(27.2	)

Bank-owned life insurance		2.3		2.7		2.2			7.4		6.3
Net gains on sales of residential mortgage loans		0.8		0.9		0.5			2.4		1.5
Other non-interest income		2.9		3.4		2.8			9.0		8.0

Total non-interest income	$	50.2	$	45.5	$	20.5		$	139.3	$	102.1

Total non-interest income increased $29.7 million, or 145%, compared to the third quarter of 2006 and $4.7 million, or 10%, from the second quarter of 2007. Included in total non-interest income are net security gains of $5.5 million and net security losses of $23.2 million in the third quarter of 2007 and 2006, respectively.

Revenues from service charges on deposit accounts for the third quarter of 2007 decreased $0.7 million, or 3%, compared to the year-ago quarter, and $0.1 million, or 1%, from the second quarter of 2007. The decreases reflect changes in consumer behavior related to overdrafts, and more customers qualifying for free ATM network transactions and free checking.

Comparing the third quarter of 2007 to the third quarter of 2006, the $0.5 million increase in insurance revenue primarily reflects increased performance and profit sharing revenues due to changes in insurance company incentive programs, partially offset by lower commission revenues. The $0.9 million increase in insurance revenue compared to the second quarter of 2007 primarily reflects the seasonal nature of renewals.

The $0.3 million increase in brokerage commission compared to the third quarter of 2006 reflects an increase in trading due to greater market volatility. The $0.4 million increase in other fee-based revenues compared to the third quarter of 2006 reflects an increase in trust fees, partially offset by a decrease in commercial loan prepayment penalties.

Securities gains in the current quarter represent the sale of People’s United Financial’s entire holdings of MasterCard Incorporated Class B Common Stock. Net gains on sales of residential mortgage loans increased $0.3 million compared to the third quarter of 2006 reflecting People’s United Bank’s decision in the fourth quarter of 2006 to sell essentially all of its newly-originated residential mortgages in the current interest rate environment. Residential mortgage sales volume increased 72% compared to the third quarter of 2006.

BOLI income totaled $2.3 million ($3.6 million on a taxable-equivalent basis) in the third quarter of 2007, compared to $2.2 million ($3.3 million on a taxable-equivalent basis) for the year-ago quarter, and $2.7 million for the second quarter of 2007 ($4.1 million on a taxable-equivalent basis). BOLI income in the second quarter of 2007 included a death benefit of $0.6 million.

The $0.5 million decrease in other non-interest income compared to the second quarter of 2007 reflects the receipt of $0.5 million of interest related to the completion of federal tax audits recorded in the second quarter of 2007.

Non-Interest Expense


	Three Months Ended									Nine Months Ended
(dollars in millions)	Sept. 30, 2007			June 30, 2007			Sept. 30, 2006			Sept. 30, 2007			Sept. 30, 2006
Compensation and benefits	$	53.1		$	54.9		$	51.3		$	159.3		$	153.5
Occupancy and equipment		17.3			16.2			15.6			50.0			46.8
Contribution to The People’s United Community Foundation		—			60.0			—			60.0			—
Professional and outside service fees		7.4			6.7			5.8			20.3			17.8
Advertising and promotion		3.1			3.5			2.4			9.0			8.0
Stationery, printing and postage		2.0			1.9			1.7			5.7			5.4
Amortization of other acquisition-related intangibles		0.3			0.3			0.2			0.8			0.8
Other non-interest expense		12.3			12.2			10.1			34.2			29.0

Total non-interest expense	$	95.5		$	155.7		$	87.1		$	339.3		$	261.3

Efficiency ratio		52.8	%		53.3	%		61.5	%		55.7	%		61.9	%

Total non-interest expense in the third quarter of 2007 increased $8.4 million, or 10%, compared to the third quarter of 2006 and decreased $0.2 million, or less than 1%, compared to the second quarter of 2007, excluding the $60 million contribution to The People’s United Community Foundation from the second quarter of 2007.

The efficiency ratio improved to 52.8% in the third quarter of 2007, compared to 61.5% in the year-ago quarter, reflecting a $40.0 million, or 29%, increase in operating revenue, partially offset by an $8.7 million, or 10%, increase in operating expenses. The increase in operating revenue reflects the increase in net interest income due to the investment of the net proceeds from the second-step conversion.

Compensation and benefits increased $1.8 million, or 4%, compared to the year-ago quarter, and decreased $1.8 million, or 3%, compared to the second quarter of 2007. The year-over-year increase primarily reflects $2.0 million of amortization expense related to the newly established ESOP, normal merit increases and higher accruals for incentive compensation, partially offset by lower pension expenses. The decrease from the second quarter of 2007 reflects lower ESOP amortization expense due to the decline in People’s United Financial’s stock price during the third quarter, lower payroll taxes and lower health care expenses. Based on the grants of restricted stock and stock options made on October 25, 2007 pursuant to People’s United Financial’s 2007 Recognition and Retention Plan and 2007 Stock Option Plan, additional compensation expense of approximately $2.5 million will be recognized in the fourth quarter of 2007.

Occupancy and equipment increased $1.7 million, or 11%, compared to the year-ago quarter, and $1.1 million, or 7%, compared to the second quarter of 2007. The increases primarily reflect higher rent-related expenses due to rate increases and additional branches.

Professional and outside service fees increased $1.6 million, or 28%, compared to the year-ago quarter, and $0.7 million, or 10%, compared to the second quarter of 2007. The increases primarily reflect higher costs for information technology-related projects.

Advertising and promotion increased $0.7 million, or 29%, compared to the third quarter of 2006, primarily due to costs associated with the rebranding of the Bank as a result of People’s Bank changing its name to People’s United Bank on June 6, 2007.

Other non-interest expense increased $2.2 million, or 22%, compared to the third quarter of 2006. The increases reflect higher insurance costs, increased amortization of equipment leased to commercial customers and regulatory assessment fees.

Discontinued Operations

Income from discontinued operations, net of income taxes, totaled $0.3 million for the third quarter of 2007, compared to $0.1 million for the year-ago quarter and $0.4 million for the second quarter of 2007.

People’s United Financial continues to generate recoveries from collection efforts on previously charged-off credit card accounts that were not included in the sale of the credit card business in 2004. These recoveries are included in income from discontinued operations in the Consolidated Statements of Income for periods subsequent to the sale. Recoveries, net of collection costs, totaled $0.5 million for the third quarter of 2007, compared to $1.0 million for the comparable period in 2006 and $0.7 million for the second quarter of 2007. The level of recoveries is expected to continue to decline over the remainder of 2007 due to the aging and diminishing pool of charged-off accounts.

FINANCIAL CONDITION

General

Total assets at September 30, 2007 were $13.6 billion, an increase of $2.9 billion, or 27%, from December 31, 2006, primarily due to a $3.3 billion increase in short-term investments, partially offset by a decrease of $436 million in total loans. The increase in short-term investments reflects the net proceeds from the second-step conversion completed on April 16, 2007.

At September 30, 2007, liabilities totaled $9.0 billion, a $331 million decrease from December 31, 2006, due to a $301 million decrease in total deposits and a $26 million decrease in other liabilities.

Total loans decreased $436 million from December 31, 2006 to September 30, 2007, reflecting decreases of $552 million in residential mortgage loans and $74 million in consumer loans, partially offset by increases of $154 million in commercial loans and $36 million in commercial real estate loans. The decrease in residential mortgage loans reflects People’s United Bank’s decision in the fourth quarter of 2006 to sell essentially all of its newly-originated residential mortgage loans due to the low spreads on such loans in the current interest rate environment.

Non-performing assets totaled $26.2 million at September 30, 2007, a $3.5 million increase from year-end 2006. The allowance for loan losses decreased $0.5 million to $73.5 million at September 30, 2007 compared to December 31, 2006, primarily reflecting reductions in the allowance for loan losses allocated to the consumer loan portfolio and residential mortgage loan portfolio, partially offset by net additions allocated to the commercial banking loan portfolio. At September 30, 2007, the allowance for loan losses as a percent of total loans was 0.82% and as a percent of non-performing loans was 318%, compared to 0.79% and 328%, respectively, at December 31, 2006.

People’s United Financial’s total stockholders’ equity was $4.5 billion at September 30, 2007, a $3.2 billion increase from December 31, 2006, reflecting the net proceeds of $3.3 billion from the second-step conversion and net income of $104.7 million, partially offset by the purchase of common stock for the ESOP of $216.8 million and dividends paid of $92.9 million. As a percentage of total assets, stockholders’ equity was 33.5% at September 30, 2007, compared to 12.5% at December 31, 2006.

People’s United Bank’s leverage capital ratio, and tier 1 and total risk-based capital ratios were 25.0%, 34.0% and 35.3%, respectively, at September 30, 2007, compared to 12.0%, 14.8% and 16.1%, respectively, at December 31, 2006. The increases from year end primarily reflect the $1.7 billion capital contribution from People’s United Financial.

Asset Quality

People’s United Financial actively manages asset quality through its underwriting practices and collection operations.

The allowance for loan losses is established through provisions for loan losses charged to income. Losses on loans, including impaired loans, are charged to the allowance for loan losses when all or a portion of a loan is deemed to be uncollectible. Recoveries of loans previously charged off are credited to the allowance for loan losses when realized. People’s United Financial maintains the allowance for loan losses at a level that is believed to be adequate to absorb probable losses inherent in the existing loan portfolio, based on a quarterly evaluation of a variety of factors. These factors include, but are not limited to: People’s United Financial’s historical loan loss experience and recent trends in that experience; risk ratings assigned by lending personnel to commercial real estate, commercial and PCLC loans, and the results of ongoing reviews of those ratings by People’s United Financial’s independent loan review function; an evaluation of non-performing loans and related collateral values; the probability of loss in view of geographic and industry concentrations and other portfolio risk characteristics; the present financial condition of borrowers; and current economic conditions. While People’s United Financial seeks to use the best available information to make these evaluations, future adjustments to the allowance for loan losses may be necessary based on changes in economic conditions, results of regulatory examinations, further information obtained regarding known problem loans, the identification of additional problem loans and other factors.

Provision and Allowance for Loan Losses


	Three Months Ended									Nine Months Ended
(dollars in millions)	Sept. 30, 2007			June 30, 2007			Sept. 30, 2006			Sept. 30, 2007			Sept. 30, 2006
Balance at beginning of period	$	72.5		$	74.4		$	74.0		$	74.0		$	75.0
Charge-offs		(2.0	)		(4.6	)		(4.7	)		(7.4	)		(7.3	)
Recoveries		0.5			0.9			0.6			1.8			4.3

Net loan charge-offs		(1.5	)		(3.7	)		(4.1	)		(5.6	)		(3.0	)
Provision for loan losses		2.5			1.8			4.1			5.1			2.0

Balance at end of period	$	73.5		$	72.5		$	74.0		$	73.5		$	74.0

Allowance for loan losses as a percentage of total loans		0.82	%		0.80	%		0.81	%		0.82	%		0.81	%
Allowance for loan losses as a percentage of non-performing loans		318.2			404.8			354.9			318.2			354.9

The provision for loan losses in the third quarter of 2007 reflected $1.5 million in net loan charge-offs and a $1.0 million increase in the allowance for loan losses. The provision for loan losses in the year-ago period reflected $4.1 million in net loan charge-offs, including a $4.0 million charge-off related to one commercial banking loan. The allowance for loan losses as a percentage of total loans was 0.82% at September 30, 2007 and 0.79% at December 31, 2006.

Net Loan Charge-Offs (Recoveries)


	Three Months Ended									Nine Months Ended
(in millions)	Sept. 30, 2007			June 30, 2007			Sept. 30, 2006			Sept. 30, 2007			Sept. 30, 2006
PCLC	$	0.6		$	0.4		$	—		$	1.1		$	0.3
Consumer		0.5			0.2			0.3			1.0			1.2
Commercial		0.5			3.7			3.9			4.2			4.0
Residential mortgage		—			(0.6	)		(0.1	)		(0.6	)		—
Commercial real estate		(0.1	)		—			—			(0.1	)		(2.5	)

Total	$	1.5		$	3.7		$	4.1		$	5.6		$	3.0

Net loan charge-offs in the third quarter of 2007 totaled $1.5 million compared to $4.1 million in the third quarter of 2006. Commercial loan net charge-offs in the third quarter of 2006 included the $4.0 million charge-off related to one commercial banking loan that was placed on non-accrual status in the second quarter of 2006.

Net loan charge-offs as a percentage of average total loans decreased 11 basis points in the third quarter of 2007 compared to the year-ago period, reflecting the $4.0 million charge-off in the year-ago period discussed above. The very low level of net loan charge-offs in terms of absolute dollars and as a percentage of average loans is unlikely to be sustainable in the future.

Net Loan Charge-Offs (Recoveries) as a Percentage of Average Loans


	Three Months Ended						Nine Months Ended
	Sept. 30, 2007		June 30, 2007		Sept. 30, 2006		Sept. 30, 2007		Sept. 30, 2006
PCLC	0.26	%	0.19	%	(0.02	)%	0.17	%	0.05	%
Consumer	0.16		0.07		0.09		0.10		0.13
Commercial	0.13		0.95		1.12		0.36		0.38
Commercial real estate	(0.02	)	—		—		(0.01	)	(0.19	)
Residential mortgage	—		(0.06	)	(0.01	)	(0.02	)	—

Total portfolio	0.07	%	0.16	%	0.18	%	0.08	%	0.05	%

Non-Performing Assets


(dollars in millions)	Sept. 30, 2007			June 30, 2007			March 31, 2007			Dec. 31, 2006			Sept. 30, 2006
Non-accrual loans:
Commercial	$	7.2		$	8.2		$	11.3		$	11.9		$	3.0
Residential mortgage		7.2			4.2			5.0			6.7			7.8
Commercial real estate		3.5			0.1			0.1			0.2			6.6
PCLC		3.0			3.9			1.4			2.1			2.1
Consumer		2.2			1.5			1.3			1.7			1.3

Total non-accrual loans		23.1			17.9			19.1			22.6			20.8
Real estate owned (“REO”) and repossessed assets, net		3.1			0.5			0.3			0.1			2.1

Total non-performing assets	$	26.2		$	18.4		$	19.4		$	22.7		$	22.9

Non-performing loans as a percentage of total loans		0.26	%		0.20	%		0.21	%		0.24	%		0.23	%
Non-performing assets as a percentage of total loans, REO and repossessed assets		0.29			0.20			0.21			0.24			0.25
Non-performing assets as a percentage of stockholders’ equity and allowance for loan losses		0.57			0.40			1.35			1.61			1.61

Total non-performing assets increased $3.5 million from December 31, 2006 and were 0.29% of total loans, REO and repossessed assets at September 30, 2007. Increases in non-performing commercial real estate loans of $3.3 million, repossessed assets of $2.8 million, non-performing PCLC loans of $0.9 million and non-performing residential mortgage loans of $0.5 million, were partially offset by a decrease of $4.7 million in non-performing commercial loans. The decrease in non-performing commercial loans primarily reflects a $3.6 million charge-off related to one loan that had been classified as non-performing since December 2006.

Total non-performing assets increased $7.8 million from June 30, 2007. The increase in non-performing commercial real estate loans reflects one loan totaling $3.4 million that was classified as non-performing this quarter. The increase in non-performing residential mortgage loans includes one loan totaling $2.0 million that was subsequently cured. The increase in REO and repossessed assets primarily reflects the repossession of a printing press and ancillary equipment from one borrower.

The level of non-performing assets is expected to fluctuate in response to changing economic and market conditions, and the relative sizes of the respective loan portfolios, along with management’s degree of success in resolving problem assets.

Liquidity

Liquidity is defined as the ability to generate sufficient cash flows to meet all present and future funding requirements at reasonable costs. Liquidity management addresses People’s United Financial’s and People’s United Bank’s ability to fund new loans and investments as opportunities arise, to meet customer deposit withdrawals and to repay borrowings and subordinated notes as they mature. People’s United Financial’s, as well as People’s United Bank’s, liquidity positions are monitored daily by management. Therefore, the Asset and Liability Management Committee (“ALCO”) of People’s United Bank has been authorized by the Board of Directors of People’s United Financial to set guidelines to ensure maintenance of prudent levels of liquidity for People’s United Financial as well as for People’s United Bank. ALCO reports to the Treasury and Finance Committee of the Board of Directors of People’s United Bank.

Asset liquidity is provided by: cash; short-term investments; proceeds from security sales, maturities and principal repayments; and proceeds from scheduled principal collections, prepayments and sales of loans. In addition, certain securities may be used to collateralize borrowings under repurchase agreements. The Consolidated Statements of Cash Flows, on page 4, present data on cash provided by and used in People’s United Financial’s operating, investing and financing activities. At September 30, 2007, People’s United Financial’s liquid assets included $1.4 billion in securities purchased under agreements to resell. People’s United Bank’s liquid assets included $2.4 billion in cash and cash equivalents, $23 million in trading account securities and $42 million in debt securities available for sale. Securities available for sale with a total fair value of $22 million at September 30, 2007 were pledged as collateral for public deposits and for other purposes.

Liability liquidity is measured by People’s United Financial’s and People’s United Bank’s ability to obtain core deposits and purchased funds at cost-effective rates that are diversified with respect to markets and maturities. Core deposits, which are considered the most stable source of liability liquidity, totaled $8.7 billion at September 30, 2007 compared to $9.0 billion at December 31, 2006 (representing 65% and 86% of total funding at the respective dates). While core deposits declined $312 million, or 3%, since year end, the change in the relative percentage mix of total funding is primarily due to the substantial increase in stockholders’ equity with the net proceeds from the second-step conversion. Purchased funds can be used from time to time to diversify People’s United Financial’s funding mix and to support asset growth. Purchased funds totaled $54 million at September 30, 2007 compared to $47 million at December 31, 2006 (representing 0.4% and 0.5% of total funding at the respective dates).

People’s United Bank’s current sources of purchased funds include: federal funds purchased, advances from the FHLB of Boston and the Federal Reserve Bank of New York, municipal deposits and repurchase agreements. At September 30, 2007, People’s United Bank’s borrowing limit from FHLB and Federal Reserve Bank advances, and repurchase agreements was $3.2 billion, based on the level of qualifying collateral available for these borrowing sources and in addition, People’s United Bank had unsecured borrowing capacity of $1.1 billion.

At September 30, 2007, People’s United Bank had outstanding commitments to originate loans totaling $704 million and approved, but unused, lines of credit extended to customers totaling $2.6 billion (including $1.5 billion of home equity lines of credit).

The sources of liquidity discussed above are deemed by management to be sufficient to fund outstanding loan commitments and to meet People’s United Financial’s and People’s United Bank’s other obligations.

Capital

People’s United Financial’s total stockholders’ equity was $4.5 billion at September 30, 2007, a $3.2 billion increase compared to $1.3 billion at December 31, 2006. This increase primarily reflects the net proceeds of $3.3 billion from the second-step conversion, net income of $104.7 million, a common stock contribution with a fair value of $40 million to The People’s United Community Foundation, and a $6.6 million decrease in Accumulated Other Comprehensive Loss (“AOCL”) since December 31, 2006, partially offset by the purchase of common stock for the ESOP totaling $216.8 million and dividends paid of $92.9 million. The decrease in AOCL reflects after-tax reductions of $4.2 million in the net unrealized gain (loss) on derivatives accounted for as cash flow hedges and $2.4 million in the net actuarial loss, prior service costs and transition obligation on pension and other postretirement benefit plans. Stockholders’ equity equaled 33.5% of total assets at September 30, 2007 and 12.5% at December 31, 2006.

People’s United Bank’s tangible capital ratio was 25.0% at September 30, 2007, compared to the minimum ratio of 1.5% generally required by its regulator, the Office of Thrift Supervision (“OTS”). People’s United Bank is also subject to the OTS’s risk-based capital regulations, which require minimum ratios of leverage capital and total risk-based capital of 4.0% and 8.0%, respectively. People’s United Bank satisfied these requirements at September 30, 2007 with ratios of 25.0% and 35.3%, respectively, compared to 12.0% and 16.1%, respectively, at December 31, 2006. The improvements from December 31, 2006 primarily reflect the $1.7 billion capital contribution from People’s United Financial with a portion of the net proceeds from the second-step conversion. People’s United Bank’s regulatory capital ratios exceeded the OTS’s numeric criteria for classification as a “well capitalized” institution at September 30, 2007.

The following summary compares People’s United Bank’s regulatory capital amounts and ratios as of September 30, 2007 to the OTS requirements for classification as a well-capitalized institution and for minimum capital adequacy. People’s United Bank’s risk-weighted total assets, as defined, totaled $8.8 billion at September 30, 2007.


						OTS Requirements
As of September 30, 2007	People’s United Bank					Classification as Well-Capitalized				Minimum Capital Adequacy
(dollars in millions)	Amount			Ratio		Amount		Ratio		Amount		Ratio
Tangible capital	$	3,012.3	(1)	25.0	%		n/a	n/a		$	180.9	1.5	%
Leverage (core) capital		3,012.3	(1)	25.0		$	603.1	5.0	%		482.5	4.0
Total risk-based capital		3,121.6	(2)	35.3			884.7	10.0			707.7	8.0

(1)

Represents total stockholder’s equity, excluding (i) after-tax net unrealized gains (losses) on debt and certain equity securities classified as available for sale, (ii) after-tax net unrealized gains (losses) on derivatives qualifying as cash flow hedges, (iii) certain assets not recognized in tier 1 capital (principally goodwill and other acquisition-related intangibles), and (iv) the amount recorded in accumulated other comprehensive income relating to SFAS No. 158.

(2)	Represents tier 1 capital plus subordinated notes, up to certain limits, and the allowance for loan losses up to 1.25% of risk-adjusted total assets.

Market Risk Management

Market risk is the risk of loss to earnings, capital and the fair market values of certain assets and liabilities resulting from changes in interest rates, equity prices and foreign currency exchange rates.

Interest Rate Risk

For People’s United Bank, the only relevant market risk at this time is interest rate risk (“IRR”), which is the potential exposure to earnings or capital that may result from changes in interest rates. People’s United Bank actively manages its IRR to achieve a balance between risk, earnings volatility and capital preservation. ALCO has primary responsibility for managing People’s United Bank’s IRR. To evaluate People’s United Bank’s IRR profile, ALCO monitors economic conditions, interest rate trends, liquidity levels and capital ratios. Management also reviews assumptions periodically for projected customer and competitor behavior, in addition to the expected repricing characteristics and cash flow projections for assets, liabilities and off-balance-sheet financial instruments. Actual conditions may vary significantly from People’s United Bank’s assumptions. Management evaluates the impact of IRR on “Income at Risk” using an earnings simulation model to project earnings under multiple interest rate environments over a one-year time horizon resulting in a quantification of IRR. Income at Risk includes significant interest rate sensitive income sources, such as net interest income, gains on sales of residential mortgage loans and BOLI income.

The earnings projections are based on a static balance sheet and estimates of pricing levels for People’s United Bank’s products under multiple scenarios intended to reflect instantaneous yield curve shocks. People’s United Bank estimates its base case Income at Risk using current interest rates. Internal guidelines regarding IRR simulation specify that for instantaneous parallel shifts of the yield curve, estimated Income at Risk for the subsequent one-year period should not decline by more than: 10% for a 100 basis point shift; 15% for a 200 basis point shift; and 20% for a 300 basis point shift.

The following table shows the estimated percentage increase (decrease) in People’s United Bank’s Income at Risk over a one-year simulation period beginning September 30, 2007. Income at Risk for a 300 basis point decline in interest rates falls outside the internal guidelines as a result of People’s United Bank’s current decision to invest the capital contribution from People’s United Financial (in April 2007) in short-term investments.


Rate Change (basis points)		Percent Change in Income at Risk
+300		20.98%
+200		14.62
+100		7.89
-100		(6.47)
-200		(15.19)
-300		(24.34)

While the scenario where interest rates decline by 300 basis points results in an Income at Risk change falling outside of internal guidelines, management is comfortable due to the extreme flexibility inherent in People’s United Bank’s current investment posture, combined with the extremely low likelihood of occurrence of that scenario.

While Income at Risk simulation identifies earnings exposure over a relatively short time horizon, Market Value of Equity (“MVE”) takes a long-term economic perspective when quantifying IRR. MVE identifies possible margin behavior over a longer time horizon and is therefore a valuable complement of interest rate risk management. Base case MVE is calculated by estimating the net present value of all future cash flows from existing assets and liabilities using current interest rates. The base case scenario assumes that future interest rates remain unchanged.

Internal guidelines limit the exposure of a decrease in MVE resulting from instantaneous parallel shifts of the yield curve in the following manner: for 100 basis points – 10% of base case MVE; for 200 basis points – 15% of base case MVE; and for 300 basis points – 20% of base case MVE.

The following table shows the estimated percentage increase (decrease) in People’s United Bank’s MVE, assuming various shifts in interest rates.


Rate Change (basis points)		Percent Change in Market Value of Equity
+300		(3.98)%
+200		(2.28)
+100		(0.95)
-100		0.16
-200		(1.20)
-300		(2.74)

Management believes People’s United Bank’s interest rate risk position at September 30, 2007 represents an acceptable level of risk. However, given the uncertainty of the magnitude, timing and direction of future interest rate movements and the shape of the yield curve, actual results may vary from those predicted by People’s United Bank’s models.

Foreign Currency Risk

Foreign exchange forward contracts are commitments to buy or sell foreign currency on a future date at a contractual price. People’s United Bank uses these instruments on a limited basis to eliminate its exposure to fluctuations in currency exchange rates on certain of its commercial loans that are denominated in foreign currencies. Gains and losses on foreign exchange contracts substantially offset the translation gains and losses on the related loans.

Derivative Financial Instruments

People’s United Bank uses derivative financial instruments, including interest rate swaps and interest rate floors, as components of its IRR management. People’s United Bank has written guidelines that have been approved by its Board of Directors and ALCO governing the use of these financial instruments, including approved counterparties and risk limits, and controls the credit risk of these instruments through collateral, credit approvals and monitoring procedures. At September 30, 2007, each of People’s United Bank’s counterparties had an investment grade credit rating from the major rating agencies and is specifically approved up to a maximum credit exposure. People’s United Bank’s credit exposure on its derivative contracts, representing those contracts with net positive fair values including the effect of bilateral netting, amounted to $15.3 million at September 30, 2007 and $11.4 million at December 31, 2006. Derivative financial instruments have been used for market risk management purposes (principally interest rate risk) and not for trading or speculative purposes.

People’s United Bank is currently using interest rate floors and interest rate swaps to manage IRR associated with certain interest-earning assets and interest-bearing liabilities. Interest rate floors, which are accounted for as cash flow hedges, are used to partially manage People’s United Bank’s exposure to a decrease in interest income on certain floating-rate commercial loans resulting from declines in certain interest rates. Interest rate swaps, with a notional value of $6.7 million, or less than one-half of one percent of total assets at September 30, 2007, are used to match more closely the repricing of fewer than five commercial real estate loans and the short-term funding associated with these loans. Interest rate swaps are accounted for as fair value hedges.

The following table summarizes certain information concerning the derivative financial instruments utilized by People’s United Bank in its management of IRR and foreign currency risk.


As of and for the periods ended September 30, 2007 (dollars in millions)	Interest Rate Floors			Interest Rate Swaps		Foreign Exchange Contracts
Notional amount at period end	$	700.0		$	6.7	$	12.6
Weighted average remaining term to maturity (in months)		40			68		1
Decrease in pre-tax income for the quarter	$	(0.9	)	$	—	$	—
Decrease in pre-tax income for the nine months		(2.2	)		—		—
Fair value:
Recognized as an asset		15.7			—		—
Recognized as a liability		—			0.3		0.5

As of and for the periods ended September 30, 2006 (dollars in millions)	Interest Rate Floors			Interest Rate Swaps		Foreign Exchange Contracts
Notional amount at period end	$	700.0		$	9.3	$	13.3
Weighted average remaining term to maturity (in months)		52			76		2
Decrease in pre-tax income for the quarter	$	(0.2	)	$	—	$	—
Decrease in pre-tax income for the nine months		(0.4	)		—		—
Fair value:
Recognized as an asset		13.8			—		0.1
Recognized as a liability		—			0.2		—

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 Report on Form 10-Q and Current Report 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 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.

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

The information required by this item appears on pages 45 through 48 of this report.

Item 4 – Controls and Procedures

People’s United Financial’s management, including the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of People’s United Financial’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that People’s United Financial’s disclosure controls and procedures are effective, as of September 30, 2007, to ensure that information relating to People’s United Financial, which is required to be disclosed in the reports People’s United Financial files with the Securities and Exchange Commission under the Exchange Act, is (1) recorded, processed, summarized and reported as and when required; and (2) accumulated and communicated to management, including the principal executive officer and the principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

During the quarter ended September 30, 2007, there has not been any change in People’s United Financial’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, People’s United Financial’s internal control over financial reporting.

Part II – Other Information

Item 1 – Legal Proceedings

In the normal course of business, People’s United Financial is subject to various legal proceedings. Management has discussed the nature of these legal proceedings with legal counsel. In the opinion of management, People’s United Financial’s financial condition or results of operations will not be affected materially as a result of the outcome of these legal proceedings.

Item 1A – Risk Factors

There have been no material changes in risk factors since December 31, 2006.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3 – Defaults Upon Senior Securities

None

Item 4 – Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders of People’s United Financial during the period covered by this report.

Item 5 – Other Information

None

Item 6 – Exhibits

The following Exhibits are filed herewith:


Exhibit No.		Description

*10.9		Amended and Restated People’s Bank 1998 Long-Term Incentive Plan

31.1		Rule 13a-14(a)/15d-14(a) Certification

31.2		Rule 13a-14(a)/15d-14(a) Certification

32		Section 1350 Certifications

*	Each exhibit identified by an asterisk constitutes a management contract or compensation plan, contract or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, People’s United Financial, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	PEOPLE’S UNITED FINANCIAL, INC.

Date: November 7, 2007	By:	/s/ John A. Klein
		John A. Klein Chairman, Chief Executive Officer and President



Date: November 7, 2007	By:	/s/ Philip R. Sherringham
		Philip R. Sherringham Executive Vice President and Chief Financial Officer



Date: November 7, 2007	By:	/s/ Christina M. Bliven
		Christina M. Bliven First Vice President, Acting Controller and Acting Chief Accounting Officer

INDEX TO EXHIBITS


Designation		Description

*10.9		Amended and Restated People’s Bank 1998 Long-Term Incentive Plan

31.1		Rule 13a-14(a)/15d-14(a) Certification

31.2		Rule 13a-14(a)/15d-14(a) Certification

32		Section 1350 Certifications

*	Each exhibit identified by an asterisk constitutes a management contract or compensation plan, contract or arrangement.

Exhibit 10.9

AMENDED AND RESTATED PEOPLE’S BANK

1998 LONG-TERM INCENTIVE PLAN

§1. Purpose . The purpose of the Plan is to promote the mutual interests of the Bank and its shareholders by enabling key employees of the Bank, or of the Parent or any Subsidiary of the Bank, to participate in the Bank’s future growth. The Plan is designed to give those employees upon whose judgment, initiative and efforts the successful conduct of the Bank’s business depends, additional incentives to perform in a superior manner. The Plan also provides a means through which the Bank can attract, motivate and retain people of experience and ability as employees.

§2. Definitions . For purposes of the Plan, the following terms shall have the meanings set forth below:

“Award” means a grant of any Non-Statutory Stock Option, Incentive Stock Option, Stock Appreciation Right, Restricted Stock Award, Performance Unit Award, or any combination of the foregoing, under the provisions of the Plan.

“Bank” means People’s Bank, a Connecticut state-chartered capital stock savings bank, and any successor thereto.

“Board” means the Board of Directors of the Bank.

“Change of Control” has the meaning set forth in Section 12(a) hereof.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

“Committee” means the Human Resources Committee referred to in Section 3 hereof.

“Disability” (and terms substantially equivalent thereto) means permanent and total disability as determined under procedures established by the Committee for purposes of the Plan.

“employment with the Bank” (and terms substantially equivalent thereto) means a subsisting employer-employee relationship between the Bank and the employee and includes employment with the Parent or any Subsidiary . Employment shall be deemed to cease, for purposes of the Plan, at such time as (a) the employee is no longer actively

performing or no longer remains obligated to perform services for the Bank in exchange for which the Bank (or related employer) is obligated to pay compensation to such employee in the form of wages, or (b) in the case of an employee who is on leave for any reason whatsoever, on the termination date specified by the Bank (or related employer) in a written communication advising the employee that his or her employment is being terminated. An employee shall be treated as remaining obligated to perform services for the Bank within the meaning of subsection (a) for the duration of any scheduled time off which has been approved by the employee’s manager and for which the employee is entitled to compensation pursuant to the Bank’s paid time off policy (as the same may be amended from time to time).

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute thereto.

“Fair Market Value” means as of a particular date:

(i) if the Stock is not then listed or admitted to trading on a national securities exchange (as that term is used in Section 6 of the Exchange Act), and prices of trades in Stock are regularly reported by NASDAQ, the mean between the high and low selling prices for Stock on such date as reported by NASDAQ, or, if no high or low selling prices for Stock are reported by NASDAQ for such date, then the mean between the high and low selling prices for Stock reported by NASDAQ for the most recent day in respect of which both high and low selling prices are so reported; or

(ii) if the Stock is then listed or admitted to trading on one or more national securities exchanges, the mean between the high and low selling prices at which Stock is traded on the principal securities exchange on which the Stock is traded on such date or, if Stock is not traded on such exchange on that date, the mean between the high and low selling prices at which Stock was traded on such exchange on the most recent day on which Stock was so traded; or

(iii) if neither (i) nor (ii) is applicable, such amount as the Committee shall determine on the basis of such factors as it deems relevant.

“FDIC” means the Federal Deposit Insurance Corporation or any successor agency thereto.

“Incentive Stock Option” means any Stock Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of the Code.

“NASDAQ” means the National Association of Securities Dealers Automated Quotation System.

“Non-Employee Director” means a person who is a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3) of the Exchange Act, or any successor definition adopted by the SEC or the FDIC, and an “outside director” for purposes of Section 162(m)(4) of the Code or any successor definition adopted by the Internal Revenue Service.

“Non-Statutory Stock Option” means any Stock Option that is not an Incentive Stock Option.

“Option Agreement” or “Stock Option Agreement” means the written agreement between the Bank and a Participant confirming the Stock Option and setting forth the terms and conditions upon which it may be exercised, as described in Section 7(b) hereof.

“Option Price” means the price per share of Stock to be paid for the shares of Stock being purchased pursuant to an Option Agreement.

“Parent” means People’s Mutual Holdings, a Connecticut state-chartered mutual holding company.

“Participant” means an eligible employee (as described in Section 5 hereof) who accepts an Award for a Stock Option, a Stock Appreciation Right, Restricted Stock, Performance Units, or any one or more of the foregoing (as described in Sections 7, 8, 9 and 10 hereof).

“Performance Goals” means the objective criteria established by the Committee from time to time in accordance with Section 11 hereof and upon which the performance of a Participant during a Performance Period is to be measured for purposes of determining the extent to which an Award has been earned.

“Performance Period” means the measuring period for determining whether Awards have been earned.

“Performance Unit Agreement” means the written agreement between the Bank and a Participant confirming the Performance Unit Award and setting forth the terms and conditions of such Award.

“Performance Unit Award” means an Award under Section 10 hereof.

“Plan” means the People’s Bank 1998 Long-Term Incentive Plan, as set forth herein and as hereinafter amended from time to time.

“Predecessor Plan” means the People’s Bank 1988 Long-Term Incentive Plan.

“Restricted Stock Agreement” means the written agreement between the Bank and a Participant confirming the Restricted Stock Award and setting forth the terms and conditions of such restrictions.

“Restricted Stock” means an Award under Section 9 hereof.

“Restriction Period” means the period determined by the Committee during which restrictions shall be applicable to Restricted Stock.

“Retirement” (and terms substantially equivalent thereto) means the termination of an employee’s employment at or after age 65.

“SAR Agreement” means the written agreement between the Bank and a Participant confirming the grant of Stock Appreciation Rights not granted in connection with Stock Options, and setting forth the terms and conditions upon which it may be exercised, as described in Section 8(b) hereof.

“SEC” means the Securities and Exchange Commission or any successor agency thereto.

“Stock” means the Common Stock of the Bank, having no par value.

“Stock Appreciation Right” means a right granted under Section 8 hereof.

“Stock Option” or “Option” means an option granted under Section 7 hereof.

“Subsidiary” means any corporation in which the Bank owns, directly or indirectly through one or more other Subsidiaries, at least 50% of the total combined voting power of all classes of stock.

“termination for Cause” (and terms substantially equivalent thereto) means a termination of employment by reason of an employee’s act of dishonesty, moral turpitude,

insubordination, or an intentional or grossly negligent act detrimental to the interests of the Bank, or of its Parent or any Subsidiary.

§3. Administration . The Plan shall be administered by the Committee or such other committee of the Board that is designated and empowered to perform the functions of the Committee, and in either case, composed of not fewer than two Non-Employee Directors of the Bank. In particular, the Committee shall have the authority, subject to the terms of the Plan, to select the officers and other key employees to whom Awards may from time to time be granted, to determine whether and to what extent Incentive Stock Options, Non-Statutory Stock Options, Stock Appreciation Rights, Restricted Stock Awards, or Performance Unit Awards, or any combination thereof are to be granted, and to determine the terms and conditions of all such grants. The Committee shall supervise and administer the Plan and shall have plenary powers and authority to adopt, amend and rescind such rules and regulations and establish such procedures as it deems appropriate for the administration of the Plan and the Awards, including rules with respect to limiting the use of shares of Common Stock of the Bank in full or part payment of the Option Price of Stock Options and in full or part payment of any applicable withholding taxes, and generally to conduct and administer the Plan and to make all determinations in connection therewith as may be necessary or advisable. Any questions of interpretation of the Plan, any Awards issued under it, or any such rules and regulations, shall be determined by the Committee, and such determinations shall be binding and conclusive for all purposes and upon all persons. The Committee may delegate some or all of its authority under the Plan as the Committee deems appropriate; provided, however, that no such delegation may be made that would (i) cause Awards under the Plan to cease to be exempt from Section 16(b) of the Exchange Act or (ii) cause any Award to cease to qualify for exemption from the deduction limitations under Section 162(m) of the Code.

§4. Types of Awards . The Committee shall have full and complete authority, in its discretion, subject to the provisions of the Plan, to grant Awards consisting of any one or a combination of Incentive Stock Options (as provided in Section 7 hereof); Non-Statutory Stock Options (as provided in Section 7 hereof); Stock Appreciation Rights (as provided in Section 8

hereof); Restricted Stock (as provided in Section 9 hereof); and Performance Units (as provided in Section 10 hereof).

§5. Eligibility . Officers and other key employees of the Bank, its Parent and any Subsidiaries (but excluding members of the Committee and any person who serves only as a director of the Bank and/or any one more of its Parent and any Subsidiaries) are eligible to be granted Awards under the Plan. The employees who shall receive Awards under the Plan shall be selected from time to time by the Committee in its sole discretion, from among those eligible, and the Committee shall determine, in its sole discretion, the size and form of each Award to be granted to each such employee selected.

§6. Stock Subject to Plan . As of July 19, 2007, the total number of shares of Stock reserved and available for distribution pursuant to Awards under the Plan, subject to adjustment as provided in Section 13 hereof, shall be 7,593,797 shares (which amount reflects adjustments to the number of shares previously reserved for distribution as a result of stock splits effected in 2004 and 2005; the exchange of shares in connection with the conversion and related stock offering effected by the Bank and the Parent in 2007; and any shares available for distribution pursuant to awards under any Predecessor Plan). Subject to the foregoing and to adjustment as provided in Section 13 hereof, the maximum aggregate number of shares of Stock that may be issued after July 19, 2007 pursuant to awards of Restricted Stock and/or issued in payment of the value of Performance Units shall be three million (3,000,000). Shares reserved and available for distribution pursuant to Awards under the Plan may consist, in whole or in part, of authorized and unissued shares or issued shares reacquired by the Bank and currently or hereafter held as treasury shares, as the Committee may from time to time determine. Shares attributable to any Award made under the Plan in the form of a Stock Option or Restricted Stock shall be unavailable for future grants so long as the Award remains outstanding, or following the exercise or deemed exercise of any Award made in the form of a Stock Option or the vesting of any Award made in the form of Restricted Stock, to the extent of such exercise, deemed exercise, or vesting (as the case may be). If any Award made in the form of a Stock Option remains unexercised in whole or in part at the expiration thereof or is terminated unexercised in whole or

in part, or if any Award made in the form of Restricted Stock is forfeited in whole or in part prior to the vesting of such Award, then in each case the shares attributable to such Award shall be available for future grants under the Plan to the extent such Award was not exercised or was forfeited (as the case may be). Notwithstanding the foregoing, if a Stock Appreciation Right granted in conjunction with a Stock Option is exercised, such Stock Option shall be deemed to have been exercised for purposes of determining whether the shares attributable to such Stock Option shall be available for future grants under the Plan. The maximum number of shares that may be made the subject of all Awards to any Participant in any calendar year in the form of Stock Options or Stock Appreciation Rights, or any combination thereof, is 100,000 shares. The maximum number of shares that may be made the subject of all Awards to any Participant in any calendar year in the form of Restricted Stock is 30,000 shares.

§7. Stock Options . The Committee may, from time to time, grant Stock Options, alone or in addition to other Awards granted under the Plan. The two types of Stock Options that may be granted are Incentive Stock Options and Non-Statutory Stock Options, which may be granted by the Committee to eligible employees (as described in Section 5 hereof) severally or together (in each case, with or without Stock Appreciation Rights). If any Stock Option does not qualify as an Incentive Stock Option, it shall constitute a Non-Statutory Stock Option as provided in this Section 7. Stock Options granted under the Plan shall be subject to the following terms and conditions, and may contain such additional terms and conditions as the Committee shall deem desirable.

(a) Grant Date . The grant of a Stock Option shall occur on the date the Committee, by resolution, (i) selects an eligible employee as grantee, (ii) determines the number of Stock Options granted to such employee, and (iii) specifies the terms and conditions of the Option Agreement. In no event may the Committee grant a Stock Option later than 10 years after the earlier of (x) the initial date of adoption of the Plan, and (y) the date the Plan is initially approved by the shareholders of the Bank.

(b) Option Agreement . Each Stock Option shall be evidenced by an Option Agreement, and the terms and provisions of each Option Agreement may differ. Each Option Agreement shall indicate on its face whether it is an agreement for Incentive Stock

Options or Non-Statutory Stock Options. If Stock Appreciation Rights are granted in connection with the grant of Stock Options, the Option Agreement shall also evidence the grant of the related Stock Appreciation Rights.

(c) Interpretation . Notwithstanding any terms of the Plan to the contrary, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered to disqualify the Plan under Section 422 of the Code.

(d) Price . The Option Price for each share of Stock purchasable under a Stock Option shall be an amount equal to the Fair Market Value of each share of the Stock on the date of grant, or such higher price as the Committee shall determine on or prior to such date; however, the Option Price per share of Stock to an eligible employee who owns Stock possessing more than 10% of the total combined voting power of all classes of stock of the Bank shall be an amount not less than 110% of the Fair Market Value of the Stock on the date the Incentive Stock Option is granted. Except as provided in Section 13, without the affirmative vote of holders of a majority of the Stock cast in person or by proxy at a meeting of shareholders of the Parent at which a quorum representing a majority of all outstanding Stock is present or represented by proxy, neither the Committee nor the Board shall approve a program providing for either (a) the cancellation of outstanding Stock Options and the grant in substitution therefor of any new awards, including specifically any new Stock Options having a lower Option Price, or (b) the amendment of outstanding Stock Options to reduce the Option Price thereof.

(e) Term . The term of each Stock Option shall be fixed by the Committee, but no Stock Option (whether an Incentive Stock Option or a Non-Statutory Stock Option) shall be exercisable more than 10 years after the date the Stock Option is granted; however, no Incentive Stock Option granted to an eligible employee who owns Stock possessing more than 10% of the total combined voting power of all classes of stock of the Bank shall be exercisable more than 5 years after the date the Stock Option is granted.

(f) Exercisability . Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee; provided, however, that except as provided in Sections 7(i), 12, 13, 14 and 16 hereof and unless otherwise determined by the Committee, no Stock Option shall be exercisable prior to the

first anniversary date of the date of grant of such Stock Option. If the Committee provides that any Stock Option is exercisable only in installments, the Committee may at any time waive such installment exercise provisions, in whole or in part, based on such factors as the Committee may determine.

(g) Method of Exercise . Subject to the provisions of this Section 7, Stock Options may be exercised, in whole or in part, at any time during the Option term by the Participant’s giving written notice of exercise to the Bank specifying the number of shares to be purchased. If a Participant wishes to exercise an Incentive Stock Option or to sell shares of Stock acquired upon the exercise of an Incentive Stock Option in a manner or within a time period that would make the Incentive Stock Option a Non-Statutory Stock Option, the Participant shall specifically notify the Bank of that fact in such notice or when such transaction occurs. Such notice shall be accompanied by payment in full of the Option Price by cash, certified or bank check, or such other form of payment as may be lawful consideration for capital stock and as the Bank may accept. With the consent of the Committee, payment in full or in part may also be made in the form of Stock already owned by the Participant or Restricted Stock (based on the Fair Market Value of such Stock on the date the Stock Option is exercised), the share certificates for which shall be endorsed in blank or accompanied by duly executed stock powers with signatures guaranteed by a broker-dealer firm that is a member of a national securities exchange or a commercial bank or trust company (unless such signature guaranty is waived by the Bank). The Committee may determine whether any restrictions shall be applicable to any shares received if payment of the Option Price for a Stock Option is made, in whole or in part, in the form of Restricted Stock, and, if any restrictions are so imposed, the terms of such restrictions. With the consent of the Committee, a Participant may elect to pay the exercise price for a Stock Option by authorizing a broker to sell shares of Stock (or a sufficient portion of the shares of Stock) acquired by the Participant upon exercise of the Option and to remit to the Bank a sufficient portion of the sale proceeds to pay the exercise price for the Stock Option and satisfy all tax withholding obligations resulting from such exercise. The Bank shall have the authority to delay the issuance of any shares

of Stock pursuant to the exercise of Stock Options until full payment therefor has been made, which includes the satisfaction of any withholding tax obligations related thereto.

(h) Transferability, Assignability . Except as otherwise provided by the Committee, Stock Options shall not be transferable by the Participant other than by will or by the laws of descent and distribution, and shall be exercisable during the Participant’s lifetime only by the Participant for his or her individual account; or, in the event of his or her legal incapacity, by his or her legal representative; or, in the event of his or her Disability, by the Participant or his or her legal representative (as the case may be).

(i) Incentive Stock Option Limitations . To the extent required for “incentive stock option” status under Section 422 of the Code, the Committee is authorized to limit the aggregate Fair Market Value of the Stock (determined as of the date of grant) with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year under the Plan and any other stock option plan of any subsidiary or parent corporation (within the meaning of Section 424 of the Code). The Committee is authorized to provide at grant that, to the extent permitted under Section 422 of the Code, if an employee’s employment with the Bank is terminated by reason of death, Disability or Retirement and the portion of any Incentive Stock Option that is otherwise exercisable during the post-termination period specified in Section 14 hereof applied without regard to this Section 7, is greater than the portion of such Option that is exercisable as an “incentive stock option” during such post-termination period under Section 422, such post-termination period shall automatically be extended (but not beyond the original option term) to the extent necessary to permit the Participant to exercise such Incentive Stock Option (either as an Incentive Stock Option or, if exercised after the expiration periods that apply for the purposes of Section 422, as a Non-Statutory Stock Option).

§8. Stock Appreciation Rights . The Committee may, from time to time and on such terms and conditions as it deems appropriate, grant Stock Appreciation Rights in connection with all or any part of a Stock Option granted under this Plan or in a separate Award. The grant of a Stock Appreciation Right shall occur on the date the Committee, by resolution, (i) selects an eligible employee or grantee, (ii) determines the number of Stock Appreciation Rights

granted to such employee, and (iii) specifies the terms and conditions of the Award. In no event may the Committee grant a Stock Appreciation Right later than 10 years after the earlier of (x) the initial date of adoption of the Plan, and (y) the date the Plan is initially approved by the shareholders of the Bank.

(a) Granted in Connection with Options . The following provisions apply to all Stock Appreciation Rights that are granted in connection with Stock Options:

(i) Grant and Exercise . Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option granted under the Plan. In the case of a Non-Statutory Stock Option, such rights may be granted either at or after the time of grant of such Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of grant of such Stock Option. A Stock Appreciation Right, or the applicable portion thereof granted with respect to a Stock Option, shall terminate and no longer be exercisable upon the termination or exercise of the related Stock Option. Unless otherwise determined by the Committee at the time of grant, a Stock Appreciation Right granted with respect to less than the full number of shares the subject of a related Stock Option shall not be reduced until the number of shares the subject of an exercise or termination of the related Stock Option exceeds the number of shares that are not the subject of the Stock Appreciation Right. A Stock Appreciation Right may be exercised by a Participant by his or her surrendering the applicable portion of the related Stock Option in accordance with procedures established by the Committee. Upon such exercise and surrender, the Participant shall be entitled to receive an amount determined in the manner prescribed in Section 8(a)(ii) hereof. Stock Options which have been so surrendered shall no longer be exercisable to the extent the related Stock Appreciation Rights have been exercised.

(ii) Terms and Conditions . Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined by the Committee. Upon the exercise of a Stock Appreciation Right, a Participant shall be entitled to receive an amount in cash or shares of Stock (or any combination of both), as determined by the Committee in its discretion, equal in value to the excess of (x) the Fair Market

Value of one share of Stock on the exercise date, over (y) the Option Price specified in the related Stock Option, multiplied by the number of shares in respect of which the Stock Appreciation Right shall have been exercised. The Committee may determine the form of payment. A Stock Appreciation Right may only be exercised when the Fair Market Value of Stock exceeds the Option Price specified in the related Stock Option. Stock Appreciation Rights shall be transferable only when and to the extent that the underlying Stock Option would be transferable under the Plan. Upon the exercise of a Stock Appreciation Right, the Stock Option or part thereof to which such Stock Appreciation Right is related shall be deemed to have been exercised for the purpose of the limitation set forth in Section 6 hereof on the number of shares issued under the Stock Appreciation Right at the time of exercise, based on the value of the Stock Appreciation Right at the time of exercise. Upon the termination of the Participant’s employment for any reason, he or she may exercise any Stock Appreciation Rights held by him or her on the same terms and conditions as the related Option.

(b) Not Granted in Connection with Options . All Stock Appreciation Rights that are not granted in connection with Stock Options shall be evidenced by a SAR Agreement, and the terms and provisions of each SAR Agreement may differ. In addition, the following provisions apply to all Stock Appreciation Rights that are not granted in connection with Stock Options:

(i) Term . The term of each Stock Appreciation Right shall be fixed by the Committee, but no Stock Appreciation Right shall be exercisable more than 10 years after it is granted.

(ii) Exercisability . Stock Appreciation Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee. If the Committee provides that any Stock Appreciation Right Award is exercisable only in installments, the Committee may at any time waive any such installment exercise provisions, in whole or in part, based on such factors as the Committee may determine. Subject to such terms and conditions, Stock Appreciation Rights may be exercised, in whole or in part, at any time

during their term by the Participant’s giving written notice of exercise to the Bank specifying the number of Stock Appreciation Rights to be exercised. Upon the exercise of a Stock Appreciation Right in accordance with its terms, a Participant shall be entitled to receive an amount in cash or shares of Stock (or any combination of both), as determined by the Committee in its discretion, equal in value to (x) the excess of the Fair Market Value of one share of Stock on the exercise date, over (y) the Fair Market Value of one share of Stock on the date of grant of the Stock Appreciation Right, multiplied by the number of shares of Stock in respect of which the Stock Appreciation Right shall have been exercised. The Committee may determine the form of payment. Any shares of Stock issued upon the exercise of a Stock Appreciation Right shall be valued at their Fair Market Value on the date of exercise.

(iii) Transferability; Assignability . Except as otherwise provided by the Committee, Stock Appreciation Right shall not be transferable by the Participant other than by will or by the laws of descent and distribution, and shall be exercisable during the Participant’s lifetime only by the Participant for his or her individual account, or, in the event of his or her legal incapacity, by his or her legal representative; or, in the event of his or her Disability, by the Participant or his or her legal representative (as the case may be).

§9. Restricted Stock Awards . The Committee may, from time to time, grant Restricted Stock Awards under the Plan, subject to the following terms and conditions and such other terms and conditions as the Committee, in its discretion, may establish.

(a) Administration . Shares of Restricted Stock may be issued either alone or in addition to other Awards granted under the Plan. The Committee shall select the officers and key employees to whom and the date or dates upon which grants of Restricted Stock will be made, the number of shares to be awarded, the time or times within which such Awards may be subject to forfeiture, the events or conditions of forfeiture, and such other terms and conditions as the Committee shall determine. The Committee may, before or at the time of grant, designate certain Awards of Restricted Stock as “Performance-Based

Awards”, in which case the Committee shall condition the grant of such Performance-Based Restricted Stock upon the attainment of specified Performance Goals established by the Committee in writing, no later than the 90th day of the Performance Period to which the Performance Goals shall apply. Performance Periods shall not be shorter than one year. Other terms, conditions and restrictions of such Awards shall be set forth in an agreement or agreements between the Bank and the Participant. The provisions of Restricted Stock Awards need not be the same with respect to each recipient. Each Restricted Stock Award shall be evidenced by a Restricted Stock Agreement.

(b) Certificates . Each Participant receiving a Restricted Stock Award shall be issued a certificate representing such shares of Restricted Stock. Such certificate shall be registered in the name of such Participant. The Committee may require that the certificates evidencing such shares be held in custody by the Bank until the restrictions thereon shall have lapsed and that, as a condition of any Restricted Stock Award, the Participant shall have delivered to the Bank upon receipt of such Award, a duly executed stock power, endorsed in blank, with signatures guaranteed by a broker-dealer firm that is a member of a national securities exchange or a commercial bank or trust company (unless such guaranty is waived by the Bank), relating to the Stock made the subject of such Restricted Stock Award.

(c) Terms and Conditions . Each grant of a Restricted Stock Award shall be subject to the following terms and conditions, in addition to such other terms and conditions as the Committee may determine:

(i) Subject to the provisions of the Plan and the Restricted Stock Agreement, during the period determined by the Committee (the “Restriction Period”), except as otherwise provided by the Committee, the Participant shall not be permitted to sell, assign, transfer, pledge, hypothecate or otherwise dispose of or encumber any shares of Restricted Stock. The Committee may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions, in whole or in part, based on service, performance and such other factors or criteria as the Committee may determine.

(ii) Except as otherwise provided in this Section 9(c)(ii) and Section 9(c)(i), the Participant shall have, with respect to his or her shares of Restricted Stock, all of the rights of a shareholder of the Bank, including the right to vote the shares and the right to receive any cash dividends. Unless otherwise determined by the Committee, cash dividends shall be automatically deferred and reinvested in additional Restricted Stock and dividends payable in Stock shall be paid in the form of shares of Restricted Stock.

(d) Performance-Based Restricted Stock Award . Restricted Stock Awards may be designated as Performance-Based by the Committee before or at the time of grant based upon the Committee’s determination that (i) the recipient is or may be a “covered employee” within the meaning of Section 162(m)(3) of the Code in the fiscal year in which the Bank would expect to be able to claim a tax deduction with respect to such Award, and (ii) the Committee wishes the Restricted Stock Award to qualify for the exemption from the limitation on deductibility imposed by Section 162(m) of the Code.

(e) Book-Entry Shares . In the event the Committee authorizes the issuance pursuant to this Plan of shares of Restricted Stock in book-entry (uncertificated) form, all references herein to the delivery of stock certificates shall be inapplicable. The Bank’s transfer agent shall keep appropriate records indicating the number of shares of Restricted Stock owned by each person to whom shares are issued pursuant to this Plan, the restrictions applicable to such shares of Restricted Stock and the duration thereof, and other relevant information. Upon the lapse of all restrictions applicable to shares of Restricted Stock, the transfer agent shall effect delivery of such shares by adjusting its records to reflect the lapse of such restrictions, and by notifying the Participant in whose name such shares were issued that such restrictions have lapsed.

§10. Performance Unit Awards . The Committee shall, from time to time, in its discretion, set Performance Goals and grant Awards to eligible employees (as defined in Section 5 hereof) in the form of Performance Units, provided that the Performance Goals are established in writing, no later than the 90th day of the Performance Period to which the Performance Goals shall apply. The extent to which an Award has been earned shall be determined following

completion of the applicable Performance Period, based upon the attainment of the Performance Goals set with respect to that Award. Performance Periods shall not be shorter than one year.

(a) Administration . Performance Units may be awarded either alone or in addition to other Awards granted under the Plan. The Committee shall select the officers and key employees to whom and the time or times at which Performance Units shall be awarded and any other terms and conditions of the Award. The Committee shall determine the nature, duration, and starting date of the Performance Period and shall determine the performance objectives to be used in valuing Performance Units and determining the extent to which Performance Units have been earned. The provisions of Performance Units Awards need not be the same with respect to each recipient, and Performance Goals may vary among Participants and groups of Participants.

(b) Performance Period . Except as provided in Section 10(c)(iii) hereof, a Participant shall be entitled to payment of Performance Units pursuant to Section 10 hereof only if the Participant is employed with the Bank for a period of time to be determined by the Committee, but such period of time in no event shall be less than one year from the date of grant of the Award. Performance Periods may overlap and Participants may simultaneously participate with respect to Performance Unit Awards that are subject to different performance factors and criteria.

(c) Terms and Conditions . Performance Unit Awards shall be subject to the following terms and conditions, in addition to any other terms and conditions the Committee may determine:

(i) Not more than 90 days after the commencement of the Performance Period, the Committee shall establish such performance targets and indicators as shall enable the Committee to calculate the percentage of a Performance Unit to be paid to a Participant based upon the extent to which such Performance Unit has been earned. The Committee shall determine the value for each Performance Unit based upon the Bank’s audited financial statements for the year immediately preceding the year during which the Performance Units are to be paid out. Payment of the value of the Performance Units shall be made in cash or whole shares of Stock, including Restricted Stock, or any combination thereof,

and in a lump sum or in annual installments, as the Committee may determine. The Committee may adjust the performance targets and indicators and measurements applicable to Performance Unit Awards to take into account changes in law, accounting and tax rules and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances.

(ii) Subject to the provisions of the Plan and the Performance Unit Award Agreement, except as otherwise provided by the Committee, Performance Unit Awards may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of.

(iii) Based on such factors or criteria as the Committee may determine, the Committee may shorten the Performance Period or declare any Performance Units immediately payable in such amounts as the Committee may determine whenever it decides in its absolute discretion that such action is in the interests of the Bank and equitable to the Participants, or in the event of hardship or other special circumstances of a Participant whose employment is terminated (other than for Cause).

(iv) Each Performance Unit Award shall be confirmed by and be subject to the terms of a Performance Unit Award Agreement.

(v) The maximum amount, including the Fair Market Value of any Stock, that may be paid to any Participant in any calendar year with respect to Performance Unit Awards is $2 million.

§11. Performance Goals . Performance Goal(s) applicable to a Performance Period shall identify one or more business criteria to be monitored during the Performance Period. Such business criteria shall be established on a Bank-specific basis or in comparison with peer group performance based on one or more of the following: earnings before interest and taxes, net earnings, earnings per share, return on equity, return on assets, stock price appreciation and total return to stockholders. The Committee shall determine the level(s) of performance that must be achieved with respect to each criterion that is identified in a Performance Goal in order for a

Performance Goal to be treated as attained in whole or in part. The Committee may base Performance Goal(s) on one or more of the foregoing business criteria. If Performance Goal(s) are based on more than one business criterion, the Committee may determine to make a grant of an Award upon attainment of the Performance Goal(s) relating to any one or more of the criteria. The Committee may not adjust Performance Goals or Performance Periods established for any Award to the extent such adjustment would increase the amount of the Award; however, the Committee shall retain the discretion to decrease Awards. The Committee shall certify in writing before payment of the amounts payable under the Restricted Stock Awards and Performance Unit Awards that the Performance Goals and any other material terms were in fact satisfied. Certification by the Committee is not required for amounts payable that are attributable solely to the increase in the value of Stock.

§12. Change of Control . In the event of a Change of Control of the Bank (as defined in Section 12(a) hereof), notwithstanding any provisions to the contrary in the Plan or in any agreements evidencing the grant of Awards, (i) any Stock Options and Stock Appreciation Rights outstanding on the date a Change of Control is deemed to have occurred shall immediately become fully exercisable; (ii) the restrictions applicable to any Restricted Stock shall lapse and such Restricted Stock shall immediately become fully vested; and (iii) any outstanding Performance Unit Awards shall be vested and paid out in accordance with the time ratio set forth in Section 14(f) hereof. All outstanding Stock Options, Stock Appreciation Rights, and Restricted Stock shall be redeemable for cash, unless otherwise determined by the Committee on or after the date of grant, with the value of shares of Stock being deemed equivalent to their Fair Market Value determined as of the date specified in Section 12(b) hereof, as of the date of such Change of Control, or as of such other date as the Committee may determine prior to the date of such Change of Control.

(a) Definition . A Change of Control shall be deemed to have occurred at any time that a person (as that term is used in Sections 13(d) and 14(d) of the Exchange Act) other than the Bank or its Parent or any Subsidiary becomes the “beneficial owner” (as defined in the Exchange Act) directly or indirectly of securities of the Bank representing a majority of the total voting power of the Bank’s then outstanding voting securities.

(b) Valuation Date . Upon the occurrence of a Change of Control of the Bank, the valuation date to be used in determining the Fair Market Value of shares of Stock shall be the date immediately preceding the date upon which such Change of Control shall have occurred.

§ 13. Reorganizations and Recapitalizations of the Bank . Unless the Committee, in its discretion, shall otherwise provide to the contrary in any agreement, the following terms apply to adjustments, reorganizations, recapitalizations, and other changes in the structure of the Bank:

(a) The existence of the Plan and Awards granted thereunder shall not affect in any way the right or power of the Bank or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Bank’s capital structure or its business, or any merger or consolidation of the Bank, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

(b) The shares with respect to which Options or Stock Appreciation Rights (or both) may be granted hereunder are shares of Stock as currently constituted, but if, and whenever, prior to the delivery by the Bank of all of the shares of Stock that are the subject of Stock Options or Stock Appreciation Rights (or both) granted pursuant to the Plan, the Bank shall effect a subdivision or combination of shares or other capital adjustment, the payment of a stock dividend or other increase or reduction in the number of shares of Stock outstanding without receiving consideration therefor in money, services or property, the number of shares of Stock available under the Plan and the number of shares of Stock with respect to which Stock Options or Stock Appreciation Rights (or both) granted hereunder may thereafter be exercised shall (i) in the event of an increase in the number of shares of Stock, be proportionately increased, and the Option Price payable per share shall be proportionately reduced; and (ii) in the event of a reduction in the number of shares of Stock, be proportionately reduced, and the Option Price payable per share shall be proportionately increased.

(c) If the Bank is reorganized, or merged into or consolidated with another corporation, or if the Bank sells or otherwise disposes of substantially all of its assets to

another corporation, or if 20% or more of all classes of outstanding capital stock of the Bank ordinarily entitled to vote in the election of directors is acquired by another corporation in exchange for stock or other securities of such other corporation and while unexercised Options remain outstanding under the Plan, subject to the provisions of Section 12 hereof, the Committee may authorize an agreement between the Bank and such other corporation providing that there shall be substituted for the shares subject to the unexercised portions of such outstanding Options an appropriate number of shares, if any, of each class of stock or other securities of the reorganized, merged, consolidated or acquiring corporation that were distributed or issued to the shareholders of the Bank in respect of their shares of Stock; and in the case of any merger or consolidation in which the Bank is not the surviving corporation, or any sale or other disposition of substantially all of the assets of the Bank to another corporation, or the acquisition of 20% or more of all classes of the outstanding capital stock of the Bank ordinarily entitled to vote in the election of directors by another corporation and in exchange for stock or other securities of such other corporation, the Committee may accelerate unmatured installments of Stock Options or Stock Appreciation Rights (or both).

§ 14. Termination of Employment . Subject to the provisions of Sections 7, 8, 9 and 10, the following terms shall apply to Awards with respect to a Participant’s termination of employment.

(a) Termination by Death . If a Participant’s employment terminates by reason of his or her death, any Stock Option or Stock Appreciation Right held by such Participant may thereafter be exercised, to the extent then exercisable or on such accelerated basis as the Committee may determine, until the expiration of the stated term of such Stock Option or Stock Appreciation Right, or for such period following the Participant’s death as may be specified in the applicable Option Agreement or SAR Agreement, whichever period is shorter.

(b) Termination by Reason of Disability . If a Participant’s employment terminates by reason of his or her Disability, any Stock Option or Stock Appreciation Right held by such Participant may thereafter be exercised by the Participant, to the extent it was

exercisable at the time of termination or on such accelerated basis as the Committee may determine, until the expiration of the stated term of such Stock Option or Stock Appreciation Right, or for such period following termination of employment by reason of the Participant’s Disability as may be specified in the applicable Option Agreement or SAR Agreement, whichever period is shorter. The period during which the Stock Option or Stock Appreciation Right may be exercised following termination by reason of Disability pursuant to this subsection (b) shall not be affected by the subsequent death of the Participant. In the event of termination of employment by reason of Disability, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option shall thereafter be treated as a Non-Statutory Stock Option.

(c) Termination by Reason of Retirement . If a Participant’s employment terminates by reason of Retirement, any Stock Option or Stock Appreciation Right held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such Retirement or on such accelerated basis as the Committee may determine, until the expiration of the stated term of such Stock Option or Stock Appreciation Right, or for such period following termination of employment by reason of the Participant’s Retirement as may be specified in the applicable Option Agreement or SAR Agreement, whichever period is shorter. The period during which the Stock Option or Stock Appreciation Right may be exercised following termination by reason of Retirement pursuant to this subsection (c) shall not be affected by the subsequent death of the Participant. In the event of termination of employment by reason of Retirement, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Non-Statutory Stock Option.

(d) Other Termination . Unless otherwise determined by the Committee, if a Participant’s employment terminates for any reason other than death, Disability, or Retirement, each Stock Option and Stock Appreciation Right shall immediately terminate, except that such Stock Option or Stock Appreciation Right, to the extent then exercisable, may be exercised for the lesser of 3 months or the balance of its term if the

Participant’s employment is terminated for reasons other than for Cause by the Bank, or its Parent or a Subsidiary (whichever is then the Participant’s employer).

(e) Effect of Termination of Employment on Restricted Stock Awards . Except to the extent otherwise provided in the applicable Restricted Stock Agreement and Section 9(c)(i) hereof, upon termination of a Participant’s employment for any reason during the Restriction Period, all shares of Restricted Stock still subject to restriction shall be forfeited by the Participant. In the event of hardship or other special circumstances affecting a Participant whose employment is involuntarily terminated (other than for Cause), the Committee may waive in whole or in part any or all remaining restrictions with respect to such Participant’s shares of Restricted Stock.

(f) Effect of Termination of Employment on Performance Unit Awards . Except to the extent otherwise provided in Section 10(c)(iii) hereof, Performance Units shall have no value if the Participant is not an employee of the Bank at the end of the Performance Period for which the Performance Unit was granted. In the event of the death, Disability, Retirement, or termination of the Participant’s employment for reasons other than Cause, the Committee may, at its discretion, direct prorated payments based upon (x) the number of full calendar months between the date of grant of the Award and the date of termination of employment, divided by, (y) the total number of months in the Performance Period.

§15. Withholding Taxes . No later than the date as of which an amount first becomes includible in the gross income for federal income tax purposes of a Participant with respect to any Award under the Plan, such Participant shall pay to the Bank, or make arrangements satisfactory to the Bank regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Bank, withholding obligations may be settled with Stock, including Stock that is part of the Award giving rise to the withholding requirement. Such Stock shall be valued at its Fair Market Value on the date when taxes otherwise would be withheld in cash. The obligations of the Bank under the Plan may be conditioned on such payment or arrangements, and the Bank, its Parent and any Subsidiary shall, to the extent permitted by law, have the right to deduct any such taxes

from any payment otherwise due to the Participant. Until such taxes have been paid or arrangements satisfactory to the Bank for their payment have been made, no share certificates shall be issued or cash shall be paid with respect to an Award.

§16. Amendments and Termination . The Board may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall be made that would impair the rights of a Participant under a Stock Option, a Stock Appreciation Right Agreement, or an agreement for a Restricted Stock Award or Performance Unit Award theretofore granted, without such Participant’s consent or which, without the approval of the Bank’s shareholders, would:

(a) except as expressly provided in the Plan, increase the total number of shares reserved for the purpose of the Plan;

(b) except as expressly provided in the Plan, decrease the Option Price of any Stock Option to less than the Fair Market Value on the date of grant;

(d) extend the maximum option period with respect to Incentive Stock Options under Section 7(e) or the maximum exercise period under Section 7(f) hereof.

The Committee may amend the terms of any Stock Option or other Award theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of a Participant without such Participant’s consent. Subject to the restrictions contained in Section 7(d), the Committee may also substitute new Stock Options for previously granted Stock Options, including previously granted Stock Options having higher Option Prices. Subject to the provisions set forth in this Section 16, the Board shall have authority to amend the Plan to take into account changes in law and tax and accounting rules, to make Awards comply as “performance-based compensation” as defined in Section 162(m) of the Code, to comply with rules exempting certain transactions under the Plan from Section 16(b) of the Exchange Act, and to take into account other developments.

§17. Effective Date . The Plan shall be effective and Awards may be granted thereunder, immediately upon its adoption by the Board. If, however, the Plan shall not have received approval by the holders of a majority of the total voting power represented by the voting

securities of the Bank within 12 months after its adoption by the Board, the Plan and all Awards thereunder shall be terminated and shall be of no further effect.

§18. General Provisions . The following general provisions shall apply to the Plan:

(a) The Plan and all Awards granted and all actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Connecticut.

(b) Nothing contained in the Plan shall prevent the Bank, its Parent or any Subsidiary from adopting other or additional compensation arrangements for its employees.

(c) Adoption of the Plan shall not confer upon any employee any right to continued employment nor shall it interfere in any way with the right of the Bank, its Parent or any Subsidiary, to terminate the employment of any of its employees at any time.

(d) The reinvestment of dividends in additional Restricted Stock at the time of any dividend payment shall only be permissible if sufficient shares of Stock are available under Section 6 hereof for such reinvestment (taking into account then outstanding Stock Options and other Awards).

(e) The Committee shall establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable in the event of such Participant’s death are to be paid.

-ooo00ooo-

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification

CERTIFICATIONS

I, John A. Klein, certify that:

I have reviewed this Quarterly Report on Form 10-Q of People’s United Financial, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: November 7, 2007				/s/ John A. Klein
				John A. Klein Chairman, Chief Executive Officer and President

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification

CERTIFICATIONS

I, Philip R. Sherringham, certify that:

I have reviewed this Quarterly Report on Form 10-Q of People’s United Financial, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: November 7, 2007				/s/ Philip R. Sherringham
				Philip R. Sherringham Executive Vice President and Chief Financial Officer

Exhibit 32

Section 1350 Certification

Executive Certification

pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of People’s United Financial, Inc. (the “Company”), a Delaware corporation, does hereby certify, to the best of such officer’s knowledge, that:

The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2007 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934.

Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period ended September 30, 2007.

This Certification is made effective as of the date the Report is filed with the Securities and Exchange Commission.

/s/ John A. Klein

John A. Klein

Chief Executive Officer

/s/ Philip R. Sherringham

Philip R. Sherringham

Chief Financial Officer

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document.