People's Bank Reports First Quarter 2001 Earnings; Increases Quarterly Dividend by 6 Percent

Apr 19, 2001, 01:00 ET from People's Bank

    BRIDGEPORT, Conn., April 19 /PRNewswire/ -- People's Bank (Nasdaq: PBCT),
 a $14 billion financial services company, today announced net income for the
 quarter ended March 31, 2001 of $13.3 million or $0.22 per share, in line with
 preliminary results released by the bank two weeks ago.
     People's Board of Directors increased the quarterly dividend on its common
 stock by $0.02 per share to $0.34 per share.  The dividend is payable May 15,
 2001, to stockholders of record on May 1, 2001.
     "We are pleased to reward our shareholders with our 14th consecutive
 semi-annual dividend increase since 1993," said John A. Klein, president and
 chief executive officer.  "Based on the closing stock price on April 18, 2001,
 the dividend yield on our common stock now exceeds 6 percent.  We believe this
 yield and the reduced payout ratio stemming from People's Mutual Holdings
 waiving dividends on most of its shares provides substantial long-term value
 to our shareholders."
     Today's dividend announcement reflects management's confidence in the
 future.  "While we had some disappointments in the first quarter, we also had
 good news. And the second quarter is off to a great start with the sale of the
 U.K. credit card and consumer loan business we announced on April 6," said
 Klein.  "We continue to believe our franchise is positioned well for the
 remainder of 2001 and beyond."
     "The $70 million pre-tax gain on the U.K. transaction was a very
 significant win for the bank and our shareholders," Klein noted.  "This
 transaction, which will be recognized in the second quarter of 2001, further
 strengthens the bank, enhances our flexibility and enables us to focus more
 resources on the Connecticut franchise and our national operations."
     People's reported continued strength in many of its core businesses in the
 first quarter.  Stop & Shop offices sustained their strong growth trend with
 deposits up 17 percent over the first quarter of 2000, and the residential
 mortgage business increased originations by $120 million and generated a
 20-percent increase in gains on mortgage sales.  Additionally, People's
 insurance subsidiary increased revenues 22 percent since last year's first
 quarter.
     Klein also noted that the commercial loan portfolio was up 15 percent over
 the first quarter of 2000, and commercial real estate finance increased its
 portfolio by 14 percent over the same period.  Included in the commercial loan
 growth is a 65-percent increase in balances for People's Capital and Leasing
 Corp.
     Managed operating revenues for the bank increased $10 million or
 5 percent, from the first quarter of 2000, noted Klein.  He added the bank's
 managed net interest margin was 4.37 percent, an increase of 12 basis points.
     Additionally, the bank's managed efficiency ratio declined to 53 percent,
 the lowest it's been in six quarters.  "The improved efficiency ratio reflects
 a $5 million reduction in expenses from the fourth quarter of 2000," he said.
     William T. Kosturko, executive vice president and interim chief financial
 officer, said earnings for the quarter reflect net losses on securities, lower
 earnings in the Credit Card Services division, and a charge-off related to a
 single commercial loan which had been previously classified as non-performing.
     The $3.3 million net loss on securities for the first quarter reflected
 $6 million in write-downs on a select group of technology stocks, which are
 all in the S&P 500 index.  Regarding the bank's investment in common stocks,
 Kosturko said, "This portfolio has had a history of providing exceptional
 returns.  Over the last five years it has generated in excess of $125 million
 in realized net securities gains.  We believe the losses we've recognized in
 the first quarter are reflective of recent market performance."
     Earnings for Credit Card Services declined approximately $4 million
 compared to the year-ago quarter to a net loss of approximately $3 million.
 These results primarily reflect higher managed charge-offs partially offset by
 an increase in managed net interest income.  The higher losses are a result of
 the bank's risk-based repricing strategy implemented in 2000, the impact of
 changing economic conditions on the consumer lending industry and higher
 bankruptcy-related losses.
     Kosturko said an additional $5 million charge-off was related to a single
 loan in the $2.6 billion Commercial Banking portfolio.  "This charge-off does
 not reflect the overall performance of the Commercial Banking division, which
 had its best year ever in 2000 and which, in the first quarter of 2001,
 realized double digit-growth in both commercial real estate and commercial
 loans.  The asset quality of our commercial banking portfolio continues to be
 strong," he added.
 
     Other News Highlights
     -- In early April, People's announced the sale of its United Kingdom
        credit card and consumer loan business to Citigroup, Inc.  The sale is
        part of a strategic effort to focus on building People's core U.S.
        businesses and will result in a pre-tax gain of approximately
        $70 million, which will be recognized in the second quarter of 2001.
 
     -- peoples.com was rated among the top five in a study of 172 financial
        services web sites in Latin America, Canada and the United States.  In
        the study, conducted by Atlanta-based Speer & Associates, Inc.,
        People's ranked ahead of companies such as Charles Schwab, Fidelity,
        Paine Webber, First Union and Wells Fargo.  People's was the only U.S.
        company of its size to make the study's top 25.
 
     -- People's also converted its branch in Monroe to a Financial Center, the
        company's fourth of these revolutionary offices.  The People's
        Financial Center is an innovative concept that brings together the
        bank's diversified array of financial products and services in one
        convenient location.  The concept is intended to make it easy for
        customers to do everything from personal banking to financial planning
        to stock trading.  The bank plans to have 18 of these offices
        throughout Connecticut by the end of 2002.
 
     Conference Call
     On April 20, 2001, at 10 a.m., Eastern Time, People's will host a
 conference call to discuss this earnings announcement. The call may be heard
 through http://www.peoples.com by selecting Investor Relations, News and
 Events, Conference Calls. Additional materials relating to the call may also
 be accessed at People's website.  The call will be archived on the website and
 available for approximately 90 days.
 
     1Q Key Performance Indicators (1Q 2001 compared with 1Q 2000 unless
 otherwise indicated)
 
     Summary
     -- Earnings declined $0.22 per share, or 50%.
     -- Managed provision for loan losses increased $21 million.
     -- Managed operating revenue increased $10 million, or 5%.
     -- Managed net interest margin improved 12 basis points to 4.37%.
     -- Net security gains (losses) declined $8 million.
 
     Commercial Banking
     People's commercial banking business continued its growth trend in the
 first quarter.  Both commercial real estate finance and commercial loans grew
 at double-digit rates with the latter benefiting from strong growth at
 People's Capital and Leasing Corp. (PCLC).  In the first quarter, People's
 reported an additional $5 million charge-off related to a single commercial
 loan that has been classified as non-performing since the third quarter of
 2000.  As of March 31, 2001, a total of $9 million has been charged-off
 against this loan, leaving a remaining balance under $10 million.
 
     *  Average commercial loans grew $147 million, or 15%.
           -- PCLC average loans and leases increased $84 million, or 65%.
     *  Average commercial real estate finance loans increased $172 million,
        or 14%.
     *  Average commercial demand deposits combined with non-deposit cash
        management balances increased $110 million, or 11%.
           --Cash management fees increased 17%.
 
     Consumer Financial Services
     This segment includes People's residential mortgage business, consumer
 deposits, insurance and brokerage services.  In the long term, Consumer
 Financial Services will benefit from the transformation of People's branch
 franchise in Connecticut as it provides more avenues for generating growth in
 each of these businesses. Fees generated from these operations provide a
 valuable diversified revenue stream for People's.
 
     *  Retail banking service charges increased $1.9 million, or 14%.
     *  Insurance revenue increased $1.1 million, or 22%.
     *  Average consumer non-interest-bearing deposits increased $69 million,
        or 10%.
     *  Supermarket deposits increased $220 million, or 17%, and averaged
        $29 million per branch.
           -- Same-store deposits for Stop & Shop branches grew an average of
              $3.8 million per store.
 
     Credit Card Services
     Credit card services encompasses People's credit card and consumer lending
 businesses.  In the first quarter, the managed provision for loan losses
 increased $16 million compared to the first quarter of 2000 and included
 $3 million in additional reserves. This increase was partially offset by an
 $11 million improvement in managed net interest income driven by higher
 yields.  A portion of the increase in the loan loss provision was anticipated
 and relates to credit card repricing activities initiated in 2000.  Another
 portion of the increase is due to a higher volume of bankruptcy filings in the
 first quarter, which nationally are running more than 20% higher than 2000.
 Management believes the increase in bankruptcy filings is related to debtors
 choosing to file prior to enactment of new bankruptcy legislation, which is
 currently pending in the U.S. Congress.  The increase in credit losses
 resulting from the slowdown in the U.S. economy also affected the quarterly
 results.
 
     *  Average managed loans for credit card services declined $267 million.
           -- Average consumer loans grew $452 million, or 107%.
           -- Average managed U.S. credit card receivables decreased
              $736 million, or 20%.
     *  Net charge-offs (as a percentage of average managed loans) for the
        credit card services segment equaled 5.62% compared to 4.10% for 1Q00
        and 4.62% for 4Q00.
           -- Three-quarter lagged net charge-offs (5.53%) increased 113 basis
              points from 1Q00 and increased 110 basis points from 4Q00.
     *  Delinquencies as a percentage of quarter-end managed loans for the
        credit card services segment equaled 3.96% compared to 2.77% for 1Q00
        and 3.56% for 4Q00.
           -- Three-quarter lagged delinquencies (3.80%) increased 92 basis
              points from 1Q00 and 26 basis points from 4Q00.
 
     Capital Markets
     *  Average short-term investments grew $229 million with a 21-basis point
        increase in yield.
     *  Common stock portfolio had a total fair value of $133 million at
        March 31, 2001.
           -- Net unrealized loss of $31 million at March 31, 2001 after
              write-downs.
           -- Securities losses for the quarter included $5.7 million in
              write-downs in the carrying amount of certain equities
              securities.
     *  Average cost of borrowings increased 86 basis points from 1Q00.
           -- Reflects a smaller percentage of short-term borrowings with lower
              yields.
           -- Reduced benefit from interest rate hedges.
 
     People's Bank is a diversified financial services company providing
 consumer, commercial, insurance and investment services.  The bank is a leader
 in supermarket banking, with 53 of its 146 branches located in Super Stop &
 Shop stores.  Through its subsidiaries, People's provides brokerage services,
 money management, equipment leasing and insurance.  Nationally, People's is
 the 16th largest issuer of MasterCard and Visa credit cards.
 
     Certain statements contained in this release are forward-looking in
 nature.  These statements are subject to risks and uncertainties that could
 cause People's actual results or financial condition to differ materially from
 those expressed in or implied by such statements.  Factors of particular
 importance to People's include but are not limited to changes in general
 economic conditions, and price levels and conditions in the public securities
 markets generally.
 
     Access People's Bank on the World Wide Web at http://www.peoples.com.
     For the latest People's announcements by fax, call PR Newswire at
 800-758-5804 and give code 113252.
 
 
     People's Bank and Subsidiaries
     FINANCIAL HIGHLIGHTS
 
                                                Quarters Ended
                              Mar. 31,  Dec. 31,  Sept. 30,  June 30,  Mar. 31,
     (dollars in millions,       2001      2000       2000      2000    2000
      except per share data)
     Operating Data:
       Net income               $13.3      $28.7      $26.2    $26.5    $27.0
       Net interest income       97.0      101.4       98.8     94.6     90.3
       Provision for
        loan losses              28.6       16.0       17.6     13.4     12.9
       Fee-based revenues        60.8       68.3       64.0     61.7     65.2
       Non-interest expense     112.2      117.5      113.6    110.4    111.2
 
     Selected Statistical Data:
       Net interest
        margin-managed
        portfolio (1), (2)      4.37%      4.54%      4.63%     4.45%    4.25%
       Net interest margin-
        owned portfolio (1)      3.74       4.02       4.06     3.98     3.75
       Return on average
        assets (1)               0.47       1.03       0.97     1.01     1.01
       Return on average
        stockholders'
        equity (1)                6.0       13.7       12.9     13.4     13.9
       Return on average
        tangible stockholders'
        equity (1)                7.0       16.1       15.4     16.0     16.8
       Return on average
        tangible stockholders'
        equity, excluding the
        effect of SFAS
        No. 115 (1), (3)          6.6       14.4       13.6     14.1     14.7
       Efficiency ratio -
        managed portfolio (2)    53.3       55.2       53.7     54.6     55.3
 
     Per Common Share Data:
       Basic and diluted
        earnings per share      $0.22      $0.47      $0.43    $0.43    $0.44
       Dividends paid            0.32       0.32       0.30     0.30     0.28
       Book value               14.31      14.39      13.76    13.22    13.04
       Tangible book value      12.31      12.36      11.68    11.11    10.88
       Stock price:
         High                   28.38      27.00      22.38    22.94    21.75
         Low                    23.38      18.69      18.59    18.13    16.38
         Close                  25.75      25.88      21.06    18.38    20.94
       Total dividend payout
        ratio (4)               62.4%      28.6%      29.4%    29.1%    26.5%
 
     (1)  Annualized.
     (2)  Managed portfolio represents the owned portfolio plus the
          off-balance-sheet securitized and sold credit card receivables.
     (3)  Computed by excluding from average tangible stockholders' equity the
          average after-tax net unrealized gain or loss on securities
          available for sale.
     (4)  Reflects the waiver of cash dividends on substantially all of the
          common shares owned by People's Mutual Holdings.
 
 
     People's Bank and Subsidiaries
     FINANCIAL HIGHLIGHTS - Continued
 
                                                Quarters Ended
                              Mar. 31,  Dec. 31,  Sept. 30,  June 30,  Mar. 31,
     (dollars in millions)      2001      2000       2000      2000      2000
     Financial Condition Data:
       General:
         Total assets -
          managed
          portfolio (1)        $13,655    $13,744    $13,248  $13,016  $13,058
         Total assets -
          owned portfolio       11,563     11,571     11,001   10,687   10,648
         Loans, net -
          managed
          portfolio (1)          9,107      9,531      9,283    9,140    9,219
         Loans, net -
          owned portfolio        7,002      7,345      7,022    6,798    6,795
         Securities, net         2,472      2,497      2,417    2,265    2,238
         Goodwill and other
          acquisition-related
          intangibles              124        125        127      130      132
         Total deposits          7,831      7,761      7,612    7,503    7,519
           Non-interest-
            bearing deposits     1,617      1,590      1,494    1,537    1,494
           Time deposits         3,458      3,511      3,466    3,189    3,208
         Borrowings              2,374      2,466      2,185    2,032    1,985
         Subordinated notes        267        266        149      149      149
         Stockholders'
          equity                   879        882        843      810      798
       Asset Quality (2):
         Total net loan
          charge-offs            $25.6      $16.0      $17.9    $13.4    $12.9
         Ratio of net loan
          charge-offs to
          average loans (3)      1.40%      0.89%      1.03%    0.78%    0.74%
         Total non-performing
          assets                  $67        $65        $62      $39      $45
         Ratio of non-
          performing assets
          to total assets        0.58%      0.56%      0.56%    0.37%    0.42%
         Allowance for loan
          losses                  $108       $105       $105     $105     $105
         Ratio of allowance
          for loan losses to
          non-performing
          loans                 163.2%     168.3%     179.8%   280.7%   250.6%
         Ratio of allowance
          for loan losses to
          total loans             1.51       1.41       1.47     1.52     1.52
       Capital:
         Average
          stockholders'
          equity to average
          assets                  7.7%       7.6%       7.5%     7.5%     7.3%
         Stockholders'
          equity to total
          assets                   7.6        7.6        7.7      7.6      7.5
         Tier 1 leverage
          capital ratio (4)        7.0        7.3        7.3      7.3      7.0
         Tier 1 risk-based
          capital ratio (4)        7.7        7.9        8.0      8.2      8.3
         Total risk-based
          capital ratio (4)       11.3       11.6       10.6     10.9     11.1
 
     (1)  Managed portfolio represents the owned portfolio plus the
          off-balance-sheet securitized and sold credit card receivables.
     (2)  Data presented is for the owned portfolio.
     (3)  Annualized.
     (4)  March 31, 2001 capital ratios are preliminary.
 
 
     People's Bank and Subsidiaries
     CONSOLIDATED STATEMENTS OF CONDITION
 
                                 Mar. 31,    Dec. 31,     Mar. 31,
      (in millions)                2001        2000         2000
      Assets
      Cash and due from
       banks                     $330.4       $373.9       $330.4
      Short-term investments      955.2        557.1        408.8
          Total cash and
           cash equivalents     1,285.6        931.0        739.2
      Securities:
        Trading account
         securities, at fair
         value                      2.2          4.3          --
        Securities available
         for sale, at fair
         value                  2,449.8      2,433.1      2,139.2
        Securities held to
         maturity, at
         amortized cost
          (fair value of
           $19.6, $59.9 and
           $97.6)                  19.6         60.0         98.5
          Total securities      2,471.6      2,497.4      2,237.7
      Loans:
        Residential mortgage    2,515.9      2,610.2      2,559.7
        Commercial real
         estate finance         1,443.6      1,423.7      1,272.8
        Commercial              1,136.4      1,174.9      1,037.3
        Credit card             1,143.8      1,343.8      1,532.3
        Other consumer            870.2        896.8        497.7
          Total loans           7,109.9      7,449.4      6,899.8
        Less allowance for
         loan losses             (107.7)      (104.7)      (105.0)
          Total loans, net      7,002.2      7,344.7      6,794.8
      Premises and
       equipment, net             210.0        212.1        210.5
      Goodwill and other
       acquisition-related
       intangibles                123.5        124.7        132.1
      Other assets                470.3        461.0        534.2
          Total assets        $11,563.2    $11,570.9    $10,648.5
 
      Liabilities
      Deposits:
        Non-interest-bearing   $1,617.4     $1,589.9     $1,494.0
        Savings, interest-
         bearing checking
         and money market       2,755.9      2,660.9      2,817.4
        Time                    3,457.8      3,510.5      3,207.6
          Total deposits        7,831.1      7,761.3      7,519.0
      Borrowings:
        Federal Home Loan
         Bank advances          1,638.5      1,773.8      1,388.7
        Federal funds
         purchased                655.3        404.7        316.4
        Repurchase
         agreements                80.4        287.1        279.6
         Total borrowings       2,374.2      2,465.6      1,984.7
      Subordinated notes          266.6        265.8        148.7
      Other liabilities           212.5        196.4        198.1
          Total liabilities    10,684.4     10,689.1      9,850.5
      Stockholders' Equity
      Common stock (without par
       value; 100.0 shares authorized;
       61.4 shares, 61.3 shares
       and 61.2 shares issued
       and outstanding)            61.4         61.3         61.2
      Additional paid-in
       capital                    202.2        201.6        200.1
      Retained earnings           685.1        680.1        622.4
      Accumulated other
       comprehensive loss         (69.9)       (61.2)       (85.7)
          Total
           stockholders'
           equity                 878.8        881.8        798.0
          Total liabilities
           and stockholders'
           equity             $11,563.2    $11,570.9    $10,648.5
 
 
     People's Bank and Subsidiaries
     CONSOLIDATED STATEMENTS OF INCOME
 
                                                Quarters Ended
                              Mar. 31,  Dec. 31,  Sept. 30,  June 30,  Mar. 31,
     (in millions, except        2001     2000      2000      2000      2000
      per share data)
 
     Interest and dividend
      income:
       Residential mortgage     $46.7      $46.5      $46.0    $44.9   $46.2
       Commercial real
        estate finance           29.6       29.8       28.2     26.9    25.8
       Commercial                24.4       25.3       24.6     23.5    21.7
       Credit card               33.3       35.4       33.3     31.8    34.2
       Other consumer            22.6       23.6       18.8     12.8     9.3
         Total interest on
          loans                 156.6      160.6      150.9    139.9   137.2
       Securities                38.3       40.1       38.1     36.5    36.6
       Short-term
        investments               9.3        7.3        7.3      6.9     5.4
         Total interest and
          dividend income       204.2      208.0      196.3    183.3   179.2
     Interest expense:
       Deposits                  64.9       68.2       64.8     58.9    56.0
       Borrowings                36.3       33.9       30.0     27.1    30.2
       Subordinated notes         6.0        4.5        2.7      2.7     2.7
         Total interest
          expense               107.2      106.6       97.5     88.7    88.9
         Net interest income     97.0      101.4       98.8     94.6    90.3
     Provision for loan
      losses                     28.6       16.0       17.6     13.4    12.9
         Net interest income
          after provision
          for loan losses        68.4       85.4       81.2     81.2    77.4
     Non-interest income:
       Fee-based revenues:
         Credit card
          securitization
          income                 19.8       26.8       25.0     24.4    25.4
         Credit card fees        11.0       10.7       10.4     10.2    12.8
         Service charges on
          deposit accounts       13.6       13.9       13.5     13.1    12.3
         Insurance revenue        6.2        6.8        5.0      4.5     5.1
         Net brokerage
          revenue                 3.5        3.5        3.5      3.7     4.4
         Other fees               6.7        6.6        6.6      5.8     5.2
         Total fee-based
          revenues               60.8       68.3       64.0     61.7    65.2
       Net security gains
        (losses)                (3.3)        2.6        3.8      5.1     5.0
       Net gains on sales of
        residential mortgage
        loans                     4.2        0.7        1.8      0.8     3.5
       Other non-interest
        income                    2.7        4.2        2.5      2.1     1.7
         Total non-interest
          income                 64.4       75.8       72.1     69.7    75.4
     Non-interest expense:
       Compensation and
        benefits                 51.3       51.5       50.1     47.9    50.1
       Occupancy and
        equipment                19.0       18.6       18.5     17.3    16.7
       Professional and
        outside service fees     13.7       15.0       15.1     14.0    12.1
       Advertising and
        promotion                11.7       14.0       13.5     13.5    13.6
       Stationery, printing
        and postage               4.6        4.3        4.0      4.3     5.4
       Amortization of
        goodwill and other
        acquisition-related
        intangibles               2.5        2.4        2.5      2.5     2.5
       Other non-interest
        expense                   9.4       11.7        9.9     10.9    10.8
         Total non-interest
          expense               112.2      117.5      113.6    110.4   111.2
         Income before
          income tax expense     20.6       43.7       39.7     40.5    41.6
     Income tax expense           7.3       15.0       13.5     14.0    14.6
         Net income             $13.3      $28.7      $26.2    $26.5   $27.0
 
     Basic and diluted
      earnings per common
      share                     $0.22      $0.47      $0.43    $0.43   $0.44
 
     Average common shares:
       Basic                    61.30      61.25      61.23    61.21   61.05
       Diluted                  61.46      61.42      61.39    61.37   61.24
 
 
     People's Bank and Subsidiaries
     AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
 
                                     March 31, 2001          December 31, 2000
                           Average            Yield/   Average           Yield/
     Quarters Ended        Balance  Interest   Rate    Balance  Interest  Rate
     (dollars in
     millions) (1)
     On-Balance-Sheet
     Earning assets: (2)
       Short-term
        investments          $578.9    $9.3    6.46%    $408.8    $7.3   7.13%
       Securities (3)       2,570.3    39.5    6.14    2,583.9    41.3    6.39
       Loans:
         Residential
          mortgage          2,633.6    46.7    7.09    2,587.8    46.5    7.20
         Commercial real
          estate finance    1,431.3    29.6    8.28    1,388.9    29.8    8.60
         Commercial         1,154.7    24.4    8.46    1,126.5    25.3    8.99
         Credit card        1,235.3    33.3   10.78    1,214.1    35.4   11.64
         Other consumer       883.3    22.6   10.23      903.7    23.6   10.44
           Total loans      7,338.2   156.6    8.53    7,221.0   160.6    8.90
           Total earning
            assets         10,487.4  $205.4   7.83%   10,213.7  $209.2   8.19%
     Other assets             921.1                      895.4
           Total assets   $11,408.5                  $11,109.1
 
     Funding liabilities:
       Deposits:
         Non-interest-
          bearing
          deposits         $1,502.9    $--      -- %   $1,454.6   $--      -- %
         Savings,
          interest-
          bearing
          checking and
          money market      2,672.4    15.6    2.33    2,634.5    17.0    2.56
         Time               3,500.4    49.3    5.63    3,494.3    51.2    5.86
           Total deposits   7,675.7    64.9    3.38    7,583.4    68.2    3.59
       Borrowings:
         Federal Home
          Loan Bank
          advances          1,695.5    26.7    6.31    1,649.9    24.9    6.05
         Federal funds
          purchased           427.5     6.2    5.79      417.4     6.3    6.12
         Repurchase
          agreements          235.8     3.4    5.82      193.3     2.7    5.74
           Total
            borrowings      2,358.8    36.3    6.16    2,260.6    33.9    6.04
       Subordinated notes     266.5     6.0    8.99      209.3     4.5    8.40
           Total funding
            liabilities    10,301.0  $107.2   4.16%   10,053.3  $106.6   4.24%
     Other liabilities        224.2                      215.6
           Total
            liabilities    10,525.2                   10,268.9
     Stockholders' equity     883.3                      840.2
           Total liabilities
            and stockholders'
            equity        $11,408.5                  $11,109.1
     Excess of earning
      assets over funding
      liabilities            $186.4                     $160.4
     Net interest
      income/spread                   $98.2   3.67%             $102.6   3.95%
     Net interest margin                      3.74%                      4.02%
 
     Off-Balance-Sheet
     Securitized and sold
      credit card
      receivables          $2,131.7   $72.5  13.60%   $2,209.2   $77.1  13.96%
     Related securities
      issued                2,131.7    32.9    6.18    2,209.2    38.7    7.00
     Net interest
      income/spread (4)               $39.6   7.42%              $38.4   6.96%
 
     Managed Net Interest
      Margin Analysis
     Earning assets       $12,619.1  $277.9   8.81%  $12,422.9  $286.3   9.22%
     Funding liabilities   12,432.7   140.1   4.51    12,262.5   145.3    4.74
     Excess of earning
      assets over funding
      liabilities            $186.4                     $160.4
     Net interest
      income/spread                  $137.8   4.30%             $141.0   4.48%
     Net interest margin                      4.37%                      4.54%
 
 
     People's Bank and Subsidiaries
     AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
 
 
     Quarters Ended                        March 31, 2000
      (dollars in               Average                      Yield/
       millions) (1)            Balance       Interest        Rate
     On-Balance-Sheet
     Earning assets: (2)
       Short-term
        investments              $349.4         $5.4          6.25%
       Securities (3)           2,424.9         37.7           6.22
       Loans:
         Residential
          mortgage              2,648.3         46.2           6.97
         Commercial real
          estate finance        1,259.3         25.8           8.21
         Commercial             1,008.2         21.7           8.60
         Credit card            1,634.5         34.2           8.37
         Other consumer           431.0          9.3           8.67
           Total loans          6,981.3        137.2           7.86
           Total earning
            assets              9,755.6       $180.3           7.39%
     Other assets                 942.8
           Total assets       $10,698.4
 
     Funding liabilities:
       Deposits:
         Non-interest-
          bearing
          deposits             $1,362.5       $ --              -- %
         Savings,
          interest-
          bearing
          checking and
          money market          2,750.4        16.6            2.42
         Time                   3,151.0        39.4            5.00
           Total deposits       7,263.9        56.0            3.09
       Borrowings:
         Federal Home
          Loan Bank
          advances              1,341.8        17.6            5.25
         Federal funds
          purchased               486.1         6.5            5.39
         Repurchase
          agreements              443.8         6.0            5.40
           Total
            borrowings          2,271.7        30.1            5.30
       Subordinated notes         148.6         2.8            7.40
           Total funding
            liabilities         9,684.2       $88.9            3.67%
     Other liabilities             37.3
           Total
            liabilities         9,921.5
     Stockholders' equity         776.9
           Total liabilities
            and stockholders'
            equity            $10,698.4
     Excess of earning
      assets over funding
      liabilities                 $71.4
     Net interest
      income/spread                           $91.4           3.72%
     Net interest margin                                      3.75%
 
     Off-Balance-Sheet
     Securitized and sold
      credit card
      receivables              $2,450.6       $77.3          12.62%
     Related securities
      issued                    2,450.6        39.0           6.36
     Net interest
      income/spread (4)                      $38.3            6.26%
 
     Managed Net Interest
      Margin Analysis
     Earning assets           $12,206.2       $257.6          8.44%
     Funding liabilities       12,134.8        127.9          4.22
     Excess of earning
      assets over funding
      liabilities                 $71.4
     Net interest
      income/spread                           $129.7          4.22%
     Net interest margin                                      4.25%
 
     (1)  Average yields earned and rates paid are annualized.
     (2)  The FTE adjustment for the first quarter of 2001, fourth quarter of
          2000 and the first quarter of 2000 was $1.2 million, $1.2 million
          and $1.1 million, respectively.
     (3)  Average balances and yields for securities available for sale are
          based on amortized cost.
     (4)  Net interest income associated with the off-balance-sheet portfolio
          is included in "credit card securitization income" in the
          consolidated statements of income.
 
 
     People's Bank and Subsidiaries
     IMPACT OF CREDIT CARD SECURITIZATION
 
 
     As of and for the quarters ended                  March 31, 2001
     (dollars in millions)                    Managed     Impact of      Owned
                                              Basis    Securitization    Basis
 
     Interest and dividend income              $276.7       ($72.5)     $204.2
     Interest expense                          (140.1)        32.9      (107.2)
       Net interest income                      136.6        (39.6)       97.0
     Provision for loan losses                  (68.0)        39.4       (28.6)
     Credit card securitization income (1)        --          19.8        19.8
     Credit card fees                            29.7        (18.7)       11.0
     Other non-interest income                   35.1         (1.5)       33.6
     Non-interest expense                      (112.2)         --       (112.2)
     Income tax expense                          (7.5)         0.2        (7.3)
       Net income (1)                           $13.7        ($0.4)      $13.3
 
     Stockholders' equity to total assets        6.4%         1.2%        7.6%
     Tier 1 leverage capital ratio (2)           6.6%         0.4%        7.0%
     Risk-based capital ratios (2):
       Tier 1                                    7.1%         0.6%        7.7%
       Total                                    10.5%         0.8%       11.3%
 
     Operating revenue                         $205.5       ($39.4)     $166.1
     Net interest margin (annualized)           4.37%       (0.63%)      3.74%
     Efficiency ratio                           53.3%        12.7%       66.0%
 
     Credit card receivables                 $3,248.9    ($2,105.1)   $1,143.8
     Non-performing credit card
      receivables                                66.2        (48.5)       17.7
     Total average earning assets            12,619.1     (2,131.7)   10,487.4
     Period end assets                       13,654.9     (2,091.7)   11,563.2
 
     (1)  Accounting for sales of securitized credit card receivables in
          accordance with SFAS No. 140 decreased credit card securitization
          income and net income by $0.6 million and $0.4 million, respectively,
          for the first quarter of 2001, and by $0.4 million and
          $0.3 million, respectively, for the first quarter of 2000.
     (2)  March 31, 2001 capital ratios are preliminary.
 
 
     People's Bank and Subsidiaries
     IMPACT OF CREDIT CARD SECURITIZATION
 
 
     As of and for the quarters ended                   March 31, 2000
     (dollars in millions)                    Managed     Impact of      Owned
                                              Basis     Securitization   Basis
 
     Interest and dividend income              $256.5       ($77.3)     $179.2
     Interest expense                          (127.9)        39.0       (88.9)
       Net interest income                      128.6        (38.3)       90.3
     Provision for loan losses                  (46.6)        33.7       (12.9)
     Credit card securitization income (1)        --          25.4        25.4
     Credit card fees                            32.4        (19.6)       12.8
     Other non-interest income                   38.8         (1.6)       37.2
     Non-interest expense                      (111.2)         --       (111.2)
     Income tax expense                         (14.7)         0.1       (14.6)
       Net income (1)                           $27.3        ($0.3)      $27.0
 
     Stockholders' equity to total assets        6.1%         1.4%        7.5%
     Tier 1 leverage capital ratio (2)           6.1%         0.9%        7.0%
     Risk-based capital ratios (2):
       Tier 1                                    7.1%         1.2%        8.3%
       Total                                     9.4%         1.7%       11.1%
 
     Operating revenue                         $195.9       ($33.7)     $162.2
     Net interest margin (annualized)           4.25%       (0.50%)      3.75%
     Efficiency ratio                           55.3%        11.5%       66.8%
 
     Credit card receivables                 $3,956.4    ($2,424.1)   $1,532.3
     Non-performing credit card
      receivables                                52.5        (38.3)       14.2
     Total average earning assets            12,206.2     (2,450.6)    9,755.6
     Period end assets                       13,058.5     (2,410.0)   10,648.5
 
     (1)  Accounting for sales of securitized credit card receivables in
          accordance with SFAS No. 140 decreased credit card securitization
          income and net income by $0.6 million and $0.4 million, respectively,
          for the first quarter of 2001, and by $0.4 million and
          $0.3 million, respectively, for the first quarter of 2000.
     (2)  March 31, 2001 capital ratios are preliminary.
 
 
     People's Bank and Subsidiaries
     NON-PERFORMING ASSETS
 
                              Mar. 31,  Dec. 31,  Sept. 30,  June 30,  Mar. 31,
     (dollars in millions)      2001      2000      2000      2000      2000
 
     Non-accrual loans:
       Residential mortgage      $19.3    $19.1    $17.1     $17.9     $19.3
       Commercial real estate
        finance                    6.1      1.3      0.8       0.8       1.1
       Commercial                 19.2     22.6     25.7       5.0       6.2
       Credit card
        (owned portfolio)         17.7     17.0     13.2      12.7      14.2
       Other consumer              3.7      2.2      1.4       1.0       1.1
          Total non-accrual
           loans                  66.0     62.2     58.2      37.4      41.9
     Real estate owned, net        1.3      2.9      3.6       2.0       3.2
          Total non-performing
           assets                $67.3    $65.1    $61.8     $39.4     $45.1
 
     Non-performing loans
      as a percentage
      of total loans             0.93%     0.84%    0.82%     0.54%    0.61%
     Non-performing assets
      as a percentage
      of total assets             0.58     0.56     0.56      0.37     0.42
     Non-performing assets
      as a percentage of
      stockholders' equity
      and allowance
      for loan losses             6.82     6.60     6.52      4.31     5.00
     Allowance for loan losses
      as a percentage of
      non-performing loans      163.22   168.26   179.76    280.73   250.59
     Allowance for loan losses
      as a percentage of loans    1.51     1.41     1.47      1.52     1.52
 
 
     People's Bank and Subsidiaries
     NET LOAN CHARGE-OFFS (RECOVERIES)
 
                              Mar. 31,  Dec. 31,  Sept. 30,  June 30,  Mar. 31,
     Quarters ended             2001      2000      2000       2000      2000
     (in millions)
     Residential mortgage      ($0.1)    ($0.2)     $0.2       $0.3      $0.7
     Commercial real estate
      finance                   (0.2)     (0.5)     (0.1)      (0.3)     (0.5)
     Commercial                  5.5       0.4       4.1        0.3       --
     Credit card
      (owned portfolio)         15.5      13.9      12.7       12.7      12.5
     Other consumer              4.9       2.4       1.0        0.4       0.2
     Total                     $25.6     $16.0     $17.9      $13.4     $12.9
 
 
 

SOURCE People's Bank
    BRIDGEPORT, Conn., April 19 /PRNewswire/ -- People's Bank (Nasdaq: PBCT),
 a $14 billion financial services company, today announced net income for the
 quarter ended March 31, 2001 of $13.3 million or $0.22 per share, in line with
 preliminary results released by the bank two weeks ago.
     People's Board of Directors increased the quarterly dividend on its common
 stock by $0.02 per share to $0.34 per share.  The dividend is payable May 15,
 2001, to stockholders of record on May 1, 2001.
     "We are pleased to reward our shareholders with our 14th consecutive
 semi-annual dividend increase since 1993," said John A. Klein, president and
 chief executive officer.  "Based on the closing stock price on April 18, 2001,
 the dividend yield on our common stock now exceeds 6 percent.  We believe this
 yield and the reduced payout ratio stemming from People's Mutual Holdings
 waiving dividends on most of its shares provides substantial long-term value
 to our shareholders."
     Today's dividend announcement reflects management's confidence in the
 future.  "While we had some disappointments in the first quarter, we also had
 good news. And the second quarter is off to a great start with the sale of the
 U.K. credit card and consumer loan business we announced on April 6," said
 Klein.  "We continue to believe our franchise is positioned well for the
 remainder of 2001 and beyond."
     "The $70 million pre-tax gain on the U.K. transaction was a very
 significant win for the bank and our shareholders," Klein noted.  "This
 transaction, which will be recognized in the second quarter of 2001, further
 strengthens the bank, enhances our flexibility and enables us to focus more
 resources on the Connecticut franchise and our national operations."
     People's reported continued strength in many of its core businesses in the
 first quarter.  Stop & Shop offices sustained their strong growth trend with
 deposits up 17 percent over the first quarter of 2000, and the residential
 mortgage business increased originations by $120 million and generated a
 20-percent increase in gains on mortgage sales.  Additionally, People's
 insurance subsidiary increased revenues 22 percent since last year's first
 quarter.
     Klein also noted that the commercial loan portfolio was up 15 percent over
 the first quarter of 2000, and commercial real estate finance increased its
 portfolio by 14 percent over the same period.  Included in the commercial loan
 growth is a 65-percent increase in balances for People's Capital and Leasing
 Corp.
     Managed operating revenues for the bank increased $10 million or
 5 percent, from the first quarter of 2000, noted Klein.  He added the bank's
 managed net interest margin was 4.37 percent, an increase of 12 basis points.
     Additionally, the bank's managed efficiency ratio declined to 53 percent,
 the lowest it's been in six quarters.  "The improved efficiency ratio reflects
 a $5 million reduction in expenses from the fourth quarter of 2000," he said.
     William T. Kosturko, executive vice president and interim chief financial
 officer, said earnings for the quarter reflect net losses on securities, lower
 earnings in the Credit Card Services division, and a charge-off related to a
 single commercial loan which had been previously classified as non-performing.
     The $3.3 million net loss on securities for the first quarter reflected
 $6 million in write-downs on a select group of technology stocks, which are
 all in the S&P 500 index.  Regarding the bank's investment in common stocks,
 Kosturko said, "This portfolio has had a history of providing exceptional
 returns.  Over the last five years it has generated in excess of $125 million
 in realized net securities gains.  We believe the losses we've recognized in
 the first quarter are reflective of recent market performance."
     Earnings for Credit Card Services declined approximately $4 million
 compared to the year-ago quarter to a net loss of approximately $3 million.
 These results primarily reflect higher managed charge-offs partially offset by
 an increase in managed net interest income.  The higher losses are a result of
 the bank's risk-based repricing strategy implemented in 2000, the impact of
 changing economic conditions on the consumer lending industry and higher
 bankruptcy-related losses.
     Kosturko said an additional $5 million charge-off was related to a single
 loan in the $2.6 billion Commercial Banking portfolio.  "This charge-off does
 not reflect the overall performance of the Commercial Banking division, which
 had its best year ever in 2000 and which, in the first quarter of 2001,
 realized double digit-growth in both commercial real estate and commercial
 loans.  The asset quality of our commercial banking portfolio continues to be
 strong," he added.
 
     Other News Highlights
     -- In early April, People's announced the sale of its United Kingdom
        credit card and consumer loan business to Citigroup, Inc.  The sale is
        part of a strategic effort to focus on building People's core U.S.
        businesses and will result in a pre-tax gain of approximately
        $70 million, which will be recognized in the second quarter of 2001.
 
     -- peoples.com was rated among the top five in a study of 172 financial
        services web sites in Latin America, Canada and the United States.  In
        the study, conducted by Atlanta-based Speer & Associates, Inc.,
        People's ranked ahead of companies such as Charles Schwab, Fidelity,
        Paine Webber, First Union and Wells Fargo.  People's was the only U.S.
        company of its size to make the study's top 25.
 
     -- People's also converted its branch in Monroe to a Financial Center, the
        company's fourth of these revolutionary offices.  The People's
        Financial Center is an innovative concept that brings together the
        bank's diversified array of financial products and services in one
        convenient location.  The concept is intended to make it easy for
        customers to do everything from personal banking to financial planning
        to stock trading.  The bank plans to have 18 of these offices
        throughout Connecticut by the end of 2002.
 
     Conference Call
     On April 20, 2001, at 10 a.m., Eastern Time, People's will host a
 conference call to discuss this earnings announcement. The call may be heard
 through http://www.peoples.com by selecting Investor Relations, News and
 Events, Conference Calls. Additional materials relating to the call may also
 be accessed at People's website.  The call will be archived on the website and
 available for approximately 90 days.
 
     1Q Key Performance Indicators (1Q 2001 compared with 1Q 2000 unless
 otherwise indicated)
 
     Summary
     -- Earnings declined $0.22 per share, or 50%.
     -- Managed provision for loan losses increased $21 million.
     -- Managed operating revenue increased $10 million, or 5%.
     -- Managed net interest margin improved 12 basis points to 4.37%.
     -- Net security gains (losses) declined $8 million.
 
     Commercial Banking
     People's commercial banking business continued its growth trend in the
 first quarter.  Both commercial real estate finance and commercial loans grew
 at double-digit rates with the latter benefiting from strong growth at
 People's Capital and Leasing Corp. (PCLC).  In the first quarter, People's
 reported an additional $5 million charge-off related to a single commercial
 loan that has been classified as non-performing since the third quarter of
 2000.  As of March 31, 2001, a total of $9 million has been charged-off
 against this loan, leaving a remaining balance under $10 million.
 
     *  Average commercial loans grew $147 million, or 15%.
           -- PCLC average loans and leases increased $84 million, or 65%.
     *  Average commercial real estate finance loans increased $172 million,
        or 14%.
     *  Average commercial demand deposits combined with non-deposit cash
        management balances increased $110 million, or 11%.
           --Cash management fees increased 17%.
 
     Consumer Financial Services
     This segment includes People's residential mortgage business, consumer
 deposits, insurance and brokerage services.  In the long term, Consumer
 Financial Services will benefit from the transformation of People's branch
 franchise in Connecticut as it provides more avenues for generating growth in
 each of these businesses. Fees generated from these operations provide a
 valuable diversified revenue stream for People's.
 
     *  Retail banking service charges increased $1.9 million, or 14%.
     *  Insurance revenue increased $1.1 million, or 22%.
     *  Average consumer non-interest-bearing deposits increased $69 million,
        or 10%.
     *  Supermarket deposits increased $220 million, or 17%, and averaged
        $29 million per branch.
           -- Same-store deposits for Stop & Shop branches grew an average of
              $3.8 million per store.
 
     Credit Card Services
     Credit card services encompasses People's credit card and consumer lending
 businesses.  In the first quarter, the managed provision for loan losses
 increased $16 million compared to the first quarter of 2000 and included
 $3 million in additional reserves. This increase was partially offset by an
 $11 million improvement in managed net interest income driven by higher
 yields.  A portion of the increase in the loan loss provision was anticipated
 and relates to credit card repricing activities initiated in 2000.  Another
 portion of the increase is due to a higher volume of bankruptcy filings in the
 first quarter, which nationally are running more than 20% higher than 2000.
 Management believes the increase in bankruptcy filings is related to debtors
 choosing to file prior to enactment of new bankruptcy legislation, which is
 currently pending in the U.S. Congress.  The increase in credit losses
 resulting from the slowdown in the U.S. economy also affected the quarterly
 results.
 
     *  Average managed loans for credit card services declined $267 million.
           -- Average consumer loans grew $452 million, or 107%.
           -- Average managed U.S. credit card receivables decreased
              $736 million, or 20%.
     *  Net charge-offs (as a percentage of average managed loans) for the
        credit card services segment equaled 5.62% compared to 4.10% for 1Q00
        and 4.62% for 4Q00.
           -- Three-quarter lagged net charge-offs (5.53%) increased 113 basis
              points from 1Q00 and increased 110 basis points from 4Q00.
     *  Delinquencies as a percentage of quarter-end managed loans for the
        credit card services segment equaled 3.96% compared to 2.77% for 1Q00
        and 3.56% for 4Q00.
           -- Three-quarter lagged delinquencies (3.80%) increased 92 basis
              points from 1Q00 and 26 basis points from 4Q00.
 
     Capital Markets
     *  Average short-term investments grew $229 million with a 21-basis point
        increase in yield.
     *  Common stock portfolio had a total fair value of $133 million at
        March 31, 2001.
           -- Net unrealized loss of $31 million at March 31, 2001 after
              write-downs.
           -- Securities losses for the quarter included $5.7 million in
              write-downs in the carrying amount of certain equities
              securities.
     *  Average cost of borrowings increased 86 basis points from 1Q00.
           -- Reflects a smaller percentage of short-term borrowings with lower
              yields.
           -- Reduced benefit from interest rate hedges.
 
     People's Bank is a diversified financial services company providing
 consumer, commercial, insurance and investment services.  The bank is a leader
 in supermarket banking, with 53 of its 146 branches located in Super Stop &
 Shop stores.  Through its subsidiaries, People's provides brokerage services,
 money management, equipment leasing and insurance.  Nationally, People's is
 the 16th largest issuer of MasterCard and Visa credit cards.
 
     Certain statements contained in this release are forward-looking in
 nature.  These statements are subject to risks and uncertainties that could
 cause People's actual results or financial condition to differ materially from
 those expressed in or implied by such statements.  Factors of particular
 importance to People's include but are not limited to changes in general
 economic conditions, and price levels and conditions in the public securities
 markets generally.
 
     Access People's Bank on the World Wide Web at http://www.peoples.com.
     For the latest People's announcements by fax, call PR Newswire at
 800-758-5804 and give code 113252.
 
 
     People's Bank and Subsidiaries
     FINANCIAL HIGHLIGHTS
 
                                                Quarters Ended
                              Mar. 31,  Dec. 31,  Sept. 30,  June 30,  Mar. 31,
     (dollars in millions,       2001      2000       2000      2000    2000
      except per share data)
     Operating Data:
       Net income               $13.3      $28.7      $26.2    $26.5    $27.0
       Net interest income       97.0      101.4       98.8     94.6     90.3
       Provision for
        loan losses              28.6       16.0       17.6     13.4     12.9
       Fee-based revenues        60.8       68.3       64.0     61.7     65.2
       Non-interest expense     112.2      117.5      113.6    110.4    111.2
 
     Selected Statistical Data:
       Net interest
        margin-managed
        portfolio (1), (2)      4.37%      4.54%      4.63%     4.45%    4.25%
       Net interest margin-
        owned portfolio (1)      3.74       4.02       4.06     3.98     3.75
       Return on average
        assets (1)               0.47       1.03       0.97     1.01     1.01
       Return on average
        stockholders'
        equity (1)                6.0       13.7       12.9     13.4     13.9
       Return on average
        tangible stockholders'
        equity (1)                7.0       16.1       15.4     16.0     16.8
       Return on average
        tangible stockholders'
        equity, excluding the
        effect of SFAS
        No. 115 (1), (3)          6.6       14.4       13.6     14.1     14.7
       Efficiency ratio -
        managed portfolio (2)    53.3       55.2       53.7     54.6     55.3
 
     Per Common Share Data:
       Basic and diluted
        earnings per share      $0.22      $0.47      $0.43    $0.43    $0.44
       Dividends paid            0.32       0.32       0.30     0.30     0.28
       Book value               14.31      14.39      13.76    13.22    13.04
       Tangible book value      12.31      12.36      11.68    11.11    10.88
       Stock price:
         High                   28.38      27.00      22.38    22.94    21.75
         Low                    23.38      18.69      18.59    18.13    16.38
         Close                  25.75      25.88      21.06    18.38    20.94
       Total dividend payout
        ratio (4)               62.4%      28.6%      29.4%    29.1%    26.5%
 
     (1)  Annualized.
     (2)  Managed portfolio represents the owned portfolio plus the
          off-balance-sheet securitized and sold credit card receivables.
     (3)  Computed by excluding from average tangible stockholders' equity the
          average after-tax net unrealized gain or loss on securities
          available for sale.
     (4)  Reflects the waiver of cash dividends on substantially all of the
          common shares owned by People's Mutual Holdings.
 
 
     People's Bank and Subsidiaries
     FINANCIAL HIGHLIGHTS - Continued
 
                                                Quarters Ended
                              Mar. 31,  Dec. 31,  Sept. 30,  June 30,  Mar. 31,
     (dollars in millions)      2001      2000       2000      2000      2000
     Financial Condition Data:
       General:
         Total assets -
          managed
          portfolio (1)        $13,655    $13,744    $13,248  $13,016  $13,058
         Total assets -
          owned portfolio       11,563     11,571     11,001   10,687   10,648
         Loans, net -
          managed
          portfolio (1)          9,107      9,531      9,283    9,140    9,219
         Loans, net -
          owned portfolio        7,002      7,345      7,022    6,798    6,795
         Securities, net         2,472      2,497      2,417    2,265    2,238
         Goodwill and other
          acquisition-related
          intangibles              124        125        127      130      132
         Total deposits          7,831      7,761      7,612    7,503    7,519
           Non-interest-
            bearing deposits     1,617      1,590      1,494    1,537    1,494
           Time deposits         3,458      3,511      3,466    3,189    3,208
         Borrowings              2,374      2,466      2,185    2,032    1,985
         Subordinated notes        267        266        149      149      149
         Stockholders'
          equity                   879        882        843      810      798
       Asset Quality (2):
         Total net loan
          charge-offs            $25.6      $16.0      $17.9    $13.4    $12.9
         Ratio of net loan
          charge-offs to
          average loans (3)      1.40%      0.89%      1.03%    0.78%    0.74%
         Total non-performing
          assets                  $67        $65        $62      $39      $45
         Ratio of non-
          performing assets
          to total assets        0.58%      0.56%      0.56%    0.37%    0.42%
         Allowance for loan
          losses                  $108       $105       $105     $105     $105
         Ratio of allowance
          for loan losses to
          non-performing
          loans                 163.2%     168.3%     179.8%   280.7%   250.6%
         Ratio of allowance
          for loan losses to
          total loans             1.51       1.41       1.47     1.52     1.52
       Capital:
         Average
          stockholders'
          equity to average
          assets                  7.7%       7.6%       7.5%     7.5%     7.3%
         Stockholders'
          equity to total
          assets                   7.6        7.6        7.7      7.6      7.5
         Tier 1 leverage
          capital ratio (4)        7.0        7.3        7.3      7.3      7.0
         Tier 1 risk-based
          capital ratio (4)        7.7        7.9        8.0      8.2      8.3
         Total risk-based
          capital ratio (4)       11.3       11.6       10.6     10.9     11.1
 
     (1)  Managed portfolio represents the owned portfolio plus the
          off-balance-sheet securitized and sold credit card receivables.
     (2)  Data presented is for the owned portfolio.
     (3)  Annualized.
     (4)  March 31, 2001 capital ratios are preliminary.
 
 
     People's Bank and Subsidiaries
     CONSOLIDATED STATEMENTS OF CONDITION
 
                                 Mar. 31,    Dec. 31,     Mar. 31,
      (in millions)                2001        2000         2000
      Assets
      Cash and due from
       banks                     $330.4       $373.9       $330.4
      Short-term investments      955.2        557.1        408.8
          Total cash and
           cash equivalents     1,285.6        931.0        739.2
      Securities:
        Trading account
         securities, at fair
         value                      2.2          4.3          --
        Securities available
         for sale, at fair
         value                  2,449.8      2,433.1      2,139.2
        Securities held to
         maturity, at
         amortized cost
          (fair value of
           $19.6, $59.9 and
           $97.6)                  19.6         60.0         98.5
          Total securities      2,471.6      2,497.4      2,237.7
      Loans:
        Residential mortgage    2,515.9      2,610.2      2,559.7
        Commercial real
         estate finance         1,443.6      1,423.7      1,272.8
        Commercial              1,136.4      1,174.9      1,037.3
        Credit card             1,143.8      1,343.8      1,532.3
        Other consumer            870.2        896.8        497.7
          Total loans           7,109.9      7,449.4      6,899.8
        Less allowance for
         loan losses             (107.7)      (104.7)      (105.0)
          Total loans, net      7,002.2      7,344.7      6,794.8
      Premises and
       equipment, net             210.0        212.1        210.5
      Goodwill and other
       acquisition-related
       intangibles                123.5        124.7        132.1
      Other assets                470.3        461.0        534.2
          Total assets        $11,563.2    $11,570.9    $10,648.5
 
      Liabilities
      Deposits:
        Non-interest-bearing   $1,617.4     $1,589.9     $1,494.0
        Savings, interest-
         bearing checking
         and money market       2,755.9      2,660.9      2,817.4
        Time                    3,457.8      3,510.5      3,207.6
          Total deposits        7,831.1      7,761.3      7,519.0
      Borrowings:
        Federal Home Loan
         Bank advances          1,638.5      1,773.8      1,388.7
        Federal funds
         purchased                655.3        404.7        316.4
        Repurchase
         agreements                80.4        287.1        279.6
         Total borrowings       2,374.2      2,465.6      1,984.7
      Subordinated notes          266.6        265.8        148.7
      Other liabilities           212.5        196.4        198.1
          Total liabilities    10,684.4     10,689.1      9,850.5
      Stockholders' Equity
      Common stock (without par
       value; 100.0 shares authorized;
       61.4 shares, 61.3 shares
       and 61.2 shares issued
       and outstanding)            61.4         61.3         61.2
      Additional paid-in
       capital                    202.2        201.6        200.1
      Retained earnings           685.1        680.1        622.4
      Accumulated other
       comprehensive loss         (69.9)       (61.2)       (85.7)
          Total
           stockholders'
           equity                 878.8        881.8        798.0
          Total liabilities
           and stockholders'
           equity             $11,563.2    $11,570.9    $10,648.5
 
 
     People's Bank and Subsidiaries
     CONSOLIDATED STATEMENTS OF INCOME
 
                                                Quarters Ended
                              Mar. 31,  Dec. 31,  Sept. 30,  June 30,  Mar. 31,
     (in millions, except        2001     2000      2000      2000      2000
      per share data)
 
     Interest and dividend
      income:
       Residential mortgage     $46.7      $46.5      $46.0    $44.9   $46.2
       Commercial real
        estate finance           29.6       29.8       28.2     26.9    25.8
       Commercial                24.4       25.3       24.6     23.5    21.7
       Credit card               33.3       35.4       33.3     31.8    34.2
       Other consumer            22.6       23.6       18.8     12.8     9.3
         Total interest on
          loans                 156.6      160.6      150.9    139.9   137.2
       Securities                38.3       40.1       38.1     36.5    36.6
       Short-term
        investments               9.3        7.3        7.3      6.9     5.4
         Total interest and
          dividend income       204.2      208.0      196.3    183.3   179.2
     Interest expense:
       Deposits                  64.9       68.2       64.8     58.9    56.0
       Borrowings                36.3       33.9       30.0     27.1    30.2
       Subordinated notes         6.0        4.5        2.7      2.7     2.7
         Total interest
          expense               107.2      106.6       97.5     88.7    88.9
         Net interest income     97.0      101.4       98.8     94.6    90.3
     Provision for loan
      losses                     28.6       16.0       17.6     13.4    12.9
         Net interest income
          after provision
          for loan losses        68.4       85.4       81.2     81.2    77.4
     Non-interest income:
       Fee-based revenues:
         Credit card
          securitization
          income                 19.8       26.8       25.0     24.4    25.4
         Credit card fees        11.0       10.7       10.4     10.2    12.8
         Service charges on
          deposit accounts       13.6       13.9       13.5     13.1    12.3
         Insurance revenue        6.2        6.8        5.0      4.5     5.1
         Net brokerage
          revenue                 3.5        3.5        3.5      3.7     4.4
         Other fees               6.7        6.6        6.6      5.8     5.2
         Total fee-based
          revenues               60.8       68.3       64.0     61.7    65.2
       Net security gains
        (losses)                (3.3)        2.6        3.8      5.1     5.0
       Net gains on sales of
        residential mortgage
        loans                     4.2        0.7        1.8      0.8     3.5
       Other non-interest
        income                    2.7        4.2        2.5      2.1     1.7
         Total non-interest
          income                 64.4       75.8       72.1     69.7    75.4
     Non-interest expense:
       Compensation and
        benefits                 51.3       51.5       50.1     47.9    50.1
       Occupancy and
        equipment                19.0       18.6       18.5     17.3    16.7
       Professional and
        outside service fees     13.7       15.0       15.1     14.0    12.1
       Advertising and
        promotion                11.7       14.0       13.5     13.5    13.6
       Stationery, printing
        and postage               4.6        4.3        4.0      4.3     5.4
       Amortization of
        goodwill and other
        acquisition-related
        intangibles               2.5        2.4        2.5      2.5     2.5
       Other non-interest
        expense                   9.4       11.7        9.9     10.9    10.8
         Total non-interest
          expense               112.2      117.5      113.6    110.4   111.2
         Income before
          income tax expense     20.6       43.7       39.7     40.5    41.6
     Income tax expense           7.3       15.0       13.5     14.0    14.6
         Net income             $13.3      $28.7      $26.2    $26.5   $27.0
 
     Basic and diluted
      earnings per common
      share                     $0.22      $0.47      $0.43    $0.43   $0.44
 
     Average common shares:
       Basic                    61.30      61.25      61.23    61.21   61.05
       Diluted                  61.46      61.42      61.39    61.37   61.24
 
 
     People's Bank and Subsidiaries
     AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
 
                                     March 31, 2001          December 31, 2000
                           Average            Yield/   Average           Yield/
     Quarters Ended        Balance  Interest   Rate    Balance  Interest  Rate
     (dollars in
     millions) (1)
     On-Balance-Sheet
     Earning assets: (2)
       Short-term
        investments          $578.9    $9.3    6.46%    $408.8    $7.3   7.13%
       Securities (3)       2,570.3    39.5    6.14    2,583.9    41.3    6.39
       Loans:
         Residential
          mortgage          2,633.6    46.7    7.09    2,587.8    46.5    7.20
         Commercial real
          estate finance    1,431.3    29.6    8.28    1,388.9    29.8    8.60
         Commercial         1,154.7    24.4    8.46    1,126.5    25.3    8.99
         Credit card        1,235.3    33.3   10.78    1,214.1    35.4   11.64
         Other consumer       883.3    22.6   10.23      903.7    23.6   10.44
           Total loans      7,338.2   156.6    8.53    7,221.0   160.6    8.90
           Total earning
            assets         10,487.4  $205.4   7.83%   10,213.7  $209.2   8.19%
     Other assets             921.1                      895.4
           Total assets   $11,408.5                  $11,109.1
 
     Funding liabilities:
       Deposits:
         Non-interest-
          bearing
          deposits         $1,502.9    $--      -- %   $1,454.6   $--      -- %
         Savings,
          interest-
          bearing
          checking and
          money market      2,672.4    15.6    2.33    2,634.5    17.0    2.56
         Time               3,500.4    49.3    5.63    3,494.3    51.2    5.86
           Total deposits   7,675.7    64.9    3.38    7,583.4    68.2    3.59
       Borrowings:
         Federal Home
          Loan Bank
          advances          1,695.5    26.7    6.31    1,649.9    24.9    6.05
         Federal funds
          purchased           427.5     6.2    5.79      417.4     6.3    6.12
         Repurchase
          agreements          235.8     3.4    5.82      193.3     2.7    5.74
           Total
            borrowings      2,358.8    36.3    6.16    2,260.6    33.9    6.04
       Subordinated notes     266.5     6.0    8.99      209.3     4.5    8.40
           Total funding
            liabilities    10,301.0  $107.2   4.16%   10,053.3  $106.6   4.24%
     Other liabilities        224.2                      215.6
           Total
            liabilities    10,525.2                   10,268.9
     Stockholders' equity     883.3                      840.2
           Total liabilities
            and stockholders'
            equity        $11,408.5                  $11,109.1
     Excess of earning
      assets over funding
      liabilities            $186.4                     $160.4
     Net interest
      income/spread                   $98.2   3.67%             $102.6   3.95%
     Net interest margin                      3.74%                      4.02%
 
     Off-Balance-Sheet
     Securitized and sold
      credit card
      receivables          $2,131.7   $72.5  13.60%   $2,209.2   $77.1  13.96%
     Related securities
      issued                2,131.7    32.9    6.18    2,209.2    38.7    7.00
     Net interest
      income/spread (4)               $39.6   7.42%              $38.4   6.96%
 
     Managed Net Interest
      Margin Analysis
     Earning assets       $12,619.1  $277.9   8.81%  $12,422.9  $286.3   9.22%
     Funding liabilities   12,432.7   140.1   4.51    12,262.5   145.3    4.74
     Excess of earning
      assets over funding
      liabilities            $186.4                     $160.4
     Net interest
      income/spread                  $137.8   4.30%             $141.0   4.48%
     Net interest margin                      4.37%                      4.54%
 
 
     People's Bank and Subsidiaries
     AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
 
 
     Quarters Ended                        March 31, 2000
      (dollars in               Average                      Yield/
       millions) (1)            Balance       Interest        Rate
     On-Balance-Sheet
     Earning assets: (2)
       Short-term
        investments              $349.4         $5.4          6.25%
       Securities (3)           2,424.9         37.7           6.22
       Loans:
         Residential
          mortgage              2,648.3         46.2           6.97
         Commercial real
          estate finance        1,259.3         25.8           8.21
         Commercial             1,008.2         21.7           8.60
         Credit card            1,634.5         34.2           8.37
         Other consumer           431.0          9.3           8.67
           Total loans          6,981.3        137.2           7.86
           Total earning
            assets              9,755.6       $180.3           7.39%
     Other assets                 942.8
           Total assets       $10,698.4
 
     Funding liabilities:
       Deposits:
         Non-interest-
          bearing
          deposits             $1,362.5       $ --              -- %
         Savings,
          interest-
          bearing
          checking and
          money market          2,750.4        16.6            2.42
         Time                   3,151.0        39.4            5.00
           Total deposits       7,263.9        56.0            3.09
       Borrowings:
         Federal Home
          Loan Bank
          advances              1,341.8        17.6            5.25
         Federal funds
          purchased               486.1         6.5            5.39
         Repurchase
          agreements              443.8         6.0            5.40
           Total
            borrowings          2,271.7        30.1            5.30
       Subordinated notes         148.6         2.8            7.40
           Total funding
            liabilities         9,684.2       $88.9            3.67%
     Other liabilities             37.3
           Total
            liabilities         9,921.5
     Stockholders' equity         776.9
           Total liabilities
            and stockholders'
            equity            $10,698.4
     Excess of earning
      assets over funding
      liabilities                 $71.4
     Net interest
      income/spread                           $91.4           3.72%
     Net interest margin                                      3.75%
 
     Off-Balance-Sheet
     Securitized and sold
      credit card
      receivables              $2,450.6       $77.3          12.62%
     Related securities
      issued                    2,450.6        39.0           6.36
     Net interest
      income/spread (4)                      $38.3            6.26%
 
     Managed Net Interest
      Margin Analysis
     Earning assets           $12,206.2       $257.6          8.44%
     Funding liabilities       12,134.8        127.9          4.22
     Excess of earning
      assets over funding
      liabilities                 $71.4
     Net interest
      income/spread                           $129.7          4.22%
     Net interest margin                                      4.25%
 
     (1)  Average yields earned and rates paid are annualized.
     (2)  The FTE adjustment for the first quarter of 2001, fourth quarter of
          2000 and the first quarter of 2000 was $1.2 million, $1.2 million
          and $1.1 million, respectively.
     (3)  Average balances and yields for securities available for sale are
          based on amortized cost.
     (4)  Net interest income associated with the off-balance-sheet portfolio
          is included in "credit card securitization income" in the
          consolidated statements of income.
 
 
     People's Bank and Subsidiaries
     IMPACT OF CREDIT CARD SECURITIZATION
 
 
     As of and for the quarters ended                  March 31, 2001
     (dollars in millions)                    Managed     Impact of      Owned
                                              Basis    Securitization    Basis
 
     Interest and dividend income              $276.7       ($72.5)     $204.2
     Interest expense                          (140.1)        32.9      (107.2)
       Net interest income                      136.6        (39.6)       97.0
     Provision for loan losses                  (68.0)        39.4       (28.6)
     Credit card securitization income (1)        --          19.8        19.8
     Credit card fees                            29.7        (18.7)       11.0
     Other non-interest income                   35.1         (1.5)       33.6
     Non-interest expense                      (112.2)         --       (112.2)
     Income tax expense                          (7.5)         0.2        (7.3)
       Net income (1)                           $13.7        ($0.4)      $13.3
 
     Stockholders' equity to total assets        6.4%         1.2%        7.6%
     Tier 1 leverage capital ratio (2)           6.6%         0.4%        7.0%
     Risk-based capital ratios (2):
       Tier 1                                    7.1%         0.6%        7.7%
       Total                                    10.5%         0.8%       11.3%
 
     Operating revenue                         $205.5       ($39.4)     $166.1
     Net interest margin (annualized)           4.37%       (0.63%)      3.74%
     Efficiency ratio                           53.3%        12.7%       66.0%
 
     Credit card receivables                 $3,248.9    ($2,105.1)   $1,143.8
     Non-performing credit card
      receivables                                66.2        (48.5)       17.7
     Total average earning assets            12,619.1     (2,131.7)   10,487.4
     Period end assets                       13,654.9     (2,091.7)   11,563.2
 
     (1)  Accounting for sales of securitized credit card receivables in
          accordance with SFAS No. 140 decreased credit card securitization
          income and net income by $0.6 million and $0.4 million, respectively,
          for the first quarter of 2001, and by $0.4 million and
          $0.3 million, respectively, for the first quarter of 2000.
     (2)  March 31, 2001 capital ratios are preliminary.
 
 
     People's Bank and Subsidiaries
     IMPACT OF CREDIT CARD SECURITIZATION
 
 
     As of and for the quarters ended                   March 31, 2000
     (dollars in millions)                    Managed     Impact of      Owned
                                              Basis     Securitization   Basis
 
     Interest and dividend income              $256.5       ($77.3)     $179.2
     Interest expense                          (127.9)        39.0       (88.9)
       Net interest income                      128.6        (38.3)       90.3
     Provision for loan losses                  (46.6)        33.7       (12.9)
     Credit card securitization income (1)        --          25.4        25.4
     Credit card fees                            32.4        (19.6)       12.8
     Other non-interest income                   38.8         (1.6)       37.2
     Non-interest expense                      (111.2)         --       (111.2)
     Income tax expense                         (14.7)         0.1       (14.6)
       Net income (1)                           $27.3        ($0.3)      $27.0
 
     Stockholders' equity to total assets        6.1%         1.4%        7.5%
     Tier 1 leverage capital ratio (2)           6.1%         0.9%        7.0%
     Risk-based capital ratios (2):
       Tier 1                                    7.1%         1.2%        8.3%
       Total                                     9.4%         1.7%       11.1%
 
     Operating revenue                         $195.9       ($33.7)     $162.2
     Net interest margin (annualized)           4.25%       (0.50%)      3.75%
     Efficiency ratio                           55.3%        11.5%       66.8%
 
     Credit card receivables                 $3,956.4    ($2,424.1)   $1,532.3
     Non-performing credit card
      receivables                                52.5        (38.3)       14.2
     Total average earning assets            12,206.2     (2,450.6)    9,755.6
     Period end assets                       13,058.5     (2,410.0)   10,648.5
 
     (1)  Accounting for sales of securitized credit card receivables in
          accordance with SFAS No. 140 decreased credit card securitization
          income and net income by $0.6 million and $0.4 million, respectively,
          for the first quarter of 2001, and by $0.4 million and
          $0.3 million, respectively, for the first quarter of 2000.
     (2)  March 31, 2001 capital ratios are preliminary.
 
 
     People's Bank and Subsidiaries
     NON-PERFORMING ASSETS
 
                              Mar. 31,  Dec. 31,  Sept. 30,  June 30,  Mar. 31,
     (dollars in millions)      2001      2000      2000      2000      2000
 
     Non-accrual loans:
       Residential mortgage      $19.3    $19.1    $17.1     $17.9     $19.3
       Commercial real estate
        finance                    6.1      1.3      0.8       0.8       1.1
       Commercial                 19.2     22.6     25.7       5.0       6.2
       Credit card
        (owned portfolio)         17.7     17.0     13.2      12.7      14.2
       Other consumer              3.7      2.2      1.4       1.0       1.1
          Total non-accrual
           loans                  66.0     62.2     58.2      37.4      41.9
     Real estate owned, net        1.3      2.9      3.6       2.0       3.2
          Total non-performing
           assets                $67.3    $65.1    $61.8     $39.4     $45.1
 
     Non-performing loans
      as a percentage
      of total loans             0.93%     0.84%    0.82%     0.54%    0.61%
     Non-performing assets
      as a percentage
      of total assets             0.58     0.56     0.56      0.37     0.42
     Non-performing assets
      as a percentage of
      stockholders' equity
      and allowance
      for loan losses             6.82     6.60     6.52      4.31     5.00
     Allowance for loan losses
      as a percentage of
      non-performing loans      163.22   168.26   179.76    280.73   250.59
     Allowance for loan losses
      as a percentage of loans    1.51     1.41     1.47      1.52     1.52
 
 
     People's Bank and Subsidiaries
     NET LOAN CHARGE-OFFS (RECOVERIES)
 
                              Mar. 31,  Dec. 31,  Sept. 30,  June 30,  Mar. 31,
     Quarters ended             2001      2000      2000       2000      2000
     (in millions)
     Residential mortgage      ($0.1)    ($0.2)     $0.2       $0.3      $0.7
     Commercial real estate
      finance                   (0.2)     (0.5)     (0.1)      (0.3)     (0.5)
     Commercial                  5.5       0.4       4.1        0.3       --
     Credit card
      (owned portfolio)         15.5      13.9      12.7       12.7      12.5
     Other consumer              4.9       2.4       1.0        0.4       0.2
     Total                     $25.6     $16.0     $17.9      $13.4     $12.9
 
 
 SOURCE  People's Bank

RELATED LINKS

http://www.peoples.com