DBRS Places Chittenden Corp.’s Ratings Under Review with Negative Implications Following Acquisition Announcement by People’s United

DBRS has today placed the long- and short-term ratings of Chittenden Corporation (Chittenden) and its related entities Under Review with Negative Implications. The rating action follows the announcement of Chittenden’s acquisition by People’s United Financial, Inc. (People’s) in a 55% stock and 45% cash transaction valued at approximately $1.9 billion. The merger remains subject to various shareholder and regulatory approvals and is expected to close in the first quarter of 2008.

DBRS does not currently rate People’s or any of its related entities. While DBRS maintains the Under Review with Negative Implications of Chittenden, it will focus on an assessment of the People’s franchise including pro forma financials of the combined entity, pricing and the proposed financing of the transaction. Chittenden’s successful operating structure of multi-bank community charters and branding are expected to be left intact, which DBRS anticipates will cause minimal customer-facing employee disruption. There is integration risk however, given People’s lack of merger experience and its potential impact on Chittenden’s well-managed franchise.

DBRS notes that the review could potentially result in the confirmation of the current ratings and the restoration of the Stable trend if the merger is deemed to be neutral to positive for Chittenden’s prospects.

Chittenden’s high quality and low volatility earnings stream will likely aid People’s complete transformation from its thrift roots into a full-fledged commercial bank. The acquisition will extend People’s branch footprint into the Vermont, New Hampshire, Massachusetts, New Hampshire and Maine markets where Chittenden has a dominant position with greater than a 20% deposit share in 57% of the cities in which it operates, far above the median among the DBRS-rated bank universe.

People’s expects the merger to be immediately accretive to 2007 earnings and anticipates an 18% reduction in Chittenden’s expenses, driven by the back office consolidation, professional fee reductions and economies of scale given the lack of branch overlap between the two organizations.

On a pro forma basis, the transaction will create a bank with approximately $22 billion in assets, $15.5 billion in deposits with a contiguous franchise of about 300 branches (including 75 supermarket branches) spreading across the states of Connecticut, Vermont, Massachusetts, New Hampshire and Maine.

Chittenden, a financial services company with headquarters in Burlington, Vermont, reported $11.6 billion in assets at March 31, 2007. People’s, a diversified financial services company with headquarters in Bridgeport, Connecticut, reported $11.6 billion in assets at March 31, 2007.

Note:
All figures are in U.S. dollars unless otherwise noted.