People's United Makes Its Move

The deal will pit People's more firmly against some of its largest competitors in the area. The company is up against heavyweights including Bank of America(BAC Quote), which expanded in New England through its 2004 acquisition of Fleet Financial acquisition; TD Bank, through its now-private franchise, TD Banknorth; and Royal Bank of Scotland, which operates there through its Citizens Financial subsidiary.

People's will also be better positioned against Webster Financial(WBS Quote) of Waterbury, Conn. -- the only other independently owned bank based in New England.

"We believe we are buying a superior performing company. Chittenden has higher profitability than most of the selling banks" in other deals, said John Klein, People's chairman and CEO, during a conference call. "This deal conforms to all the strategic and financial objectives that we set forth during the second-step conversion."

Chittenden will add 133 branches to People's, giving the combined company a total of nearly 300 branches in the Northeast. The combined company will have assets of approximately $22 billion.

Analysts had recently been speculating that Chittenden was considering a sale.

Peter Winter, an analyst at BMO Capital Markets, said last month that during a road show with analysts, Chittenden's management spent a lot of time answering questions about a potential sale.

"The standard answer was 'we'll consider anything,'" Winter said in May. "The tone has shifted."