Fitch Upgrades First Republic's Sub Debt & Trust Preferred To 'A+' On Merrill Lynch Buy

Business Wire, Sept 24, 2007

NEW YORK -- Fitch Ratings has upgraded and removed from Rating Watch Positive the subordinated debt and trust preferred ratings of First Republic Bank (First Republic). Fitch has also affirmed, removed from Rating Watch Positive and subsequently withdrawn First Republic's Issuer Default Rating (IDR), deposit and preferred stock ratings. These rating actions follow the $1.8 billion acquisition of First Republic by Merrill Lynch and Co., Inc. (Merrill Lynch) that closed on Sept. 21, 2007. Fitch originally placed First Republic on Rating Watch Positive on Jan. 27 of this year. A detailed list of ratings follows at the end of this release.

As a division of Merrill Lynch Bank & Trust, FSB (MLBT-FSB), First Republic will operate a stand-alone brand and retain its name and current management structure. First Republic will assume the subordinated debt and preferred stock ratings of Merrill Lynch - its ultimate parent. Deposits will be under the name of MLBT-FSB, and will be rated accordingly. First Republic preferred stock will be exchanged into Merrill Lynch preferred shares (Series 6 and 7). These ratings are based on a consolidated view of Merrill Lynch (rated 'AA-/F1 ' by Fitch), and are uniform for those subsidiaries that issue debt.

As of June 30, 2007, First Republic had outstanding subordinated notes totaling $63.8 million. Its two real estate investment trust (REIT) subsidiaries had preferred stock of $141.6 million.

MLBT-FSB, a direct, wholly owned subsidiary of the holding company, offers a variety of real estate financing services and deposit products for Merrill Lynch private clients and other retail customers. The First Republic purchase expands the company's wealth management footprint.

Fitch has upgraded and removed the following ratings from Rating Watch Positive:

First Republic Bank

--Subordinated debt to 'A ';

First Republic Preferred Capital Corp. Series A, B, D

--Preferred Stock to 'A '.

First Republic Preferred Capital Corp. II Series B

--Preferred Stock to 'A '.

Fitch has also affirmed, removed from Rating Watch Positive and withdrawn the following ratings:

First Republic Bank

--Long-term deposit 'A-';

--IDR 'BBB ';

--Short-term deposit 'F2';

--Short-term IDR 'F2'.

--Preferred stock series A & B 'BBB-';

--Support '5';

--Individual 'B';

--Support Floor Rating 'NF'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.