Fitch Affirms LaSalle Bank Corporation at 'AA-'; Outlook Stable.

CHICAGO -- Fitch Ratings has affirmed all ratings for LaSalle Bank Corporation (LBC) and its principal banking subsidiaries, including the long-term Issuer Default Rating (IDR) of 'AA-' and the short-term rating of 'F1+'. Today's rating action follows LBC's announcement of an agreement to sell ABN AMRO Mortgage Group, Inc. (AAMG), its mortgage origination and servicing business. A complete list of ratings follows at the end of this release.

LBC announced that it has agreed to sell AAMG for a slight gain. The sale includes the $224 billion mortgage servicing portfolio and should result in the reduction of approximately $8 billion of risk-weighted assets. Although the divestiture eliminates a fee income source for LBC, core performance of the remainder of the franchise remains sound. LBC has lost market share in mortgage originations and servicing over the last few years. Further, the various parts of the mortgage business often contribute disproportionately to earnings volatility and synergies with LBC's other businesses have been limited. Specifically, the sale will eliminate LBC's sizeable mortgage servicing rights asset (nearly 25% of equity at Sept. 30, 2006) and the earnings volatility and market risk issues associated with it.

The level of support from parent ABN AMRO Bank N.V. (ABN) remains the key rating driver for LBC. LBC is very integrated with Netherlands-based ABN, one of the 15 largest banks in the world. Fitch's rating assessment of LBC also incorporates the sound core performance and market position of principal banking subsidiaries LaSalle Bank National Association (LaSalle Bank) and LaSalle Bank Midwest National Association (LaSalle Bank Midwest). The banks possess strong deposit market shares in the firm's primary markets of Chicago and Detroit. The franchise has gained market share the last two years.

LBC's earnings performance has tended to trail that of its regional bank peers, although the gap has generally been narrowing. Continued improvement in core earnings and core deposit generation, in conjunction with full resolution of its mortgage regulatory compliance matters, could provide positive momentum for the Individual Rating.

Earnings performance in 2006 and 2005 have benefitted from unsustainably low credit costs, good earning asset growth and a strengthening net interest margin (NIM). LBC's Global Securitization Trust Services Group should provide a growing fee income stream. This group provides trustee and processing services for mortgage- and asset-backed securities, ranks number two in the world as trustee of collateralized debt obligations (CDOs) and is the leading trustee in the U.S. for commercial mortgage-backed securities. LBC has instilled a greater focus on efficiency over the last two years. ABN previously announced in December 2006 that in an effort to further improve efficiency, it will reduce its staff in North America by 5% or approximately 900 positions. Fitch expects the bulk of this headcount reduction will occur in LBC.

LBC's financial performance is also underpinned by solid asset quality and capital and a sound funding profile. At less than 1% of loans and foreclosed real estate, Fitch considers LBC's level of problem assets to be manageable. Net charge-offs during 2005 and the first nine months of 2006 were quite low, benefiting from significant commercial loan recoveries. The loan loss reserve is viewed as adequate at 1.22% of loans and 197% of NPLs.

Consolidated capital ratios are managed globally at the ABN level, as allowed by the U.S. regulators. However, LBC's capital ratios remain strong. Capital levels at subsidiary banks also remain solid. The scope of LBC's businesses generate a need for wholesale funding to supplement its core deposit base. Wholesale funding sources are considered diverse.

The following ratings are affirmed:

LaSalle Bank Corporation

-- Long-term Issuer Default Rating (IDR), 'AA-';

-- Short-term, 'F1+';

-- Individual, 'B/C';

-- Support, '1';

-- Stable Rating Outlook.

LaSalle Bank N.A.

LaSalle Bank Midwest N.A.

-- Long-term Deposits, 'AA';

-- Long-term IDR, 'AA-';

-- Short-term Deposits, 'F1+';

-- Short-term, 'F1+';

-- Individual, 'B/C';

-- Support, '1';

-- Stable Rating Outlook.

The following ratings are assigned:

LaSalle Bank Corporation

-- Preferred stock, 'A+'.

ABN AMRO North America Preferred Funding Trust I and II

-- Preferred stock, 'A+'.

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.