Fitch Rates ALESCO Preferred Funding II, Ltd./Inc.

Business Editors

CHICAGO--(BUSINESS WIRE)--Dec. 23, 2003

Fitch Ratings assigns the following ratings to ALESCO Preferred Funding II, Ltd./Inc. (ALESCO II) as listed below:

-- $150,000,000 class A-1 senior secured floating-rate notes due

Jan. 30, 2034 'AAA';

-- $66,000,000 class A-2 senior secured floating-rate notes due

Jan. 30, 2034 'AAA';

-- $64,300,000 class B-1 mezzanine secured floating-rate notes due

Jan. 30, 2034 'A';

-- $40,000,000 class B-2 mezzanine secured fixed/floating-rate

notes due Jan. 30, 2034 'A'.

The ratings on the class A-1 and A-2 notes, (collectively, the class A notes) address the likelihood that investors will receive timely payment of interest and ultimate payment of principal by the stated maturity date. The ratings on the class B-1 and B-2 notes, (collectively, the class B notes) address the likelihood that investors will receive ultimate payment of interest and ultimate payment of principal by the stated maturity date. Periodic payments on the notes will be paid quarterly starting in April 2004.

The assets of ALESCO II, a bankruptcy-remote special-purpose corporation, consist of a $335,500,000 diversified portfolio of newly issued trust preferred securities (85.10%), secondary trust preferred securities (11.92%), and bank subordinated notes (2.98%). Each of the underlying obligors are FDIC-insured commercial banks and thrifts. The portfolio is diversified geographically (largest region equals 32.79%), and by obligor (largest equals 2.98%). The average size of the underlying issues is $7.29 million.

The ALESCO II portfolio is a fully funded, static portfolio of assets. There are two overcollateralization (OC) tests and two interest coverage (IC) tests that will trap cash to bring the test back into compliance any time a test is failing. Cash trapped through any OC or IC test failure will be used to pay down the most senior notes outstanding.

Placement agents for this transaction are Merrill Lynch International and Sandler O'Neill & Partners, LP. For additional information on structural and others features of ALESCO II, including: reserve accounts, de-leveraging features and auction calls, see the Fitch new issue report, 'ALESCO Preferred Funding II, Ltd./Inc.', which will be made available shortly on FitchResearch, the Fitch Ratings subscription-based web site located at 'www.fitchratings.com'.

For more information on Fitch's approach to rating collateralized debt obligations (CDOs) of trust preferred securities, see the special report, 'Rating Criteria for Bank and Trust Preferred CDOs', dated July 31, 2002 and also available at 'www.fitchratings.com'.