PNC warns of fallout from Adelphia suits (1 Viewer)


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Apr 18, 2005
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Shares in PNC Financial Services Group were taken down a peg Wednesday as the bank warned that lawsuits brought by creditors of Adelphia Communications could have "material consequences."

Bankrupt Adelphia's creditors and shareholders, who seek unspecified damages, allege that PNC and other financial firms committed fraud and violations of securities laws, contributing to Adelphia's collapse.

PNC said in an annual report filed Wednesday with the SEC that it believes it can defend itself against complicated claims that arose from bankruptcy court proceedings, and the firm will vigorously contest them in a federal court in Manhattan.

Adelphia founder John Riggs was sentenced in 2005 to 15 years for misusing company funds and hiding debt. His son Timothy received a 20-year sentence.

On a strong day for stocks Wednesday, shares of PNC fell 79 cents, to $69.89. PNC hit a 52-week high of $71.42 in late February as Wall Street was cheering a deal in which Merrill Lynch will acquire part of PNC's stake in the investment management firm BlackRock.

PNC's fortunes have been turning around since it put an Enron-like accounting scandal behind it in 2003. The company got in trouble with regulators for moving troubled investments off the books into offshore partnerships and it had to restate past earnings, make some management changes and submit to increased oversight.

Since then, CEO James Rohr has been cutting operating costs and expanding the retail bank, acquiring Bridgewater-based United National Bank and Riggs National Corp., which operates in the Washington, D.C., area. Profits rose about 11 percent in 2005 to $1.6 billion.

Pittsburgh-based PNC, New Jersey's No. 3 deposit holder behind Bank of America and Wachovia, trimmed 1,800 jobs companywide in 2005 as part of a cost-cutting plan and will cut 1,200 more this year, according to the annual report.

PNC employed about 25,000 people at year's end and it operates a network of more than 500 retail bank branches, including about 300 in New Jersey.

It recently filed notice with regulators of intentions to add a branch in Lincoln Park and one in Woodcliff Lake.

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