PNC Bank 2005 Annual Report Download - page 12

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owned by PNC Bank, N. A. We occupy the entire building. In
addition, PNC Bank, N.A. owns a thirty-four story structure
adjacent to One PNC Plaza, known as Two PNC Plaza, that
houses additional office space.
We own or lease numerous other premises for use in conducting
business activities. The facilities owned or occupied under lease
by our subsidiaries are considered by us to be adequate. We
include here by reference the additional information regarding
our properties in Note 10 Premises, Equipment and Leasehold
Improvements in the Notes To Consolidated Financial
Statements in Item 8 of this Report.
ITEM 3 – LEGAL PROCEEDINGS
Some of our subsidiaries are defendants (or have potential
contractual contribution obligations to other defendants) in
several pending lawsuits brought during late 2002 and 2003
arising out of the bankruptcy of Adelphia Communications
Corporation and its subsidiaries. There also are threatened
additional proceedings arising out of the same matters. One of
the lawsuits was brought, on Adelphia’ s behalf by the
unsecured creditors’ committee and equity committee in
Adelphia’ s consolidated bankruptcy proceeding and was
removed to the United States District Court for the Southern
District of New York by order dated February 9, 2006. The
other lawsuits, one of which is a putative consolidated class
action, were brought by holders of debt and equity securities
of Adelphia and have been consolidated for pretrial purposes
in that district court. These lawsuits arise out of lending and
securities underwriting activities engaged in by these PNC
subsidiaries together with other financial services companies.
In the aggregate, more than 400 other financial services
companies and numerous other companies and individuals
have been named as defendants in one or more of the lawsuits.
Collectively, with respect to some or all of the defendants, the
lawsuits allege federal law claims, including violations of
federal securities and other federal laws, violations of common
law duties, aiding and abetting such violations, voidable
preference payments, and fraudulent transfers, among other
matters. The lawsuits seek unquantified monetary damages,
interest, attorneys’ fees and other expenses, and a return of the
alleged voidable preference and fraudulent transfer payments,
among other remedies. We believe that we have defenses to
the claims against us in these lawsuits, as well as potential
claims against third parties, and intend to defend these
lawsuits vigorously. These lawsuits involve complex issues of
law and fact, presenting complicated relationships among the
many financial and other participants in the events giving rise
to these lawsuits, and have not progressed to the point where
we can predict the outcome of these lawsuits. It is not
possible to determine what the likely aggregate recoveries on
the part of the plaintiffs in these matters might be or the
portion of any such recoveries for which we would ultimately
be responsible, but the final consequences to PNC could be
material.
On April 29, 2005, an amended complaint was filed in the
putative class action against PNC; PNC Bank, N.A.; our
Pension Plan and its Pension Committee in the United States
District Court for the Eastern District of Pennsylvania
(originally filed in December 2004). The complaint claims
violations of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”), arising out of the January 1,
1999 conversion of our Pension Plan from a traditional
defined benefit formula into a “cash balance” formula, the
design and continued operation of the Plan, and other related
matters. Plaintiffs seek to represent a class of all current and
former employee-participants in and beneficiaries of the Plan
as of December 31, 1998 and thereafter. Plaintiffs also seek to
represent a subclass of all current and former employee-
participants in and beneficiaries of the Plan as of December
31, 1998 and thereafter who were or would have become
eligible for an early retirement subsidy under the former Plan
at some time prior to the date of the amended complaint. The
plaintiffs are seeking unquantified damages and equitable
relief available under ERISA, including interest, costs, and
attorneys’ fees. On November 21, 2005, the court granted our
motion to dismiss the amended complaint. Plaintiffs have
appealed this ruling to the United States Court of Appeals for
the Third Circuit. We believe that we have substantial
defenses to the claims against us in this lawsuit and intend to
defend it vigorously.
In its Form 10-Q for the quarter ended March 31, 2005, Riggs
disclosed a number of pending lawsuits. All material lawsuits
have been finally resolved or settlement agreements have been
reached, in some cases subject to final documentation or court
approval. None of the pending settlement amounts where the
settlement has not been completed is material to PNC. The
pending settlement amount for each of these lawsuits has been
reserved upon the recording of our acquisition of Riggs.
As a result of the acquisition of Riggs, PNC is now
responsible for Riggs’ obligations to provide indemnification
to its directors, officers, and, in some cases, employees and
agents against certain liabilities incurred as a result of their
service on behalf of or at the request of Riggs. PNC is also
now responsible for Riggs’ obligations to advance on behalf of
covered individuals costs incurred in connection with certain
claims or proceedings, subject to written undertakings to repay
all amounts so advanced if it is ultimately determined that the
individual is not entitled to indemnification. Since the
acquisition, we have advanced such costs on behalf of covered
individuals from Riggs and expect to continue to do so in the
future at least with respect to lawsuits and other legal matters
identified in Riggs’ first quarter 2005 Form 10-Q.
There are several pending judicial or administrative
proceedings or other matters arising out of the three 2001
PAGIC transactions. These pending proceedings or other
matters are described below. Among the requirements of a
June 2003 Deferred Prosecution Agreement that one of our
subsidiaries entered into relating to the PAGIC transactions
was the establishment of a Restitution Fund through our $90
million contribution. The Restitution Fund will be available to
satisfy claims, including for the settlement of the pending
securities litigation referred to below. Louis W. Fryman,
chairman of Fox Rothschild LLP in Philadelphia,
Pennsylvania, is administering the Restitution Fund.