Rancho Cucamonga-based PFF Bank settled its shareholder lawsuit last week, potentially easing the way for its planned merger with FBOC, Inc., an Illinois banking concern.
As an article by the Daily Bulletin's Matt Wrye reported, the suit had alleged that PFF executives got rid of their company stock at a time when they knew they faced big losses from problem loans to builders and developers.
Wrye also informs us that PFF workers and retires have filed their own class action suit against the company:
Meanwhile, Pittsburgh- based Stember, Feinstein, Doyle & Payne - in conjunction with an Agoura Hills firm - filed a class-action suit against PFF and executives on Tuesday seeking to recover $80 million for 900 employees and retirees.
It says executives invested workers' 401(k) and stock plans into PFF shares while knowing the company wasn't "accurately recording its financial condition on its books" and disclosing its true condition to the public.
"They knew the company was headed for trouble," said Steven Pincus, attorney at the Pittsburgh law firm.
More lawsuits could be on their way. If those plaintiffs win, it would deliver a devastating blow to a bank already being watched by federal regulators because of liquidity issues.
Wrye's piece also reminds us of how poorly PFF has performed. According to the article, the company has suffered over $240 million in combined losses in the past three quarters and customers have withdrawn $600 million in assets between March and June this year.
As we previously noted, some of the PFF board fared well with stock options before the bank's fall from grace, to the tune of many hundreds of thousands of dollars in profit from stock sales.
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