Pa.'s Keystone Settles Class Action for $30M
HARRISBURG, Pa. - Keystone Financial Inc. said Wednesday that it would pay $30 million to settle a class action brought by 43 school districts in Pennsylvania.The districts sued a subsidiary of the $7 billion-asset banking company, Mid-State Bank, in 1997 to recover investment losses. They alleged that the bank should have known the school districts' investment adviser, Devon Capital Management, had mishandled the investment of school district funds.
At the time, Mid-State was providing custodial services to Devon Capital. Devon's principal, John Gardner Black, has since pleaded innocent to134 counts, including fraud, and is awaiting trial in federal court.
"We reached this decision because of the uncertainties of litigation not to mention the time, cost, and distraction associated with such cases," said Keystone chief executive Carl L. Campbell. "We were concerned that this case could have taken our attention away from serving our customers."
Wednesday's settlement does not cover four lawsuits filed by school districts that did not join the class action. Keystone has set aside about $21 million to settle those claims.
- Taran Provost
N.Y. Bank in $85M Deal for Pa. Company
NORWICH, N.Y. - Continuing its push into northeastern Pennsylvania, NBT Bancorp announced plans Wednesday to buy Pioneer American Holding Corp. in Carbondale for $84.5 million of stock.The deal is the second announced by NBT in Pennsylvania this year. In August, the $1.4 billion-asset company said it would buy Lake Ariel Bancorp for about $93 million. NBT's plan is to merge Pioneer American and Lake Ariel - which operate in many of the same markets - into a still-unnamed subsidiary with close to $1 billion of assets.
"Our abilities to make the necessary cost savings and initiate effective revenue growth plans are immeasurably enhanced by combining the two banks," said Daryl Forsythe, NBT's president and chief executive officer.
NBT is the parent of NBT Bank, one of the oldest in upstate New York. It operates 36 branches in nine counties. Pioneer American is the holding company for Pioneer American bank, a $420 million-asset institution with 18 branches in five Pennsylvania counties. The deal, valued at about $29.33 per share, is expected to close in April.
- Alan Kline
Mortgage Demand Falls as Rates Keep Rising
WASHINGTON - Mortgage applications continued to slip in the week that ended last Friday. The Mortgage Bankers Association said Wednesday that its application index fell 4% from the preceding week, to 287.9, as the average rate on a 30-year, fixed-rate mortgage jumped 4 basis points, to 7.92%.