A federal grand jury in Wilmington has indicted the former Wilmington Trust Corp. on criminal charges, alleging the bank illegally hid hundreds of millions of dollars in land-development loans that were so delinquent that one banker called them "credit turds."

Although a number of larger U.S. banks were forced to sell themselves at bargain-basement prices as property values collapsed in the recession, Wilmington Trust is the only bank bailed out by the Troubled Asset Relief Program to face criminal charges, according to Charles Oberly, U.S. attorney for Wilmington.

M&T Bank Corp., the Buffalo lender that bought Wilmington Trust as it faced financial collapse in 2010, has hired lawyers in New York and Washington to defend itself.

Bank spokesman Philip Hosmer and Christopher Gunther, an attorney at Skadden, Arps who represents M&T, declined to comment.

Oberly had previously charged the bank's former chief financial officer, Robert V.A. Harra Jr., and three other bank executives with signing off on fraudulent regulatory reports that underreported delinquent loans. The bankers have denied wrongdoing and are contesting those criminal charges, which were expanded in a Superseding Indictment that added Wilmington Trust as a defendant.

Prosecutors have not charged the bankers' boss, former Wilmington Trust chairman and chief executive Ted Cecala, who also signed reports. "The investigation is ongoing," Oberly spokeswoman Kim Reeves said.

Separate from the manager indictments, at least three former Wilmington Trust employees in Pennsylvania and Delaware have been found guilty of criminal charges related to illegal lending practices since the bank collapsed.

Complaints by federal prosecutors have depicted a bank with an aggressive, generous, and loosely supervised sales culture, where favored developer clients were granted improper credit extensions when they failed to pay back loans on schedule.

The indictment alleges that bad loans were routinely underreported in 2009 and 2010, even as the accused warned each other to improve loan report accuracy.

To raise capital as losses mounted, Wilmington Trust sold $274 million worth of new stock to investors in February 2010, while hiding bad loans and exaggerating its financial strength so investors couldn't know what they were getting into, according to the indictment.

After federal examiners found that Wilmington Trust had fallen behind on hundreds of millions of dollars in previously undisclosed real estate loans, the bank agreed in November 2010 to be bought by M&T for just $3.84 a share, less than half of the bank's stock market value on the day before and down more than two-thirds from what investors had paid for the new shares just months before.

In pressing M&T to pay for Wilmington Trust's damages, Oberly is going to bat for the trust's outraged former shareholders, who include descendants of the founding du Pont family as well as ex-bank employees and pension and mutual funds.

Besides fooling investors, "Wilmington Trust received $330 million in TARP funds and is the first TARP recipient institution to be indicted," Oberly noted in a statement.