Wilmington Trust, an M&T Bank subsidiary, will pay $60 million to settle claims of false loan reports brought by the U.S. Attorney's Office in Delaware.
The settlement, announced Tuesday, resolves allegations that predated M&T's 2011 purchase of Wilmington Trust. M&T was not charged in the case.
"Wilmington Trust believes resolving this matter now is in the best interest of the company," M&T said in a statement.
The U.S. Attorney's office alleged Wilmington Trust filed false monthly reports to the Federal Reserve in 2009 and 2010 that excluded past-due loans. Prosecutors alleged the bank illegally concealed hundreds of millions of dollars in bad loans to developers from investors, bank examiners and the federal TARP bailout program, according to the Philadelphia Inquirer.
The $60 million includes $16 million that was previously paid to the U.S. Securities and Exchange Commission in a related action. Wilmington Trust did not admit liability as part of the settlement, M&T said.
"To function effectively, our financial markets require accurate disclosures – and regulators need to receive accurate information," the U.S. Attorney's Office said in a statement. "That didn't happen here."
M&T acquired Delaware's largest bank at a bargain price: a $351 million all-stock deal that valued Wilmington Trust at a 46 percent discount to its previous stock price.
The U.S. Attorney's Office said the settlement "secured a substantial payment for victims who sustained losses as a result of what transpired," and that "Wilmington Trust accepted responsibility for its actions."
The U.S. Attorney's Office also agreed to dismiss criminal charges pending against Wilmington Trust. "If possible, we wanted to avoid the collateral consequences of a criminal conviction for the bank, which could have resulted in the loss of jobs and revenue for our community," the office said in a statement.
Wilmington Trust and four of its former executives were just about to go on trial. The four executives still face charges, but the start of their was postponed until March.
The U.S. Attorney's Office called Wilmington Trust "a fixture in this community for more than 100 years. This is why the bank's decline and fire sale acquisition by M&T Bank was such a significant development in this community; and why this office has invested substantial time, energy and resources in the investigation and prosecution of this case."
Tribune News Service contributed to this report.