A former loan officer at Wilmington Trust in Delaware is facing jail time after pleading guilty this week to bank fraud.

Joseph Terranova conspired to extend credit to borrowers on terms that would not have been approved by the bank, the Justice Department charged in an indictment filed in April with the U.S. District Court in Wilmington.

Terranova, who faces a maximum penalty of five years imprisonment and a $250,000 fine, also was accused of loaning money to customers to enable them to stay current on loans and caused the bank to misreport loans that were past due or troubled.

In 2008, Wilmington Trust, which had been among the state's leading banks until the financial crisis, received $330 million in funds through the Trouble Asset Relief Program. U.S. law criminalizes false statements to financial institutions that received bailout funds.

M&T Corp. (MTB) bought Wilmington Trust in 2011.

"We hope that in bringing these charges and securing a conviction, others will be deterred from engaging in similar conduct," U.S. Attorney Charles Oberly III said in a press release Tuesday. The fraud contributed to the decline and sale of an important Delaware company, "at significant cost, economically and emotionally, to the citizens of this state," Oberly said.

Terranova "concealed the bank's true financial condition by engaging in 'extend and pretend' schemes to keep loans current and to hide past-due loans from regulators and investors," added Christy Romero, the special inspector general for Tarp.

Patrick Cotter, a lawyer for Terranova, declined to comment.

Over about a year starting in December 2006, Terranova conspired with a local real estate developer to mislead bank officials about the terms of $12.2 million of loans for the construction of a shopping center, the indictment charged.

One of the loans included a $1 million line of credit for the borrower, which Terranova allegedly increased to $2 million without authorization from the loan committee and allowed the borrower to use for purposes that differed from those the committee approved.

On dozens of occasions Terranova is said to have authorized officers to advance funds to eligible borrowers to extend credit that increased Wilmington Trust's exposure beyond that approved by the loan committee or permitted by the bank's policies.