Mechanics Bank Sells $417M Auto Loan Portfolio to Bank of America

Mechanics Bank has completed the sale of a $417 million portfolio of performing indirect auto loans to Bank of America’s trading desk. The bank completed this sale to increase liquidity and simplify its balance sheet. The transaction occurred at a price near book value and represents a shift for the regional lender as it reallocates capital.

"The transaction represents a step in the company’s efforts to optimize its balance sheet and allocate capital," said C.J. Johnson, President and CEO of Mechanics Bancorp, in a statement. "It will reduce risk, improve liquidity and enhance future profitability."

Operational Continuity and Portfolio Retention

Mechanics Bank will retain approximately $13 million in runoff auto loans despite transferring the bulk of the portfolio. Westlake Portfolio Management will continue to act as the servicer for the loans held by both institutions to ensure borrowers experience minimal disruption.

This servicing arrangement is common in large portfolio transfers. It allows the selling institution to offload credit risk and capital requirements associated with the assets without disrupting customer relationships or requiring changes to payment processing.

Financial Position and Market Context

Mechanics Bancorp reported total assets of $21.2 billion as of June 30, 2026. The sale of the $417 million portfolio reduces the bank’s exposure to consumer auto debt, which allows for potential deployment of capital into other areas of the business.

Mechanics Bank (MCHB) traded at $15.40 per share as of September 18, 2026. The bank decided to offload these assets as regional financial institutions examine their loan books to navigate interest rate changes and regulatory capital requirements.