Bank of America to Buy Mechanics Auto Loan Runoff
Mechanics Bancorp said the sale of the substantial majority of runoff auto loans will reduce risk, improve liquidity and enhance future profitability.
Bank of America (BAC) agreed to purchase approximately $417 million of runoff auto loans from Mechanics Bancorp (MCHB) in an asset-purchase deal.
Mechanics, the Walnut Creek, Calif.-based financial holding company of Mechanics Bank, said the sale of the substantial majority of its runoff auto loans will reduce risk, improve liquidity and enhance the future profitability of the company.
C.J. Johnson, President and CEO of Mechanics, said: “This transaction represents another important step in our ongoing efforts to optimize our balance sheet and allocate capital to its highest and best use.”
The sale follows a December 2025 agreement in which Mechanics Bank sold its Fannie Mae Delegated Underwriting and Servicing business line to Fifth Third Bancorp (FITB) in an all-cash transaction, including an approximately $1.8 billion DUS servicing portfolio and associated escrow amounts, with Fifth Third hiring the Mechanics Bank employees operating the unit. That deal was expected to close in the first quarter of 2026, subject to customary closing conditions and Fannie Mae’s approval of Fifth Third as an authorized DUS lender.
Mechanics Bank is a full-service bank with $22.4 billion in assets as of December 31, 2025, and 166 branches across California, Oregon, Washington and Hawaii. The runoff auto-loan sale is another balance-sheet action after the DUS exit, as the company continues to reallocate capital away from non-core assets.
The runoff auto-loan sale will reduce risk, improve liquidity and enhance future profitability, consistent with the capital-allocation framing Johnson used for the DUS transaction.