Mechanics Bank, of Walnut Creek, Calif., is exiting the indirect auto lending business, a spokesman confirmed to Automotive News.
The bank’s auto finance business planned to stop accepting loan applications after Wednesday, the spokesman said.
He did not answer questions about why the bank is leaving the auto lending business.
Mechanics Bank in its 2021 annual report said it offered indirect auto lending for new- and used vehicles, working with franchised and independent dealerships in 27 states.
Mechanics Bank’s letter to shareholders in its 2021 annual report said the bank’s balance sheet saw strong growth and maturation that year in part due to its Mechanics Bank Auto Finance division.
Stuart McCallum, national dealership practice leader for Withum, an East Brunswick, N.J., advisory and accounting firm, told Automotive News that Mechanics Bank’s exit from indirect lending isn’t unique.
“The amount of banks that have pulled back from indirect lending over the last 90 to 120 days has been pretty substantial,” McCallum said. “They started scaling back, and then some banks I have worked with have really just completely turned off the spigot over the last 60 days or 90 days.”
