**
UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549 

 

 

**FORM 10-K**

 

 

(Mark one) 

[X] ANNUAL REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 

EXCHANGE ACT OF 1934 

For the fiscal year ended December 31, 2021 

OR 

[    ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 

EXCHANGE ACT OF 1934 

For the transition period from                to                

**California Republic Auto Receivables Trust 2018-1**

(Exact name of Issuing Entity as specified in its charter) 

Central Index Key Number of Issuing Entity: 0001741276 

Commission File Number of Issuing Entity: 333-207639-04

**California Republic Funding, LLC**

(Exact name of Depositor as specified in its charter) 

Central Index Key Number of Depositor: 0001561326 

Commission File Number of Depositor: 333-207639

**Mechanics Bank**

(Exact nameof Sponsor as specified in its charter) 

Central Index Key Number of Sponsor: 0001603949 

 

**Delaware**
  **38-7183565**
(State or other jurisdiction of incorporation or organization of Issuing

Entity)

 
  
(I.R.S Employer Identification No.)

 
**1111 Civic Dr., Ste. 390, Walnut Creek CA**  **94596**(Address of principal executive offices of Issuing Entity)  (Zip Code)
Telephone number, including area code of Issuing Entity:**(925)******** 482-8000**

Securities registered pursuant to Section 12(b) of the Act:        None 

Securities registered pursuant to Section 12(g) of the Act:        None 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 ofthe Securities Act. 

Yes [ ] No [X] 

Indicate by check markif the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. 

Yes [ ] No [X] 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Actof 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 

Yes [X] No [ ] 

Indicate by check mark whether theregistrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant wasrequired to submit such files). 

Yes [X] No [ ] 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-acceleratedfiler, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One): 

 
Large Accelerated Filer [ ]  Accelerated Filer [ ]Non-Accelerated Filer [X]  Smaller reporting company [ ]Emerging growth company [ ]  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition periodfor complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ] 

Indicate bycheck mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))by the registered public accounting firm that prepared or issued its audit report. 

[ ] 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). 

Yes [ ] No [X] 

State the aggregate market value of the votingand non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price ofsuch common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. 

Not applicable. 

Documents Incorporated By Reference 

List hereunder thefollowing documents if incorporated by reference and the part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders;(2) Any proxy or information statement; and, (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. 

None. 
**

**PART I**

**The following items have been omitted from Part I in accordance with general instruction J(1) to Form 10-K:**

Item 1. Business. 

Item 1A. Risk Factors.

Item 1B. Unresolved Staff Comments. 

None. 

Item 2. Properties. 

Item 3. Legal Proceedings. 

Item 4. Mine Safety Disclosures. 

Not applicable. 

**PART II**

**The following items have beenomitted from Part II in accordance with general instruction J(1) to Form 10-K:**

Item 5. Market forRegistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 

Item 6. Selected Financial Data 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk. 

Item 8. Financial Statements and Supplementary Data. 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 

Item 9A. Controls and Procedures. 

Item 9B. OtherInformation. 

None. 

Item 9C. Disclosure Regarding ForeignJurisdictions that Prevent Inspections 

Not applicable. 

**PART III**

**The following items havebeen omitted from Part III in accordance with general instruction J(1) to Form 10-K:**

Item 10. Directors,Executive Officers and Corporate Governance. 

Item 11. Executive Compensation. 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters. 

Item 13. Certain Relationships and Related Transactions, and Director Independence. 

Item 14. Principal Accounting Fees and Services. 

**Thefollowing substitute information is provided in accordance with General Instruction J(2) to Form 10-K:**

**Item 1112(b) of Regulation AB. Significant Obligors of Pool Assets (Financial Information)**

None. 

**Item 1114(b)(2) of Regulation AB. CreditEnhancement and Other Support Except for Certain Derivatives Instruments (Information Regarding Significant Enhancement Providers)**

None. 

**Item 1115(b) of Regulation AB. Certain Derivatives Instruments (Financial Information)**

None. 

**Item******** 1117 of Regulation AB**.**Legal Proceedings**

No legal proceedings are pending, or are known by registrant to be contemplated by governmental authorities, against any ofMechanics Bank (the “Sponsor”), California Republic Funding, LLC (the “Depositor”), or California Republic Auto Receivables Trust 2018-1 (the “Trust”), or as to which any propertyof any such entities are subject, that are material to holders of the Notes issued by the Trust. 

U.S. Bank National Association, the Indenture Trusteewith respect to the Trust, has provided the following disclosure: 

U.S. Bank N.A. and other large financial institutions have been sued in their capacityas trustee or successor trustee for certain residential mortgage-backed securities (“RMBS”) trusts. The complaints, primarily filed by investors or investor groups against U.S. Bank N.A. and similar institutions, allege the trustees causedlosses to investors as a result of alleged failures by the sponsors, mortgage loan sellers and servicers to comply with the governing agreements for these RMBS trusts. Plaintiffs generally assert causes of action based upon the trustees’purported failures to enforce repurchase obligations of mortgage loan sellers for alleged breaches of representations and warranties, notify securityholders of purported events of default allegedly caused by breaches of servicing standards bymortgage loan servicers and abide by a heightened standard of care following alleged events of default. 

U.S. Bank N.A. denies liability and believes thatit has performed its obligations under the RMBS trusts in good faith, that its actions were not the cause of losses to investors, that it has meritorious defenses, and it has contested and intends to continue contesting the plaintiffs’ claimsvigorously. However, U.S. Bank N.A. cannot assure you as to the outcome of any of the litigation, or the possible impact of these litigations on the trustee or the RMBS trusts. 

On March 9, 2018, a law firm purporting to represent fifteen Delaware statutory trusts (the “DSTs”) that issued securities backed by studentloans (the “Student Loans”) filed a lawsuit in the Delaware Court of Chancery against U.S. Bank N.A. in its capacities as indenture trustee and successor special servicer, and three other institutions in their respective transactioncapacities, with respect to the DSTs and the Student Loans. This lawsuit is captioned The National Collegiate Student Loan Master Trust I, et al. v. U.S. Bank National Association, et al., C.A. No. 2018-0167-JRS (Del. Ch.) (the “NCMSLTAction”). The complaint, as amended on June 15, 2018, alleged that the DSTs have been harmed as a result of purported misconduct or omissions by the defendants concerning administration of the trusts and special servicing of the StudentLoans. Since the filing of the NCMSLT Action, certain Student Loan borrowers 

have made assertions against U.S. Bank N.A. concerning special servicing that appear to be based on certain allegations made on behalf of the DSTs in the NCMSLT Action. 

U.S. Bank N.A. has filed a motion seeking dismissal of the operative complaint in its entirety with prejudice pursuant to Chancery Court Rules 12(b)(1) and12(b)(6) or, in the alternative, a stay of the case while other prior filed disputes involving the DSTs and the Student Loans are litigated. On November 7, 2018, the Court ruled that the case should be stayed in its entirety pending resolutionof the first-filed cases. On January 21, 2020, the Court entered an order consolidating for pretrial purposes the NCMSLT Action and three other lawsuits pending in the Delaware Court of Chancery concerning the DSTs and the Student Loans, whichremains pending. 

U.S. Bank N.A. denies liability in the NCMSLT Action and believes it has performed its obligations as indenture trustee and specialservicer in good faith and in compliance in all material respects with the terms of the agreements governing the DSTs and that it has meritorious defenses. It has contested and intends to continue contesting the plaintiffs’ claims vigorously.

**Item 1119 of Regulation AB. Affiliations and Certain Relationships and Related Transactions.**

Information required by Item 1119 of Regulation AB has been omitted from this report on Form 10-K in reliance on theInstructions to Item 1119. 

**Item 1122 of Regulation AB. Compliance with Applicable Servicing Criteria.**

The Sponsor (in its role as servicer), and the Indenture Trustee (the Sponsor, as servicer, and the Indenture Trustee collectively as the “ServicingParticipants”) have each been identified by the Depositor as participating in the servicing function with respect to the asset pool held by the Trust. The Servicing Participants have each completed a report on an assessment of compliance withits respective servicing functions (each, a “Servicing Report”), which Servicing Reports are attached as exhibits to this Form 10-K. Neither the Servicing Reports prepared by any of the ServicingParticipants, nor the Attestation Reports provided by the Servicing Participants’ respective registered public accounting firms have identified any material instance of noncompliance with the servicing criteria applicable to the respectiveServicing Participant. 

**Item 1123 of Regulation AB. Servicer Compliance Statement.**

The Sponsor (in its role as servicer) has been identified by the Depositor as a servicer with respect to the asset pool held by the Trust. The Sponsor hascompleted a statement of compliance with its obligations under the applicable servicing agreement (the “Compliance Statement”), signed by an authorized officer of the Sponsor. The Compliance Statement is attached as an exhibit to this Form10-K.

**PART IV**

**Item 15. Exhibits, Financial Statement Schedules.**

(a)    (1) Financial Statements: Not applicable. 

        (2) Financial Statement Schedules: Not applicable 

        (3) List of Exhibits 

The following exhibits are provided as part of, and incorporated by reference into, this Annual Report on Form 10-K:

 

**      Exhibit**

 
 
**Description**

 
      3.1 Depositor’s Certificate of Formation   *  3.2 Depositor’s Operating Agreement   *  4.1 Amended and Restated Trust Agreement   **  4.2 Indenture   **  10.1 Sale and Servicing Agreement   **  10.2 Administration Agreement   **  10.3 Receivables Purchase Agreement   **  10.4 Asset Representations Review Agreement   **  31 Section 302 Certification   Filed herewith  33.1 Management’s Report on assessment of Compliance with SEC Regulation AB Servicing Criteria   Filed herewith  33.2 Indenture Trustee’s Assertion of Compliance   Filed herewith  34.1 Report of Independent Registered Public Accounting Firm (Crowe LLP on behalf of Mechanics Bank)   Filed herewith  34.2 Report of Independent Registered Public Accounting Firm (Ernst & Young LLP on behalf of Indenture Trustee)   Filed herewith  35 Servicing Compliance Report of Mechanics Bank as Servicer   Filed herewith  * Incorporated herein by reference to the corresponding Exhibit to California Republic Funding LLC’s Registration Statement on Form S-3 filed on August 28, 2013 (File No. 333-190866).  *  * Incorporated herein by reference to the corresponding Exhibit to the Form 8-K filed by the Trust on June 28, 2018 (File No. 333-207639-04).
 
(b)
Exhibits. 

The Depositor hereby is providing as part of this Annual Report on Form 10-K the exhibits listed inItem 15(a)(3) set forth above. 

(c)
Financial Statement Schedule. 

Not Applicable. 

**SUPPLEMENTAL INFORMATION TOBE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.**

No annual report to security holders, proxy statement, form of proxy or other proxy soliciting material has been sent to any security holders or is presentlyanticipated to be furnished to security holders subsequent to the filing of this annual report on Form 10-K.

**SIGNATURES**

Pursuant to the requirements ofSection 13 or 15(d) of the Securities Exchange Act of 1934, the Depositor has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

California Republic Funding, LLC, as Depositor 

 

By: /s/ John W. DeCero

John W. DeCero, Chief Executive Officer

Dated: March 15, 2022