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First month's worth of balance sheet data for Motus Bank available
June 19, 2019
10:48 am
Doug
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The first month's balance sheet data for Motus Bank are in, following OSFI's publication of the April 30, 2019, financial data returns. And, they seem to be likely in a bit behind of their internal targets and well behind with what I'd expected when Motus had provided some early guidance in terms of total new applications processed back in approximately late April.

Unfortunately, OSFI financial data returns do not break down term deposit maturity profile, nor do they break down their effective average interest rate paid and thus their interest expense; however, this is how things shaped up:

Demand deposits (i.e., chequing and savings accounts and those savings accounts in RRSPs and TFSAs)
Non-registered: $4.483 million
Tax-sheltered (i.e., RRSP, TFSA, and, possibly, RRIFs if any managed to get transferred in with the first month, which seems unlikely as @Loonie can no doubt firmly attest!): $1.591 million

Term deposits
Non-registered: $1.744 million
Tax-sheltered: $373 thousand

For comparison, Motus Bank had ~$50 thousand on deposit prior to their April 2, 2019, launch date.

Loans and Mortgages
Real estate secured lending-revolving (i.e., HELOCs): $268 thousand
Real estate secured lending-non-revolving (i.e., mortgages): $545 thousand (all uninsured mortgages, which means none are so-called high-ratio CMHC, Genworth, or Canada Guarantee mortgage insured)
Unsecured lending (i.e., lines of credit and demand loans): $236 thousand

Note the above lending data includes limits authorized but which are necessarily undrawn.

As to required regulatory bank risk capital, Motus Bank has on deposit and in short-term treasury bills, approximately $54 million that was transferred from parent company Meridian Credit Union's cash assets.

Turning to profitability, which is only available quarterly so this will be heavily focused in the loss column as it would be for the quarter ended March 31, 2019:

Net loss of $1 thousand for the quarter, though I note they have no staffing expenses and no interest expense that had yet to be paid (if interest is paid on the 30th or 31st, it likely would show up on the following month's return, that is to say, in May). Seems like Meridian Credit Union may be subsidizing the cost of the staffing of Motus Bank, at least initially, which will mean Motus will be somewhat of a drag on Meridian's profitability and net income for the foreseeable future.

In short, Motus may well be opening up several thousand new accounts per month, but they seem to be predominantly low value transactional accounts. Meridian are astute managers - I think they'll give this a couple years, but if they don't start seeing lending growth and assuming they have no need for the deposits, Motus will start to be a real drag for them.

Cheers,
Doug

Prediction: While deposit traction seems to be slow, they're still showing significantly more deposits than loans and mortgages, which furthers the narrative of a slow lending environment due to slow economic growth. As such, if that trend continues and does not narrow such that their total lending (and crucially, drawn credit facilities) does not grow at a faster clip than their deposits, I predict that Meridian/Motus will give it until September before cutting both HISA and GIC rates markedly, irrespective of any potential BoC cut. Assuming no BoC rate cut, I would predict Motus' highest deposit rate will drop fully 0.60-0.85% and cap out at between 2.25-2.50%. Likewise, their HISA rate will likely go down between 0.25-0.50%, to 1.75-2.00%. There would be no sense paying that extra interest if your lending book remains a fraction of your deposit book. They don't want to suffer bigger losses than need be.

June 19, 2019
2:20 pm
Loonie
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I appreciate your ferreting this out.
Could it be that mortgages are being negotiated but have not yet concluded due to closing dates not yet reached? Have to wonder though how difficult it is to actually get a mortgage with them, considering how difficult it is to get an RIF transferred in! I would expect mortgages to be more difficult, not less, considering that they are giving out money for them.
How does this compare to activity in the mortgage market in general?

I have currently $36 deposited with them - a dollar from me and the rest from Peter. Still waiting for capacity to open joint accounts!

June 19, 2019
3:23 pm
Doug
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Loonie said
I appreciate your ferreting this out.
Could it be that mortgages are being negotiated but have not yet concluded due to closing dates not yet reached? Have to wonder though how difficult it is to actually get a mortgage with them, considering how difficult it is to get an RIF transferred in! I would expect mortgages to be more difficult, not less, considering that they are giving out money for them.
How does this compare to activity in the mortgage market in general?

I have currently $36 deposited with them - a dollar from me and the rest from Peter. Still waiting for capacity to open joint accounts!  

No problem. Their mortgages are supposed to be a completely digital application process, complete with regular, real-time status updates via mobile and, possibly, online banking status updates. Their unsecured line of credits and loans are funded by Motus Bank, but are using back office KYC and application platform technology from Grow Technology (which was previously a direct-to-consumer lender competing with Mogo and Borrowell, but now is only in the B2B and service provider space). So, at least on credit applications, their technology is supposedly leading edge...it's too bad they couldn't have (a) partnered with another service provider to handle registered plan onboarding and real-time transfer updates (novel idea, eh!? sf-wink), (b) loosened up their risk management controls by providing customers with access to deposited funds limits, and (c) streamlined their administrative processes to improve processing times all around. Then they'd have a real killer banking solution. 😉

Thanks, also, for sharing what percentage of Motus' overall deposits you make up. $36 on, call it, $7-8 million in deposits...that just might be the highest percentage your total deposits of the overall financial insitution's total deposits you make up. Haven't run the number exclusively, but say a few hundred thousand on $2.5 billion versus $36 on $7-8 million. The latter seems larger.

From the sounds of it, in terms of transfers of registered plans, Oaken and Achieva are the ones to beat, with Hubert a close third if not in a virtual three-way tie for first place. Wonderful neither of them charges transfer out fees, too. They don't reimburse on transfer ins, but that's a nice touch! Obviously shows they have confidence in their services that you won't rate shop too much. If Oaken just had a RIF Savings account, like you said in another thread, I suspect you probably would consolidate a lot of your deposit business with them. Seems so odd, more so than Hubert not offering a 1-year RIF GIC (though that's odd, too!). Does Hubert offer a RIF Savings account at least?

You're quite right, though. This would likely include any closed mortgages but which had been yet undrawn (i.e., funded). However, it wouldn't include those deals which had yet to close.

Cheers,
Doug

June 19, 2019
9:21 pm
Loonie
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I think what you're saying is that I may be one of the bigger depositors - courtesy of Peter!

If so, they have a lot of work to do building up confidence and business among the people who've joined. However, I have 42K minimum, possibly 62K or more which I am waiting to put into joint savings account there if I can get through the account opening process! I guess that will make me a super-depositor! sf-laugh (where's my toaster? lol)

One wonders why all these people have joined actually, if they are not doing significant deposits or mortgages. Were they all planning on transferring money in but found themselves foiled? I hope not. Maybe they all want chequing. I suppose some might have signed up for auto-deposits from payroll etc but these might not have kicked in at time of your calculations.

I don't think I would have left my RIF at Oaken, although I might have out of inertia, if they'd offered a savings rate. Motus was always the best deal for me as they offer 18 months at 3.1% and also a savings rate. Oaken doesn't offer 18 months on RIF. The more I thought about it, the more sense 18 months made in my situation, IF I could count on a timely transfer, which I couldn't at Motus.

When Meridian sets its mind to it (i.e. one of their employees does), it can be very efficient with transfers. When I finally decided to turn to Meridian for my RIF, my rep acted very quickly and had an acknowledgement from Oaken the next day, followed by the money right on time when the GIC matured. This gives me some hope for Motus, since you or someone told me they use the same back office, more or less, or their systems are the same or something like that.

As you suggested somewhere, if Motus can fulfil its promises, it should be an excellent FI. I definitely hope they can work it out, soon, because I have a spot for them in our portfolios. I think I personally experienced a farcical sequence of no-go's and errors, but they need to solve the fundamental problem that it is very cumbersome to follow some of their procedures, even if they should work properly.

I hope you are able to report on their progress in subsequent months. It will be interesting to see.

June 20, 2019
10:21 am
Doug
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Thanks, Loonie, as always for your timely, thorough, and thoughtful reply. sf-cool

Loonie said
I think what you're saying is that I may be one of the bigger depositors - courtesy of Peter!

Yep, you got it exactly, though I hadn't thought of it as being thanks to Peter / HighInterestSavings.ca Cash Back partnership promotion, but yep that's true! In many respects, Motus Bank probably owes more to this forum and to RedFlagDeals for its customer growth than to Rob Carrick's Globe and Mail article. I don't think he has the "fan base" he thinks he does. It's too bad Motus doesn't partake in this forum (I wonder if they read your RIF transfer horror story! 😉 ) like others, such as Manulife Bank and Achieva Financial, do.

If so, they have a lot of work to do building up confidence and business among the people who've joined. However, I have 42K minimum, possibly 62K or more which I am waiting to put into joint savings account there if I can get through the account opening process! I guess that will make me a super-depositor! sf-laugh (where's my toaster? lol)

Oh wow, yeah, if you put $40-60,000 into a HISA or 1 year or 18-month GIC at Motus Bank, you'd probably make up about 1-2% of Motus' overall deposit base, which is actually quite significant. While Meridian Credit Union, Motus' parent company, is financially sound and has the financial assets to inject further risk capital into Motus Bank should it be required (if their loan growth doesn't pick up, they won't need to and it could be argued they may well be over-capitalized), because the deposit base of Motus Bank is so small, I would actually stick to CDIC deposit insurance limits (if anyone, or you, were planning on exceeding them). Had their loan growth been substantial, with such a small base of deposits, that makes them more prone to OSFI requiring a risk capital infusion if, say, a large depositor pulled out. I suspect you and your spouse would've stuck to your CDIC limits with Motus Bank anyway, but just thought I should point that out for other readers.

One wonders why all these people have joined actually, if they are not doing significant deposits or mortgages. Were they all planning on transferring money in but found themselves foiled? I hope not. Maybe they all want chequing. I suppose some might have signed up for auto-deposits from payroll etc but these might not have kicked in at time of your calculations.

Bingo! It's the Motus chequing, mobile app, and streamlined account opening process that doesn't require an initial cleared cheque deposit. People are opening accounts for automatic payroll deposits into their chequing and for Meridian's/Motus' Sweep feature that sweeps excess balances automatically at the end of the day into a Motus Savings account, I think. Some people would likely just prefer to use the Motus Savings account if Motus would get their act together and just come right out and say that pre-authorized debits are included free of charge on Motus Savings. The knock against them, though, is that all deposits are held, which I think they need to work on and implement. If they clarified those two things and improved their EFT processing timeframes, I'd at least use Motus for day-to-day banking and non-registered savings versus, say, a Motive Financial or Alterna Bank.

[snip]
I hope you are able to report on their progress in subsequent months. It will be interesting to see.  

Will try and post a follow up in September, time permitting. If I miss it, I'll post something in December and, by then, we'd have two full fiscal quarters of earnings (or losses) and approximately 6-8 months of balance sheet growth (hopefully!).

Cheers,
Doug

June 20, 2019
3:29 pm
Loonie
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You're right that we won't be exceeding CDIC limits, should we ever succeed in opening our joint savings and chequing accounts.
It's funny to think we could be major depositors, but perhaps that will change by the time we are finally able to make that deposit, which I think will be at least another month at this rate. I won't transfer the money in until I actually receive the cheques, as the money must be available at all times. It may just be the backlog that is slowing down deposits - if people have the patience to wait.
The chequing account pays very good interest, which may account for its popularity. It was 0.5% last time I looked, but haven't looked recently.

I somehow doubt they read this forum. If they did, I would expect them to be asking around the office as to who had had the experience I described. Surely only one person had a misdirected courier package! In that case, I would have expected someone might have followed up with me, but there has been nothing. Nobody has ever asked why I didn't send the forms back after having so much trouble receiving them. However, it's quite obvious that they are not keeping up at all.

June 26, 2019
6:00 am
Alexandre
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Doug said
I predict that Meridian/Motus will give it until September before cutting both HISA and GIC rates markedly, irrespective of any potential BoC cut.

They didn't wait that long, unfortunately. As of June 26, 2019, rates at Motus are down across the board for their different GIC products. For example, their 18 months and 2 years GIC are down from yesterday's 3% to today's 2.75% and 2.8%.

Rates for their Escalator RRSP and TFSA GIC are down as of today, as well.

Your prediction, Doug, concerned me enough to rush and buy GIC from Motus. I finalized the process yesterday, and got GIC on yesterday's 3% rate. Thanks.

June 26, 2019
6:48 am
krwilson
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I am truly disliking Motus at this point. The incredible slow transfers and then the long hold. Now seeing this rate reduction is getting close to the last straw. I sent them an internal email just now explaining what I class as their failings and see if I can get the 3% GIC I planned to buy. If not, goodbye Motus....wasting my time.

June 26, 2019
9:59 am
Loonie
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I don't really blame motus for the rate cut as it's happening everywhere or soon will. The US is looking at a rate cut from the Fed, which is bad news for all of us. I am also concerned about the standoff with China being a factor in our economy.

However, Motus' slowness is another matter. Today, on the phone, a Motus rep said they are overwhelmed with new business and thus have fallen behind in fulfillment. That's the first time they've admitted it to me. She also verified, when asked, that she works for both Motus and Meridian.

June 28, 2019
4:40 am
krwilson
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"Thanks for reaching out to us. Our rates are subject to change at anytime without notice, at this time we can only offer you our current rate that is posted on our website.

Feel free to give our Member Service a call at 1-833-696-6887 if you have any questions.

Our team is available Monday-Sunday: 8:00 A.M. to 12:00 Midnight- E.S.T.

Thanks for choosing motusbank."

==> Not impressed overall. I understand that rates change but no acknowledgement of their crappy system does not help me.

June 28, 2019
9:39 am
Doug
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krwilson said
"Thanks for reaching out to us. Our rates are subject to change at anytime without notice, at this time we can only offer you our current rate that is posted on our website.

Feel free to give our Member Service a call at 1-833-696-6887 if you have any questions.

Our team is available Monday-Sunday: 8:00 A.M. to 12:00 Midnight- E.S.T.

Thanks for choosing motusbank."

==> Not impressed overall. I understand that rates change but no acknowledgement of their crappy system does not help me.  

I'd agree with that, krwilson. I expected, and correctly predicted, Motus' impressive GIC rates would drop to bring them below being top of the market. I think unless mortgage and loan growth (not just undrawn LOC limits) picks up, they're likely to drop GIC rates further such that they offer only a modest 0.10-0.30 premium over Meridian Credit Union's current rates.

Still, Motus' CEO Bill Maurin said, repeatedly, they intended to maintain the deposit and mortgage rates at least for the medium term based on the verbiage he used in media interviews. The swiftness by which they cut rates, irrespective of any Bank of Canada rate changes, surprised even me a bit (I was thinking it'd be at least another 2-3 months before they cut).

Plus, as you say, when you try and e-mail them with your feedback for improvement, they give you scripted answers and just say they'll add it to the feedback pile à la Tangerine with which they never do anything. So, while I would hate to see another digital bank fail, with the forthcoming onslaught of digital banking competitors (that's right, there's at least 3-5 others waiting in the wings, either with federal continuance applications or new product offerings), I would not be at all surprised to see Motus do an RBC/Zag Bank/Vancity in 24 months from now. 🙁

Cheers,
Doug

June 28, 2019
12:36 pm
Loonie
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I hope your prediction is premature and wrong, Doug, as I"ve just spent so much time trying to get set up with Motus. And it would be a difficult blow for Meridian. Let's hang on and see what the next results bring. I do wish, though, that they could keep up.

I take these "we won't lower our rates" statements with a grain of salt. I think it was EQ who vigorously insisted their initial offering was "not a promo rate", wasn't it? (I may misremember which FI it was.) Hah!
Basically, they are all promo rates, especially with a new FI, until proven otherwise, in my view at least.
There are some rates that are promo rates but are guaranteed for a specific period, subject to modest declines if overall rates change. I prefer those deals. e.g. DUCs' current 3% through Jan /20 (now closed to new subscribers).

June 28, 2019
3:00 pm
Doug
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Loonie said
I hope your prediction is premature and wrong, Doug, as I"ve just spent so much time trying to get set up with Motus. And it would be a difficult blow for Meridian. Let's hang on and see what the next results bring. I do wish, though, that they could keep up.

I take these "we won't lower our rates" statements with a grain of salt. I think it was EQ who vigorously insisted their initial offering was "not a promo rate", wasn't it? (I may misremember which FI it was.) Hah!
Basically, they are all promo rates, especially with a new FI, until proven otherwise, in my view at least.
There are some rates that are promo rates but are guaranteed for a specific period, subject to modest declines if overall rates change. I prefer those deals. e.g. DUCs' current 3% through Jan /20 (now closed to new subscribers).  

True, Loonie, about EQ Bank, though they did keep their unprecedented 3% (the fact we are noting 3% as unprecedented on a HISA is somewhat comical in and of itself!) for at least 3 months. Motus Bank last little better than 2 months on their GIC rates. Their HISA rate wasn't exactly market leading so has some extra length of time before necessitating a cut.

Cheers,
Doug

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