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Email this6:23 pm
December 12, 2009
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Norman1 said
Coast Capital CU isn't going assume the liability for the Motus deposits without receiving assets to offset those deposit liabiities.
I disagree. It's not like they're assuming a liability by taking on deposits. The cash is there; it's paid a contracted rate. It's not like they're agreeing to assume deposits for which funds are missing.
Banks and credit unions don't look at deposit-by-deposit and loan-by-loan to see if they're perfectly offset with each other. They look at assuming the deposits and/or loans in the context of their whole book of business. If they need to raise additional liquidity or borrowing, they will do so.
6:25 pm
December 12, 2009
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AltaRed said
Motusbank is simply winding up its business. It is not insolvent so there is nothing for CDIC to pay out to depositors. However, the assets (loans) and deposits (liabilities) need to go somewhere and as Norman1 said, whoever takes on the deposits (liabilities) wants profitable assets in good standing in return to offset those liabilities.
It doesn't always work like that, though. Norman1 has never worked in the financial services industry, so doesn't know how things are operationalized. In fact, I suspect, based on his posts, his occupation is as an attorney-at-law. He is welcome to correct me, if he wishes. 
6:34 pm
December 12, 2009
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Loonie said
I'm still confused.
If, as Norman says, the deposits are "gone", i.e. loaned out, then what would CC and Mer be acquiring? The loan book? If so, these loans pay interest higher than what is owed to depositor. Is that not enough to satisfy CC and Mer?Obviously this is not my area!
It's okay, it's not Norman1's area, either. Banks and credit unions assume deposits and/loans all the time. CDIC and OSFI do not look to see every deposit and loan are matched perfectly. They look at their financial and risk disclosure returns, which they're required to publish quarterly, and would be required to transmit said returns to the regulators before any asset assumption takes place.
You're quite right, it's not like Coast Capital Savings is agreeing to assume deposits whereby some of the funds have been embezzled or are missing. The cash backing the deposits on the balance sheet is there, so there is no risk.
Ideally, they'd like for the asset purchase or assumption to be profitable, but even in corporate acquisitions, there are times when such purchases are dilutive or non-accretive to shareholders. Not saying this is the case here, but it could be. Coast Capital Savings is actually going to be taking a closer look at Motus' loans and mortgages than its deposits. It might also be Coast Capital Savings already has excess loans and mortgages on its books, so it might be agreeing to take on way more of Motus' deposits than its loans and mortgages. Or, it might work out an arrangement with Meridian whereby, let's say there are underperforming loans or loans or mortgages which don't meet Coast's credit quality risk appetite, they might agree to assume some of them, but they will want something in return, whether that be at a discount to their book value, extra cash on Motus' balance sheet, or lower rate paying deposits. Those will all be details Motus/Meridian and Coast Capital Savings will
work out themselves in terms of agreements between the firms as they look to operationalize the asset purchase and assumption agreements.
Does that help?
Cheers,
Doug
6:38 pm
December 12, 2009
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Norman1 said
Meridian will not be assuming any of the deposit liabilities. The proposal is all the Motus Bank deposit liabilities are assumed by CDIC member Coast Capital Savings Federal CU in return for all the bank's non-Ontario loans and some of the bank's Ontario loans.This is from their announcement Upcoming changes to …:
Transition of deposits and remainder of lending products to Coast Capital
We chose to partner with Coast Capital, a federal, member-owned credit union. to help support your financial needs. … All lending accounts held in provinces outside of Ontario, a small selection of lending accounts held in Ontario, and deposit accounts from all provinces will be transitioned to Coast Capital. Transition of these accounts is subject to regulatory approval. …
The deposits will continue to have CDIC coverage at Coast Capital.
That's what I thought as well, but it turns out you and I were both wrong. Coast Capital Savings is assuming most of the loans and mortgages outside of Ontario, as well as all the deposits outside of Ontario.
Meridian is assuming most of the loans and mortgages and all of the deposits inside Ontario.
Meridian can therefore maintain its bond of association restriction to Ontario residents.
Some Motus customers will not be migrated and will instead be debanked in terms of deposits and told to renew their credit facilities elsewhere.
Per https://www.motusbank.ca/announcement
Cheers,
Doug
6:29 am
November 18, 2017
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Let's keep our ears cocked to see if Coast Capital will now offer a very good deal to attract more capital - They've done this several times, including last year.
KamWest: Wikipedia summarizes,,,
Coast Capital Savings Credit Union was created out of a merger on December 31, 2000 between Pacific Coast Savings Credit Union and Richmond Savings Credit Union. At the time, the merged entity's $3.2 billion in assets made it the second largest credit union in Canada behind Vancity's $6.4 billion. In June 2002, Coast Capital Savings acquired Surrey Metro Savings, expanding the reach of the credit union from Vancouver Island to the Fraser Valley.
...
The asset base of the credit union increased from $6.1 billion to over $22 billion between 2002 and 2023.
They're a strong credit union, and have swallowed up a few others over the years. You haven't heard about them in Toronto because they were exclusively a BC credit union until they "federalized" and went Canada-wide in 2016, converting to CDIC coverage. They have not been very aggressive in pursuing business outside BC so far.
Coast Capital gained a lot of business in the early 2000s with a no-fee savings account, but they've added many fees over the lase year. My account now has a ridiculous $8.50 monthly fee but it's rebated to me because I'm an existing member and over 65. I just keep them on because I'm grandfathered for free paper statements and their juicy promotions.
RetirEd
9:46 am
October 27, 2013
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This, perhaps slightly dated, list indicates the top 30 credit unions in Canada. https://wowa.ca/infographics-finance-realestate-canada/30-largest-credit-unions-in-canada-oct-2024
I would suggest any CU outside the top 10, and maybe even the top 5, in terms of assets will be ripe for merger and/or acquisition over the next 10 years. A financial institution appears to need at least $20B or higher in assets to remain competitive, as has also been apparent with banks as well. Smith Financial (Fairstone) bulked up with Home Trust, EQ bulked up with Concentra, and National bulked up with CWB. Laurentian will disappear too as soon as it is dismembered into its parts.
I mention this only because I believe anyone who has accounts with smaller institutions (both CU and banks) should expect continued consolidation in one form or the other.
9:50 am
April 6, 2013
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Doug said
That's what I thought as well, but it turns out you and I were both wrong. Coast Capital Savings is assuming most of the loans and mortgages outside of Ontario, as well as all the deposits outside of Ontario.
Meridian is assuming most of the loans and mortgages and all of the deposits inside Ontario.
…
No, they are not. There are no changes to that announcement page since I quoted from it.
Coast Capital will be assuming all the Motus deposits: "deposit accounts from all provinces will be transitioned to Coast Capital."
All Motus loans outside Ontario and some of the Ontario loans will be given to Coast Capital: "All lending accounts held in provinces outside of Ontario, a small selection of lending accounts held in Ontario, … will be transitioned to Coast Capital."
10:26 am
April 6, 2013
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Doug said
It's okay, it's not Norman1's area, either. Banks and credit unions assume deposits and/loans all the time. CDIC and OSFI do not look to see every deposit and loan are matched perfectly. They look at their financial and risk disclosure returns, which they're required to publish quarterly, and would be required to transmit said returns to the regulators before any asset assumption takes place.
You're quite right, it's not like Coast Capital Savings is agreeing to assume deposits whereby some of the funds have been embezzled or are missing. The cash backing the deposits on the balance sheet is there, so there is no risk.
…
No, the cash is not there. I know a lot more than you do, Doug.
According to their lastest January 2025 OSFI bank balance sheet, Motus Bank has about $20.7 million in cash. Motus Bank owes depositors about $47.8 million for their savings and chequing account balances. Motus Bank owes depositors another $60.9 million for issued term deposits.
$60.9 + $47.8 - $20.7 = $88 million of the deposited money is literally gone. Embezzled, gone missing, or, more likely, lent out.
Clearly, you neither have the facts nor the understanding about what you are writing about.
10:52 am
October 27, 2013
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Norman1 said
According to their lastest January 2025 OSFI bank balance sheet, Motus Bank has about $20.7 million in cash. Motus Bank owes depositors about $47.8 million for their savings and chequing account balances. Motus Bank owes depositors another $60.9 million for issued term deposits.$60.9 + $47.8 - $20.7 = $88 million of the deposited money is literally gone. Embezzled, gone missing, or, more likely, lent out.
I think we could/should assume the vast majority of the $88M is 'lent out' with a few key questions. What is the quality of those loans, i.e. are any of them impaired? How much is demand loans that can be called back to meet a potential 'run on the bank' for the $47.8M that is liquid and cannot be covered with $20.7M of cash on hand?
One has to assume that most(?) depositors will be (have been) cleaning out their deposit accounts and any maturing term deposits this past month. Could Motus go insolvent before the orderly wind down?
This is one of the real issues with institutions that have disproportionate percentages of liquid liabilities. Remember the run on Oaken Financial/Home Trust in 2017? They had an outsized portion of their liabilities in highly liquid HISA accounts.
8:40 pm
April 6, 2013
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Motus Bank has shareholder equity of about +$18.8 million as of January 31, 2025. Assets do exceed liabilities. So, the bank is not bankrupt. That leaves the question of liquidity.
The bank has $23.9 million of insured residential mortgages. The bank can pledge that to the Bank of Canada and obtain up to 90% of the market value of those mortgages under the central bank's Standing Term Liquidity Facility (STFL).
The bank has another $86.7 million of uninsured residential mortgages. The bank can pledge those uninsured mortgages that have LTV ratio at or below 80% to the Bank of Canada (eligible mortgages).
The STFL can advance 33% to 90% of the eligible uninsured mortgages' market value, depending on "Bank of Canada’s estimate of the current loan-to-value (cLTV) ratio of the individual mortgages and the geographic location of the properties."
Unfortunately, the OSFI filing is not detailed enough to calculate how much of those $86.7 million of uninsured mortgages are eligible.
So, not obvious from the OSFI balance sheet if there would or would not be a problem with a run on that $47.8 million of chequing and savings account deposits.
2:46 am
November 18, 2017
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Norman1: said:
According to their lastest January 2025 OSFI bank balance sheet, Motus Bank has about $20.7 million in cash.
Is the word "cash" the key here? Wouldn't that exclude the value of non-cash assets like loaned-out money or expected tax refund and the like?
RetirEd
9:00 am
April 6, 2013
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RetirEd said
Is the word "cash" the key here? Wouldn't that exclude the value of non-cash assets like loaned-out money or expected tax refund and the like?
That's correct. Cash does not include those signed loan agreements, liens at the land registry offices in their favour, and any guarantees for the loans.
4:12 am
December 20, 2019
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Norman1 said
According to their lastest January 2025 OSFI bank balance sheet, Motus Bank has about $20.7 million in cash.
I'll tell you a fact... they're going to have a heck of a lot less than that come Monday April 14th
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