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Second month's worth of balance sheet data for Motus Bank available
July 17, 2019
7:18 pm
Doug
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Following the in-demand synopsis of Motus Bank's first month worth of balance sheet growth (as at April 30, 2019), the following is a quick summary of the latest available balance sheet data as at May 31, 2019, from OSFI's filings. For comparison, April 30th's information is included in parentheses. sf-cool

Demand deposits (i.e., chequing and savings accounts and those savings accounts in RRSPs and TFSAs)
Non-registered: $13.617 million ($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!): $7.193 million ($1.591 million)

Term deposits
Non-registered: $7.163 million ($1.744 million)
Tax-sheltered: $2.772 million ($373,000)

Loans and Mortgages
Real estate secured lending-revolving (i.e., HELOCs): $267,000 (268,000)
Real estate secured lending-non-revolving (i.e., mortgages): $1.3 million ($545,000) (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): $1.575 million ($236 thousand)

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

I'll look up the profitability information, if anyone's interested.

Cheers,
Doug

July 17, 2019
8:14 pm
Loonie
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Thanks, Doug. Seems like they are picking up speed. Looks like they took in roughly 23 million in May. This could account for their inability to cope with demand. Someone like me would have taken up a couple of hours of their time between one thing and another.

Any info on number of new clients?

As an "owner" of Motus through Meridian, I would be interested in their profitability.

July 18, 2019
6:02 am
Briguy
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Looks like they have way too many deposits and hardly any lending. Wonder how long they can sustain this?

July 18, 2019
8:24 am
Doug
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Loonie said
Thanks, Doug. Seems like they are picking up speed. Looks like they took in roughly 23 million in May. This could account for their inability to cope with demand. Someone like me would have taken up a couple of hours of their time between one thing and another.

Any info on number of new clients?

Nope, unfortunately, the OSFI filings don't state those sort of figures, like number of customers (gross or net of discontinued relationships). The only data we have is an initial press release put out by Motus or Meridian, possibly at Meridian's 2019 AGM in April, that said they'd attracted ~2,700 clients in the first couple weeks of launch. Even if we assume that same growth rate, which is possible though somewhat less likely, that assumes they may have as many as 18-20,000 customers, though it's probably somewhat less than that. Assuming this was accurate, dividing that by the ~$23 million in deposits gets you $1,150 per customer. Of course, deposits are not divided perfectly equally like this, but the data does seem to show that Motus Bank has been successful in attracting new customers, but likely isn't meeting their expectations in terms of dollar value of deposit growth and certainly not in lending. At any rate, this likely explains their inability to cope with demand in that they're attracting new relationships but not really getting the dollars they'd hoped.

As an "owner" of Motus through Meridian, I would be interested in their profitability.  

Unfortunately, this data won't be out until approximately 1 month after Motus Bank's fiscal second quarter 2019, which ended June 30, 2019, as OSFI filings on income and expenditures are disclosed quarterly versus balance sheets, which are disclosed monthly. I will be interested in this - likely due out in August or September - because, so far, they've not shown any expenses, which suggests Meridian Credit Union may be subsidizing the operation. Whether Meridian is subsidizing it or not, Motus Bank will either be a direct or an indirect drag on Meridian Credit Union's net income over the short- to medium-term.

Cheers,
Doug

July 18, 2019
8:32 am
Doug
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Briguy said
Looks like they have way too many deposits and hardly any lending. Wonder how long they can sustain this?  

Completely agree, and this is one of the main reasons I maintain my position that Motus Bank will likely drop their TFSA savings rate to 2.25%, their HISA rate to 2.00%, and their 1-5 GIC rates by between 0.25-0.40% on or before the end of September 2019. Even if we assume their mortgage book, which suggests, as at May 31, 2019, they've only attracted 2-3 mortgages, picked up to between $5-7 million at the end of June, they still have way too many deposits. Sure, they might be able to use these deposits to fund lending within Ontario at the parent, Meridian Credit Union, but the whole modus operandi Meridian put forth for Motus Bank was to grow their lending book outside of Ontario and, thus, Meridian's annual net income. If they wanted to just grow deposits at a premium rate to that put forth by Meridian branches, they already updated their bond of association in 2015 allowing them to operate outside of Ontario. They could've just added a Meridian Credit Union virtual branch managed by the Meridian contact centre without all the added infrastructure, regulatory capital, and staffing.

For comparison, the Manitoba credit unions' virtual banking branches have been $100-300 million in total deposits (some less than that), Motive Financial has ~$500 million, and even Canadian Tire Bank still has ~$400 million in direct-to-consumer deposits plus another billion in brokered deposits.

Cheers,
Doug

July 18, 2019
1:42 pm
Loonie
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Thanks, Doug.
We did note right form the beginning that they were pushing mortgages. But, then, so is virtually every other FI too!

July 18, 2019
7:10 pm
Briguy
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Good analysis Doug. I completely agree they will have to drop interest rates unless they attract some more lending. The mortgage market is brutal at the moment, with every FI dropping their lending rates and motus can't compete in this lending market.

July 19, 2019
2:51 am
3oakwest
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I would imagine that if they drop interest rates to the amounts Doug is suggesting, they will start to lose deposit money.

July 19, 2019
4:37 am
Loonie
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threeoakwest said
I would imagine that if they drop interest rates to the amounts Doug is suggesting, they will start to lose deposit money.  

I agree.
I would probably move my Motus money over to Alterna, where i can get the other features I need but have to pay for the cheques.
I am not sure they will lower rates that much though. What do we know about how the other FIs we follow are doing in this mortgage crunch? They may all be in a similar fix for all i know, and so far the others are holding their rates in tandem with Motus'. For this reason, I think they may not actually lower their rates unless the others do. If they lose both mortgages and deposits, there isn't much of a bank left, and I don't think Meridian wouldn't allow that after such a short period of time.
I say, give them a little longer, at least until into September. By then, all the Spring and most of the Summer real estate deals will have closed.

Right now, they need to focus on running a smooth ship, never mind getting any more business to deal with!

Has anyone been seeing ads for them? I don't read the print newspapers any more, and I simply can't remember if I've seen online ads, as I tend to ignore them. Are they using any other media, especially outside of Ontario?

P.S.: I don't know how accurate this is, but it makes for some interesting reading, especially the projections for the whole of 2019 and 2020:
https://www.crea.ca/housing-market-stats/quarterly-forecasts/

July 19, 2019
7:51 am
Doug
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Loonie said

I agree.
I would probably move my Motus money over to Alterna, where i can get the other features I need but have to pay for the cheques.

Have you looked into ASAP Cheques or DiscountCheques.com? Both use the same MICR ink and paper thickness/size requirements of Payments Canada accredited printers, but as was explained to me, Payments Canada requires them to purchase special software to win Payments Canada's stamp of approval. So, despite that they aren't Payments Canada approved, they guaranteed their cheques will clear or they'll refund your full purchase price (which they haven't had to do, so that says something of Payments Canada's asinine accreditation process!). You can get 200 cheques for about $35 + shipping, which is equivalent to about $10 all-in (tax in shipping) per book of 50 cheques each. By contrast, D+H charges $40 (or more!) for 50 cheques (100 cheques if your FI subsidizes the cost 50%). DiscountCheques.com has the same pricing as ASAP Cheques, but is 160 cheques for the same price, so it's marginally more expensive on a book of 50 cheques basis. sf-cool

And, the reality is, many Canadian credit unions use either of ASAP Cheques or DiscountCheques.com as their preferred, default cheque supplier. So, that alone gives me a lot of comfort and confidence. 😉

Otherwise, if it's just free cheques you're after, why not look to Simplii Financial? They're arguably more responsive than Tangerine of late. I'd love to know why you'd prefer not to deal with them. They have free and unlimited cheques, free and unlimited Interac e-Transfers, unlimited linked bank-to-bank transfer accounts, fast 1 business day or same business day EFT transaction processing times, surcharge-free access to CIBC ATM network (including for deposits), and access to funds limits up to $5,000 available with no holds, depending on creditworthiness.

Beyond that, you could look to other Ontario credit unions that offer free cheque books for seniors over age 60. Also, if it's just about free cheques, don't you get free cheque books with your Meridian Credit Union chequing account for seniors? sf-wink

I say, give them a little longer, at least until into September. By then, all the Spring and most of the Summer real estate deals will have closed.

I agree...sit tight, and see how rates shake out. If you have a Motus account, keep it. If you don't, stay on hold until September and keep your money where it is. The rate differential is likely inconsequential, especially so for only a month or two.

Right now, they need to focus on running a smooth ship, never mind getting any more business to deal with!

Their scripted response to me via e-mail seems like they don't seem concerned with their strict policy of holding all deposits, regardless of client's tenure or creditworthiness, and their slow as molasses EFT processing times. So, that's why I'm so pessimistic on Motus Bank. 🙁

Has anyone been seeing ads for them? I don't read the print newspapers any more, and I simply can't remember if I've seen online ads, as I tend to ignore them. Are they using any other media, especially outside of Ontario?

No, that's one of the problems. Instead of paying third party lead generators a commission, who, in turn, share a portion of that commission with partner sites like GreatCanadianRebates and HighInterestSavings Cash Back that provide a portion of that shared commission with the new customer that signed up, they should follow Tangerine's, Simplii's, and B.C. credit unions' lead of offering cash back sign up purchases directly to customers. They also need to advertise more than just sponsored Facebook posts and paid search ads. They're trying to operate this business on the cheap, with no marketing spend, but if that was the goal, they arguably could've just launched a virtual banking branch of Meridian Credit Union without having to put up $60 million in Meridian Credit Union member owners' money in retained earnings Meridian would otherwise invest on its own balance sheet! Ontario legislation permits credit unions to deal out of province, and Meridian updated its bond of association to remove Ontario residency requirements in 2015.

Cheers,
Doug

July 19, 2019
7:08 pm
Loonie
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Thanks for the tips on alternative cheque companies. I'll make a note to myself. I knew they existed, but never looked into it as I haven't paid for any in a very long time. What would I ever do with 100 or 200 cheques? - certain to outlast me!
Yes, I have a stockpile of cheques from both CIBC and TD, but this particular chequing account is separate and needs to be paired with a HISA that pays a decent rate for both interest and immediate chequing access.
I don't have a chequing account at Meridian as I've never needed one.

I think I understand your pessimism, but when you add it all up, their transfer times are not so different from others'. It takes 3 days for Motus to actually make the transfer, but only 3 more days to remove the Hold on it, so total of six business days, about the same as the rest. Earlier, when they were really swamped, it was taking four days for the first phase.

Advertising might help with their mortgages, but I don't know how one of these FIs hopes to stand out against the others these days as the rates are all so low. However, I'm not in the mortgage market, so I don't know the details. Given that they can't keep up with deposits, it might be just as well for them to hold off on mortgage advertising for now. Maybe they're still in a kind of beta phase.

It should be an interesting AGM next year!

July 30, 2019
5:35 pm
Doug
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Motus Bank has finally added their first public regulatory filing (B-20, showing the composition of their lending book), for the quarter ended March 31, 2019, or the fiscal first quarter for Motus Bank.

Link: https://www.motusbank.ca/MotusBank/media/motusbank/pdf/B20-Disclosures.pdf

Most of this we already knew from my summaries above and here, but one interesting thing that was notable is that its first lending book went to...Alberta! We also see a bit more of the breakdown, with $65,000 booked as a conventional uninsured mortgage (at least 20% down) and $267,000 registered as a home equity line of credit. No breakdown as to number of mortgages or whether the HELOC was drawn or undrawn and what percentage, but what's interesting is the dates. Most of the lending from the first month's worth of balance sheet data I reported was booked prior to Motus Bank's public launch.

One wonders how that was possible, though one explanation might be that the initial month's worth of lending was for Motus Bank staff. Perhaps a senior manager or executive acquired a condo in Lake Louise or Sylvan Lake as a winter or summer vacation getaway, eschewing the high prices of Ontario's cottage country? 😉

Motus Bank has also added a "Corporate reports" page to the "Corporate Governance" page on its website where the regulatory disclosures (supposedly published quarterly) and annual audited financial statements will appear.

Link: https://www.motusbank.ca/About-Us/Corporate-Governance

Cheers,
Doug

July 30, 2019
6:30 pm
MapleOne
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Loonie said
Thanks, Doug. Seems like they are picking up speed. Looks like they took in roughly 23 million in May.

A million of that is mine sf-laugh

I have is spread across a number of accounts so they would allow me to deposit that much.

I did the following....

Savings Account
TSFA GIC
RRSP GIC

So I had to spread it across that many accounts for them to allow one million.

Funny thing was when I opened the account I used an agent to transfer two million and they let it through into one account. A week or so later I got the email telling me I had to move it out.

The following are the rates I got....

Savings 2.25%
TSFA 2.50%
TSFA GIC 2.85%
RRSP GIC 2.70%, 3.10%, 3.15%, 3.35%, 3.95% - 5 years staggered but can draw out funds on each anniversary date.

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