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Update on balance sheet and (un)profitability of Motus Bank
January 11, 2023
7:29 pm
justsmileandnod
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Canadianbull said
How bad is the situation? Is it really that bad that people actually think these guys will not survive for next 5 years? I really like the rates. I am looking forward to invest 160K in 2 different GICs.  

For me, while the rates at motusbank are pretty good, they aren't spectacular enough for me to risk losing sleep over the next 5 years. If I wanted to find a 5 year home for $300k (including interest), and I wanted CDIC coverage for all of it, I would spread it across 3 FIs -- one of which could be motusbank. Maybe after 5 years I'd sacrifice $4000 or so in interest, I'm perfectly OK with that. It's the premium I'd pay for not losing any sleep over the next 5 years. That's like, what, 1825 nights, right? So $2.19 a night NOT to care about what crazy, stupid things motusbank might be doing. I'll take that deal.

Obviously you should do whatever you like. But why fall in love with motusbank? Get a $190k 5-year GIC with an Ontario CU through a deposit broker. You can get 5.50% as of today from Windsor Family, DUCA or IC Savings I believe ($190k because in 5 years that takes you just under $250k, which is the FSRA limit). And if you have another $120k, grab another 5 year GIC from another Ontario CU through the same broker.

So you get a better ROI and (in my opinion) your money is safer.

January 11, 2023
8:39 pm
Canadianbull
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I live in AB. Is that going to be a problem?

January 11, 2023
8:45 pm
Norman1
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GIC Direct brokers are offering five-year GIC's that pay 5½% for people in Alberta.

There could be other GIC issuers outside Ontario that are also offering five year GIC's paying 5½%.

January 11, 2023
8:45 pm
HighInterestWinner
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Canadianbull said
I live in AB. Is that going to be a problem?  

I do not think it would be at all. But then again I could be wrong. But I am pretty sure you will be okay.

January 11, 2023
9:57 pm
HermanH
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Canadianbull said
I live in AB. Is that going to be a problem?  

So do I.
Just call the broker and ask what can be sold to you in AB. I have found that GICWealth usually beats the rates from GICDirect.
I called Monarch and was told that Direct should have access to all the same offers available from Monarch, but the have the same limitations (i.e. some CUs may not be available in AB.)

January 12, 2023
9:22 am
justsmileandnod
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FYI as was mentioned here a little while ago, Monarch has "entered into a purchase agreement" to buy GIC Direct. In my view, this is one more reason to feel confident dealing with either of them.

January 12, 2023
10:35 am
Canadianbull
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Should I call GIC direct or Monarch? I guess people have changed my mind not to invest with Motus. I have never dealt with these brokers. I want to hear from people about their experience good or bad.

January 12, 2023
10:41 am
HermanH
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Canadianbull said
Should I call GIC direct or Monarch?

I would suggest you select the broker who has a branch within your area. That way, you can take advantage of any rates. Otherwise, a rate you want may expire by the time your cheque arrives at the broker's office. Some offers allow you to have a rate held, but this courtesy is not always available.

Recently, Monarch had a 1- or 2-yr GIC rate of 5.9%, but it expired within 2 days. The only way I could have taken advantage of it would have been to live in the same city and walk the cheque over to the office. Without the cheque in hand, no purchase was possible. The short duration of the offer precluded any other type of transaction. There was no way the mail could have gotten there in time.

January 12, 2023
12:24 pm
Canadianbull
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How do you know that it's expiring in 2 days. My funds are on hold for another day.

January 12, 2023
4:41 pm
Loonie
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Canadianbull said
How do you know that it's expiring in 2 days. My funds are on hold for another day.  

You likely will not know.
If pursuing a broker rate, your best bet is to take advantage of it asap and use a locally convenient broker or a courier who can promise same day delivery of your cheque during business hours as there is no guarantee the offer will be there tomorrow. Sometimes they last for days, even weeks, sometimes only one day. It's at the discretion of the issuer as to when the deal ends; the broker takes instruction from the issuer. Rates for registered plans can usually be held for a limited time but the transfer form must come in before the offer ends and can probably be faxed (have to ask).
If you are planning to utilize a particular broker, you may be able to speed things up a bit by setting up an account in advance, with your ID info etc.
It's best to call the broker and ask about your particular situation.

January 12, 2023
6:38 pm
Canadianbull
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Are we not expecting to rates go up after BOC rate hike meeting?

January 12, 2023
7:39 pm
justsmileandnod
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Canadianbull said
Are we not expecting to rates go up after BOC rate hike meeting?  

I'm not expecting the 5 year rate to go up. Everything I've seen suggests that FIs don't need 5-year mortgage money right now. I expect to see small jumps in 1-3 year GICs, and lots of FIs -- for once -- honoring the "H" in their so-called HISA and offering around 3% for the next year or so (which is stunning for some of them).

Who knows what is going to happen, but from what I'm seeing the bet is on rates starting to come down again in the second half of 2024. But even in that happens, I don't expect FIs to respond by dialing up their 5-year GIC rates to anything that we've been seeing the past 6-8 months. I think maybe 2-3 FIs (the usual suspects -- Oaken, Motive, maybe EQ) will hover around 5%, but the rest will be around 4.

I could be completely wrong, and I've been way off in the past (look no further than the 4-year GIC I bought in 2021 for 2.5%). But the above is what I'm betting on right now with the decisions I'm making.

January 12, 2023
7:39 pm
Doug
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Canadianbull said
How bad is the situation? Is it really that bad that people actually think these guys will not survive for next 5 years? I really like the rates. I am looking forward to invest 160K in 2 different GICs.  

I'd stay within your CDIC limits, certainly, but that being said, I think the more likely outcome is either (a) Meridian Credit Union or (b) another financial institution buys Motus' assets and deposits, at cost or a discount to cost, and assumes them for the remainder of their terms. In scenario A, your existing Motus turned Meridian GIC would then be subject to FSRA deposit insurance versus CDIC insurance.

Cheers,
Doug

January 12, 2023
8:11 pm
butterflycharm
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- Non-interest revenue ($3.1 million, of which $3 million is classified as 'other' and $100,000 is classified as service charges)

1- What does 'other' mean? anyway to find where that $3 million revenue comes from?

2- They are an independent bank from Meridian - are they not? So, if they have no way but to go bankrupt with CDIC kicking in if they can't pay their debts and no one wants to buy them. Why would Meridian want to bail them out unless Meridian has put security up for their loans.

3- Has this sort of report been done for EQ, Tangerine, and others by any members?

January 12, 2023
9:24 pm
HermanH
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Canadianbull said
How do you know that it's expiring in 2 days. My funds are on hold for another day.  

I didn't know the 5.9% offer was going to expire in 2 days. That's just what actually happened.

I've asked what I could do if such a situation occurs in the future and there seems to be no way for someone like me to take advantage of such a rate. I simply do not live close to a Monarch branch, so I'm out of luck. Also, that rate may not have been available to AB residents. Double-damned. sf-cry

January 12, 2023
9:39 pm
justsmileandnod
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HermanH said
I didn't know the 5.9% offer was going to expire in 2 days. That's just what actually happened.

I've asked what I could do if such a situation occurs in the future and there seems to be no way for someone like me to take advantage of such a rate. I simply do not live close to a Monarch branch, so I'm out of luck. Also, that rate may not have been available to AB residents. Double-damned. sf-cry  

Rapport Credit Union: "We love our members and always put them first!"
Also Rapport Credit Union: "We're offering the highest 1-year GIC rate in about 15 years, but only to people who aren't members."

*start Benny Hill music*

January 13, 2023
6:27 am
Doug
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butterflycharm said

- Non-interest revenue ($3.1 million, of which $3 million is classified as 'other' and $100,000 is classified as service charges)

1- What does 'other' mean? anyway to find where that $3 million revenue comes from?

We don't know what the 'other' non-interest revenue is because, despite their previous CFO promising to publish non-consolidated financial statements for Motus Bank, they haven't done that. We have to rely on the OSFI financial data returns.

2- They are an independent bank from Meridian - are they not? So, if they have no way but to go bankrupt with CDIC kicking in if they can't pay their debts and no one wants to buy them. Why would Meridian want to bail them out unless Meridian has put security up for their loans.

To be clear, they don't need a bail out from Meridian. I'm just saying that Meridian may decide them continuing to generate annual losses, which reduce Meridian Credit Union's annual profits, as well as the required regulatory capital Meridian has to put up to operate the subsidiary, it may be better to, say, wind up the business and migrate Motus clients to comparable products at Meridian Credit Union. At that point, your deposits would then become FSRA-insured deposits. sf-cool

3- Has this sort of report been done for EQ, Tangerine, and others by any members?  

I did a similar review of Tangerine, yes! I'll try and get the forum thread link. EQ Bank is the direct-to-consumer brand of Equitable Bank's consumer banking division. They are very profitable, generating between $9-10 per common share of net income. In relative size, they are now the 7th largest Canadian bank by assets (ahead of HSBC Bank Canada, if you exclude their Global Banking and Markets business), Manulife Bank, and Laurentian Bank. They are of a comparable size to ATB Financial.

Cheers,
Doug

January 13, 2023
3:30 pm
Canadianbull
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So far, Motus is offering the best rate for tfsa. I want to buy 68K GIC under my tfsa account. I am confused on rather to go with Motus or pick someone else who has lower rate for 5 years!sf-frown

January 13, 2023
3:46 pm
JenE
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Well, I’ve decided to go with Motusbank. They are Meridian’s offshoot after all. You can always ask them for their 30 day rate guarantee, to give you some time to explore further. Good luck.

January 13, 2023
5:03 pm
justsmileandnod
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Canadianbull said
So far, Motus is offering the best rate for tfsa. I want to buy 68K GIC under my tfsa account. I am confused on rather to go with Motus or pick someone else who has lower rate for 5 years!sf-frown  

Then why not just go with motusbank? Your $68k GIC won't surpass the $100k CDIC threshold during the next 5 years (if you go with a 5 year term).

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