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Update on balance sheet and (un)profitability of Motus Bank
January 13, 2023
5:12 pm
Doug
British Columbia, Canada
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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  

What's the difference in rate you're comparing? On that amount, unless it's like 0.50% or more difference, it's unlikely to make much of a difference. In any case, I can probably find you a better alternative to Motus at the same, better, or almost the same rate, without using a deposit broker. sf-cool

Cheers,
Doug

January 13, 2023
5:14 pm
Doug
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JenE said
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.  

That's fine. Don't be surprised if you get a letter in the mail saying your GIC is being migrated from Motus Bank to Meridian Credit Union, or some other financial institution, and that financial institution will honour your GIC rate for the remainder of its term. If it's a provincial credit union as the assuming FI, your deposit insurance will change from CDIC to CU deposit insurance. sf-cool

Cheers,
Doug

January 13, 2023
6:15 pm
Canadianbull
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@Doug why are you so sure about it like its going to happen? Please find me a better rate. I bet I will not complain

January 13, 2023
10:36 pm
Loonie
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I haven't been able to read all of the above.
Can someone tell me in simple numerical terms what is motus' recent trajectory in terms of number of customers, value of deposits and of loans, and cost of expenses?

January 18, 2023
10:48 pm
butterflycharm
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Doug said

That's fine. Don't be surprised if you get a letter in the mail saying your GIC is being migrated from Motus Bank to Meridian Credit Union, or some other financial institution, and that financial institution will honour your GIC rate for the remainder of its term. If it's a provincial credit union as the assuming FI, your deposit insurance will change from CDIC to CU deposit insurance. sf-cool

Cheers,
Doug  

They either have to honor the interest rate on GICs even if transferred or sold to another entity or they are not meeting their obligations and will be administered by FSRA and people will be made whole the principle and interest. Is that the law?

January 19, 2023
1:15 am
Loonie
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motus may be owned by a CU, but it is a bank, insured by CDIC.
It may not be that simple for Meridian, the CU owner, to assume motus. It could be bureaucratically complicated. I think the CDIC insurance would have to stick, and Meridian can't provide that.

I recall that when Coast Capital switched from being a provincial CU to a federal one, that the original insurance went with them on existing GICs. I'm not sure what the rules would be in this case but could be something similar.. Maybe Coast would even acquire motus. They sure could use a national roll out, but one that makes financial sense.

January 19, 2023
4:58 am
savemoresaveoften
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Motus unprofitable is very different from Motus financially insolvent.
Motus and Meridian is basically same back office, support, and everything else. Really not much "fixed expense" for Motus.

Just like Simplii is essentially CIBC, just a different branding.

Like Loonie said, the only diff is Motus being CDIC, while Meridian is CU. I am speculating maybe Meridian is using Motus has a test bed to see what it is like to be a federal regulated entity, so they can learn from it if Meridian wants to eventually graduate to the big scene.

I also noticed MOTUS GIC rates are much lower than Meridian. That make Motus rate consistent with the big boys lol

January 19, 2023
5:58 am
MattS
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Motusbank new LOWER GIC rates not yet reflected in the chart.. with those rates they certainly aren’t trying to attract more activity to their experiment

January 19, 2023
12:17 pm
HermanH
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5-yr rate just dropped from 5.2% to 4.3%. WOW.

March 2, 2023
6:09 am
KamWest
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Meridian is now a better rate than almost all motus products. It used to be the other way around.

I have an rrsp gic coming due at motus in march and I inquired about moving it to meridian and was told there would be a $50 charge.

The places are in the same building and they want to charge me $50

Well if I'm going to be charged I am going to move it to Hubert instead because they are even higher than Meridian.

I was willing to take a little hit staying in the meridian/motus umbrella as far as interest goes but since they are charging me I'm moving to "Happy Savings" aka Hubert.

Now what I did not tell them....

x2 maxed out rrsp's and x2 maxed out TFSA for me and my wife. It will be a bigger loss than they anticipated but quite honestly without the interest rate motus just has nothing going for it anymore.

March 2, 2023
9:44 am
Loonie
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Meridian will reimburse the $50. All you have to do is ask.

March 8, 2023
4:47 pm
wren
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I don't think people realize that motusbank is the only real challenger bank Canada has.

There is no where else you can get no fee banking with the reasonable rates, and have loc, HELOC, interac, e-transfers, mortgages, and link Qtrade investing.

The only thing they are missing is a credit card which they were supposed to launch but the pandemic paused that.

If they launched a credit card I know lots of people that would switch to them instantly. It's foolish they didn't.

Cuz right now you have Simplii which is garbage except for their credit card and Tangerine which has crap rates too.

March 8, 2023
6:15 pm
moveyourmoney
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wren said
I don't think people realize that motusbank is the only real challenger bank Canada has.

There is no where else you can get no fee banking with the reasonable rates, and have loc, HELOC, interac, e-transfers, mortgages, and link Qtrade investing.

The only thing they are missing is a credit card which they were supposed to launch but the pandemic paused that.

If they launched a credit card I know lots of people that would switch to them instantly. It's foolish they didn't.

Cuz right now you have Simplii which is garbage except for their credit card and Tangerine which has crap rates too.  

I never really considered motusbank, I’ll have to do a little research on them. What do you see as advantages in terms of rates? I’ve been working the hisa promos and been fortunate to get some good rates consistently. Gic’s might be different, but I don’t see motusbank as a leader there either. If I wasn’t getting promo offers, I’d probably be back at Motive who offer a regular rate of 3.8% for hisa. Simplii and Tangerine at 5.25% for the next few months. Let me know more.

March 8, 2023
6:37 pm
wren
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When motusbank first started they were very competitive with their rates. They had the best mortgage rates and loc rates. Usually had very competitive hisa rate next to EQ. The best part of all was no special offers needed. No bullshit multiple kinds of accounts.

It seems in the past few months motusbank they have lagged a bit.

From the perspective of being able to recommend a bank to friends less savvy that don't want to juggle things that was simple and treated people fairly they are the only one... If only they had a cc.

Looks like motive cleaned up their extra account types. But no mortgages, loc, HELOC or stock brokerage linking.

Which leaves tangerine. Sigh

April 29, 2023
2:52 pm
Doug
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Since the last update, the following is an update on Motus Bank's balance sheet and unprofitability, with balance sheet data as of end of February 2023 and income statement information as of Q4 2022:

Doug said
Despite Motus Bank's CFO promising to produce separate, non-consolidated annual audited financial statements every year and distribute them on their website, they've not done that. So, we have to continue to rely on the balance sheet and income return details provided by OSFI.

Balance sheet (as at September 30, 2022)

Balance sheet (as at February 28, 2023)

Loans:
- Loans, including lines of credit: $22 million
- Of which: $15 million is secured by non-residential property

No change. These are the same values.

Mortgages:
- Insured (CMHC and/or Sagen and Canada Guaranty): $24 million
- Of which: $0 is NHA-insured, pooled/securitized mortgages that have not yet been sold and remain on the bank's balance sheet
- Uninsured: $161 million

Mortgages:
- Insured (CMHC and/or Sagen and Canada Guaranty): $33 million
- Of which: $13.7 is NHA-insured, pooled/securitized mortgages that have not yet been sold and remain on the bank's balance sheet
- Uninsured: $141 million

Meridian Credit Union members' capital held for required regulatory purposes:
- $40 million in deposits held with the central bank and other commercial banks
- $10 million held in treasury bills

- $40 million in deposits held with the central bank and other commercial banks
- $5 million held in treasury bills

Demand and short-term notice deposits and other liabilities:
- Tax sheltered: $41 million
- Non-registered: $72 million

- Tax sheltered: $33 million
- Non-registered: $45 million

Term deposits:
- Tax sheltered: $45 million
- Non-registered: $48 million

- Tax sheltered: $55 million
- Non-registered: $59 million

Mortgages payable by the bank:
- $14 million

$1.8 million

Income statement as of year-end 2022

- $6.3 million in interest income, adding only $1.8 million from Q3 2022
- Non-interest revenue ($3.788 million)
Less:
- Deposit interest payable on demand and notice deposits: $828,000
- Deposit interest payable on term deposits: $2.36 million
- Other non-interest expenses: $9.016 million, of which $5.621 million is salaries

Net Loss for the year: $8.338 million

Annualized run rate proforma net loss: $6-10 million

They came in a bit worse than the low end of my forecasted range. Actually, they came in right in the midpoint of my forecast.

of which reduces parent Meridian Credit Union's annual profit

Motus Bank has yet to turn a profit for Meridian, and its growth in assets appears to have plateaued. On the deposit front, the demand deposits appear to be plummeting, on the scale of Silicon Valley Bank albeit over a longer time horizon, but they're offset modestly by movement into fixed-term deposits. Net-net, their deposits declined from $206 million as at Q3 2022 to $191 million as at February 28, 2023.

Cheers,
Doug 

April 29, 2023
2:57 pm
AltaRed
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Meridian members should be outraged.

April 29, 2023
3:00 pm
Doug
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AltaRed said
Meridian members should be outraged.  

Completely agree. If any Meridian Credit Union members attend the Meridian AGM, I encourage them to ask about the Motus financial performance. 🙂

July 10, 2023
4:43 pm
dollarbill
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I think if Motus changed it's operation to be similar to EQ ( One account, free unlimited interac, good service) they would draw a good number of accounts and maybe get themselves out of trouble.

August 19, 2023
7:40 pm
ego boy
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savemoresaveoften said
Motus unprofitable is very different from Motus financially insolvent.
Motus and Meridian is basically same back office, support, and everything else. Really not much "fixed expense" for Motus.

Just like Simplii is essentially CIBC, just a different branding.

Like Loonie said, the only diff is Motus being CDIC, while Meridian is CU. I am speculating maybe Meridian is using Motus has a test bed to see what it is like to be a federal regulated entity, so they can learn from it if Meridian wants to eventually graduate to the big scene.

I also noticed MOTUS GIC rates are much lower than Meridian. That make Motus rate consistent with the big boys lol  

motusbank now has some of the worst GIC interest rates in Canada. I get better rates from the Big Boys.

Recently, I have been purchasing 2 year GICs (non-cashable, compound interest). motusbank pays 4.20%. TD Canada Trust pays 5.25%. RBC Royal Bank pays 5.20%.

I also discovered today a little interesting "quirk" in how TD Canada Trust's online (website) GIC buying process works. They actually present you with two interest rates: the posted rate and also your own "personalized rate." I am not sure how TD Canada Trust computes this "personalized rate." Perhaps it is based on the size of the GIC, the total amount of money deposited in all of your accounts, or something else, I don't know. So even though the posted rate on TD's website is 5.25%, they offered me a "personalized rate" of 5.30%.

Another little interesting thing I discovered about TD's GIC buying process is that it lets you pick a maturity date based on days and years. So you can pick years (1, 2, 3, and so on) and also days (1, 2, 3, . . . 364). If you try to buy a 3 year GIC, for example, the posted rate is 4.50% (and my 3 year "personalized rate" is 4.55%). But if you put in 2 years and 364 days (so 3 years less one day) they offered me 5.30% as my "personalized rate."TD-Canada-Trust-GIC-Rates-for-my-online-post-August-19-2023.png

August 19, 2023
9:52 pm
Norman1
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ego boy said


I also discovered today a little interesting "quirk" in how TD Canada Trust's online (website) GIC buying process works. They actually present you with two interest rates: the posted rate and also your own "personalized rate." I am not sure how TD Canada Trust computes this "personalized rate." Perhaps it is based on the size of the GIC, the total amount of money deposited in all of your accounts, or something else, I don't know. So even though the posted rate on TD's website is 5.25%, they offered me a "personalized rate" of 5.30%.

RBC Royal Bank has been doing the same.

For example, two year RBC non-redeemable GIC:

4.25% Posted rate
5.20% Posted special rate
5.30% Special rate in online banking GIC purchase

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