Motus Bank's days as a going concern appear numbered | motusbank | Discussion forum

Loonie said
Thanks, Doug.

Just wondering... how do you lose 20 million a year on 1000 customers and remain in business at all? For that, we should all be getting concierge banking service and at least 10% on our deposits!  

It's a good question, and I'm not sure I have all the information to answer that, but I'll try. For starters, they have a board of directors that consists largely of Meridian Credit Union Limited directors, including board chair Karen Farbridge, a retiree who runs her own consulting company, serves as the elected mayor of Guelph, and serves as board chair of both Meridian and Motus Bank. Despite Motus Bank's financial results also being consolidated within Meridian's, Meridian sees fit to pay her an extra $45,000 per year as board chair of Motus in addition to the $45-60,000 she earns from chairing Meridian. The same is true of most other non-employee directors of Motus Bank, who are also Meridian directors. That adds up to a significant extra cost.

The other big issue is staffing. Motus has staffed their contact centre more than sufficiently, with nearly around the clock and seven day a week hours of service, not simply relying on Meridian contact centre staff (who, in large part, work in the same building in St. Catharines).

Contrast that with Motive Financial, which has thousands more customers than Motus, but fewer than 5-10 employees dedicated to the operation, which leads to perennial onboarding issues and a poor client experience. If Motus were actually growing and had the banking technology infrastructure to match, this would be okay and a clear differentiator; I'd probably even recommend Motus. But they don't.

Meridian needs to bite the bullet and end this train wreck; they could even blame it on their former CEO, Bill Maurin, if they really wanted.

Cheers,
Doug

mordko said
I know the elected mayor of Guelph and pretty sure his name isn’t Karen.  

Sorry, former mayor. Looks like she either didn't run again as mayor or lost election in 2022.

KamWest said

From the end of 2023
https://www.motusbank.ca/MotusBank/media/motusbank/pdf/Pillar-3-Disclosure-December-2023.pdf

Add up all provinces and Ontario has more business than all the other provinces combined.

If I were a betting man I would forecast a folding into Meridian.  

Yeah, that's how I'd bet as well. It's all a matter of whether Meridian's board wants to change their bond of association to open membership to all residents of Canada, as the Ontario credit union legislation do allow it. It'd be a bit 'messier', but they could also fold in the Ontario members' deposits and mortgages into existing Meridian products and memberships, and then wind down or sell the credit products of Motus customers outside of Ontario and close the deposit products of Motus customers outside of Ontario.

The Motus balance sheet continues to decline since December 31st last year. As at July 31, 2024, they have about $140 million in mortgage and other lending exposure, and about $120 million in deposits. That's tiny. Like Hubert Financial tiny, but not Hubert Financial cost structure.

Cheers,
Doug

AltaRed said

I am guessing that because CC is a federal credit union with CDIC insurance, there are no restrictions on membership for Motus account holders in the rest of Canada, i.e. not in Ontario.  

I actually very much doubt that has anything to do with it. There is nothing in Ontario provincial legislation and regulations governing Ontario credit unions that would prevent Meridian Credit Union's board of directors from opening up their bond of association to include residents from outside of Ontario. That being said, they may have to do that in order to take on the mortgage, line of credit, and demand loan customers of Motus Bank.

It's honestly probably more to do with Meridian not wanting to offer a no-fee chequing account and Coast Capital willing to migrate Motus customers to their Free Chequing, Free Debit, and More Account, or potentially upsell them to a fee-based account.

Looking at Motus' January 2025 balance sheet, this is peanuts for either firm. Coast is getting about $57 million in term deposits/GICs, and $46 million in demand deposits. Meridian is getting about $109 million in residential mortgages and $31 million in various other lending and loan products, plus about $20 million in assets pledged with the central bank as reserves for the lending products.

If Motus Bank were a provincial credit union themselves, they wouldn't even make the Canadian Credit Union Association's top 100 credit unions, with Revelstoke Credit Union coming in at # 100 with about $283 million in assets. They wouldn't even make the top 200 credit unions.

Note this will done by as an asset purchase agreement, meaning if you decide to transfer to Coast, you will be getting new account numbers, a new transit, a new online banking login, new debit card, new everything. You'll need to set up brand new external account links, and note with Coast, you can only transfer money to Coast within Coast Online Banking. They deliberately do not have functionality for pushing money out of Coast, and they charge $1.50 for every Interac e-Transfer. Worse still, because you're being acquired, you won't be eligible for new member bonus promotions for joining Coast.

All in all, I recommend closing your accounts before the transfer.

Cheers,
Doug