Should Niagara Credit Union accept the Ontario Share and Deposit Insurance Corporation’s (OSDIC) proposed plan to merge with Pelham Credit Union as of November 1981? Background on the Key Players: Provides basic banking services to the general public and commercial loans. It has a reputation of being an innovator in the field. Over the years it has developed a lending expertise in dealing with local farmers and small businesses, resulting in a near zero default rate (see Appendix A). It has experience in mergers as it merged with two small credit unions in the southern half of the peninsula in early 1981. It currently is the largest credit union in the area, with well-located branches throughout the region. The company is in good financial health and has consistently made money throughout the years. PELHAMStarted in 1957, it concentrates on making consumer loans. It has no commercial loans. In 1975 it merged with a financially troubled credit union resulting in a larger membership and deposit base. It merged again in 1980 with a small credit union resulting in 5 branches. However, it ended up closing two of the branches because it was not economical to run them. It is currently in financial distress, which has resulted in the proposed merger with Niagara. OSDICIts mandate is to protect the deposits of the members of Ontario’s credit unions. It monitors credit unions that are experiencing financial difficulty. If a credit union’s liquidity becomes jeopardized the OSDIC has three possible options: Nurse the credit union back to health (very costly). Facilitate a merger with another credit union (least costly). Liquidate the credit union (negative image). It would prefer to try to broker a merger between credit unions, as this is the least costly option.INDUSTRY ANALYSISCredit unions in the Niagara area used to be very community oriented with most credit union membership being based o...
