Niagara

of roughly half a million.3. Opportunity to grow the less risky and more profitable commercial loan area (synergistic benefits).4. Support from the OSDIC ($1.7 million in deficit relief).5. Enhanced competitive position and presence within the region.However, due to the lack of information in the case we feel that Niagara may be in a position to negotiate a better deal. We would like to see the OSDIC pay for the renovation cost of the Foothill branch and remove the stipulation of having to retain Pelham’s employees. In order to properly assess Niagara’s negotiating power more case information is needed: What stage of negotiations are they at, early or late, since proposals can be thrown back and forth? What kind of costs are involved if the OSDIC was to pursue other alternatives such as liquidation or nursing the company back to health? How much worse is a Pelham merger with Family Savings: is it only marginally worse or is it significantly worse?If one could put a dollar figure on these costs then we would have a much better idea as to the probability of negotiating a better deal.APPENDIX ACALCULATION OF DEFAULT RATE ON LOANS (1945 – 1981):Default Rate = Bad loans / Total Loan = $78 000 / $475 000 000 = 0.00016 or 0.016%APPENDIX BMARKET FACTS:Number of Competitors within the Region = 113shows competitive environmentPopulation as of 1981 = 386 288shows small marketPopulation Growth = 368 288 – 365 438 / 368 288shows slow growth(1976-1981) = 0.0077 or 0.77%Reduction in New Homes Built = general down trendshows reduced need for(1980-1981) mortgages which in turn reduces businessAPPENDIX CEXPLANATION OF WHY SPREADS INCREASE OR DECREASE:Interest on consumer deposits are paid out on a variable basis, depending what the prime rate of interest is. Interests on consumer loans are usually set for five-year intervals. Thus, if interest rates i...