The First National Bank of Edmond had decided to purchase The First National Bank of Plano in Texas.The bank is interested in this purchase because The First National Bank of Plano is in financial distress and the First National Bank of Edmond thinks this is a cheap way to get a start in the large Texas market.The FDIC supports this acquisition because it won't have to make any insurance payouts.What motive for a merger does this most likely reflect?

Question

Quizplus · Accepted Answer

The motive for a merger in this scenario is to rescue a failing institution, The First National Bank of Plano, which is in financial distress. The First National Bank of Edmond sees this as a cheap way to enter the Texas market. The fact that the FDIC supports this acquisition because it won't have to make any insurance payouts further confirms that the First National Bank of Plano is in trouble and needs assistance. Therefore, the most likely motive behind this merger is to rescue a failing institution.

The First National Bank of Edmond Had Decided to Purchase