In the payoff method, your assets above the FDIC insured amount, $200,000 USD, will be lost. With a purchase and assumption transaction, the assets and liabilities (most of them) are transferred intact to a new bank owner. This is essentially what happened when Bear Sterns went down. After the Federal Reserve orchestrated (in the middle of the night) a loan to JP Morgan that went to Bear, Morgan four days later purchased and assumed the assets and liabilities of Bear Stearn. To save Bear, the Fed reactivated emergency protocol, which had last been used in the Great Depression, that allowed Federal Reserve lending to an investment bank selling stocks and bonds. Overall, a purchase and assume transaction is preferable.