Dennis C. Gandy - Page 15

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          SBA loan proceeds as collateral for the loans from PCA and from             
          other lenders.                                                              
               On December 18, 1986, Mr. Gandy borrowed $90,000 from                  
          Sunbelt Savings (then Independent American Savings).  The                   
          proceeds of this loan were used as a payment on the PCA loans.              
          On April 16, 1987, at the request of PCA, petitioners redeemed              
          the CD’s that were being used for collateral in order to reduce             
          the balance outstanding on their PCA loan; they made a payment of           
          $356,835.83 on that balance.  At the same time, petitioners                 
          repaid the December 18, 1986, loan for $90,000 from Sunbelt                 
          Savings with funds from one of the redeemed CD’s.                           
               Other Loans                                                            
               On January 15, 1986, Mr. Gandy borrowed $21,000 from the               
          First State Bank of Van.  This money was deposited in the nursery           
          bank account.  Petitioners repaid this loan with funds from the             
          nursery bank account on February 18, 1986.                                  
               On March 10, 1986, Mrs. Gandy borrowed $1,500 from the First           
          State Bank of Van, the proceeds of which went to Vernon Sexton.             
          This loan was repaid in approximately monthly payments from a               
          bank account at Sunbelt Savings styled Carolyn Gandy, Trust for             
          Vernon Sexton, Jr.                                                          
               On August 1, 1986, Mr. Gandy borrowed $90,000 from Sunbelt             
          Savings.  Petitioners used the proceeds to fund a portion of a              
          mortgage loan that they made to Todd Fowler (Fowler), as                    
          discussed below.                                                            



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