U.S. Bancorp, Successor In Interest to West One Bancorp and Subsidiaries, formerly known as Moore Financial Group, Inc. - Page 6

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               1 The time deposits with banks had stated maturities of less           
          than 180 days, and often less than 61 days.  All the time                   
          deposits were in exact multiples of $1 million, and the majority            
          of the obligors were foreign banks.  Petitioner's records showed            
          the CD's as having originated from the following foreign centers:           
          The Cayman Islands, Nassau, Toronto, Zurich, London, and                    
          Frankfurt.                                                                  
               2 The CD's with banks had stated maturities of 9 months to 1           
          year.  All the CD's were in exact multiples of $1 million, and              
          the majority of the obligors were foreign banks.  Each CD was               
          denominated either "Yankee" or "Euro".                                      
               3 The amounts agreed upon by the parties with respect to               
          loans have been adjusted to remove all amounts in respect of                
          obligations of local governments.                                           
               4 The total amounts of interest included in the accruals               
          include loans due and payable in 1986 on which principal and                
          interest remained unpaid at yearend.                                        

               None of the short-term obligations held by IFNB at yearend             
          1986 had been previously issued and then acquired by IFNB from              
          third parties (i.e., from parties other than the borrower,                  
          debtor, or obligor).  The only obligations acquired by IFNB from            
          third parties were long-term corporate bonds and U.S. Government            
          securities, none of which are in issue in this matter.                      
               Petitioner supports its assertion that IFNB originated the             
          short-term obligations at issue here in the ordinary course of              
          its banking business, by stating that IFNB relied upon the                  
          borrower's good faith and credit--along with any collateral used            
          to secure the loan--to repay the resulting obligation.  Although            
          (as discussed below) respondent asserts that the time deposits              







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