Two years ago, First Bank acquired a security interest in all the equipment of Moe’s Construction. That security interest was perfected by a financing statement, also filed two years ago.

Six months ago, without authorization from First Bank, Moe’s sold a machine that it used as equipment to Tom’s Salvage Yard (Tom's). Tom’s paid for the machine using the proceeds of a loan from Second Bank and placed the machine in its inventory. Second Bank had acquired a security interest in all of the existing and after-acquired inventory of Tom’s three years ago, at which time it perfected its security interest by filing a financing statement against Tom’s inventory.

Assuming Tom’s still owns the machine, which one of the following statements is correct?

1. First Bank’s security interest in the machine has priority because First Bank was the first to perfect a security interest in the machine.

2. First Bank’s security interest has priority even though Second Bank was the first to file or perfect as to the machine.

3. Second Bank’s security interest has priority because Second Bank was the first to file a financing statement covering the machine.

4. Second Bank’s security interest has priority because Second Bank has a perfected purchase-money security interest in the machine.

5. Only one of the banks has a security interest in the machine.