Dialogue

Northwestern Financial Review, Aug 1-Aug 14, 2002

Readers follow up on Sub S column

RE: Straight Talk column, 7-1-02 on the difference between credit unions and sub S banks.

I enjoyed your Subchapter S article, and I will recommend all employees of the bank read the piece. Good work.

Bill Hess

President & CEO

Iowa Savings Bank

Carroll, Iowa

The current issue arrived in the mail today, and as usual, I turned to the Straight Talk column to see what you had to say. I have to say that you are nearly always "right on the money." A statement you have in Sub S taxation is skewed just a touch but not serious enough to detract from the main theme of the column.

I would guess that a good share of Sub S shareholders have a personal Federal tax rate as high as or higher than the corporate tax rate. The corporate rate is 34 percent while the maximum personal tax rate currently is 38.6 percent. Your statement is correct as far as the state tax is concerned. The franchise tax for C corp banks in Minnesota is 9.8 percent while the maximum state personal tax rate is 7.85 percent. Keep up the good work!

Neil Fruechte, President

Roundbank

Waseca, Minn.

Congress, please...

RE: Industry Watch column of 6-- 15-02 regarding a credit union's sponsorship of a major league baseball team and the stalled bankruptcy reform legislation.

Tom, you are right on track with both issues. Too bad we can't get Congress to realize that credit unions will continue to take advantage of the tax advantage and erode our customer base. Daniel L. Krieger, Chairman

First National Bank

Ames, Iowa