MINNEAPOLIS – After the media storm surrounding Northwest Airlines’ plans to evict NWA Federal Credit Union from its properties, the airline sent out an expanded statement on April 29 detailing why it felt it had to proceed with the non-renewal of leases. On its Web site, NWA FCU responded to a number of Northwest points that appeared in the airline’s statement. One Northwest point said the airline “has provided the credit union with valuable consideration for the exclusive location of its facilities at many Northwest buildings throughout the U.S., other exclusive access to airline employees, providing access to NWA benefit plans for NWA FCU employees and free use of its logo and other company identifiers in NWA FCU advertising and promotions.” The credit union acknowledged that “Northwest Airlines does lease space in a variety of its facilities to the credit union for our on-site offices and ATMs, paying market rates-as determined by Northwest-for this leased space at rates that vary from $16.50 per square foot to $60.94 per square foot for the 9 square feet for the ATM in Anchorage. We have never asked for-or been offered-”exclusivity” in those leases or for any other `exclusive access’ to airline employees.” Regarding benefits, the credit union said “NWA FCU employees do have access to Northwest Airlines benefit plans for which the credit union reimburses the airline for 100% of the cost of those benefits-as determined by Northwest-plus pays an additional administration fee.” The credit union goes on to say it “does include pictures of Northwest aircraft and other Northwest-related images on its checks as well as on its credit and debit cards and in other materials. This has been the practice of the credit union since our founding in 1938 and we submit such uses to Northwest for their approval. Throughout our 65-year relationship, Northwest’s management has consistently supported our use of those materials as a way to underscore Northwest’s impact on the community.” Northwest Airlines pointed out that the credit union had “posted a profit of $20 million in 2002, a return far in excess of most commercial banks and said it “cannot afford to continue to support the credit union in this manner, at the expense of our employees and the company.” The credit union responded with “we are a not-for-profit financial cooperative owned by our members and thus don’t have “profits” in the sense of a traditional business, explaining that earnings are split between “(returning) to our members in the form of reduced loan rates and fees, higher savings rates and increased services” and reserves as required by the NCUA. “These reserves belong to all members of the credit union and cannot be given to Northwest Airlines or anyone else and are used to support the growth of deposits, loans and member service.” NWA FCU stated that the “average reserve ratio for credit unions our size is 10.56%. The NCUA grades credit unions on how well they manage reserve accounts. In 2002, NWA FCU grew nearly $200 million in assets and added $20 million (10%) to reserves. To have done otherwise would have been considered poor management and opened the credit union to regulatory criticism. Our return on average assets is in fact less than most local commercial banks. For example, in 2002, NWA FCU had a return on average assets of 1.75% while U.S. Bank showed 1.93%, TCF 1.98% and Wells Fargo 1.78%.” While we have a valuable, mutually beneficial relationship that has spanned some 65 years, Northwest does not “support” the credit union in any meaningful sense of the word. We pay unsubsidized rents and we pay-dollar-for-dollar-for any services we receive from the airline. Included are payments for employee benefits of $3.3 million and office/ATM lease payments of $132,546 annually. Northwest Airlines also questioned “rather than passing the profits backs to its membership, the credit union invested in “ill-advised projects” such as the credit union’s new headquarters in Apple Valley, Minn. NWA FCU said it moved to the new building in 2000 “because we had outgrown our old headquarters building in Bloomington to the extent that we were leasing additional space to house our employees.” Further, the credit union “looked at a number of alternatives besides construction, but in the final analysis, our member-elected board of directors concluded that constructing a new headquarters was the best option. Not only did we get a headquarters suitable for our entire organization, we were also able to open a much-needed branch for our members residing in the southern suburbs and we reduced our exposure to the vagaries of the leasing market. Currently we occupy approximately 70% of the building. The remaining portion is leased to other companies with an occupancy rate of 98%.” -

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