SEATAC, Wash. -- Four months after seeing signs that it couldpotentially be among the next in the industry to be a target of anunsolicited merger, Alaska Airlines/Horizon Air Employees FederalCredit Union didn't sit idly by fretting.

Back in March, the $50 million credit union learned that anemployee at the $1.6 billion Wings Financial Federal Credit Unionhad registered a Web site domain with the name"AlaskaHorizonWings.com," similar to the site the Apple Valley,Minn.-based credit union created during its merger campaign towardsContinental Federal Credit Union, "continentalwings.com." The site,which was still live at press time, was launched on March 9, thesame day Wings Financial sent its merger proposal to Continental'sboard. The plan was eventually turned down and what ensued was amonth long, unprecedented and "unwanted" merger chase that came toan end when NCUA stepped in and said the $200 payments beingoffered by Wings Financial to Continental's members wereimpermissible under the Federal Credit Union Act.

Shortly after the merger proposal hit the surface, AAHAEFCUPresident/CEO Dulce Frial confirmed with Credit Union Times that ithad been approached in May 2006 and again in December 2006 by WingsFinancial about a possible merger. AAHAEFCU's board turned down theproposal both times. Today, Frial said the credit union is stayingthe course, but also looking at better ways to reach more potentialmembers and to serve existing ones.

"Like everyone, we have our challenges," Frial said. "I think wecan service the members we have and we can bring in more. I'mencouraged by that. Our thing is to keep listening to themembers."

Based on member feedback, the credit union is working onbringing better loan promotions to those who don't have "A paper"credit, Frial said. The intent here is to continue helping thosewho may have fallen on hard times, but are really trying to getback on track.

"We recognize not everyone has an A-plus credit rating but wewant to help them through good and bad times," Frial said. "It'sthat classic 'cradle to grave.' We want to show that you don't haveto be this huge credit union to help members throughout theirlives."

AAHAEFCU's free online banking has proven to be very popularwith members so adding more brick and mortar branches to its twolocations in Anchorage and Seattle is not in the foreseeablefuture, Frial said. Members are accessing accounts through thecredit union's electronic services and audio response. Still, on arecent flight to Los Angeles, Frial struck up a conversation with aflight attendant who said she loves the credit union and wishesthere was a branch in L.A.

"Contrary to people thinking that [more prefer branches] ourmembers are finding it easier to pick up the phone to checkbalances," Frial said. "We don't

want to be ABC stores--'all block covered' stores

like Starbucks."

Frial is aware of the larger credit unions in the area served byAAHAEFCU, but there are no fears of members walking out enmasse.

"What makes us special is we have a good relationship with oursponsors. We're old school and I

encourage that."

Going forward, the credit union is working on picking up itsefforts to target groups that have not really beentargeted--Generation Y and new employees to the airline industryand their families. The goal is to become their primary financialinstitution especially helping the Gen Yers with their first carand home purchases. For instance, AAHAEFCU has just rolled out anauto loan promotion that finances 100% of a person's purchase priceincluding tax and license, other fees and GAP insurance.

Meanwhile, when Wings Financial recently announced that it hadpartnered with JetBlueAirways to serve the carrier's 11,000employees, Frial admits it piqued her interest.

"That's fine," she remembers thinking. "If it's a merger betweentwo parties that's amenable, then that's fabulous. We wish themwell."

Like AAHAEFCU, the $300 million FAA First Federal Credit Unionalso looked like it was on Wings Financial's radar. Eileen Rivera,president/CEO of FAA First, also told Credit Union Times back inMarch that the credit union was approached by Wings Financial in2006 about a "partnership proposal." Rivera said Wings FinancialPresident/CEO Paul Parish had assured her that FAA First was offthe merger radar. Rivera knew that a domain Web site name had beenregistered with the moniker "FAAFirstWings.com." Wings Financialconfirmed one of its employees had registered the name in December2006.

The unsettling merger moves sparked a public image campaign atFAA First, Rivera acknowledged.

"We wanted to hear from members on why they like us and why theydo business with us," Rivera said. "It made us think about [theoutcome] if we were ever considered a target."

To that end, FAA First has collected "great testimonials" frommembers elaborating on why they love their credit union, Riverasaid. The "feel good promotion" is currently being used to recruitnew members. Long before the Wings/Continental shakeout, FAA Firsthas conducted weekly pricing reviews from nearby competitorsincluding other credit unions and local players.

"We've always had pretty aggressive pricing, even it if it meanttaking a hit on ROA," Rivera said. "We don't want to find ourselvesbeing a target."

Employee morale is stronger than ever, Rivera pointed out. Infact, many have stepped forward to say they are "prepared tosupport and defend" the

credit union.

"If anything, this has brought us together in a sense of prideand ownership," Rivera said.

She would still like to see the regulator take more stepsthrough added protections. NCUA has not wavered in its stance thatit will not even consider a merger application unless the proposalis approved by all credit union boards. Rivera said the gapsare

still a concern.

"It's pretty clear that the board will make the final decisionand [a credit union] can't merge without board approval," Riverasaid. "To me, it's missing the resources to protect. A credit unionshould not have to keep defending its decision."

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