First USA Inc. has an article of faith: The credit card is the most important financial tool a customer can ever have.

The company must be right, given its Midas touch.

Through a combination of timing, luck, and basic business acumen, First USA has been diversifying its products and strategies and improving its profits at double-digit rates for years. The breakneck pace of that growth has many in the industry wondering how long it can last.

"We believe growth in the credit card industry is going to continue to be very good," said John C. Tolleson, chairman and chief executive officer. "We believe we can beat the market in terms of growth rates. We believe we can do that by staying focused and continuing to enhance our overall structure."

Mr. Tolleson and Richard W. Vague, chairman and chief executive officer of the First USA Bank subsidiary, have been working together at beating the market for years.

In 1976, Mr. Tolleson, then a banker in Austin, Tex., was asked to move to Dallas to head the consumer business of MCorp. That included a $400 million credit card portfolio.

He asked Mr. Vague, then an MCorp senior vice president, to help him.

As MCorp ran into financial trouble in the mid-1980s - Banc One Corp. eventually bought its banking remnants - the credit card operation was sold to Lomas Mortgage Corp. of Dallas. Mr. Tolleson and Mr. Vague took control of the card business in a 1989 leveraged buyout, adopting the holding company name First USA Inc.

Since then, they have been climbing the card industry charts, taking First USA public in 1992 and partially spinning off their merchant processing arm, Paymentech, this year.

From 1993 to 1995, First USA Bank, Wilmington, Del., jumped from 12th to fourth among U.S. bank card issuers. It had $18.3 billion of outstandings and 14.3 million accounts at June 30, the end of its fiscal year.

First USA has also been rattling competitors by courting and recruiting top management talent.

Moving still further along the growth path, the company chartered a thrift in May called First USA Federal Savings Bank, also in Wilmington, headed by chief financial officer Jack A. Antonini, the former USAA Federal Savings Bank president and chief executive officer. The thrift has been offering mortgages and installment loans and has plans for auto loans, home equity loans, debit cards, and a host of other financial products.

"Having very broad and deep relationships with consumers turns those relationships into lifetime relationships," said Mr. Vague. "We're meeting and satisfying the needs of the consumer through the full array of financial products."

Outside sources expect First USA to aim for those lifetime relationships by cross-selling financial products to its creditworthy accounts.

Patricia Hudson, president of Porges/Hudson Marketing Inc. in San Francisco, said that, as relationships broaden with the credit card as focal point, "the more the customer will see their financial well-being with that institution going beyond just the charge card."

Analysts and consultants alike say First USA has a potent weapon in its data mining capability.

Susan L. Roth, a Bear, Stearns & Co. analyst, said the company has kept operating costs low and "maximized the benefits of technology."

Mr. Tolleson said low costs at First USA and other independent card specialists - the so-called monoline issuers - have let them diversify.

"They have the ability to do other products, to enter into other financial businesses, with a much better infrastructure than the traditional bank," he said.

Ms. Roth added that, as revolving credit growth slows, First USA will be challenged to maintain earnings growth of 15% to 20%. The old low-rate strategy will no longer be sufficient, she said.

"Home equity lending is a huge business, and credit card issuers have to be in this," she said. "The consumer wants to consolidate debts and lower interest rates."

First USA built a name for itself on low interest rates and no annual fee at a time when no other issuer would risk six months of charging just 5.9% interest. Today, offers of this kind are standard.

While low rates are still its touchstones, partnership and affinity marketing play an increasingly significant role at First USA.

The company is up against the niche marketing champion, MBNA Corp., known for its systematic rollouts of affinity cards through 4,300 groups and associations.

First USA said it has more than 1,000 cobranding and affinity relationships.

Since 1992, the company has had an exclusive arrangement with a Boston firm, now called First USA Partners, that had designed affinity programs for MBNA.

"We have moved into a very aggressive segmentation strategy," said Mr. Tolleson. "We have hundreds of different products designed for different segments of the population."

Moshe Orenbuch, an analyst at Sanford C. Bernstein and Co. in New York, said First USA seeks out groups of 3,000 or more people.

In a report in August, Mr. Orenbuch said more than half its mailings relate to cobranding and affinity programs and one-third of new accounts come from them.

"They will add fewer accounts going forward," Mr. Orenbuch said. "They are looking to deepen existing products with the existing customer base."

The analyst noted that First USA added 697,000 accounts in its fourth fiscal quarter, down from 957,000 the previous quarter.

First USA's niche and cobranding partners include American Kennel Club and Walden Books. It also has a new America Online card that offers rebate points toward free hours on-line.

"They are not a mass marketer, they are a niche marketer," said James L. Accomando, president of Accomando Consulting Inc., Fairfield, Conn. "The only opportunity for future growth is further segmentation."

Another facet of First USA's growth is its 77%-owned merchant processing subsidiary, First USA Paymentech Inc.

According to The Nilson Report, Oxnard, Calif., the processing arm accounts for less than 10% of First USA's operating profits but 26% of the parent's $3.1 billion market value.

"It will be one of the earlier large-merchant group participants in on- line selling, and we will be there in a big way," said Mr. Tolleson. "We are a part owner of First Virtual Holdings, which is really the leader in developing safe on-line credit card transactions."

First USA has a smorgasbord of opportunities to choose from, and Mr. Tolleson intends to seek them out globally - big journeys that must start with small steps.

"We are diversifying," he said, "but we view the credit card as our core business. That won't change. We think that the credit card is the most important financial tool for the consumer today."

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