More than two dozen companies are racing to become the American Automobile Association's exclusive partner to provide financial services to its 37 million members.

The Orlando-based association set off intense competition last month when it contacted 46 companies to determine their interest in becoming the association's partner. And at least 25 of them have said they are interested in the proposal, AAA said.

The race shifted into high gear on Wednesday when Mellon Bank Corp. and U.S. Bancorp unveiled an unusual alliance to offer the AAA's members credit cards, auto loans and an array of other services.

As part of the deal, a subsidiary of Pittsburgh-based Mellon will acquire U.S. Bancorp's AAA credit card portfolio of 480,000 accounts representing $230 million in receivables.

The two banks are hoping their quick action places them first in line for consideration.

"We have developed this alliance, knowing that the request for proposal will be issued," said Rick Comandich, senior vice president and manager of U.S. Bancorp's convenience banking.

Some of the 25 companies offer credit cards and other financial products to the auto club's members. The AAA has been offering credit cards through banks since 1978.

The AAA's flagship affinity card program is divided between nine issuers, including Banc One Lafayette in Indiana, which issued the lion's share of the 3.8 million cards before U.S. Bancorp and Mellon Bank joined forces.

Banc One was edged out of its leadership position by about a percentage point, said James J. Gudinas, managing director of AAA's financial services. At yearend 1994, Banc One had cardholder relationships with 41.2% of the AAA's members versus the partners' combined relationships of 42.2%.

Both U.S. Bancorp and Mellon bank have been offering credit cards and deposit products to club members separately, but together they want to become the single largest provider of the AAA's financial services. They plan to offer services such as home equity lines of credit investment products, and mortgages.

"This marketing approach allows both institutions to broaden our potential customer base," said Robert D. Sznewajs, executive vice president, U.S. Bancorp.

The AAA, a nonprofit organization made up of 122 motor clubs with 1,000 offices, has nearly 37 million members.

If the two banks win the contract, it would not be the first time that Mellon would have provided services to a major association. Last December, Mellon secured a deal with the American Dental Association to deliver a variety of financial services to its members. The same consulting firm that is working on the AAA proposal, B.U.S.A. of San Antonio, Tex., represented the dental association in its search for a partner.

Under the terms of the U.S. Bancorp and Mellon venture, an independent marketer will provide marketing and advertising support. Member Financial Services, headed up by a former executive of U.S. Bancorp, Gene Mitchell, will be based in Portland, Ore.

Ronald L. Mandle, a Sanford C. Bernstein & Co. analyst, said he sees the banks' alliance as a natural fit, because Mellon wants to expand its credit card portfolio, and U.S. Bancorp has said that it wants to concentrate on its core businesses, deposit accounts. U.S. Bancorp said; however, that it will retain the half a billion portion of its credit card portfolio not related to the AAA card.

While the AAA eventually wants to charter its own bank to offer financial services, Mr. Gudinas said any relationship the association forms with another company would not be short-term.

"It would be a long-term temporary relationship, and 10 years would not be out of the question," he said.

In the meantime, Banc One also has designs on the AAA. Banc One offers credit cards, home equity, installment, and auto loans to the association's members.

"We requested the proposal," said Mark Tonnesen, president of Banc One Credit Card Services Co., Columbus, Ohio, "and we fully expect to strengthen and continue our relationship with the association."

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