First Bank System Inc.'s agreement to buy U.S. Bancorp wouldn't substantially increase its credit card business right away, but there is opportunity for growth.

U.S. Bancorp, Portland, Ore., which issues only Visa cards, is the nation's 49th-largest bank card issuer, while Minneapolis-based First Bank ranks 20th, according to The Nilson Report. If the $8.4 billion deal announced last week is consummated, the combined portfolio would rank 17th, with $5.5 billion in outstandings and two billion accounts, according to Nilson.

"The acquisition is more a way for First Bank to expand their branch presence and acquire customers rather than acquiring card accounts from U.S. Bancorp," said Jeffrey Baxter, principal at S.J. Baxter and Associates, Forest Hill, Md.

The new U.S. Bancorp would stretch across 17 states with 905 traditional branches and 90 based in stores.

The planned merger could realize "$84 million in revenue enhancements," said Catherine L. Murray, an analyst at J.P. Morgan. "Of that, $9 million is expected to come from corporate card deals and $19 million from credit card loans."

First Bank System is the nation's No. 1 issuer of corporate cards, a product its proposed merger partner doesn't offer. That's where U.S. Bancorp could bring something to the table.

"We have an extensive customer base based on corporate lending, and First Bank could market those commercial products to them," said Mary Ruble, spokeswoman for U.S. Bancorp.

Stanley Anderson, president of Anderson and Associates, Arvada, Colo., noted that U.S. Bancorp has a number of corporate clients with ties to the Pacific Rim, which bodes well for First Bank's international aspirations.

"That market has long been thought of as a very lucrative and ideal marketplace for many U.S. banks," he added.

K. Shelly Porges, chief executive of Porges/Hudson Marketing Inc., San Francisco, noted that U.S. Bancorp was among the first to issue the Visa Check card-a card tied to a deposit account.

The merchant transaction business of both companies would get a lift from a merger. First Bank was the seventh-largest bank acquirer of merchant transactions in 1996, according to Nilson, while U.S. Bancorp ranked 21st. The combined entity would be No. 5, handling more than $19.7 billion Visa and MasterCard transactions.

In automated teller machine deployment, the combined company would rank third, with 4,565 machines.

No decision has been made on the executive management for the expanded card unit, but Mr. Anderson said he questions how many of U.S. Bancorp's credit card team would stay because First Bank has so much management depth.

In particular, he said, Steven Putney, president of corporate payment systems for First Bank, "has extensive experience."

One area the two could develop is cobranding. U.S. Bancorp has no cobranded partners; it sold its U S West card program to Household International in 1995. First Bank issues cobranded cards for Northwest Airlines and Amway.

"First Bank has a pretty healthy consumer credit card portfolio," Mr. Baxter said. "They might be able to breath some life into U.S. Bancorp."

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