Magazine article American Banker

There Would Be Room for Card Growth at New U.S. Bancorp

Magazine article American Banker

There Would Be Room for Card Growth at New U.S. Bancorp

Article excerpt

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. …

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