First USA, Inc. forms new subsidiary; registration statement filed.

DALLAS--(BUSINESS WIRE)--Jan. 12, 1996--First USA, Inc. (NYSE:FUS) today announced the formation of First USA Paymentech, Inc., a wholly owned subsidiary that is the parent company of First USA Merchant Services, Inc. and First USA Financial Services, Inc., the company's payment processing and commercial card business.

In conjunction with the formation of the new unit, First USA Paymentech has filed a registration statement with the Securities and Exchange Commission for a proposed underwritten initial public offering and separate direct offerings by First USA Paymentech.

The proposed underwritten offering represents 5,100,000 shares, or approximately 16 percent of the 30,946,081 common shares of First USA Paymentech to be outstanding after the offering, (or approximately 18 percent, if the underwriters' over-allotment options are exercised in full). The proposed separate direct offerings consist of two programs to sell shares to certain directors and key employees of First USA Paymentech and First USA, Inc. and represent a total of 1,435,000 shares, or approximately 4.6 percent, of the outstanding common stock of First USA Paymentech. Following consummation of the offerings, First USA, Inc. expects to own approximately 79 percent of the common stock of First USA Paymentech (or approximately 77 percent, if the underwriters' over-allotment options are exercised in full). First USA, Inc. presently has no plans to further reduce its ownership interest in First USA Paymentech through sales or other dispositions.

The creation of a public market in the common stock of First USA Paymentech will provide the benefit of additional capital to support continued growth and will foster better recognition of the inherent value of First USA, Inc.'s payment processing businesses.

First USA Paymentech is a processor of merchant credit card transactions and an issuer of credit and charge cards to businesses and other entities through its wholly owned units, First USA Merchant Services and First USA Financial Services. First USA Merchant Services, founded in 1985, is the third largest processor of credit card transactions for merchants in the United States, processing approximatley $24.6 billion in sales volume and approximatley 446 million transaction during calendar year 1995. First USA Financial Services recently began marketing and issuing commercial card products, including business cards, corporate cards and purchasing cards.

It is currently estimated that the public offering price in the underwritten offering will be between $14 and $16 per share. It is expected that approximately $40.6 million of the total proceeds of the underwritten and direct offerings will be used by First USA Paymentech to repay fully a loan payable to First USA, Inc., while the remainder will be used for general corporate purposes.

In the United States and Canada, Merrill Lynch & Co. will act as the lead manager and Goldman, Sachs & Co. and Montgomery Securities will act as co-managers of the underwritten offerings. Outside the United States and Canada, Merrill Lynch International Limited will act as the lead international manager and Goldman Sachs International and Montgomery Securities will act as the international co-managers. The company intends to grant the United States and international managers 30-day options to purchase up to 612,000 and 153,000 additional shares of common stock, respectively, to cover over-allotments, if any.

Through its unit, First USA Bank, First USA, Inc. is one of the largest issuers of consumer credit cards in the United States, with approximately 11.9 million credit cards issued and $15.0 billion in managed credit card loans outstanding as of Sept. 30, 1995.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.

Copies of the registration statement relating to the underwritten offerings may be obtained from Merrill Lynch & Co.; Attn: Dan Cummings; World Financial Center; North Tower; New York, N.Y. 10281. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

CONTACT: First USA, Inc., Dallas

George A. McCane, 214/849-3737