WASHINGTON - After sorting through two postal rate increases since 1990, bank mailrooms now face a reclassification proposal that threatens to drive up their costs next year.
"I'm concerned about what the impact of this is going to be on my bottom line in 1996," said Peter Glenn, a NationsBank vice president who oversees mail operations. "Our gut feeling is that it will affect us negatively."
The cause of Mr. Glenn's stomach pains is a Postal Service proposal to change the discount structure for the various subclasses of first-class mail used by banks for virtually all of the 6.6 million pieces of correspondence they send each year.
To encourage mailers to print address information on letters in computer-scannable barcodes, the Postal Service wants to increase discounts for barcoded mail and reduce them for mail that is presorted by the sender but not barcoded.
But the proposal would raise the percentage of letters in each mail batch that must be barcoded to qualify for the discount. For banks unable to meet the new requirement, the net effect could be an increase in mailing costs.
Postal costs are significant expense items for banks, which mail monthly statements to borrowers, depositors, and credit card customers. At NationsBank, mailing costs of $100 million represented 2% of noninterest expenses in 1994, Mr. Glenn said.
In 1993, American Bankers Association figures show, banks spent more than $2.2 billion on postage, an increase of 35% over the $1.6 billion mail bill in 1989. More than 80% of the increase was attributable to a 19% rate hike that took effect in 1990.
Not enough information is available on the reclassification proposal to estimate its effect with any certainty, according to Irv Warden, associate general counsel of the ABA.
More will be known when the Postal Service publishes the proposal for comment in the Federal Register, a move expected later this month. What is certain is that banks will have to adjust their mailing practices if they want to avoid a cost increase.
Under the proposal filed with the Postal Rate Commission, an oversight board with the power to approve or reject rate changes, rates for presorted mail without barcoding would rise from 27.4 cents each to 30 cents.
For barcoded mail containing five digits of the addressee's zip code, rates would drop from 25.8 cents to 23.5 cents. Rates for barcoded mail with three zip code digits would fall from 26.4 cents to 25 cents.
ABA figures show that the average bank barcoded only 11% of its mail in 1993. Presorted letters accounted for 39% of bank mail that year, while 42% went full-rate first class. The increase in the presort rate means that banks hoping to control costs must print bar codes on more letters.
But proposed new requirements for the barcoding classifications cast doubt on the ability of many banks to qualify for the discounts. A batch of mail would qualify only if every piece is barcoded. Currently, batches qualify if 85% of the letters are barcoded.
Another new restriction would limit the discount to batches of at least 150 pieces for each zip code zone. Mr. Glenn said NationsBank mails fewer than 150 pieces to many zip codes, making these mailings ineligible for the discount.