Mail Rooms Seek Cushion Against Postal Rate Rises

Though the threat of higher postal rates has abated for now, some banks are reworking their mail-room automation in anticipation of future hikes.

Earlier this month, the board of governors of the U.S. Postal Service rejected a 1-cent rise in the price of a first-class stamp, to 30 cents. Under law, the price cannot now be raised this year.

The American Bankers Association applauded the action, saying a 1-cent hike would add $50 million a year to banks' mailing costs. Banks generate more mail than any other industry.

More Rises Expected

However, the victory is not as sweet as some bankers would like to believe. In comments immediately following the board of governors' decision, Postmaster General Anthony M. Frank predicted at least two more rate rises this decade. The first of these could come as early as 1994.

"It's clear the rate rises can't be held off forever," said Earl Stratton, senior vice president at TCF Bank Savings in Minneapolis. "But there are certainly ways to get around them."

Mr. Stratton is referring to mailing discounts of up to 5.7 cents offered by the Postal Service to companies that barcode and presort their letters. By investing about $100,000 in software and equipment, $4 billion-asset TCF Bank saved almost $1 million last year by automating certain mail operations, and it is prepared to expand the program to take advantage of any new discounts when rates go up again.

"Operations contribute as tangibly to the bottom line as revenues do," said Mr. Stratton. "The savings are there if you want to find them."

|The Savings Are There'

One of the more innovative programs implemented at the bank -- selective inserting -- results in $20,000 in postage savings each month, bank officials said. In selective inserting, a proprietary mainframe software package developed by the bank weighs each monthly statement to be mailed to customers.

Basing its calculations on the average weight of each check and piece of paper to be included in a statement, the software is able to decide if including marketing material in the statement will move the letter into a higher rate category. The system, which uses mailing equipment from Pitney Bowes, inserts marketing items only when they will not increase mailing costs.

In a practice common at many institutions, TCF has also combined its savings and checking account statements into a single mailing wherever possible. This has resulted in $300,000 in annual savings.

And, perhaps most important, the bank has bar-coded and presorted all its high-volume mailings. Mail treated in this manner can be sent for 23.3 cents, and the bank estimates it saved over $600,000 last year by taking these steps.

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