Postmaster General Anthony M. Frank's prediction of higher postal rates is compelling more banks to begin revamping their mail operations.

A number of institutions, including $6 billion-asset First Alabama Bancshares Inc., have moved in recent months to automate the process of mailing letters by purchasing systems that presort and code the mail.

Because preprocessed letters are cheaper for the post office to handle, the required postage for such items can be as much as 5.7 cents lower than for regular first-class mail.

First Alabama installed a software package this month that reduced its monthly mailing operations expenses; bank officials predict it will save at least $150,000 a year.

A Year for Streamlining

First Alabama joins TCF Bank Savings in Minneapolis and a number of other $1 billion-plus institutions that have streamlined their mailroom in 1991.

These moves come on the heels on predictions from the Postal Service's Mr. Frank that first-class rates would rise at least twice more in this decade.

"The rises hit our industry harder than any other," said Irving D. Warden, general counsel at the American Bankers Association, referring to the fact that U.S. banks generate almost 5 billion pieces of mail annually - the most volume from any single industry.

"Since the ups and downs of the overall rate are pretty much beyond our control, the best bet for most banks seems to be the offered discounts."

Winnowing Out the Chaff

To take advantage of the discounts Mr. Warden describes, First Alabama installed a system last month from Blue Lake Software, Birmingham, Ala.

The mainframe computer software culls all the customer addresses in a particular mailing from the bank's main system. After the ZIP codes are converted into computer-readable bar codes, the letters are sorted into ZIP code order.

A mailing of more than 500 letters, pretreated in this manner, generally qualifies for the optimum first-class rate of 23.3 cents per letter. But discounts can vary according to how the addresses are grouped.

Discounts Hard to Ignore

According to vendors of the systems, a comprehensive mailing solution - such as the ones offered by Blue Lake; Bell & Howell Co., Skokie, Ill.; Bryce Office Systems Inc., Oxford, Conn.; Pitney Bowes Mailing Systems, Stamford, Conn., Group 1 Software Inc., Greenbelt, Md.; and others - will typically cut 15% to 25% off annual mailing costs.

The price of the systems vary widely according to the size of the institution.

"The discounts are making it hard for banks not to take advantage," said Jeff McDonald, vice president of Blue Lake Software.

The ABA has estimated that each penny increase in the first class rate translates into an additional $50 million in additional postage costs for the banking industry.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.