Conformed
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported) October 24, 1995
Beneficial Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-1177 51-0003820
(State or other jurisdic- (Commission (IRS Employer
tion of incorporation) File Number) Identification No.)
301 North Walnut Street, Wilmington, Delaware 19801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (302)425-2500
No Change
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
The following is the text of a press release of
Beneficial Corporation, a Delaware corporation, issued on
October 24, 1995:
BENEFICIAL CORPORATION REPORTS 17% INCREASE
IN THIRD-QUARTER EARNINGS
- Highest Third-Quarter Earnings in the Company's History -
WILMINGTON, Del. -- Beneficial Corporation (NYSE: BNL)
today reported third-quarter net income of $60.1 million, up 17%
from earnings of $51.4 million in the third quarter of 1994.
Comparable earnings per share increased 16% to $1.10 from $0.95 in
the 1994 period. These are the highest third-quarter earnings in
the Company's history.
"Beneficial's operating performance continued quite
strong and in accord with the operating plan during the third
quarter," said Finn M.W. Caspersen, chairman and chief executive
officer. "Although receivables growth was less than the
exceptional performance of the prior year, earnings benefited from
a wider net interest margin of 10.16%, and from continued
improvements in expense control.
"While 1995 earnings were significantly impacted by the
first quarter's loss provision for our Refund Anticipation Loan
business, we continue to look forward to outstanding earnings
improvement in 1996," Caspersen stated. "Toward that end, we are
making concerted efforts to further improve operating efficiency
of all operations. Current expense-reduction efforts in U.S.
operations, particularly at headquarters, may result in a small
charge in the fourth quarter.
"We remain more optimistic than ever about Beneficial's
longer term prospects," Caspersen concluded.
For the first nine months, earnings fell 15% to
$143.6 million from $168.5 million in the 1994 period. Comparable
nine-month earnings per share fell 16% to $2.62 from $3.13 in
1994. As previously announced, Beneficial recorded a $65 million
pretax loss, or $39 million net aftertax, for the RAL business
during the first quarter of this year because of unanticipated
changes in IRS tax refund procedures.
Total managed receivables, both owned and serviced,
increased $245 million before foreign exchange translation impact
during this year's third quarter, compared to an exceptional gain
of $421 million on the same basis a year earlier. 1994
third-quarter receivables growth benefited from unusually strong
growth at Beneficial National Bank USA, reflecting the rapid store
opening program of one merchant. Total managed receivables at
September 30 were $13,668 million, up 12% from $12,153 million at
September 30, 1994.
For the first nine months, total managed receivables,
before foreign exchange translation, increased $644 million,
compared to a gain of $856 million in the comparable 1994 period.
Through the first nine months, Beneficial has gained nearly
213,000 new customer accounts. Beneficial is on track for another
year of managed receivables growth in excess of $1 billion.
Credit quality remained strong by any historical
measure. While chargeoffs and delinquencies have increased, the
increases largely reflect the anticipated maturing of the large
BNB USA private-label credit card portfolio, as well as overall
mix changes in the portfolio toward a somewhat greater proportion
of unsecured loans. The chargeoff ratio on the higher yielding
personal loan portfolio has increased this year.
Third-quarter net chargeoffs increased to $54.5 million
from $35.0 million in the third quarter of 1994. As a percentage
of average owned receivables, third-quarter net chargeoffs
increased to 1.73% of the portfolio on an annualized basis from
1.21% a year earlier. For the first nine months, net chargeoffs
increased to $139.8 million from $107.1 million in the 1994
period, while the net chargeoff percentage increased to 1.48% from
1.26% in 1994.
All owned loan and sales finance balances delinquent two
months and greater on a contractual basis increased to 3.19% from
2.89% at June 30 of this year and 2.56% at September 30, 1994.
Examining delinquency of managed receivables reveals a percentage
of 3.16% at September 30, compared to 2.81% at June 30, 1995, and
2.55% at September 30, 1994.
At September 30, the allowance for credit losses was
$359.1 million, or 2.90% of receivables, significantly increased
from the 2.67% of receivables level a year earlier, and unchanged
from the 2.90% at June 30 of this year. At this level, the
reserve remains particularly conservative both on an absolute
basis and relative to net chargeoffs, covering annualized first
nine months net chargeoffs 1.9 times. Also, the absolute balance
of the reserve at September 30 is $27.5 million greater than at
the 1994 year-end. During the third quarter, the loan loss
reserve increased $11.7 million.
The Company has received strong preliminary indications
of interest in its German consumer banking operation, BFK Bank AG,
which is for sale. Due diligence is now taking place. Even
assuming completion of the sale at a premium to book value, there
is, nevertheless, the possibility of a modest special charge
related to Germany at year-end because of the write-off of
associated deferred tax accounts and potential reserve additions
for the previously disclosed Fundus loan portfolio. At this time
analyses are not yet complete.
Beneficial Corporation is a $14 billion, New York Stock
Exchange-listed financial services holding company. Subsidiaries
of the Company provide financial services through their various
consumer-finance, credit-card, banking and insurance operations
located throughout the United States, Canada, the United Kingdom
and Germany.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
BENEFICIAL CORPORATION
(Registrant)
By /s/ Thomas P. McGough
Thomas P. McGough
Senior Vice President-
Finance and Treasurer
Dated: October 24, 1995
