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) April 24, 1997
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)
Item 5. Other Events.
The following is the text of a press release of Beneficial
Corporation, issued on April 24, 1997:
BENEFICIAL CORPORATION REPORTS STRONG FIRST-QUARTER
EARNINGS AGAINST PRIOR-YEAR RECORD
EARNINGS DECLINE 6% TO $100.7 MILLION FROM ALL-TIME
QUARTERLY EARNINGS RECORD OF $107.4 MILLION ACHIEVED
IN THE FIRST QUARTER OF 1996
EARNINGS PER SHARE FALL 8% TO $1.80 FROM $1.96
- Quarterly Earnings are the Second Highest
for any Quarter in Beneficial's History -
WILMINGTON, Del. -- Beneficial Corporation (NYSE: BNL) today reported
first-quarter earnings of $100.7 million, down 6% from earnings of $107.4
million in the first quarter of 1996. Comparable earnings per share
declined 8% to $1.80 from $1.96 in the 1996 period. 1996 earnings were
the highest quarterly earnings for any quarter in Beneficial's history,
while 1997 profits represent the second highest quarterly earnings level
ever achieved.
1996 quarterly earnings benefited from $48.3 million in net aftertax
profits ($80.5 million pretax) from the tax refund anticipation loan
(RAL) business, while this year's quarter enjoyed RAL aftertax profits of
$42.1 million ($70.1 million pretax). In addition, the 1996 quarter
benefited from an $8.4 million net aftertax gain related to the sale of
an annuity block of business by the Company's life insurance
subsidiary. Removing the gain from the annuity sale and total RAL
profits from both years, earnings of the remainder of Beneficial's
business increased 16% in this year's quarter.
"We are pleased to report the second highest quarterly earnings in
Beneficial's history," said Finn M. W. Caspersen, chairman and chief
executive officer. "As anticipated, RAL profits were lower than the
particularly high level of 1996, which benefited from very strong
collections on loans previously written off during the 1995 season.
Nevertheless, RAL earnings will be strong for the year, and should
exceed plan.
"Of particular importance, results were driven by a strong recovery in
earnings at Beneficial National Bank USA (BNB USA), our private-label
credit card bank, as lending spreads widened appreciably. Additionally,
operations were marked by continuing strong internal receivables growth
in our North American loan office system, coupled with healthy
commensurate credit insurance earnings.
Caspersen concluded, "Operating fundamentals for Beneficial Corporation
remain strong. We remain highly optimistic about full-year earnings
prospects, and expect another record year."
Total managed receivables at March 31 were $16,735 million, representing
a decline of $126 million during the first quarter, compared to an
increase of $332 million during the first quarter of 1996. However, much
of the current-year decline in managed receivables is due to the
distortion of foreign exchange translation in the environment of a much
stronger U.S. dollar. Before the impact of foreign exchange, current-
year managed receivables declined only $33 million.
The current-year decline in receivables also reflects the anticipated
significant paydown of maturing same-as-cash portfolio tranches at BNB
USA. BNB USA's receivables declined $222 million during the quarter,
compared to a gain of $151 million a year earlier. Conversely,
internally generated earning asset growth was strong. Internally
generated receivables growth in the North American loan office system
was $121 million in the first quarter of 1997, compared to net runoff
of $41 million during the first quarter of 1996. Portfolio acquisitions
had added $234 million to the 1996 quarter's total growth, while
contributing only $44 million this year.
First-quarter net chargeoffs increased to $92.9 million from
$69.5 million in the first quarter of 1996. As an annualized percentage
of average owned receivables, net chargeoffs increased to 2.53% from
1.98% a year earlier, and as a percentage of average managed receivables
increased to 2.23% from 1.84% in the 1996 quarter. However, the chargeoff
rate declined from the fourth-quarter 1996 level of 2.75% on an owned
basis and 2.37% on a managed basis.
Continuing the trend of recent quarters, chargeoffs reflect the increased
proportion of higher-yielding unsecured loans in the overall portfolio,
as well as the continuing expected maturing of the BNB USA private-label
credit card portfolio.
All owned receivables delinquent two months and greater on a contractual
basis increased to 3.70% from 3.16% a year earlier and 3.38% at December
31, 1996. Examining delinquency of all managed receivables exhibits a
similar pattern as managed delinquency increased to 3.58% at March 31, up
from 3.15% a year earlier and 3.20% at year-end 1996. The modest
increase in delinquency from the year-end level reflects the normal
seasonal pattern for delinquency to increase during the first quarter.
At March 31 the allowance for credit losses was $494.5 million, or
3.35% of outstanding owned receivables, compared to $498.2 million, or
3.40% of outstanding owned receivables at year-end, and $423.2 million,
or 3.05% of receivables at March 31, 1996.
Beneficial Corporation is a $17 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, Ireland, 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/ Samuel F. McMillan
Samuel F. McMillan
Senior Vice President
and Treasurer
Dated: April 24, 1997
