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) July 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 July 24, 1997:
BENEFICIAL CORPORATION'S SECOND-QUARTER EARNINGS INCREASE 7%
EARNINGS PER SHARE REACH $1.61, UP FROM $1.50 A YEAR EARLIER
- First-Half Earnings Essentially Flat -
- Six-Month Return on Equity at 21.8% -
- Return on Assets at 2.22% -
WILMINGTON, Del. -- Beneficial Corporation (NYSE: BNL) today reported
second-quarter earnings of $88.3 million, up 7% from earnings of
$82.4 million in the same period last year. Earnings per share also
increased 7% to $1.61 from $1.50 in the 1996 period.
"This was another solid quarter for Beneficial Corporation," said Finn
M. W. Caspersen, chairman and chief executive officer. "Second-quarter
operations were marked by continued strong internally generated
receivables growth in the North American loan office system and
improved operating expense control. Although overall credit quality
remains relatively stable compared to the first quarter, Beneficial
increased the loan loss reserve balance by $11 million during the
quarter, and increased the loan loss reserve percentage to 3.47% from
3.35% of receivables at March 31, 1997.
"Significantly, a strong recovery in earnings continued at Beneficial
National Bank USA (BNB USA), the Company's private-label credit card
bank. As was the case in the first quarter, results also benefited
from strong insurance earnings."
Caspersen concluded, "We continue to be on track for another record
earnings year."
Last year's second quarter included unusually strong aftertax profits
from tax refund anticipation loan (RAL) operations of $18.1 million and
a $14.8 million aftertax gain from the sale of receivables in a
securitization in the capital markets. Conversely, the 1997 quarter
included only $2.9 million of RAL aftertax profits, a $21.5 million
aftertax securitization gain, a $4.7 million aftertax gain on the sale
of The Central National Life Insurance Company of Omaha's ordinary life
portfolio, and a $5.4 million tax benefit from the utilization of a
capital loss. Excluding these items from both years, net earnings of
the remainder of Beneficial's business increased 9% in this year's
second quarter.
For the first half, earnings declined slightly to $189.0 million from
the record first-half level of $189.8 million in 1996. 1996's first
half included $66.4 million in RAL aftertax profits and an $8.4 million
aftertax gain related to the sale of the Beneficial Insurance Group's
annuity block, while this year's results include strong, but lower, RAL
earnings of $45.0 million. First-half earnings per share declined 1%
to $3.41 from $3.46 in 1996. 1997 profits are the second-highest
six-month earnings in the Company's history. Removing the impact of
one-time items in both years, as well as all securitization gains and
RAL earnings, the earnings of the remainder of Beneficial's business
increased 12% in the first half.
Total managed receivables increased $328 million during the second
quarter before the impact of foreign exchange translation, compared
with an increase of $316 million in the second quarter of 1996.
Receivables growth was strong in the North American loan office system,
as managed receivables expanded $266 million compared with a gain of
$129 million in the second quarter of 1996. Reflecting the anticipated
paydown of certain maturing same-as-cash portfolio tranches at BNB USA,
BNB USA's receivables declined $89 million during the quarter compared
with a gain of $145 million a year earlier. Beneficial's total managed
receivables at June 30 crossed the $17 billion mark at $17,066 million,
a 12% gain over June 30, 1996.
For the first half, total managed receivables before the impact of
foreign exchange increased $295 million, compared with a gain of
$676 million during the first half of 1996. North American loan office
system receivables increased $431 million during the half, up from
$321 million a year earlier. Internally generated loan office
receivables growth was markedly improved. Removing the impact of
acquisitions in both years, internally generated loan growth in the
North American loan office system was $320 million, versus a loss of
$3 million in the first half of 1996. Conversely, the BNB USA runoff
was $311 million in the 1997 period compared with a gain of
$296 million during the 1996 first half.
Total owned receivables at June 30 were $14,585 million, a decrease
from $14,773 million at March 31, reflecting the sale of $808 million
of home equity loans through a securitization in the capital markets
during the second quarter.
Second-quarter net chargeoffs increased to $95.6 million from
$67.8 million in the second quarter of 1996, but were only slightly
above this year's first-quarter total of $92.9 million. As an
annualized percentage of average owned receivables, net chargeoffs
increased to 2.61% from 1.98% a year earlier and 2.53% in the first
quarter of 1997. As a percentage of average managed receivables,
second-quarter net chargeoffs of 2.26% compared with writeoffs of 1.75%
on this basis a year earlier, and were virtually unchanged from 2.23%
in the first quarter of this year.
For the first half, net chargeoffs increased to $188.5 million from
$137.3 million a year earlier, and as a percentage of average owned
receivables climbed to 2.57% from 1.98% in 1996. As a percentage of
averaged managed receivables, net chargeoffs rose to 2.25% from 1.80% a
year earlier.
Continuing the trend of recent quarters, chargeoffs reflect the
continuing expected maturing of the BNB USA private-label credit card
portfolio, as well as the influence of a somewhat higher proportion of
higher-yielding unsecured loans in the overall portfolio as compared to
a year ago.
All owned receivables delinquent two months and greater on a
contractual basis increased to 3.89% from 3.50% a year earlier and
3.70% at March 31, 1997. Examining delinquency of all managed
receivables reflects a modest increase to 3.68% at June 30, up from
3.30% a year earlier, and 3.58% at March 31 of this year. Particularly
considering changes in the portfolio mix, overall delinquency remains
quite reasonable by historical measures.
At June 30, the allowance for credit losses was $505.4 million or 3.47%
of outstanding owned receivables, compared with $494.5 million or 3.35%
of owned receivables at March 31 of this year, and $437.3 million, or
3.31% of owned receivables at June 30, 1996. During the second
quarter, the Company added $11 million to the balance of the loan loss
reserve.
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: July 24, 1997
