Ocwen Financial Announces Preliminary Operating Results for First Quarter 2015
April 30 2015 - 4:32PM
Ocwen Financial Corporation, (NYSE:OCN)
("Ocwen" or the "Company"), a leading financial
services holding company, today reported preliminary net income of
$34.4 million, or $0.27 per share, for the three months ended March
31, 2015 compared to net income of $60.5 million, or $0.43 per
share, for the three months ended March 31, 2014. Ocwen generated
preliminary revenue of $510.4 million, down 7% compared to the
first quarter of the prior year. Preliminary income from operations
was $132.1 million for the three months ended March 31, 2015
compared to $202.1 million for the first quarter of 2014.
Preliminary Cash Flow from Operating Activities was $323 million
for the three months ended March 31, 2015, up 65% over the same
period last year.
"I am proud of what we have accomplished as far as managing the
business through this difficult transition period. We made great
progress on our asset sale strategy, have returned to profitability
and continue to generate substantial operating cash flow,"
commented Ron Faris, President and CEO of Ocwen. "However, I am not
satisfied with only making $34 million in the quarter. We intend to
do better."
Pre-tax income during the first quarter of 2015 was impacted by
the following significant items: a $26.9 million gain from the sale
of Freddie Mac performing loan mortgage servicing rights (MSRs)
with an unpaid principal balance (UPB) of approximately $9.1
billion, a $12.9 million gain on the sale of certain legacy
performing and non-performing whole loans, a $(17.8) million
impairment charge due to a decline in the fair value of our
government insured MSRs primarily resulting from the Federal
Housing Administration (FHA) reducing the mortgage insurance
premium rate by 50 bps during the quarter, $(9.0) million of
monitor costs, $(8.4) million of strategic advisor expenses and
$(8.3) million of fair value related changes. The Lending segment
generated $16.0 million of pre-tax income during the quarter.
The Company also announced that it now currently intends to file
its 2014 Form 10-K and first quarter 2015 Form 10-Q no later than
May 29, 2015.
The financial results and other financial data presented in this
press release are preliminary, based upon the Company's estimates
and subject to completion of the Company's final financial closing
procedures. Moreover, this data has been prepared on the basis of
currently available information. The Company's independent auditor
has not audited or reviewed, and does not express an opinion with
respect to this data. This data does not constitute a comprehensive
statement of the Company's financial results for the quarter ended
March 31, 2015 or of its financial position for any period, and the
Company's final data could differ materially from its preliminary
data. The preliminary data presented in this press release
incorporates the impact that would result if the Company fully
reserved for its deferred tax asset.
Webcast and Conference Call
Ocwen will host a webcast and conference call on Thursday, April
30, 2015, at 5 p.m., Eastern Time, to discuss its preliminary
financial results for the first quarter of 2015. The conference
call will be webcast live over the internet from the Company's
website at www.Ocwen.com, click on the "Shareholder Relations"
section. A replay of the conference call will be available via the
website approximately two hours after the conclusion of the call
and will remain available for approximately 30 days.
About Ocwen Financial Corporation
Ocwen Financial Corporation is a financial services holding
company which, through its subsidiaries, is engaged in the
servicing and origination of mortgage loans. Ocwen is headquartered
in Atlanta, Georgia, with offices throughout the United States and
support operations in India and the Philippines. Utilizing
proprietary technology, global infrastructure and superior training
and processes, Ocwen provides solutions that help homeowners and
make our clients' loans worth more. Ocwen may post information that
is important to investors on its website (www.Ocwen.com).
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements by their nature address matters
that are, to different degrees, uncertain. Forward-looking
statements involve a number of assumptions, risks and uncertainties
that could cause actual results to differ materially.
Important factors that could cause actual results to differ
materially from those suggested by the forward-looking statements
include, but are not limited to, the following: adverse effects on
our business as a result of recent regulatory settlements;
reactions to the announcement of such settlements by key
counterparties; increased regulatory scrutiny and media attention,
due to rumors or otherwise; uncertainty related to claims,
litigation and investigations brought by government agencies and
private parties regarding our servicing, foreclosure, modification
and other practices; any adverse developments in existing legal
proceedings or the initiation of new legal proceedings; our ability
to effectively manage our regulatory and contractual compliance
obligations; our ability to execute on our strategy to reduce the
size of our Agency servicing portfolio; the adequacy of our
financial resources, including our sources of liquidity and ability
to fund and recover advances, repay borrowings and comply with debt
covenants; our servicer and credit ratings as well as other actions
from various rating agencies, including the impact of recent
downgrades of our servicer and credit ratings; volatility in our
stock price; the characteristics of our servicing portfolio,
including prepayment speeds along with delinquency and advance
rates; our ability to contain and reduce our operating costs; our
ability to successfully modify delinquent loans, manage
foreclosures and sell foreclosed properties; uncertainty related to
legislation, regulations, regulatory agency actions, government
programs and policies, industry initiatives and evolving best
servicing practices; as well as other risks detailed in Ocwen's
reports and filings with the Securities and Exchange Commission
(SEC), including its annual report on Form 10-K/A for the year
ended December 31, 2013 (filed with the SEC on 08/18/14) and its
quarterly report on Form 10-Q for the quarter ended September 30,
2014 (filed with the SEC on 10/31/14). Anyone wishing to understand
Ocwen's business should review its SEC filings. Ocwen's
forward-looking statements speak only as of the date they are made
and, except for our ongoing obligations under the U.S. federal
securities laws, we undertake no obligation to update or revise
forward-looking statements whether as a result of new information,
future events or otherwise.
Residential Servicing
Statistics |
|
|
|
|
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
At or
for the Three Months Ended |
|
March 31, |
December 31, |
September 30, |
June 30, |
March 31, |
|
2015 |
2014 |
2014 |
2014 |
2014 |
Total UPB of loans and REO
serviced |
$382,214,002 |
$398,727,727 |
$411,279,614 |
$435,119,848 |
$449,570,596 |
|
|
|
|
|
|
Non-performing loans and REO serviced as a %
of total UPB (1) |
12.5% |
13.2% |
13.4% |
12.9% |
13.8% |
|
|
|
|
|
|
Prepayment speed (average CPR)(2) |
13.3%(3) |
12.7% |
12.8% |
12.9% |
11.2% |
(1) Performing loans include those
loans that are less than 90 days past due and those loans for which
borrowers are making scheduled payments under loan modification,
forbearance or bankruptcy plans. We consider all other loans to be
non-performing. |
|
|
|
|
|
(2) Constant Prepayment Rate for the
prior three months. |
|
|
|
|
|
(3) Includes average CPR of 15.8% for
prime loans and 9.6% for non-prime loans. |
|
|
|
|
|
Preliminary Segment Results
(Unaudited) |
|
|
(Dollars in thousands) |
|
|
|
For the Three Months
Ended March 31, |
2015 |
2014 |
Servicing |
|
|
Revenue |
$471,125 |
$520,823 |
Operating expenses |
337,911 |
307,933 |
Income from
operations |
133,214 |
212,890 |
Other expense, net |
(86,492) |
(136,267) |
Income before income
taxes |
$46,722 |
$76,623 |
|
|
|
Lending |
|
|
Revenue |
$37,746 |
$28,767 |
Operating expenses |
23,785 |
31,464 |
Income (loss) from
operations |
13,961 |
(2,697) |
Other income, net |
2,022 |
3,276 |
Income before income
taxes |
$15,983 |
$579 |
|
|
|
Corporate Items and
Other |
|
|
Revenue |
$1,608 |
$1,711 |
Operating expenses |
16,697 |
9,837 |
Loss from operations |
(15,089) |
(8,126) |
Other income (expense),
net |
(4,787) |
2,627 |
Loss before income
taxes |
$(19,876) |
$(5,499) |
|
|
|
Corporate Eliminations |
|
|
Revenue |
$(35) |
$(40) |
Operating expenses |
(35) |
(40) |
Income (loss) from
operations |
— |
— |
Other income (expense),
net |
— |
— |
Income (loss) before income
taxes |
$ — |
$ — |
|
|
|
Consolidated income before income
taxes |
$42,829 |
$71,703 |
|
OCWEN FINANCIAL
CORPORATION AND SUBSIDIARIES |
PRELIMINARY
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Dollars in thousands,
except share data) |
(UNAUDITED) |
|
|
For the Three Months
Ended March 31, |
2015 |
2014 |
Revenue |
|
|
Servicing and subservicing
fees |
$446,541 |
$490,459 |
Gain on loans held for sale,
net |
44,504 |
43,987 |
Other revenues |
19,399 |
16,815 |
Total revenue |
510,444 |
551,261 |
|
|
|
Operating expenses |
|
|
Compensation and
benefits |
105,144 |
105,637 |
Amortization of mortgage
servicing rights |
38,494 |
62,094 |
Servicing and
origination |
101,802 |
43,947 |
Technology and
communications |
39,351 |
36,976 |
Professional
services |
56,931 |
21,398 |
Occupancy and
equipment |
25,714 |
32,051 |
Other operating
expenses |
10,922 |
47,091 |
Total operating
expenses |
378,358 |
349,194 |
|
|
|
Income from operations |
132,086 |
202,067 |
|
|
|
Other income (expense) |
|
|
Interest income |
5,575 |
5,327 |
Interest expense |
(119,396) |
(139,873) |
Gain on sale of mortgage
servicing rights |
26,406 |
— |
Gain on extinguishment of
debt |
— |
2,253 |
Other, net |
(1,842) |
1,929 |
Other expense, net |
(89,257) |
(130,364) |
|
|
|
Income before income taxes |
42,829 |
71,703 |
Income tax expense |
8,440 |
11,217 |
Net
income |
34,389 |
60,486 |
Net income (loss) attributable to
non-controlling interests |
(34) |
15 |
Net income attributable
to Ocwen stockholders |
34,355 |
60,501 |
Preferred stock dividends |
— |
(581) |
Deemed dividend related to beneficial
conversion feature of preferred stock |
— |
(416) |
|
Net income attributable
to Ocwen common stockholders |
$34,355 |
$59,504 |
|
|
|
Earnings per share attributable to
Ocwen common stockholders |
|
|
Basic |
$0.27 |
$0.44 |
Diluted |
$0.27 |
$0.43 |
|
|
|
Weighted average common shares
outstanding |
|
|
Basic |
125,272,228 |
135,227,067 |
Diluted |
126,999,662 |
141,089,455 |
|
|
|
OCWEN FINANCIAL
CORPORATION AND SUBSIDIARIES |
PRELIMINARY
CONSOLIDATED BALANCE SHEETS |
(Dollars in thousands,
except share data) |
(UNAUDITED) |
|
March 31, |
December 31, |
|
2015 |
2014 |
Assets |
|
|
Cash |
$242,332 |
$129,473 |
Mortgage servicing rights
($897,797 and $93,901 carried at fair value) |
1,820,651 |
1,913,992 |
Advances |
942,538 |
893,914 |
Match funded
advances |
2,252,967 |
2,409,442 |
Loans held for sale ($339,508
and $401,120 carried at fair value) |
407,997 |
488,612 |
Loans held for investment -
reverse mortgages, at fair value |
1,808,141 |
1,550,141 |
Receivables, net |
300,751 |
270,596 |
Premises and equipment,
net |
42,945 |
43,310 |
Other assets ($7,701 and
$7,335 carried at fair value) |
500,659 |
490,811 |
Total assets |
$8,318,981 |
$8,190,291 |
|
|
|
Liabilities and Equity |
|
|
Liabilities |
|
|
Match funded
liabilities |
$2,000,676 |
$2,090,247 |
Financing liabilities
($2,296,892 and $2,058,693 carried at fair value) |
2,488,607 |
2,258,641 |
Other secured
borrowings |
1,603,707 |
1,733,691 |
Senior unsecured
notes |
350,000 |
350,000 |
Other liabilities |
822,244 |
793,534 |
Total liabilities |
7,265,234 |
7,226,113 |
|
|
|
|
|
|
Equity |
|
|
Ocwen Financial Corporation
(Ocwen) stockholders' equity |
Common stock, $.01 par value;
200,000,000 shares authorized; |
1,253 |
1,252 |
125,302,788 and 125,215,615
shares issued and outstanding at |
March 31, 2015 and December 31,
2014, respectively |
Additional paid-in
capital |
517,915 |
515,194 |
Retained earnings |
540,239 |
453,869 |
Accumulated other comprehensive
loss, net of income taxes |
(8,465) |
(8,908) |
Total Ocwen stockholders'
equity |
1,050,942 |
961,407 |
Non-controlling interest in
subsidiaries |
2,805 |
2,771 |
Total equity |
1,053,747 |
964,178 |
Total liabilities and
equity |
$8,318,981 |
$8,190,291 |
|
|
|
|
|
|
OCWEN FINANCIAL
CORPORATION AND SUBSIDIARIES |
PRELIMINARY
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Dollars in
thousands) |
(UNAUDITED) |
|
|
|
|
For the Three
Months Ended March 31, |
|
2015 |
2014 |
Cash flows from operating
activities |
|
|
Net income |
$34,389 |
$60,486 |
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
Amortization of mortgage
servicing rights |
38,494 |
62,094 |
Amortization of debt issuance
costs – senior secured term loan |
1,552 |
1,087 |
Depreciation |
4,344 |
5,540 |
Provision for bad
debts |
14,170 |
31,386 |
Impairment of mortgage
servicing rights |
17,769 |
— |
Gain on sale of mortgage
servicing rights |
(26,406) |
— |
Gain on loans held for sale,
net |
(44,504) |
(43,987) |
Realized and unrealized losses
on derivative financial instruments |
1,154 |
920 |
Gain on extinguishment of
debt |
— |
(2,253) |
Loss on valuation of mortgage
servicing rights, at fair value |
33,175 |
5,148 |
Increase in deferred tax
assets, net |
— |
(3,680) |
Equity-based compensation
expense |
2,117 |
1,427 |
Origination and purchase of
loans held for sale |
(1,036,150) |
(2,378,056) |
Proceeds from sale and
collections of loans held for sale |
1,142,282 |
2,414,699 |
Changes in assets and
liabilities: |
|
|
Decrease in advances and match
funded advances |
104,258 |
13,434 |
Decrease in receivables and
other assets, net |
518 |
48,437 |
Increase (decrease) increase in
other liabilities |
20,583 |
(41,170) |
Other, net |
15,050 |
20,270 |
Net cash provided by operating
activities |
322,795 |
195,782 |
|
|
|
OCWEN FINANCIAL
CORPORATION AND SUBSIDIARIES |
PRELIMINARY
CONSOLIDATED STATEMENTS OF CASH FLOWS – (continued) |
(Dollars in
thousands) |
(UNAUDITED) |
|
|
|
|
For
the Three Months Ended March 31, |
|
2015 |
2014 |
Cash flows from investing
activities |
|
|
Cash paid to acquire ResCap
Servicing Operations (a component of Residential Capital,
LLC) |
— |
(54,220) |
Net cash paid to acquire
controlling interest in Ocwen Structured Investments,
LLC |
— |
(7,833) |
Purchase of mortgage servicing
rights, net |
(3,267) |
(6,698) |
Acquisition of advances in
connection with the purchase of mortgage servicing
rights |
— |
(83,942) |
Acquisition of advances in
connection with the purchase of loans |
— |
(60,482) |
Proceeds from sale of advances
and match funded advances |
1,765 |
— |
Proceeds from sale of mortgage
servicing rights |
49,465 |
— |
Origination of loans held for
investment - reverse mortgages |
(235,271) |
(176,658) |
Principal payments received on
loans held for investment - reverse mortgages |
26,170 |
14,030 |
Additions to premises and
equipment |
(3,918) |
(3,308) |
Other |
301 |
891 |
Net cash used in investing
activities |
(164,755) |
(378,220) |
|
|
|
Cash flows from financing
activities |
|
|
Repayment of match funded
liabilities |
(89,571) |
(3,151) |
Proceeds from other secured
borrowings |
1,858,258 |
1,497,669 |
Repayments of other secured
borrowings |
(2,040,746) |
(1,652,903) |
Payment of debt issuance
costs |
(12,643) |
(175) |
Proceeds from sale of mortgage
servicing rights accounted for as a financing |
— |
123,551 |
Proceeds from sale of loans
accounted for as a financing |
238,615 |
226,626 |
Proceeds from sale of advances
accounted for as a financing |
472 |
55,702 |
Repurchase of common
stock |
— |
(2,308) |
Payment of preferred stock
dividends |
— |
(581) |
Proceeds from exercise of
common stock options |
413 |
1,176 |
Other |
21 |
706 |
Net cash (used in) provided by financing
activities |
(45,181) |
246,312 |
|
|
|
Net increase in cash |
112,859 |
63,874 |
Cash at beginning of year |
129,473 |
178,512 |
Cash at end of period |
$242,332 |
$242,386 |
CONTACT: FOR FURTHER INFORMATION CONTACT:
Investors:
Stephen Swett
T: (203) 614-0141
E: shareholderrelations@ocwen.com
Media:
John Lovallo
T: (917) 612-8419
E: jlovallo@levick.com
Dan Rene
T: (202) 973 -1325
E:drene@levick.com
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