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Press release from GlobeNewswire (a Nasdaq OMX company)

Ocwen Reports EPS of $0.71 for 2011 Up 97% Over 2010, Net Income of $78.3 Million for 2011 Up 106% Over 2010, Cash Flow From Operations of $982 Million for 2011

Thursday, February 23, 2012

Ocwen Reports EPS of $0.71 for 2011 Up 97% Over 2010, Net Income of $78.3 Million for 2011 Up 106% Over 2010, Cash Flow From Operations of $982 Million for 201103:34 EST Thursday, February 23, 2012ATLANTA, Feb. 23, 2012 (GLOBE NEWSWIRE) -- Ocwen Financial Corporation ("Ocwen" or the "Company") (NYSE:OCN) today reported Net income of $9.7 million, or $0.08 per share, for the fourth quarter of 2011. This compares with Net income of $9.9 million, or $0.09 per share, for the fourth quarter of 2010. In the fourth quarter of 2011, Ocwen incurred $31.3 million of transaction-related expenses, largely associated with the Litton Loan Servicing LP ("Litton") acquisition, and $3.6 million of losses on foreign exchange forward contracts. Adjusting for these resulted in normalized pre-tax earnings for the quarter of $53.4 million, a 57% increase over the normalized results in the fourth quarter of 2010. Revenue for the fourth quarter was $156.6 million, 38% higher than the fourth quarter of 2010.  For the full year 2011, Net income was $78.3 million or $0.71 per share versus full year 2010 Net income of $38.0 million or $0.36 per share. Full year Revenue in 2011 was $495.9 million up 38% from 2010. Normalized pre-tax earnings for 2011 increased by 54% over 2010 to $188.8 million. Fourth quarter business performance highlights: Completed the transfer of the remaining loans on the Litton platform to the Ocwen platform on November 1, 2011. Entered into acquisition agreements that will add approximately $31 billion of unpaid principal balance (UPB) to Ocwen's servicing portfolio and converted approximately $11 billion from subservicing to owned servicing in early 2012.  Completed a follow on public offering of 28,750,000 shares of common stock on November 9, 2011 resulting in net proceeds of $354.4 million. These funds were raised to support pending and potential future servicing acquisitions. Secured an additional $200 million borrowing commitment on the Senior Secured Term Loan which is expected to result in proceeds of $194 million to support pending servicing acquisitions. Reduced delinquencies from 28.7% on September 30, 2011 to 27.9% on December 31, 2011. Completed 18,663 loan modifications. HAMP modifications accounted for 16% of completed modifications. Increased loan modification offers in the fourth quarter of 2011 by 23% over the third quarter of 2011 to a total of 21,566. Generated Cash flow from operations of $178.5 million. Full-year 2011 Business performance highlights: December 31, 2011 servicing portfolio UPB was $102.2 billion, an increase of 38% over year-end 2010. Completed 76,205 loan modifications. Generated $982 million in Cash flow from operations. On February 10, 2012, Ocwen entered into an agreement to sell to Home Loan Servicing Solutions (HLSS) the right to receive the servicing fees relating to approximately $16 billion of UPB. In addition, HLSS will take over ownership and responsibility for the associated servicing advances and match funded liabilities. Ocwen will continue to service the loans receiving a subservicing fee and ancillary income. The sale is expected to close when HLSS completes its initial public offering. As valued on December 31, 2011, Ocwen expects to receive approximately $181 million in cash from the transaction; 25% of the proceeds will be used to pay-down the Senior Secured Term Loan as required by the terms of the loan. The remaining cash will be available for future acquisitions, debt repayment or other corporate purposes under the terms of the Senior Secured Term Loan.  "The Litton acquisition continues to meet or exceed our expectations," said Ron Faris, President and CEO. "The integration was completed on November 1st as planned. Particularly gratifying has been our solid delinquency management performance to-date on the Litton loans, and we should see further progress in coming months as our modification programs take hold. On our overall portfolio, we were able to reduce non-performing loans from 28.7% in the third quarter to 27.9% in the fourth quarter. Ocwen's success in scaling-up its operations and maintaining strong servicing results is attributable to the experience of our team and Ocwen's industry-leading technology. The sturdy performance of the Litton acquisition makes us even more confident that we will achieve a seamless integration of the pending portfolio acquisitions into our platform. In anticipation of these pending deals, we have ramped up our operations accordingly which dampened actual and normalized earnings in the fourth quarter and will similarly impact results in the first quarter of 2012." Mr. Faris added, "We completed 18,663 modifications in the fourth quarter, which is an increase of more than 18.5% over the prior quarter. Moreover, we saw a substantial rise in modification offers in the fourth quarter indicating continued modification growth and reduced delinquency levels in the first quarter of this year. For all of 2011, Ocwen completed 76,205 modifications. We remain committed to reducing losses on the loans we service and helping homeowners stay in their homes through sensible loan modifications." Chairman William Erbey stated, "The imminent execution of an asset sale to HLSS is an important milestone in our strategy to make Ocwen into an 'equity-light' fee-for-services business. In the near-term, HLSS should provide us additional capital for growth, without dilution to existing shareholders, and make Ocwen more competitive on transactions.  Over time, we would hope to move most of Ocwen's MSRs and advances to HLSS. The impact of this should be higher returns on equity than we could achieve by keeping the assets on Ocwen's balance sheet." Mr. Erbey further commented that, "The servicing industry as a whole continues to be in the news with the recent federal and state settlement with major banks. We believe that the changes in the industry remain positive for Ocwen's growth and provide useful clarity around servicing standards. Our sales pipeline remains robust and our competitive position very strong." The fourth quarter of 2010 had a total of $18.8 million of normalizing items, including $17.5 million of transaction expenses related to the HomEq acquisition that should be considered when comparing with 2011 results. For more detail on normalizing items as well as prior earnings releases and SEC filings please refer to the "Shareholder Relations" section of our website at Ocwen Financial Corporation is a leading provider of residential and commercial loan servicing, special servicing and asset management services. Ocwen is headquartered in Atlanta, Georgia with offices in West Palm Beach and Orlando, Florida, Houston, Texas, McDonough, Georgia and Washington, DC and support operations in India and Uruguay. Utilizing advanced technology and world-class training and processes, we provide solutions that help homeowners and make our clients' loans worth more. Additional information is available at This news 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 are not guarantees of future performance, and 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: general economic and market conditions, prevailing interest or currency exchange rates, governmental regulations and policies, international political and economic uncertainty, availability of adequate and timely sources of liquidity, federal income tax rates, real estate market conditions and trends and the outcome of ongoing litigation as well as other risks detailed in Ocwen's reports and filings with the Securities and Exchange Commission, including Form 10-Q for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011 and its annual report on Form 10-K for the year ended December 31, 2011 to be filed on or before February 29, 2012. The forward-looking statements speak only as of the date they are made and should not be relied upon. Ocwen undertakes no obligation to update or revise the forward-looking statements. This news release contains references to "normalized" results, which are non-GAAP performance measures. We believe these non-GAAP performance measures may provide additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States.Residential Servicing Statistics (Dollars in thousands)  At or for the three months ended  December 31,September 30,June 30,March 31,December 31,  20112011201120112010 Total unpaid principal balance of loans and REO serviced $102,199,222 $106,126,168 $70,830,567 $70,542,961 $73,886,391 Non-performing loans and REO serviced as a % of total UPB (1) 27.9% 28.7% 24.2% 24.7% 27.3% Prepayment speed (average CPR)  14.1% 15.2% 14.3% 13.9% 12.6%(1) Non-performing loans exclude those serviced under special servicing agreements where we have no obligation to advance.   Segment Results (Dollars in thousands) (UNAUDITED) Three monthsTwelve monthsFor the periods ended December 31,2011201020112010Servicing         Revenue  $155,646 $113,216 $494,871 $359,798 Operating expenses  86,539 59,069 231,238 200,108 Income from operations  69,107 54,147 263,633 159,690 Other expense, net   (43,646)  (35,313)  (127,753)  (81,495) Income from continuing operations before income taxes  25,461 18,834 135,880 78,195          Corporate Items and Other         Revenue  651 441 2,348 2,112 Operating expenses  3,471 4,341 8,971 37,130 Loss from operations   (2,820)  (3,900)  (6,623)  (35,018) Other income (expense), net   (4,122) 225  (6,262)  (4,023) Loss from continuing operations before income taxes   (6,942)  (3,675)  (12,885)  (39,041)          Corporate Eliminations         Revenue  328  (384)  (1,289)  (1,529) Operating expenses  471  (145)  (625)  (764) Loss from operations   (143)  (239)  (664)  (765) Other income, net  143 239 664 765 Income (loss) from continuing operations before income taxes  — — — —Consolidated income from continuing operations        before income taxes $18,519 $15,159 $122,995 $39,154  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except share data)(UNAUDITED)          For the periods ended December 31,Three monthsTwelve months  2011201020112010Revenue         Servicing and subservicing fees  $147,922 $102,859 $458,875 $321,699 Process management fees  8,082 9,572 34,233 33,704 Other revenues  621 842 2,822 4,978 Total revenue  156,625 113,273 495,930 360,381          Operating expenses         Compensation and benefits  40,737 17,892 99,844 87,644 Amortization of mortgage servicing rights  12,937 9,352 42,996 31,455 Servicing and origination  3,062 2,095 8,254 6,851 Technology and communications  11,843 7,062 33,617 25,644 Professional services  9,232 5,316 19,961 42,837 Occupancy and equipment  8,756 19,407 23,759 32,924 Other operating expenses  3,914 2,141 11,153 9,119 Total operating expenses  90,481 63,265 239,584 236,474          Income from operations  66,144 50,008 256,346 123,907          Other income (expense)         Interest income  2,232 2,352 8,876 10,859 Interest expense   (45,756)  (35,906)  (132,770)  (85,923) Loss on trading securities  —  (4,010) —  (7,968) Loss on loans held for resale, net   (998)  (3,239)  (4,529)  (5,865) Equity in (loss) earnings of unconsolidated entities   (56) 27  (746) 1,371 Other, net   (3,047) 5,927  (4,182) 2,773 Other expense, net   (47,625)  (34,849)  (133,351)  (84,753)           Income from continuing operations before taxes  18,519 15,159 122,995 39,154 Income tax expense  8,864 5,235 44,672 5,545Income from continuing operations  9,655 9,924 78,323 33,609 Income from discontinued operations, net of taxes  — — — 4,383Net income  9,655 9,924 78,323 37,992 Net loss (income) attributable to non-controlling interest   (4)  (3) 8  (8)Net income attributable to Ocwen Financial Corporation (OCN) $9,651 $9,921 $78,331 $37,984          Basic earnings per share         Income from continuing operations attributable to OCN  $0.08 $0.10 $0.75 $0.34 Income from discontinued operations attributable to OCN — — — 0.04 Net income attributable to OCN  $0.08 $0.10 $0.75 $0.38          Diluted earnings per share         Income from continuing operations attributable to OCN  $0.08 $0.09 $0.71 $0.32 Income from discontinued operations attributable to OCN — — — 0.04 Net income attributable to OCN  $0.08 $0.09 $0.71 $0.36          Weighted average common shares outstanding         Basic  115,185,458 100,610,141 104,507,055 100,273,121 Diluted  123,102,557 107,441,874 111,855,961 107,483,015  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Dollars in thousands, except share data)(UNAUDITED)        December 31,December 31,  20112010      Assets     Cash  $144,234 $127,796 Restricted cash – for securitization investors  675 727 Loans held for resale, at lower of cost or fair value  20,633 25,803 Advances  103,591 184,833 Match funded advances  3,629,911 1,924,052 Loans, net – restricted for securitization investors  58,560 67,340 Mortgage servicing rights, net  293,152 193,985 Receivables, net  83,202 69,518 Deferred tax assets, net  107,968 138,716 Goodwill  78,432 12,810 Premises and equipment, net  7,350 5,475 Investments in unconsolidated entities  23,507 12,072 Other assets  185,942 158,282 Total assets  $4,737,157 $2,921,409      Liabilities and Equity    Liabilities     Match funded liabilities  $2,558,951 $1,482,529 Secured borrowings – owed to securitization investors  53,323 62,705 Lines of credit and other secured borrowings  540,369 246,073 Debt securities  82,554 82,554 Other liabilities  158,649 142,731 Total liabilities  3,393,846 2,016,592      Equity     Ocwen Financial Corporation stockholders' equity     Common stock, $.01 par value; 200,000,000 shares authorized;     129,899,288 and 100,726,947 shares issued and outstanding at     December 31, 2011 and December 31, 2010, respectively  1,299  1,007 Additional paid-in capital  826,121 467,500 Retained earnings  523,787 445,456 Accumulated other comprehensive loss, net of income taxes  (7,896) (9,392) Total Ocwen Financial Corporation stockholders' equity  1,343,311 904,571 Non-controlling interest in subsidiaries  — 246 Total equity  1,343,311 904,817 Total liabilities and equity  $4,737,157 $2,921,409CONTACT: John P. Van Vlack Executive Vice President, Chief Financial Officer & Chief Accounting Officer T: (561) 682-7721 E: