updated 2/24/2011 6:45:52 AM ET 2011-02-24T11:45:52

ATLANTA, Feb. 24, 2011 (GLOBE NEWSWIRE) -- Ocwen Financial Corporation ("Ocwen" or the "Company") (NYSE:OCN) today reported net income for the twelve months ended December 31, 2010 of $38.0 million or $0.36 per share, compared with net income of $0.3 million or $0.00 per share in 2009. 2010 net income includes the reversal of a $9.1 million valuation allowance for income tax expense.

For the fourth quarter of 2010 Ocwen reported net income of $9.9 million compared to net income of $9.4 million for the fourth quarter of 2009. Pre-tax income from continuing operations was $15.2 million for the fourth quarter of 2010 versus $20.2 million for the fourth quarter of 2009. 

Fourth quarter 2010 pre-tax income from continuing operations was affected by:

  • Non-recurring transaction related expenses for the HomEq servicing acquisition of $17.5 million consisting primarily of $14.6 million in Occupancy and Equipment expense from writing-off leasehold improvements and establishing a reserve for the discounted future rent and lease termination fees on the two HomEq facilities which were acquired and closed in 2010 and severance and WARN Act compensation of $2.6 million.
  • Interest expense of $1.2 million representing incremental amortization of up-front fees and original issue discount on the Senior Secured Term Loan related to the partial prepayment of this loan in 2010.

FOURTH QUARTER BUSINESS PERFORMANCE HIGHLIGHTS

  • Reduced servicing advances by $237.0 million, or 10.1%.
  • Completed 19,999 loan modifications of which 20% were HAMP modifications which exceeded the upper end of guidance of 16,000 to 19,000.
  • Made a $135.0 million voluntary prepayment on the Senior Secured Term Loan which along with the mandatory repayments reduced the outstanding balance to $197.5 million as of December 31, 2010. (Additional voluntary prepayments of $162.5 million were made subsequent to year-end.)

"Ocwen remains very pleased with our acquisition of HomEq as revenues are ramping up as expected and both delinquency rates and advances are dropping," said Ron Faris, President and CEO. In addition, we completed the transition in 2010 at a cost of $52.6 million, which was below our previous estimate of $56.0 million, and we do not expect any material expenses for the HomEq legacy platform beyond 2010. We were able to complete 19,999 loan modifications in the fourth quarter of 2010, tying a previous quarterly record, which along with a reduction in the number of newly delinquent loans helped contribute to the $237 million decline in servicing advances. We take great pride in our ongoing leadership in completing sustainable loan modifications that help more families keep their homes," Faris added.  

Chairman Bill Erbey stated, "Our strong cash flow generation enabled us subsequent to year-end 2010 to repay all but $35 million of the $350 million Senior Secured Term Loan. Ocwen has sufficient liquidity to repay this loan in full and once completed will save the $9.3 million in interest and amortization incurred on this loan in the fourth quarter of 2010.  However, it was important to leave a small amount of the Senior Secured Term Loan outstanding to maintain the accordion feature which provides financing flexibility should we acquire a significant portfolio. We substantially reduced non-core assets to less than $50 million excluding the non-recourse assets for the four securitization trusts that we now include on our balance sheet." 

Servicing

In comparison to the fourth quarter of 2009, revenue was 57% higher, and the total of unpaid principal balance serviced increased from $50.0 billion at December 31, 2009 to $73.9 billion at December 31, 2010. 

Operating expense increased by $28.6 million due to $17.5 million in non-recurring transaction expenses related to the HomEq acquisition and to growth in our Servicing business. After adjusting for the non-recurring expenses, operating expenses increased by 36.4% over the fourth quarter of 2009. 

Pre-tax income for Servicing was $18.8 million in the fourth quarter of 2010. After adjusting for the one-time items affecting the Servicing segment in the fourth quarter of 2010, pre-tax income was $37.5 million or 28.0% higher than in the fourth quarter of 2009. Excluding the interest expense on the Senior Secured Term loan that was almost fully repaid subsequent to the end of 2010, adjusted pre-tax income in Servicing would have been $45.6 million or 56% higher due to growth in our servicing portfolio and unit cost reductions. 

Loans and Residuals

Loans and Residuals incurred a loss from continuing operations before taxes of $3.0 million as compared to a loss of $2.1 million in the fourth quarter of 2009. The fourth quarter 2010 loss includes a $2.1 million reduction in the valuation of performing loans as a result of changes in market conditions. The balance of assets in this segment was $103.9 million at December 31, 2010. Excluding $67.3 million in non-recourse assets associated with the four securitization trusts that we first included in our financial statement in 2010, our assets were $36.6 million.

Asset Management Vehicles

The loss from continuing operations before taxes for Asset Management Vehicles was $0.6 million as compared to a loss of $1.8 million in the fourth quarter of 2009. The carrying value of our investment in Asset Management Vehicles was $12.1 million at December 31, 2010.

Corporate

In the fourth quarter of 2010 losses from continuing operations before taxes were $0.05 million compared to a pre-tax loss of $5.3 million in the fourth quarter of 2009. The following items affected results in the quarter:

  • Gain of $6.0 million representing Ocwen's share of proceeds from the sale of three low income housing partnerships with no book value.
  • Realized loss of $4.0 million on the sale of all remaining Auction Rate Securities.

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, and Washington DC and support operations in India and Uruguay. Utilizing advanced technology and world-class training and processes, we provide solutions that make our clients' loans worth more. Additional information is available at www.ocwen.com .

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, including, but not limited to, successful completion of the HomEq transaction, future liquidity and cost-effective resources in India. 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, 2010, June 30, 2010 and September 30, 2010 and its annual report on Form 10-K for the year ended December 31, 2010 to be filed on or before March 1, 2011. 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.

 
 
Residential Servicing Statistics (Dollars in thousands)
  At or for the three months ended
  December 31,

2010
September 30,

2010
June 30,

2010
March 31,

2010
December 31,

2009
Total unpaid principal balance of loans and REO serviced  $ 73,886,391  $ 76,140,022  $ 55,244,576  $ 49,677,999  $ 49,980,077
Non-performing loans and REO serviced as a % of total UPB (1) 27.3% 27.2% 26.2% 25.3% 25.6%
Prepayment speed (average CPR) 13% 13% 13% 12% 15%
           
(1) The increase in non-performing loans and REO serviced as a % of total UPB is due entirely to the acquisition of portfolios with higher delinquency rates. Non-performing loans exclude those serviced under special servicing agreements where we have no obligation to advance.
         
         
Segment Results (Dollars in thousands) (UNAUDITED)        
  Three months Twelve months
For the periods ended December 31, 2010 2009 2010 2009
Ocwen Asset Management        
 Servicing        
 Revenue  $ 113,216  $ 72,327  $ 359,798  $ 272,725
 Operating expenses   59,069   30,472   200,108   129,252
 Income from operations  54,147  41,855  159,690  143,473
 Other expense, net   (35,313)   (12,555)   (81,495)   (55,792)
 Income from continuing operations before taxes   18,834   29,300   78,195   87,681
 Loans and Residuals        
 Revenue  $ —   —  —  —
 Operating expenses   862   631   4,240   2,831
 Loss from operations  (862)   (631)  (4,240)  (2,831)
 Other income (expense), net   (2,124)   (1,427)   1,394   (6,290)
 Loss from continuing operations before taxes   (2,986)   (2,058)   (2,846)   (9,121)
 Asset Management Vehicles         
 Revenue  $ 166  422  696  1,851
 Operating expenses   596   578   2,099   3,108
 Loss from operations  (430)  (156)  (1,403)  (1,257)
 Other income (expense), net   (212)   (1,594)   606   (4,060)
 Loss from continuing operations before taxes   (642)   (1,750)   (797)   (5,317)
Income from continuing operations before taxes   15,206   25,492   74,552   73,243
         
Ocwen Solutions        
 Mortgage Services        
 Revenue  —  —  —  54,052
 Operating expenses   —   —   —   37,040
 Income from operations  —  —  —  17,012
 Other income, net   —   —   —   803
 Income from continuing operations before taxes   —   —   —   17,815
 Financial Services        
 Revenue  —  —  —  40,293
 Operating expenses   —   —   —   45,002
 Loss from operations  —  —  —  (4,709)
 Other expense, net   —   —   —   (1,260)
 Loss from continuing operations before taxes   —   —   —   (5,969)
 Technology Products        
 Revenue  —  —  —  28,331
 Operating expenses   —   —   —   18,638
 Income from operations  —  —  —  9,693
 Other expense, net   —   —   —   (103)
 Income from continuing operations before taxes   —   —   —   9,590
Income from continuing operations before taxes   —   —   —   21,436
         
Corporate Items and Other        
 Revenue  275  385  1,416  1,066
 Operating expenses   2,883   4,942   30,791   16,308
 Loss from operations  (2,608)  (4,557)  (29,375)  (15,242)
 Other income (expense), net   2,561   (741)   (6,023)   13,824
 Loss from continuing operations before taxes   (47)   (5,298)   (35,398)   (1,418)
         
Corporate Eliminations        
 Revenue  (384)  (386)  (1,529)  (17,590)
 Operating expenses   (145)   (117)   (764)   (16,525)
 Loss from operations  (239)  (269)  (765)  (1,065)
 Other income, net   239   269   765   1,065
 Income (loss) from continuing operations before taxes   —   —   —   —
Consolidated income from continuing operations

 before taxes


 $ 15,159


 $ 20,194


 $ 39,154


 $ 93,261
 
 
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except share data)
(UNAUDITED)

 
  Three months Twelve months
For the periods ended December 31, 2010 2009 2010 2009
         
Revenue        
 Servicing and subservicing fees  $ 102,859  $ 62,635  $ 321,699  $ 264,467
 Process management fees  9,572  9,710  33,704  108,082
 Other revenues   842   403   4,978   8,179
 Total revenue   113,273   72,748   360,381   380,728
         
Operating expenses        
 Compensation and benefits  17,892  12,862  87,644  87,620
 Amortization of mortgage servicing rights  9,352  6,485  31,455  32,228
 Servicing and origination  2,095  2,376  6,851  38,653
 Technology and communications  7,062  5,712  25,644  20,066
 Professional services  5,316  4,428  42,837  26,200
 Occupancy and equipment  19,407  3,929  32,924  18,985
 Other operating expenses   2,141   714   9,119   11,902
 Total operating expenses   63,265   36,506   236,474   235,654
         
Income from operations   50,008   36,242   123,907   145,074
         
Other income (expense)        
 Interest income  2,352  2,375  10,859  8,786
 Interest expense  (35,906)  (12,846)  (85,923)  (62,954)
 Gain (loss) on trading securities  (4,010)  (2,159)  (7,968)  11,187
 Loss on loans held for resale, net  (3,239)  (2,349)  (5,865)  (11,132)
 Equity in earnings (losses) of unconsolidated entities  27  (1,325)  1,371  (2,933)
 Other, net   5,927   256   2,773   5,233
 Other expense, net   (34,849)   (16,048)   (84,753)   (51,813)
         
Income from continuing operations before taxes  15,159  20,194  39,154  93,261
Income tax expense   5,235   13,307   5,545   96,110
 Income (loss) from continuing operations  9,924  6,887  33,609  (2,849)
Income from discontinued operations, net of taxes     —   2,488   4,383   3,121
 Net income  9,924  9,375  37,992  272
Net loss (income) attributable to non-controlling interests   (3)   14   (8)   25
 Net income attributable to Ocwen Financial

 Corporation
(OCN)
 $ 9,921  $ 9,389  $ 37,984  $ 297
         
Basic earnings per share        
 Income (loss) from continuing operations  $ 0.10  $ 0.07  $ 0.34  $ (0.04)
 Income from discontinued operations   —   0.02   0.04   0.04
 Net income attributable to OCN  $ 0.10  $ 0.09  $ 0.38  $ —
         
Diluted earnings per share        
 Income (loss) from continuing operations  $ 0.09  $ 0.07  $ 0.32  $ (0.04)
 Income from discontinued operations   —   0.02   0.04   0.04
 Net income attributable to OCN  $ 0.09  $ 0.09  $ 0.36  $ —
         
Weighted average common shares outstanding        
 Basic  100,610,141  99,871,247  100,273,121  78,252,000
 Diluted  107,441,874  107,150,497  107,483,015  78,252,000
 
 
 

OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)


(UNAUDITED)
     
  December 31,

2010 
December 31,

2009
     
Assets    
 Cash  $ 127,796  $ 90,919
 Restricted cash – for securitization investors  727  
 Trading securities, at fair value:    
 Auction rate  —  247,464
 Subordinates and residuals  —  3,692
 Loans held for resale, at lower of cost or fair value  25,803  33,197
 Advances  184,833  145,914
 Match funded advances  1,924,052  822,615
 Loans, net – restricted for securitization investors  67,340  —
 Mortgage servicing rights, net  193,985  117,802
 Receivables, net  69,518  67,095
 Deferred tax assets, net  138,716  132,683
 Goodwill  12,810  —
 Premises and equipment, net  5,475  3,325
 Investments in unconsolidated entities  12,072  15,008
 Other assets   158,282   89,636
 Total assets  $ 2,921,409  $ 1,769,350
     
Liabilities and Equity    
 Liabilities    
 Match funded liabilities  $ 1,482,529  $ 465,691
 Secured borrowings – owed to securitization investors  62,705  —
 Lines of credit and other secured borrowings  246,073  55,810
 Investment line  —  156,968
 Servicer liabilities  2,492  38,672
 Debt securities  82,554  95,564
 Other liabilities   140,239   90,782
 Total liabilities   2,016,592   903,487
     
 Equity    
 Ocwen Financial Corporation stockholders' equity    
 Common stock, $.01 par value; 200,000,000 shares authorized; 100,726,947 and  99,956,833 shares issued and outstanding 

  at December 31, 2010 and December 31, 2009, respectively
 1,007  1,000
  Additional paid-in capital  467,500  459,542
  Retained earnings  445,456  405,198
  Accumulated other comprehensive loss, net of income taxes   (9,392)   (129)
  Total Ocwen Financial Corporation stockholders' equity  904,571  865,611
 Non-controlling interest in subsidiaries   246   252
 Total equity   904,817   865,863
  Total liabilities and equity  $ 2,921,409  $ 1,769,350
     
CONTACT: John P. Van Vlack
         Executive Vice President
         Chief Financial Officer & Chief Accounting Officer
         T: (561) 682-7721
         E: John.VanVlack@Ocwen.com

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.94%
$30K home equity loan FICO 5.19%
$75K home equity loan FICO 4.58%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.40%
13.40%
Cash Back Cards 17.92%
17.91%
Rewards Cards 17.12%
17.11%
Source: Bankrate.com