ATLANTA, May 5, 2011 (GLOBE NEWSWIRE) -- Ocwen Financial Corporation ("Ocwen" or the "Company") (NYSE:OCN) today reported net income of $22.1 million or $0.21 per share for the first quarter of 2011. This compares with net income of $20.9 million or $0.20 per share for the first quarter of 2010. The Company incurred in the first quarter of 2011 $11.9 million in incremental amortization of up-front fees and original issue discount on its Senior Secured Term Loan (SSTL) related to a partial prepayment of this loan. Normalizing for the SSTL items and a $0.9 million reduction in litigation accruals, net income would have been $29.1 million or $0.27 per share.
Income from operations was $69.8 million for the first quarter of 2011 as compared to $40.4 million for the first quarter of 2010, up 73%. Revenue for the first quarter was $111.0 million, up 47% compared to the first quarter of 2010.
First quarter business performance highlights:
- Completed 24,502 loan modifications of which 14% were HAMP modifications which exceeded the upper end of guidance of 19,000 to 22,000.
- Generated cash flow from operations for the first quarter of 2011 of $368.1 million.
- Made voluntary prepayments of $162.5 million on the SSTL which along with the mandatory repayment reduced the outstanding principal balance to $26.3 million as of March 31, 2011.
- Reduced servicing advances by $294.2 million, or 14%.
"We are very pleased with our strong operating results for the first quarter," said Ron Faris, President and CEO. "With the up-front costs behind us, the HomEq transaction is a strong contributor to earnings as it continues to meet or exceed expectations. Ocwen's investment in its industry-leading servicing platform has further improved customer satisfaction and increased loan resolutions. We are proud that our efforts have helped keep more families in their homes and reduce losses to investors. Our ongoing improvements helped drive a quarterly record volume of 24,502 modifications, up more than 22% over the fourth quarter of 2010, and a large reduction in non-performing loans. Over the past three months, the percentage of non-performing loans fell 9.5% from 27.3% to 24.7%, excluding GSE special servicing." Faris added that, "because our servicing segment now represents over 99% of Ocwen's revenues, we have consolidated into Corporate Items and Other the Loans and Residuals and Asset Management Vehicles segments."
Chairman Bill Erbey stated that, "Ocwen's robust cash-flow enabled the Company to pay-down debt and positions us well to take advantage of growth opportunities in the marketplace. Ocwen paid-down all but $26.3 million of its $350 million SSTL, keeping the facility open to provide capacity for new business. Ocwen has a solid pipeline of opportunities for both sub-servicing and servicing. Just after the end of the quarter, for example, Ocwen signed a $3.2 billion sub-servicing agreement that closes this month. Our financial capacity, along with our competitive advantages in delinquency management and low operating cost, position us well to source new business."
In comparison to the first quarter of 2010, revenue was 47% higher, driven by growth in the portfolio as unpaid principal balance serviced increased from $49.7 billion at March 31, 2010 to $70.5 billion at March 31, 2011. Operating expense increased by $9.0 million or 29%.
Other expense, net increased by $24.1 million due to interest expense on borrowings related to the HomEq acquisition. Normalizing for the $11.9 million of incremental amortization of up-front fees and original issue discount on the SSTL loan, adjusted pre-tax income of the Servicing segment would have been $46.7 million or up 44% over the first quarter of 2010 due to the growth in our servicing portfolio, delinquency management and unit cost reductions.
Corporate Items and Other
In the first quarter of 2011, losses from income before taxes were $0.3 million as compared to $1.1 million in the first quarter of 2010. Because of their minor impact on financial results, Ocwen no longer reports Loans and Residuals and Asset Management Vehicles as separate segments. Rather, these are now consolidated under Corporate Items and Other. Comparisons to prior periods reflect restatement of Corporate Items and Other to include these former segments.
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 .
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 its annual report on Form 10-K for the year ended December 31, 2010. 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.
(1) Non-performing loans exclude those serviced under special servicing agreements where we have no obligation to advance.
CONTACT: John P. Van Vlack Executive Vice President, Chief Financial Officer & Chief Accounting Officer T: (561) 682-7721 E: John.VanVlack@Ocwen.com