Florida | 1-13219 | 65-0039856 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
(a) - (c) | Not applicable |
(d) | Exhibits: |
OCWEN FINANCIAL CORPORATION (Registrant) | ||
Date: May 1, 2014 | By: | /s/ John V. Britti |
John V. Britti | ||
Executive Vice President & Chief Financial Officer | ||
(On behalf of the Registrant and as its principal financial officer) |
![]() | Ocwen Financial Corporation® |
FOR IMMEDIATE RELEASE | FOR FURTHER INFORMATION CONTACT: | |
Stephen Swett or Brad Cohen T: (203) 682-8200 E: shareholderrelations@ocwen.com | ||
or | ||
John V. Britti Executive Vice President & Chief Financial Officer T: (561) 682-7535 E: John.Britti@Ocwen.com |
OCWEN FINANCIAL ANNOUNCES OPERATING RESULTS FOR FIRST QUARTER 2014 | |
| Net income of $75.8 million and Revenue of $551.3 million |
| EPS of $0.54 up 74% over Q1 2013 |
• | There was a $5.1 million loss on the $7.6 billion portion of the mortgage servicing rights (“MSR”) portfolio marked at fair value as compared to a fourth quarter 2013 gain of $19.1 million. There was also an MSR impairment reversal of $2.4 million for the fourth quarter. Combined, these changes produced a $26.6 million change quarter-over-quarter. |
• | Reserves for uncollectible servicing receivables increased by $24.3 million versus an increase of $5.7 million in the fourth quarter of 2013. |
• | The lending segment generated earnings of $0.6 million compared to $14.8 million in the fourth quarter of 2013. The reverse mortgage business posted a $6.3 million loss versus a $0.3 million loss in the prior quarter. Forward lending profit fell from $15.1 million to $6.9 million. |
• | On February 26, 2014, we issued $123.6 million of Ocwen Asset Servicing Income Series (“OASIS”), Series 2014-1 Notes secured by owned MSRs relating to a reference pool of Freddie Mac mortgages with $11.8 billion of unpaid principal balance (“UPB”). This transaction is recorded as a financing and mitigates prepayment risk. |
• | Completed 28,456 loan modifications, with HAMP modifications accounting for 39% of the total. Modifications that included some principal reduction accounted for 49% of total modifications. |
• | The constant pre-payment rate (“CPR”) fell from 13.1% in the fourth quarter of 2013 to 11.2% in the first quarter of 2014. In the first quarter of 2014, prime CPR was 12.6%, and non-prime CPR was 9.2%. |
• | Completed the final transfers of previously announced OneWest and Greenpoint transactions. |
• | Completed the remaining acquisition of MSRs associated with the February 2013 ResCap transaction. Ocwen had been subservicing these loans for the ResCap estate. |
• | Deferred servicing fees (“DSF”) related to delinquent borrower payments amounted to $580.4 million at March 31, 2014. Ocwen does not recognize DSF as revenue until collected, and it does not accrue DSF on its balance sheet. |
• | Total delinquencies declined from 14.5% at December 31, 2013 to 13.8% at March 31, 2014. |
• | Net cash provided by operating activities of $213.0 million, with adjusted cash-flow from operating activities of $204.0 million. |
• | Originated forward and reverse mortgage loans with UPB of $1.1 billion and $163.2 million, respectively. |
Residential Servicing Statistics (Dollars in thousands) | |||||||||||||||||||
At or for the three months ended | |||||||||||||||||||
March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | |||||||||||||||
Total unpaid principal balance of loans and REO serviced | $ | 449,570,596 | $ | 464,651,332 | $ | 434,819,426 | $ | 436,255,383 | $ | 467,071,661 | |||||||||
Non-performing loans and REO serviced as a % of total UPB (1) | 13.8 | % | 14.5 | % | 14.6 | % | 14.4 | % | 15.0 | % | |||||||||
Prepayment speed (average CPR)(2) | 11.2%(3) | 13.1 | % | 15.8 | % | 20.8 | % | 20.1 | % |
(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 12.6% for prime loans and 9.2% for non-prime loans. |
Segment Results (Dollars in thousands) (UNAUDITED) | ||||||||
For the Three Months Ended March 31, | 2014 | 2013 | ||||||
Servicing | ||||||||
Revenue | $ | 520,823 | $ | 375,690 | ||||
Operating expenses | 307,933 | 210,628 | ||||||
Income from operations | 212,890 | 165,062 | ||||||
Other expense, net | (119,010 | ) | (117,545 | ) | ||||
Income before income taxes | $ | 93,880 | $ | 47,517 | ||||
Lending | ||||||||
Revenue | $ | 28,767 | $ | 13,908 | ||||
Operating expenses | 31,464 | 11,098 | ||||||
Income (loss) from operations | (2,697) | 2,810 | ||||||
Other income, net | 3,276 | 2,218 | ||||||
Income before income taxes | $ | 579 | $ | 5,028 | ||||
Corporate Items and Other | ||||||||
Revenue | $ | 1,711 | $ | 16,713 | ||||
Operating expenses | 9,837 | 20,969 | ||||||
Loss from operations | (8,126) | (4,256) | ||||||
Other income, net | 2,627 | 3,046 | ||||||
Loss before income taxes | $ | (5,499 | ) | $ | (1,210 | ) | ||
Corporate Eliminations | ||||||||
Revenue | $ | (40 | ) | $ | (45 | ) | ||
Operating expenses | (40 | ) | (45 | ) | ||||
Income (loss) from operations | — | — | ||||||
Other income (expense), net | — | — | ||||||
Income (loss) before income taxes | $ — | $ — | ||||||
Consolidated income before income taxes | $ 88,960 | $ 51,335 |
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share data) (UNAUDITED) | ||||||||
For the Three Months Ended March 31, | 2014 | 2013 | ||||||
Revenue | ||||||||
Servicing and subservicing fees | $ | 490,459 | $ | 367,493 | ||||
Gain on loans held for sale, net | 43,987 | 8,172 | ||||||
Other revenues | 16,815 | 30,601 | ||||||
Total revenue | 551,261 | 406,266 | ||||||
Operating expenses | ||||||||
Compensation and benefits | 105,637 | 94,626 | ||||||
Amortization of mortgage servicing rights | 62,094 | 47,883 | ||||||
Servicing and origination | 43,947 | 23,616 | ||||||
Technology and communications | 36,976 | 30,012 | ||||||
Professional services | 21,398 | 13,486 | ||||||
Occupancy and equipment | 32,051 | 18,249 | ||||||
Other operating expenses | 47,091 | 14,778 | ||||||
Total operating expenses | 349,194 | 242,650 | ||||||
Income from operations | 202,067 | 163,616 | ||||||
Other income (expense) | ||||||||
Interest expense | (122,616 | ) | (93,416 | ) | ||||
Gain (loss) on debt redemption | 2,253 | (17,030 | ) | |||||
Other, net | 7,256 | (1,835 | ) | |||||
Total other expense, net | (113,107 | ) | (112,281 | ) | ||||
Income before income taxes | 88,960 | 51,335 | ||||||
Income tax expense | 13,129 | 6,188 | ||||||
Net income | 75,831 | 45,147 | ||||||
Net loss attributable to non-controlling interests | 15 | — | ||||||
Net income attributable to Ocwen stockholders | 75,846 | 45,147 | ||||||
Preferred stock dividends | (581 | ) | (1,485 | ) | ||||
Deemed dividends related to beneficial conversion feature of preferred stock | (416 | ) | (1,086 | ) | ||||
Net income attributable to Ocwen common stockholders | $ | 74,849 | $ | 42,576 | ||||
Earnings per share attributable to Ocwen common stockholders | ||||||||
Basic | $ | 0.55 | $ | 0.31 | ||||
Diluted | $ | 0.54 | $ | 0.31 | ||||
Weighted average common shares outstanding | ||||||||
Basic | 135,227,067 | 135,638,567 | ||||||
Diluted | 141,089,455 | 139,559,157 |
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) (UNAUDITED) | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
Assets | ||||||||
Cash | $ | 242,386 | $ | 178,512 | ||||
Mortgage servicing rights ($110,826 and $116,029 carried at fair value) | 2,040,355 | 2,069,381 | ||||||
Advances | 937,926 | 890,832 | ||||||
Match funded advances | 2,655,854 | 2,552,383 | ||||||
Loans held for sale ($338,228 and $503,753 carried at fair value) | 383,703 | 566,660 | ||||||
Loans held for investment - reverse mortgages, at fair value | 923,464 | 618,018 | ||||||
Goodwill | 420,201 | 420,201 | ||||||
Receivables, net | 182,724 | 152,516 | ||||||
Deferred tax assets, net | 118,156 | 116,558 | ||||||
Premises and equipment, net | 51,553 | 53,786 | ||||||
Other assets | 229,105 | 309,143 | ||||||
Total assets | $ | 8,185,427 | $ | 7,927,990 | ||||
Liabilities, Mezzanine Equity and Equity | ||||||||
Liabilities | ||||||||
Match funded liabilities | $ | 2,361,662 | $ | 2,364,814 | ||||
Financing liabilities ($870,462 and $615,576 carried at fair value) | 1,693,147 | 1,284,229 | ||||||
Other secured borrowings | 1,633,999 | 1,777,669 | ||||||
Other liabilities | 560,615 | 644,595 | ||||||
Total liabilities | 6,249,423 | 6,071,307 | ||||||
Mezzanine Equity | ||||||||
Series A Perpetual Convertible Preferred stock, $.01 par value; 200,000 shares authorized; 62,000 shares issued and outstanding at March 31, 2014 and December 31, 2013; redemption value $62,000 plus accrued and unpaid dividends | 60,776 | 60,361 | ||||||
Equity | ||||||||
Ocwen Financial Corporation (Ocwen) stockholders’ equity | ||||||||
Common stock, $.01 par value; 200,000,000 shares authorized; 135,365,174 and 135,176,271 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | 1,354 | 1,352 | ||||||
Additional paid-in capital | 819,362 | 818,427 | ||||||
Retained earnings | 1,061,543 | 986,694 | ||||||
Accumulated other comprehensive loss, net of income taxes | (9,542 | ) | (10,151 | ) | ||||
Total Ocwen stockholders’ equity | 1,872,717 | 1,796,322 | ||||||
Non-controlling interest in subsidiaries | 2,511 | — | ||||||
Total equity | 1,875,228 | 1,796,322 | ||||||
Total liabilities, mezzanine equity and equity | $ | 8,185,427 | $ | 7,927,990 |
Normalized Pre-Tax Income Summary (Dollars in Millions) | Three Months Ended March 31, | |||||||
2014 | 2013 | |||||||
GAAP Income before income taxes | $89.0 | $51.3 | ||||||
Transition and Transaction related expenses | 23.4 | 38.2 | ||||||
Legal/Settlement expense | 1.6 | - | ||||||
Discontinued/Sold Operations | - | (5.10) | ||||||
Loss on sale of Assets | - | |||||||
Funding related expenses | - | 17.0 | ||||||
Normalized income before income taxes | $114.0 | $ | 101.4 |
Normalized Pre-Tax Income Summary (Dollars in Millions) | Three Months Ended March 31, | |||||||
2014 | 2013 | |||||||
Revenue | ||||||||
Servicing and subservicing fees | $- | $5.4 | ||||||
Other revenues | - | 9.6 | ||||||
Total revenue (A) | - | 15.0 | ||||||
Operating expenses | ||||||||
Compensation and benefits | 9.1 | 29.0 | ||||||
Amortization of mortgage servicing rights | - | - | ||||||
Servicing and origination | - | 4.9 | ||||||
Technology and communications | 9.8 | 5.0 | ||||||
Professional services | 5.1 | 3.7 | ||||||
Occupancy and equipment | - | 2.4 | ||||||
Other operating expenses | 1.0 | 1.2 | ||||||
Total operating expenses (B) | 25.0 | 46.2 | ||||||
Other income (expense) | ||||||||
Interest expense | - | (0.8) | ||||||
Other, net | - | (18.1) | ||||||
Other expense, net (C) | - | (18.9) | ||||||
Total Normalization (B+A+C) | $25.0 | $ | 50.1 |
Adjusted Cash Flow from Operating Activities Reconciliation (Dollars in Millions) | Three Months Ended March 31, 2014 | ||
GAAP Net Cash Provided by Operating Activities (A) | $213.0 | ||
Decrease in Advances and Match Funded Advances (B) | 13.4 | ||
Funding Efficiency (C) | 67 | % | |
Reduction of match funded liabilities (D=B*C) | 9.0 | ||
Adjusted Cash Flow from Operating Activities (A-D) | $204.0 |
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