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Ocwen Reports Net Income Of $9.9 Million For Q4 2010 And $38 Million For Full Year 2010

Stocks in this article: OCN

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.  

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