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Ocwen Financial Announces Operating Results For First Quarter 2014

Stocks in this article: OCN

  • Net income of $75.8 million and Revenue of $551.3 million
  • EPS of $0.54 up 74% over Q1 2013

ATLANTA, Ga. May 1, 2014 (GLOBE NEWSWIRE) -- Ocwen Financial Corporation, (NYSE:OCN) , a leading financial services holding company, today reported Net income of $75.8 million, or $0.54 per share, for the first quarter of 2014 compared to Net income of $45.1 million, or $0.31 per share, for the first quarter of 2013. Ocwen generated revenue of $551.3 million, up 36% from the first quarter of 2013. Income from operations grew by 24% to $202.1 million for the first quarter of 2014 as compared to $163.6 million for the first quarter of 2013.

Pre-tax earnings on a GAAP basis for the first quarter of 2014 were $89.0 million, a 73% increase as compared to the first quarter of 2013. Ocwen's normalized pre-tax earnings for the first quarter of 2014 were $114.0 million, a 12% increase from the first quarter of 2013. Ocwen incurred a total of $25.0 million in normalized expenses in the first quarter of 2014 that were primarily transition-related expenses. 

The following items, not included in normalization, representing a change of $59.4 million should be taken into account when comparing earnings for the fourth quarter of 2013 and the first quarter of 2014.

  • 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.

"Going forward, we believe compliance and counterparty strength will be among the most important factors determining long-term success in the servicing business. We consider our solid balance sheet, National Mortgage Settlement compliance and long history of success in large servicing transfers, where we are able to substantially reduce delinquencies and keep more people in their homes, to be substantial competitive advantages. Ocwen is the only non-bank servicer to be subject to its own National Mortgage Settlement that applies across the entire servicing portfolio, and we maintain the strongest capital ratios among large non-bank servicers. In fact, we hold more capital relative to mortgage servicing rights than most banks," commented Bill Erbey, Ocwen's Chairman. "However, increased compliance and operational risk management does not come without a cost, as you can see from our first quarter normalized earnings."

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