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This content is a press release from our partner Globe Newswire. The AP newsroom and editorial departments were not involved in its creation.
PRESS RELEASE from provider: Globe Newswire
This content is a press release from our partner Globe Newswire. The AP newsroom and editorial departments were not involved in its creation.

Ocwen Financial Announces Operating Results for Fourth Quarter and Full Year 2018

February 27, 2019

-- Reported a Net Loss of $(2.3) million for the fourth quarter of 2018 and a Net Loss of $(70.8) million for the full year 2018

-- Completed the acquisition of PHH Corporation, ended the year with a total servicing portfolio of 1.6 million loans representing unpaid principal balance (“UPB”) of $256 billion

-- Completed our cost re-engineering plan and have commenced execution

-- Completed the first two major servicing loan transfers to BlackKnight’sMSP®system,which involved approximately 240,000 loans

-- Successfully bid on MSR acquisitions of $5.4 billion in UPB in the fourth quarter of 2018 and first quarter to date

-- Ended the year with $555 million of total equity and $329 million of cash

WEST PALM BEACH, Fla., Feb. 27, 2019 (GLOBE NEWSWIRE) -- Ocwen Financial Corporation, (NYSE:OCN) (“Ocwen” or the “Company”), a leading financial services holding company, today reported a net loss of $(70.8) million, or $(0.53) per share, for the full year 2018 compared to a net loss of $(128.0) million, or $(1.01) per share, for the full year of 2017, a $57.2 million improvement.

For the three months ended December 31, 2018, Ocwen reported a net loss of $(2.3) million, or $(0.02) per share.

Glen A. Messina, President and CEO of Ocwen, said, “We made solid progress in the quarter as we work to realize the scale and cost savings benefits of combining Ocwen and PHH and position the Company for future profitability. We are focused on executing our key business initiatives in order to address our most critical near-term business challenges, improve our financial performance, and establish a stronger foundation for the future. We continue with our disciplined and prudent approach to our integration efforts and are encouraged by the overall progress we are making.”

Fourth Quarter and Full Year 2018 Results

Pre-tax loss from continuing operations for the fourth quarter of 2018 was $(7.8) million and included a PHH post-acquisition pre-tax loss of $(31.5) million. Pre-tax results for the quarter were impacted by a number of significant items, including but not limited to: $64.0 million in bargain purchase gain, $(16.4) million in PHH transaction, integration and restructuring costs and $(10.1) million in expense related to significant litigation and regulatory settlements.

The Servicing segment recorded $(40.6) million of pre-tax loss for the fourth quarter of 2018 and included a PHH post-acquisition pre-tax loss of $(21.2) million. The business was negatively impacted by lower revenue from a smaller servicing portfolio due to portfolio runoff and de-boarding of previously announced subservicing clients as a result of terminations and transfers. For the full year 2018, the Servicing business recorded $(31.9) million of pre-tax loss.

The Lending segment recorded $3.0 million of pre-tax income for the fourth quarter of 2018. Our forward lending business incurred a $(5.3) million pre-tax loss that included a PHH post-acquisition pre-tax loss of $(2.4) million. Our reverse mortgage lending business recorded pre-tax income of $8.3 million. The Lending businesses were $5.1 million favorable to prior quarter largely driven by favorable valuation changes on our reverse mortgage lending portfolio as a result of falling interest rates. For the full year 2018, the Lending business recorded pre-tax income of $11.2 million, an increase of $15.6 million versus 2017. The forward lending business had a pre-tax loss of $(9.2) million, which was more than offset by $20.3 million of pre-tax income in our reverse mortgage lending business.

Additional Business Highlights

-- In 2018, Ocwen completed 39,545 loan modifications to help struggling families stay in their homes, 17% of which included debt forgiveness totaling over $200 million. -- Delinquencies decreased from 7.8% at September 30, 2018 to 4.9% at December 31, 2018, primarily driven by acquisition of lower delinquency PHH portfolio and ongoing consumer assistance efforts. -- The constant pre-payment rate (“CPR”) decreased from 13.7% in the third quarter of 2018 to 12.9% in the fourth quarter of 2018. In the fourth quarter of 2018, the prime CPR was 14.8%, and the non-prime CPR was 11.8%. -- For the full year 2018, Ocwen originated forward and reverse mortgage loans with UPB of $0.9 billion and $0.6 billion, respectively. The Company intends to re-enter the correspondent forward lending channel and successfully launched a proprietary jumbo reverse mortgage pilot program. -- Our reverse mortgage portfolio ended the year with an estimated $68.1 million in discounted future gains from future draws on existing loans. Neither the anticipated future gains nor future funding liability are included in the Company’s financial statements.

Webcast and Conference Call

Ocwen will host a webcast and conference call on Wednesday, February 27, 2019, at 8:30 a.m., Eastern Time, to discuss its financial results for the fourth quarter and full year 2018. The conference call will be webcast live over the internet from the Company’s website at www.Ocwen.com. To access the call, click on the “Shareholder Relations” section. A replay of the conference call will be available via the website approximately two hours after the conclusion of the call and will remain available for approximately 30 days.

About Ocwen Financial Corporation

Ocwen Financial Corporation is a financial services holding company which, through its subsidiaries, originates and services loans. We are headquartered in West Palm Beach, Florida, with offices throughout the United States and in the U.S. Virgin Islands as well as in India and the Philippines. We have been serving our customers since 1988. We may post information that is important to investors on our website ( www.Ocwen.com ).

Forward Looking Statements

This press 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. These forward-looking statements may be identified by a reference to a future period or by use of forward-looking terminology.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Our business has been undergoing substantial change which has magnified such uncertainties. Readers should bear these factors in mind when considering such statements and should not place undue reliance on such statements.

Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. In the past, actual results have differed from those suggested by forward looking statements and this may happen again.

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: uncertainty related to our ability to successfully integrate PHH’s business, and to realize the strategic objectives, synergies and other benefits of the acquisition at the time anticipated or at all, including our ability to integrate, maintain and enhance PHH’s servicing, subservicing and other business relationships, including its relationship with New Residential Investment Corp. (NRZ); our ability to transition loan servicing to the Black Knight Financial Services, Inc. LoanSphere MSP® servicing system within the time and cost parameters anticipated and without significant disruptions to our customers and operations; uncertainty related to our cost re-engineering efforts and the other actions we believe are necessary for us to improve our financial performance; uncertainty related to claims, litigation, cease and desist orders and investigations brought by government agencies and private parties regarding our servicing, foreclosure, modification, origination and other practices, including uncertainty related to past, present or future investigations, litigation, cease and desist orders and settlements with state regulators, the Consumer Financial Protection Bureau (CFPB), State Attorneys General, the Securities and Exchange Commission (SEC), the Department of Justice or the Department of Housing and Urban Development (HUD) and actions brought under the False Claims Act by private parties on behalf of the United States of America regarding incentive and other payments made by governmental entities; adverse effects on our business as a result of regulatory investigations, litigation, cease and desist orders or settlements; reactions to the announcement of such investigations, litigation, cease and desist orders or settlements by key counterparties, including lenders, the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Government National Mortgage Association (Ginnie Mae); our ability to comply with the terms of our settlements with regulatory agencies and the costs of doing so; increased regulatory scrutiny and media attention; any adverse developments in existing legal proceedings or the initiation of new legal proceedings; our ability to effectively manage our regulatory and contractual compliance obligations; our ability to interpret correctly and comply with liquidity, net worth and other financial and other requirements of regulators as well as those set forth in our debt and other agreements; our ability to comply with our servicing agreements, including our ability to comply with our agreements with, and the requirements of, Fannie Mae, Freddie Mac and Ginnie Mae and maintain our seller/servicer and other statuses with them; the adequacy of our financial resources, including our sources of liquidity and ability to sell, fund and recover advances, repay borrowings and comply with our debt agreements, including the financial and other covenants contained in them; our ability to timely transfer mortgage servicing rights under our agreements with NRZ; our ability to maintain our long-term relationship with NRZ under these arrangements; our ability to realize anticipated future gains from future draws on existing loans in our reverse mortgage portfolio; our servicer and credit ratings as well as other actions from various rating agencies, including the impact of prior or future downgrades of our servicer and credit ratings; as well as other risks detailed in Ocwen’s reports and filings with the SEC, including its annual report on Form 10-K for the year ended December 31, 2018 once filed. Anyone wishing to understand Ocwen’s business should review its SEC filings. Ocwen’s forward-looking statements speak only as of the date they are made and, we disclaim any obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise.

FOR FURTHER INFORMATION CONTACT: Investors: Media: Stephen Swett John Lovallo T: (203) 614-0141 T: (917) 612-8419 E: shareholderrelations@ocwen.com E: jlovallo@levick.com

Residential Servicing Statistics (Dollars in thousands) At or for the Three Months Ended December 31, September 30, June 30, 2018 March 31, December 31, 2018 2018 2018 2017 --------------- --------------- --------------- --------------- --------------- Total unpaid principal balance of loans $ 256,000,490 $ 160,996,474 $ 167,127,014 $ 173,388,876 $ 179,352,554 and REO serviced Non-performing loans and REO serviced 4.9 % 7.8 % 8.3 % 9.0 % 9.3 % as a % of total UPB (1) 12.9 % 13.7 % 14.3 % 12.9 % 14.4 % Prepayment speed (average CPR) (2) (3) (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. CPR measures prepayments as a percentage of the current outstanding loan balance expressed as a compound annual rate. (3) Average CPR for the three months ended December 31, 2018 includes 14.8% for prime loans and 11.8% for non-prime loans.

Segment Results (Dollars in thousands) For the Three Months For the Twelve Months Ended Ended December 31, December 31, 2018 2017 2018 2017 ----------- ----------- ----------- ------------- Servicing Revenue $ 276,991 $ 238,943 $ 951,224 $ 1,041,290 Expenses 249,406 78,978 772,467 716,384 Other expense, net (68,201 ) (131,315 ) (210,705 ) (278,226 ) --------- - --------- - --------- - ----------- - Income (loss) from continuing operations (40,616 ) 28,650 (31,948 ) 46,680 before income taxes --------- - --------- - --------- - ----------- - Lending Revenue 28,556 32,018 93,672 127,475 Expenses 25,870 27,430 82,906 128,058 Other income (expense), net 362 (1,947 ) 388 (3,848 ) --------- - --------- - --------- - ----------- - Income (loss) from continuing operations 3,048 2,641 11,154 (4,431 ) before income taxes --------- - --------- - --------- - ----------- - Corporate Items and Other Revenue 5,382 5,809 18,149 25,811 Expenses 27,543 61,895 77,123 154,203 Other income (expense), net 51,966 (20,519 ) 8,292 (57,830 ) --------- - --------- - --------- - ----------- - Income (loss) from continuing operations 29,805 (76,605 ) (50,682 ) (186,222 ) before income taxes --------- - --------- - --------- - ----------- - Consolidated loss before income taxes $ (7,763 ) $ (45,314 ) $ (71,476 ) $ (143,973 ) - ------- - - ------- - - ------- - - --------- -

OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) For the Three Months For the Twelve Months Ended Ended December 31, December 31, 2018 2017 2018 2017 ----------- ----------- ----------- ------------ Revenue Servicing and subservicing fees $ 276,241 $ 227,853 $ 934,336 $ 989,376 Gain on loans held for sale, net 16,608 26,426 77,743 103,402 Other revenue, net 18,080 22,491 50,966 101,798 --------- - --------- - --------- - ---------- - Total revenue 310,929 276,770 1,063,045 1,194,576 --------- - --------- - --------- - ---------- - Expenses Compensation and benefits 86,816 86,244 298,036 358,994 Professional services 54,733 83,800 165,554 229,451 MSR valuation adjustments, net 61,762 (62,484 ) 153,457 52,962 Servicing and origination 39,845 13,435 131,297 141,496 Technology and communications 30,935 20,960 98,241 100,490 Occupancy and equipment 22,262 16,450 59,631 66,019 Other expenses 6,466 9,898 26,280 49,233 --------- - --------- - --------- - ---------- - Total expenses 302,819 168,303 932,496 998,645 --------- - --------- - --------- - ---------- - Other income (expense) Interest income 4,008 3,864 14,026 15,965 Interest expense (85,440 ) (150,767 ) (275,041 ) (363,238 ) Bargain purchase gain 64,036 — 64,036 — Gain on sale of mortgage servicing rights, net 1,022 2,674 1,325 10,537 Other, net 501 (9,552 ) (6,371 ) (3,168 ) --------- - --------- - --------- - ---------- - Total other expense, net (15,873 ) (153,781 ) (202,025 ) (339,904 ) --------- - --------- - --------- - ---------- - Loss from continuing operations before income taxes (7,763 ) (45,314 ) (71,476 ) (143,973 ) Income tax expense (benefit) (4,012 ) (51 ) 529 (15,516 ) --------- - --------- - --------- - ---------- - Loss from continuing operations, net of tax (3,751 ) (45,263 ) (72,005 ) (128,457 ) Income from discontinued operations, net of tax 1,409 — 1,409 — --------- - --------- - --------- - ---------- - Net loss (2,342 ) (45,263 ) (70,596 ) (128,457 ) Net (income) loss attributable to non-controlling — 780 (176 ) 491 interests Net loss attributable to Ocwen stockholders $ (2,342 ) $ (44,483 ) $ (70,772 ) $ (127,966 ) - ------- - - ------- - - ------- - - -------- - Earnings (loss) per share attributable to Ocwen common stockholders – Basic and Diluted Continuing operations $ (0.03 ) $ (0.34 ) $ (0.54 ) $ (1.01 ) Discontinued operations $ 0.01 $ - $ 0.01 $ - Weighted average common shares outstanding 133,912,42 130,893,02 133,703,35 127,082,058 Basic 5 5 9 133,912,42 130,893,02 133,703,35 127,082,058 Diluted 5 5 9

OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data) December 31, December 31, 2018 2017 ------------- ------------- Assets Cash $ 329,132 $ 259,655 Restricted cash (amounts related to VIEs of $20,968 and $21,922) 67,878 42,905 Mortgage servicing rights ($1,457,149 and $671,962 carried at fair value) 1,457,149 1,008,844 Advances, net 249,382 211,793 Match funded assets (related to variable interest entities (VIEs)) 937,294 1,177,357 Loans held for sale ($176,525 and $214,262 carried at fair value) 242,622 238,358 Loans held for investment, at fair value (amounts related to VIEs of $26,520 and 5,498,719 4,715,831 $0) Receivables, net 198,262 199,529 Premises and equipment, net 33,417 37,006 Other assets ($7,568 and $8,900 carried at fair value) (amounts related to VIEs of $2,874 379,567 511,886 and $5,437) Assets related to discontinued operations 794 — ----------- - ----------- - Total assets $ 9,394,216 $ 8,403,164 - --------- - - --------- - Liabilities and Equity Liabilities HMBS-related borrowings, at fair value $ 5,380,448 $ 4,601,556 Other financing liabilities ($1,057,671 and $508,291 carried at fair value) (amounts 1,127,613 593,518 related to VIEs of $24,815 and $0) Match funded liabilities (related to VIEs) 778,284 998,618 Other secured borrowings, net 382,538 545,850 Senior notes, net 448,727 347,338 Other liabilities ($4,986 and $635 carried at fair value) 703,636 769,410 Liabilities related to discontinued operations 18,265 — ----------- - ----------- - Total liabilities 8,839,511 7,856,290 ----------- - ----------- - Equity Ocwen Financial Corporation (Ocwen) stockholders’ equity Common stock, $.01 par value; 200,000,000 shares authorized; 133,912,425 and 131,484,058 shares issued and outstanding at December 31, 2018 and December 1,339 1,315 31, 2017, respectively Additional paid-in capital 554,056 547,057 Retained earnings (accumulated deficit) 3,567 (2,083 ) Accumulated other comprehensive loss, net of income taxes (4,257 ) (1,249 ) ----------- - ----------- - Total Ocwen stockholders’ equity 554,705 545,040 Non-controlling interest in subsidiaries — 1,834 ----------- - ----------- - Total equity 554,705 546,874 Total liabilities and equity $ 9,394,216 $ 8,403,164 - --------- - - --------- -

OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) For the Years Ended December 31, 2018 2017 ----------- ------------ Cash flows from operating activities Net loss $ (70,596 ) $ (128,457 ) Adjustments to reconcile net loss to net cash provided by operating activities: MSR valuation adjustments, net 153,457 52,962 Gain on sale of mortgage servicing rights, net (1,325 ) (10,537 ) Provision for bad debts 49,180 76,828 Depreciation 27,202 26,886 Loss on write-off of fixed assets, net — 8,502 Amortization of debt issuance costs 2,921 2,738 Reversal of valuation allowance on deferred tax assets (23,347 ) (29,979 ) Decrease in deferred tax assets other than provision for valuation allowance 20,058 30,710 Equity-based compensation expense 2,366 5,624 (Gain) loss on valuation of financing liability (19,269 ) 41,282 (Gain) loss on trading securities (527 ) 6,756 Net gain on valuation of mortgage loans held for investment and HMBS-related (18,698 ) (23,733 ) borrowings Bargain purchase gain (64,036 ) — Gain on loans held for sale, net (32,722 ) (53,209 ) Origination and purchase of loans held for sale (1,715,190) (3,695,163 ) Proceeds from sale and collections of loans held for sale 1,625,116 3,662,065 Changes in assets and liabilities: Decrease in advances and match funded advances 258,899 330,052 Decrease in receivables and other assets, net 144,310 199,209 Decrease in other liabilities (69,207 ) (100,650 ) Other, net 3,986 7,135 --------- - ---------- - Net cash provided by operating activities 272,578 409,021 --------- - ---------- - Cash flows from investing activities Origination of loans held for investment (920,476 ) (1,277,615 ) Principal payments received on loans held for investment 400,521 444,388 Net cash acquired in the acquisition of PHH 64,692 — Restricted cash acquired in the acquisition of PHH 38,813 — Purchase of mortgage servicing rights (5,433 ) (1,658 ) Proceeds from sale of mortgage servicing rights 7,276 4,234 Proceeds from sale of advances and match funded advances 33,792 9,446 Issuance of automotive dealer financing notes (19,642 ) (174,363 ) Collections of automotive dealer financing notes 52,598 162,965 Additions to premises and equipment (9,016 ) (9,053 ) Proceeds from sale of real estate 9,546 3,147 Other, net 2,464 (707 ) Net cash used in investing activities (344,865 ) (839,216 ) --------- - ---------- - OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS — (continued) (Dollars in thousands) For the Years Ended December 31, 2018 2017 ----------- ------------ Cash flows from financing activities Repayment of match funded liabilities, net (220,334 ) (282,379 ) Proceeds from mortgage loan warehouse facilities and other secured borrowings 2,991,261 7,215,264 Repayments of mortgage loan warehouse facilities and other secured borrowings (3,417,398) (7,431,763 ) Repurchase of senior notes, net (18,482 ) — Payment of debt issuance costs — (841 ) Proceeds from sale of mortgage servicing rights accounted for as a financing 279,586 54,601 Proceeds from sale of reverse mortgages (HECM loans) accounted for as a financing 948,917 1,281,543 (HMBS-related borrowings) Repayment of HMBS-related borrowings (391,985 ) (418,503 ) Issuance of common stock — 13,913 Capital distribution to non-controlling interest (822 ) — Purchase of non-controlling interest (1,188 ) — Other (2,818 ) (1,478 ) --------- - ---------- - Net cash provided by financing activities 166,737 430,357 --------- - ---------- - Net increase in cash and restricted cash 94,450 162 Cash and restricted cash at beginning of year 302,560 302,398 --------- - ---------- - Cash and restricted cash at end of year $ 397,010 $ 302,560 - ------- - - -------- - (1) Cash and restricted cash as of December 31, 2018 and December 31, 2017 includes $329.1 million and $259.7 million of cash and $67.9 million and $42.9 million of restricted cash respectively.