Item 2.
1-month LIBOR was 1.30% and 1.38% at March 31, 2003 and December 31, 2002, respectively.
This line of credit secured by advances on loans serviced for others was originally entered into during April 2001 to fund advances purchased in connection with our acquisitions of mortgage servicing rights.
We plan to retain non-brokered deposits as a source of financing our operations while at the same time reducing our reliance on brokered deposits. We plan to reduce this reliance by using proceeds from the sale of non-core assets to pay off maturing brokered deposits and by diversifying our funding sources through obtaining credit facilities for servicing rights and advances. Our ability to continue to attract new non-brokered deposits and rollover existing non-brokered deposits depends largely on our ability to compete with interest
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Dollars in thousand, except share data)
rates offered by other banks in the northern New Jersey area. In 2002 and during the first quarter of 2003, we were able to increase the amount of non-brokered deposits outstanding. If we are unable to maintain the amount of non-brokered deposits outstanding and must replace them with alternative sources of funds, it is likely that we would have to incur higher interest costs to fund our assets.
In the last several years, our Residential Loan Servicing business has grown through the purchase of servicing rights. Servicing rights entitle the owner to earn servicing fees and other types of ancillary income and impose various obligations on the servicer. Among these are the obligation to make advances for delinquent principal and interest, taxes, insurance and various other items that are required to preserve the assets being serviced.
Our ability to continue to grow our servicing business depends in part on our ability to obtain additional financing to purchase new servicing rights and to fund servicing advances. We currently use a variety of sources of debt to finance these assets, including deposits and credit facilities. Our credit facilities provide financing to us at amounts that are less than the full value of the related servicing advances that serve as the collateral for the credit facilities. If we cannot replace or renew these sources as they mature or obtain additional sources of financing, we may unable to acquire new servicing rights and make the associated advances.
Under a match funding agreement that we entered into on December 20, 2001, we are eligible to sell advances on loans serviced for others up to a maximum debt balance of $200,000 at any one time. At March 31, 2003 we had $106,452 of bonds-match funded agreements outstanding under this facility, which, if not renewed, will mature in December 2003. The sales of advances did not qualify as sales for accounting purposes; therefore, we report them as secured borrowings with pledges of collateral. We have accounted for additional sales under this facility in the same manner.
Under a revolving credit facility executed in April 2001 we have the right to pledge servicing advances as collateral for a loan up to $100,000. The facility, if not renewed, will mature in April 2004. The balance outstanding under this facility at March 31, 2003 was $100,000.
In April 2003, we obtained a $20,000 mortgage loan secured by our investment in office building in Jacksonville, Florida. The loan matures in May 2005, but we may extend the term of the loan, at our option, to May 2008. The loan bears interest based on LIBOR plus 350 basis points with a floor of 5.75%. We also entered into a $60,000 secured credit agreement that may be used to fund servicing advances and acquisitions of servicing rights. The amount of this agreement may be increased to a maximum of $200,000 if increased commitments from existing lenders or new commitments from prospective lenders can be obtained. The agreement matures April 2004 and bears interest at LIBOR plus 162.5 basis points for funding of servicing advances or 225 basis points for funding of acquisitions of servicing rights.
At March 31, 2003, we also had $205,136 of unrestricted cash and cash equivalents and $7,355 of short duration CMOs that we could use to secure additional borrowings. At March 31, 2003, we were eligible to borrow up to an aggregate of $50,000 from the FHLB of New York (based on the availability of acceptable collateral). We had no outstanding FHLB advances or securities we sold under agreements to repurchase from the FHLB at March 31, 2003 or December 31, 2002.
We closely monitor our liquidity position and ongoing funding requirements. Among the risks and challenges associated with our funding activities are the following:
•
Scheduled maturities of all certificates of deposit for the twelve months ending March 31, 2004, the twelve months ending March 31, 2005 and thereafter amount to $282,554, $87,871 and $33,194, respectively.
•
Expiration of existing collateralized line of credit in April 2004.
•
Maturity of our match funded servicing advance funding facility in December 2003, as discussed above.
•
Maturity of a note and loan totaling $47,710 in September and October 2003.
•
Potential extension of resolution and sale timelines for non-core assets in the current weak economic environment.
•
Ongoing cash requirements to fund operations of our holding company and OTX.
•
Cash requirements to fund our acquisition of additional servicing rights and related advances.
We believe that our existing sources of liquidity, including internally generated funds, will be adequate to fund our planned activities for the foreseeable future, although there can be no assurances in this regard. As discussed above, we continue to evaluate other sources of liquidity, such as lines of credit from unaffiliated parties, match funded debt and other secured borrowings.
Our operating activities provided $15,576 and $72,739 of cash flows during the first quarters of 2003 and 2002, respectively. During the foregoing periods, cash was generated from operating activities, despite the net losses recorded, for two reasons. First, the net
50
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Dollars in thousand, except share data)
losses included non-cash reserves and impairment charges in 2002 and depreciation of premises and equipment and amortization of purchased mortgage servicing rights in both years. Second, our securities portfolio generated positive cash flow through sales, interest and principal payments. The decline in cash flows provided by operating activities in the first quarter of 2003 was primarily the result of a decline in cash provided by our trading securities.
Our investing activities provided (used) cash flows totaling $(12,477) and $53,900 during the first quarters of 2003 and 2002, respectively. During the foregoing periods, cash flows from our investing activities were provided primarily from principal payments on our loans and proceeds from sales of loans and real estate. We used cash flows from our investing activities primarily to purchase mortgage servicing rights and fund loans made to facilitate the sales of real estate assets. The decline in net cash provided by investing activities is primarily due to a decline in principal payments received on loans and a decline in proceeds from sales of loans and real estate, offset in part by a decline in the amount of mortgage servicing rights purchased.
Our financing activities provided (used) cash flows of $21,406 and $(113,627) during the first quarters of 2003 and 2002, respectively. Cash flows related to our financing activities primarily resulted from changes in deposits, proceeds from obligations outstanding under lines of credit and repayment of match funded debt. The increase in cash provided by financing activities in the first quarter of 2003 is primarily related to the change in deposits. Deposits totaling $104,190 matured during the first quarter of 2002 while deposits actually increased by $6,419 during the first quarter of 2003.
Commitments. At March 31, 2003, we had $447 of commitments related to the funding of construction loans. We believe that we have adequate resources to fund all such unfunded commitments to the extent required and that substantially all of such unfunded commitments will be funded during 2003. See Note 8 to our Interim Consolidated Financial Statements.
Off-Balance Sheet Risks. In addition to commitments to extend credit, we are party to various off-balance sheet financial instruments in the normal course of our business to manage our interest rate risk and foreign currency exchange rate risk. See Note 4 to our Interim Consolidated Financial Statements and “Asset and Liability Management”.
We conduct business with a variety of financial institutions and other companies in the normal course of business, including counterparties to our off-balance sheet financial instruments. We are subject to potential financial loss if the counterparty is unable to complete an agreed upon transaction. We seek to limit counterparty risk through financial analysis, dollar limits and other monitoring procedures.
Regulatory Capital and Other Requirements
See Note 5 to our Interim Consolidated Financial Statements.
Recent Accounting Developments
For information relating to the effects of our adoption of recent accounting standards, see Note 2 to our Interim Consolidated Financial Statements.
51
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
(Dollars in thousand)
Asset and Liability Management
Asset and liability management is concerned with the timing and magnitude of the repricing of assets and liabilities. Our objective is to attempt to control risks associated with interest rate and foreign currency exchange rate movements. In general, our strategy is to match asset and liability balances within maturity categories and to manage foreign currency rate exposure related to our investments in non-U.S. dollar functional currency operations in order to limit our exposure to earnings variations and variations in the value of assets and liabilities as interest rates and foreign currency exchange rates change over time. Our Asset/Liability Management Committee (the “Committee”), which is composed of OCN’s directors and officers, formulates and monitors our asset and liability management in accordance with policies approved by OCN’s Board of Directors. The Committee meets to review, among other things, the sensitivity of our assets and liabilities to interest rate changes and foreign currency exchange rate changes, the book and market values of assets and liabilities, unrealized gains and losses, including those attributable to hedging transactions, purchase and sale activity, and maturities of investments and borrowings. The Committee also approves and establishes pricing and funding decisions with respect to overall asset and liability composition.
The Committee’s methods for evaluating interest rate risk include an analysis of our interest rate sensitivity “gap,” which is defined as the difference between interest-earning assets and interest-bearing liabilities maturing or repricing within a given time period. A gap is considered positive when the amount of interest-rate sensitive assets exceeds the amount of interest-rate sensitive liabilities. A gap is considered negative when the amount of interest-rate sensitive liabilities exceeds interest-rate sensitive assets. During a period of rising interest rates, a negative gap would tend to adversely affect net interest income, while a positive gap would tend to result in an increase in net interest income. During a period of falling interest rates, a negative gap would tend to result in an increase in net interest income, while a positive gap would tend to affect net interest income adversely. Because different types of assets and liabilities with the same or similar maturities may react differently to changes in overall market rates or conditions, changes in interest rates may affect net interest income positively or negatively even if an institution were perfectly matched in each maturity category.
The following table sets forth the estimated maturity or repricing of our interest-earning assets and interest-bearing liabilities at March 31, 2003. The amounts of assets and liabilities shown within a particular period were determined in accordance with the contractual terms of the assets and liabilities, except:
•
Adjustable-rate loans, performing discount loans and securities are included in the period in which they are first scheduled to adjust and not in the period in which they mature,
•
Fixed-rate mortgage-related securities reflect estimated prepayments, which were estimated based on analyses of broker estimates, the results of a prepayment model that we use and empirical data,
•
Non-performing discount loans reflect the estimated timing of resolutions that result in repayment to us,
•
NOW and money market checking deposits and savings deposits, which do not have contractual maturities, reflect estimated levels of attrition, which are based on our detailed studies of each such category of deposit and
•
Escrow deposits and other non-interest bearing checking accounts, which amounted to $95,268 at March 31, 2003, are excluded.
52
Item 3.
Quantitative and Qualitative Disclosures about Market Risk.
(Dollars in thousands)
Our management believes that these assumptions approximate actual experience and considers them reasonable; however, the interest rate sensitivity of our assets and liabilities in the table could vary substantially if different assumptions were used or actual experience differs from the historical experience on which the assumptions are based.
| | March 31, 2003 | |
| |
| |
| | Within Three
Months | | Four to
Twelve
Months | | More Than
One Year to
Three Years | | Three Years
and Over | | Total | |
| |
| |
| |
| |
| |
| |
Rate-Sensitive Assets | | | | | | | | | | | | | | | | |
Interest-earning deposits | | $ | 51,665 | | $ | — | | $ | — | | $ | — | | $ | 51,665 | |
Federal funds sold and repurchase agreements | | | 100,000 | | | — | | | — | | | — | | | 100,000 | |
Trading securities | | | 5,818 | | | 11,303 | | | 14,803 | | | 14,725 | | | 46,649 | |
Loans, net (1) | | | 25,807 | | | 13,611 | | | 35,093 | | | 6,380 | | | 80,891 | |
Investment securities, net | | | 4,691 | | | — | | | — | | | — | | | 4,691 | |
Match funded loans and securities (1) | | | 908 | | | 20,952 | | | 7,302 | | | 10,112 | | | 39,274 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Total rate-sensitive assets | | | 188,889 | | | 45,866 | | | 57,198 | | | 31,217 | | | 323,170 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Rate-Sensitive Liabilities | | | | | | | | | | | | | | | | |
NOW and money market checking deposits | | | 15,476 | | | 185 | | | 395 | | | 1,030 | | | 17,085 | |
Savings deposits | | | 102 | | | 200 | | | 396 | | | 704 | | | 1,403 | |
Certificates of deposit | | | 99,028 | | | 183,526 | | | 95,433 | | | 25,632 | | | 403,619 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Total interest-bearing deposits | | | 114,606 | | | 183,911 | | | 96,224 | | | 27,366 | | | 422,107 | |
Bond-match funded loan agreements | | | 137,184 | | | 3,385 | | | — | | | — | | | 140,569 | |
Obligations outstanding under lines of credit | | | 100,000 | | | — | | | — | | | — | | | 100,000 | |
Notes, debentures and other | | | 4,235 | | | 43,475 | | | 33,500 | | | — | | | 81,210 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Total rate-sensitive liabilities | | | 356,025 | | | 230,771 | | | 129,724 | | | 27,366 | | | 743,886 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Interest rate sensitivity gap excluding financial instruments | | | (167,136 | ) | | (184,905 | ) | | (72,526 | ) | | 3,851 | | | (420,716 | ) |
Financial Instruments | | | | | | | | | | | | | | | | |
Interest rate floors | | | — | | | 443 | | | — | | | — | | | 443 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Total rate-sensitive financial instruments | | | — | | | 443 | | | — | | | — | | | 443 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Interest rate sensitivity gap including financial instruments | | $ | (167,136 | ) | $ | (184,462 | ) | $ | (72,526 | ) | $ | 3,851 | | $ | (420,273 | ) |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Cumulative interest rate sensitivity gap | | $ | (167,136 | ) | $ | (351,598 | ) | $ | (424,124 | ) | $ | (420,273 | ) | | | |
| |
|
| |
|
| |
|
| |
|
| | | | |
Cumulative interest rate sensitivity gap as a percentage of total rate-sensitive assets | | | (51.72 | )% | | (108.80 | )% | | (131.24 | )% | | (130.05 | )% | | | |
(1)
Balances have not been reduced for non-performing loans.
We have experienced an increasingly large negative interest rate sensitivity gap in recent years. This change has been the result of both our acquisition of OAC and our change in strategic focus away from capital-intensive businesses and into fee-based sources of income. The result has been an increase in the relative amount of noninterest–earning assets, such as real estate assets and loan servicing assets that are funded by interest-bearing liabilities. Consequently, the amount of the negative interest rate sensitivity gap may continue to increase as we continue the transition to fee-based businesses.
The OTS has established specific minimum guidelines for thrift institutions to observe in the area of interest rate risk as described in Thrift Bulletin No. 13a, “Management of Interest Rate Risk, Investment Securities, and Derivative Activities” (“TB 13a”). Under TB 13a, institutions are required to establish and demonstrate quarterly compliance with board-approved limits on interest rate risk that are defined in terms of net portfolio value (“NPV”), which is defined as the net present value of an institution’s existing assets, liabilities and off-balance sheet instruments. These limits specify the minimum net portfolio value ratio (“NPV Ratio”) allowable under current interest rates and hypothetical interest rate scenarios. An institution’s NPV Ratio for a given interest rate scenario is calculated by dividing the NPV that would result in that scenario by the present value of the institution’s assets in that same scenario. The hypothetical scenarios are represented by immediate, permanent, parallel movements (shocks) in the term structure of interest rates of plus and minus 100, 200 and 300 basis points from the actual term structure observed at quarter end. The current NPV Ratio for each of the seven rate scenarios and the corresponding limits approved by OCN’s Board of Directors, and as applied to OCN, are as follows at March 31, 2003:
53
Item 3.
Quantitative and Qualitative Disclosures about Market Risk.
(Dollars in thousands)
Rate Shock in basis points | | Board Limits
(minimum NPV Ratios) | | Current
NPV Ratios | |
| |
| |
| |
+300 | | 5.00% | | 28.99% | |
+200 | | 6.00% | | 28.85% | |
+100 | | 7.00% | | 28.76% | |
0 | | 8.00% | | 28.68% | |
-100 | | 7.00% | | 28.49% | |
-200 | | 6.00% | | 28.60% | |
-300 | | 5.00% | | 28.73% | |
The Committee also regularly reviews interest rate risk by forecasting the impact of alternative interest rate environments on net interest income and NPV and evaluating such impacts against the maximum potential changes in net interest income and NPV that is authorized by OCN’s Board of Directors, and as applied to OCN. The following table quantifies the potential changes in net interest income and net portfolio value should interest rates go up or down (shocked) 300 basis points, assuming the yield curves of the rate shocks will be parallel to each other. The cash flows associated with loans and securities are calculated based on prepayment and default rates that vary by asset. Projected losses, as well as prepayments, are generated based upon the actual experience with the subject pool, as well as similar, more seasoned pools. To the extent available, loan characteristics such as loan-to-value ratio, interest rate, credit history, prepayment penalty terms and product types are used to produce the projected loss and prepayment assumptions that are included in the cash flow projections of the assets. When interest rates are shocked, these projected loss and prepayment assumptions are further adjusted. The base interest rate scenario assumes interest rates at March 31, 2003. Actual results could differ significantly from the OCN results estimated in the following table:
| | Estimated Changes in | |
| |
| |
Rate Shock in basis points | | Net Interest | | NPV | |
| |
| |
| |
+300 | | 52.28% | | —% | |
+200 | | 34.86% | | (0.13)% | |
+100 | | 17.43% | | (0.07)% | |
0 | | —% | | —% | |
-100 | | (17.43)% | | (0.45)% | |
-200 | | (34.86)% | | 0.39% | |
-300 | | (52.28)% | | 1.14% | |
The Committee is authorized to utilize a wide variety of off-balance sheet financial techniques to assist it in the management of interest rate risk and foreign currency exchange rate risk. These techniques include interest rate caps and floors and foreign currency futures contracts.
Interest Rate Risk Management. We have purchased amortizing caps and floors to hedge our interest rate exposure relating to match funded loans and securities. Those caps and floors had an aggregate notional amount of $108,501 and $29,633, respectively, at March 31, 2003, as compared with an aggregate notional amount of $111,799 and $30,563, respectively, at December 31, 2002.
See the “Interest Rate Management” section of Note 4 to the Interim Consolidated Financial Statements included in Item 1 herein (which is incorporated herein by reference) for additional disclosures regarding our interest rate derivative financial instruments.
Foreign Currency Exchange Rate Risk Management. We have entered into foreign currency futures to hedge our investments in foreign subsidiaries that own the shopping center located in Halifax, Nova Scotia and residual interests backed by residential loans originated in the UK.
See the “Foreign Currency Management” section of Note 4 to the Interim Consolidated Financial Statements included in Item 1 herein for additional disclosures regarding our foreign currency derivative financial instruments.
54
Item 4. Controls and Procedures.
We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our reports under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to the management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Within 90 days prior to the date of filing of this Quarterly Report on Form 10-Q and pursuant to Exchange Act Rule 13a - 15, we conducted an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rule 13a-14(c). Based upon the evaluation, the Chief Executive Officer along with the Chief Financial Officer concluded that our disclosure controls and procedures are effective, in all material respects, in timely alerting them to material information required to be included in our Exchange Act reports. Additionally, there have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we conducted the evaluation.
55
Forward-Looking Statements
Certain statements contained herein are not, and certain statements contained in our future filings with the Securities and Exchange Commission (the “Commission”), in our press releases or in the our other public or shareholder communications may not be, based on historical facts and are “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, which are based on various assumptions (some of which are beyond our control), may be identified by reference to a future period(s) or by the use of forward-looking terminology such as “anticipate,” “believe,” “commitment,” “consider,” “continue,” “could,” “estimate,” “expect,” “foresee,” “intend,” “in the event of,” “may,” “plan,” “propose,” “prospect,” “whether,” “will,” “would,” future or conditional verb tenses, similar terms, variations on such terms or negatives of such terms. Although we believe the anticipated results or other expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that those results or expectations will be attained. Actual results could differ materially from those indicated in such statements due to risks, uncertainties and changes with respect to a variety of factors, including, but not limited to, international, national, regional or local economic environments (particularly in the market areas where we operate), government fiscal and monetary policies (particularly in the market areas where we operate), prevailing interest or currency exchange rates, effectiveness of interest rate, currency and other hedging strategies, laws and regulations affecting financial institutions, investment companies and real estate (including regulatory fees, capital requirements, access for disabled persons and environmental compliance), uncertainty of foreign laws and potential political issues related to operations outside of the USA, competitive products, pricing and conditions (including from competitors that have significantly greater resources than our Company), credit, prepayment, basis, default, subordination and asset/liability risks, loan servicing effectiveness, ability to identify acquisitions and investment opportunities meeting our investment strategy, the course of negotiations and the ability to reach agreement with respect to the material terms of any particular transaction, satisfactory due diligence results, satisfaction or fulfillment of agreed upon terms and conditions of closing or performance, the timing of transaction closings, software integration, development and licensing, damage to our computer equipment and the information stored our data centers, availability of and costs associated with obtaining adequate and timely sources of liquidity, ability to repay or refinance indebtedness (at maturity or upon acceleration), to meet collateral calls by lenders (upon re-valuation of the underlying assets or otherwise), to generate revenues sufficient to meet debt service payments and other operating expenses, availability of discount loans and servicing rights for purchase, size of, nature of and yields available with respect to the secondary market for mortgage loans, financial, securities and securitization markets in general, adequacy of allowances for loan losses, changes in real estate conditions (including liquidity, valuation, revenues, rental rates, occupancy levels and competing properties), adequacy of insurance coverage in the event of a loss, other factors generally understood to affect the real estate acquisition, mortgage, servicing and leasing markets, securities investments and the software and technology industry, and other risks detailed from time to time in our reports and filings with the Commission, including our periodic reports on Forms 10-Q, 8-K and 10-K, which filings are available from the SEC. Given these uncertainties, readers are cautioned not to place undue reliance on such statements. We do not undertake, and specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
56
Part II - Other Information
Item 1.
Legal Proceedings.
See “Note 8 Commitments and Contingencies” of Ocwen Financial Coporation’s Interim Consolidated Financial Statements.
Item 6.
Exhibits and Reports on Form 8-K.
(a)3
Exhibits.
2.1 | Agreement of Merger dated as of July 25, 1999 among Ocwen Financial Corporation, Ocwen Asset Investment Corp. and Ocwen Acquisition Company (1) |
| |
3.1 | Amended and Restated Articles of Incorporation (2) |
| |
3.2 | Amended and Restated Bylaws (3) |
| |
4.0 | Form of Certificate of Common Stock (2) |
| |
4.1 | Form of Indenture between OCN and Bank One, Columbus, NA as Trustee (2) |
| |
4.2 | Form of Note due 2003 (Included in Exhibit 4.1) (2) |
| |
4.3 | Certificate of Trust of Ocwen Capital Trust I (4) |
| |
4.4 | Amended and Restated Declaration of Trust of Ocwen Capital Trust I (4) |
| |
4.5 | Form of Capital Security of Ocwen Capital Trust I (Included in Exhibit 4.4) (4) |
| |
4.6 | Form of Indenture relating to 10.875% Junior Subordinated Debentures due 2027 of OCN (4) |
| |
4.7 | Form of 10.875% Junior Subordinated Debentures due 2027 of OCN (Included in Exhibit 4.6) (4) |
| |
4.8 | Form of Guarantee of the OCN relating to the Capital Securities of Ocwen Capital Trust I (4) |
| |
4.9 | Form of Indenture between Ocwen Federal Bank FSB and The Bank of New York as Trustee (5) |
| |
4.10 | Form of Subordinated Debentures due 2005 (5) |
| |
10.1 | Ocwen Financial Corporation 1996 Stock Plan for Directors, as amended (6) |
| |
10.2 | Ocwen Financial Corporation 1998 Annual Incentive Plan (7) |
| |
10.3 | Compensation and Indemnification Agreement, dated as of May 6, 1999, between OAC and the independent committee of the Board of Directors (8) |
| |
10.4 | Indemnity agreement, dated August 24, 1999, among OCN and OAC’s Board of Directors (9) |
| |
10.5 | Amended Ocwen Financial Corporation 1991 Non-Qualified Stock Option Plan, dated October 26, 1999 (9) |
| |
10.6 | First Amendment to Agreement, dated March 31, 2000, between HCT Investments, Inc. and OAIC Partnership I, L. P. (9) |
| |
10.7 | Form of Employment Agreement dated as of April 1, 2001, by and between Ocwen Financial Corporation and Arthur D. Ringwald (10) |
| |
99.1 | Certification of the Chief Executive Officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
| |
99.2 | Certification of the Chief Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
(1)
Incorporated by reference from the similarly described exhibit included with the Registrant’s Current Report on Form 8-K filed with the Commission on July 26, 1999.
(2)
Incorporated by reference from the similarly described exhibit filed in connection with the Registrant’s Registration Statement on Form S-1 (File No. 333-5153), as amended, declared effective by the Commission on September 25, 1996.
(3)
Incorporated by reference from the similarly described exhibit included with the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1998.
(4)
Incorporated by reference from the similarly described exhibit filed in connection with Ocwen Financial Corporation’s Registration Statement on Form S-1 (File No. 333-28889), as amended, declared effective by the Commission on August 6, 1997.
(5)
Incorporated by reference from the similarly described exhibit filed in connection with Amendment No. 2 to Offering Circular on Form OC (on Form S-1) filed on September 7, 1995.
57
Part II - Other Information
(6)
Incorporated by reference from the similarly described exhibit filed in connection with the Registrant’s Registration Statement on Form S-8 (File No. 333-44999), effective when filed with the Commission on January 28, 1998.
(7)
Incorporated by reference from the similarly described exhibit to Ocwen Financial Corporation’s Definitive Proxy Statement with respect to Ocwen Financial Corporation’s 1998 Annual Meeting of Shareholders filed with the Commission on March 31, 1998.
(8)
Incorporated by reference from OAC’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1999.
(9)
Incorporated by reference from the similarly described exhibit included with Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000.
(10)
Incorporated by reference from the similarly described exhibit included with the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001.
(b)
Reports on Form 8-K Filed during the Quarter Ended March 31, 2003.
(1)
A Form 8-K was filed by OCN on February 7, 2003 that contained a news release announcing Ocwen Financial Corporation’s financial results for the fourth quarter and year ended December 31, 2002.
(2)
A Form 8-K was filed by OCN on March 13, 2003 that contained a news release announcing the termination of certain litigation and corresponding settlement by Ocwen Financial Corporation.
58
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | OCWEN FINANCIAL CORPORATION |
| | By: |
/s/ Mark S. Zeidman
|
| |
|
|
| | Mark S. Zeidman,
Senior Vice President and
Chief Financial Officer
(On behalf of the Registrant and as its principal financial officer) |
Date: May 15, 2003
59
CERTIFICATIONS
I, William C. Erbey, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Ocwen Financial Corporation;
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a)
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)
evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
c)
presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a)
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6.
The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
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Date: May 15, 2003 | |
/s/ William C Erbey |
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| | William C. Erbey
Chief Executive Officer |
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I, Mark S. Zeidman, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Ocwen Financial Corporation;
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a)
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)
evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
c)
presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date:
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a)
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6.
The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
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Date: May 15, 2003 | | |
/s/ Mark S. Zeidman
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| | |
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| | | | Mark S. Zeidman
Chief Financial Officer |
61
