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Exhibit 99.1
[GRAPHIC LOGO OMITTED]
OCWEN FINANCIAL CORPORATION(R)
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FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
ROBERT J. LEIST, JR.
VICE PRESIDENT & CHIEF ACCOUNTING OFFICER
T: (561) 682-7958
E: rleist@ocwen.com
OCWEN FINANCIAL CORPORATION ANNOUNCES
FIRST QUARTER RESULTS
WEST PALM BEACH, FL - (May 9, 2001) Ocwen Financial Corporation (NYSE: OCN)
today reported a net loss for its first quarter ended March 31, 2001 of $(23.5)
million, or $(0.35) per share, compared to a net loss of $(5.1) million or
$(0.07) per share for the 2000 first quarter. In addition to continued
investment in OTX, the results reflect a number of non-cash charges, including
provisions for losses on discount loans, increases in reserves for loss on
affordable housing assets and an addition to the valuation allowance for
deferred taxes.
Chairman and CEO William C. Erbey stated "Despite our first quarter results, we
made excellent progress towards achieving our strategic goals. In our
residential loan servicing business the unpaid principal balance of loans
serviced for others, including loans acquired but not yet boarded, grew to $19.1
billion at March 31, 2001, an 82% increase over year end 2000. Additionally, in
April we closed on another $1.8 billion in unpaid principal balance of servicing
from Metropolitan Mortgage & Securities Co., Inc.
In our technology businesses at OTX, transaction volume on the REALTransSM
system grew significantly in the first quarter of 2001 as compared to the fourth
quarter of 2000.
We also made progress in exiting from our capital-intensive businesses.
Excluding servicing advances and mortgage servicing rights, total assets at
March 31, 2001 were reduced by $270.3 million or 13.6% as compared to December
31, 2000. Our plan is to continue to reduce our exposure. For example, in the
month of April we sold or resolved another $48.6 million of commercial assets.
This progress, however, was not made without some cost. In the first quarter our
residential discount loan, commercial loan and unsecured businesses incurred an
aggregate pretax loss of $12.1 million. A significant component of this loss was
the recording of provisions for losses on loans, discount loans and REO
aggregating $14.3 million. Similarly, our Affordable Housing business incurred a
pretax loss of $7.9 million, including the addition of $4.5 million of reserves
for losses on the expected sale of these assets. Additionally, we recorded a
non-cash after tax charge of $10.0 million to increase our deferred tax asset
valuation allowance.
While near term pressure on earnings will continue during our transition, we are
confident that the Company's $479.0 million of equity, $302.1 million of cash
and cash equivalents and newly executed servicing advance financing agreements
provide the liquidity and financial strength necessary to achieve our long term
objectives."
The Loan Servicing business segment reported record net income of $5.3 million
in the first quarter of 2001 as compared to net income of $3.7 million in the
first quarter of 2000. The number of loans serviced for others as of March 31,
2001, including both those boarded and those that will be boarded over the next
several months grew to 280,000 at the end of the first quarter as compared to
165,000 at the end of 2000. It is expected that net income in this business will
further increase as the newly acquired loans are boarded over the next several
months.
Continuing investments in OTX in the first quarter of 2001 resulted in a net
loss of $(8.5) million, compared to $(4.5) million in the 2000 first quarter.
These results reflect the ongoing effort in OTX to complete the development of
its advanced technology products and to broaden its marketing campaigns, the
costs of which are reflected in current earnings. Additionally, first quarter
results for OTX included a non-recurring pretax charge of $3.2 million to record
the final payment made in connection with the acquisition in 1997 of one of
OTX's subsidiaries. The integration of Washington Mutual and other customers
onto the REALTrans system is expected to generate significant increases in OTX's
revenues in the second half of 2001.
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The discount loan businesses, including Residential, Commercial and Unsecured,
reported net losses of $(1.1), $(5.0) and $(1.4) million, respectively, in the
first quarter of 2001. These results primarily reflect pretax provisions for
loan losses totaling $14.1 million in these three business units in the first
quarter. These provisions, which are largely non-cash charges, were recorded in
response to changes in the first quarter in the credit quality of the assets or,
in the case of the Unsecured business segment, slower than anticipated
collection experience.
The Affordable Housing business posted a net loss of $(4.6) million in the 2001
first quarter as compared to net income of $1.2 million in 2000. These losses
include pretax reserves of $4.5 million recorded on properties that are not
currently classified as held for sale.
First quarter 2001 results included extraordinary gains of $2.2 million (net of
tax) as compared to $2.1 million in the first quarter of 2000. The extraordinary
gains were earned on the repurchase at a discount of $15.8 million par amount of
the Company's 10 7/8% Capital Trust Securities and $4.2 million par amount of
the Company's 11 7/8% Senior Notes. The Company will continue to evaluate
additional debt repurchases during 2001.
Income tax expense for the first quarter of 2001 included a non-cash provision
for a valuation allowance on the Company's deferred tax asset of $10.0 million.
No such provision was recorded in the first quarter of 2000. The Company has
established this allowance based upon generally accepted accounting principles
that require it to estimate that portion of the deferred tax asset that may not
be realized for financial reporting purposes in the near future. The Company's
ability to utilize the deferred tax asset and its need for the valuation
allowance ultimately will depend on future profitability.
RECENT DEVELOPMENTS
On April 18, 2001, the Company acquired the servicing rights to more than $1.8
billion in mortgage loans from Metropolitan Mortgage & Securities Co., Inc. The
servicing rights to approximately 31,000 loans will be transferred.
On April 18, 2001, the Company executed a Receivables Financing Facility
Agreement with Greenwich Capital Financial Products, Inc. ("Greenwich"), whereby
the Company borrowed $23.9 million collateralized by certain of the Company's
servicing advances. According to a Commitment Letter signed in connection with
the execution of the Agreement, the Company has agreed to finance at least $200
million of servicing advances with Greenwich over the course of the next two
years.
On April 20, 2001, the Company executed a Loan and Security Agreement with
Credit Suisse First Boston whereby the Company may borrow up to $100 million
over the next year collateralized by certain of the Company's servicing
advances. The Company borrowed approximately $38.1 million on this credit line
on the date of execution.
Ocwen Financial Corporation is a financial services company headquartered in
West Palm Beach, Florida. The Company's primary business is the servicing and
special servicing of nonconforming, subperforming and nonperforming residential
and commercial mortgage loans. Ocwen also specializes in the development of
related loan servicing technology and software for the mortgage and real estate
industries. Additional information about Ocwen Financial Corporation is
available at www.ocwen.com. REALTransSM is the property of Ocwen Financial
Corporation.
Certain statements contained herein 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 may be identified by reference to a
future period(s) or by the use of forward-looking terminology such as "will,"
"continue," "expect," "further," "generate," "reduce," "plan," "ongoing,"
"develop," "anticipate," future or conditional verb tenses, similar terms,
variations on such terms or negatives of such terms. 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 changes in market
conditions as they exist on the date hereof, applicable economic environments,
government fiscal and monetary policies, prevailing interest or currency
exchange rates, effectiveness of interest rate, currency and other hedging
strategies, laws and regulations affecting financial institutions and real
estate operations (including regulatory fees, capital requirements, income and
property taxation and environmental compliance), uncertainty of foreign laws,
competitive products, pricing and conditions, credit, prepayment, basis,
default, subordination and asset/liability risks, loan servicing effectiveness,
the ability to identify acquisitions and investment opportunities meeting OCN's
investment strategy, satisfaction or fulfillment of agreed upon terms and
conditions of closing or performance, timing of transaction closings, software
integration, development and licensing effectiveness, change or damage to the
Company's computer equipment and the information stored in its data centers,
availability of adequate and timely sources of liquidity, dependence on existing
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sources of funding, ability to repay or refinance indebtedness (at maturity or
upon acceleration), 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, allowances for loan losses, geographic concentrations of assets,
changes in real estate conditions (including valuation, revenues and competing
properties), adequacy of insurance coverage in the event of a loss, the market
prices of the common stock of OCN, other factors generally understood to affect
the real estate acquisition, mortgage, servicing and leasing markets, securities
investments and the software and technologies industries, and other risks
detailed from time to time in OCN's reports and filings with the Securities and
Exchange Commission, including its periodic reports on Forms 8-K, 10-Q and 10-K,
including Exhibit 99.1 attached to OCN's Form 10-K for the year ended December
31, 2000.
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INTEREST INCOME AND EXPENSE
For the three months ended March 31, 2001 2000
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(Dollars in thousands)
INTEREST INCOME:
Federal funds sold and repurchase agreements ................... $ 1,644 $ 1,709
Trading securities ............................................. 5,700 --
Securities available for sale .................................. -- 12,869
Loans available for sale ....................................... 221 807
Investment securities and other ................................ 346 327
Loan portfolio ................................................. 1,883 3,968
Match funded loans and securities .............................. 2,483 3,311
Discount loan portfolio ........................................ 12,540 25,099
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24,817 48,090
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INTEREST EXPENSE:
Deposits ....................................................... 18,071 24,685
Advances from the Federal Home Loan Bank ....................... 4 --
Securities sold under agreements to repurchase ................. 2 2,640
Bonds - match funded agreements ................................ 2,966 3,356
Obligations outstanding under lines of credit .................. 720 3,471
Notes, debentures and other interest bearing obligations ....... 5,117 9,244
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26,880 43,396
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Net interest (loss) income before provision for loan losses .... $ (2,063) $ 4,694
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NET (LOSS) INCOME BY BUSINESS SEGMENT
For the three months ended March 31, 2001 2000
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(Dollars in thousands)
Single family residential discount loans ........................ $ (1,089) $ 3,086
Commercial loans ................................................ (5,031) 694
Domestic residential mortgage loan servicing .................... 5,278 3,731
Investment in low-income housing tax credits .................... (4,610) 1,217
OTX ............................................................. (8,535) (4,475)
Commercial Real Estate .......................................... 100 693
UK operations ................................................... -- (1,542)
Subprime single family residential lending ...................... 1,066 (4,561)
Unsecured collections ........................................... (1,364) (2,173)
Ocwen Realty Advisors ........................................... 87 142
Corporate items and other ....................................... (9,418) (1,910)
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$ (23,516) $ (5,098)
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OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
For the three months ended March 31, 2001 2000
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NET INTEREST INCOME:
Income ................................................................................ $ 24,817 $ 48,090
Expense ............................................................................... 26,880 43,396
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Net interest income before provision for loan losses .................................. (2,063) 4,694
Provision for loan losses ............................................................. 8,120 2,608
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Net interest (loss) income after provision for loan losses ............................ (10,183) 2,086
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NON-INTEREST INCOME:
Servicing and other fees .............................................................. 31,117 24,166
Gain on interest earning assets, net .................................................. (645) 10,994
Unrealized gain on trading and match funded securities, net ........................... 4,003 --
Impairment charges on securities available for sale ................................... -- (6,833)
Loss on real estate owned, net ........................................................ (984) (7,007)
Gain on other non interest earning assets, net ........................................ 456 138
Net operating gains on investments in real estate ..................................... 2,554 5,553
Amortization of excess of net assets acquired over purchase price ..................... 4,583 2,794
Other income .......................................................................... 2,046 1,139
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43,130 30,944
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NON-INTEREST EXPENSE:
Compensation and employee benefits .................................................... 20,935 16,583
Occupancy and equipment ............................................................... 3,093 3,263
Technology and communication costs .................................................... 10,148 5,621
Loan expenses ......................................................................... 4,235 3,930
Net operating losses on investments in certain low-income housing tax credit interests. 5,062 1,499
Amortization of excess of purchase price over net assets acquired ..................... 778 773
Professional services and regulatory fees ............................................. 4,026 3,839
Other operating expenses .............................................................. 2,579 2,566
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50,856 38,074
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Distributions on Company-obligated, mandatorily redeemable securities of
subsidiary trust holding solely junior subordinated debentures of the Company ....... 2,053 3,194
Equity in income (losses) of investments in unconsolidated entities ..................... 45 (2,260)
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Loss before income taxes and extraordinary gain ......................................... (19,917) (10,498)
Income tax (expense) benefit ............................................................ (5,762) 3,255
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Loss before extraordinary gain .......................................................... (25,679) (7,243)
Extraordinary gain on repurchase of debt, net of taxes .................................. 2,163 2,145
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Net loss ................................................................................ $ (23,516) $ (5,098)
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(LOSS) EARNINGS PER SHARE:
Basic:
Loss before extraordinary gain ...................................................... $ (0.38) $ (0.10)
Extraordinary gain .................................................................. 0.03 0.03
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Net loss ............................................................................ $ (0.35) $ (0.07)
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Diluted:
Loss before extraordinary gain ...................................................... $ (0.38) $ (0.10)
Extraordinary gain .................................................................. 0.03 0.03
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Net loss ............................................................................ $ (0.35) $ (0.07)
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Weighted average common shares outstanding:
Basic ................................................................................. 67,152,363 68,222,987
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Diluted ............................................................................... 67,152,363 68,222,987
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OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
March 31, December 31,
2001 2000
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ASSETS:
Cash and amounts due from depository institutions ........................ $ 39,413 $ 18,749
Interest earning deposits ................................................ 9,990 134,987
Federal funds sold and repurchase agreements ............................. 155,500 --
Trading securities, at fair value:
Collateralized mortgage obligations (AAA-rated) ........................ 97,196 277,595
Subordinates, residuals and other securities ........................... 109,461 112,647
Loans available for sale, at lower of cost or market ..................... 10,096 10,610
Real estate held for sale ................................................ 21,623 22,670
Low-income housing tax credit interests held for sale .................... 100,800 87,083
Investment securities, at cost ........................................... 13,257 13,257
Loan portfolio, net ...................................................... 77,983 93,414
Discount loan portfolio, net ............................................. 439,649 536,028
Match funded loans and securities, net ................................... 110,470 116,987
Investments in low-income housing tax credit interests ................... 54,213 55,729
Investments in unconsolidated entities ................................... 447 430
Real estate owned, net ................................................... 136,267 146,419
Investment in real estate ................................................ 116,125 122,761
Premises and equipment, net .............................................. 42,483 43,152
Income taxes receivable .................................................. 34,980 30,261
Deferred tax asset, net .................................................. 82,171 95,991
Advances on loans and loans serviced for others .......................... 299,609 227,055
Mortgage servicing rights ................................................ 67,477 51,426
Other assets ............................................................. 49,479 52,169
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$ 2,068,689 $ 2,249,420
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits ............................................................... $ 1,133,691 $ 1,258,360
Bonds - match funded agreements ........................................ 99,732 107,050
Obligations outstanding under lines of credit .......................... 32,796 32,933
Notes, debentures and other interest bearing obligations ............... 169,130 173,330
Accrued interest payable ............................................... 26,470 22,096
Excess of net assets acquired over purchase price ...................... 32,082 36,665
Accrued expenses, payables and other liabilities ....................... 32,070 36,030
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Total liabilities ................................................... 1,525,971 1,666,464
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Company obligated, mandatorily redeemable securities of subsidiary
trust holding solely junior subordinated debentures of the Company.... 63,685 79,530
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 20,000,000 shares authorized;
0 shares issued and outstanding..................................... -- --
Common stock, $.01 par value; 200,000,000 shares authorized;
67,152,363 shares issued and outstanding at March 31, 2001,
and December 31, 2000, respectively.................................. 672 672
Additional paid-in capital ............................................ 223,177 223,163
Retained earnings ..................................................... 255,678 279,194
Accumulated other comprehensive income, net of taxes:
Net unrealized gain on securities available for sale ................ -- --
Net unrealized loss on derivative financial instruments ............. (20) --
Net unrealized foreign currency translation (loss) gain ............. (474) 397
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Total stockholders' equity ............................................ 479,033 503,426
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$ 2,068,689 $ 2,249,420
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