================================================================================
Exhibit 99.1
[GRAPHIC OMITTED]
OCWEN
Ocwen Financial Corporation(R)
================================================================================
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
Robert J. Leist, Jr.
Senior Vice President & Principal Financial Officer
T: (561) 682-7958
E: robert.leist@ocwen.com
----------------------
OCWEN FINANCIAL CORPORATION ANNOUNCES
FIRST QUARTER 2006 NET INCOME
West Palm Beach, FL - (April 27, 2006) Ocwen Financial Corporation (NYSE:OCN)
today reported net income of $16.5 million or $0.26 per share for the first
quarter of 2006. This compares to $2.4 million or $0.04 per share for the first
quarter of 2005.
Chairman and CEO William C. Erbey stated "Our first quarter results were driven
primarily by the strong performance of our Residential Servicing segment. As
compared to the first quarter of last year Residential Servicing reported higher
fees and float earnings as well as lower expenses reflecting reduced loan
pay-offs along with process improvements and automation intended to reduce costs
and enhance the customer experience. The first quarter also benefited from an
improved performance in our Residential Origination Services segment, which
included approximately $4.4 million of transaction gains associated with our
loan sale and securitization activities.
Our balance sheet declined by $297 million, primarily due to the securitization
of approximately $470 million of loans during the first quarter, partially
offset by the purchase of $260 million of loans which were securitized in April,
2006. Our capital and liquidity position remains strong, with cash and
investment grade securities of $217 million, a decline in liabilities of $316
million and equity of $366 million at quarter-end."
Residential Servicing
For the three months ended March 31, 2006 2005
- --------------------------------------------- ------------ ------------
Revenue...................................... $ 79,941 $ 68,446
Operating expenses........................... 55,630 61,396
Other income (expense)....................... (6,443) (4,103)
------------ ------------
Pre-tax income (loss)........................ $ 17,868 $ 2,947
============ ============
o As of March 31, 2006, we were the servicer of approximately 378
thousand loans with an unpaid principal balance (UPB) of $42.9 billion
as compared to approximately 369 thousand loans and $42.8 billion of
UPB at December 31, 2005.
o Revenue in the first quarter of 2006 reflects increased servicing fees
from a larger servicing portfolio, as well as higher float income.
o The decline in operating expenses reflects a reduction in interest
paid to investors related to loan pay-offs as well as a reduction in
operating expenses reflecting process improvements and automation
undertaken in 2005.
Commercial Servicing
For the three months ended March 31 2006 2005
- --------------------------------------------- ------------ ------------
Revenue...................................... $ 3,115 $ 4,441
Operating expenses........................... 2,849 4,373
Other income (expense)....................... (1) (46)
------------ ------------
Pre-tax income (loss)........................ $ 265 $ 22
============ ============
o Revenue and expense declines primarily reflect the sale of GSS Japan
and reduced expenses in GSS Taiwan
Page 5 of 9
Ocwen Financial Corporation
First Quarter 2006 Results
April 27, 2006
Ocwen Recovery Group
For the three months ended March 31 2006 2005
- --------------------------------------------- ------------ ------------
Revenue...................................... $ 2,201 $ 3,812
Operating expenses........................... 2,633 3,398
Other income (expense)....................... 82 89
------------ ------------
Pre-tax income (loss)........................ $ (350) $ 503
============ ============
o The decline in revenue in 2006 primarily reflects a shift in revenue
from proprietary assets to lower yielding third-party contracts.
o Operating expenses declined in 2006 as a result of process
improvements, technology enhancements and a greater concentration of
India resources. These initiatives are ongoing and have yet to reach
completion.
Residential Origination Services
For the three months ended March 31 2006 2005
- --------------------------------------------- ------------ ------------
Revenue...................................... $ 14,574 $ 12,267
Operating expenses........................... 21,437 11,081
Other income (expense)....................... 11,886 1,648
------------ ------------
Pre-tax income (loss)........................ $ 5,023 $ 2,834
============ ============
o First quarter 2006 results include approximately $4.4 million of
transaction gains primarily related to our securitization and loan
sale activities.
o Pre-tax income in 2006 from our securities portfolio, refinance and
Ocwen Realty Advisors businesses was offset by losses from both our
newer due diligence operations, where we continue to build capacity
and from an entity we began to consolidate as of year-end 2005.
Business Process Outsourcing
For the three months ended March 31 2006 2005
- --------------------------------------------- ------------ ------------
Revenue...................................... $ 2,723 $ 2,586
Operating expenses........................... 2,725 2,455
Other income (expense)....................... (10) (33)
------------ ------------
Pre-tax income (loss)........................ $ (12) $ 98
============ ============
o Pre-tax income declined in the first quarter of 2006 primarily as a
result of increased compensation costs as the business prepares for
new sales initiatives.
Corporate Items and Other
For the three months ended March 31 2006 2005
- --------------------------------------------- ------------ ------------
Revenue...................................... $ (105) $ (64)
Operating expenses........................... 2,717 1,986
Other income (expense)....................... 1,486 (1,417)
------------ -----------
Pre-tax income (loss)........................ $ (1,336) $ (3,467)
============ ===========
o Results for 2006 include a gain of approximately $0.9 million
representing interest income arising from a cash distribution on a
commercial residual security now approaching the end of its economic
life.
o In first quarter of 2005 we retained greater interest expense in
Corporate, reflecting the high cash balances we were holding in
preparation for debanking.
Page 6 of 9
Ocwen Financial Corporation
First Quarter 2006 Results
April 27, 2006
Ocwen Financial Corporation is a leading provider of servicing and origination
processing solutions to the loan industry with headquarters in West Palm Beach,
Florida, offices in Orlando, Florida and Downers Grove, Illinois and global
operations in Canada, Germany, India and Taiwan. We make our clients' loans
worth more by leveraging our superior processes, innovative technology and
high-quality, cost-effective global human resources. Additional information is
available at www.ocwen.com.
-------------
This news 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, including, but not limited to, the
outlook on rate increases and prepayment speeds, the securitization market and
our plans to securitize loans. Forward-looking statements are not guarantees of
future performance, and involve a number of assumptions, risks and uncertainties
that could cause actual results to differ materially.
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: general economic and market conditions, prevailing interest
or currency exchange rates, governmental regulations and policies, international
political and economic uncertainty, availability of adequate and timely sources
of liquidity, federal income tax rates, real estate market conditions and trends
and the outcome of ongoing litigation as well as other risks detailed in OCN's
reports and filings with the Securities and Exchange Commission, including its
periodic report on Form 10-K for the year ended December 31, 2005. The
forward-looking statements speak only as of the date they are made and should
not be relied upon. OCN undertakes no obligation to update or revise the
forward-looking statements.
Page 7 of 9
Ocwen Financial Corporation
First Quarter 2006 Results
April 27, 2006
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
For the three months ended March 31, 2006 2005
- ----------------------------------------------- ------------ ------------
Revenue
Servicing and subservicing fees ........... $ 80,084 $ 72,380
Process management fees ................... 19,312 16,952
Other revenues ............................ 3,053 2,156
------------ ------------
Total revenue ......................... 102,449 91,488
------------ ------------
Operating expenses
Compensation and benefits ................. 25,701 24,371
Amortization of servicing rights .......... 26,288 25,115
Servicing and origination ................. 13,197 14,033
Technology and communications ............. 6,639 7,399
Professional services ..................... 7,779 5,018
Occupancy and equipment ................... 4,976 4,242
Other operating expenses .................. 3,411 4,511
------------ ------------
Total operating expenses .............. 87,991 84,689
------------ ------------
Other income (expense)
Interest income ........................... 18,113 6,332
Interest expense .......................... (17,254) (8,440)
Loss on trading securities ................ (374) (1,398)
Gain on loan sales ........................ 3,105 --
Other, net ................................ 3,410 (356)
------------ ------------
Other income (expense), net ........... 7,000 (3,862)
------------ ------------
Income before income taxes .................... 21,458 2,937
Income tax expense ............................ 4,925 550
------------ ------------
Net income ................................ $ 16,533 $ 2,387
============ ============
Earnings per share
Basic ...................................... $ 0.26 $ 0.04
Weighted average common shares outstanding
Basic ....................................... 63,247,835 62,743,287
Page 8 of 9
Ocwen Financial Corporation
First Quarter 2006 Results
April 27, 2006
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
March 31, December 31,
2006 2005
------------ ------------
Assets
Cash ................................................................. $ 183,813 $ 269,611
Trading securities, at fair value
Investment grade ................................................. 33,215 1,685
Subordinates and residuals ....................................... 45,992 30,277
Loans held for resale ................................................ 364,924 624,671
Advances ............................................................. 238,920 219,716
Match funded advances ................................................ 357,828 377,105
Mortgage servicing rights ............................................ 146,993 148,663
Receivables .......................................................... 62,025 68,266
Premises and equipment, net .......................................... 39,947 40,108
Other assets ......................................................... 80,903 74,031
------------ ------------
Total assets ..................................................... $ 1,554,560 $ 1,854,133
============ ============
Liabilities and Stockholders' Equity
Liabilities
Match funded liabilities ......................................... $ 322,757 $ 339,292
Servicer liabilities ............................................. 218,088 298,892
Lines of credit and other secured borrowings ..................... 406,381 626,448
Debt securities .................................................. 150,329 154,329
Other liabilities ................................................ 88,922 85,912
------------ ------------
Total liabilities ............................................. 1,186,477 1,504,873
------------ ------------
Minority interest in subsidiary ...................................... 1,943 1,853
Stockholders' Equity
Common stock, $.01 par value; 200,000,000 shares authorized;
63,358,780 and 63,133,471 shares issued and outstanding at
March 31, 2006 and December 31, 2005, respectively ............ 634 631
Additional paid-in capital ....................................... 186,095 184,262
Retained earnings ................................................ 179,731 163,198
Accumulated other comprehensive income (loss), net of taxes ...... (320) (684)
------------ ------------
Total stockholders' equity ....................................... 366,140 347,407
------------ ------------
Total liabilities and stockholders' equity .................... $ 1,554,560 $ 1,854,133
============ ============
Page 9 of 9