UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report
(Date of earliest event reported): May 9, 2005
OCWEN FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Florida 1-13219 65-0039856
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1661 Worthington Road
Suite 100
West Palm Beach, Florida 33409
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (561) 682-8000
The Forum, Suite 1000
1675 Palm Beach Lakes Boulevard, West Palm Beach, Florida
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Page 1 of 9
Exhibit Index on Page 4
Item 8.01 Other Events
The news release of the Registrant dated May 9, 2005, announcing its
first quarter 2005 results is attached hereto and filed herewith as
Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
(a) - (b) Not applicable.
(c) Exhibits
The following exhibits are filed as part of this report:
99.1 Text of a press release by the Registrant dated May 9, 2005.
Page 2 of 9
SIGNATURES
Pursuant to the requirements 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, hereunto duly authorized.
OCWEN FINANCIAL CORPORATION
(Registrant)
By: /s/ ROBERT J. LEIST, JR.
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Robert J. Leist, Jr.
Vice President & Chief Accounting
Officer and Acting Chief Financial
Officer
Date: May 9, 2005
Page 3 of 9
INDEX TO EXHIBIT
Exhibit No. Description Page
- ----------- ----------- ----
99.1 News release of Ocwen Financial Corporation, dated 5
May 9, 2005, announcing its first quarter 2005
results and certain other information.
Page 4 of 9
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Exhibit 99.1
[GRAPHIC OMITTED]
OCWEN
Ocwen Financial Corporation(R)
================================================================================
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
Robert J. Leist, Jr.
Vice President & Acting Chief
Financial Officer
T: (561) 682-7958
E: robert.leist@ocwen.com
OCWEN FINANCIAL CORPORATION ANNOUNCES
FIRST QUARTER NET INCOME
West Palm Beach, FL - (May 9, 2005) Ocwen Financial Corporation (NYSE:OCN) today
reported net income for the first quarter of 2005 of $2.4 million or $0.04 per
share compared to net income of $6.8 million or $0.10 per share for the first
quarter of 2004. Results for 2005 are net of a tax provision of $0.6 million as
compared to $0.01 million in the same period of 2004.
Chairman and CEO William C. Erbey stated "Our first quarter results were
impacted by several items that merit noting:
o In the aggregate, our core businesses earned pre-tax income of $6.4
million as compared to $10.3 million in the same period last year, a
difference of $3.9 million. This decline is primarily due to three
factors:
o in the first quarter of 2005 our core businesses absorbed
approximately $1.2 million more overhead costs than in 2004
because we no longer allocate such costs to the closed
non-core Affordable Housing and Commercial Asset businesses;
o Residential Loan Servicing pre-overhead contribution declined
by $1.3 million and
o contribution from our Subprime Finance group declined by $1.4
million.
o We are encouraged that our Residential Loan Servicing business, while
still below the earnings of the first quarter of last year, has begun
to benefit from increased interest rates, achieving an increase of $3.5
million or 163% in its pre-overhead contribution as compared to the
fourth quarter of last year.
o Expenses rose in the first quarter of this year as compared to last
year by approximately $2.1 million or 4%, largely due to investments we
are making in staff in the Ocwen Recovery Group and Business Process
Outsourcing organizations of approximately $1.4 million and increased
sales and marketing costs of approximately $0.5 million.
As we noted in our annual report, we have reorganized our segment reporting this
quarter in order to better reflect our focus on providing solutions to our
customers. This change entailed changes to three segments
o Residential Servicing (including the Residential Loan Servicing, VA
servicing and REALServicing(TM) groups)
o Residential Origination Services (including our loans for resale and
title activities as well as REALTrans(TM), Ocwen Realty Advisors,
Mortgage Due Diligence Services and Subprime Finance) and
o Commercial Servicing, which now includes REALSynergy(TM).
We continue to report on our other two core businesses - Ocwen Recovery
Group and Business Process Outsourcing. Given the substantial sales of
assets during 2004, we have closed the non-core Affordable Housing and
Commercial Assets businesses and will now report the results of managing
the few remaining non-core assets in our Corporate segment.
As we announced last year, we are continuing the process of debanking. In this
regard, we have reduced our deposit liabilities by $106.2 million or 25% since
the end of last year and subsequent to March 31st have concluded two additional
financing arrangements with a total capacity of $165 million. Our cash and
investment grade security balances remain high in anticipation of debanking, and
together with our new financing arrangements, provide us with the capital and
liquidity required to achieve our 2005 objectives."
The Residential Servicing business reported pre-tax income of $2.9 million in
the first quarter of 2005 vs. $5.5 million in the 2004 first quarter. While
Residential Loan Servicing results remain below first quarter 2004 levels, they
have improved as compared to the fourth quarter of last year, reflecting reduced
prepayment speeds and the growing impact of more recently priced portfolios. Our
servicing portfolio grew during the first quarter. As of March 31, 2005, we were
the servicer of approximately 331 thousand loans with an unpaid principal
Page 5 of 9
Ocwen Financial Corporation
First Quarter Results
May 9, 2005
balance (UPB) of $37.4 billion, as compared to approximately 320 thousand loans
and $34.5 billion of UPB at December 31, 2004.
Residential Origination Services reported pre-tax income of $2.8 million in the
first quarter of 2005 as compared to $3.0 million in the same period last year.
These results reflect improved results in our loan refinancing and resale
programs, in settlement and fulfillment services and in REALTrans, offset by a
declines in earnings of Ocwen Realty Advisors and Subprime Finance. Our Mortgage
Due Diligence Services group, which we initiated at the beginning of the year,
generated $1.8 million in revenue and $0.3 million of contribution before
overhead in the first quarter.
Our other core businesses reported aggregate pre-tax income of $0.6 million in
the first quarter of 2005 as compared to pre-tax income of $1.8 million in the
first quarter of 2004. This is primarily due to reduced earnings of $0.9 million
in Ocwen Recovery Group, reflecting additional costs associated with investing
in the development of our India collection capabilities.
The Corporate Segment reported a pre-tax loss of $(3.5) million in the first
quarter of 2005 as compared to income of $0.7 million in the first quarter of
last year. Corporate results for 2005 include approximately $1.1 million of
costs related to our remaining non-core real estate, loan and affordable housing
assets as well as $1.4 million of interest expense related in part to our high
cash balances in preparation for debanking. Corporate results also include
interest income on federal income tax receivables of $0.4 million and $3.7
million for the first quarter of 2005 and 2004, respectively. We have also
reduced our remaining real estate assets during the first quarter, closing on
the sale of our Halifax shopping mall, which had a book value of $8.8 million as
of December 31, 2004. We have $23.0 million of non-core assets remaining as of
March 31, 2005, several of which are subject to sales contracts we expect to
close later this year.
Ocwen Financial Corporation is a diversified financial services holding company
with headquarters in West Palm Beach, Florida and operations in Canada, China,
Germany, India, Japan and Taiwan. Ocwen Financial Corporation is engaged in a
variety of businesses related to residential and commercial mortgage servicing,
real estate asset management, asset recovery, business process outsourcing and
the marketing and sales of technology solutions to third parties. Ocwen
Financial Corporation is a global leader in customer service excellence as a
result of our company-wide commitment to quality, integrity and accountability.
Additional information about Ocwen Financial Corporation 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,
interest rates and the impact of changes in interest rates and prepayment speeds
on our Residential Loan Servicing business, the impact of actions that may
result in our no longer being a thrift holding company, the adequacy of our
liquidity position and the outlook on reduction in non-core assets.
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, uncertainty related to dispute resolution and litigation, federal
income tax rates, recognition of deferred tax credits and real estate market
conditions and trends, 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, 2004. 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 6 of 9
Ocwen Financial Corporation
First Quarter Results
May 9, 2005
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
For the three months ended March 31, 2005 2004
- ------------------------------------------------------------------ ------------ ------------
Revenue
Servicing and related fees ..................................... $ 45,389 $ 42,291
Vendor management fees ......................................... 10,881 13,003
Gain (loss) on trading securities, net ......................... (1,397) (643)
Valuation gains (losses) on real estate ........................ 89 (1,851)
Gain (loss) on sales of real estate ............................ 34 (541)
Operating income (loss) from real estate ....................... (174) 8
Other income ................................................... 1,884 6,621
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Non-interest revenue ......................................... 56,706 58,888
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Interest income ................................................ 6,332 4,605
Interest expense ............................................... 8,440 7,802
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Net interest income (expense) before provision for loan losses (2,108) (3,197)
Provision for loan losses ...................................... 4 (531)
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Net interest income (expense) after provision for loan losses (2,112) (2,666)
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Total revenue ............................................... 54,594 56,222
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Non-interest expense
Compensation and employee benefits ............................. 24,371 22,033
Occupancy and equipment ........................................ 4,242 3,997
Technology and communication costs ............................. 7,399 6,669
Loan expenses .................................................. 5,712 7,927
Loss (gain) on investments in affordable housing properties .... 642 (38)
Professional services and regulatory fees ...................... 4,721 5,825
Other operating expenses ....................................... 4,570 3,036
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Non-interest expense ......................................... 51,657 49,449
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Income (loss) before income taxes ................................ 2,937 6,773
Income tax expense (benefit) ..................................... 550 11
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Net income (loss) ............................................ $ 2,387 $ 6,762
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Earnings (loss) per share
Basic .......................................................... $ 0.04 $ 0.10
Diluted ........................................................ $ 0.04 $ 0.10
Weighted average common shares outstanding
Basic .......................................................... 62,743,287 67,762,414
Diluted ........................................................ 64,018,882 69,093,785
Page 7 of 9
Ocwen Financial Corporation
First Quarter Results
May 9, 2005
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share data)
March 31, December 31,
2005 2004
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Assets
Cash and amounts due from depository institutions .............................. $ 107,227 $ 168,799
Interest earning deposits ...................................................... 113,306 119,052
Trading securities, at fair value:
Investment grade ............................................................ 75,104 86,215
Subordinates and residuals .................................................. 37,363 39,527
Match funded assets (including advances on loans serviced for others of $266,281
and $276,626) ................................................................. 269,959 280,760
Advances on loans and loans serviced for others ................................ 232,261 240,430
Mortgage servicing rights ...................................................... 135,274 131,409
Receivables .................................................................... 135,468 126,719
Real estate .................................................................... 9,450 18,732
Affordable housing properties .................................................. 4,968 5,641
Loans (net of allowance for loan losses of $4,350 and $4,546) .................. 8,575 3,792
Premises and equipment, net .................................................... 39,066 37,440
Other assets ................................................................... 66,568 68,977
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Total assets ................................................................ $ 1,234,589 $ 1,327,493
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Liabilities and Stockholders' Equity
Liabilities
Deposits ..................................................................... $ 199,530 $ 301,299
Escrow deposits .............................................................. 121,499 125,977
Match funded liabilities ..................................................... 222,437 244,327
Lines of credit and other secured borrowings ................................. 91,089 50,612
Debt securities .............................................................. 231,249 231,249
Accrued liabilities .......................................................... 34,278 42,391
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Total liabilities ........................................................... 900,082 995,855
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Minority interest in subsidiaries .............................................. 1,581 1,530
Stockholders' Equity
Common stock, $.01 par value; 200,000,000 shares authorized: 62,750,904 and
62,739,478 shares issued and outstanding .................................... 628 627
Additional paid-in capital .................................................... 181,464 181,336
Retained earnings ............................................................. 150,520 148,133
Accumulated other comprehensive income (loss), net of taxes ................... 314 12
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Total stockholders' equity .................................................. 332,926 330,108
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Total liabilities and stockholders' equity ................................ $ 1,234,589 $ 1,327,493
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Page 8 of 9
Ocwen Financial Corporation
First Quarter Results
May 9, 2005
Pre-Tax Income (Loss) by Business Segment
For the three months ended March 31, 2005 2004
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(Dollars in thousands)
Core businesses
Residential Servicing ....................... $ 2,947 $ 5,493
Residential Origination Services ............ 2,834 3,034
Ocwen Recovery Group ........................ 503 1,401
Business Process Outsourcing ................ 98 397
Commercial Servicing ........................ 21 (42)
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6,403 10,283
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Non-core businesses
Commercial Assets ........................... -- (3,241)
Affordable Housing .......................... -- (973)
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-- (4,214)
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Corporate Items and Other ..................... (3,466) 704
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Income (loss) before income taxes ............. $ 2,937 $ 6,773
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Page 9 of 9