Ocwen Financial Corporation
May 4, 2010

Ocwen Financial Corporation Announces First Quarter 2010 Financial Results

WEST PALM BEACH, Fla., May 4, 2010 -- Ocwen Financial Corporation ("Ocwen" or the "Company") (NYSE:OCN) today reported net income of $20.9 million or $0.20 per diluted share for the first quarter of 2010. This compares to net income of $15.1 million or $0.24 per diluted share for the first quarter of 2009. Pre-tax income from continuing operations was $31.4 million for the first quarter of 2010 as compared to pre-tax income of $23.3 million for the first quarter of 2009. The 35% improvement in pre-tax income occurred despite the absence of any revenues associated with the Company's former Ocwen Solutions business due to the August 10, 2009 separation of Altisource Portfolio Solutions S.A.

 

FIRST QUARTER BUSINESS PERFORMANCE HIGHLIGHTS

"The operational and financial success of our first quarter demonstrates our industry leading position as a special servicer.Our pre-tax income grew by 56% over the fourth quarter of 2009," said Ronald Faris, President of Ocwen."At the same time, we produced 19,612 modifications, of which 6,312 were HAMP.In the April Oversight Report published by the Congressional Oversight Panel, Ocwen led the industry in the total dollars of HAMP incentives as of February 2010."

Chairman and CEO William Erbey added, "In the process of raising equity last year, we committed to acquiring new business, increasing loan modifications and issuing TALF financing.With the completion of our recently announced acquisition, we:

At present, our servicing portfolio is $55.1 billion, an increase of 35% since March 31, 2009."

Servicing

In comparison to the first quarter of 2009, revenue was constant while operating expenses were 10% favorable as the shift towards sub-servicing reduced amortization expense by 37%. Pre-tax income for Servicing of $32.5 million was 29% higher than the same quarter last year due to decreases in amortization of servicing rights, servicing and origination expense, and interest expense.

Loans and Residuals

Loans and Residuals incurred a loss from continuing operations before taxes of $0.1 million as compared to a loss of $4.1 million in the first quarter of 2009. The change reflects a smaller portfolio and a slower decline in loans and real estate valuations.

Asset Management Vehicles

Income from continuing operations before taxes for Asset Management Vehicles was $0.2 million as compared to a loss of $0.5 million in the first quarter of 2009. This improvement primarily reflects higher gains on loan resolutions.

Corporate

In the first quarter of 2010, losses from continuing operations before taxes declined by 66% primarily due to the continuing success in cost control initiatives as compared to the first quarter of 2009.

Total consolidated assets increased by 3% to $1,815.5 million for the quarter as the $209.1 million increase in cash and $71.3 million consolidation of loans, net – restricted for securitization investors more than offset the reductions in auction rate securities, advances, match funded advances and receivables. Total liabilities increased by 2% to $924.6 million primarily due to new borrowings under the $200 million TALF note, the financing of $88.2 million par value of auction rate securities with $75 million non-recourse debt, and the $69 million consolidation of secured borrowings – owed to securitization investors, offset in part by the full repayment of the Investment line.

Ocwen Financial Corporation is a leading provider of residential and commercial loan servicing, special servicing and asset management services. Ocwen is headquartered in West Palm Beach, Florida with offices in California, the District of Columbia and Georgia and support operations in India and Uruguay. Utilizing proprietary technology and world-class training and processes, we provide solutions that make our clients' loans worth more. 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 securitization market and our plans to securitize loans and expectations as to the impact of rising interest rates and cost-effective resources in India. 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 Ocwen's reports and filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2009. The forward-looking statements speak only as of the date they are made and should not be relied upon. Ocwen undertakes no obligation to update or revise the forward-looking statements.

Residential Servicing Statistics (Dollars in thousands)
  At or for the three months ended
  March 31,


2010
December 31,
2009
September 30,
2009
June 30,
2009
March 31,
2009
Total unpaid principal balance of loans and REO serviced $49,677,999 $49,980,077 $40,293,698 $38,406,007 $40,789,135
Non-performing loans and REO serviced as a % of total UPB (1) 25.3%

25.6%
26.9% 27.4% 25.1%
Prepayment speed (average CPR) 12% 19% 20% 22% 21%
           
(1)Loans for which borrowers are making scheduled payments under modification, forbearance or bankruptcy plans are considered performing loans. Non-performing loans exclude those serviced under special servicing agreements where we have no obligation to advance.        

           
Segment Results (Dollars in thousands) (UNAUDITED)    
   
For the three months ended March 31, 2010 2009
   
Ocwen Asset Management    
Servicing    
Revenue $75,453 $74,694


Operating expenses
30,787 34,218
Income from operations 44,666 40,476
Other expense, net (12,161) (15,280)
Income from continuing operations before taxes 32,505 25,196
Loans and Residuals    
Revenue
Operating expenses 1,191 561
Loss from operations (1,191) (561)
Other income (expense), net 1,066 (3,577)
Loss from continuing operations before taxes (125) (4,138)
Asset Management    
Revenue 188 537
Operating expenses 467 762
Loss from operations (279) (225)
Other income (expense), net 523 (302)
Income (loss) from continuing operations before taxes 244 (527)
Income from continuing operations before income taxes 32,624 20,531
     
Ocwen Solutions    
Mortgage Services    
Revenue 18,017
Operating expenses 12,892
Income from operations

5,125
Other income, net 23
Income from continuing operations before taxes 5,148
Financial Services    
Revenue 17,318
Operating expenses 18,151
Loss from operations (833)
Other expense, net (468)
Loss from continuing operations before taxes (1,301)
Technology Products    
Revenue 10,573
Operating expenses 8,173
Income from operations 2,400
Other expense, net (76)
Income from continuing operations before taxes 2,324
Income from continuing operations before income taxes 6,171
     
Corporate Items and Other    
Revenue 348 253
Operating expenses 2,923 3,982
Loss from operations (2,575) (3,729)
Other income, net 1,396 291
Loss from continuing operations before taxes (1,179) (3,438)
     
Corporate Eliminations    
Revenue (403) (6,802)
Operating expenses (191) (6,473)
Loss from operations (212) (329)
Other income, net 212 329
Income from continuing operations before taxes
Consolidated income from continuing operations
before income taxes

$31,445

$23,264
     
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES    
CONSOLIDATED STATEMENTS OF OPERATIONS    
(Dollars in thousands, except share data)    
(UNAUDITED)    
For the three months ended March 31, 2010 2009
   
Revenue    
Servicing and subservicing fees $66,480 $78,810
Process management fees 7,906 33,692
Other revenues 1,200 2,088
Total revenue 75,586 114,590
     
Operating expenses    
Compensation and benefits 12,777 28,545
Amortization of mortgage servicing rights 6,375 10,041
Servicing and origination 591 12,638
Technology and communications 5,664 4,808
Professional services 3,255 7,186
Occupancy and equipment 4,446 6,046
Other operating expenses 2,069 3,002
Total operating expenses 35,177 72,266
     
Income from operations 40,409 42,324
     
Other income (expense)    
Interest income 3,645 2,165
Interest expense (12,471) (16,663)
Gain (loss) on trading securities 765 (380)
Loss on loans held for resale, net (1,038) (4,554)
Equity in earnings of unconsolidated entities 735 27
Other, net (600) 345
Other expense, net (8,964) (19,060)
     
Income from continuing operations before income taxes 31,445 23,264
Income tax expense 10,574 8,037
Income from continuing operations 20,871 15,227
Loss from discontinued operations, net of income taxes (188)
Net income 20,871 15,039
Net loss (income) attributable to non-controlling interests (11) 70
Net income attributable to Ocwen Financial
Corporation
(OCN)
$20,860 $15,109
     
Basic earnings per share    
Income from continuing operations $0.21 $0.24
Loss from discontinued operations

Net income attributable to OCN $0.21 $0.24


   
Diluted earnings per share    
Income from continuing operations $0.20 $0.24


Loss from discontinued operations
Net income attributable to OCN $0.20 $0.24
     
Weighted average common shares outstanding    
Basic 99,975,881 62,750,010
Diluted 107,324,415 67,871,466
     
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(UNAUDITED)


   
  March 31, 2010
December 31,
2009
     
Assets    
Cash $300,013 $90,919
Restricted cash – for securitization investors 1,378  
Trading securities, at fair value    
Auction rate 125,036 247,464
Subordinates and residuals 59 3,692
Loans held for resale, at lower of cost or fair value 32,934 33,197
Advances 137,675 145,914
Match funded advances 757,111 822,615
Loans, net – restricted for securitization investors 71,336
Mortgage servicing rights 111,721 117,802
Receivables, net 53,562 67,095
Deferred tax assets, net 115,142 132,683
Premises and equipment, net 3,385 3,325
Investments in unconsolidated entities 14,329 15,008
Other assets 91,778 89,636
Total assets $1,815,459

$1,769,350
   

Liabilities and Equity  

Liabilities  

Match funded liabilities $556,485 $465,691
Secured borrowings – owed to securitization investors

68,996
Lines of credit and other secured borrowings 118,509 55,810
Investment line 156,968
Servicer liabilities 21,251 38,672
Debt securities 82,634 95,564
Other liabilities 76,737 90,782
Total liabilities 924,612 903,487
     
Equity    
Ocwen Financial Corporation stockholders' equity    
Common stock, $.01 par value; 200,000,000 shares authorized;100,164,608 and 99,956,833 shares issued and outstanding at


March 31, 2010 and December 31, 2009, respectively
1,002 1,000
Additional paid-in capital 461,449 459,542
Retained earnings 428,332 405,198
Accumulated other comprehensive loss, net of income taxes (180) (129)
Total Ocwen Financial Corporation stockholders' equity 890,603 865,611
Non-controlling interest in subsidiaries 244 252
Total equity 890,847 865,863
Total liabilities and equity $1,815,459

$1,769,350
   

CONTACT:  Ocwen Financial Corp.
          David J. Gunter, Executive Vice President, Chief Financial
           Officer & Chief Accounting Officer
          (561) 682-8367
          David.Gunter@Ocwen.com