Ocwen Financial Corp. reported a second quarter net income of $10 million, or $0.08 per share, for the three months ending June 30, 2015, according to the company’s second quarter earnings statement.
Year-over-year, Ocwen’s net income declined by $57 million from $67 million, or $0.48 per share, for the second quarter.
"The company made positive strides on many fronts in the second quarter,” said Ron Faris, president and CEO of Ocwen. “We continue to work closely with our regulators and monitors, and the environment remains stable. Our efforts to build out a strong 'bank-like' risk and compliance infrastructure are taking hold. We were profitable and generated strong operating cash flow.”
According to the statement, Ocwen generated revenue of $463 million, down 16 percent from $553 million in the second quarter of last year.
Income from operations was $111 million for the second quarter compared to $208 million for the second quarter of 2014. Cash from operating activities was $210 million for the second quarter, up $196 million over the same period last year.
Pre-tax income for the second quarter of 2015 was impacted by a number of significant items, according to Ocwen. The company says that $30 million of net gains from sales of performing and non-performing agency mortgage servicing rights (MSRs) with a total unpaid principal balance (UPB) of $56.5 billion affected pre-tax income positively. Additionally, $15 million of strategic advisor expenses and $6 million of monitor costs were deducted from this income. Servicing contributed $45 million of pre-tax income inclusive of the gain on sales of MSRs, and the lending segment generated $14 million of pre-tax income for the second quarter of 2015.
Faris also noted that the company sold off a large portion of non-performing loans, reduced their corporate debt, and revealed a new cost improvement initiative.
“We executed on our asset sale strategy, including the sale of $3 billion of non-performing agency servicing, and we reduced corporate debt by $264 million while ending the quarter with almost half a billion dollars in available liquidity,” Faris said. “Additionally, we executed our first servicing advance refinance of 2015 at better than expected rates, receiving strong support from the financing market.”
He adds, "We have also launched a cost improvement effort to right size our cost structure in line with the reduction in our assets and revenue. Our aim is to reduce our costs by over $150 million, while continuing to enhance the borrower experience, strengthen our risk and compliance infrastructure and deliver strong loss mitigation results. Similar to our plan to grow our origination capabilities, this cost improvement initiative is aggressive, but it is a critically important step in our transformation and one that is necessary to ensure our long-term success."