Ocwen to restate 2Q14 earnings
There may be a "material weakness"
Ocwen Financial Services Corp. (OCN) said it wold restate earnings because of accounting problems. Ocwen said it expects to reduce pretax income for the first quarter by $17 million and to increase it by the same amount for 2013 after its auditor found what may be "a material weakness'' in the way it recorded the value of certain debt, according to an article in The Wall Street Journal.
While Tuesday's accounting disclosure didn't affect overall profits in the long run, it did raise questions about internal controls and continuing problems with regulators, analysts said. Ocwen's shares slid 4.5% to close at $25.16.
"The issue today looks relatively benign by itself," said Bose George, an analyst at Keefe, Bruyette & Woods. "But the real issue is that they can't grow until they resolve the regulatory questions, and the regulatory problems are nowhere near resolved."
At the end of July, Ocwen Financial reported net income of $67 million, or $0.48 per share, for the second quarter of 2014, compared to net income of $76.7 million, or $0.53 per share, for the second quarter of 2013.