Ocwen turns profit in first quarter but CEO vows to “do better”

Reports net income of $34.4 million in first quarter

Reversing a trend that saw it lose $546 million in 2014, Ocwen Financial (OCN) reported net income of $34.4 million, or $0.27 per share, for the first quarter of 2015.

The company’s first-quarter results were down from the first quarter of 2014, when the company reported net income of $60.5 million, or $0.43 per share, but still beat the Capital IQ Consensus Estimate by $0.23 per share, according to a note from

Ocwen reported preliminary revenue of $510.4 million, down 7% compared to the first quarter of the prior year. The company’s preliminary income from operations was $132.1 million for the first three months of 2015 compared to $202.1 million for the first quarter of 2014.

The company also stated that its preliminary cash flow from operating activities was $323 million for the first quarter, up 65% over the same period last year.

Despite the improvement on the company’s recent results, Ocwen President and CEO Ron Faris said he was not satisfied with the company’s first quarter.

“I am proud of what we have accomplished as far as managing the business through this difficult transition period,” Faris said. “We made great progress on our asset sale strategy, have returned to profitability and continue to generate substantial operating cash flow. However, I am not satisfied with only making $34 million in the quarter. We intend to do better."

Ocwen said that its first-quarter pre-tax income was impacted by several significant items in the first quarter, including: a $26.9 million gain from the sale of Freddie Mac performing loan mortgage servicing rights with an unpaid principal balance of approximately $9.1 billion and a $12.9 million gain on the sale of “certain legacy performing and non-performing whole loans.”

Ocwen also reported a $17.8 million impairment charge due to a decline in the fair value of the company’ government-insured MSRs primarily resulting from the Federal Housing Administration reducing the mortgage insurance premium rate by 50 basis points during the quarter.

The company also reported $9 million of monitor costs, $8.4 million of strategic advisor expenses and $8.3 million of fair value related changes.

The company’s servicing segment generated $471.12 million in revenue in the first quarter of 2015 compared to $520.82 million in the first quarter of 2014.

Ocwen also reported that its lending segment generated $16 million of pre-tax income during the quarter.

The company also announced it now currently intends to file its 2014 Form 10-K and first quarter 2015 Form 10-Q no later than May 29, 2015.

Earlier this week, HousingWire reported that Ocwen and Assurant (AIZ) agreed to pay $140 million to settle a massive class-action lawsuit, which accused Ocwen of artificially inflating the cost of force-placed insurance in exchange for kickbacks from Assurant.

But Ocwen said that it established a reserve for its portion of the settlement in the third quarter of 2014 and believes it is “adequately reserved” to pay out the settlement claims.

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