Slide 1: Business Update Third Quarter 2023
Business Update Third Quarter 2023 November 7, 2023 © 2023 Ocwen Financial Corporation. All rights reserved.
Slide 2: Forward-Looking Statements / Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS NON-GAAP FINANCIAL MEASURES This presentation contains forward-looking statements within the and forward loan buyouts and put backs, as well as repay, renew and This presentation contains references to adjusted pre-tax income (loss), meaning of Section 27A of the Securitie
Slide 3: Executive Summary
Executive Summary Solid adjusted pre-tax income driven by $17M vs Q3’22 Adjusted Pre-tax Income(a) $10M servicing segment $2M vs Q2’23* * excl Q2 gain on reverse whole loan transaction GAAP net income reflects balanced business Net Income $8M $7M vs Q2’23 and interest rate risk management Pre-tax No
Slide 4: Repositioned the business to operate profitably in current industry environment
Repositioned the business to operate profitably in current industry environment Growing Adjusted Pre-tax Income(a) and performing in line with ROE guidance 25 25% Financial Objectives 23 20 20% • Sustain Q3’23 financial performance • Continuous cost improvement 15 15 15% • Disciplined MSR investing
Slide 5: Balanced and diversified business creates opportunities and mitigates risk
Balanced and diversified business creates opportunities and mitigates risk Servicing Driving Sustained Diverse Capabilities Create Diversified Servicing Portfolio Adjusted Pre-tax Income(a) Unique Opportunities Mitigates Risk % of Servicing UPB end of Q3’23 Commercial 46 Servicing Rvs Whole Loan ($M
Slide 6: Driving prudent growth adapted for the environment
Driving prudent growth adapted for the environment Increasing Mix of Higher Robust Servicing Additions with Increased Margin Products YoY Focus on Subservicing 3.0 Servicing Additions UPB GNMA CL, Best Efforts, Non- Delegated, CD, Reverse Subservicing 17.8 2.0 16.0 % of Originations MSR Owned 5.9 1.
Slide 7: Delivering industry top-tier servicing operational performance and cost structure
Delivering industry top-tier servicing operational performance and cost structure… Cost Structure On Par With Recognized Servicing Excellence Superior Servicing Capabilities Competitors Over Twice Our Size Consistently lower delinquency levels Fully Loaded Cost to Service(c) compared to industry(a)
Slide 8: While driving increased borrower and client satisfaction
… while driving increased borrower and client satisfaction Increasing Customer Satisfaction Technology Boosts Customer Experience Serving Client Needs Net Promoter Scores (NPS) ✓ Executing omnichannel technology plan to ✓ A holistic infrastructure to support client needs enhance speed, accuracy and
Slide 9: Building multiple MSR capital partner relationships to support growth objectives
Building multiple MSR capital partner relationships to support growth objectives Servicing UPB funded by MSR capital partners Meaningful progress in building MSR investor (including synthetic subservicing and ESS) partnerships to enable capital-light growth • MSR investor program with Oaktree and MA
Slide 10: Q3'23 Financial Highlights
Continued profitability (Adjusted Pre-tax Income) driven by Servicing segment Q3’23 Financial Highlights ($M, except per share metrics) Q3’22 Q2’23 Q3’23 Q3’23 QoQ Detail • GAAP Net Income down ($7M) due to Q2 $15M gain on opportunistic reverse GAAP Net Income (Loss) 37 15 8 whole loan transaction E
Slide 11: Positive and growing operating income
Positive and growing operating income Adjusted Pre-tax Income (Loss)(a) Bridge Q2’23 to Q3’23 All Segments Rvs Whole All Segments Loan Transaction 15 8 10 10 4 6 ($M) (7) ($M) Q2’23 Originations Servicing Unallocated Q3’23 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Corporate Adjusted Pre-tax (5%) 3% 5% 7%* 9% Ad
Slide 12: Deleveraging by allocating capital to repurchase debt
Deleveraging by allocating capital to repurchase debt Sep/Oct ‘23 Debt Repurchase Opportunistic Debt Repurchase Plan • $646M in senior secured notes (as of 9/30) due in 2026/2027 $15M Repurchased in PHH senior secured notes $13.9M in Q3’23 • Intend to use excess liquidity when available for opportun
Slide 13: Prudent interest rate risk management of our MSR exposure
Prudent interest rate risk management of our MSR exposure Balance sheet MSRs far exceed MSRs Hedge Coverage Ratio that carry interest rate risk exposure Remains Above Target GAAP MSR UPB GAAP Fair Value(a) Hedge Coverage Ratio (HCR) qtr end end of Q3’23 qtr avg 198 197 201 2,860 MAV, Rithm, Other Di
Slide 14: Servicing profitability remains strong and consistent
Servicing profitability remains strong and consistent Servicing Update Servicing Profitability Drivers • Stable Forward Servicing PTI Adjusted Pre-tax Income(a) Subservicing UPB Subserviced UPB at qtr end $7 $46 $31 Reverse Forward - Higher custodial float income driven by 3 167 increased balances a
Slide 15: Originations profitability driven by Correspondent and Co-Issue channels
Originations profitability driven by Correspondent and Co-Issue channels Originations Update Originations Profitability Drivers • Originations segment adjusted PTI improved Adjusted Pre-tax Income(a) Revenue Margins(b) 200 $3M QoQ primarily driven by Correspondent $11 ($1) $2 180 Fwd CD 415 420 (CL)
Slide 16: We believe our share price is not reflective of the strength of our business
We believe our share price is not reflective of the strength of our business, especially with a positive and growing adjusted pre-tax income(a) 150 OCN Share Price Peer Group(b) Russell 2000 Index 140 130 120 • Book value per share at $58 as 110 of 9/30/23, up 3% over Q2’23 100 end of period, 6% ove
Slide 17: Wrap-Up
Wrap-Up As we continue to execute our business strategy, we believe we are well-positioned to navigate the market environment ahead and deliver long-term value for our shareholders Balanced and diversified business creates opportunities and mitigates risk Driving prudent growth adapted for the envir
Slide 18: Appendix
Appendix • Ocwen: Who We Are • Condensed Consolidated Balance Sheets (GAAP) • Condensed Balance Sheet Breakdown • Condensed Consolidated Statement of Operations (GAAP Income Statement) • Notes Regarding Non-GAAP Financial Measures • Notables • Adjusted Pre-tax Income (Loss) and Weighted Average Shar
Slide 19: Ocwen is a mortgage originator and servicer
Ocwen is a mortgage originator and servicer focused on creating positive outcomes for clients, homeowners, investors and communities Balanced and Diversified Business Competitive Advantages Diversified originations sources to balance Four pillar servicing portfolio optimizes risks earnings and drive
Slide 20: Condensed Consolidated Balance Sheets (GAAP)
Condensed Consolidated Balance Sheets (GAAP) Assets September 30, June 30, September 30, (Dollars in millions) 2022 2023 2023 Cash and cash equivalents 227 213 194 Restricted cash 45 119 72 Mortgage servicing rights (MSRs), at fair value 2,714 2,676 2,860 Advances, net 642 603 565 Loans held for sal
Slide 21: Condensed Balance Sheet Breakdown
Condensed Balance Sheet Breakdown Balance sheet breakdown Total in $M, at 9/30/23 Rithm, MAV & GAAP GNMA All Other Pledged HECM EBO others MSR Cash 194 194 Loans 8,732 7,614 1,118 MSRs 2,860 1,119 1,741 Advances 565 565 Other assets 661 275 386 Total Assets 13,012 1,119 7,614 275 4,004 HMBS borrowin
Slide 22: Condensed Consolidated Statement of Operations (GAAP Income Statement)
Condensed Consolidated Statement of Operations (GAAP Income Statement) 3 Months Ended 3 Months Ended 3 Months Ended (Dollars in millions) Sep 30, 2022 Jun 30, 2023 Sep 30, 2023 Revenue Servicing and subservicing fees 216 238 238 Gain on reverse loans held for investment and HMBS-related borrowings,
Slide 23: Note Regarding Non-GAAP Financial Measures
Note Regarding Non-GAAP Financial Measures In the following slides, we present supplemental information (including reconciliations) relating to certain illustrative adjustments to GAAP pre-tax income (loss). We believe these non-GAAP financial measures provide a useful supplement to discussions and
Slide 24: Notables
Notables a) MSR Valuation Adjustments that are due to changes in market interest rates, valuation inputs or other (Dollars in millions) Q3’22 Q2’23 Q3’23 assumptions, net of overall fair value gains / (losses) on MSR hedge, including FV changes of Pledged MSR liabilities associated with MSR transfer
Slide 25: Adjusted Pre-tax Income (Loss) and Weighted Average Shares Outstanding
Adjusted Pre-tax Income (Loss) and Weighted Average Shares Outstanding In $M Q3’22 Q2’23 Q3’23 I Reported Net Income (Loss) 37 15 8 II Notable Items 40 (6) (0) III Income Tax Benefit (Expense) 4 (1) (1) IV Adjusted Pre-tax Income (Loss) [ I – II – III ] (7.2) 22.7 9.6 Weighted Average Shares Outstan
Slide 26: GAAP ROE Calculation
GAAP ROE Calculation In $M Q3’22 Q2’23 Q3’23 I Reported Net Income (Loss) 37 15 8 II Annualized Net Income (Loss) [ I * 4 ] 148 62 34 Equity A Beginning Period Equity 544 416 434 B Ending Period Equity 546 434 445 III Average Equity [ (A + B) / 2 ] 545 425 439 IV GAAP ROE [ II / III ] 27% 15% 8% Ocw
Slide 27: Adjusted Pre-Tax Income ROE Calculation
Adjusted Pre-Tax Income ROE Calculation In $M Q3’22 Q2’23 Q3’23 I Reported Net Income (Loss) 37 15 8 II Notable Items 40 (6) (0) III Income Tax Benefit (Expense) 4 (1) (1) IV Adjusted Pre-tax Income (Loss) [ I – II – III ] (7) 23 10 V Annualized Adjusted Pre-tax Income (Loss) (29) 91 38 [ IV * 4 ] E
Slide 28: Fully Diluted Share and Equity Data
Fully Diluted Share and Equity Data(a) As of 9/30/23 Equity in $M Shares I. Basic Equity and Outstanding Shares $445.1 7,677,008 II. Awards & Options $0.4 841,500 III. Diluted Equity and Shares [ I + II ] $445.5 8,518,508 IV. Warrants(b) $38.1 1,446,016 V. Fully Diluted Equity and Shares [ III + IV
Slide 29: MSR Valuation Assumptions – Forward Owned MSRs
MSR Valuation Assumptions – Forward Owned MSRs As of 6/30/2023 As of 9/30/2023 ($ in M) FN/ FH FHA/ VA Non-Agency Total Retained FN/ FH FHA/ VA Non-Agency Total Retained UPB 92,323 14,647 14,094 121,064 88,738 16,829 13,832 119,398 Loan Count (000s) 363 89 90 543 347 95 88 530 Fair Value 1,292 226 1
Slide 30: End Notes
End Notes SLIDE 3 SLIDE 10 SLIDE 11 a) See slides 23-27 for discussion of non-GAAP measures including a) See slide 26 for calculation a) See slides 23-27 for discussion of non-GAAP measures notable items b) MSR Valuation Adjustments due to rates and assumption changes and Adjusted PTI (Loss) has bee
Slide 31: End Notes
End Notes SLIDE 24 SLIDE 24 (cont’d) a) MSR Valuation Adjustments that are due to changes in market interest f) Long-term incentive program (LTIP) compensation expense changes rates, valuation inputs or other assumptions, net of overall fair value attributable to stock price changes during the perio
Slide 32: Abbreviations
Abbreviations • Adj: Adjusted (GAAP, net of notables) • GoS: Gain on Sale • PLS: Private Label Securities • bps: Basis Points (1/100th of a percent) • GSE: Government Sponsored Enterprise (FNMA, FHLMC) • PHH: PHH Mortgage Corporation, a wholly-owned subsidiary • BV: Book Value (Equity / Outstanding