Slide 1: Investor Presentation February 29, 2016
Investor Presentation February 29, 2016 ©2016 Ocwen Financial Corporation. All rights reserved.
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS: Our presentation contains certain forward-looking statements as defined under the federal securities laws such as our statements relating to our expectations and strategies for growth, including through our new business lines, and our statements relating to anticipated co
Slide 3: Agenda
Agenda Executive Summary Q4 and Total Year 2015 Results Ocwen Strategy Appendix Ocwen Financial Corporation? 3
Slide 4: Executive Summary
Executive Summary ($ in millions, except Earnings per Share and where otherwise stated) Launched Ocwen strategy to be a world class asset origination and servicing company that delivers service excellence to our customers Launched a new commercial lending business, Automotive Capital Services, to se
Slide 5: Servicing performance
Servicing performance(a) In October, 2015, the National Housing Resource Center (NHRC) conducted a national survey of 200 housing counselors, as well as a small number of legal services lawyers who work with homeowners who are in foreclosure, to ask how well mortgage servicers were complying with th
Slide 6: Q4 and Total Year 2015 Results
Q4 and Total Year 2015 Results Ocwen Financial Corporation? 6
Slide 7: Q4 2015 Reported Financial Results
Q4 2015 Reported Financial Results ($ in millions except loss per share) Key Results Q4 15 Q3 15 VPQ$ Servicing revenue down 8% driven by MSR sales and Revenues $362 405 (42) runoff; Lending revenue down 39% primarily due to ??Servicing 344 375 (31) lower lock volumes ??Lending 18 30 (12) $28 lower
Slide 8: Q4 2015 Reported Segment Results
Q4 2015 Reported Segment Results ($ in millions, except where otherwise stated) Servicing Lending Q4 15 Q3 15 VPQ%(a) Q4 15 Q3 15 VPQ%(a) Revenues $344 $375 (8)% Revenues $18 $30 (39)% ??Servicing / Sub-servicing 255 289 (12) ??Gain on loans held for sale 12 23 (49) ??HAMP/Late/Other fees 74 71 4 ??
Slide 9: Servicing and Legal expenses drive Adjusted Operating Expense higher than Q3 15
Servicing and Legal expenses drive Adjusted Operating Expense higher than Q3 15 ($ in millions) $7.7 $(9.5) $21.7 $(3.1) $(3.2) $327.1 $313.5 Q3’15 Adj. OpEx Servicing Expenses Legal Expenses Amortization and Technology Other Q4’15 Adj. OpEx MSR FV Change Significant Cost Drivers: Servicing Expenses
Slide 10: Leverage & Liquidity Update
Leverage & Liquidity Update ($ in millions, except where otherwise stated) SSTL as of 12/31/15 Liquidity and Financing Update Average Available Liquidity(b) of $377 in the fourth quarter 2015, with $331 of Available Liquidity at the end of the quarter OMART private label servicing advance facility r
Slide 11: 2015 Financial Results
2015 Financial Results ($ millions except EPS) FY 15 FY 14 V$(a) Pre-tax Loss Walk vs. Prior Year Revenues $1,741 $2,111 (370) ??Servicing 1,614 1,985 (372) FY 14 Pre-tax Income: $(443) ??Lending 125 119 6 Goodwill Impairment (2014) 420 NY DFS Settlement (2014) 150 Operating expenses (1,478) (2,035)
Slide 12: Ocwen Strategy
Ocwen Strategy Ocwen Financial Corporation? 12
Slide 13: Corporate Governance
Corporate Governance Continue to enhance Ocwen s Corporate Governance structures Named Phyllis Caldwell Chairwoman effective 3/15/16 Recently named Carol Galante and Jacques Busquet as new independent directors, in addition to three new independent directors added in 2015 Caldwell Galante Busquet Fo
Slide 14: Ocwen Vision and Strategy
Ocwen Vision and Strategy Our vision for Ocwen is to be a world-class asset Vision origination and servicing company that delivers service excellence to our customers and strong equity returns for our investors Strategic Operational and Service Asset Generation Pillars Excellence Continuous Cost “Ou
Slide 15: Asset Generation Strategy
Asset Generation Strategy We intend to grow by originating, servicing and refinancing select consumer and commercial loans where Ocwen has a competitive advantage. We plan to take limited interest rate risk, moderate credit risk and moderate collateral risk. Our goal is to generate profits throughou
Slide 16: Mortgage Originations Growth Strategy
Mortgage Originations Growth Strategy ??Ocwen currently a ~$5B / year originator ??Aspire to be “Top-10”, but prioritizing profitable growth that includes underserved markets ??Focus on maximizing each channel supported by initiatives Retail ($1 $5B) Wholesale ($1 $5B) Correspondent ($TBD) Reverse (
Slide 17: Ocwen Well Positioned to Reach Underserved Segments
Ocwen Well Positioned to Reach “Underserved” Unmet Need Segments Originations Market for Qualified Mortgages #1 Customers are creditworthy and kept QM away by other factors (Language, trust, etc.) Agency #2 Customers who “perceive they don t qualify h and don t attempt to access credit FHA #3 Custom
Slide 18: Automotive Capital Services Launched
Automotive Capital Services Launched www.autocapservices.com Ocwen Financial Corporation? 18
Slide 19: Automotive Capital Services Milestones
Automotive Capital Services Milestones Market Opportunity Business formed in 2015 under the leadership of Tom Gilman, a 30+ year leader in 18,000 ~$9B+ automotive finance (TD Bank, Chrysler Financial) Created team of automotive industry experts with ~200 years of collective experience Identified mar
Slide 20: Automotive Capital Services Business Launch
Automotive Capital Services Business Launch Why we like this business Growth Aspiration ??Seasoned leadership team with significant 2/25/16 12/31/18 ($ in millions) domain expertise ??Business to business focus Active Dealers (#) 22 3,600 ??Provides value to dealers with a differentiated lending alt
Slide 21: Cost Improvement Initiative
Cost Improvement Initiative From September 2015 Presentation: February 2016 Update: Significant progress made on cost improvement efforts, but more work needed to return to profitability Currently project the Servicing + Corporate segment(a) cost reductions to be within the September 2015 implied ra
Slide 22: Shareholder Relations Information
Shareholder Relations Information Ocwen Financial Corporation is a financial services holding company which, through its subsidiaries, originates and services loans. We are headquartered in West Palm Beach, Exchange New York Stock Exchange (NYSE) Florida, with offices throughout the United States an
Slide 23: Appendix
Appendix Ocwen Financial Corporation? 23
Slide 24: Debt Facilities Overview
Debt Facilities Overview (balances as of 12/31/15) ($ in millions, except where otherwise stated) Debt Available Weighted Average Weighted Average Balance Facility Cap Credit Advance Rate Interest Rate Maturity Comments Advance Facilities 9/19/2016 3.09% for term Notes; 2016 maturity for $1,100 of n
Slide 25: Adjusted Cash Flow from Operations Calculation
Consolidated Statement of Cash Flows: Adjusted Cash Flow from Operations Calculation ($ in millions) Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Cash Provided by Operating Activities (A) $349 $(206) $325 $210 $239 $(192) Decrease in Advances and Match Funded Advances (B) 113 55 104 279 109$40 Fu
Slide 26: Adjusted Operating Expense Reconciliation
Adjusted Operating Expense Reconciliation Adjusted Operating Expense, a non-GAAP measure, is a supplemental metric used by management to evaluate our Company s underlying operating expense performance. Adjusted Operating Expense adjusts GAAP operating expense for (1) changes in fair value of our MSR
Slide 27: Operating Expense Roll-forward
Operating Expense Roll-forward Compensation & Amortization of Servicing & Technology & Professional Occupancy & Other Operating Total ($ in millions) Benefits Servicing Rights Origination Communication Services Equipment Expenses Q3’15 Actual Operating Expenses (GAAP) 102.6 18.1 101.5 37.2 62.4 31.0
Slide 28: Ocwen-only MSR Economics
Ocwen-only MSR Economics The below chart reflects illustrative geconomich values to Ocwen of the MSRs based upon the 12/31/15 balance sheet. The chart excludes MSRs whose Rights have been sold to NRZ as well as the economics sold off in the OASIS notes ($ in millions) $2,004 NRZ Subservicing reflect
Slide 29: MSR Valuation Assumptions
MSR Valuation Assumptions (a) “OASIS Financed” represents the value attributed to the securitized 21 bp service fee strip, and “OASIS Retained” the left over service fee and other cash flows that remain with Ocwen (b) “OASIS Retained” + “MSRs Retained” = Line 9 on page 30 (c) The ($17mm) difference
Slide 30: MSR Valuation Reconciliation
MSR Valuation Reconciliation ($ in Note: This is not a full valuation of the Company, just an illustration of the implied value of our MSRs adjusting for certain 30 Ocwen Financial Corporation? factors. A full valuation would need to include fixed / overhead costs not captured in the value of the MS
Slide 31: P&L Impact of Fair Value & Amortization Changes
P&L Impact of Fair Value & Amortization Changes ($ in millions) Q3’15 Q4’15 V$ Slide Reference Non-Agency MSR Fair Value Change 0 - Portfolio Run-off $ (26.2) $ (23.9) $ 2.3 Slide 9 via line 7 below - Interest Rate and Other Assumption Changes 4.0 (2.5) (6.5) Slide 26 1 Total Non-Agency MSR Fair Val