Onity Group Inc. · NYSE:ONIT
Onity — Ocwen Financial — Investor Presentation (February 2012)
19 slides from Onity's investor presentation, Feb 13, 2012
Slide 1: Investor Presentation February 2012
Investor Presentation February 2012 © 2012 Ocwen Financial Corporation. All rights reserved.
Slide 2: Who we are and what we do
2 Who we are and what we do Leading provider of residential and commercial mortgage loan servicing and special servicing » Publicly - traded (NYSE: OCN) pure play mortgage servicer with $1.9 billion in market capitalization » 20+ years of innovation in loss mitigation » #1 in servicing quality in th
Slide 3: Mortgage servicing overview
3 Mortgage servicing overview Residential mortgage loan servicing primarily involves: » Collection and transfer of mortgage payments from borrowers » Cash management and escrow account responsibilities » Mitigation of losses through loan modifications, short sales and other options » Administration
Slide 4: Ocwen Has Produced Substantial Shareholder Value in 2011
4 Ocwen Has Produced Substantial Shareholder Value in 2011 $900 $950 $1,000 $1,050 $1,100 $1,150 $1,200 $1,250 $1,300 $1,350 $1,400 S&P 500 index (weekly) SPX index $8 $9 $10 $11 $12 $13 $14 $15 $16 OCN stock price (weekly) OCN stock price While the S&P 500 index increased by only 4% from 12/31/2010
Slide 5: Acquisition Updates
Acquisition Updates LITTON Approximately $38.6 billion UPB boarding complete as of November 1, 2011 All elements either as planned or exceeding plan, including strong early results on delinquencies Most transition - related costs complete in 4Q2011 Saxon Approximately $26.8 billion UPB mostly subpri
Slide 6: Summary of investment highlights
Summary of investment highlights 6 Ocwen is well positioned to take advantage of attractive growth opportunities Highly scalable platform with lowest operating cost in the industry Deploying capital to take advantage of attractive opportunities Substantial cash flow generation Superior servicing and
Slide 7: $10.5 trillion in residential mortgages outstanding
7 $10.5 trillion in residential mortgages outstanding as of December 31, 2010 » $1.4 trillion of delinquent loans Top four banks service 54% of total loans, but focused on prime “low touch” loans » “High touch” servicers are best equipped to improve loan performance Ocwen currently looking at over $
Slide 8: We have a strong pipeline of attractive growth opportunities
8 We have a strong pipeline of attractive growth opportunities Ocwen began purchasing non - performing loans in 1992 and has serviced subprime loans since 1996 Track record of growing the business over an extended time period $21.9 $42.8 $73.9 $129.9 2001 2005 2010 Q1 2012 ($ in billions, UPB at per
Slide 9: Ocwen's key differentiators are directly proportional to delinquency of portfolio
9 Ocwen’s key differentiators are directly proportional to delinquency of portfolio Ocwen has » A 70% cost advantage in servicing non - performing loans » A proven ability to reduce delinquencies and advances » Best in class 90+ day to current roll rates of 14% for subprime adjustable rate loans and
Slide 10: Highly scalable platform with lowest operating cost in the industry
Highly scalable platform with lowest operating cost in the industry 10 10 1. Source: Analysis of Nov 2009 MIAC cost per non - performing loan applied to Ocwen's portfolio relative to Ocwen's marginal cost study for November 2009. Can quickly scale its servicing platform to efficiently board acquired
Slide 11: Proven ability to close transactions and effectively board loans
Litton Saxon HomEq Proven ability to close transactions and effectively board loans 3 Acquired portfolio has $38.6 billion in UPB and approximately $2.5 billion in servicer advances for a purchase price of $247.2 million (closed September 1, 2011) Acquisition makes Ocwen the #1 subprime servicer in
Slide 12: Superior servicing and loss mitigation practices
0% 4% 8% 12% 16% Ocwen New Century Centex HFN RFC Option One Aurora IndyMac WaMu Saxon Long Beach Fremont HomEq Wells ASC Chase HLS MLN EMC SPS Ameriquest Fieldstone Fairbanks Litton Countrywide Nat City Equity One Wilshire Ameriquest 12 Superior servicing and loss mitigation practices… 0% 4% 8% 12%
Slide 13: Effective at driving down delinquencies and advances
13 0% 2% 4% 6% 8% May - 10 Aug - 10 Nov - 10 Jan - 11 Apr - 11 Jul - 11 Legacy Ocwen Saxon HomEq Litton … with differing levels of advances as a % of UPB 6.3% 4.2% 3.0% 1.9% 1. Based on UPB where Ocwen is required to make servicer advances as of 9/30/2011 Delinquency Percentage (90+ Days) by Portfol
Slide 14: Capital and return on capital by deal over time
1. Illustrative numbers representing different deal types 0% 20% 40% 60% 80% 100% 120% Year 1 Year 2 Year 3 Year 4 Year 5 Deal 1 Deal 2 Deal 3 Deal 4 Capital / UPB (1) As performance improves, capital requirements fall and return on capital increases Pre - tax return on capital (1) - 10% 0% 10% 20%
Slide 15: Substantial cash flow generation
Substantial cash flow generation 15 15 Without any new UPB, the existing portfolio, including Litton, is expected to generate substantial free cash flow Cash provided by operating activities was $630mm in the first six months of 2011 (which excludes Litton) Even if delinquencies increase 25%, free c
Slide 16: Conservative balance sheet
Conservative balance sheet… 16 Highly rated assets (as reported 9/30/11) Source: Company filings. 1. Excludes $60 million of Loans, Net - Restricted for Securitization Investors arising from FAS 167 accounting rule change. 2. Includes $57 million of goodwill. The balance sheet consists of high quali
Slide 17: …with upside potential
17 …with upside potential 7 167 178 572 133 133 468 300 311 1040 Book value MIAC / 3rd party Internal valuation Litton Ocwen 13.38 3.32 9.67 9.78 16.7 Book value MIAC / 3rd party Internal valuation MSR values according to various methodologies Implied book value / share Our industry - lowest cost to
Slide 18: Summary of investment highlights
Proven ability to close transactions and effectively board loans Summary of investment highlights 18 Why now – Ocwen is well positioned to take advantage of attractive growth opportunities Highly scalable platform with lowest operating cost in the industry Deploying capital to take advantage of attr
Slide 19: HLSS Transaction Update
19 19 HLSS Transaction Update In February 2012, Ocwen expects that HLSS will complete an initial public offering that could significantly reduce capital needs » HLSS will be structured in a tax efficient manner as a Passive Foreign Investment Company (“PFIC”), offering investors yield in the form of
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