Onity Group Inc. · NYSE:ONIT
Onity — Ocwen Financial — Q2 2020 Earnings Presentation
18 slides from Onity's earnings presentation, Jul 16, 2020
Slide 1: Business Update: Preliminary Second Quarter 2020
Business Update Preliminary Second Quarter 2020 July 16, 2020 © 2020 Ocwen Financial Corporation. All rights reserved.
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by a reference to a fut
Slide 3: Today's Ocwen is a leading mortgage special servicer and originator
Today’s Ocwen is a leading mortgage special servicer and originator creating positive outcomes for homeowners, communities and investors Servicing Originations − 1.3 million residential and − Retail, wholesale, correspondent, Scale and commercial loans Multiple flow and enterprise sales Diversity −
Slide 4: Execution of key business priorities has improved profitability and positioned Ocwen for growth
Execution of our key business priorities has improved profitability, positioned Ocwen for growth and reduced key risks Return to Profitability Positioned for Growth Diminishing Risks Adjusted PTI excluding Lump-Sum Origination Volume ($B) Forbearance Plans with Advance Amortization ($M) Obligations
Slide 5: Second quarter results demonstrate continued improvement in business and financial performance
Second quarter results demonstrate continued improvement in business and financial performance 2Q’20 Reflects Continued Progress Against Adjusted Expenses ($M)(a) Key Business Initiatives Adjusted Pre-tax Income Excluding $916 Lump-Sum Amortization ($M)(a) ~41% $8 $542 $(166) $(23) $(322) 2Q’18 FY’1
Slide 6: Multi-channel, scalable originations capability creates balance and positions Ocwen for growth
Multi-channel, scalable originations capability creates balance and positions Ocwen for continued growth from sustainable sources Origination Volume Adjusted PTI ($M) (a) Continuing to Expand Capacity and Capability Excluding Bulk ($B) $38 • Flow, correspondent, wholesale, and retail $4.0 channels p
Slide 7: Servicing operational performance and capabilities demonstrate our leadership position
Servicing operational performance and capabilities demonstrate our leadership position and value to customers, clients and investors Adjusted PTI ex. Lump-sum Servicing UPB ($B) • Seeing the impact of higher pre-payments, increase in Amortization ($M)(a) forbearance plans, and foreclosure moratoria
Slide 8: COVID-19 forbearance plan requests diminishing, levels below base case forecast
COVID-19 forbearance plan requests diminishing, total plan levels below our base case forecast, and agency plans compare favorably to industry As of July 13 th approximately 112,000 active FB(b) plans where 22% of maturing FB forbearance plans(a) – new requests diminishing OCN advances 36% plans rei
Slide 9: Significant cash balance increase driven by efficient cash management
Significant cash balance increase driven by efficient cash management practices and lower than projected servicing advance levels Cash and Equivalents ~$140 million of ($ millions) incremental servicing advances(b) ~$115 million ~$25 million cash $314 anticipated funding on need $264 advance lines Q
Slide 10: Interest rate environment and forbearance levels driving growth opportunities
Interest rate environment and forbearance plan levels driving growth opportunities in both performing and special servicing Near-term opportunity in originations Long-term opportunity in non- and performing servicing performing servicing • Interest rate levels driving industry origination • Double-d
Slide 11: Well positioned to manage resolution of COVID-19 forbearance volumes
Well positioned to manage the resolution of current COVID-19 forbearance volumes with minimal business impact Advance Requirements Q2 Revenue Impact Deferred servicing fees ~$3M until resolution of forbearance PLS P&I advances up to 30 days of delinquency or loss mitigation Deferred servicing fees ~
Slide 12: A balanced business model with growth capacity, plus core competencies and scale
A balanced business model with growth capacity, plus … core competencies and scale to capitalize on emerging opportunities Profitable core business with strong growth and turnaround momentum. Execution of key business priorities 1 has improved profitability, positioned Ocwen for growth and reduced k
Slide 13: Appendix
Appendix • Notes Regarding Non-GAAP Financial Measures • Expense Notables • Income Statement Notables • Expense Notables by Segment • Income Statement Notables by Segment Ocwen Financial Corporation 13
Slide 14: Note Regarding Adjustments to GAAP Expenses and Pre-tax Income (Loss)
Note Regarding Adjustments to GAAP Expenses and Pre-tax Income (Loss) In the follow ing slides, w e present supplemental information (including reconciliations) relating to certain illustrative adjustments to GAA P expenses, and pre-tax income (loss). We believe this information is instructive as an
Slide 15: Expense Notables
Expense Notables $ Millions Q2'18 Q2'20(c) OCN + PHH OCN OCN (Annualized) (Annualized) I Expenses (as reported)(a) 1,107 (b) II Reclassifications 5 III Deduction of MSR valuation adjustments, net (132) IV Operating Expenses (I+II+III) 979 145 579 Adjustments for Notables Re-engineering costs (32) (9
Slide 16: Income Statement Notables
Income Statement Notables ($millions) Q2'18 Q2'20 OCN + PHH OCN OCN (Annualized) (Annualized) I Reported Pre-Tax Income / (Loss)(a) (253) (6) (25) Adjustments for Notables Expense Notables (from prior slide) 9 (b) Non-Agency MSR FV Change 3 (b) Agency MSR FV Change, net of macro hedge 3 NRZ MSR Liab
Slide 17: Expense Notables by Segment
Expense Notables by Segment $ Millions Q1'20 Q2'20 Servicing Originations Servicing (c) Originations I Operating Expenses 80 27 83 29 Adjustments for Notables Re-engineering costs (2) (0) (0) (0) Significant legal and regulatory settlement expenses 1 - 0 - CFPB & state regulatory defense & escrow an
Slide 18: Income Statement Notables by Segment
Income Statement Notables by Segment $ Millions Q1'20 Q2'20 Servicing Originations Servicing (c) Originations I Reported Pre-Tax Income / (Loss) (56) 10 10 29 Adjustments for Notables Expense Notables (from prior table) (1) 0 (4) 1 (a) Non-Agency MSR FV Change (10) - 3 - (a) Agency MSR FV Change, ne