Onity Group Inc. · NYSE:ONIT
Onity — Ocwen Financial — Investor Presentation (November 2011)
16 slides from Onity's investor presentation, Nov 16, 2011
Slide 1: Investor Presentation November 2011
Investor Presentation November 2011 © 2011 Ocwen Financial Corporation. All rights reserved.
Slide 2: Forward-looking statement and non-GAAP measures
FORWARD-LOOKING STATEMENT: Our presentation may contain certain forward-looking statements that are made pursuant to the Safe Harbor provisions of the federal securities laws. These forward-looking statements may be identified by a reference to a future period or by the use of forward-looking termin
Slide 3: Who we are and what we do
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 $1.5bn in market capitalization ♦ 20+ years of innovation in loss mitigation ♦ #1 in servicing quality in third part
Slide 4: Summary of investment highlights
Summary of investment highlights 1 Ocwen is well positioned to take advantage of attractive growth opportunities 2 Highly scalable platform with operating cost 70% below the industry 3 Superior servicing and loss mitigation practices effective at driving down delinquencies and advances 4 Acquisition
Slide 5: Growing demand for high-touch servicers in $11 trillion industry
1 Growing demand for high-touch servicers in $11 trillion industry ■ $10.5tn in residential mortgages outstanding as of December 31, 2010 1 ♦ $1.4tn of delinquent loans ■ Top four banks service 54% of total loans, but focused on prime “low touch” loans ♦ We believe “High touch” servicers are best eq
Slide 6: We have a strong pipeline of attractive growth opportunities
1 We have a strong pipeline of attractive growth opportunities Ocwen began purchasing non-performing loans in 1992 and has serviced subprime loans since 1996 Growth opportunities ■ On October 19, 2011, we signed a definitive agreement to acquire Saxon and certain MSRs owned by Morgan Stanley and its
Slide 7: Why is Ocwen well positioned to benefit from these opportunities
1 Why is Ocwen well positioned to benefit from these opportunities ■ Ocwen’s key differentiators are directly proportional to delinquency of portfolio ■ Ocwen has ♦ A 70% cost advantage in servicing non-performing loans 1 ♦ A proven ability to reduce delinquencies and advances ♦ Best in class 90+ da
Slide 8: Highly scalable platform with lowest operating costs
2 Highly scalable platform with lowest operating costs ■ Can quickly scale its servicing platform to efficiently board acquired portfolios with only modest additions to infrastructure ■ Lowest operating cost relative to the subprime mortgage servicing industry 1 ■ Achieves its competitive position t
Slide 9: Effective at driving down delinquencies and advances
3 Effective at driving down delinquencies and advances Delinquency Percentage (90 day + non-performing) by Portfolio (1) … with differing levels of advances as a % of UPB 1. Based on UPB where Ocwen is required to make servicer advances as of 9/30/2011 Note: The information presented shows a snapsho
Slide 10: Revenue in basis points by portfolio
3 Revenue in basis points by portfolio Revenue in bps – Saxon Servicing, HomEq & Litton Portfolios Annualized figures Notes: Saxon servicing portfolio was boarded in May-2010, HomEq portfolio in Sep-2010, & Litton portfolio in Sep-2011. Total Revenue = Contractual Servicing Fee plus Ancillary Revenu
Slide 11: Acquisitions provide attractive returns, which increase over time
4 Acquisitions provide attractive returns, which increase over time ■ Margins expand as revenue per UPB grows without concomitant increase in expense ■ Portfolio becomes less capital intensive as delinquencies and advances decline ■ Pre-tax return on capital increases Underwritten capital / UPB Unde
Slide 12: Substantial cash flow generation
5 Substantial cash flow generation ■ 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) ■ According to our analysis, even if the d
Slide 13: Low risk balance sheet
6 Low risk balance sheet… $977mm of equity supported by high quality assets with limited recourse debt Highly rated assets (as reported 9/30/11) Source: Company filings. 1. Excludes $60mm of Loans, Net - Restricted for Securitization Investors arising from FAS 167 accounting rule change. 2. Includes
Slide 14: …with upside potential
6 …with upside potential Our industry-lowest cost to service creates incremental value embedded in the MSR 1 MSR values according to various methodologies Implied book value / share Adjusting to reflect Ocwen’s lower advance ratio would further increase the value of the MSR 1. Source: Analysis of Ma
Slide 15: We are deploying capital to take advantage of attractive opportunities
7 We are deploying capital to take advantage of attractive opportunities 1. As of 9/1/2011 2. To be raised. There is no assurance that the Company will be successful in raising this capital. 3. There is no assurance that the Saxon and JPM transactions will close.
Slide 16: Summary of investment highlights
Summary of investment highlights 1 Ocwen is well positioned to take advantage of attractive growth opportunities 2 Highly scalable platform with operating cost 70% below the industry 3 Superior servicing and loss mitigation practices effective at driving down delinquencies and advances 4 Acquisition
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