Slower prepayment speeds boosted Home Loan Servicing Solutions' earnings, which came in slightly above consensus expectations and caused least one group of analysts late this week to raise their fiscal year 2015 estimates for the company.
Fourth-quarter 2013 earnings per share rose to 56 cents from 49 cents the previous quarter as its net income rose to $40.1 million from $34.9 million during the same period. In fourth quarter of 2012, HLSS' net income was $14.3 million and it earned 44 cents per ordinary share.
Prepayment speeds at the company during 4Q 2013 fell to 12.4% from 13.7% on a consecutive-quarter basis, according to Sterne Agee analysts, who have raised their fiscal year 2015 estimate to $2.20 from $2.10.
HLSS anticipates first-quarter earnings per share will be around 50 to 54 cents based on its current prepayment rate assumptions.
The company during the fourth quarter of 2013 acquired $9.9 billion in servicing from Ocwen, ending the quarter with a total of $180.4 billion. Ocwen spun HLSS off in 2010 to acquire servicing assets.
HLSS in the fourth quarter of 2013 also closed on a purchase of roughly $600 million worth of Federal Housing Administration-insured Ginnie Mae Early Buy loans, which have cash flow dynamics in line with those of mortgage servicing rights.