Ocwen Financial Corp. reported lower income year-over-year as servicing revenue fell steeply, despite the gains from the sale of nonperforming loans.
The Atlanta-based company's net income dropped to $9.7 million from nearly $67 million a year ago. Earnings per share of 8 cents came in below the average estimate of 17 cents from analysts polled by Bloomberg.
Much of the year-over-year decline in income stemmed from the 19% dip in servicing revenue to $423 million, which was partially offset by a decrease in expenses for this segment.
Ocwen also saw an overall increase in its losses from corporate items to a $46.5 million loss versus a $21 million loss the year prior, due to a 104% jump in expenses.
The company's lending activities did provide a boost, though, with income for this business more than doubling year-over-year to $14.4 million. Other bright spots in the quarter included the company's execution of its asset sale strategy, which led to the sale of $3 billion of nonperforming agency servicing, and a $264 million reduction in corporate debt.
Ocwen will also pursue a cost improvement effort to align its cost structure with the reductions the company has seen in its assets and revenue, company president and chief executive Ron Faris said in the earnings release.
"Our aim is to reduce our costs by over $150 million, while continuing to enhance the borrower experience, strengthen our risk and compliance infrastructure, and deliver strong loss mitigation results," Faris said.
"Similar to our plan to grow our origination capabilities, this cost improvement initiative is aggressive, but it is a critically important step in our transformation and one that is necessary to ensure our long-term success."
Expenses during the second quarter increased 2% year-over-year to $352 million, with reductions in salary costs and the amortization of mortgage servicing rights mitigating upticks in expenses associated with professional services, servicing and origination.
