Ocwen Financial Corp (NYSE:OCN) has announced its operating and financial results for the 3Q2016. The company recorded a net income of $2.4 million, pre tax, during the period, which was $98.8 million higher than the previous quarter. This was largely a result of $178 million generated from operating activities, which was $147 million higher than 2Q2016. However, Ocwen noted that it still had settlement amounts pending, which included Fisher settlements of $30 million and a letter dating remediation of $22 million, amongst others.
Out of the three major business segments of OCN, the servicing and automotive capital services segments had recorded significant growth, while the company’s lending segment had declined dramatically. Ron Farris, the CEO of OCN, pointed out that this was the first quarterly profit for the company, since the 2Q2015. He lauded the efforts of his servicing team, which he stated were responsible making over 21,000 modifications during the 3Q2016 and delivering $12 million in gains on servicer cleanup.
Mr. Farris was of the view that although the automotive and mortgage lending businesses are experiencing growth, there was still work to be done in improving the operating margins of the two segments. In the managements conference call with its investors, the CEO revealed that he had challenged his entire team to achieve profitability during the 3Q2016 and not next year, with hopes that their efforts would be assisted by improved interest rates. He pointed out even though the interest rates were of little help and there were a number of legacy costs as well, the team was still able to deliver on the challenge.
The CEO was also critical of the lending segment, during the conference call, voicing his belief that for long-term success Ocwen would need more contributions from this segment. He further claimed that this belief was backed by the competitive advantage held by the company, in terms of technology. This also includes the ongoing implementation of a loan origination system, which would automate the underwriting and verifications process.
Ocwen Financial Corp (NYSE:OCN) gained 17.05% in terms of share price during the October 27 trading session, on a trade volume of 14.78 million, to close at $4.12 per share.