UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
------------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 28, 1999
OCWEN ASSET INVESTMENT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 001-14043 65-0736120
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
THE FORUM, SUITE 1000
1675 PALM BEACH LAKES BOULEVARD, WEST PALM BEACH, FLORIDA 33401
(Address of principal executive office) (Zip Code)
(561) 682-8000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
News release of Ocwen Asset Investment Corp., dated July 28, 1999, announcing
second quarter 1999 results is attached hereto and filed herewith as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable
(c) Exhibits
(99) News release of Ocwen Asset Investment Corp. dated July
28, 1999, announcing second quarter 1999 results.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
OCWEN ASSET INVESTMENT CORP.
(Registrant)
Date: July 28, 1999 By: /s/ MARK S. ZEIDMAN
----------------------------------------
Name: Mark S. Zeidman
Title: Senior Vice President and
Chief Financial Officer
3
<PAGE>
INDEX TO EXHIBIT
Exhibit No. Description Page
----------- ----------- ----
99 News release of Ocwen Asset Investment Corp. dated 5
July 28, 1999, announcing second quarter 1999 results.
4
================================================================================
[GRAPHIC OMITTED] OCWEN ASSET INVESTMENT CORP.
[OCWEN LOGO]
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION, CONTACT:
A. RICHARD HURWITZ
VP, CORPORATE COMMUNICATIONS
T: (561) 682-8575
E: [email protected]
OCWEN ASSET INVESTMENT CORP. REPORTS 1999 SECOND QUARTER RESULTS
West Palm Beach, FL - July 28, 1999 Ocwen Asset Investment Corp. (NYSE: OAC)
(the "Company") reported a 1999 second quarter net loss of $(18.2) million, or
$(0.96) per diluted share, compared to net income of $6.6 million, or $0.35 per
diluted share, for the same period a year ago. Excluding losses on securities
available for sale, 1999 second quarter net income would have been $3.7 million,
or $0.19 per diluted share, compared to $6.6 million, or $0.35 per diluted share
for the same period a year ago.
For the six months ended June 30, 1999, the net loss was $(19.0) million, or
$(1.00) per diluted share, compared to a net loss of $(3.9) million, or $(0.20)
per diluted share, for the same period a year ago. Excluding losses on
securities available for sale, for the six months ended June 30, 1999, net
income was $10.5 million, or $0.55 per diluted share, compared to $12.9 million,
or $0.68 per diluted share, for the same period a year ago.
LOSSES ON SECURITIES AVAILABLE FOR SALE
During the 1999 second quarter, OAC incurred net losses of $23.9 million on its
securities available for sale portfolio which were comprised of a $19.0 million
writedown of its residential subprime and residual mortgage-backed securities
and a $4.9 million writedown of its commercial mortgage-backed securities. For
the six months ended June 30, 1999, net losses on securities available for sale
were $31.4 million, compared to $17.1 million for the same period a year ago.
<TABLE>
<CAPTION>
SELECTED OPERATING RESULTS:
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ----------------------------
Dollars in thousands, except per share data 1999 1998 1999 1998
- ------------------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net interest income before provision for loan losses $ 8,766 $ 9,779 $ 18,220 $ 16,558
Real estate (loss) income, net ..................... (673) (255) (494) 548
Other expenses ..................................... 3,924 2,266 6,782 3,360
(Losses) on securities ............................. (23,907) -- (31,362) (17,077)
Minority interest in net (loss) income of
consolidated subsidiary .......................... 1,792 (511) 1,946 (321)
Net (loss) income .................................. (18,167) 6,646 (18,951) (3,858)
Net income excluding writedown of securities
available for sale ............................... 3,658 6,646 10,458 12,923
PER SHARE DATA:
Net (loss) earnings per diluted share ............. (0.96) 0.35 (1.00) (0.20)
Dividends .......................................... -- 0.49(1) -- 0.74(1)
Weighted average common shares
outstanding (diluted) ............................ 18,965,000 19,088,026 18,965,000 18,965,000
</TABLE>
(1) Includes June 1998 special dividend of $0.08 per share attributable to the
Company's remaining undistributed 1997 taxable income.
5
<PAGE>
Ocwen Asset Investment Corp.
1999 Second Quarter Results
RECENT DEVELOPMENTS
OAC and Ocwen Financial Corporation (NYSE: OCN), announced on July 26, 1999 that
they have signed a definitive merger agreement providing for OCN to acquire OAC
for 0.71 shares of OCN common stock for each outstanding share of OAC common
stock (other than those OAC shares owned by OCN or its subsidiaries). This
exchange ratio represents a $5.50 price per share or an approximate 19 percent
premium to the closing price of $4 5/8 for OAC common stock on July 23, 1999,
based on the closing price of $7 3/4 for OCN common on that date.
The merger agreement contemplates that, except in certain circumstances, OAC
would declare and set a record date for the final 1998 dividend required for OAC
to maintain its status as a REIT under the federal tax provisions prior to the
consummation of the merger. The final 1998 dividend has been deferred by the
Board of Directors of OAC and is expected to be approximately $15.5 million, or
$0.82 per share. There can be no assurance, however, as to whether or when that
dividend will actually be paid. The merger, which is structured to be taxable to
the OAC shareholders, is expected to close in the fourth quarter of 1999,
subject to antitrust approvals and the approval of the shareholders of each of
OCN and OAC.
SELECTED REVIEW OF LIQUIDITY POSITION
At June 30, 1999, the Company had cash and cash equivalents of $32.4 million and
a debt to equity ratio of 2.6 to 1, compared to cash and cash equivalents of
$53.4 million and a debt to equity ratio of 2.9 to 1 at December 31, 1998. At
June 30, 1999, OAC's book value per share was $10.97, compared to $11.66 at
December 31, 1998. At June 30, 1999, the net worth of the Company's operating
partnership exceeded the levels required by the net worth covenants of the
Company's various debt agreements.
SELECTED FUNDING REQUIREMENTS THROUGH JUNE 30, 2000:
(Dollars in millions)
Maturing repurchase agreements ................ $ 62.3
Construction/renovation funding commitments.... 44.7
Less available lines of credit ....... (11.7) 33.0
----- -------
Total funding requirements .................... 95.3
Less cash and cash equivalents........ (32.4)
-------
Funding deficit................................ $ 62.9
=======
In addition, and as discussed above, the amount of OAC's deferred final 1998
dividend is expected to be approximately $15.5 million, or $0.82 per diluted
share.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase were $73.9 million at June 30,
1999, compared to $138.6 million at December 31, 1998. These obligations were
secured by certain of OAC's investments in subordinated interests in commercial
mortgage-backed securities, residual interests in subprime residential loan
securitizations, and U.K. mortgage loan residual securities. The following table
summarizes the maturity dates of OAC's securities sold under agreements to
repurchase and the fair value of the related collateral securities as of June
30, 1999:
(Dollars in millions) Fair Value of Collateral
--------------------------
Outstanding Commercial Residential
Maturity Date Borrowing Securities Securities
- ------------------------------ ----------- ---------- -----------
Within 1 month ............... $ 46.2 $ 74.4 $ 8.6
2 - 5 months ................. 11.6 14.5 --
6 - 12 months ................ 4.5 -- 69.8
More than 1 year ............. 11.6 -- 49.3
-------- --------- ----------
Total ........................ $ 73.9 $ 88.9 $ 127.7
======== ========== ==========
Currently, interest payments with respect to these obligations are approximately
$0.7 million per month (which assumes that the repurchase agreements, which
mature within 30 days, are renewed at approximately the same rate of interest).
6
<PAGE>
Ocwen Asset Investment Corp.
1999 Second Quarter Results
OBLIGATIONS OUTSTANDING UNDER LINES OF CREDIT
Obligations outstanding under lines of credit amounted to $41.0 million at June
30, 1999, compared to $34.5 million at December 31, 1998. These obligations were
incurred pursuant to a three-year agreement, which is collateralized by
commercial loans and is described below.
OBLIGATIONS OUTSTANDING UNDER LINES OF CREDIT - SECURED BY REAL ESTATE
Obligations outstanding under lines of credit secured by real estate amounted to
$143.8 million at June 30, 1999, compared to $142.6 million at December 31,
1998. These borrowings have three-year terms and interest rates that float with
LIBOR. Set forth below is information regarding OAC's mortgage indebtedness
relating to its investment in real estate at June 30, 1999:
<TABLE>
<CAPTION>
(Dollars in millions) Principal Interest Maturity Annual
Property Amount Rate Date Payment
- ------------------------------------ ---------- ---------------- ------------- --------
<S> <C> <C> <C> <C>
Bush Street Property................ $75.0 LIBOR plus 1.75% April 2001(2) $5.0 (3)
Other............................... $68.8 (1) LIBOR plus 1.75% June 2001 (2) $4.6 (3)
</TABLE>
1) Represents the portion of the outstanding balance that is secured by real
estate under a $200 million line of credit. As of June 30, 1999, OAC's
investments in Cortez Plaza, 450 Sansome Street, 10 UN Plaza, Prudential
Plaza, and 690 Market Street secured this loan, and an additional $41.0
million was borrowed and secured by commercial mortgage loans. The
aggregate balance amounted to $109.8 million at June 30, 1999.
2) Subject to certain conditions, OAC may extend the maturity date by one
year.
3) Annual interest payment based on the interest rate in effect as of June 30,
1999.
SELECTED REVIEW OF OPERATING RESULTS
NET INTEREST INCOME
Net interest income before provision for loan losses decreased $1.0 million to
$8.8 million during the second quarter of 1999, compared to the same period a
year ago. The net interest income decrease was due to a $106.8 million increase
in the average balances of interest-bearing liabilities and an increase in the
cost of funds primarily related to the issuance in July 1998 of the 11.5%
Redeemable Notes due 2005, mitigated by the bonds-match funded loan agreement.
The net interest spread decreased 81 basis points from 4.60% in the second
quarter of 1998 to 3.79% in the second quarter of 1999. Net interest income
before provision for loan losses increased $1.7 million to $18.2 million for the
six months ended June 30, 1999, compared to the same period a year ago.
The following table sets forth information regarding the total amount of income
from interest-earning assets and the resultant average yields, prior to
impairment charges. This information is based on daily average balances during
the reported periods.
<TABLE>
<CAPTION>
For the Three Months ended June 30,
------------------------------------------------------------------
(Dollars in thousands) 1999 1998
-------------------------------- ---------------------------------
Average Annualized Average Annualized
Balance Interest Yield/Rates Balance Interest Yield/Rates
-------- -------- ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits .......................... $ 31,597 $ 326 4.13% $ 9,781 $ 97 3.97%
Securities held for trading ........................ -- -- -- 20,106 (375) (7.46)
Securities available for sale ...................... 299,152 12,064 16.13 319,909 11,535 14.42
Commercial and multifamily loan portfolio .......... 76,240 2,221 11.65 40,563 1,468 14.48
Match funded residential loans ..................... 148,110 3,000 8.10 -- -- --
Residential loan portfolio ......................... 6,427 132 8.22 118,348 2,178 7.36
Discount loan portfolio ............................ 5,618 132 9.40 9,282 423 18.23
------------------------------ -------------------------------
Total interest-earning assets .................... $567,144 $ 17,875 12.61% $517,989 $ 15,326 11.84%
------------------------------ -------------------------------
Interest-bearing liabilities:
Securities sold under agreements to repurchase ..... 92,606 2,039 8.81 174,024 3,302 7.59
Obligations outstanding under lines of credit ...... 41,015 706 6.89 132,246 2,245 6.79
11.5% Redeemable Notes due 2005 .................... 143,000 4,111 11.50 -- -- --
Bonds-match funded loan agreement .................. 136,488 2,253 6.60 -- -- --
------------------------------ -------------------------------
Total interest-bearing liabilities ............... 413,109 9,109 8.82 306,270 5,547 7.24
------------------------------ -------------------------------
Net interest income/net interest spread.................. $ 8,766 3.79% $ 9,779 4.60%
======== ========
Net interest margin...................................... 6.18% 7.55%
</TABLE>
7
<PAGE>
Ocwen Asset Investment Corp.
1999 Second Quarter Results
REAL ESTATE (LOSS) INCOME, NET
Real estate (loss), net increased $0.4 million to $(0.7) million for the three
months ended June 30, 1999, compared to the same period a year ago. This
increase reflects a $3.7 million increase in rental income, offset by a $2.6
million increase in rental operation expense, a $0.5 million increase in
depreciation and amortization expense, and a $1.0 million increase in interest
expense. These increases in real estate operating income and expenses, compared
to the same period a year ago, were largely the result of an increase in OAC's
net investment in real estate to $211.4 million at June 30, 1999, compared to
$176.9 million at June 30, 1998. Real estate (loss) income, net was $(0.5)
million for the six months ended June 30, 1999, compared to $0.5 million in the
same period a year ago.
OTHER EXPENSES
Other expenses increased $1.7 million to $3.9 million for the three months ended
June 30, 1999, compared to the same period a year ago. This increase was
primarily due to a $1.3 million increase in servicing fees payable to Ocwen
Federal Bank, a wholly-owned subsidiary of OCN, as well as added legal and
accounting fees in connection with the proposed merger with OCN. Other expenses
increased $3.4 million to $6.8 million for the six months ended June 30, 1999,
compared to the same period a year ago. The management fees payable by OAC to
Ocwen Capital Corporation ("OCC"), a wholly-owned subsidiary of OCN, totaled
$1.5 million for the quarter ended June 30, 1999 and $3.1 million for the six
months ended June 30, 1999.
LOSSES ON SECURITIES AVAILABLE FOR SALE
OAC incurred net losses of $23.9 million on its securities available for sale
portfolio during the second quarter 1999. The losses were taken primarily
against residential subprime bonds reflecting continuing market illiquidity for
these instruments. The Company prices its securities portfolio at fair value
each month based on the lower of broker/dealer marks or internal values. For the
six months ended June 30, 1999 and 1998, net losses on securities available for
sale were $31.4 million and $17.1, respectively.
SELECTED REVIEW OF SECURITIES PORTFOLIO
At June 30, 1999, OAC's securities available for sale portfolio was $284.5
million and consisted of:
o Non-investment grade and unrated subordinate commercial mortgage-backed
securities having an amortized cost of $98.6 million and a fair value
of $101.9 million,
o Unrated residential subprime residuals having an amortized cost of
$160.5 million and a fair value of $173.6 million, and
o Unrated subordinate residential mortgage-backed securities having an
amortized cost of $9.0 million and a fair value of $9.0 million.
At June 30, 1999, OAC's unrated subprime residual portfolio of $173.6 million
consisted of:
o $83.3 million of seasoned residuals (securitized between 1994 and 1997)
with overcollateralization reserves funded at approximately $122.7
million, and
o $90.3 million of unseasoned residuals (securitized in 1998) with
overcollateralization reserves funded at approximately $29.7 million.
At December 31, 1998, OAC's securities available for sale portfolio was $351.2
million and consisted of:
o Non-investment grade and unrated subordinate commercial mortgage-backed
securities having an amortized cost of $115.7 million and a fair value
of $117.1 million,
o Unrated residential subprime residuals having an amortized cost of
$209.1 million and a fair value of $218.7 million, and
o Unrated subordinate residential mortgage-backed securities having an
amortized cost of $15.4 million and a fair value of $15.4 million.
At December 31, 1998, OAC's unrated subprime residual portfolio of $218.7
million consisted of:
o $110.0 million of seasoned residuals (securitized between 1994 and
1997) with overcollateralization reserves funded at approximately
$122.5 million, and
o $108.7 million of unseasoned residuals (securitized in 1998) with
overcollateralization reserves funded at approximately $26.6 million.
8
<PAGE>
Ocwen Asset Investment Corp.
1999 Second Quarter Results
OTHER
Ocwen Asset Investment Corp., a real estate investment trust headquartered in
West Palm Beach, Florida, has invested in underperforming commercial real
estate, subordinate commercial mortgage-backed securities, subordinate and
residual residential mortgage-backed securities, and commercial and residential
mortgage loans. Additional information about Ocwen Asset Investment Corp.
is available at www.ocwen.com - OAC.
CERTAIN STATEMENTS CONTAINED HEREIN ARE NOT BASED ON HISTORICAL FACTS AND ARE
"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 REFERENCE TO A
FUTURE PERIOD(S) OR BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS
"CONTEMPLATE", "EXPECT," "MAY," "PROPOSE," "WILL," "WOULD," FUTURE OR
CONDITIONAL VERB TENSES, SIMILAR TERMS, VARIATIONS ON SUCH TERMS OR NEGATIVES OF
SUCH TERMS. ALTHOUGH OAC BELIEVES THE ANTICIPATED RESULTS OR OTHER EXPECTATIONS
REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON REASONABLE
ASSUMPTIONS, ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE INDICATED IN SUCH
STATEMENTS DUE TO RISKS, UNCERTAINTIES AND CHANGES WITH RESPECT TO A VARIETY OF
FACTORS, INCLUDING, BUT NOT LIMITED TO, INTERNATIONAL, NATIONAL, REGIONAL OR
LOCAL ECONOMIC ENVIRONMENTS, GOVERNMENT FISCAL AND MONETARY, PREVAILING INTEREST
OR CURRENCY EXCHANGE RATES, EFFECTIVENESS OF INTEREST RATE, CURRENCY EXCHANGE
RATE AND OTHER HEDGING STRATEGIES, LAWS AND REGULATIONS AFFECTING REAL ESTATE
INVESTMENT TRUSTS, INVESTMENT COMPANIES AND REAL ESTATE (INCLUDING CAPITAL
REQUIREMENTS, INCOME AND PROPERTY TAXATION, ACCESS FOR DISABLED PERSONS AND
ENVIRONMENTAL COMPLIANCE), UNCERTAINTY OF FOREIGN LAWS, COMPETITIVE PRODUCTS,
PRICING AND CONDITIONS (INCLUDING FROM COMPETITORS THAT HAVE SIGNIFICANTLY
GREATER RESOURCES THAN OAC), CREDIT, PREPAYMENT, BASIS, DEFAULT, SUBORDINATION
AND ASSET/LIABILITY RISKS, LOAN SERVICING EFFECTIVENESS, SATISFACTORY DUE
DILIGENCE RESULTS, SATISFACTION OR FULFILLMENT OF AGREED UPON TERMS AND
CONDITIONS OF CLOSING OR PERFORMANCE, TIMING OF TRANSACTION CLOSINGS, THE
DECISION TO CURTAIL EACH BUSINESS LINE AND DISCONTINUE INVESTMENT ACTIVITIES,
AVAILABILITY OF AND COSTS ASSOCIATED WITH OBTAINING ADEQUATE AND TIMELY SOURCES
OF LIQUIDITY, DEPENDENCE ON EXISTING SOURCES OF FUNDING, ABILITY TO REPAY OR
REFINANCE INDEBTEDNESS (AT MATURITY OR UPON ACCELERATION), TO MEET COLLATERAL
CALLS BY LENDERS (UPON RE-VALUATION OF THE UNDERLYING ASSETS OR OTHERWISE), TO
GENERATE REVENUES SUFFICIENT TO MEET DEBT SERVICE PAYMENTS AND OTHER OPERATING
EXPENSES AND TO SECURITIZE WHOLE LOANS, TAXABLE INCOME EXCEEDING CASH FLOW, SIZE
OF, NATURE OF AND YIELDS AVAILABLE WITH RESPECT TO THE SECONDARY MARKET FOR
MORTGAGE LOANS AND FINANCIAL, SECURITIES AND SECURITIZATION MARKETS IN GENERAL,
ALLOWANCES FOR LOAN LOSSES, GEOGRAPHIC CONCENTRATIONS OF ASSETS (TEMPORARY OR
OTHERWISE), TIMELY LEASING OF UNOCCUPIED SQUARE FOOTAGE (GENERALLY AND UPON
LEASE EXPIRATION), CHANGES IN REAL ESTATE MARKET CONDITIONS (INCLUDING
LIQUIDITY, VALUATION, REVENUES, RENTAL RATES, OCCUPANCY LEVELS AND COMPETING
PROPERTIES), ADEQUACY OF INSURANCE COVERAGE IN THE EVENT OF A LOSS, KNOWN OR
UNKNOWN ENVIRONMENTAL CONDITIONS, EXTERNAL MANAGEMENT, CONFLICTS OF INTEREST,
YEAR 2000 COMPLIANCE, OTHER FACTORS GENERALLY UNDERSTOOD TO AFFECT THE REAL
ESTATE ACQUISITION, MORTGAGE AND LEASING MARKETS, SECURITIES INVESTMENTS AND
RAPID GROWTH COMPANIES, AND OTHER RISKS DETAILED FROM TIME TO TIME IN OAC'S
REPORTS AND FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"),
INCLUDING ITS REGISTRATION STATEMENTS ON FORMS S-3, S-4 AND S-11 AND ITS
PERIODIC REPORTS ON FORMS 10-Q, 8-K, AND 10-K. GIVEN THESE UNCERTAINTIES,
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH STATEMENTS, AND OAC
DOES NOT UNDERTAKE TO REVISE, AND SPECIFICALLY DISCLAIMS ANY OBLIGATION, TO
PUBLICLY RELEASE THE RESULT OF ANY REVISIONS WHICH MAY BE MADE TO, ANY
FORWARD-LOOKING STATEMENTS TO REFLECT THE OCCURRENCE OF ANTICIPATED OR
UNANTICIPATED EVENTS OR CIRCUMSTANCES AFTER THE DATE OF SUCH STATEMENTS. PLEASE
REFER TO EXHIBIT 99.2 INCLUDED WITH THE FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1998 AND FILED WITH THE SEC, FOR A DESCRIPTION OF MATERIAL RISKS FACED BY
THE COMPANY AND ITS SECURITIES HOLDERS.
ATTACHED ARE THE CONSOLIDATED FINANCIAL STATEMENTS.
9
<PAGE>
Ocwen Asset Investment Corp.
1999 Second Quarter Results
<TABLE>
<CAPTION>
OCWEN ASSET INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, December 31,
1999 1998
------------- -------------
<S> <C> <C>
ASSETS
Cash and amounts due from depository institutions ...................... $ 5,162,989 $ 3,484,929
Interest-bearing deposits .............................................. 27,210,332 49,880,276
Securities available for sale, at fair value ........................... 284,488,118 351,153,971
Commercial and multi-family loan portfolio, net ........................ 79,478,045 65,282,965
Residential loan portfolio, net ........................................ 6,064,404 8,058,445
Match funded residential loans, net .................................... 135,857,672 173,609,873
Discount loan portfolio, net ........................................... 5,618,022 5,618,022
Investment in real estate, net ......................................... 211,368,063 208,058,721
Principal and interest receivable ...................................... 4,352,684 7,475,795
Other assets ........................................................... 19,008,588 15,702,816
------------- -------------
Total assets ........................................................ $ 778,608,917 $ 888,325,813
============= =============
LIABILITIES:
Securities sold under agreements to repurchase ......................... $ 73,847,048 $ 138,611,824
Obligations outstanding under lines of credit .......................... 41,015,023 34,472,404
Obligations outstanding under lines of credit - secured by real estate.. 143,755,698 142,556,880
11.5% Redeemable Notes due 2005 ........................................ 143,000,000 143,000,000
Bonds - match funded loan agreement .................................... 124,209,290 163,403,966
Accrued expenses, payables and other liabilities ....................... 22,805,816 21,190,288
------------- -------------
Total liabilities ................................................... 548,632,875 643,235,362
------------- -------------
Minority interest .......................................................... 21,967,987 23,914,058
------------- -------------
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; 25,000,000 shares authorized;
0 shares issued and outstanding ..................................... -- --
Common Stock, $.01 par value; 200,000,000 shares authorized;
18,965,000 shares issued and outstanding ............................ 189,650 189,650
Additional paid-in capital ............................................. 294,492,203 294,492,203
Cumulative dividends declared .......................................... (36,277,546) (36,277,546)
Retained deficit ....................................................... (65,345,486) (46,394,403)
Accumulative other comprehensive income:
Unrealized gain on securities available for sale .................... 16,365,730 11,038,151
Cumulative translation adjustment ................................... (1,416,496) (1,871,662)
------------- -------------
Total other comprehensive income .................................. 14,949,234 9,166,489
------------- -------------
Total shareholders' equity ........................................ 208,008,055 221,176,393
------------- -------------
$ 778,608,917 $ 888,325,813
============= =============
</TABLE>
10
<PAGE>
Ocwen Asset Investment Corp.
1999 Second Quarter Results
<TABLE>
<CAPTION>
OCWEN ASSET INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Repurchase agreements and interest bearing deposits.. $ 326,219 $ 97,510 $ 820,823 $ 295,648
Securities held for trading ......................... -- (375,300) -- 106,892
Securities available for sale ....................... 12,063,542 11,534,635 25,702,059 16,183,217
Commercial and Multifamily loans .................... 2,220,840 1,467,916 3,869,354 2,273,702
Match funded residential loans ...................... 3,000,208 -- 6,327,351 --
Residential loans ................................... 132,153 2,178,010 277,551 2,613,031
Discount loans ...................................... 132,400 423,421 258,718 1,326,198
------------ ------------ ------------ ------------
17,875,362 15,326,192 37,255,856 22,798,688
------------ ------------ ------------ ------------
INTEREST EXPENSE:
Securities sold under agreements to repurchase ...... 2,039,165 3,302,044 4,681,167 3,966,815
Obligations outstanding under lines of credit ....... 705,826 2,244,723 1,312,510 2,273,769
11.5% Redeemable Notes due 2005 ..................... 4,111,250 -- 8,265,400 --
Bonds-match funded loan agreements ................. 2,252,778 -- 4,776,380 --
------------ ------------ ------------ ------------
9,109,019 5,546,767 19,035,457 6,240,584
------------ ------------ ------------ ------------
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 8,766,343 9,779,425 18,220,399 16,558,104
Provision for loan losses ........................... 221,239 100,976 479,091 206,049
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES.. 8,545,104 9,678,449 17,741,308 16,352,055
------------ ------------ ------------ ------------
REAL ESTATE-OPERATING INCOME:
Rental income ....................................... 8,167,173 4,515,204 16,149,603 6,549,491
Other ............................................... 15,057 18,978 25,439 26,835
------------ ------------ ------------ ------------
8,182,230 4,534,182 16,175,042 6,576,326
------------ ------------ ------------ ------------
REAL ESTATE-OPERATING EXPENSES:
Rental operation .................................... 4,900,308 2,342,105 8,863,017 3,275,851
Depreciation & amortization ......................... 1,259,927 758,484 2,453,904 1,062,921
Interest ............................................ 2,695,211 1,689,103 5,352,537 1,689,103
------------ ------------ ------------ ------------
8,855,446 4,789,692 16,669,458 6,027,875
------------ ------------ ------------ ------------
REAL ESTATE (LOSS) INCOME, NET ........................ (673,216) (255,510) (494,416) 548,451
------------ ------------ ------------ ------------
OTHER EXPENSES:
Management fees ..................................... 1,530,662 1,704,751 3,055,091 2,533,632
Due diligence expenses .............................. -- 174,955 122,745 367,644
Foreign currency loss ............................... -- -- -- (116,953)
Other ............................................... 2,393,481 386,439 3,603,790 576,094
------------ ------------ ------------ ------------
3,924,143 2,266,145 6,781,626 3,360,417
------------ ------------ ------------ ------------
(LOSSES) GAINS ON SECURITIES .......................... (23,906,787) 34 (31,362,420) (17,077,045)
------------ ------------ ------------ ------------
(LOSS) INCOME BEFORE MINORITY INTEREST ................ (19,959,042) 7,156,828 (20,897,154) (3,536,956)
Minority interest in net (loss) income of
consolidated subsidiary ............................. 1,791,820 (510,696) 1,946,071 (321,154)
------------ ------------ ------------ ------------
NET (LOSS) INCOME ................................... $(18,167,222) $ 6,646,132 $(18,951,083) $ (3,858,110)
============ ============ ============ ============
NET (LOSS) EARNINGS PER SHARE:
Basic ............................................... $ (0.96) $ 0.35 $ (1.00) $ (0.20)
============ ============ ============ ============
Diluted ............................................. $ (0.96) $ 0.35 $ (1.00) $ (0.20)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic ............................................... 18,965,000 18,965,000 18,965,000 18,965,000
============ ============ ============ ============
Diluted ............................................. 18,965,000 19,088,026 18,965,000 18,965,000
============ ============ ============ ============
</TABLE>
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