OCWEN FINANCIAL CORP
8-K, 1998-10-28
SAVINGS INSTITUTION, FEDERALLY CHARTERED
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                                  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): OCTOBER 26, 1998

                           OCWEN FINANCIAL CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)




      FLORIDA                       0-21341                    65-0039856
  (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)


       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (561) 682-8000


                                       N/A
          (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)


                                  PAGE 1 OF 18
                             EXHIBIT INDEX ON PAGE 4

<PAGE>


ITEM 5.  OTHER EVENTS

The news  release  of Ocwen  Financial  Corporation,  dated  October  26,  1998,
announcing  its third  quarter 1998 results and certain  other  information,  is
attached hereto and filed herewith as Exhibit 99.


ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS

    (c)  Exhibits

         The following exhibit is filed as part of this report:

         (99) News  release of Ocwen  Financial  Corporation  dated  October 26,
              1998.

                                       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 FINANCIAL CORPORATION
                                   (Registrant)


                                    By:  /s/ MARK S. ZEIDMAN
                                         -----------------------------
                                             Mark S. Zeidman
                                             Senior Vice President and
                                             Chief Financial Officer



Date:  October 28, 1998

                                       3
<PAGE>


INDEX TO EXHIBIT



     Exhibit No.    Description                                            Page
     -----------    -----------                                            ----

          99        News release of Ocwen  Financial  Corporation  dated    5
                    October 26, 1998,  announcing its third quarter 1998
                    results and certain other information.

                                       4


- --------------------------------------------------------------------------------
Ocwen Financial Corporation                                           Exhibit 99
- --------------------------------------------------------------------------------
1675 Palm Beach Lakes Blvd.
West Palm Beach, FL  33401
NYSE symbol: OCN

NEWS RELEASE:     IMMEDIATE                                    October  26, 1998

OCWEN FINANCIAL CORPORATION REPORTS THIRD QUARTER RESULTS

WEST PALM BEACH, FL - Ocwen Financial Corporation (NYSE: OCN) today reported net
income of $24.9  million,  or $0.41 per diluted  share,  for the  quarter  ended
September 30, 1998.  Returns on average assets and average equity were 2.74% and
23.58%, respectively, for the third quarter of 1998. This compares to net income
of $20.2 million,  or $0.35 per diluted share, and returns on average assets and
average equity of 2.78% and 26.47%, respectively, for the third quarter of 1997.

William C.  Erbey,  Chairman  and Chief  Executive  Officer  said,  "We are very
pleased  with OCN's  results  this  quarter,  particularly  in light of existing
market  conditions.  In fact, this was the most profitable third quarter OCN has
ever had. Our core discount loan  businesses and commercial  real estate lending
activities were strong  contributors to quarterly net income,  and our servicing
fees  more than  doubled  over the same  quarter  last  year.  The  increase  in
servicing fees reflects an increase in loans  serviced for others,  and supports
our growth strategy of increasing fee-based income streams."

Mr.  Erbey  continued,  "As you know,  the  United  States  capital  markets  --
including the financial services and mortgage-backed  securities markets -- have
experienced significant  volatility,  raising the very real possibility that the
United States might be on the verge of an economic downturn.  If events continue
on their present course,  slowing  economic growth would likely result in rising
delinquencies,  creating a greater demand for OCN's services. In anticipation of
these events, OCN is taking the following actions: 

o   Refocusing its resources on its core  competencies,  namely the  acquisition
    and  management  of  servicing-intensive   assets  and  the  development  of
    exportable  loan  servicing  technology  for the  mortgage  and real  estate
    industries.

    o   OCN has  eliminated  approximately  200  positions  since  August  1998,
        including the layoff of  approximately  150 employees with the objective
        of reducing its operating expenses and efficiency ratio. The majority of
        these  positions  related  to  OCN's  discontinuation  of  its  subprime
        domestic retail branch network.

o   Increasing  its liquidity  position to maximize  OCN's ability to capitalize
    upon opportunities that an economic downturn will present.

o   Reducing  OCN's  reliance  upon gain on sale  accounting.  For example,  OCN
    currently  anticipates  effecting  only one United  States  subprime and one
    United Kingdom ("UK") subprime  securitization  during the fourth quarter of
    1998.

Mr.  Erbey  continued,  "We are  very  pleased  with  our  investment  in  Ocwen
Technology  Xchange,  or OTX, our new technology  division,  which was formed to
supply software products to the mortgage and real estate industries,  making our
advanced  mortgage  loan  servicing,   resolution  and  origination   technology
available to third parties through software licenses.

We are very proud to have recently gained  endorsements by several servicers and
large mortgage loan  originators  of our advanced loan servicing  technology and
e-commerce system. The marketing of these products has only just begun."

- --------------------------------------------------------------------------------
Contacts                    Christine A. Reich                    (561) 682-8569
                             William C. Erbey                     (561) 682-8520
                             Mark S. Zeidman                      (561) 682-8600
- --------------------------------------------------------------------------------

                                       5
<PAGE>

Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998

<TABLE>
<CAPTION>
THIRD QUARTER AND NINE MONTHS RESULTS AT A GLANCE           Third Quarter                     Nine Months
- -------------------------------------------------    ----------------------------    ----------------------------
In thousands of dollars, except per share data           1998            1997            1998            1997
- -------------------------------------------------    ------------    ------------    ------------    ------------
<S>                                                  <C>             <C>             <C>             <C>         
Revenues ........................................    $     98,540    $     63,359    $    186,197    $    179,217
Provision for loan losses .......................          (1,806)         (4,088)        (13,734)        (21,739)
Expenses ........................................         (68,914)        (33,069)       (165,972)        (86,953)
Income tax (expense) benefit ....................          (2,922)         (6,179)          2,888         (14,911)
Minority interest ...............................              33             142              (2)            384
                                                     ------------    ------------    ------------    ------------
Net income ......................................    $     24,931    $     20,165    $      9,377    $     55,998
                                                     ============    ============    ============    ============
Earnings per share:
   Basic ........................................    $       0.41    $       0.35    $       0.15    $       1.02
   Diluted ......................................    $       0.41    $       0.35    $       0.15    $       1.01
Weighted average shares outstanding:  
   Basic ........................................      60,785,467      57,004,218      60,716,777      54,734,082
   Diluted ......................................      61,074,499      57,749,958      61,249,163      55,341,404
</TABLE>

ALL  REFERENCES  BELOW  REGARDING  CHANGES ARE BASED ON  COMPARISONS TO THE SAME
PERIOD A YEAR AGO.

Revenues increased $35.2 million or 56% in the third quarter of 1998 and were up
$7.0 million or 4% for the nine months ended  September 30, 1998. 

o   Net interest income before  provision for loan losses increased $3.3 million
    or 9% to $40.7  million  in the third  quarter of 1998.  In the nine  months
    ended September 30, 1998, net interest income increased $17.3 million or 21%
    to $100.2  million.  The  increase in net interest  income  during the third
    quarter of 1998 was  largely  due to a $7.1  million  increase  in  interest
    income on loans  available for sale and a $7.9 million  increase in interest
    income on  discount  loans  offset by a $2.7  million  decrease  in interest
    income on the loan portfolio and a $6.7 million increase in interest expense
    on obligations outstanding under lines of credit.

o   Non-interest  income increased $32.4 million or 128% to $57.9 million in the
    third  quarter of 1998.  This  increase is due primarily to an $18.2 million
    increase in gains on interest  earning assets,  an $8.0 million  increase in
    servicing  fees and  other  charges  and a $9.8  million  increase  in other
    income.  The increase in servicing  fees reflects a significant  increase in
    loans serviced for others, from $5.51 billion at December 31, 1997 and $8.17
    billion at June 30 1998 to $9.96  billion at September  30, 1998,  resulting
    from  securitizations by OCN of single family residential discount loans and
    subprime  loans (which  account for $2.91 billion) and agreements to service
    mortgage  loans for others (which account for $7.05  billion).  OCN has also
    increasingly  entered  into  special  servicing   arrangements  whereby  OCN
    services  loans  that  become  greater  than 60 days  past due and  receives
    incentive  fees  to  the  extent  certain  loss  mitigation  parameters  are
    achieved.  Through  September 30, 1998, OCN has been designated as a special
    servicer for pools of loans  totaling  approximately  $9.2 billion in unpaid
    principal   balance.   For  the  nine  months  ended   September  30,  1998,
    non-interest income increased 7% to $86.0 million.

Provision for loan losses decreased by $2.3 million in the third quarter of 1998
and $8.0 million  during the nine months ended  September  30, 1998 is primarily
due to a  decline  in the  balance  of  discount  loan and loan  portfolios.  At
September 30, 1998, OCN had allowances for loan losses of $21.1 million and $4.1
million on its discount loan and loan portfolios,  respectively,  which amounted
to 1.9% and 1.8% of the respective balances. OCN maintained reserves of 1.6% and
1.4% on its discount loans and loan  portfolios,  respectively,  at December 31,
1997.

Expenses  rose $35.8 million or 108% in the third quarter of 1998 as a result of
growth in OCN's core  business  lines and in the  expenses  of OTX and Ocwen UK,
which  amounted to $6.0 million and $15.4 million,  respectively,  for the third
quarter of 1998.  Details of this growth for the quarter include: 

o   Compensation and employee benefits  increased $12.0 million or 59% primarily
    due to an 81% increase in the average number of employees from 944 to 1,704.

o   Occupancy and equipment expense increased $4.5 million or 89%.

                                       6
<PAGE>


Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998


o   Distributions  on capital  securities  amounted to $3.4  million  during the
    third quarter of 1998, an increase of $1.5 million.

o   Other operating  expenses increased by $15.8 million primarily due to a $7.2
    million  increase  in loan  related  expenses,  a $2.5  million  increase in
    amortization of goodwill,  a $2.3 million increase in professional  expenses
    and a $1.8 million increase in marketing expenses.

Income tax expense was recorded at a rate of 10.5% for the third quarter of 1998
as  compared  to 23.6% for the third  quarter of 1997.  OCN  estimates  that its
effective  tax rate for  1998  will  approximate  7.9%  before  the use of a net
operating  loss carry forward.  Such  operating loss carry forward  results in a
$3.4 million tax benefit for the nine months ended September 30, 1998.

RECENT DEVELOPMENTS

On September 17, 1998, OCN completed the  securitization  of 2,706 single family
residential  mortgage  discount loans with an aggregate unpaid principal balance
of $172.9  million.  OCN recorded a net gain of $19.2 million on the sale of the
senior classes of securities in connection with this transaction.  OCN continues
to service  the loans for a fee and has  retained  an  interest  in the  related
subordinate security valued at $12.1 million.

On September 29, 1998, OCN completed the securitization of 2,205 subprime single
family residential  mortgage loans with an aggregate unpaid principal balance of
$261.6  million.  OCN  recorded  a net gain of $13.3  million on the sale of the
senior classes of securities in connection with this transaction.  OCN continues
to service  the loans for a fee and has  retained  an  interest  in the  related
residual security valued at $18.3 million.

On October 7, 1998,  OCN announced  it's recent filing of a $250.0 million shelf
registration statement with the Securities and Exchange Commission ("SEC") which
allows for the issuance of up to $250.0  million of common and preferred  stock,
capital trust  securities,  senior and subordinated  debt and other  securities.
Mark S. Zeidman,  Chief Financial Officer,  stated,  "Since OCN's initial public
offering, we have been planning to file a shelf registration  statement once OCN
became  eligible  under  the SEC's  regulations  in order to take  advantage  of
capital-raising opportunities if and when they arise in the future."

For the nine months ended September 30, 1998, OCN purchased  discount loans with
a total unpaid  principal  balance of  approximately  $842.2  million.  Combined
purchases and  originations  of subprime single family loans for the same period
amounted to  approximately  $1.42  billion of unpaid  principal  balance,  which
includes $134.1 million of  originations  by Ocwen UK, $292.8 million  purchased
from the US operations of Cityscape and $421.3  million  purchased in connection
with the  acquisition  of the UK  operation  of  Cityscape  during the first and
second quarter of 1998, respectively.

THE  REMAINDER OF THIS RELEASE  CONTAINS  SUMMARY  INFORMATION  ON OCN'S SEGMENT
PROFITABILITY,  SPECIFIC  AREAS OF  RESULTS,  FINANCIAL  CONDITION  AND  AVERAGE
BALANCES AND RATES, AS WELL AS OCN'S INTERIM  UNAUDITED  CONSOLIDATED  FINANCIAL
STATEMENTS.

                                       7
<PAGE>


Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998



NET INCOME SUMMARY BY BUSINESS ACTIVITY

Through September 30, 1998, OCN continued to engage in significant discount loan
acquisition  and resolution  activities and a variety of other mortgage  lending
activities,  which  generally  reflect  OCN's desire to focus on business  lines
which  leverage its core  competency,  the servicing and management of servicing
intensive  assets.  The following  table presents the estimated  contribution by
business activity to OCN's net income for the periods indicated.

<TABLE>
<CAPTION>
                                                                Three Months                                Nine Months
                                                 -----------------------------------------     -----------------------------------
  For the periods ended September 30,                   1998                      1997                1998                1997
                                                 -------------------     -----------------     ------------------     ------------
 (Dollars in thousands)                           Amount       %          Amount      %         Amount      %         Amount    %
- ----------------------------------------------   --------   --------     --------  -------     --------  --------     -------  ---
<S>                                                 <C>           <C>      <C>          <C>      <C>          <C>      <C>      <C>
Discount Loans:                                                                                

  Single family residential loans ............      6,056         24       (1,537)      (8)      28,575       305      10,787   19
  Large commercial real estate loans .........     11,996         48       10,611       53       25,293       270      20,415   36
  Small commercial real estate loans .........      1,651          7          457        2        7,669        82       1,599    3

Investment in low-income housing tax credits .      1,751          7        4,043       20        7,036        75       7,803   14

Commercial real estate lending ...............      6,928         28        4,045       20       12,246       130       6,113   11

Subprime single family residential lending (1)     (4,192)       (17)        (684)      (3)      (1,828)      (19)         60   --

Mortgage loan servicing (2) ..................      1,582          6        1,473        7        5,710        61       2,581    5

Investment securities ........................      2,394         10        2,207       11      (69,722)     (744)      5,612   10

OTX ..........................................     (1,826)        (7)          --       --       (6,076)      (65)         --   --

Other ........................................     (1,409)        (6)        (450)      (2)         474         5       1,028    2
                                                 --------   --------     --------  -------     --------  --------     -------  ---
                                                 $ 24,931        100%    $ 20,165      100%    $  9,377       100%    $55,998  100%
                                                 ========   ========     ========  =======     ========  ========     =======  ===
</TABLE>

(1) Includes net income (loss) from foreign  operations derived from Ocwen UK of
    ($2.9)  million  and  $2.9  million  for the  three  and nine  months  ended
    September 30, 1998, respectively.

(2) Includes  net  income  from  foreign  operations  derived  from  Ocwen UK of
    $216,000 and $1.9 million for the three and nine months ended  September 30,
    1998, respectively.

REVENUES

NET INTEREST INCOME

Interest  income of $88.5  million for the third  quarter of 1998  increased  by
$11.2  million or 15% over that of the third  quarter of 1997.  This increase is
the result of a $542.3  million  increase  in average  interest-earning  assets,
offset by an 82 basis point decrease in the average yield earned. The decline in
the average  yield earned for the third  quarter of 1998 is  primarily  due to a
decline  in the yield on  securities  available  for sale,  offset in part by an
increase  in the  yield  on the  loan  portfolio  (primarily  due to  additional
interest  received in connection  with the payoff of  commercial  loans.) Of the
$542.3 million net increase in average  interest-earning assets, $364.3 million,
$295.4  million and $140.7  million  related to  securities  available for sale,
loans available for sale and the discount loan portfolio,  respectively,  offset
by a $157.4 million  decrease related to the loan portfolio and a $156.1 million
decrease in federal funds sold and repurchase agreements.  Of the $295.4 million
increase in loans  available for sale,  $129.6 million  related to loans held by
Ocwen UK. The average yield on interest-earning  assets was 11.94% and 12.76% in
the third quarter of 1998 and 1997, respectively,  and 10.70% and 11.48% for the
nine months ended September 30, 1998 and 1997, respectively. For the nine months
ended September 30, 1998,  interest  income amounted to $241.5 million,  a $42.7
million or 21.5% increase over the same period in 1997.

                                       8
<PAGE>


Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998

Interest  expense of $47.9  million for the third  quarter of 1998  increased by
$7.9 million or 20% over the comparable  period in the prior year as a result of
a $340.0  million or 14%  increase  in the average  balance of  interest-bearing
liabilities.   Of  the  $340.0  million  increase  in  the  average  balance  of
interest-bearing liabilities, $337.0 million and $71.4 million related to

increases  in  borrowings  under  lines of  credit  and  securities  sold  under
agreements to  repurchase,  respectively,  offset by a $76.1 million  decline in
certificates of deposit.  The average rate paid on interest-bearing  liabilities
was 7.08% and 6.76% in the third quarter of 1998 and 1997, respectively. For the
nine months  ended  September  30,  1998,  interest  expense  amounted to $141.3
million, a $25.3 million or 22% increase over the same period of the prior year.

As a result of the above,  net interest income before  provision for loan losses
of $40.7 million for the third  quarter of 1998  increased by $3.3 million or 9%
from the third quarter of 1997 and the net interest margin for the third quarter
of 1998  decreased  to 5.49%  from  6.17% for the  third  quarter  of 1997.  Net
interest  income of $100.2 million for the nine months ended  September 30, 1998
increased $17.3 million or 21% over the comparable  period of the prior year and
the net interest margin declined 34 basis points to 4.44%.

NON-INTEREST INCOME

Non-interest  income for the third quarter of 1998 amounted to $57.9 million, an
increase of $32.4  million or 128% from that of the third  quarter of 1997.  The
increase was  primarily  due to an $18.2  million  increase in gains on interest
earning assets, an $8.0 million increase in servicing fees and other charges and
a $9.8 million  increase in other income.  Other income of $17.1 million for the
third quarter of 1998 included $5.0 million of gains on sales of  investments in
real estate,  $3.4 million of income  resulting from OCN's equity  investment in
Kensington  Mortgage Company,  $2.9 million of brokerage  commissions  earned in
connection  with Ocwen UK loan  originations,  a $2.3 million gain recognized in
connection with the sale of investments in three  low-income  housing tax credit
projects and $1.8 million of  management  fees earned from OAC.  Other income of
$7.3  million  for the third  quarter  of 1997 is  primarily  comprised  of $6.3
million  of gains  recognized  in  connection  with the sale of  investments  in
low-income housing tax credit projects. Gains on interest-earning assets for the
third quarter of 1998 amounted to $24.2 million and were primarily  comprised of
a $13.3  million  gain  recognized  in  connection  with the  securitization  of
subprime  single  family  residential  mortgage  loans with an aggregate  unpaid
principal  balance of $261.6  million,  and a $19.2  million gain  recognized in
connection  with  the  securitization  of  discount  single  family  residential
mortgage loans with an aggregate  unpaid  principal  balance of $172.9  million,
offset by a $10.8 million charge on certain available for sale securities. Gains
on  interest-earning  assets  for the  nine  months  ended  September  30,  1998
decreased by $45.2 million from the same period in 1997 primarily as a result of
the $8.5  million and $77.6  million  charge on AAA-rated  agency  interest-only
securities from the first and second quarter of 1998, respectively, and includes
$55.7  million in gains  earned  during the first and second  quarter of 1998 in
connection with securitizations of discount and subprime mortgage loans.

The increase in servicing  fees and other  charges  reflects an increase in loan
servicing  and related  fees as a result of an increase  in loans  serviced  for
others. The unpaid principal balance of loans serviced for others averaged $9.13
billion  and  $3.03  billion   during  the  third  quarter  of  1998  and  1997,
respectively,  and $7.47 billion and $2.52 billion  during the nine months ended
September 30, 1998 and 1997,  respectively.  At September 30, 1998, OCN serviced
142,844 loans for third parties  totaling  $9.96  billion  versus  125,318 loans
totaling $8.17 billion at June 30, 1998, and 70,308 loans totaling $5.51 billion
at December 31, 1997.

EQUITY IN EARNINGS OF INVESTMENT IN JOINT VENTURES

On December 12,  1997,  BCBF LLC (the "LLC"),  a joint  venture  between OCN and
Black Rock Finance LP,  distributed all of its remaining assets to its partners.
As a result,  no equity in earnings of  investment in joint venture was recorded
during 1998.  During the third quarter of 1997, OCN recorded  $546,000 of income
related  to its  investment  in  joint  ventures,  consisting  primarily  of net
interest income. Income from the joint venture amounted to $16.2 million for the
first nine months of 1997 and includes  $9.2 million of net gains related to the
securitization of single-family residential loans in the first quarter of 1997.

PROVISION FOR LOAN LOSSES

 Provision  for loan losses  decreased by $2.3  million in the third  quarter of
1998 and $8.0 million  during the nine months  ended  September  30,  1998.  The
decline  in the  provision  for  loan  losses  in  1998 as  compared  to 1997 is
primarily due to a

                                       9
<PAGE>


Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998

decline in the balance of discount loans and loan  portfolios.  At September 30,
1998,  OCN had  allowances  for losses of $21.1  million and $4.1 million on its
discount loan and loan portfolios, respectively, which amounted to 1.9% and 1.8%
of the  respective  balances.  OCN  maintained  reserves of 1.6% and 1.4% on its
discount loans and loan portfolios, respectively, at December 31, 1997.

EXPENSES

NON-INTEREST EXPENSE

Non-interest expense amounted to $65.5 million for the third quarter of 1998 and
includes  $6.0  million  and  $15.4  million   related  to  OTX  and  Ocwen  UK,
respectively,  representing  an increase of $34.3 million or 110% over the third
quarter of 1997.  Compensation and employee benefits  increased by $12.0 million
as the average  number of employees  increased to 1,704 from 944.  Occupancy and
equipment  expense  increased $4.5 million  primarily due to an increase in data
processing  costs,  general office  equipment  expenses and rent expense.  Other
operating  expenses  increased by $15.8 million  primarily due to a $7.2 million
increase in loan related  expenses,  a $2.5 million  increase in amortization of
goodwill,  a $2.3 million  increase in professional  expenses and a $1.8 million
increase in marketing  expenses.  For the nine months ended  September 30, 1998,
non-interest  expense  amounted  to $155.8  million,  a $70.7  million  or 83.0%
increase over the same period of the prior year.

DISTRIBUTIONS  ON  COMPANY-OBLIGATED,   MANDATORILY   REDEEMABLE  SECURITIES  OF
SUBSIDIARY TRUST HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES

In August 1997, Ocwen Capital Trust I, a wholly-owned  subsidiary of OCN, issued
$125.0  million of 10 7/8% Capital  Securities.  Distributions  amounted to $3.4
million and $10.2 million  during the three and nine months ended  September 30,
1998, respectively, as compared to $1.9 million for the same periods in 1997.

INCOME TAXES

Income tax  (expense)  benefit  amounted to $(2.9)  million  and $(6.2)  million
during the third  quarter of 1998 and 1997,  respectively,  and $2.9 million and
$(14.9)  million  for the  nine  months  ended  September  30,  1998  and  1997,
respectively.  OCN's income taxes  reflect an expected tax rate of 7.9% for 1998
before the use of a $3.4  million  tax benefit  resulting  from the use of prior
year net operating loss carryforwards. This compares to an effective tax rate of
21.4% for 1997.  OCN's  expected  tax rate is less than its  statutory  tax rate
primarily  due to tax  credits of $4.6  million  and $3.8  million for the third
quarter of 1998 and 1997, respectively,  and $13.6 million and $10.3 million for
the first nine months of 1998 and 1997, respectively, resulting from investments
in low-income housing tax credit interests.  No valuation allowance was required
at September 30, 1998 because it is expected that losses and tax credits will be
utilized to offset future taxable income and tax expense.

ASSETS AND LIABILITIES

At September 30, 1998,OCN had $3.39 billion of total assets as compared to $3.07
billion at December  31,  1997,  an increase of $115.0  million or 3% and $321.6
million or 11%, respectively.  The increase in total assets was primarily due to
a $236.1  million  increase in securities  available for sale,  primarily  short
duration collateralized mortgage obligations, a $160.3 million increase in loans
available for sale, a $105.6 million increase in cash and cash equivalents and a
$75.1 million  increase in  investment  securities,  offset by a $339.6  million
decrease in discount  loans.  OCN acquired  discount loans with a combined total
unpaid principal balance of approximately $168.5 million during the three months
ended September 30, 1998,  resulting in total acquisitions of $842.2 million for
the nine months  ended  September  30,  1998.  In addition,  OCN  purchased  and
originated single family  residential  loans to subprime  borrowers with a total
unpaid  principal  balance  of  approximately  $271.9  million  during the third
quarter  of 1998,  of which  $88.0  million  were  originated  by Ocwen  UK.  At
September 30, 1998,  OCN had $2.82 billion of total  liabilities  as compared to
$2.52 billion at December 31, 1997.  The increase in total  liabilities  was due
primarily to a $93.7 million  increase in deposits and a $215.5 million increase
in obligations  outstanding under lines of credit (obtained primarily to finance
the acquisition and origination of single family residential subprime loans).

                                       10
<PAGE>


Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998

CAPITAL

Stockholders'  equity increased $24.4 million or 6% during the nine months ended
September 30, 1998 to $444.1  million from $419.7  million at December 31, 1997.
The increase is  primarily  the result of net income of $9.4 million and a $16.1
million  increase in net  unrealized  gains on  securities  available  for sale,
offset by a net unrealized foreign currency translation loss of $2.5 million. At
September  30,  1998,   stockholders'  equity  included  $11.1  million  of  net
unrealized  gains on  securities  available for sale (gains of $23.1 million and
losses of $12.0 million) and a net unrealized foreign currency  translation loss
of $2.5  million,  as compared  with $5.0  million of net  unrealized  losses on
securities available for sale at December 31, 1997.

LIQUIDITY

The  primary  sources of funds for  liquidity  consists  of  deposits,  lines of
credit, and maturities and payments of principal and interest on OCN's loans and
securities  and  proceeds  from  the sale and  securitization  thereof,  reverse
repurchase agreements and Federal Home Loan Bank advances.

At September 30, 1998,  Ocwen  Financial  Corporation  had  approximately  $34.1
million of debt outstanding  secured by discount  commercial  office loans. This
debt was repaid in full on October  6, 1998 in  connection  with the sale of the
loans. As of October 26, 1998,  Ocwen Financial  Corporation has no secured debt
and has unpledged  securities with a market value of $18.8 million  available to
secure borrowings.

At September 30, 1998,  Investors Mortgage Insurance Holding Company ("IMI") had
entered  into $19.6  million of reverse  repurchase  agreements  with  unrelated
counterparties and had unpledged securities with a market value of $43.3 million
available to secure additional borrowings. Subsequent to September 30, 1998, the
amount outstanding under these reverse repurchase agreements has been reduced to
$13.6 million due to margin calls.

At  September  30,  1998,  Ocwen  Federal  Bank  ("OFB")  had $1.83  billion  of
certificates of deposit  outstanding.  Of this amount,  scheduled  maturities of
certificates of deposit during the 12 months ending September 30, 1999, 2000 and
thereafter  amounted to $989.0  million,  $345.4  million,  and $502.6  million,
respectively.  Additionally,  at  September  30,  1998,  OFB had  cash  and cash
equivalents  in  excess  of  $261.0  million,   unencumbered   investment  grade
mortgage-backed  securities of  approximately  $471.6 million,  and unencumbered
non-investment  grade securities of approximately $21.5 million,  which could be
used to secure additional borrowings. At September 30, 1998, OFB was eligible to
borrow up to an aggregate  of $652.5  million from the Federal Home Loan Bank of
New York (subject to the  availability  of acceptable  collateral) and had $58.9
million of assets which could be pledged as security for such advances.

OFB's ability to make capital  distributions as a Tier 1 association pursuant to
the Office of Thrift  Supervision  ("OTS") capital  distribution  regulation are
limited by the  regulatory  capital  levels which it has committed to the OTS it
would maintain,  commencing on June 30, 1997. As a result of a verbal  agreement
between OFB and the OTS to dividend  subordinate  and residual  mortgage-related
securities resulting from securitization  activities conducted by OFB, which had
an aggregate  carrying  value of $20.8 million at September 30, 1998, OFB may be
limited in its  ability to pay cash  dividends  to OCN.  OFB  recently  received
approval  from the OTS to pay a $30.0 million cash dividend to OCN in the fourth
quarter of 1998. Future cash dividends depend on the future operating results of
OFB.

The  liquidity  of OCN  includes  lines of credit  obtained  by Ocwen  Financial
Services  ("OFS"),  as follows:  (i) a $200 million  secured line of credit,  of
which $100  million was  committed,  (ii) a $50 million  secured line of credit,
(iii) a $200 million secured line of credit of which $100 million was committed,
and (iv) a $200  million  secured  line of  credit,  of which $100  million  was
committed.  The lines of credit  mature  between  March 1999 and July  2001.  An
aggregate  of $144.1  million  was  outstanding  under  these lines of credit at
September  30, 1998.  Additionally,  at September  30, 1998 OFS had entered into
$27.0  million  of  reverse   repurchase   agreements  and  residual   financing
collateralized by subprime residuals with a number of counterparties in order to
finance residual  securities  retained in connection with its  securitization of
subprime  residential mortgage loans. Of this amount, $16.8 million is scheduled
to  mature  in  July  2001,  with  the  balance  subject  to  monthly   renewal.
Additionally,  OFS had unpledged securities with a market value of $19.0 million
available to secure additional borrowings.

                                       11
<PAGE>


Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998

Further, Ocwen UK has entered into a term loan and a revolving warehouse line of
credit which is available to finance  Ocwen UK's  originations  and purchases of
subprime  mortgage loans. At September 30, 1998, the term loan, which matures in
January 1999, was for $37.4 million ((pound)22.0  million),  against which $29.6
million  ((pound)17.4  million) had been borrowed,  and the warehouse  facility,
which  matures in April  1999,  was for  $169.9  million  ((pound)100.0  million
reduced for the  amount  borrowed  under the term  loan), against  which  $115.8
million ((pound)68.2 million) had been borrowed.  Additionally, at September 30,
1998 Ocwen UK had entered into an $18.7 million  reverse  repurchase  agreement,
which  matures in July 2001,  with  Greenwich  International  Ltd.  to finance a
residual  security  retained in  connection  with Ocwen UK's  securitization  of
subprime residential mortgage loans.


FORWARD-LOOKING STATEMENTS

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  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
"ANTICIPATE," "BELIEVE,"  "COMMITMENT,"  "CONTINUE," "COULD," "ESTIMATE," "MAY,"
"PRESENT," "WILL," FUTURE OR CONDITIONAL VERB TENSES, SIMILAR TERMS,  VARIATIONS
ON SUCH TERMS OR NEGATIVES OF SUCH TERMS.  ALTHOUGH OCN 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  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
POLICIES,  PREVAILING  INTEREST OR CURRENCY  EXCHANGE  RATES,  EFFECTIVENESS  OF
INTEREST  RATE,  CURRENCY AND OTHER  HEDGING  STRATEGIES,  LAWS AND  REGULATIONS
AFFECTING FINANCIAL INSTITUTIONS,  REAL ESTATE INVESTMENT TRUSTS AND REAL ESTATE
(INCLUDING  REGULATORY  FEES,  CAPITAL  REQUIREMENTS  AND  INCOME  AND  PROPERTY
TAXATION),  UNCERTAINTY  OF FOREIGN  LAWS,  COMPETITIVE  PRODUCTS,  PRICING  AND
CONDITIONS (INCLUDING FROM COMPETITORS THAT HAVE SIGNIFICANTLY GREATER RESOURCES
THAN OCN), CREDIT, PREPAYMENT, BASIS, DEFAULT, SUBORDINATION AND ASSET/LIABILITY
RISKS,  LOAN  SERVICING  EFFECTIVENESS,  ABILITY TO  IDENTIFY  ACQUISITIONS  AND
INVESTMENT   OPPORTUNITIES   MEETING  OCN'S  INVESTMENT   STRATEGY,   COURSE  OF
NEGOTIATIONS  AND ABILITY TO REACH  AGREEMENT  WITH RESPECT TO MATERIAL TERMS OF
ANY PARTICULAR TRANSACTION,  SATISFACTORY DUE DILIGENCE RESULTS, SATISFACTION OR
FULFILLMENT  OF AGREED  UPON TERMS AND  CONDITIONS  OF  CLOSING OR  PERFORMANCE,
TIMING  OF  TRANSACTION  CLOSINGS,  ACQUISITIONS  AND  INTEGRATION  OF  ACQUIRED
BUSINESSES, SOFTWARE INTEGRATION, DEVELOPMENT AND LICENSING, 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, AVAILABILITY OF DISCOUNT LOANS FOR PURCHASE, SIZE
OF,  NATURE OF AND YIELDS  AVAILABLE  WITH RESPECT TO THE  SECONDARY  MARKET FOR
MORTGAGE LOANS,  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  CONDITIONS  (INCLUDING  LIQUIDITY,
VALUATION,  REVENUES,  RENTAL RATES, OCCUPANCY LEVELS AND COMPETING PROPERTIES),
ADEQUACY  OF  INSURANCE  COVERAGE  IN  THE  EVENT  OF  LOSS,  KNOWN  OR  UNKNOWN
ENVIRONMENTAL  CONDITIONS,   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  OCN'S  REPORTS  AND  FILINGS  WITH  THE  SEC,  INCLUDING  ITS
REGISTRATION STATEMENTS ON FORMS S-1 AND S-3 AND PERIODIC REPORTS ON FORMS 10-Q,
8-K AND 10-K.

                                       12
<PAGE>


Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998

ATTACHED ARE THE FINANCIAL SUMMARY, THE AVERAGE BALANCE AND RATE ANALYSIS TABLES
AND THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS.

<TABLE>
<CAPTION>
OCWEN FINANCIAL CORPORATION                                 At or for the Three                      At or for the Nine
FINANCIAL SUMMARY                                        Months ended September 30,               Months ended September 30,
                                                   --------------------------------------  ---------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)             1998             1997      Change %     1998            1997        Change %
- ------------------------------------------------   -----------     -----------   --------  -----------     -----------    --------
<S>                                                <C>             <C>               <C>   <C>             <C>               <C>
OPERATIONS DATA:
Interest income ................................   $    88,542     $    77,326       15    $   241,457     $   198,795       21
Interest expense ...............................        47,859          39,944       20        141,291         115,976       22
                                                   -----------     -----------             -----------     -----------
Net interest income ............................        40,683          37,382        9        100,166          82,819       21
Provision for loan losses ......................         1,806           4,088      (56)        13,734          21,739      (37)
                                                   -----------     -----------             -----------     -----------
   Net interest income after provision for
     loan losses ...............................        38,877          33,294       17         86,432          61,080       42
                                                   -----------     -----------             -----------     -----------
Servicing fees and other charges ...............        15,348           7,321      110         39,044          17,510      123
Gain on interest-earning assets, net ...........        24,170           5,999      303            908          46,142      (98)
Other non-interest income ......................        18,339          12,111       51         46,079          16,526      179
                                                   -----------     -----------             -----------     -----------
   Total non-interest income ...................        57,857          25,431      128         86,031          80,178        7
                                                   -----------     -----------             -----------     -----------
Compensation and employee benefits .............        32,474          20,471       59         83,721          55,069       52
Other non-interest expense .....................        33,042          10,748      207         72,056          30,034      140
                                                   -----------     -----------             -----------     -----------
   Total non-interest expense ..................        65,516          31,219      110        155,777          85,103       83
Capital Trust Securities .......................         3,398           1,850       84         10,195           1,850      451
Equity in earnings of investment in joint
  ventures .....................................            --             546     (100)            --          16,220     (100)
                                                   -----------     -----------             -----------     -----------
   Income before income taxes ..................        27,820          26,202        6          6,491          70,525      (91)
                                                   -----------     -----------             -----------     -----------
Income tax (expense) benefit ...................        (2,922)         (6,179)     (53)         2,888         (14,911)     119
Minority interest ..............................            33             142      (77)            (2)            384     (101)
                                                   -----------     -----------             -----------     -----------
   Net income ..................................   $    24,931     $    20,165       24    $     9,377     $    55,998      (83)
                                                   ===========     ===========             ===========     ===========
Earnings per share:
   Basic .......................................   $      0.41     $      0.35       17    $      0.15     $      1.02      (85)
   Diluted .....................................   $      0.41     $      0.35       17    $      0.15     $      1.01      (85)

KEY RATIOS:
Net interest spread ............................          4.86%           6.00%     (19)          3.93%           4.82%     (18)
Net interest margin ............................          5.49%           6.17%     (11)          4.44%           4.78%      (7)
Annualized Return on Average:
   Assets (1) (2) ..............................          2.74%           2.78%      (1)          0.34%           2.72%     (88)
   Equity (2) ..................................         23.58%          26.47%     (11)          2.92%          29.86%     (90)
Efficiency Ratio (3) ...........................         66.49%          49.27%     (35)         83.66%          47.49%      76

AVERAGE BALANCES:
Securities available for sale ..................   $   597,261     $   232,957      156    $   571,862     $   293,393       95
Loan portfolio .................................       255,113         412,520      (38)       273,979         427,749      (36)
Discount loan portfolio ........................     1,357,124       1,216,417       12      1,347,753       1,228,267       10
Total interest-earning assets ..................     2,966,091       2,423,833       22      3,008,093       2,308,516       30
Total assets ...................................     3,644,135       2,903,514       26      3,628,944       2,747,893       32

Deposits .......................................     1,940,487       2,000,512       (3)     1,879,363       2,022,407       (7)
Total interest-earning liabilities .............     2,702,114       2,362,201       14      2,780,923       2,322,348       20
Total liabilities ..............................     3,221,237       2,598,744       24      3,201,134       2,497,816       28
Total stockholders' equity .....................       422,898         304,770       39        427,810         250,077       71
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       13
<PAGE>


Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998

(1) Includes  OCN's pro rata share of average  assets held by the joint  venture
    for the three and nine months ended September 30, 1997.

(2) Exclusive of the charge of $77,645 ($62,368 after tax) in the second quarter
    of 1998 associated with OCN's interest only portfolio, the annualized return
    on average assets would have been 3.20% for the nine months ended  September
    30, 1998 and the annualized  return on average equity would have been 27.12%
    for the nine months ended September 30, 1998.

(3) Before  provision  for loan  losses,  and  including  equity in  earnings of
    investment  in joint  venture for the three and nine months ended  September
    30, 1997. Exclusive of the $77,645 charge in the second quarter of 1998, the
    efficiency  ratio would have been 59.04% for the nine months ended September
    30, 1998.

                                       14
<PAGE>

Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998

<TABLE>
<CAPTION>
OCWEN FINANCIAL CORPORATION
AVERAGE BALANCE/RATE ANALYSIS
                                                                Three months ended September 30,
                                         ----------------------------------------------------------------------------
                                                          1998                                  1997
                                         -------------------------------------   ------------------------------------
                                          Average                   Annualized    Average                  Annualized
                                          Balance       Interest    Yield/Rate    Balance      Interest    Yield/Rate
                                         ----------    ---------    ----------   ----------   ----------   ----------
<S>                                      <C>           <C>             <C>       <C>          <C>              <C>  
AVERAGE ASSETS:
Federal funds sold and repurchase
  agreements.........................    $  185,765    $   2,508       5.40%     $  341,868   $    4,844       5.67%
Securities available for sale........       597,261        8,982       6.02         232,957        8,725      14.98
Loans available for sale.............       467,449       11,390       9.75         172,053        4,267       9.92
Investment securities and other......       103,379        1,617       6.26          48,018          695       5.79
Loan portfolio.......................       255,113       13,771      21.59         412,520       16,425      15.93
Discount loan portfolio..............     1,357,124       50,274      14.82       1,216,417       42,370      13.93
                                         ----------    ---------                 ----------   ----------
Total interest-earning assets,            
  interest income....................     2,966,091       88,542      11.94      $2,423,833       77,326      12.76
                                         ----------    ---------                 ----------   ----------
Non-interest earning cash............        53,347                                   6,061
Allowance for loan losses............       (26,844)                                (25,866)
Investments in low-income housing
  tax credit interests...............       138,716                                  95,399
Investment in joint ventures.......           1,132                                  25,552
Real estate owned, net...............       153,474                                 139,143
Investment in real estate............        22,615                                  54,181
Other assets.........................       335,604                                 185,211
                                         ----------                              ----------
Total assets.........................    $3,644,135                              $2,903,514   
                                         ==========                              ==========

AVERAGE LIABILITIES AND STOCKHOLDERS'
  EQUITY:
Interest-bearing demand deposits.....    $   50,912    $     552       4.34%     $   34,521   $      282       3.27%
Savings deposits.....................         1,606            9       2.24           1,933           11       2.28
Certificates of deposit..............     1,887,969       30,585       6.48       1,964,058       30,764       6.27
                                         ----------    ---------                 ----------   ----------
Total interest-bearing deposits......     1,940,487       31,146       6.42       2,000,512       31,057       6.21
Notes, debentures and other..........       225,397        6,772      12.02         233,717        6,798      11.63
Obligations outstanding under lines
  of credit..........................       461,316        8,767       7.60         124,341        2,025       6.51
Securities sold under agreements to
  repurchase.........................        74,495        1,168       6.27           3,075           56       7.28
Federal Home Loan Bank advances......           419            6       5.73             556            8       5.76
                                         ----------    ---------                 ----------   ----------
Total interest-bearing liabilities,
  interest expense...................     2,702,114       47,859       7.08       2,362,201       39,944       6.76
Non-interest bearing deposits........           951                                  37,269   
Escrow deposits......................       201,221                                  80,840   
Capital Trust Securities.............       125,000                                  68,548
Other liabilities....................       191,951                                  49,886   
                                         ----------                              ----------
Total liabilities....................     3,221,237                               2,598,744   
Stockholders' equity.................       422,898                                 304,770   
                                         ----------                              ----------
Total liabilities and stockholders'      
  equity.............................    $3,644,135                              $2,903,514
                                         ==========                              ==========

Net interest income before provision
  for loan losses....................                  $  40,683                              $   37,382
                                                       =========                              ==========
Net interest rate spread...........                                    4.86%                                   6.00%
Net interest margin..................                                  5.49%                                   6.17%
Ratio of interest-earning assets to
  interest-bearing liabilities.......                                   110%                                    103%
</TABLE>

                                                     15
<PAGE>


Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998


<TABLE>
<CAPTION>
                                                                     Nine months ended September 30,
                                               --------------------------------------------------------------------------
                                                               1998                                  1997
                                               ------------------------------------- ------------------------------------
                                               Average                   Annualized   Average                  Annualized
                                               Balance       Interest    Yield/Rate   Balance      Interest    Yield/Rate
                                              ----------    ---------    ----------  ----------   ----------   ----------
<S>                                           <C>           <C>             <C>       <C>          <C>         <C>  
AVERAGE ASSETS:                                                        (Dollars in thousands)
Federal funds sold and repurchase agreements  $  130,421    $  4,944       5.05%     $  179,132   $    7,296      5.43%
Securities available for trading............          --          --         --           4,393          248      7.53
Securities available for sale...............     571,862      25,655       5.98         293,393       23,407     10.64
Loans available for sale....................     601,708      46,185      10.23         142,194       11,091     10.40
Investment securities and other.............      82,370       3,633       5.88          33,388        2,122      8.47
Loan portfolio..............................     273,979      31,688      15.42         427,749       37,791     11.78
Discount loan portfolio.....................   1,347,753     129,352      12.80       1,228,267      116,840     12.68
                                              ----------    --------                 ----------   ----------
Total interest-earning assets, interest         
   income...................................   3,008,093     241,457      10.70       2,308,516      198,795     11.48
                                                            --------                              ----------
Non-interest earning cash...................      31,826                                  9,872    
Allowance for loan losses...................     (25,632)                               (21,274)    
Investments in low-income housing tax
   credit interests.........................     128,089                                 95,525    
Investment in joint ventures................       1,081                                 39,772    
Real estate owned, net......................     167,346                                117,966    
Investment in real estate...................      46,521                                 18,060
Other assets................................     271,620                                179,456    
                                              ----------                             ----------
  Total assets..............................   3,628,944                             $2,747,893    
                                              ==========                             ==========

AVERAGE LIABILITIES AND STOCKHOLDERS'
   EQUITY:
Interest-bearing demand deposits............  $   36,901    $  1,165       4.21%     $   33,940   $    1,005      3.95%
Savings deposits............................       1,695          29       2.28           2,197           38      2.31
Certificates of deposit.....................   1,840,767      86,474       6.26       1,986,270       91,278      6.13
                                              ----------    --------                 ----------   ----------
  Total interest-bearing deposits...........   1,879,363      87,668       6.22       2,022,407       92,321      6.09
Notes, debentures and other.................     225,790      20,258      11.96         230,160       20,388     11.81
Obligations outstanding under lines of           556,581      28,390       6.80          46,225        2,298      6.63
   credit...................................
Securities sold under agreements to              116,556       4,869       5.57          12,760          533      5.57
   repurchase...............................
Federal Home Loan Bank advances.............       2,633         106       5.37          10,796          436      5.38
                                              ----------    --------                 ----------   ----------
  Total interest-bearing liabilities,
   interest expense.........................   2,780,923     141,291       6.77       2,322,348      115,976      6.66
                                                            --------                              ----------
Non-interest bearing deposits...............      14,546                                 26,986    
Escrow deposits.............................     151,749                                 74,853    
Capital Trust Securities....................     125,000                                 22,849
Other liabilities...........................     128,916                                 50,780    
                                              ----------                             ----------
  Total liabilities.........................   3,201,134                              2,497,816    
Stockholders' equity........................     427,810                                250,077    
                                              ----------                             ----------
  Total liabilities and stockholders' equity  $3,628,944                             $2,747,893    
                                              ==========                             ==========
Net interest income before provision for
   loan losses..............................                $100,166                              $   82,819
                                                            ========                              ==========
Net interest rate spread....................                               3.93%                                  4.82%
Net interest margin.........................                               4.44%                                  4.78%
Ratio of interest-earning assets to
   interest-bearing liabilities.............                                108%                                    99%
</TABLE>

                                                    16
<PAGE>

Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998
<TABLE>
<CAPTION>

OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES                                        September 30,  December 31,
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                                          1998           1997
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)                                           (Unaudited)     (Audited)
                                                                                    -----------    -----------
<S>                                                                                 <C>            <C>        
Assets
Cash and amounts due from depository institutions ...............................   $    22,374    $    12,243
Interest earning deposits .......................................................        22,489        140,001
Federal funds sold and repurchase agreements ....................................       213,000             --
Securities available for sale, at market value ..................................       712,850        476,796
Loans available for sale, at lower of cost or market ............................       337,336        177,041
Investment securities, net ......................................................        88,430         13,295
Loan portfolio, net .............................................................       224,741        266,299
Discount loan portfolio, net ....................................................     1,094,590      1,434,176
Investments in low-income housing tax credit interests ..........................       133,682        128,614
Investment in joint ventures ....................................................         1,206          1,056
Real estate owned, net ..........................................................       169,720        167,265
Investment in real estate .......................................................        17,271         65,972
Premises and equipment, net .....................................................        41,636         21,542
Income taxes receivable .........................................................        34,701             --
Deferred tax asset ..............................................................        42,581         45,148
Excess of purchase price over net assets acquired ...............................        34,430         15,560
Principal, interest and dividends receivable ....................................        18,395         17,284
Escrow advances on loans ........................................................        53,280         47,888
Other assets ....................................................................       128,016         38,985
                                                                                    -----------    -----------
                                                                                    $ 3,390,728    $ 3,069,165
                                                                                    ===========    ===========
Liabilities and Stockholders' Equity

Liabilities:
   Deposits .....................................................................   $ 2,076,537    $ 1,982,822
   Securities sold under agreements to repurchase ...............................        60,798        108,250
   Obligations outstanding under lines of credit ................................       333,803        118,304
   Notes, debentures and other interest bearing obligations .....................       225,317        226,975
   Accrued interest payable .....................................................        43,887         32,238
   Income taxes payable .........................................................            --          3,132
   Accrued expenses, payables and other liabilities .............................        80,159         51,709
                                                                                    -----------    -----------
     Total liabilities ..........................................................     2,820,501      2,523,430
                                                                                    -----------    -----------

Company-obligated, mandatorily redeemable securities of
       subsidiary trust holding solely junior subordinated 
       debentures of the Company ................................................       125,000        125,000

Minority interest ...............................................................         1,136          1,043

Commitments and contingencies

Stockholders' equity:
   Preferred stock, $.01 par value; 20,000,000 shares authorized; 0 shares issued
     and outstanding ............................................................            --             --
Common stock, $.01 par value; 200,000,000 shares authorized; 60,794,193 and
60,565,835 shares issued and outstanding at September 30, 1998 and December 31,
1997, respectively ..............................................................           608            606
   Additional paid-in capital ...................................................       166,193        164,751
   Retained earnings ............................................................       268,726        259,349
   Net unrealized gain (loss) on securities available for sale, net of taxes ....        11,073         (5,014)
   Net unrealized foreign currency translation loss, net of taxes ...............        (2,509)            --
                                                                                    -----------    -----------
     Total stockholders' equity .................................................       444,091        419,692
                                                                                    -----------    -----------
                                                                                    $ 3,390,728    $ 3,069,165
                                                                                    ===========    ===========
</TABLE>

                                                      17

<PAGE>

Ocwen Financial Corporation (OCN)
Third Quarter Results
October 26, 1998
<TABLE>
<CAPTION>

    OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
    (UNAUDITED)
                                                                   Three Months                    Nine Months
                                                          ----------------------------    ----------------------------
    For the periods ended September 30,                       1998            1997            1998             1997
                                                          ------------    ------------    ------------    ------------
<S>                                                       <C>             <C>             <C>             <C>         
Interest income:
  Federal funds sold and repurchase agreements ........   $      2,508    $      4,844    $      4,944    $      7,296
  Securities available for sale .......................          8,982           8,725          25,655          23,407
  Securities held for trading .........................             --              --              --             248
  Loans available for sale ............................         11,390           4,267          46,185          11,091
  Loans ...............................................         13,771          16,425          31,688          37,791
  Discount loans ......................................         50,274          42,370         129,352         116,840
  Investment securities and other .....................          1,617             695           3,633           2,122
                                                          ------------    ------------    ------------    ------------
                                                                88,542          77,326         241,457         198,795
                                                          ------------    ------------    ------------    ------------
Interest expense:
  Deposits ............................................         31,146          31,057          87,668          92,321
  Securities sold under agreements to repurchase ......          1,168              56           4,869             533
  Advances from the Federal Home Loan Bank ............              6               8             106             436
  Obligations outstanding under lines of credit .......          8,767           2,025          28,390           2,298
  Notes, debentures and other interest bearing         
  obligations .........................................          6,772           6,798          20,258          20,388
                                                          ------------    ------------    ------------    ------------
                                                                47,859          39,944         141,291         115,976
                                                          ------------    ------------    ------------    ------------
  Net interest income before provision for loan losses          40,683          37,382         100,166          82,819
Provision for loan losses .............................          1,806           4,088          13,734          21,739
                                                          ------------    ------------    ------------    ------------
  Net interest income after provision for loan losses .         38,877          33,294          86,432          61,080
                                                          ------------    ------------    ------------    ------------

Non-interest income:
  Servicing fees and other charges ....................         15,348           7,321          39,044          17,510
  Gains on interest earning ...........................         24,170           5,999             908          46,142
  Gain on real estate owned, net ......................          1,216           4,793          12,763           8,628
  Other income ........................................         17,123           7,318          33,316           7,898
                                                          ------------    ------------    ------------    ------------
                                                                57,857          25,431          86,031          80,178
                                                          ------------    ------------    ------------    ------------
Non-interest expense:
  Compensation and employee benefits ..................         32,474          20,471          83,721          55,069
  Occupancy and equipment .............................          9,485           5,029          24,495          11,818
  Net operating loss on investments in real estate and
    certain low-income housing tax credit interests ...          2,696             622           4,988           1,819
  Other operating expenses ............................         20,861           5,097          42,573          16,397
                                                          ------------    ------------    ------------    ------------
                                                                65,516          31,219         155,777          85,103
                                                          ------------    ------------    ------------    ------------
Distributions on Company-obligated, mandatorily
  redeemable securities of subsidiary trust holding
  solely junior subordinated debentures ...............          3,398           1,850          10,195           1,850
Equity in earnings of investment in joint ventures ....             --             546              --          16,220
                                                          ------------    ------------    ------------    ------------
  Income before income taxes ..........................         27,820          26,202           6,491          70,525
Income tax (expense) benefit ..........................         (2,922)         (6,179)          2,888         (14,911)
Minority interest in net (income) loss of consolidated
  subsidiary ..........................................             33             142              (2)            384
                                                          ------------    ------------    ------------    ------------
  Net income ..........................................   $     24,931    $     20,165    $      9,377    $     55,998
                                                          ============    ============    ============    ============

Income per share:
  Basic ...............................................   $       0.41    $       0.35    $       0.15    $       1.02
                                                          ============    ============    ============    ============
                                                          $       0.41    $       0.35    $       0.15    $       1.01
                                                          ============    ============    ============    ============

Weighted average common shares outstanding:
  Basic ...............................................     60,785,467      57,004,218      60,716,777      54,734,082
                                                          ============    ============    ============    ============
  Diluted .............................................     61,074,499      57,749,958      61,249,163      55,341,404
                                                          ============    ============    ============    ============

                                                           18
</TABLE>



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