GEORGETOWN, Grand Cayman, July 12, 2012 (GLOBE NEWSWIRE) -- Home Loan Servicing Solutions, Ltd. ("HLSS" or the "Company") (Nasdaq:HLSS) today reported net income of $4.7 million, or $0.33 per ordinary share, for the second quarter of 2012, its first full quarter of operations.
Second quarter business performance highlights:
- Earned $4.7 million, or $0.33 per ordinary share.
- Declared dividends totaling $4.3 million for the quarter, or $0.30 per ordinary share.
- Completed the acquisition of mortgage servicing assets related to non-agency mortgage loans with an unpaid principal balance ("UPB") of $2.9 billion from Ocwen on May 1, 2012, enabling HLSS' portfolio to grow to $17.3 billion of UPB.
- Executed a swap of variable rate LIBOR for a fixed rate of 60 basis points for a term of 48 months covering the projected interest exposure resulting from the acquisition.
- Received net proceeds of $1.7 million from the sale of 129,600 shares to cover underwriters' over-allotment.
- Reduced delinquencies to 21% of UPB and improved the ratio of advances to UPB to 2.5%.
- Experienced an annualized prepayment rate of 15.2% with no change in servicing asset valuations.
Subsequent to the end of the second quarter of 2012:
- On July 9, 2012, the Company's Board of Directors declared a monthly dividend of $0.10 per ordinary share with respect to each of July, August and September 2012.
"We are pleased with HLSS' earnings which were at the upper end of our guidance for the first full quarter of operations and exceeded our dividends declared," said President John Van Vlack. "Earnings benefited from decreases in delinquencies and advances to UPB which reduces our interest expense. We expect to complete a second flow purchase on August 1, 2012 using cash generated in excess of our dividend to replenish and grow our portfolio by drawing on Ocwen's portfolio which exceeds $100 billion of UPB of servicing owned."
Chairman William Erbey stated, "The stability of our asset valuations highlights the quality of our assets and our continued ability to generate a highly predictable income stream. We believe that over time, investors will come to appreciate the exceptional value that HLSS represents."
For more information on prior releases and SEC Filings, please refer to the "Shareholders" section of our website at www.hlss.com.
Home Loan Servicing Solutions (HLSS) is an internally-managed owner of non-agency mortgage servicing assets with historically stable valuations and cash flows. HLSS' assets are predominately mortgage servicing advances that, along with the related servicing rights, are over-collateralized 30 times by residential real estate. HLSS' objective is to generate stable, recurring fee-based earnings and dividends throughout the economic cycle. For more information, visit www.hlss.com.
The Home Loan Servicing Solutions, Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=12504
This news release contains 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. Forward-looking statements are not guarantees of future performance, and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the following: general economic and market conditions, prevailing interest rates, governmental regulations and policies, availability of adequate and timely sources of liquidity, our ability to maintain our PFIC status, real estate market conditions and other risks detailed in HLSS' reports and filings with the Securities and Exchange Commission. The forward looking statements speak only as of the date they are made and should not be relied upon. HLSS' undertakes no obligation to update or revise the forward-looking statements.
The following table presents our condensed consolidated results of operations in accordance with U.S. GAAP reconciled to our internally reported financial results. Accordingly, adjustments are made to reflect Servicing Fee Revenue, Servicing Expense and Amortization Expense on a gross rather than a net basis.
Our income from operations as presented in our Management Reporting shown below should be considered in addition to, and not as a substitute for, income from operations determined in accordance with GAAP.
| For the three months ended June 30, 2012: |
Condensed Consolidated Results (GAAP) |
Adjustments |
Management Reporting (Non-GAAP) |
| Revenue | |||
| Servicing fee revenue | $ — | $ 23,040 | $ 23,040 |
| Interest income - notes receivable – Rights to MSRs | 10,580 | (10,580) | — |
| Professional services | 744 | — | 744 |
| Interest income – other | 103 | — | 103 |
| Total revenue | 11,427 | 12,460 | 23,887 |
| Operating expenses | |||
| Compensation and benefits | 1,029 | — | 1,029 |
| Servicing expense | — | 9,728 | 9,728 |
| Amortization of MSRs | — | 2,732 | 2,732 |
| General and administrative expenses | 715 | — | 715 |
| Total operating expenses | 1,744 | 12,460 | 14,204 |
| Income from operations | $ 9,683 | $ — | $ 9,683 |
| HOME LOAN SERVICING SOLUTIONS, LTD. AND SUBSIDIARIES | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (Dollars in thousands, except share data) | ||||
| (UNAUDITED) | ||||
| Three months | Six months | |||
| For the periods ended June 30, | 2012 | 2011 | 2012 | 2011 |
| Revenue | ||||
| Interest income – notes receivable – Rights to MSRs | $ 10,580 | $ — | $ 13,525 | $ — |
| Interest income – other | 103 | — | 136 | — |
| Total interest income | 10,683 | — | 13,661 | — |
| Other revenue | 744 | — | 995 | — |
| Total revenue | 11,427 | — | 14,656 | — |
| Operating expenses | ||||
| Compensation and benefits | 1,029 | — | 1,425 | — |
| General and administrative expenses | 715 | 17 | 946 | 44 |
| Total operating expenses | 1,744 | 17 | 2,371 | 44 |
| Income (loss) from operations | 9,683 | (17) | 12,285 | (44) |
| Other expense | ||||
| Interest expense | 4,964 | — | 6,255 | — |
| Other expense | 4,964 | — | 6,255 | — |
| Income (loss) before income taxes | 4,719 | (17) | 6,030 | (44) |
| Income tax expense | 60 | — | 77 | — |
| Net income (loss) | $ 4,659 | $ (17) | $ 5,953 | $ (44) |
| Earnings (loss) per share | ||||
| Basic | $ 0.33 | $ (0.83) | $ 0.65 | $ (2.19) |
| Diluted | $ 0.33 | $ (0.83) | $ 0.65 | $ (2.19) |
| Weighted average ordinary shares outstanding | ||||
| Basic | 14,194,370 | 20,000 | 9,191,172 | 20,000 |
| Diluted | 14,194,370 | 20,000 | 9,191,172 | 20,000 |
| HOME LOAN SERVICING SOLUTIONS, LTD. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (Dollars in thousands, except share data) | ||
| (UNAUDITED) | ||
| June 30, | December 31, | |
| 2012 | 2011 | |
| Assets | ||
| Cash | $ 36,458 | $ 283 |
| Match funded advances | 430,040 | — |
| Notes receivable – Rights to MSRs | 70,175 | — |
| Other assets | 23,986 | 2,860 |
| Total assets | $ 560,659 | $ 3,143 |
| Liabilities and Equity Liabilities | ||
| Match funded liabilities | $ 368,467 | $ — |
| Dividends payable | 1,420 | — |
| Other liabilities | 8,696 | 3,134 |
| Total liabilities | 378,583 | 3,134 |
| Equity | ||
| Equity – Ordinary shares, $.01 par value; 200,000,000 and 5,000,000 shares authorized; 14,197,218 and 20,000 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively | 142 | — |
| Additional paid-in capital | 179,285 | 300 |
| Retained earnings (accumulated deficit) | 3,214 | (291) |
| Accumulated other comprehensive income (loss) | (565) | — |
| Total equity | 182,076 | 9 |
| Total liabilities and equity | $ 560,659 | $ 3,143 |