Home Loan Servicing Solutions, Ltd. Reports EPS of $0.76 and Net Income of $54.1 Million in the Second Quarter of 2014 and

Home Loan Servicing Solutions, Ltd. Reports EPS of $0.76 and Net Income of
$54.1 Million in the Second Quarter of 2014 and Declares Monthly Dividend of
$0.16 Per Share

GEORGE TOWN, Grand Cayman, July 17, 2014 (GLOBE NEWSWIRE) -- Home Loan
Servicing Solutions, Ltd. ("HLSS", "our", "we" or the "Company") (Nasdaq:HLSS)
today reported net income of $54.1 million, or $0.76 per ordinary share, for
the second quarter of 2014. Additionally, the Company's Board of Directors
today declared monthly dividends of $0.16 per ordinary share for July, August
and September 2014.

Second quarter business performance highlights:

  *Earned $41.4 million, or $0.58 per ordinary share, after adjusting for the
    increase in the fair value of our MSR assets of $12.7 million, or $0.18
    per ordinary share. The increase in the annualized prepayment speed to
    10.9 percent reduced earnings by $0.02 per ordinary share relative to
    first quarter earnings.
  *Issued $400 million of unrated four-year term notes secured by servicing
    advance receivables at a weighted average fixed interest rate of 2.88%.
  *Acquired re-performing whole loans with an aggregate UPB of $396.9 million
    from a large bank. The purchase price for these loans was $276.3 million.
  *Borrowed $219.5 million on a new $290.0 million mortgage loan facility to
    finance the re-performing loan purchase.

Subsequent to the end of the second quarter of 2014:

  *On July 16, 2014, entered into agreements to extend the maturity of our
    variable funding notes with an aggregate borrowing capacity of $2.1
    billion to August 28, 2015.
  *On July 17, 2014, declared monthly dividends of $0.16 per ordinary share
    for each of the months of July, August and September 2014.

"After adjusting for the revaluation of our MSR assets, earnings were close to
the high-end of our expectations as prepayment speeds increased only modestly
from the record low last quarter. This increase was due to the predicted
recovery in the rate of liquidations on seriously delinquent loans," said
President and CEO John Van Vlack. "Earnings stability will benefit from the
issuance of four-year fixed rate term notes and from the reinvestment of cash
generated in excess of our dividend in the purchase of re-performing loans."

"As an asset class, I expect re-performing loans to provide an attractive
risk-adjusted yield based on the Company's experience with modified loans in
our existing servicing portfolio," said Chairman William Erbey. "The strategic
fit of re-performing loans is enhanced as the income generated from the
prepayment of loans purchased at a discount offers a hedge against prepayments
in HLSS' existing non-agency MSRs."

For more information on prior releases and SEC Filings, please refer to the
"Shareholders" section of our website at www.hlss.com.

HLSS is an internally-managed owner of residential mortgage assets with
historically stable valuations and cash flows. HLSS' largest asset is mortgage
servicing advances that, along with the related servicing rights, are
over-collateralized more than 25 times by the underlying 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.

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. All statements, other than
statements of historical facts, included in this press release, including,
without limitation, statements we make about our business model, dividend,
future earnings, financing, market opportunities, asset performance, asset
valuation, business strategy and expectations and objectives for our future
performance, are forward-looking statements. These forward-looking statements
include declarations regarding our management's beliefs and current
expectations. All forward-looking statements are subject to certain risks,
uncertainties and assumptions. If one or more of these risks or uncertainties
materialize, or if underlying assumptions prove incorrect, our actual results,
performance or achievements could differ materially from those expressed in,
or implied by, any such forward-looking statements. Important factors that
could cause or contribute to such difference include those risks specific to
our business detailed within our reports and filings with the SEC, including
our Annual Report on Form 10-K for the year ended December 31, 2013, filed
with the SEC on February 6, 2014 (the "2013 Form 10-K") and our Quarterly
Report on Form 10-Q for the quarter ended June 30, 2014 (the "Q2 Form 10-Q").
You should not place undue reliance on such forward-looking statements, which
speak only as of their dates. We undertake no obligation to update or revise
forward-looking statements¸ whether as a result of new information, future
events or otherwise. You should carefully consider the risk factors described
under the heading "Risk Factors" within our 2013 Form 10-K and our Q2 Form
10-Q.

The following table presents our consolidated results of operations in
accordance with U.S. GAAP ("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 format
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     Condensed                        Management
June 30, 2014:                 Consolidated      Adjustments    Reporting
                               Results (GAAP)                   (Non-GAAP)
                                                             
Revenue                                                       
                                                             
Servicing fee revenue          $—              $185,690     $185,690
Interest income - notes        89,969           (89,969)      —
receivable – Rights to MSRs
Interest income – other        7,790            —             7,790
Related party revenue(1)       773             —            773
Total revenue                  98,532          95,721       194,253
                                                             
Operating expenses                                            
Compensation and benefits      2,031            —             2,031
Servicing expense              —                90,901        90,901
Amortization of MSRs           —                17,535        17,535
Change in fair value of Notes  —                (12,715)      (12,715)
receivable – Rights to MSRs
Related party expenses (2)     496              —             496
General and administrative     1,949           —            1,949
expenses
Total operating expenses       4,476           95,721       100,197
Income from operations         $94,056         $—           $94,056

(1) Revenue earned as part of our Professional Services Agreement with Ocwen
Financial Corporation (together with its subsidiaries, collectively "Ocwen").
(2) Expenses incurred as part of our Professional Services Agreement and
Administrative Services Agreement with Ocwen and Altisource Portfolio
Solutions, S.A., respectively.

                                      

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,   2014       2013        2014       2013
Revenue                                                         
Interest income – notes          $89,969   $49,852    $171,821  $94,422
receivable – Rights to MSRs
Interest income – other          7,790     97         10,750    199
Total interest income            97,759    49,949     182,571   94,621
Related party revenue            773       560        1,401     967
Total revenue                    98,532    50,509     183,972   95,588
                                                               
Operating expenses                                              
Compensation and benefits        2,031     1,602      3,765     2,768
Related party expenses           496       226        868       452
General and administrative       1,949     734        4,098     1,379
expenses
Total operating expenses         4,476     2,562      8,731     4,599
                                                               
Income from operations           94,056    47,947     175,241   90,989
                                                               
Other expense                                                   
Interest expense                 40,001    20,034     77,512    38,276
Other expense                    40,001    20,034     77,512    38,276
                                                               
Income before income taxes       54,055    27,913     97,729    52,713
Income tax expense               —         27         —         39
Net income                       $54,055   $27,886    $97,729   $52,674
                                                               
                                                               
Earnings per share
Basic                           $0.76     $0.48     $1.38     $0.92
Diluted                          $0.76     $0.48     $1.38     $0.92
                                                               
Weighted average ordinary shares                                
outstanding
Basic                           71,016,771 57,633,399 71,016,771 57,133,888
Diluted                          71,016,771 57,633,399 71,016,771 57,133,888
                                                               
Dividends declared per share     $0.48     $0.42      $0.93     $0.80

                                      

HOME LOAN SERVICING SOLUTIONS, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(UNAUDITED)
                                                 June 30, 2014 December 31,
                                                                2013
Assets                                                         
Cash and cash equivalents                         $89,418     $87,896
Match funded advances                             6,133,758    6,387,781
Notes receivable – Rights to MSRs                 629,579      651,060
Loans held for investment                         802,091      —
Related party receivables                         17,054       70,049
Deferred tax assets                               1,024        1,024
Other assets                                      261,579     130,153
Total assets                                      $7,934,503  $7,327,963
                                                              
Liabilities and Equity                                         
Liabilities                                                    
Match funded liabilities                          $5,593,927  $5,715,622
Other borrowings                                  1,049,728    343,386
Dividends payable                                 11,363       10,653
Income taxes payable                              600          682
Deferred tax liabilities                          578         1,266
Related party payables                            2,990        10,732
Other liabilities                                 11,147      11,884
Total liabilities                                 6,670,333   6,094,225
                                                                          
                                                                          
Equity                                                                     
Equity – Ordinary shares, $.01 par value;
200,000,000 shares authorized; 71,016,771 and     710          710         
71,016,771 shares issued and outstanding at June
30, 2014 and December 31, 2013, respectively
Additional paid-in capital                        1,210,121    1,210,057   
Retained earnings                                 52,488       20,804      
Accumulated other comprehensive income, net of    851         2,167      
tax
Total equity                                      1,264,170   1,233,738  
Total liabilities and equity                      $7,934,503  $7,327,963 

CONTACT: James E. Lauter
         Senior Vice President &
         Chief Financial Officer
         T: +1 345-815-3932
         E: James.Lauter@hlss.com

Home Loan Servicing Solutions, Ltd. Logo
 
Press spacebar to pause and continue. Press esc to stop.