UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

or

Commission file number: 1-8972

INDYMAC BANCORP, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:

(800) 669-2300

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

[None.]

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K     þ.

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes þ          No o

      Based on the closing price for shares of Common Stock as of June 30, 2004, the aggregate market value of Common Stock held by non-affiliates of the registrant was approximately $1,919,920,310. For the purposes of the foregoing calculation only, in addition to affiliated companies, all directors and executive officers of the registrant have been deemed affiliates.

      As of February 18, 2005, 62,165,649 shares of IndyMac Bancorp, Inc. Common Stock, $.01 par value per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement for the 2005 Annual Meeting — Part III

INDYMAC BANCORP, INC.

2004 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

INDYMAC BANCORP, INC.

2004 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

Item 1. and Item 7.

PART I

FORWARD-LOOKING STATEMENTS

      Certain statements contained in this Form 10-K may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements regarding our financial condition, results of operations, plans, objectives and future performance and business. Forward-looking statements typically include the words “anticipate,” “believe,” “estimate,” “expect,” “project,” “plan,” “forecast,” “intend,” and other similar expressions. These statements reflect our current views with respect to future events and financial performance. They are subject to risks and uncertainties, including, among others, those identified in the “Key Operating Risks” and “Risk Factors That May Affect Future Results” discussions below, which could cause future results to differ materially from historical results or from the results anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates or as of the date hereof if no other date is identified. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

      We are the holding company for IndyMac Bank, F.S.B., a Federal Deposit Insurance Corporation (“FDIC”) insured savings and loan association (“IndyMac Bank” or “Bank”). IndyMac Bank® is the largest savings and loan headquartered in Los Angeles County, California and the 10th largest nationwide, based on assets. IndyMac is in the business of designing, manufacturing, and distributing cost-efficient financing for the acquisition, development, and improvement of single-family homes. IndyMac also provides financing secured by single-family homes to facilitate consumers’ personal financial goals, and strategically invests in single-family related assets. We facilitate the acquisition, development, and improvement of single-family homes through our award-winning e-MITS® (Electronic Mortgage Information and Transaction System) platform that automates underwriting, risk-based pricing and rate locking on a nationwide basis via the Internet. IndyMac’s mortgage products and services are tailored to meet the needs of both consumers and businesses.

      IndyMac (then known as Countrywide Mortgage Investments, Inc.) was founded as a passive mortgage real estate investment trust (“REIT”) in 1985 and transitioned its business model to become an active, operating mortgage lender in 1993. In response to the global liquidity crisis in the fourth quarter of 1998 in which many non-regulated financial institutions, mortgage lenders and mortgage REITs were adversely impacted or did not survive, we determined that it would be advantageous to become a depository institution. The depository structure provides significant advantages in the form of diversified financing sources, the retention of capital to support growth, and a strong platform for the origination of mortgages. Accordingly, effective January 1, 2000, we terminated our status as a REIT and converted to a fully taxable entity, and, on July 1, 2000, we acquired SGV Bancorp, Inc. (“SGVB”), which then was the parent of First Federal Savings and Loan Association of San Gabriel Valley, a federal savings association. We contributed substantially all of our assets and operations to the subsidiary savings association, which we renamed IndyMac Bank.

      On July 16, 2004, we completed the acquisition of 93.75% of the outstanding shares of common stock of Financial Freedom Holdings, Inc. (“FFHI”), the leading provider of reverse mortgages in the United States of America, and the related assets from Lehman Brothers Bank, F.S.B. and its affiliates for an aggregate cash purchase price of approximately $84.6 million. The remaining shares of the common stock of FFHI, constituting 6.25% of the outstanding shares of common stock, were held by its chief executive officer after the acquisition. The acquisition was consummated as FFHI’s focus on the reverse mortgage industry aligns well with our strategy to increase market share by offering niche mortgage products and servicing a broad customer base. In November 2004, as part of an internal reorganization, FFHI merged into its then wholly owned subsidiary Financial Freedom Senior Funding Corporation (collectively with FFHI, “Financial Freedom”). As a result of the merger, the Company owns 93.75%, and Financial Freedom’s chief executive officer owns 6.25%, of the outstanding shares of common stock of Financial Freedom. Financial Freedom currently operates as a subsidiary of IndyMac Bank.

      References to “IndyMac Bancorp” or the “Parent Company” refer to the parent company alone, while references to “IndyMac,” or the “Company” refer to the parent company and its consolidated subsidiaries.

BUSINESS MODEL

      IndyMac’s hybrid thrift/mortgage banking business model is the framework for our corporate structure. Our primary business is the origination of and investment in single-family residential mortgage assets. A mortgage banking company originates mortgage loans for sale to investors, and services such loans on an on-going basis for the investors. As such, a mortgage banking company has a higher asset turnover rate than a traditional savings and loan association, and generates a higher portion of its income from gains on the sale of loans and servicing fees, and a lower portion from net interest income. Mortgage loan production can also be held on the balance sheet in the form of loans and mortgage-backed securities (“MBS”), similar to a more traditional savings and loan, providing a source of revenues that is designed to be counter-cyclical to mortgage banking revenues. These revenues consist primarily of interest income and servicing fees. IndyMac is strategically focused on increasing the relative size of its portfolios of prime mortgage and home equity loans, as well as mortgage servicing rights, to achieve greater balance between its mortgage banking activities and its core investing activities. We believe that our investing activities will increasingly serve to stabilize IndyMac’s core income.

      The mortgage market is a trillion-dollar industry, with mortgages outstanding growing an average of 7 to 8 percent annually over the last several decades. IndyMac’s long-term strategy focuses on gaining a larger share of the mortgage origination market without compromising profitability goals. During 2004, we successfully executed our strategy and reached a record level of production while the market volume declined 25%. According to the National Mortgage News, by the fourth quarter of 2004, we were one of the top 12 originators of mortgage loans in the United States of America and our market share was 1.71%. During 2004, our market share approximated 1.33% based on our mortgage loan origination volume of $37.9 billion, a 73% increase from our market share of 0.77% in 2003. We will continue to leverage our mortgage-banking infrastructure, increase our marketing and sales efforts, and expand our geographic presence in an effort to gain additional market share in the future. To complement our mortgage banking activities, we will continue to add high quality single-family residential and home equity loans or securities backed by these loans to the investment portfolio to help mitigate fluctuations in earnings during the mortgage origination cycle.

      We offer many types of home mortgage products using a technology-based approach, leveraged across multiple products, channels and customers. We serve a wide range of customers, including consumers, mortgage brokers, mortgage bankers, community financial institutions, homebuilders, and real estate professionals. The environment of historically low interest rates over the past several years has been very favorable for mortgage lenders who effectively hedged their mortgage servicing rights. Consumers continued to refinance existing loans and historically low mortgage rates opened the door for home ownership to many first time buyers. The Mortgage Bankers Association forecasts a modest increase in interest rates in 2005 with total origination volume decreasing 11% to $2.5 trillion, while the purchase mortgage originations will continue strong and remain near the 2004 level. Given the significant industry transition, forecasting continues to be difficult. We currently expect EPS to be approximately $4.05 per share in 2005 before the implementation of FASB Statement No. 123 (revised 2004), Share-Based Payment, which requires the expensing of stock options. This forecast reflects an increase of 19% from the $3.40 per share earned on a pro forma basis in 2004. We estimate that the implementation of stock option expensing will reduce EPS by approximately $0.12 in 2005, resulting in a full year forecast of $3.93 per share, including the expensing of stock options. However, the economy, interest rates and our industry remain volatile and as a result, our actual results could vary by as much as ten percent from this forecast.

MORTGAGE BANKING ACTIVITIES

      We offer single-family residential mortgage products in all 50 states using a technology-based approach. Our ability to leverage our technology investment over multiple channels, products and customers creates an efficient, low-cost operating platform. Our Internet-based, e-MITS platform is an automated loan submission, underwriting, and risk-based pricing system that allows any of our mortgage loan customers, both business and

consumer, to conduct business with us electronically through our mortgage loan Internet sites. During 2004, 63.7% of the loan balance of mortgage loans we acquired was processed through e-MITS.

      We provide our mortgage banking customers with a range of choices designed to meet their financial needs. Our broad product line includes adjustable-rate mortgages (“ARMs”) offering borrowers multiple payment options, and fixed-rate mortgages, both conforming and non-conforming (a conforming loan is one that falls within the maximum loan size and meets other criteria for inclusion in the guarantee programs of Fannie Mae or Freddie Mac). We also offer subprime loans and reverse mortgages.

      When we have accumulated a sufficient volume of loans with similar characteristics, generally $50 million to $1 billion in principal amount, we sell the loans in the secondary market. The length of time between when we purchase a mortgage loan and when we sell or securitize the mortgage loan generally ranges from 10 to 90 days, depending on factors such as loan volume by product type and market fluctuations in the prices of MBS. On average during 2004, we sold loans within 61 days of purchase or origination.

      We sell the majority of the mortgage loans that we originate or purchase (82% in 2004). The loans are usually sold on a non-recourse basis, but we do make certain representations and warranties concerning the loans. We generally retain the servicing rights with respect to loans sold to the government sponsored enterprises, or GSEs (primarily Fannie Mae and Freddie Mac). The credit losses on these loans are absorbed by the GSEs. We pay guarantee fees to the GSEs to compensate them for their assumption of credit risk. We also sell loans to the Federal Home Loan Bank of San Francisco (“FHLB”), for which we retain the servicing rights. Loans sold to the FHLB typically contain a risk-sharing arrangement in which we benefit from the performance of the loans sold. This benefit is typically less than 10 basis points of the loan amount sold and is recorded as a residual and included as a component of securities classified as trading.

      We also sell loans through private-label securitizations. Loans sold through private-label securitizations consist primarily of non-conforming loans and subprime loans. The securitization process involves the sale of the loans to one of our wholly owned bankruptcy remote special purpose entities which then sells the loans to a separate, transaction-specific securitization trust in exchange for cash and certain trust interests that we retain. The securitization trust issues and sells undivided interests to third party investors that entitle the investors to specified cash flows generated from the securitized loans. These undivided interests are usually represented by certificates with varying interest rates and are secured by the payments on the loans acquired by the trust, and commonly include senior and subordinated classes. The senior class securities are usually rated “AAA” by at least two of the major independent rating agencies and have priority over the subordinated classes in the receipt of payments. We have no obligation to provide funding support (other than temporary servicing advances) to either the third party investors or securitization trusts. The third party investors or the securitization trusts have no recourse to our assets or us and have no ability to require us to repurchase their securities. We do make certain representations and warranties concerning the loans, such as lien status or mortgage insurance coverage, and if we are found to have breached a representation or warranty we could be required to repurchase the loan from the securitization trust. We do not guarantee any securities issued by the securitization trusts. The securitization trusts represent “qualified special purpose entities” which meet the legal isolation criteria of Statement of Financial Accounting Standards No. 140, “Accounting for Transfer and Servicing of Financial Assets and Extinguishments of Liabilities” (“SFAS 140”), and are therefore not consolidated for financial reporting purposes. To a lesser extent, we also sell loans on a whole-loan basis to institutional investors with either servicing retained by us or released to the institutional investors.

      In addition to the cash we receive from the sale of MBS, we typically retain certain interests in the securitization trust as payment for the loans. These retained interests may include mortgage servicing rights (“MSRs”), AAA-rated interest-only securities, AAA-rated senior securities, subordinated classes of securities, residual securities, securities associated with prepayment charges on the underlying mortgage loans, cash reserve funds, or an overcollateralization account. Other than AAA-rated interest-only securities, the AAA-rated senior securities, the securities associated with prepayment charges on the underlying mortgage loans, and the MSRs, these retained interests are subordinated and serve as credit enhancement for the more senior securities issued by the securitization trust. We are entitled to receive payment on most of these retained interests only after the third party investors are repaid their investment plus interest and there is excess cash in

the securitization trust. Our ability to obtain repayment of our residual interests depends solely on the performance of the underlying mortgage loans. Material adverse changes in performance of the loans, including actual credit losses and prepayment speeds, may have a significant adverse effect on the value of these retained interests.

      We usually retain the servicing rights for the securitized mortgage loans, as discussed in the description of servicing operations below under the caption “Loan Servicing Operations.” As a servicer, we are entitled to receive a servicing fee equal to a specified percentage of the outstanding principal balance of each loan. This servicing fee is calculated and payable on a monthly basis. We may also be entitled to receive additional servicing compensation, such as late payment fees or prepayment charges. Our servicing fees have priority in payment over each class of securities issued by the securitization trusts.

      In addition to securitization trusts, from time to time we use Net Interest Margin (“NIM”) trusts to securitize our interest in residual securities and securities associated with prepayment charges on the underlying mortgage loans from prior or recently completed securitization transactions. NIM trusts issue notes to outside investors secured by the residual securities and securities associated with prepayment charges on the underlying mortgage loans we contribute to the trusts. The cash proceeds from the sale of the NIM notes to investors are paid to us as payment for the securities. The NIM notes are obligations of the NIM trusts and are collateralized only by the residual securities and securities associated with prepayment charges on the underlying mortgage loans. We are not obligated to make any payments on the NIM notes. These entities represent qualified special purpose entities and are therefore not consolidated for financial reporting purposes in accordance with SFAS 140. At inception, the outside investors have the majority interest in the fair value of the residual securities and securities associated with prepayment charges on the underlying mortgage loans. We receive cash flows from our retained interests in the NIM trusts once the NIM notes issued to the investors are fully paid off. At December 31, 2004, these NIM trusts held assets valued at $142.6 million and our retained interests in these NIM trusts are valued at $42.5 million. Our retained interests in the NIM trusts are included as a component of securities classified as trading securities on our consolidated balance sheets.

      Our mortgage banking revenue consists primarily of gain on the sale of loans, net interest income, and fee income associated with the loans held for sale. We sell our loans through three distribution channels in the secondary market: GSEs, private-label securitizations, and whole loan sales. Additionally, we transfer loans to our investment portfolio, which currently consists primarily of ARM and hybrid ARM loans.

      Because many of our mortgage banking activities are tied to the purchase and sale of single-family residences, our business is subject to some seasonal volatility. Typically, loan originations tend to be higher in summer months and lower in winter months.

INVESTING AND HELOC ACTIVITIES

Investments

      In an effort to generate continuing earnings that are more stable and complement our mortgage banking activities, we invest in single-family residential (“SFR”) mortgage loans, construction loans, home equity lines of credit (“HELOC”), mortgage securities, and MSRs either retained in connection with our mortgage banking activities or purchased in the secondary mortgage market. The strategy of our Investing and HELOC activities is to: 1) leverage and scale infrastructure with prudent mortgage related asset growth to stabilize and diversify company-wide earnings, targeting a return on equity ranging from 15% to 20%; and 2) hedge the interest rate and prepayment risks attendant with servicing-related assets.

      Mortgage loans held for investment are generally originated or acquired through our Mortgage Banking Divisions and transferred to the Investing Divisions. Held for investment loans may also be acquired from third party sellers. Such loans are typically prime loans as the majority of the subprime loans originated are securitized in private transactions or sold to GSEs. The Investing Divisions invest in loans for which they can earn an acceptable return on equity. We are currently investing primarily in ARMs in order to minimize interest rate risk, and to a lesser extent, loan products which we believe the market does not properly price. We may also retain a portion of the loans acquired through our exercise of clean-up calls as these loans are

generally high quality, seasoned loans that generate an above-market yield. In addition to the investments in SFR mortgage loans, we also invest in construction financing for single-family residences provided directly to individual consumers, builder construction financing facilities for larger residential subdivision loans, and HELOCs.

      A substantial portion of the servicing-related assets retained by the Investing Divisions are generated in connection with issuances of private-label securities and agency loan sales by our mortgage banking operations. Retained assets typically include MSRs and, to a lesser degree, AAA-rated and agency interest-only securities, AAA-rated senior securities, non-investment grade securities and residuals. In addition to retaining assets from our private-label securitizations and agency loan sales, the Investing Divisions also purchase MBS issued by other lenders in the secondary mortgage market. Our investment grade securities include AAA-rated and agency interest-only securities, agency MBS and debentures, and other MBS. In addition to hedging the AAA-rated and agency interest-only securities portfolio, the Investing Divisions also manage and hedge our investment in MSRs. Substantially all MSRs were created in connection with our mortgage banking activities and include both primary and master servicing, as further discussed below. However, we may purchase MSRs from other servicers if we believe the investment will generate appropriate returns.

      The primary sources of revenue for the Investing Divisions are net interest income on loans and securities, service fee income from MSRs, and to a lesser extent, the gain on sale of HELOCs. Valuation changes related to MSRs (subject to lower of amortized cost or fair value limitations), AAA-rated and agency interest-only securities and their related hedges are also recognized through earnings. Periodically, trading gains or losses may also be recognized through earnings, although trading is not a core investing activity.

Loan Servicing Operations

      At December 31, 2004, primarily through our Home Loan Servicing operation in Kalamazoo, Michigan, we serviced $56.0 billion of mortgage loans, of which $50.2 billion was serviced for others. The servicing portfolio includes servicing for prime and subprime loans, HELOCs, reverse mortgages, manufactured housing loans and home improvement loans.

      Servicing of mortgage loans includes: collecting loan payments; responding to customers’ inquiries; accounting for principal and interest; holding custodial (impound) funds for payment of property taxes and insurance; making physical inspections of the mortgaged property, as necessary; counseling delinquent mortgagors; modifying and refinancing loans; supervising foreclosures and liquidation of foreclosed property; performing required tax reporting; and performing other loan administration functions necessary to protect investors’ interests and comply with applicable laws and regulations. Servicing operations also include remitting loan payments, less servicing fees, to trustees and, in some cases, advancing delinquent borrower payments to investors, subject to a right of reimbursement.

SEGMENTS

      IndyMac is structured to achieve synergies among its operations and to enhance customer service, operating through its four main segments, Mortgage Banking Divisions, IndyMac Consumer Bank, Specialty Product Divisions and Investing Divisions. The common denominator of the Company’s business is providing consumers with single-family residential mortgages through relationships with each segment’s core customers via the channel in which each operates. Mortgage Banking Divisions provide consumers with single-family permanent mortgage lending through relationships with mortgage professionals — mortgage brokers, mortgage bankers, as well as through community financial institutions, real estate professionals, and consumers. IndyMac Consumer Bank provides the platform for the mortgage and deposit services that IndyMac offers directly to consumers through its branch network. Specialty Product Divisions support the production of niche products including construction lending, HELOCs, and reverse mortgages through all of IndyMac’s relationship and consumer direct production channels. The Investing Divisions serve as the main link to customers whose mortgages we service. Through their investments in single-family residential (“SFR”) mortgages,

MBS and MSRs, the Investing Divisions generate core spread and fee income and provide critical support to IndyMac’s mortgage lending operations.

Mortgage Banking Divisions

Mortgage Professionals

      Our largest production channel, mortgage professionals, was responsible for 49% of our total mortgage production during 2004. This group acquires mortgage loans through its relationships with mortgage professionals, including mortgage brokers, mortgage bankers and financial institutions. When originating or purchasing mortgage loans, we generally acquire the rights to “service” the mortgage loans (as described below). When we sell the loans, we may either retain the related servicing rights and service the loans through our Home Loan Servicing division or sell those rights. See “Loan Servicing Operations” above. This group’s production volume includes both purchases and originations. Originations are defined as loans that are generated by the mortgage broker, but closed in our name (also referred to as “table funded” loans).

      This division targets customers based on their loan production volume, product mix and projected revenue to us. The sales force is responsible for maintaining and increasing loan production from these customers by marketing our strengths, which include a “one stop shop” for all products, competitive pricing and response time efficiencies in the loan purchase process through our e-MITS underwriting process and high customer service standards.

      During 2004, to continue our emphasis on increasing production capacity and geographic penetration to build market share, the division opened two new regional centers. With these two new centers, the division currently has nine regional centers. Looking ahead, we plan to add a minimum of six new regional offices over the next five years as a way of increasing geographic penetration to gain market share in target markets, improving customer service, and improving operational efficiencies.

Real Estate Professionals

      Through our LoanWorks® brand, we serve real estate professionals who are interested in cross-selling mortgage loans as an additional service to their home purchase clients. LoanWorks.com allows real estate agents to utilize our Web-based e-MITS technology as their in-house mortgage processing center and their online origination management system.

      Our marketing focus on real estate agents includes participation in local real estate forums, trade shows, seminars and continuing education courses aimed at individual real estate agents, and advertising in national and regional trade publications. Additionally, this division generates single-family residential mortgage loans through subdivision developers. Our strategy includes developing relationships with homebuilders through direct customer contact and program presentations, as well as drawing upon existing construction lending builder relationships and industry contacts. Although this division produces a relatively small volume of mortgage loans, we believe this channel provides a growth opportunity as it leverages our existing technology and infrastructure and recognizes the important role that Realtors and homebuilders play in the home purchase mortgage process.

Web & Direct Mail

      This channel originates retail mortgage loans on a centralized basis using multiple marketing channels, including direct originations through our Web site, which is supported by our e-MITS technology, direct mail, indirect Internet leads provided by various multi-lender sites, direct Internet leads developed through online advertising, and affinity relationships.

      Our website offers a wide range of home loan products directly to consumers nationwide. This site enables consumers to apply for a mortgage loan, obtain loan approvals, lock in an interest rate and receive a printable approval letter, all online, and all within minutes. The website also features online loan status information, daily rate comparisons to major competitors, and a quick mortgage rate pricing tool. Through the telemarket-

ing operations and our Southern California retail banking branch network, loan consultants counsel consumers with respect to the loan application process, process loan applications utilizing our e-MITS technology and make lending decisions.

IndyMac Conduit

      The division is responsible for leveraging our mortgage infrastructure to purchase loans in bulk from mortgage bankers, financial institutions and other capital market participants across the country. Our specialized niche products provide an attractive offering for this customer base. This channel was responsible for 20% of our total mortgage production during 2004.

IndyMac Consumer Bank

      Through our website at www.IndyMacBank.com, consumers can access their accounts 24-hours a day, seven days a week. Online banking allows customers to access their accounts, view balances, transfer funds between accounts, view transactions, download account information and pay their bills conveniently from any computer terminal. Consumers can also conduct transactions through our telebanking operation or in one of our Southern California branches. Our deposit products include regular savings accounts, demand deposit accounts, money market accounts, certificate of deposit accounts, and individual retirement accounts.

Specialty Product Divisions

Consumer Construction

      Our Consumer Construction Lending division offers a variety of residential construction programs and lot financing through our relationship channels and directly to consumers. Through our streamlined e-MITS online application process, the division offers a single-close construction-to-permanent loan that provides borrowers with the funds to build a primary residence or vacation home. Our customers have convenient online access to construction funds and loan information at any time. When the home is completed, the loan automatically converts to a permanent 30- or 15-year loan, which we typically sell, without any additional costs or closing documents required. The product represents a hybrid activity between our portfolio lending and our mortgage banking activities.

Subdivision Financing

      We provide acquisition, development and construction financing for small to large residential subdivision builders in target markets through this division. Local expert account officers work directly with builders in providing financing and overseeing the progress of the financed projects, while our highly automated central operations in Pasadena oversee credit, loan closing and loan administration functions. This division works closely with the Real Estate Professionals division to provide permanent mortgage loans to their customers when they sell the completed residence. A substantial portion of our builder construction loans is secured by corporate or personal guarantees of the builders as well as the real estate. Builder construction loans are typically based on Prime interest rates.

HELOC

      IndyMac’s HELOC division specializes in providing HELOC and second mortgages nationwide through direct marketing to homeowners. With a streamlined application process and competitive pricing, this division provides homeowners the ability to easily tap the excess equity in their homes for a variety of uses. With the HELOC product, homeowners have convenient access to their funds using equity checks or a Visa® credit card. IndyMac’s home equity products are available across all IndyMac’s mortgage channels to new and existing mortgage or banking customers.

Financial Freedom

      Through the acquisition of Financial Freedom, we have become the leading provider of reverse mortgages in the United States. Reverse mortgages allow homeowners age 62 and older to convert home equity into cash to supplement their retirement income. The equity may be withdrawn in a lump sum, as annuity-style monthly payments, as a credit line, or any combination thereof. Reverse mortgages offered by us feature: no recourse to the borrower, no repayment during the borrower’s occupancy of the home, and a repayment amount that cannot exceed the value of the home (after costs of sale). With the increased familiarity that senior homeowners and their financial advisors have with this product, and the appreciation of home prices, the reverse mortgage market is expected to grow dramatically.

Investing Divisions

      Our Investing Divisions complement the Company’s mortgage banking activities and serve to diversify the Company’s revenue stream through its investments. The assets included in these divisions are broken down into four main groups:

      (3) MBS, which include AAA-rated agency and private label MBS, and investment-grade securities.

      (4) Discontinued products, which include home improvement and manufactured housing loans.

      In addition to generating revenue for the Company, the Investing Divisions perform the mortgage servicing function, which includes payment processing, customer service, collections, loss mitigations and investor reporting. Select Investing Divisions are also engaged in mortgage banking activities. At December 31, 2004, total assets of our Investing Divisions were $8.4 billion, of which 19% were loan servicing and retained assets, 53% were SFR mortgage loans, 27% were MBS, and 1% were discontinued products. Our policy is that all of our Investing Divisions’ assets, including assets acquired from Mortgage Banking Divisions or IndyMac Consumer Bank, must meet or exceed minimum targeted return requirements. In addition to the Investing Divisions’ investments, certain investing activities also take place in the Mortgage Banking Divisions, Specialty Product Divisions and IndyMac Consumer Bank segments. These activities generate assets which include construction loans and HELOCs.

      For further information on the revenues earned and expenses incurred by each of our segments, refer to “Note 3 — Segment Reporting” included in the Company’s consolidated financial statements incorporated herein.

REGULATION AND SUPERVISION

GENERAL

      As a savings and loan holding company, IndyMac Bancorp is subject to regulation by the Office of Thrift Supervision (“OTS”) under the savings and loan holding company provisions of the Federal Home Owners’ Loan Act (“HOLA”). As a federally chartered and insured savings and loan association, IndyMac Bank is subject to regulation, supervision and periodic examination by the OTS, which is the primary federal regulator

of savings associations, and the FDIC, in its role as federal deposit insurer. The primary purpose of regulatory examination and supervision is to protect depositors, financial institutions and the financial system as a whole rather than the shareholders of financial institutions or their holding companies. The following summary is not intended to be a complete description of the applicable laws and regulations or their effects on us, and it is qualified in its entirety by reference to the particular statutory and regulatory provisions described.

REGULATION OF INDYMAC BANK

General

      Both IndyMac Bank and the Company are required to file periodic reports with the OTS concerning our activities and financial condition. The OTS has substantial enforcement authority with respect to savings associations, including authority to bring enforcement actions against a savings association and any of its “institution-affiliated parties,” which term includes directors, officers, employees, controlling shareholders, agents and other persons who participate in the conduct of the affairs of the institution. The FDIC has “backup” enforcement authority over us and has the power to terminate a savings association’s FDIC deposit insurance. In addition, we are subject to regulations of the Federal Reserve Board relating to equal credit opportunity, electronic fund transfers, collection of checks, truth in lending, truth in savings, and availability of funds for deposit customers.

Qualified Thrift Lender Test

      Like all savings and loan holding company subsidiaries, IndyMac Bank is required to meet a qualified thrift lender (“QTL”) test to avoid certain restrictions on our operations, including the activities restrictions applicable to multiple savings and loan holding companies, restrictions on our ability to branch interstate and IndyMac Bancorp’s mandatory registration as a bank holding company under the Bank Holding Company Act of 1956. A savings association satisfies the QTL test if: (i) on a monthly average basis, for at least nine months out of each twelve month period, at least 65% of a specified asset base of the savings association consists of loans to small businesses, credit card loans, educational loans, or certain assets related to domestic residential real estate, including residential mortgage loans and mortgage securities; or (ii) at least 60% of the savings association’s total assets consist of cash, U.S. government or government agency debt or equity securities, fixed assets, or loans secured by deposits, real property used for residential, educational, church, welfare, or health purposes, or real property in certain urban renewal areas. IndyMac Bank is currently, and expects to remain, in compliance with QTL standards.

Regulatory Capital Requirements

      OTS capital regulations require savings associations to satisfy three sets of capital requirements: tangible capital, Tier 1 (leverage) capital, and risk-based capital. In general, an association’s tangible capital, which must be at least 1.5% of adjusted total assets, is the sum of common shareholders’ equity adjusted for the effects of other comprehensive income (“OCI”), less goodwill and other disallowed assets. An association’s ratio of Tier 1 capital to adjusted total assets (the “core capital” or “leverage” ratio) must be at least 3% for the most highly rated associations and 4% for others. Higher capital ratios may be required if warranted by the particular circumstances, risk profile, or growth rate of a given association. Under the risk-based capital requirement, a savings association must have Tier 1 capital equal to at least 4% of risk-weighted assets and total capital (core capital plus supplementary capital) equal to at least 8% of risk-weighted assets. Tier 1 capital must represent at least 50% of total capital and consists of core capital elements, which include common shareholders’ equity, qualifying noncumulative, nonredeemable perpetual preferred stock, and minority interests in the equity accounts of consolidated subsidiaries, but exclude goodwill and certain other intangible assets. Supplementary capital mainly consists of qualifying subordinated debt, preferred stock that does not meet Tier 1 capital requirements, and portions of allowance for loan losses.

      The above capital requirements are viewed as minimum standards by the OTS. The OTS regulations also specify minimum requirements for a savings association to be considered a “well-capitalized institution” as

defined in the “prompt corrective action” regulation described below. A “well-capitalized” savings association must have a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 6% or greater and a leverage ratio of 5% or greater. IndyMac Bank currently meets, and expects to continue to meet, all of the requirements of a “well-capitalized institution.”

      The OTS regulations include prompt corrective action provisions that require certain remedial actions and authorize certain other discretionary actions to be taken by the OTS against a savings association that falls within specified categories of capital deficiency. The relevant regulations establish five categories of capital classification for this purpose, ranging from “well-capitalized” or “adequately capitalized” through “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” In general, the prompt corrective action regulations prohibit an OTS-regulated institution from declaring any dividends, making any other capital distributions, or paying a management fee to a controlling person, such as its parent holding company, if, following the distribution or payment, the institution would be within any of the three undercapitalized categories.

Insurance of Deposit Accounts

      Deposits of the Bank are presently insured by the Savings Association Insurance Fund (“SAIF”), which is administered by the FDIC, up to $100,000 per depositor. The FDIC has established a risk-based system for setting deposit insurance assessments. Under the risk-based assessment system, a savings association’s insurance assessments vary according to the level of capital the institution holds and the degree to which it is the subject of supervisory concern. Insurance of deposits may be terminated by the FDIC upon a finding that the savings association has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or the OTS.

Capital Distribution Regulations

      OTS regulations limit “capital distributions” by savings associations, which include, among other things, dividends and payments for stock repurchases. A savings association that is a subsidiary of a savings and loan holding company must notify the OTS of a capital distribution at least 30 days prior to the proposed declaration of dividend or the approval by the association’s board of directors of the proposed capital distribution. The 30-day period provides the OTS with an opportunity to object to the proposed distribution if it believes that the distribution would not be advisable.

      An application to the OTS for specific approval to pay a dividend, rather than the notice procedure described above, is required if: (a) the total of all capital distributions made during a calendar year (including the proposed distribution) exceeds the sum of the institution’s year-to-date net income and its retained income for the preceding two years, (b) the institution is not eligible under OTS regulations for “expedited treatment” (which is generally available to institutions the OTS regards as well run and adequately capitalized), (c) the institution would not be at least “adequately capitalized” following the proposed capital distribution, or (d) the distribution would violate an applicable statute, regulation, agreement, or written condition imposed on the institution by the OTS.

Community Reinvestment Act and the Fair Lending Laws

      Savings associations are examined under the Community Reinvestment Act (“CRA”) and related regulations of the OTS on the extent of their efforts to help meet the credit needs of their communities, including low and moderate-income neighborhoods. In addition, the Equal Credit Opportunity Act and the Fair Housing Act, together known as the “Fair Lending Laws,” prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes. Enforcement of these regulations has been an important focus of federal regulatory authorities and of community groups in recent years. A failure by IndyMac Bank to comply with the provisions of the CRA could, at a minimum, result in adverse action on branch and certain other corporate applications, and regulatory restrictions on our activities, and

failure to comply with the Fair Lending Laws could result in enforcement actions by the OTS, as well as other federal regulatory agencies and the Department of Justice. IndyMac Bank received an overall “Satisfactory” rating during our most recent CRA evaluation.

Privacy Protection

      The OTS has adopted privacy protection regulations which require each savings association to adopt procedures to protect consumers’ and customers’ “nonpublic personal information.” It is IndyMac Bank’s policy not to share customers’ information with any unaffiliated third parties, except as expressly permitted by law, or to allow third party companies to provide marketing services on our behalf, or under joint marketing agreements between us and other unaffiliated financial institutions. In addition to federal laws and regulations, we are required to comply with any privacy requirements prescribed by California and other states in which we do business that afford consumers with protections greater than those provided under federal law.

KEY OPERATING RISKS

      Like all businesses, we assume a certain amount of risk in order to earn returns on our capital. For further information on these and other key operating risks, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

INCOME TAX CONSIDERATIONS

      We report our income on a calendar year basis using the accrual method of accounting. We are subject to federal income taxation under existing provisions of the Internal Revenue Code of 1986, as amended, in generally the same manner as other corporations. We are also subject to state taxes in the areas in which we conduct business.

EMPLOYEES

      As of December 31, 2004, we had 5,323 full-time equivalent employees, including 673 temporary employees. We believe that we have generally good relations with our employees.

COMPETITION

      We face significant competition in acquiring and selling loans. In our mortgage banking operations, we compete with other mortgage bankers, GSEs, established third party lending programs, investment banking firms, banks, savings and loan associations, and other lenders and entities purchasing mortgage assets. With regard to MBS issued through our mortgage banking operations, we face competition from other investment opportunities available to prospective investors. We estimate our market share of the U.S. mortgage market to be approximately 1.71% based on the fourth quarter 2004 mortgage production. A number of our competitors have significantly larger market share and financial resources. We seek to compete with financial institutions and mortgage companies through an emphasis on quality of service, diversified products and maximum use of technology.

      The GSEs have made and we believe will continue to make significant technological and economic advances to broaden their customer bases. When the GSEs contract or expand, there are both positive and negative impacts on our mortgage banking lending operations. As GSEs expand, additional liquidity is brought to the market, and loan products can be resold more quickly. Conversely, expanding GSEs increase competition for loans, which may reduce profit margins on loan sales. We seek to address these competitive pressures by making a strong effort to maximize our use of technology, by diversifying into other residential mortgage products that are less affected by GSEs, and by operating in a more cost-effective manner than our competitors.

WEBSITE ACCESS TO UNITED STATES SECURITIES AND EXCHANGE COMMISSION FILINGS

      All reports filed electronically by us with the Securities and Exchange Commission (“SEC”), including Annual Reports on Form 10-K, quarterly reports on Form 10-Q, and current event reports on Form 8-K, as well as any amendments to those reports, are made accessible as soon as reasonably practicable after filing with the SEC at no cost on our website at www.IndyMacBank.com. These filings are also accessible on the SEC’s website at www.sec.gov.

      We have a Code of Business Conduct and Ethics that is applicable to all of our employees, officers and directors, including the principal executive officer, the principal financial officer and the principal accounting officer. We also adopted formal corporate governance standards in January 2002, which the Nominating and Governance Committee of the Board of Directors reviews annually to ensure they incorporate recent corporate governance developments and generally meet the corporate governance needs of IndyMac. You may obtain copies of each of the Code of Business Conduct and Ethics and the Board of Directors’ Guidelines for Corporate Governance Issues by accessing the “Corporate Governance” subsection of the “Investors” section of www.IndyMacBank.com, or by writing to our Corporate Secretary at IndyMac Bancorp, Inc., 155 North Lake Avenue, Pasadena, California 91101.

ITEM 2.     PROPERTIES

      Our significant leased properties are as follows:

      In addition to the above leased office space, we own the building that houses our mortgage banking headquarters, located in Pasadena, California, totaling 265,000 square feet. We also own a building in La Mirada, California with 16,500 square feet, which houses our information technology data center. We own an additional 4 retail banking properties, containing an aggregate of approximately 56,000 square feet, located in Southern California.

      In the ordinary course of business, the Company and its subsidiaries are defendants in or parties to a number of legal actions. Certain of such actions involve alleged violations of employment laws, unfair trade practices, consumer protection laws, including claims relating to the Company’s loan origination and collection efforts, and other federal and state banking laws. Certain of such actions include claims for breach of contract, restitution, compensatory damages, punitive damages and other forms of relief. The Company reviews these actions on an on-going basis and follows the provisions of Statement of Financial Accounting Standards No. 5, “Accounting for Contingencies” when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, the Company bases its decisions on the evidence discovered and in its possession, the strength of probable witness testimony, the viability of its defenses and the likelihood of prevailing at trial or resolving the matter through alternative dispute resolution. Due to the difficulty of predicting the outcome of such actions, the Company can give no assurance that it will prevail on all claims made against it; however, management believes, based on current knowledge and after consultation with counsel, that these legal actions, individually and in the aggregate, and the losses, if any, resulting from the final outcome thereof, will not have a material adverse effect on the Corporation and its subsidiaries’ financial position, but may have a material impact on the results of operations of particular periods.

      No matters were submitted to a vote of shareholders during the quarter ended December 31, 2004.

PART II

STOCK INFORMATION

      IndyMac Bancorp Inc.’s common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “NDE.”

      The following table sets forth the high and low sales prices (as reported by Bloomberg Financial Service) for shares of IndyMac Bancorp Inc.’s common stock for the years ended December 31, 2004 and 2003.

ISSUANCE OF COMMON STOCK

      On June 8, 2004, we issued 3,200,000 shares of common stock at a market price of $31.75 through a public offering. On July 12, 2004, we issued an additional 130,000 shares of common stock at a market price of $31.75 upon the exercise of the underwriters’ over-allotment option. The cash proceeds of $96.25 million from the initial closing, net of expenses, were recorded as equity during the second quarter of 2004. The cash proceeds from the exercise of the over-allotment option, net of expenses, of $3.9 million were recorded as equity during the third quarter of 2004. Certain of the proceeds were used to finance the acquisition of Financial Freedom and the remaining proceeds have been used for general corporate purposes, including, but not limited to, continued asset growth for IndyMac Bank.

SHARE REPURCHASE ACTIVITIES

      In June 1999, our Board of Directors approved a $100.0 million share repurchase program, which was subsequently increased by the Board to $500.0 million. The Board of Directors also approved a special repurchase of 3,640,860 shares from Countrywide Financial Corporation, Inc. (“Countrywide”), which was not a part of our share repurchase program. From the share repurchase program’s inception through December 31, 2002, we repurchased 28 million shares in open market transactions and from Countrywide at an average price of approximately $18.02 per share, for an aggregate investment of $504.4 million. At December 31, 2004, we had $63.6 million of remaining capacity to repurchase shares under the current authorization from the Board of Directors. No share repurchases under the share repurchase program have been made since December 31, 2002.

      From time to time, we also repurchase shares from certain employees and officers at the then-current market price under the Company’s stock incentive plans. The following table summarizes the share repurchase activities from our employees and officers during 2004, as well as the information during the same period regarding our publicly announced share repurchase program described above:

      As of February 18, 2005, 62,165,649 shares of IndyMac Bancorp Inc.’s common stock were held by approximately 1,787 shareholders of record.

DIVIDEND POLICY

      IndyMac’s Board of Directors initiated a dividend policy in 2003. Since that time IndyMac has successfully increased its dividend payout ratio to be more in line with other financial institution payout ratios, which range from 30% to 50%. Looking forward, IndyMac expects to continue to increase its dividend at the discretion of the Board of Directors based on IndyMac’s operating performance and financial position. As a result, IndyMac expects to increase future dividends within a targeted range between IndyMac’s long-term earnings per share growth goal of 15% and its historical earnings per share growth rate of 26% since 1992 under current management.

      Cash dividends declared were as follows during 2004 and 2003:

      In 2004 and 2003, we funded the payment of dividends primarily from the cash on hand at the Company. The future principal source of funds for the dividend payments is anticipated to be the dividends we will receive from IndyMac Bank. The payment of dividends by IndyMac Bank is subject to regulatory requirements and review. See the “Capital Distribution Regulations” section on page 14 for further information.

EQUITY COMPENSATION PLANS INFORMATION

      The equity compensation plans information required by this Item 5 is hereby incorporated by reference to IndyMac Bancorp’s definitive proxy statement, to be filed pursuant to Regulation 14A within 120 days after the end of our 2004 fiscal year.

      On March 9, 2004, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 105, “Application of Accounting Principles to Loan Commitments” (“SAB No. 105”). In SAB No. 105, the SEC determined that an interest rate lock commitment should generally be valued at zero at inception. Profits inherent in the rate lock will be recognized at the time of the sale of the underlying loan. The Company adopted this standard effective April 1, 2004, which affected the second quarter 2004 gain on sale of loans with a negative impact of $52.2 million before-tax, and had carryover impact of $5.1 million before-tax, and $2.2 million before-tax on the earnings of the third and fourth quarters of 2004, respectively. Since all loans that were rate locked prior to April 1, 2004, have been sold, SAB No. 105 will no longer have a negative impact on earnings in 2005.

      Additionally, on July 16, 2004, the Company acquired 93.75% of the outstanding shares of common stock of FFHI and related assets from Lehman Brothers Bank, F.S.B. and its affiliates for an aggregate cash

purchase price of $84.6 million. FFHI was merged into its then wholly owned subsidiary in November 2004, with the surviving entity referred to as Financial Freedom, and now IndyMac Bank owns 93.75%, and the chief executive officer of Financial Freedom owns 6.25% of the outstanding shares of common stock of Financial Freedom. The acquisition from Lehman Brothers Bank, F.S.B. was accounted for using the purchase accounting method and the results of Financial Freedom’s operations have been included in the consolidated financial statements since the acquisition date. As part of the allocation of the purchase price, we recorded loans held for sale and the loan application pipeline at their fair values at the acquisition date. By allocating a portion of the purchase price to these assets, we increased the cost basis of loans that are subsequently sold. This increased cost basis decreases the gain on sale when the related loans are sold. We allocated a total of $7.9 million in purchase price to the loan portfolio and loan application pipeline. Of this amount, $6.0 million was recognized as the related loans were sold during the third quarter of 2004, and $1.9 million was recognized in the fourth quarter of 2004.

      In the table below, in addition to the financial information presented in accordance with generally accepted accounting principles (“GAAP”), we have presented certain pro forma non-GAAP financial measures that are marked with footnote (1). These pro forma non-GAAP financial measures are calculated based on the GAAP gain on sale of loans but adjusted to exclude the effect of the SAB No. 105 change in accounting principle related to rate lock commitments as well as the impact of the purchase accounting adjustments for the Financial Freedom acquisition described above. We believe these pro forma non-GAAP financial measures provide useful information to investors in evaluating and comparing our financial condition and results of operations on a consistent basis from period to period, and it is on this basis that our management internally assesses our performance.

      Although we believe these pro forma non-GAAP financial measures are useful to investors, they should not be considered a substitute for, or superior to, GAAP results.

OVERVIEW

      IndyMac is a leading hybrid thrift/mortgage banking company. We offer a wide range of home mortgage products to a broad customer base using a technology-based approach. IndyMac is structured to achieve synergies among its operations and to enhance customer service. We are now operating through four main segments: Mortgage Banking Divisions, IndyMac Consumer Bank, Specialty Product Divisions and Investing Divisions. The common denominator of the Company’s business is providing consumers with single-family residential mortgages through relationships with each segment’s core customers via the channel in which each operates. Mortgage Banking Divisions provide consumers with single-family permanent mortgage lending through relationships with mortgage professionals — mortgage brokers, mortgage bankers, as well as through community financial institutions, real estate professionals, and consumers. IndyMac Consumer Bank provides the platform for the mortgage and deposit services that IndyMac offers directly to consumers through its branch network. Specialty Product Divisions support the production of niche products including construction lending, HELOCs, and reverse mortgages through all of IndyMac’s relationship and consumer direct production channels. The Investing Divisions serve as the main link to customers whose mortgages we service. Through its investments in SFR mortgages, MBS and MSRs, the Investing Divisions generate core spread and fee income and provide critical support to IndyMac’s mortgage lending operations.

      Our operating activities primarily consist of three broad categories: mortgage banking activities, investing activities and HELOC activities. All of these activities are performed to varying degrees by each of our main segments as shown in the tables that follow. Mortgage banking activities are characterized by high asset turnover (the production and sale of mortgage loans) and efficient utilization of capital but can be cyclical in nature depending on interest rates. Revenues generated by mortgage banking activities include gain on sale of mortgage loans, fee income and net spread (interest) income during the period loans are held pending sale. Investing and HELOC activities tend to provide a source of revenues that is generally counter-cyclical to mortgage banking revenues, comprised primarily of net interest income and servicing fees. IndyMac is strategically focused on increasing the relative size of its portfolios of mortgage loans, securities, and mortgage servicing and investments in HELOC-related assets to achieve greater balance between its mortgage banking activities and its core investing activities. We believe that our investing activities have and will continue to stabilize IndyMac’s core income. In addition to its revenue contribution, the Investing Divisions perform the mortgage servicing function, which includes payment processing, customer service, default management and reporting to investors in our securitizations. The mortgage servicing function creates added opportunities to retain customers when the interest rate environment makes it attractive for them to refinance and to cross-market customers with other Company products. Default management, which includes the processes of collections, loss mitigation, foreclosure, bankruptcy, and foreclosed assets management, enables IndyMac to proactively manage credit risk for the Company and its investors in its securities. See “Item 1. Business” for further descriptions of our operating segments.

      Record revenues, earnings and earnings per share, on a pro forma basis, as a result of record level mortgage production, characterized IndyMac’s overall results for the year ended December 31, 2004. The Company’s mortgage production achieved a new record level of $37.9 billion for 2004, and increased our mortgage industry market share to 1.33% for the year, up 73% from 2003 and by the fourth quarter of 2004, our market share was 1.71%⁽¹⁾ based on the MBA’s Mortgage Finance Forecast dated January 27, 2005, up

71% from the market share of approximately 1.00% for the fourth quarter of 2003. For the year ended December 31, 2004, IndyMac earned $211.3 million, or $3.40 per share on a pro forma basis excluding the change in accounting for rate locks pursuant to SAB No. 105 and the purchase accounting adjustment for the acquisition of Financial Freedom, compared to $171.3 million, or $3.01 per share during the year ended December 31, 2003. On a GAAP basis, the Company earned $170.5 million, or $2.74 per share, during the year ended December 31, 2004. In addition, in line with our strategic objectives, the Company continued to deploy capital to facilitate balance sheet growth and achieved record total assets of $16.9 billion as of December 31, 2004.

      The following table provides a reconciliation of IndyMac’s GAAP results including the SAB No. 105 accounting change and the purchase accounting adjustment, and on a pro forma basis excluding these two items:

      The following tables summarize the Company’s financial results for the year ended December 31, 2004, illustrating the revenues earned in its mortgage banking activities, investing and HELOC activities by each of its operating segments. The profitability of each operating segment is measured on a fully-leveraged basis after allocating capital based on regulatory capital rules. Operating segments that originate mortgage loans are credited with gain on sale at funding based on the estimated fair value. Any difference between the actual gain on sale realized and the estimate is credited or charged to the operating segment in the period the loan is sold or transferred to the held for investment portfolio. Differences between the gain on sale credited to the operating segments and the consolidated gain on sale due to timing of loan sales or transfers to the held for investment portfolio are eliminated in consolidation. The Company uses a funds transfer pricing (“FTP”) system to allocate interest income and expense to the operating segments. Each operating segment is allocated funding with maturities and interest rates matched with the expected lives and repricing frequencies of the segment’s assets. IndyMac Consumer Bank receives a funding credit for deposits using a similar methodology. The difference between these allocations and the Company’s actual net interest income and capital levels resulting from centralized management of funding costs is reported in the Treasury Group. Corporate overhead costs related to managing the Company as a whole are not allocated to the operating segments.

      The following table summarizes the segment financial highlights for the year ended December 31, 2004: