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UNITED STATES

Form 10-K

(Mark One)       þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003

or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from                     to

Commission file number: 1-8972

INDYMAC BANCORP, INC.

Registrant’s telephone number, including area code:

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, 2003, the aggregate market value of Common Stock held by non-affiliates of the registrant was approximately $1,398,990,175. 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 23, 2004, 57,396,048 shares of IndyMac Bancorp, Inc. Common Stock, $.01 par value per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

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INDYMAC BANCORP, INC.

2003 FORM 10-K ANNUAL REPORT

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INDYMAC BANCORP, INC.

2003 FORM 10-K ANNUAL REPORT

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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.

ITEM 1.     BUSINESS

      We are the holding company for IndyMac Bank, F.S.B., a Federal Deposit Insurance Corporation (“FDIC”) insured savings and loan association. IndyMac Bank® is the largest savings and loan in Los Angeles County and the 14th 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 ratelocking 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, F.S.B. (“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, 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, similar to a more traditional savings and

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      The mortgage market is a huge industry, with mortgages outstanding growing an average of 7 to 8 percent annually over the last several decades. According to the National Mortgage News, we were one of the top 19 originators of mortgage loans in the United States. During the fourth quarter of 2003, our market share approximated 0.8% based on mortgage loan origination volume of $29.2 billion in 2003. IndyMac’s long-term strategy focuses on gaining a larger share of the mortgage origination market without compromising our profitability goals. We plan to accomplish this by leveraging our mortgage-banking infrastructure, increasing our marketing and sales efforts, and expanding our geographic presence. To complement our mortgage banking activities, we will continue to add high quality single-family residential and home equity 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 three 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. By late 2003, the market began transitioning back to more traditional levels. The Mortgage Bankers Association estimates that production fell by 49% in the fourth quarter of 2003 compared to the third quarter of 2003 and that 2004 origination volume will decrease 47% to $2 trillion, compared to $3.8 trillion in 2003. While our forecast includes a reduction in origination volume in 2004, we do not expect to experience a decrease as significant as other mortgage bankers due to our focus in less interest rate sensitive mortgage products and mortgage channels with strong ties to the purchase market. Looking ahead, we expect our earnings to remain relatively flat in 2004 compared to 2003, but then increasing to approximately $4.00 per share in 2005. We would expect continued solid EPS growth thereafter given our historical compounded annual EPS growth rate from December 31, 1992 through December 31, 2003 of 28%. These earning estimates do not include the impact of the potential change in rate lock accounting discussed in “Item 7, Operations, Mortgage Banking Activities.”

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 2003, 72% 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, construction financing for single-family residences provided directly to individual consumers, builder construction financing facilities for larger residential subdivision loans and home equity lines of credit (“HELOCs”).

      When we have accumulated a sufficient volume of loans with similar characteristics, generally $100 million to $500 million in principal amount, we resell 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

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      We sell the majority of the mortgage loans that we originate or purchase (79% in 2003). The loans are sold on a non-recourse basis, but we 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 have recently begun selling 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 prime 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 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 who typically acquire the related loan servicing rights.

      In addition to the cash the securitization trust pays for the loans, we often 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, cash reserve funds, or an overcollateralization account. Other than AAA-rated interest-only securities, the AAA-rated senior securities 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 the loans. 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 penalties. Our servicing fees have priority in payment over the senior classes of securities issued by the securitization trusts.

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      In addition to securitization trusts, from time to time we use Net Interest Margin (“NIM”) trusts to securitize our interest in residual securities from prior or recently completed securitization transactions. NIM trusts issue bonds to outside investors secured by the residual securities we contribute to the trusts. The cash proceeds from the sale of the NIM bonds to investors are paid to us by the NIM trusts as payment for the residual securities. The NIM bonds are obligations of the NIM trusts and are collateralized only by the residual securities. We are not obligated to make any payments on the bonds. 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. We receive cash flows from our retained interests in the NIM trusts once the bonds issued to the investors are fully paid off. At December 31, 2003, these NIM trusts held assets valued at $46.9 million and our retained interests in these NIM trusts are valued at $16.0 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 ACTIVITIES

Investments

      In an effort to generate continuing earnings that are more stable and complement our mortgage banking activities, we invest in residential mortgage loans, mortgage securities, and MSRs either retained in connection with our mortgage banking activities or purchased in the secondary mortgage market. The strategy of our Investment Portfolio Group 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 activities and transferred to the Investment Portfolio Group. 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 Investment Portfolio Group invests in loans for which it 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.

      A substantial portion of the servicing related assets retained by the Investment Portfolio Group 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 Investment Portfolio Group also purchases mortgage-backed securities issued by other lenders in the secondary mortgage market. Our investment grade securities include AAA-rated and agency interest-only securities, agency mortgage-backed securities and debentures, and other mortgage-backed securities. In addition to hedging the AAA-rated and agency interest-only securities portfolio, the Investment Portfolio Group also manages and hedges 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.

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      The primary sources of revenue for the Investment Portfolio Group are net interest income on loans and securities, and service fee income from MSRs. We also were able to recognize significant revenue from gain on sale of loans acquired through our clean up call and retention program during 2003. 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 Investment Portfolio Group activity.

Loan Servicing Operations

      At December 31, 2003, through our Home Loan Servicing operation in Kalamazoo, Michigan, we serviced $36.9 billion of mortgage loans, of which $6.1 billon were owned by us. The servicing portfolio includes servicing for prime and subprime loans, HELOCs, 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 three main segments, IndyMac Mortgage Bank, IndyMac Consumer Bank and the Investment Portfolio Group. 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 channels in which each operates. IndyMac Mortgage Bank provides consumers with mortgage products through relationships with the Company’s business customers — mortgage brokers, mortgage bankers, community financial institutions, real estate professionals and homebuilders. IndyMac Consumer Bank provides the platform for the mortgage and deposit services that IndyMac offers directly to consumers. The Investment Portfolio Group serves as the main link to customers whose mortgages we service. Through its investments in single-family residential (“SFR”) mortgages, mortgage-backed securities and MSRs, the Investment Portfolio Group generates core spread and fee income and provides critical support to IndyMac’s mortgage lending operations.

      Our business relationship customers include customers in the following channels: business-to-business (“B2B”), business-to-realtor (“B2R”), consumer construction (Home Construction Lending, or “HCL”) and our homebuilder division (“HBD”). Our direct to consumer channels include business-to-consumer (“B2C”), HELOC division and retail banking.

INDYMAC MORTGAGE BANK

Mortgage Professionals (B2B)

      Our B2B channel was responsible for 62% of our total mortgage production during 2003. B2B acquires mortgage loans through three primary channels: wholesale, correspondent, and conduit, working through mortgage brokers, mortgage bankers and financial institutions. When acquiring mortgage loans, we generally purchase 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. B2B’s production volume includes both purchases

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      B2B has a centralized group that targets customers based on their loan production volume, product mix and projected revenue to us. Our B2B sales force is responsible for maintaining and increasing loan production from these customers by marketing B2B’s 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 2003, to continue our emphasis on increasing production capacity and geographic penetration to build market share, the B2B division opened new regional centers in Dallas, Texas and Seattle, Washington. With these two new centers, the B2B division currently has seven regional centers. Looking ahead, we plan to open additional centers as a way of increasing geographic penetration to gain market share in target markets, improving customer service, and improving operational efficiencies.

Realtors (B2R)

      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.

      B2R’s 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. Although B2R is currently small in comparison to the B2B and B2C divisions, we believe the B2R channel provides a growth opportunity as it leverages our existing technology and infrastructure and recognizes the important role that Realtors play in the home purchase mortgage process.

Home Construction Lending (HCL)

      Our Home 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, HCL offers a single-close construction-to-permanent loan that provides borrowers with the funds to build a primary residence or vacation home. HCL 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.

Homebuilder (HBD)

      The primary focus of our homebuilder division is to generate single-family residential mortgage loans through our business of lending to subdivision lenders. 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. Similar to our B2R strategy, the generation of mortgage loans through homebuilders provides a strong growth opportunity in the home purchase loan market.

      We also provide construction financing for residential subdivision developers through this division, with a focus on those homebuilders that have committed to utilizing our e-MITS technology 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.

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INDYMAC CONSUMER BANK

Consumer Direct (B2C)

      The B2C channel originates 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, indirect Internet leads provided by various multi-lender or Internet-based marketing firms, customer referral and portfolio refinance leads, direct mail and telemarketing, affinity relationships, and community lending through our 10 retail bank branches.

      Our B2C 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 B2C’s telemarketing 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.

Southern California Retail Banking

      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.

HELOC

      IndyMac’s HELOC division specializes in providing second mortgages and HELOCs 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 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.

INVESTMENT PORTFOLIO GROUP

      Our Investment Portfolio Group complements the Company’s mortgage banking activities and serves to diversify the Company’s revenue stream through its investments. The Investment Portfolio Group’s assets are broken down into four main groups:

	(1)	Whole loans, including all single-family residential loans held for investment other than discontinued products.
	(2)	Mortgage servicing-related assets, which include the following:

	•	MSRs, interest-only strips and residual securities,
	•	securities held as hedges of such assets, including principal-only securities, agency debentures, U.S. treasury bonds, and investment and non-investment grade securities, and
	•	loans held for sale that have been acquired through clean-up calls or through the Investment Portfolio Group’s customer retention programs.

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

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

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      In addition to generating revenue for the Company, the Investment Portfolio Group performs the mortgage servicing function. At December 31, 2003, total assets of our Investment Portfolio Group were $8.1 billion, of which 20% were mortgage servicing-related assets, 60% were whole loans, 19% were mortgage-backed securities, and 1% were discontinued products. Our policy is that all of our Investment Portfolio Group assets, including assets acquired from IndyMac Mortgage Bank or IndyMac Consumer Bank, must meet or exceed minimum targeted return requirements. In addition to the Investment Portfolio Group’s investments, certain investing activities also take place in the IndyMac Mortgage Bank and IndyMac Consumer Bank segments. These activities generate assets which include the investment in construction loans and HELOCs.

      For further information on the revenues earned and expenses incurred by each of our segments, refer to “Note 2 — 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 association, we are 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

      We 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 associations, we are 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 in 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. We are currently, and expect to remain, in compliance with QTL standards.

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Regulatory Capital Requirements

      OTS capital regulations require savings associations to satisfy three capital ratio requirements: tangible capital, Tier 1 core (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 core 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 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 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, and a leverage ratio of 5% or greater. Additionally, to qualify as a “well-capitalized institution,” a savings association’s Tier 1 risk-based capital, defined as core capital plus supplementary capital less portions of the association’s allowance for loan losses, must be equal to at least 6% of risk-weighted assets. We currently meet, and expect to continue to meet, all of the requirements of a “well-capitalized institution.”

      The OTS regulations contain prompt corrective action provisions that require certain mandatory 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 an opportunity to object to the proposed distribution if it believes that the distribution would not be advisable.

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      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 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 us 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. We 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 our 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, 2003, we had 3,883 full-time equivalent employees, including 371 temporary employees. We believe that we have generally good relations with our employees.

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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 mortgage-backed securities 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%. 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.

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ITEM 2.     PROPERTIES

      Our significant leased properties are as follows:

*	Commencing in 2004

      In addition to the above leased office space, we own the building that houses our mortgage banking headquarters, located in Pasadena, California, totaling 266,000 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 five banking offices, containing an aggregate of approximately 60,000 square feet, located in Southern California.

ITEM 3.     LEGAL PROCEEDINGS

      On February 3, 2004, Washington Mutual Mortgage Securities Corporation filed a lawsuit against IndyMac in the Superior Court of the State of California. The lawsuit involves a contractual dispute about standard representations and warranties on single-family mortgage loans that were sold to PNC Mortgage Corporation during the period 1997 to 2000, prior to Washington Mutual’s acquisition of PNC Mortgage Corporation in 2001. Washington Mutual alleges damages of approximately $50 million, the bulk of which includes the principal balance of the loans in question, with the remainder of the amount consisting of interest and alleged losses. The loans in question represent less than 1% of the nearly $6 billion in loans that were sold to PNC between 1997 and 2000. IndyMac maintains a reserve for potential losses related to its standard representations and warranties on loans sold and discusses such reserve in its financial statements filed with the SEC. Management believes that the resolution of this dispute will not have a material impact on the financial condition of IndyMac.

      We are involved in other litigation arising from normal operations. In the opinion of management, none of these matters are likely to have a materially adverse effect on our results of operations or financial condition.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of shareholders during the quarter ended December 31, 2003.

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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, 2003 and 2002.

      During the year ended December 31, 2002, we repurchased 6.2 million shares under our board-approved stock repurchase plan. No such repurchases were made during 2003. The Company repurchased 24,178 shares during 2003 from certain employees and officers under the Company’s internal benefit programs offered to employees and officers.

      As of February 23, 2004, 57,396,048 shares of IndyMac Bancorp Inc.’s common stock were held by approximately 1,853 shareholders of record.

DIVIDEND POLICY

      In January of 2003, our Board of Directors reestablished the declaration and payment of quarterly cash dividends. Dividends will be paid at the discretion of the Board of Directors, based on IndyMac’s operating performance and financial position, including earnings, capital and liquidity. It is management’s intent to continue paying cash dividends in the near future. Cash dividends declared were as follows during 2003:

      There were no dividends declared during 2002.

      In 2003, we funded the payment of dividends from the cash on hand at the holding company. The future principal source of funds for the dividend payments is anticipated to be the dividends we will receive from the Bank. The payment of dividends by the Bank is subject to regulatory requirements and review. See the caption “Capital Distribution Regulations” above 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 2003 fiscal year.

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ITEM 6.     SELECTED FINANCIAL DATA(1)

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	(1)	Prior to January of 2000, one of IndyMac’s subsidiaries, IndyMac, Inc. was not consolidated with IndyMac Bancorp for financial reporting or tax purposes, but was accounted for under the equity

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		method. Effective January of 2000, IndyMac Bancorp purchased all of IndyMac, Inc.’s outstanding common stock. Beginning January of 2000, IndyMac, Inc. was consolidated into the financial statements of IndyMac Bancorp as a wholly owned subsidiary.

	(2)	The provision for income taxes in 2000 was reduced by a one-time tax benefit totaling $36.1 million due to the termination of our REIT status.
	(3)	In accordance with SEC Staff Accounting Bulletin 55 (“SAB 55”), historical net income for 1999 has been adjusted for the pro forma provision for income taxes calculated assuming we were fully taxable. Pro forma earnings per share are similarly presented for the year ended December 31, 1999, reflecting the pro forma effect of the change in our tax status to a fully taxable entity effective in January of 2000. In accordance with SAB 55, historical net income per share is not presented, as it is not meaningful based upon our conversion from a REIT to a fully taxable entity effective January of 2000.
	(4)	Dividends declared per common share as a percentage of diluted earnings per share.
	(5)	Defined as operating expenses divided by net interest income and other income.
	(6)	Average equity divided by net interest income and other income.
	(7)	Efficiency ratio multiplied by the capital to net revenue ratio.
	(8)	Debt includes deposits.
	(9)	IndyMac Bank, F.S.B. (excludes unencumbered cash at the Parent Company available for investment in IndyMac Bank). Risk-based capital ratio is based on the regulatory standard risk weighting. With IndyMac’s additional subprime risk weightings, the ratios are 12.29%, 14.03%, 14.59%, and 12.26% for the years ended December 31, 2003, 2002, 2001 and 2000, respectively.

(10)	Represents the total loan portfolio excluding amounts of loans from discontinued product lines.
(11)	Represents entire servicing portfolio including IndyMac owned loans and loans subserviced for others on an interim basis.
(12)	Includes newly originated commitments on construction loans.

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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, operating through its three main segments, IndyMac Mortgage Bank, IndyMac Consumer Bank and the Investment Portfolio Group. The common denominator of our business is providing consumers with single-family residential (“SFR”) mortgages through relationships with each segment’s core customers via the channels in which each operates. IndyMac Mortgage Bank is focused on providing consumers with mortgage products through relationships with the Company’s business customers — mortgage brokers, mortgage bankers, financial institutions, real estate professionals and homebuilders. IndyMac Consumer Bank provides the platform for the mortgage and deposit services that IndyMac offers directly to consumers. The Investment Portfolio Group serves as the main link to customers whose mortgages we service. Through its investments in SFR mortgages, mortgage-backed securities and mortgage servicing rights (“MSRs”), the Investment Portfolio Group generates core spread and fee income and provides critical support to IndyMac’s mortgage lending operations.

      While our segments are structured to achieve synergies with our varying customer base and marketing strategies, our operating activities primarily consist of two broad categories: mortgage banking activities and investing activities. Both 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 activities tend to provide a source of revenues which 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 and HELOC loans held for investment and mortgage servicing in an effort to achieve greater balance between its mortgage banking activities and its core investing activities. We believe that our investing activities will increasingly act to stabilize IndyMac’s core income. In addition to its revenue contribution, the Investment Portfolio Group performs 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 cross-market customers with other Company products. Default management, which includes the processes of collections, loss mitigation, foreclosures, bankruptcies, 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 as a result of continued strong mortgage loan production, characterized IndyMac’s overall results for the year ended December 31, 2003. IndyMac earned $171 million, or $3.01 per share, during 2003, its highest earnings and earnings per share in its history. Loan production was at an all time high at $30 billion for the year. Additionally, we grew our average earning assets 48% compared to 2002.

      The fourth quarter of 2003 marked the beginning of what is expected to be a very significant transition in the mortgage industry, with the Mortgage Bankers Association of America (“MBAA”) estimating that mortgage production industry-wide will decline 47% in 2004 compared to 2003. In spite of this significant contraction in the market, we are forecasting our 2004 earnings per share to range from $2.90 to $3.25. See “Future Outlook” below for further information on our financial projections.

      The following tables summarize the Company’s financial results for the year ended December 31, 2003, illustrating the revenues earned in its mortgage banking, investing and financing activities by each of its divisions. The profitability of each operating segment is measured on a fully-leveraged basis after allocating capital based on regulatory capital rules. The Company uses a fund transfer pricing (“FTP”) methodology to

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      The following table summarizes the segment financial highlights for the year ended December 31, 2003: