INDYMAC BANCORP INC - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended March 31, 2004

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.

(Exact name of registrant as specified in its charter)


Delaware		95-3983415
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

155 North Lake Avenue, Pasadena, California (Address of principal executive offices)		91101-7211 (Zip Code)

Registrant’s telephone number, including area code:

(800) 669-2300

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 requirements for the past 90 days. Yes þ No o

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock outstanding as of April 23, 2004: 57,844,832 shares

FORM 10-Q QUARTERLY REPORT

For the Period Ended March 31, 2004

TABLE OF CONTENTS


		Page

PART I. FINANCIAL INFORMATION
	Forward-Looking Statements		2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2
	Highlights for the Quarter		2
	Overall Results		4
	Our Business		4
	Mortgage Banking Activities		15
	Loan Production		15
	Mortgage Production by Division and Channel		16
	Loan Sales		19
	Investing and HELOC Activities		23
	Investing Activities		24
	Construction Lending		31
	HELOC Portfolio		33
	Net Interest Income		34
	Overall Interest Rate Risk Management		36
	Credit Risk and Reserves		37
	General		37
	Secondary Market Reserve		40
	Operating Expenses		41
	Dividend Policy		41
	Future Outlook		41
	Liquidity and Capital Resources		42
	Overview		42
	Principal Sources of Cash		42
	Principal Uses of Cash		45
	Accumulated Other Comprehensive Loss		45
	Regulatory Capital Requirements		45
	Share Repurchases		46
	Off-Balance Sheet Arrangements		46
	Aggregate Contractual Obligations		47
	Key Operating Risks		48
	Interest Rate Risk		48
	Valuation Risk		48
	Credit Risk		48
	Liquidity Risk/ Access to Capital Markets		49
	Government Regulation and Monetary Policy		49
	Competition		50
	Other Risks		50
	Critical Accounting Policies		50
Item 3.	Quantitative and Qualitative Disclosure About Market Risk		51
Item 1.	Financial Statements (Unaudited)		52
	Consolidated Balance Sheets		52
	Consolidated Statements of Earnings		54
	Consolidated Statements of Shareholders’ Equity and Comprehensive Income		55
	Consolidated Statements of Cash Flows		56
	Notes to Consolidated Financial Statements		57
Item 4.	Controls and Procedures		62
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		62
Item 6.	Exhibits and Reports on Form 8-K		62
EXHIBIT 4.1
EXHIBIT 4.2
EXHIBIT 10.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains statements that 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 projected financial condition and results of operations, plans, objectives, 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 that 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. For further information on our key operating risks, refer to IndyMac’s annual report on Form 10-K for the year ended December 31, 2003.

References to “IndyMac Bancorp” or “the Parent Company” refer to the parent company alone while references to “IndyMac,” the “Company,” or “we” refer to IndyMac Bancorp, Inc. and its consolidated subsidiaries. References to “IndyMac Bank” or the “Bank” refer to our subsidiary IndyMac Bank, F.S.B. and its consolidated subsidiaries. The following discussion addresses the Company’s financial condition and results of operations for the three months ended March 31, 2004.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

HIGHLIGHTS FOR THE QUARTER

Highlights for the quarter ended March 31, 2004, were as follows:



			Three Months Ended

			March 31,		March 31,		December 31,
			2004		2003		2003


			(Dollars in millions, except per share data)
Income Statement
	Net interest income after provision for loan losses		$	92	$	60	$	94
	Gain on sale of loans		$	84	$	84	$	80
	Other income		$	9	$	13	$	4
	Net revenues		$	185	$	157	$	178
	Operating expenses		$	115	$	96	$	107
	Net earnings		$	42	$	37	$	43
Per Share Data
	Basic earnings per share		$	0.74	$	0.67	$	0.78
	Diluted earnings per share		$	0.70	$	0.66	$	0.75
	Dividends paid per share		$	0.25	$	0.10	$	0.20
	Book value per share at end of quarter		$	18.26	$	15.99	$	17.93
	Closing price per share		$	36.29	$	19.45	$	29.79
	Average common shares (in thousands)
		Basic		56,997		54,827		55,878
		Diluted		59,791		55,979		58,024



		Three Months Ended

		March 31,			March 31,			December 31,
		2004			2003			2003


		(Dollars in millions, except per share data)
Performance Ratios
	Return on average equity (annualized)		16.16	%		17.20	%		17.20	%
	Return on average assets (annualized)		1.16	%		1.49	%		1.24	%
	Dividend payout ratio(1)		35.71	%		14.93	%		26.67	%
	Net interest income to pretax income		135.53	%		103.29	%		137.70	%
	Average cost of funds		2.32	%		3.20	%		2.36	%
	Net interest margin		2.82	%		2.80	%		3.08	%
	Efficiency ratio(2)		62	%		60	%		59	%
	Capital to net revenue ratio(3)		1.40	%		1.36	%		1.37	%
	Capital adjusted efficiency ratio(4)		87	%		81	%		81	%
	Operating expenses to loan production		1.61	%		1.45	%		1.63	%
Balance Sheet and Asset Quality Ratios
	Debt to equity ratio(5)		12.7:1			9.7:1			12.0:1
	Core capital ratio(6)		7.50	%		9.14	%		7.56	%
	Risk-based capital ratio(6)		13.25	%		14.83	%		12.95	%
	Non-performing assets to total assets		0.75	%		1.03	%		0.76	%
	Allowance for loan losses to total loans held for investment		0.78	%		1.20	%		0.71	%
	Allowance for loan losses and other reserves to non-performing loans		80	%		83	%		87	%
	Allowance for loan losses to annualized net charge-offs		645	%		347	%		395	%
	Provision for loan losses to net charge-offs		74.3	%		85.8	%		104.9	%
	Provision to net charge-offs (core loan portfolio)(7)		40.0	%		115.9	%		150.8	%
Other Selected Items
	Loans serviced(8)	$	38,930		$	30,944		$	36,858
	Loan production(9)	$	7,146		$	6,585		$	6,577
	Pipeline of mortgage loans in process	$	5,949		$	6,044		$	4,116
	Loans sold	$	4,907		$	5,524		$	4,641
	Net margin on sale of loans		1.71	%		1.52	%		1.72	%

(1) Dividends declared per common share as a percentage of diluted earnings per share.

(2) Defined as operating expenses divided by net interest income and other income.

(3) Average equity divided by net interest income and other income.

(4) Efficiency ratio multiplied by the capital to net revenue ratio.

(5) Debt includes deposits.

(6) 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 12.61%, 13.76% and 12.29% for the quarters ended March 31, 2004, March 31, 2003 and December 31, 2003, respectively.

(7) Represents the total loan portfolio excluding amounts of loans from discontinued product lines.

(8) Represents entire servicing portfolio including IndyMac owned loans and loans subserviced for others on an interim basis.

(9) Includes newly originated commitments on construction loans.

OVERALL RESULTS

We believe IndyMac’s performance in the first quarter of 2004 was strong and marked a good start for us in this mortgage industry transition year. Our mortgage production increased 10% this quarter relative to the fourth quarter of 2003, outperforming the overall mortgage industry, which reflected a 7% decline in overall mortgage loans produced according to the Mortgage Bankers Association. Additionally, we continue to execute successfully our strategies to optimize our balance sheet and thrift infrastructure with growth of 6.0% and 5.6%, respectively, in our earning assets and mortgage loan servicing portfolio compared with the fourth quarter of 2003. Throughout all of this, we continued to focus on solid enterprise risk management and the mitigation of interest rate risk in a period of highly volatile interest rates.

Comparing first quarter 2004 to first quarter 2003, net revenues increased 18%, primarily driven by a 49% increase in net interest income, and operating expenses increased 20%, resulting in net earnings of $41.9 million, up 14% over the prior year.

OUR BUSINESS

IndyMac is structured to achieve synergies among its operations and enhance customer service. Operating through its four main segments, IndyMac Mortgage Bank, IndyMac Consumer Bank, Home Equity Division 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. 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 Home Equity Division was previously included in the Consumer Bank Segment and has been designated as a separate operating segment this quarter as this unit is now evaluated directly by our CEO in deciding resource allocations and assessing performance. The Home Equity Division is a product focused division that supports the production of home equity lines of credit (HELOCs) and other home equity products through all of IndyMac’s relationship and consumer direct production channels. 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 (“MBS”) 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 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 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 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 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.

The following tables summarize the Company’s financial results for the three months ended March 31, 2004, illustrating the revenues earned in its mortgage banking activities, investing and HELOC 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”) 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. The Retail Bank division within the Consumer Banking Group 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 unit. 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 three months ended March 31, 2004:


														Investment
					Mortgage			Consumer			Home Equity			Portfolio						Total
					Bank			Bank			Division			Group			Other			Company


					(Dollars in thousands)
Operating Results
Mortgage Banking Activities
Net interest income					$	29,632		$	4,488		$	—		$	7,680		$	—		$	41,800
Gain (loss) on sale of loans						57,773			20,347			—			13,810			(8,262	)		83,668
Other income (expense)						8,646			3,326			—			(2	)		137			12,107

	Net revenues (expense)					96,051			28,161			—			21,488			(8,125	)		137,575
	Operating expenses					42,217			19,850			—			687			—			62,754

		Pretax income (loss)				53,834			8,311			—			20,801			(8,125	)		74,821

Investing Activities
Net interest income						17,127			—			—			34,713			1,958			53,798
Provision for loan losses						(200	)		—			—			(1,197	)		(3	)		(1,400	)
Service fee (expense) income						—			—			—			(5,562	)		2,223			(3,339	)
(Loss) gain on sale of securities						—			—			—			(5,793	)		806			(4,987	)
Other income						1,341			—			—			1,239			708			3,288

	Net revenues					18,268			—			—			23,400			5,692			47,360
	Operating expenses					9,995			—			—			11,478			—			21,473

		Pretax income				8,273			—			—			11,922			5,692			25,887

HELOC Activities
Net interest income						2,946			1,288			746			—			—			4,980
Provision for loan losses						(72	)		(24	)		(4	)		—			—			(100	)
Service fee income						—			—			195			—			—			195
Other income						319			246			151			—			—			716

	Net revenues					3,193			1,510			1,088			—			—			5,791
	Operating expenses					422			277			911			—			—			1,610

		Pretax income				2,771			1,233			177			—			—			4,181

Financing and Other Activities
Net interest income (loss)						—			4,705			—			—			(11,350	)		(6,645	)
Other income						—			494			—			—			117			611

	Net revenues (expense)					—			5,199			—			—			(11,233	)		(6,034	)
	Operating expenses					—			5,035			—			—			24,514			29,549

		Pretax income (loss)				—			164			—			—			(35,747	)		(35,583	)

			Total pretax income (loss)			64,878			9,708			177			32,723			(38,180	)		69,306

				Net income (loss)	$	39,251		$	5,873		$	107		$	19,798		$	(23,099	)	$	41,930

Ratios
Percentage of assets						33.61	%		4.88	%		0.78	%		55.99	%		4.74	%		100	%
Percentage of total revenue (expense)						63.63	%		18.88	%		0.59	%		24.30	%		(7.40	)%		100	%
Percentage of pretax income (loss)						93.61	%		14.01	%		0.26	%		47.22	%		(55.10	)%		100	%
Balance Sheet Data
Average interest-earning assets(1)					$	4,800,908		$	666,902		$	104,253		$	7,489,153		$	325,677		$	13,386,893
Average total assets					$	4,889,239		$	709,612		$	113,104		$	8,145,785		$	690,632		$	14,548,372
Allocated capital					$	324,541		$	50,406		$	10,040		$	478,766		$	179,569		$	1,043,322
Capital allocated to mortgage banking activities					$	156,107		$	27,147		$	—		$	18,877		$	—		$	202,131
Capital allocated to investing activities					$	134,090		$	—		$	—		$	459,889		$	—		$	593,979
Capital allocated to HELOC activities					$	34,344		$	22,019		$	10,040		$	—		$	—		$	66,403
Capital allocated to financing and other activities					$	—		$	1,240		$	—		$	—		$	179,569		$	180,809
Allocated capital/total average assets						6.64	%		7.10	%		8.88	%		5.88	%		26.00	%		7.17	%
Loans Produced					$	5,862,720		$	967,021		$	34,716		$	281,642		$	—		$	7,146,099
Purchase mortgages						46	%		10	%		N/A			0	%		N/A			39	%
Cash out refinance mortgages						35	%		57	%		N/A			0	%		N/A			37	%
Rate and term refinance mortgages						19	%		33	%		N/A			100	%		N/A			24	%
Performance Ratios
Return on equity (ROE)						49	%		47	%		4	%		17	%		N/A			16	%
ROE — mortgage banking activities						84	%		74	%		—			268	%		N/A			90	%
ROE — investing activities						15	%		—			—			6	%		N/A			11	%
ROE — HELOC activities						20	%		14	%		4	%		—			N/A			15	%
ROE — financing and other activities						—			32	%		—			—			N/A			(48	)%
Return on assets (ROA)						3.23	%		3.33	%		0.38	%		0.98	%		N/A			1.16	%
Net interest margin						4.16	%		6.32	%		2.88	%		2.28	%		N/A			2.82	%
Efficiency ratio						45	%		72	%		83	%		26	%		N/A			62	%
Capital adjusted efficiency ratio						31	%		26	%		192	%		69	%		N/A			87	%
Average FTE						1,947			857			15			481			621			3,921


(1)	The allowance for loan losses is excluded from average loan balances for purposes of calculating average interest-earning assets.

The following table provides additional detail on the segment results for IndyMac Mortgage Bank for the three months ended March 31, 2004:



					Relationship Businesses —
					IndyMac Mortgage Bank

					B2B			B2R			HCL			HBD			Total


					(Dollars in thousands)
Operating Results
Mortgage Banking Activities
Net interest income					$	24,332		$	546		$	3,880		$	874		$	29,632
Gain on sale of loans						50,573			1,664			3,866			1,670			57,773
Other income						6,393			253			1,761			239			8,646

	Net revenues					81,298			2,463			9,507			2,783			96,051
	Operating expenses					35,737			3,585			779			2,116			42,217

		Pretax income (loss)				45,561			(1,122	)		8,728			667			53,834

Investing Activities
Net interest income						—			—			10,297			6,830			17,127
Provision for loan losses						—			—			(100	)		(100	)		(200	)
Service fee income						—			—			—			—			—
Loss on sale of securities						—			—			—			—			—
Other income						—			—			1,241			100			1,341

	Net revenues					—			—			11,438			6,830			18,268
	Operating expenses					—			—			7,968			2,027			9,995

		Pretax income				—			—			3,470			4,803			8,273

HELOC Activities
Net interest income						2,707			126			39			74			2,946
Provision for loan losses						(67	)		(3	)		(1	)		(1	)		(72	)
Service fee income						—			—			—			—			—
Other income						284			21			9			5			319

	Net revenues					2,924			144			47			78			3,193
	Operating expenses					378			30			6			8			422

		Pretax income				2,546			114			41			70			2,771

Financing and Other Activities
Net interest income						—			—			—			—			—
Other income						—			—			—			—			—

	Net revenues					—			—			—			—			—
	Operating expenses					—			—			—			—			—

		Pretax income				—			—			—			—			—

			Total pretax income (loss)			48,107			(1,008	)		12,239			5,540			64,878

				Net income (loss)	$	29,105		$	(610	)	$	7,405		$	3,351		$	39,251

Ratios
Percentage of assets						17.80	%		0.54	%		10.49	%		4.78	%		33.61	%
Percentage of total revenue						45.60	%		1.41	%		11.37	%		5.25	%		63.63	%
Percentage of pretax income (loss)						69.41	%		(1.45	)%		17.66	%		7.99	%		93.61	%
Balance Sheet Data
Average interest-earning assets					$	2,514,066		$	76,873		$	1,519,899		$	690,070		$	4,800,908
Average total assets					$	2,590,331		$	78,492		$	1,525,436		$	694,980		$	4,889,239
Allocated capital					$	169,220		$	5,157		$	80,078		$	70,086		$	324,541
Capital allocated to mortgage banking activities					$	137,902		$	3,277		$	10,009		$	4,919		$	156,107
Capital allocated to investing activities					$	—		$	—		$	69,654		$	64,436		$	134,090
Capital allocated to HELOC activities					$	31,318		$	1,880		$	415		$	731		$	34,344
Capital allocated to financing and other activities					$	—		$	—		$	—		$	—		$	—
Allocated capital/total average assets						6.53	%		6.57	%		5.25	%		10.08	%		6.64	%
Loans Produced					$	4,472,381		$	109,027		$	872,339		$	408,973		$	5,862,720
Purchase mortgages						34	%		51	%		99	%		84	%		46	%
Cash out refinance mortgages						43	%		34	%		0	%		11	%		35	%
Rate and term refinance mortgages						23	%		15	%		1	%		5	%		19	%
Performance Ratios
Return on equity (ROE)						69	%		(48	)%		37	%		19	%		49	%
ROE — mortgage banking activities						80	%		(83	)%		212	%		33	%		84	%
ROE — investing activities						—			—			12	%		18	%		15	%
ROE — HELOC activities						20	%		15	%		24	%		23	%		20	%
ROE — financing and other activities						—			—			—			—			—
Return on assets (ROA)						4.52	%		(3.13	)%		1.95	%		1.94	%		3.23	%
Net interest margin						4.33	%		3.52	%		3.76	%		4.53	%		4.16	%
Efficiency ratio						43	%		139	%		41	%		42	%		45	%
Capital adjusted efficiency ratio						22	%		68	%		39	%		76	%		31	%
Average FTE						1,378			134			278			157			1,947



IndyMac Mortgage Bank Divisions

B2B		Business-to-Business division, its major lending channels are via relationships with mortgage professionals: mortgage brokers, mortgage bankers and financial institutions
B2R		Business-to-Realtor division, provides mortgage loan services through relationships with Realtors
HCL		Home Construction Lending division, provides construction-to-permanent mortgages and lot loans to individuals who are in the process of building their own homes, through IndyMac’s B2B relationships and directly with consumers
HBD		Homebuilder division, provides financing to subdivision developers and generates mortgage loans through its relationships with these entities

The following table provides additional details on the segment results for IndyMac Consumer Bank and Home Equity Division for the three months ended March 31, 2004:



					Consumer Direct Businesses —
					IndyMac Consumer Bank
														Home Equity
					B2C			Retail Bank			Total			Division


					(Dollars in thousands)
Operating Results
Mortgage Banking Activities
Net interest income					$	4,171		$	317		$	4,488		$	—
Gain on sale of loans						18,706			1,641			20,347			—
Other income						3,132			194			3,326			—

	Net revenues					26,009			2,152			28,161			—
	Operating expenses					18,362			1,488			19,850			—

		Pretax income				7,647			664			8,311			—

Investing Activities
Net interest income						—			—			—			—
Provision for loan losses						—			—			—			—
Service fee income						—			—			—			—
Loss on sale of securities						—			—			—			—
Other income						—			—			—			—

	Net revenues					—			—			—			—
	Operating expenses					—			—			—			—

		Pretax income				—			—			—			—

HELOC Activities
Net interest income						1,158			130			1,288			746
Provision for loan losses						(21	)		(3	)		(24	)		(4	)
Service fee income						—			—			—			195
Other income						226			20			246			151

	Net revenues					1,363			147			1,510			1,088
	Operating expenses					248			29			277			911

		Pretax income				1,115			118			1,233			177

Financing and Other Activities
Net interest income						—			4,705			4,705			—
Other income						—			494			494			—

	Net revenues					—			5,199			5,199			—
	Operating expenses					—			5,035			5,035			—

		Pretax income				—			164			164			—

			Total pretax income			8,762			946			9,708			177

				Net income	$	5,301		$	572		$	5,873		$	107

Ratios
Percentage of assets						4.31	%		0.57	%		4.88	%		0.78	%
Percentage of total revenue						14.82	%		4.06	%		18.88	%		0.59	%
Percentage of pretax income						12.64	%		1.36	%		14.01	%		0.26	%
Balance Sheet Data
Average interest-earning assets					$	605,488		$	61,414		$	666,902		$	104,253
Average total assets					$	626,627		$	82,985		$	709,612		$	113,104
Allocated capital					$	45,212		$	5,194		$	50,406		$	10,040
Capital allocated to mortgage banking activities					$	25,478		$	1,669		$	27,147		$	—
Capital allocated to investing activities					$	—		$	—		$	—		$	—
Capital allocated to HELOC activities					$	19,735		$	2,284		$	22,019		$	10,040
Capital allocated to financing and other activities					$	—		$	1,240		$	1,240		$	—
Allocated capital/total average assets						7.22	%		6.26	%		7.10	%		8.88	%
Loans Produced(1)					$	878,494		$	88,527		$	967,021		$	34,716
Purchase mortgages						8	%		26	%		10	%		N/A
Cash out refinance mortgages						58	%		51	%		57	%		N/A
Rate and term refinance mortgages						34	%		23	%		33	%		N/A
Performance Ratios
Return on equity (ROE)						47	%		44	%		47	%		4	%
ROE — mortgage banking activities						73	%		97	%		74	%		—
ROE — investing activities						—			—			—			—
ROE — HELOC activities						14	%		13	%		14	%		4	%
ROE — financing and other activities						—			32	%		32	%		—
Return on assets (ROA)						3.40	%		N/A			3.33	%		0.38	%
Net interest margin						3.54	%		N/A			6.32	%		2.88	%
Efficiency ratio						68	%		87	%		72	%		83	%
Capital adjusted efficiency ratio						28	%		15	%		26	%		192	%
Average FTE						599			258			857			15




IndyMac Consumer Bank Divisions

B2C		Business-to-Consumer division, offers SFR mortgage loans directly to consumers via the Internet and centralized call center
Retail Bank		Retail Bank division, offers direct lending and deposit products to our depositors through our retail branch network, on-line contact center, and institutional money desk

The following table provides additional details on the segment results for the Investment Portfolio Group for the three months ended March 31, 2004:



					Investment Portfolio Group

					Mortgage
					Servicing-Related			SFR Mortgage						Discontinued
					Assets(1)			Loans(2)			MBS(3)			Products(4)			Total


					(Dollars in thousands)
Operating Results
Mortgage Banking Activities
Net interest income					$	7,680		$	—		$	—		$	—		$	7,680
Gain on sale of loans						13,514			296			—			—			13,810
Other (loss) income						(2	)		—			—			—			(2	)

	Net revenues					21,192			296			—			—			21,488
	Operating expenses					687			—			—			—			687

		Pretax income				20,505			296			—			—			20,801

Investing Activities
Net interest income						7,234			18,334			8,044			1,101			34,713
Provision for loan losses						—			(97	)		—			(1,100	)		(1,197	)
Service fee expense						(5,562	)		—			—			—			(5,562	)
(Loss) gain on sale of securities						(6,693	)		—			900			—			(5,793	)
Other income						484			755			—			—			1,239

	Net (expense) revenues					(4,537	)		18,992			8,944			1			23,400
	Operating expenses					9,203			918			305			1,052			11,478

		Pretax (loss) income				(13,740	)		18,074			8,639			(1,051	)		11,922

HELOC Activities
Net interest income						—			—			—			—			—
Provision for loan losses						—			—			—			—			—
Service fee income						—			—			—			—			—
Other income						—			—			—			—			—

	Net revenues					—			—			—			—			—
	Operating expenses					—			—			—			—			—

		Pretax income				—			—			—			—			—

Financing and Other Activities
Net interest income						—			—			—			—			—
Other income						—			—			—			—			—

	Net revenues					—			—			—			—			—
	Operating expenses					—			—			—			—			—

		Pretax income				—			—			—			—			—

			Total pretax income (loss)			6,765			18,370			8,639			(1,051	)		32,723

				Net income (loss)	$	4,093		$	11,114		$	5,227		$	(636	)	$	19,798

Ratios
Percentage of assets						11.13	%		33.34	%		11.11	%		0.42	%		55.99	%
Percentage of total revenue						9.02	%		10.44	%		4.84	%		0.00	%		24.30	%
Percentage of pretax income (loss)						9.76	%		26.51	%		12.47	%		(1.52	)%		47.22	%
Balance Sheet Data
Average interest-earning assets					$	991,723		$	4,839,307		$	1,590,575		$	67,548		$	7,489,153
Average total assets					$	1,618,683		$	4,850,752		$	1,615,815		$	60,535		$	8,145,785
Allocated capital					$	200,874		$	234,973		$	37,009		$	5,910		$	478,766
Capital allocated to mortgage banking activities					$	18,877		$	—		$	—		$	—		$	18,877
Capital allocated to investing activities					$	181,997		$	234,973		$	37,009		$	5,910		$	459,889
Capital allocated to HELOC activities					$	—		$	—		$	—		$	—		$	—
Capital allocated to financing and other activities					$	—		$	—		$	—		$	—		$	—
Allocated capital/ total average assets						12.41	%		4.84	%		2.29	%		9.76	%		5.88	%
Loans Produced					$	281,642		$	—		$	—		$	—		$	281,642
Performance Ratios
Return on equity (ROE)						8	%		19	%		57	%		(43	)%		17	%
ROE — mortgage banking activities						264	%		—			—			—			268	%
ROE — investing activities						(18	)%		19	%		57	%		(43	)%		6	%
ROE — HELOC activities						—			—			—			—			—
ROE — financing and other activities						—			—			—			—			—
Return on assets (ROA)						1.02	%		0.92	%		1.30	%		(4.23	)%		0.98	%
Net interest margin						6.05	%		1.52	%		2.03	%		6.56	%		2.28	%
Efficiency ratio						59	%		5	%		3	%		96	%		26	%
Capital adjusted efficiency ratio						179	%		14	%		4	%		128	%		69	%
Average FTE						437			11			4			29			481

(1) Mortgage servicing-related assets include the following: (i) MSRs, interest-only strips and residual securities, (ii) securities held as hedges of such assets, including principal-only securities, agency debentures and U.S. treasury bonds, (iii) loans acquired through clean-up calls or through the Investment Portfolio Group’s customer retention programs, and (iv) investment and non-investment grade securities.

(2) Assets include all single-family residential loans held for investment other than discontinued products.

(3) Assets include AAA-rated agency and private label MBS.

(4) Discontinued products are home improvement and manufactured housing loans.

The following table provides additional details on the segment results for all others for the three months ended March 31, 2004:


					Treasury						Corporate						Total
					Group(1)			Subtotal			Overhead			Eliminations			Company


					(Dollars in thousands)
Operating Results
Mortgage Banking Activities
Net interest income					$	—		$	41,800		$	—		$	—		$	41,800
Gain (loss) on sale of loans						—			91,930			—			(8,262	)		83,668
Other income						—			11,970			—			137			12,107

	Net revenues (expense)					—			145,700			—			(8,125	)		137,575
	Operating expenses					—			62,754			—			—			62,754

		Pretax income (loss)				—			82,946			—			(8,125	)		74,821

Investing Activities
Net interest income						—			51,840			—			1,958			53,798
Provision for loan losses						—			(1,397	)		—			(3	)		(1,400	)
Service fee (expense) income						—			(5,562	)		—			2,223			(3,339	)
(Loss) gain on sale of securities						—			(5,793	)		—			806			(4,987	)
Other income						—			2,580			708			—			3,288

	Net revenues					—			41,668			708			4,984			47,360
	Operating expenses					—			21,473			—			—			21,473

		Pretax income				—			20,195			708			4,984			25,887

HELOC Activities
Net interest income						—			4,980			—			—			4,980
Provision for loan losses						—			(100	)		—			—			(100	)
Service fee income						—			195			—			—			195
Other income						—			716			—			—			716

	Net revenues					—			5,791			—			—			5,791
	Operating expenses					—			1,610			—			—			1,610

		Pretax income				—			4,181			—			—			4,181

Financing and Other Activities
Net interest loss						(10,682	)		(5,977	)		(668	)		—			(6,645	)
Other income						114			608			—			3			611

	Net (expense) revenues					(10,568	)		(5,369	)		(668	)		3			(6,034	)
	Operating expenses					873			5,908			23,641			—			29,549

		Pretax (loss) income				(11,441	)		(11,277	)		(24,309	)		3			(35,583	)

			Total pretax (loss) income			(11,441	)		96,045			(23,601	)		(3,138	)		69,306

				Net (loss) income	$	(6,922	)	$	58,107		$	(14,279	)	$	(1,898	)	$	41,930

Ratios
Percentage of assets						3.55	%		98.81	%		1.19	%		0.00	%		100	%
Percentage of total (expense) revenue						(5.72	)%		101.68	%		0.02	%		(1.70	)%		100	%
Percentage of pretax (loss) income						(16.51	)%		138.59	%		(34.06	)%		(4.53	)%		100	%
Balance Sheet Data
Average interest-earning assets					$	317,084		$	13,378,300		$	8,593		$	—		$	13,386,893
Average total assets					$	516,485		$	14,374,225		$	174,147		$	—		$	14,548,372
Allocated capital					$	27,378		$	891,131		$	152,191		$	—		$	1,043,322
Capital allocated to mortgage banking activities					$	—		$	202,131		$	—		$	—		$	202,131
Capital allocated to investing activities					$	—		$	593,979		$	—		$	—		$	593,979
Capital allocated to HELOC activities					$	—		$	66,403		$	—		$	—		$	66,403
Capital allocated to financing and other activities					$	27,378		$	28,618		$	152,191		$	—		$	180,809
Allocated capital/ total average assets						5.30	%		6.20	%		87.39	%		—			7.17	%
Loans Produced					$	—		$	7,146,099		$	—		$	—		$	7,146,099
Purchase mortgages						N/A			N/A			N/A			N/A			39	%
Cash out refinance mortgages						N/A			N/A			N/A			N/A			37	%
Rate and term refinance mortgages						N/A			N/A			N/A			N/A			24	%
Performance Ratios
Return on equity (ROE)						N/A			26	%		N/A			N/A			16	%
ROE — mortgage banking						N/A			100	%		N/A			N/A			90	%
ROE — investing activities						N/A			8	%		N/A			N/A			11	%
ROE — HELOC activities						N/A			15	%		N/A			N/A			15	%
ROE — financing and other activities						N/A			(96	)%		N/A			N/A			(48	)%
Return on assets (ROA)						N/A			1.63	%		N/A			N/A			1.16	%
Net interest margin						N/A			2.79	%		N/A			N/A			2.82	%
Efficiency ratio						N/A			48	%		N/A			N/A			62	%
Capital adjusted efficiency ratio						N/A			57	%		N/A			N/A			87	%
Average FTE						25			3,325			596			N/A			3,921

(1) During the three months ended March 31, 2004, the Treasury Group reported net interest expense of $10.7 million. This amount includes interest expenses related to the trust preferred debentures issued by the Company in 2003 and 2001, which is not allocated to the business units. The Treasury Group also credits the Retail Bank and Investment Portfolio Group amounts in addition to their normal FTP credit to reward their raising of core deposits. Additionally, the net expense in Treasury reflects the cost of maintaining adequate corporate liquidity, as well as certain fixed rate deposits with longer maturities raised in prior years, the higher cost of which is not allocated to the business units.

The following table compares the quarterly detail segment results of operations by period:



	Relationship Businesses — IndyMac Mortgage Bank

	B2B			B2R			HCL			HBD			Total


	(Dollars in thousands)
Mortgage Banking Activities
Q1 04 — Pretax income (loss)	$	45,561		$	(1,122	)	$	8,728		$	667		$	53,834
Q4 03 — Pretax income (loss)		44,648			(159	)		13,161			1,087			58,737
Annualized Percent Change		8	%		(2,423	)%		(135	)%		(155	)%		(33	)%
Q1 03 — Pretax income (loss)		55,221			(197	)		8,363			882			64,269
Percent Change		(17	)%		(470	)%		4	%		(24	)%		(16	)%
Investing Activities
Q1 04 — Pretax income		—			—			3,470			4,803			8,273
Q4 03— Pretax income		—			—			3,467			5,076			8,543
Annualized Percent Change		NM			NM			0	%		(22	)%		(13	)%
Q1 03 — Pretax income		—			—			3,820			5,491			9,311
Percent Change		NM			NM			(9	)%		(13	)%		(11	)%
HELOC Activities
Q1 04 — Pretax income		2,546			114			41			70			2,771
Q4 03 — Pretax income		1,634			55			34			41			1,764
Annualized Percent Change		223	%		429	%		82	%		283	%		228	%
Q1 03 — Pretax income		928			79			52			7			1,066
Percent Change		174	%		44	%		(21	)%		900	%		160	%
Financing and Other Activities
Q1 04 — Pretax income		—			—			—			—			—
Q4 03 — Pretax income		—			—			—			—			—
Q1 03 — Pretax income		—			—			—			—			—
Net Income
Q1 04 — Net income (loss)		29,105			(610	)		7,405			3,351			39,251
Q4 03 — Net income (loss)		28,001			(63	)		10,081			3,753			41,772
Annualized Percent Change		16	%		(3,473	)%		(106	)%		(43	)%		(24	)%
Q1 03 — Net income (loss)		33,970			(71	)		7,402			3,860			45,161
Percent Change		(14	)%		(759	)%		0	%		(13	)%		(13	)%
Performance Ratios
Q1 04
ROE		69	%		(48	)%		37	%		19	%		49	%
ROA		4.52	%		(3.13	)%		1.95	%		1.94	%		3.23	%
NIM		4.33	%		3.52	%		3.76	%		4.53	%		4.16	%
Efficiency ratio		43	%		139	%		41	%		42	%		45	%
Capital adjusted efficiency ratio		22	%		68	%		39	%		76	%		31	%
Average FTE		1,378			134			278			157			1,947
Q4 03
ROE		73	%		(4	)%		55	%		23	%		56	%
ROA		4.77	%		(0.30	)%		2.95	%		2.32	%		3.76	%
NIM		4.24	%		4.23	%		4.06	%		4.90	%		4.28	%
Efficiency ratio		41	%		102	%		35	%		37	%		41	%
Capital adjusted efficiency ratio		20	%		44	%		25	%		60	%		26	%
Average FTE		1,411			146			258			137			1,952
Q1 03
ROE		95	%		(4	)%		49	%		22	%		65	%
ROA		6.28	%		(0.26	)%		2.67	%		2.33	%		4.47	%
NIM		4.66	%		4.04	%		4.39	%		4.94	%		4.62	%
Efficiency ratio		34	%		102	%		35	%		33	%		36	%
Capital adjusted efficiency ratio		14	%		41	%		28	%		58	%		22	%
Average FTE		1,074			145			211			90			1,520

The Mortgage Bank segment’s net income decreased by 6%, or $2.5 million compared to the fourth quarter 2003, and 13% or $5.9 million from the first quarter 2003. The decrease was primarily due to the increase in operating expenses, partially offset by the increase in net interest income. Our operating expenses increased as we expanded our sales force to support the continuing growth in our mortgage production. Additionally, we incurred additional marketing costs to promote our product offerings and gain market share. The increase in net interest income was attributable to the increase in average interest-earning assets, as we sold a smaller percentage of loans to loans produced while our production volume went up.

The following table compares the quarterly detail segment results of operations by period, continued:



	Consumer Direct Businesses —
	IndyMac Consumer Bank
										Home Equity
	B2C			Retail Bank			Total			Division


	(Dollars in thousands)
Mortgage Banking Activities
Q1 04 — Pretax income	$	7,647		$	664		$	8,311		$	—
Q4 03 — Pretax income		8,406			368			8,774			—
Annualized Percent Change		(36	)%		322	%		(21	)%		—
Q1 03 — Pretax income		16,249			674			16,923			—
Percent Change		(53	)%		(1	)%		(51	)%		—
Investing Activities
Q1 04 — Pretax income		—			—			—			—
Q4 03 — Pretax income		—			—			—			—
Annualized Percent Change		NM			NM				%		—
Q1 03 — Pretax income		—			—			—			—
Percent Change		NM			NM				%		—
HELOC Activities
Q1 04 — Pretax income		1,115			118			1,233			177
Q4 03 — Pretax income		604			45			649			153
Annualized Percent Change		338	%		649	%		360	%		63	%
Q1 03 — Pretax income		472			78			550			(560	)
Percent Change		136	%		51	%		124	%		132	%
Financing and Other Activities
Q1 04 — Pretax income		—			164			164			—
Q4 03 — Pretax income		—			209			209			—
Q1 03 — Pretax loss		—			(3,344	)		(3,344	)		—
Net Income
Q1 04 — Net income		5,301			572			5,873			107
Q4 03 — Net income		5,451			376			5,827			93
Annualized Percent Change		(11	)%		209	%		3	%		60	%
Q1 03 — Net income (loss)		10,116			(1,568	)		8,548			(339	)
Percent Change		(48	)%		136	%		(31	)%		132	%
Performance Ratios
Q1 04
ROE		47	%		44	%		47	%		4	%
ROA		3.40	%		—			3.33	%		0.38	%
NIM		3.54	%		—			6.32	%		2.88	%
Efficiency ratio		68	%		87	%		72	%		83	%
Capital adjusted efficiency ratio		28	%		15	%		26	%		192	%
Average FTE		599			258			857			15
Q4 03
ROE		50	%		31	%		48	%		5	%
ROA		3.51	%		NM			3.33	%		0.46	%
NIM		3.60	%		NM			6.61	%		3.15	%
Efficiency ratio		63	%		91	%		69	%		62	%
Capital adjusted efficiency ratio		27	%		15	%		25	%		184	%
Average FTE		613			251			864			15
Q1 03
ROE		94	%		(73	)%		66	%		(84	)%
ROA		6.54	%		NM			4.97	%		(8.49	)%
NIM		3.89	%		NM			4.75	%		(7.55	)%
Efficiency ratio		46	%		176	%		59	%		226	%
Capital adjusted efficiency ratio		16	%		114	%		22	%		229	%
Average FTE		553			202			755			9

The Consumer Bank segment’s first quarter 2004 net income was comparable to the fourth quarter 2003, while decreased by $2.7 million compared to the first quarter a year ago. The decrease in net income year over year was primarily due to lower mortgage production, consistent with the overall market trends.

The Home Equity Division (the Division) generated net income of $107,000 during the first quarter 2004 as compared to a net income of $93,000 in the fourth quarter 2003, and a net loss of $339,000 in the first quarter 2003. The increase in net income from both quarters was driven by the increase in net interest income, resulting from increase in average interest-earning assets as the Division continues to grow.

The following table compares the quarterly detail segment results of operations by period, continued:



	Investment Portfolio Group

	Mortgage
	Servicing-			SFR
	Related			Mortgage						Discontinued
	Assets			Loans			MBS			Products			Total


	(Dollars in thousands)
Mortgage Banking Activities
Q1 04 — Pretax income	$	20,505		$	296		$	—		$	—		$	20,801
Q4 03 — Pretax income		29,366			1,593			—			—			30,959
Annualized Percent Change		(121	)%		(326	)%		—			—			(131	)%
Q1 03 — Pretax income		11,578			—			—			—			11,578
Percent Change		77	%		—			—			—			80	%
Investing Activities
Q1 04 — Pretax (loss) income		(13,740	)		18,074			8,639			(1,051	)		11,922
Q4 03 — Pretax (loss) income		(12,949	)		15,295			6,838			(786	)		8,398
Annualized Percent Change		(24	)%		73	%		105	%		(135	)%		168	%
Q1 03 — Pretax (loss) income		(4,878	)		6,453			(2,461	)		(842	)		(1,728	)
Percent Change		(182	)%		180	%		451	%		(25	)%		790	%
HELOC Activities
Q1 04 — Pretax income		—			—			—			—			—
Q4 03 — Pretax income		—			—			—			—			—
Annualized Percent Change		—			—			—			—			—
Q1 03 — Pretax income		—			—			—			—			—
Percent Change		—			—			—			—			—
Financing and Other Activities
Q1 04 — Pretax income		—			—			—			—			—
Q4 03 — Pretax income		—			—			—			—			—
Q1 03 — Pretax income		—			—			—			—			—
Net Income
Q1 04 — Net income (loss)		4,093			11,114			5,227			(636	)		19,798
Q4 03 — Net income (loss)		9,932			10,217			4,137			(476	)		23,810
Annualized Percent Change		(235	)%		35	%		105	%		(134	)%		(67	)%
Q1 03 — Net income (loss)		4,054			3,904			(1,489	)		(509	)		5,960
Percent Change		1	%		185	%		451	%		(25	)%		232	%
Performance Ratios
Q1 04
ROE		8	%		19	%		57	%		(43	)%		17	%
ROA		1.02	%		0.92	%		1.30	%		(4.23	)%		0.98	%
NIM		6.05	%		1.52	%		2.03	%		6.56	%		2.28	%
Efficiency ratio		59	%		5	%		3	%		96	%		26	%
Capital adjusted efficiency ratio		179	%		14	%		4	%		128	%		69	%
Average FTE		437			11			4			29			481
Q4 03
ROE		18	%		20	%		52	%		(29	)%		20	%
ROA		1.75	%		0.96	%		1.13	%		(2.89	)%		1.18	%
NIM		6.00	%		1.61	%		2.04	%		7.21	%		2.70	%
Efficiency ratio		37	%		6	%		4	%		65	%		22	%
Capital adjusted efficiency ratio		80	%		17	%		5	%		79	%		48	%
Average FTE		396			9			3			33			441
Q1 03
ROE		8	%		20	%		(14	)%		(25	)%		7	%
ROA		1.11	%		0.83	%		(0.41	)%		(2.42	)%		0.49	%
NIM		5.12	%		1.43	%		(0.84	)%		7.04	%		1.72	%
Efficiency ratio		54	%		10	%		(7	)%		55	%		46	%
Capital adjusted efficiency ratio		183	%		27	%		32	%		70	%		180	%
Average FTE		404			6			4			36			450

The Investment Portfolio Group segment’s net income in the first quarter of 2004 increased $13.8 million compared to the first quarter of 2003. The increase was largely due to the net interest income and gain on sale of loans from the clean-up call activities and the servicing retention program implemented during 2003. This increase was somewhat offset by declines in servicing income due to declining interest rates in the first quarter 2004. However, compared to the fourth quarter 2003, the net income decreased due to lesser clean-up call activities and acquiring lower yielding loans from clean-up calls, resulting in reductions in gain on sale of loans and net interest income, partially offset by the improvements on losses on service fee, net of hedges.

The following table compares the quarterly detail segment results of operations by period, continued:


	Treasury						Corporate						Total
	Group			Subtotal			Overhead			Eliminations			Company


	(Dollars in thousands)
Mortgage Banking Activities
Q1 04 — Pretax income (loss)	$	—		$	82,946		$	—		$	(8,125	)	$	74,821
Q4 03 — Pretax income (loss)		—			98,470			—			(16,248	)		82,222
Annualized Percent Change		—			(63	)%		—			200	%		(36	)%
Q1 03 — Pretax income (loss)		—			92,770			—			(7,771	)		84,999
Percent Change		—			(11	)%		—			(5	)%		(12	)%
Investing Activities
Q1 04 — Pretax income		—			20,195			708			4,984			25,887
Q4 03 — Pretax income		—			16,941			1			3,128			20,070
Annualized Percent Change		—			77	%		NM			237	%		116	%
Q1 03 — Pretax income		—			7,583			—			1,081			8,664
Percent Change		—			166	%		—			361	%		199	%
HELOC Activities
Q1 04 — Pretax income		—			4,181			—			—			4,181
Q4 03 — Pretax income		—			2,566			—			—			2,566
Annualized Percent Change		—			252	%		—			—			252	%
Q1 03 — Pretax income		—			1,056			—			—			1,056
Percent Change		—			296	%		—			—			296	%
Financing and Other Activities
Q1 04 — Pretax income		(11,441	)		(11,277	)		(24,309	)		3			(35,583	)
Q4 03 — Pretax income		(10,815	)		(10,606	)		(23,127	)		3			(33,730	)
Q1 03 — Pretax income		(9,788	)		(13,132	)		(20,567	)		—			(33,699	)
Net Income
Q1 04 — Net (loss) income		(6,922	)		58,107			(14,279	)		(1,898	)		41,930
Q4 03 — Net (loss) income		(6,543	)		64,959			(13,710	)		(7,936	)		43,313
Annualized Percent Change		(23	)%		(42	)%		(17	)%		304	%		(13	)%
Q1 03 — Net (loss) income		(5,922	)		53,408			(12,443	)		(4,048	)		36,917
Percent Change		(17	)%		9	%		(15	)%		53	%		14	%
Performance Ratios
Q1 04
ROE		—			26	%		—			—			16	%
ROA		—			1.63	%		—			—			1.16	%
NIM		—			2.79	%		—			—			2.82	%
Efficiency ratio		—			48	%		—			—			62	%
Capital adjusted efficiency ratio		—			57	%		—			—			87	%
Average FTE		25			3,325			596			—			3,921
Q4 03
ROE		—			31	%		—			—			17	%
ROA		—			1.88	%		—			—			1.24	%
NIM		—			3.07	%		—			—			3.08	%
Efficiency ratio		—			43	%		—			—			59	%
Capital adjusted efficiency ratio		—			46	%		—			—			81	%
Average FTE		22			3,294			560			—			3,854
Q1 03
ROE		—			32	%		—			—			17	%
ROA		—			2.19	%		—			—			1.49	%
NIM		—			2.77	%		—			—			2.80	%
Efficiency ratio		—			45	%		—			—			60	%
Capital adjusted efficiency ratio		—			46	%		—			—			81	%
Average FTE		22			2,756			529			—			3,285

MORTGAGE BANKING ACTIVITIES

Loan Production

During the first three months of 2004, the Company produced $7.1 billion of loans, which was a 9% increase over the $6.6 billion of loans produced during the first and fourth quarters of 2003. Our focus on less cyclical products, such as Alt-A, subprime, HELOCs and consumer construction, resulted in significant growth in each of these products in the first quarter of 2004 compared to the first quarter of 2003. This increase more than offset the decrease in our agency conforming and jumbo products which are more cyclical in nature, closely tracking changes in the overall mortgage market. Additionally, we continued to further penetrate the purchase market, increasing our purchase transactions 44% year over year. Further, our Investment Portfolio’s customer retention program continues to show strong production, originating $282 million in loans, a 109% increase over the fourth quarter 2003 volume.

Total production by loan type was as follows:



			Three Months Ended

			March 31,		March 31,		Percent			December 31,		Percent
			2004		2003		Change			2003		Change


			(Dollars in millions)
Volume by product
Prime(1)
	Alt-A		$	4,584	$	3,017		52	%	$	3,893		18	%
	Agency conforming			608		1,421		(57	)%		701		(13	)%
	Jumbo			407		1,013		(60	)%		368		11	%
Subprime(1)				458		384		19	%		486		(6	)%
Home equity line of credit(2)				244		180		36	%		259		(6	)%
Consumer construction(2)				603		440		37	%		586		3	%

		Subtotal mortgage production		6,904		6,455		7	%		6,293		10	%
Subdivision construction commitments				242		130		86	%		284		(15	)%

		Total production volume	$	7,146	$	6,585		9	%	$	6,577		9	%

Mortgage — Web-based production			$	4,319	$	4,920		(12	)%	$	4,270		1	%
Mortgage pipeline at period end(3)			$	5,949	$	6,044		(2	)%	$	4,116		45	%

(1) Fundings.

(2) New commitments.

(3) Includes rate lock commitments for loans in process plus loans that have been submitted for processing, but not yet rate locked.

The following table details the mix of our production and pipeline between purchase, cash-out refinance and rate/term refinance transactions as of and for the quarters ended March 31, 2004, March 31, 2003, and December 31, 2003. Consistent with the overall market trends, compared to the fourth quarter 2003, the decline in interest rates during the latter part of the first quarter 2004 reduced our mix of purchase business as a percent of total productions.



	As of and for the Quarters Ended

	March 31,			March 31,			Percent			December 31,			Percent
	2004			2003			Change			2003			Change


	(Dollars in millions)
Mortgage loan production:
Purchase transactions	$	2,669		$	1,854			44	%	$	2,720			(2	)%
Cash-out refinance transactions		2,562			2,531			1	%		2,335			10	%
Rate/term refinance transactions		1,673			2,070			(19	)%		1,238			35	%

Total mortgage loan production	$	6,904		$	6,455			7	%	$	6,293			10	%

% purchase transactions		39	%		29	%					43	%
Mortgage pipeline:
Purchase transactions	$	2,249		$	1,439			56	%	$	1,586			42	%
Cash-out refinance transactions		1,900			2,423			(22	)%		1,568			21	%
Rate/term refinance transactions		1,800			2,182			(18	)%		962			87	%

Mortgage pipeline at period end	$	5,949		$	6,044			(2	)%	$	4,116			45	%

% purchase transactions		38	%		24	%					39	%

Mortgage Production by Division and Channel

IndyMac generates its mortgage production through multiple channels on a nationwide basis with a concentration in those regions of the country in which we have regional offices or in which there are higher home prices, including California, Florida, New Jersey and New York. Our highest concentration of mortgage loans relates to properties in California, which is the largest market in the U.S. Mortgages secured by California properties accounted for 45% of the mortgage loans we produced in the first three months of 2004 based on dollar value, and 37% based on number of loans. This is a decrease from the level of concentration during the fourth quarter of 2003, which totaled 47% and 40%, respectively. We expect this trend to continue to be diluted in the future as we execute on our plan to double the number of regional offices outside of California over the next five years.

IndyMac Mortgage Bank produces mortgages through its Business-to-Business (“B2B”), Business-to-Realtor (“B2R”), Consumer Construction (“Home Construction Lending” or “HCL”) and Homebuilder (“HBD”) divisions. IndyMac Consumer Bank produces mortgages through its Business-to-Consumer (“B2C”) and Retail Bank divisions. The Home Equity Division supports the production of HELOCs through all of IndyMac channels of production and markets directly to consumers through targeted marketing and cross selling activities. The Investment Portfolio Group generates loan production through its customer retention program in connection with its servicing portfolio.

The following table shows production and key performance indicators of the various relationship businesses of IndyMac Mortgage Bank during the three months ended March 31, 2004.



			Relationship Businesses —
			IndyMac Mortgage Bank

			B2B			B2R			HCL			HBD			Total


			(Dollars in millions)
Volume by Channel and Customer Source
	Wholesale		$	2,123		$	—		$	432		$	—		$	2,555
	Correspondent/ Mortgage bankers			1,108			—			269			—			1,377
	Correspondent/ Financial institutions			71			—			—			—			71
	Conduit			1,170			—			—			—			1,170
	Realtors			—			109			—			—			109
	Builder/ Builder affiliates			—			—			38			167			205
	Consumer direct marketing by HCL			—			—			133			—			133

		Subtotal mortgage production		4,472			109			872			167			5,620
	Builder and subdivision construction commitments			—			—			—			242			242

		Total relationship businesses production volume	$	4,472		$	109		$	872		$	409		$	5,862

Percentage of total production				62.6	%		1.5	%		12.2	%		5.8	%		82.1	%
		Total production first quarter 2003.	$	4,003		$	246		$	681		$	222		$	5,152
		Total production fourth quarter 2003.	$	4,096		$	133		$	863		$	411		$	5,503
Composition of mortgage production
		Purchase transactions		34	%		51	%		99	%		84	%		46	%
		Cash-out refinance transactions		43	%		34	%		0	%		11	%		35	%
		Rate/term refinance transactions		23	%		15	%		1	%		5	%		19	%
Key Performance Indicators for the Three Months Ended March 31, 2004
Active Customers:(1)
	Average monthly active customers			2,060			123			325			35			2,543
	Active customers during the quarter			3,609			264			777			61			4,711
	Net new customers during the quarter(2)			731			255			N/A			17			1,003
Sales personnel				417			69			88			45			619
Cost per funded mortgage loan (bps)				76			369			98			165			N/A
Percentage Change for the Three Months Ended March 31, 2004 vs. March 31, 2003
Active Customers:(1)
	Average monthly active customers			3	%		(45	)%		64	%		40	%		4	%
	Active customers during the quarter			14	%		(42	)%		60	%		53	%		14	%
Sales personnel				34	%		2	%		47	%		137	%		36	%
Cost per funded mortgage loan (bps)				0	%		78	%		27	%		46	%		N/A

(1) Active customers are defined as customers who funded at least one loan during the period. The HCL division utilizes the B2B marketing relationships with mortgage brokers and mortgage bankers to produce consumer construction loans. As a result, there is some overlap of the two active customer statistics and new customers are reported under the B2B channel only. The sales and marketing personnel under the HCL division are primarily focused on marketing the consumer construction product directly to consumers.

(2) Net new customers is the number of new customers signed up during the quarter less those terminated.

IndyMac Mortgage Bank’s production increase of 14% from the three months ended March 31, 2003 to the three months ended March 31, 2004 was higher than anticipated due to the unexpectedly strong refinance market

in the first quarter of 2004. While we anticipate that the remainder of 2004 will reflect a more normalized interest rate environment, there will be some positive continuing effects from the first quarter rate locks on the second quarter volume. Additionally, due to the rate declines in the first quarter of 2004, our mix of purchase business declined to 46% versus 50% in the fourth quarter of 2003. Consistent with the foregoing, we would expect that our production mix will continue to shift towards purchase volume under a more normalized environment.

Our primary channel — B2B — experienced record active customers. HCL and HBD continued to take advantage of the strong purchase market as new home construction starts remain near seasonally adjusted record levels. HCL new commitment origination volumes approximated fourth quarter 2003 levels, overcoming seasonal downturn pressure, and the annualized origination volumes represent approximately 5.9% of the estimated $40 billion custom residential construction market. Overall, HCL enters 2004 as the second largest custom residential lender in the nation and the largest in California. During the first quarter 2004, HBD entered into new tract construction commitments of $242 million, up 86% or $112 million from the first quarter of 2003. HBD expects to generate future mortgage loans through our relationships with these subdivision developers as well as post construction home loans with their buyers.

During the first quarter 2004, our Realtor channel — B2R — refocused on its core purpose, which is to capture purchase volume and build long-term relationships with Realtors. Realtor purchase volume was a majority of B2R’s production in the first quarter, reflecting the effort to reduce reliance on refinance volumes. Additional action steps were taken to improve execution. Specifically, we created internal sales support groups to ensure prompt and close follow-up on all leads and we aligned operations teams for consistent collaboration with customers. Based on current pipeline and execution improvements, we anticipate strong growth going forward with volumes increasing approximately one-third in the second quarter, and we expect our revamped business model to show improvement with Realtors as the year progresses.

The following table shows production and other key performance indicators of the various consumer direct businesses of IndyMac Consumer Bank and Home Equity Division during the three months ended March 31, 2004. In addition, during the first quarter ended March 31, 2004, as shown below, our Investment Portfolio Group generated $282 million of loans through its customer retention program in connection with its servicing portfolio.



			Consumer Direct Businesses —
			IndyMac Consumer Bank
												Home			Investment
						Retail						Equity			Portfolio
			B2C			Bank			Total			Division(1)			Group


			(Dollars in millions)
Volume by Channel and Source
Web-based Production:
	Direct at www.indymacmortgage.com		$	109		$	—		$	109		$	—		$	—
	Indirect Web-based leads			139			—			139			—			—
Cross-marketing and portfolio refinancing				447			34			481			—			282
Direct telemarketing and affinity relationships				183			—			183			35			—
Retail banking branches				—			55			55			—			—

		Total consumer direct production volume	$	878		$	89		$	967		$	35		$	282

Percentage of total production				12.3	%		1.2	%		13.5	%		0.5	%		3.9	%
Total production first quarter 2003.			$	1,314		$	78		$	1,392		$	41			N/A
Total production fourth quarter 2003.			$	802		$	73		$	875		$	57		$	135
Composition of mortgage production:
	Purchase transactions			8	%		26	%		10	%		N/A			0	%
	Cash-out refinance transactions			58	%		51	%		57	%		N/A			0	%
	Rate/term refinance transactions			34	%		23	%		33	%		N/A			100	%

(1) The amount represents the loans produced only by the Home Equity Division. HELOC loans produced by other business divisions totaled $209 million during the first quarter of 2004. HELOC loans produced by business divisions other than the Home Equity Division are included in the production volume of the respective originating business division.

B2C’s production volume declined 33% for the three months ended March 31, 2004, compared to the three months ended March 31, 2003, which is in line with expectations as this business is expected to be more cyclical as a result of changes in interest rates. The Home Equity Division was established during 2002 to facilitate targeted marketing of our HELOC product directly to consumers in addition to the production of HELOCs within our other production channels. Through a streamlined application process and competitive pricing, this division provides homeowners the ability to easily access the excess equity in their homes for a variety of uses. Currently, we hold the HELOC-related assets on our balance sheet, as the underlying HELOCs are prime rate based, high FICO scores and have combined loan-to-value less than 80%. The HELOC product also tends to be somewhat counter-cyclical to the mortgage industry. As interest rates rise, consumers who want to access the equity in their home are more inclined to utilize a HELOC product rather than a cash-out refinance of their existing low-rate mortgage loan. As a result, we expect the Home Equity Division’s production to increase as the market transitions to a higher interest rate environment.

Loan Sales

The Company sold $4.9 billion and $5.5 billion of loans during the three months ended March 31, 2004 and 2003, respectively. The Company’s gain on sale of loans of $84 million in the first quarter of 2004 is comparable to the $84 million gain on sale of loans in the first quarter of 2003; however, the net profit margin has improved from 1.52% at March 31, 2003 to 1.71% at March 31, 2004. The increase in the net margin after hedging is due to a combination of factors including: (1) an increase in the sale of higher margin subprime and called loans; (2) an increase in the sale of higher margin adjustable rate loans; and (3) increased demand for mortgage-backed securities that resulted in higher sale margins as spreads tightened.

The Company hedges the interest rate risk inherent in its pipeline of rate locks and mortgage loans held for sale to protect its margin on sale of loans. Hedging practices can vary significantly from company to company ranging across a broad spectrum. At one extreme, a mortgage banker may choose not to hedge its pipeline at all. Mortgage bankers who choose not to hedge their pipeline will typically report higher earnings and profit margins in a falling interest rate environment, and lower earnings and profit margins in a rising interest rate environment. This will be the most profitable strategy over an indefinite period of time as more production is done in the declining rate environment, assuming the rates rise as often as they fall. However, this strategy results in highly volatile earnings and could result in losses for an extended period of time potentially risking the depletion of capital reserves. Conversely, at the other extreme, a mortgage banker can choose to hedge 100% of its pipeline with option-based instruments to closely offset the “free option” enjoyed by the mortgage loan applicant to not close on his or her loan (i.e. “fallout”). This hedging strategy will generally produce stable and consistent results, but profitability is significantly reduced as the cost of the options can be prohibitive.

Generally, prudent mortgage bankers will choose a strategy that falls along the spectrum of the above extremes. IndyMac tends to utilize instruments such as forward sale agreements whose change in value as interest rates change is expected to offset the change in value of its underlying mortgage pipeline based on expected closing ratios. Utilizing this strategy we focus on trying to maintain stable profit margins with an emphasis on forecasting expected fallout to more precisely estimate our required hedge coverage ratio and minimize hedge costs. By closely monitoring key factors such as product type, business units, progress or “status” of transactions, as well as changes in market interest rates since we committed a rate to the borrower (“rate lock commitments”), the Company seeks to quantify the optional component of each rate lock, and in turn, the aggregate rate lock pipeline. By accurately evaluating these factors, the Company has been able to minimize the purchase of options and also stabilize gain on sale margins over different rate environments. Companies with lower coverage ratios may tend to follow the market increasing their hedge costs and reducing their profit margins as interest rates rise. In comparing financial results, investors should be aware of the varying results that can be achieved under different hedge strategies.

The following table illustrates the impact of the Company’s pipeline hedging activities.



	Three Months Ended

	March 31,			March 31,			Percent			December 31,			Percent
	2004			2003			Change			2003			Change


	(Dollars in millions)
Gross gain on mortgage loan sales	$	126		$	118			7	%	$	97			30	%
Gross margin before hedging		2.58	%		2.14	%		21	%		2.09	%		23	%
Hedging (losses)	$	(42	)	$	(34	)		26	%	$	(17	)		153	%
Net gains on sale	$	84		$	84			0	%	$	80			5	%
Net margin after hedging		1.71	%		1.52	%		13	%		1.72	%		(1	)%

Included in the pipeline are rate lock commitments in addition to mortgage loans held for sale. Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives pursuant to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” (“SFAS 133”) and, therefore, are recorded at fair value. The Company hedges the risk of changes in fair value of rate lock commitments by selling forward contracts on securities of Fannie Mae or Freddie Mac as the Company deems appropriate to prudently manage this risk. These forward contracts are also accounted for as derivatives and recorded at fair value.

In measuring the fair value of rate lock commitments, the proceeds expected upon eventual loan sale are used. This value excludes the value of the MSRs inherent in the loan except for certain high quality, liquid, conventional mortgages where whole loan sale prices including servicing rights are readily available. These values are calculated using the same methodologies that are used in our loan sales, adjusted using an anticipated fallout factor for rate lock commitments that will likely not be funded. This method of calculating the value of the derivative has the effect of recognizing a portion of the gain from mortgage loans before the loans are funded. As of March 31, 2004, the fair value of the rate lock commitments, net of related hedges, was $30.8 million.

On March 9, 2004, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 105, “Application of Accounting Principles to Loan Commitments”, which provides guidance regarding loan commitments that are accounted for as derivative instruments. In this Bulletin, the SEC determined that an interest rate lock commitment should generally be valued at zero at inception. The rate locks will continue to be adjusted for changes in value resulting from changes in market interest rates. The Company will adopt this new standard prospectively as of April 1, 2004. Under the new accounting guidance, the Company will no longer recognize any revenue at the inception of the rate lock. Profits inherent in the rate lock will be recognized at the time of the underlying loans are sold. The implementation of the standard is expected to have a one-time negative impact on gain on sales totaling approximately $24 to $27 million after-tax in the second quarter of 2004. This amount is an estimate based on our current estimate of rate lock volume in the second quarter. The ultimate amount of the impact will be affected by actual rate lock volumes in the second quarter, as well as profit margins on such rate locks and the volume of loan sales during the quarter. The ultimate amount of the impact will not be known until the end of the second quarter. This accounting change affects the timing of revenue recognition and offsetting mark-to-market gains and losses, generally by one quarter or less, but not the ultimate amount of revenue recognized over time.

The following table presents the gain on sale margins by product type for the quarters ended March 31, 2004, and December 31, 2003:



	Three Months Ended March 31, 2004							Three Months Ended December 31, 2003
Gain on Sale Margins
by Product Type	Amount Sold		Gain on Sale		Margin			Amount Sold		Gain on Sale		Margin


	(Dollars in millions)
Alt-A and Jumbo	$	3,463	$	53.9		1.56	%	$	2,815	$	48.6		1.73	%
Agency conforming		725		6.5		0.89	%		1,061		12.3		1.16	%
Subprime		426		14.9		3.50	%		286		7.1		2.48	%
Loans acquired through clean-up calls		293		8.4		2.86	%		325		8.7		2.68	%
Lot loan and income property		—		—		—	%		154		3.2		2.08	%

Total gain on sale of loans	$	4,907	$	83.7		1.71	%	$	4,641	$	79.9		1.72	%

Although the total gain on sale margin was comparable for the quarter ended March 31, 2004, to December 31, 2003 there were changes by product type. Subprime gain on sale margins increased due to an increased demand for whole loans. Others decreased due to more competitive pricing. The increase in the gain on sale margin for called loans was the result of the loans sold having a lower cost basis than those sold in the previous quarter.

In addition to the gain on sale, IndyMac earns spread and fee income on its mortgage loans held for sale. It is important to look at the entire mortgage banking revenue stream in evaluating performance, as these components may vary in differing interest rate environments and sale strategies. The following table depicts the total revenue margin on mortgage loans sold, which is calculated by dividing the sum of gain on sale of loans, net interest income, and fee income by the amount of loans sold:



	Three Months Ended

	March 31,		% of loans			March 31,		% of loans			December 31,		% of loans
	2004		sold			2003		sold			2003		sold


	(Dollars in thousands)
Gain on sale of loans	$	83,668		1.70	%	$	83,784		1.51	%	$	79,883		1.72	%
Net interest income		41,800		0.85	%		36,441		0.66	%		45,856		0.99	%
Fee income		12,107		0.25	%		14,791		0.27	%		12,170		0.26	%

Total mortgage banking revenue	$	137,575		2.80	%	$	135,016		2.44	%	$	137,909		2.97	%

Loans sold	$	4,906,724				$	5,523,701				$	4,641,318

The following table shows the various channels through which loans were distributed.



		Three Months Ended

		March 31,		Distribution			March 31,		Distribution			December 31,		Distribution
		2004		Percentages			2003		Percentages			2003		Percentages


		(Dollars in millions)
Sales to the GSEs(1)		$	2,304		45	%	$	3,464		58	%	$	2,777		42	%
Private-label securitizations			1,085		21	%		1,471		25	%		1,018		16	%
Whole loan sales			1,518		30	%		589		10	%		846		13	%

	Subtotal sales		4,907		96	%		5,524		93	%		4,641		71	%
Investment portfolio acquisitions(2)			195		4	%		403		7	%		1,911		29	%

	Total loan distribution	$	5,102		100	%	$	5,927		100	%	$	6,552		100	%

(1) Government-sponsored enterprises.

(2) Loan production that IndyMac elected to retain in its investment portfolio.

In conjunction with the sale of mortgage loans in private-label securitizations and government-sponsored enterprises (“GSEs”) transactions, the Company generally retains certain assets. The primary assets retained include MSRs and, to a lesser degree, AAA-rated and agency interest-only strips, non-investment grade securities and residual securities. The allocated cost of the retained assets at the time of sale is recorded as an asset with an offsetting increase to the gain on sale of loans (or a reduction in the cost basis of the loans sold). The calculation of the $84 million in gain on sale of loans earned during the three months ended March 31, 2004, included the retention of $86 million of servicing-related assets and $11 million of other investment and non-investment grade securities. Additionally, the Company has also created approximately $19 million in retained assets from the HELOC securitization, which was structured as a secured borrowings for which no gain was recognized. Cash flow collected during the three months ended March 31, 2004 from assets previously retained amounted to $47.8 million. More information on the valuation assumptions related to IndyMac’s retained assets and the HELOC securitization can be found under the headings, “Valuation of Servicing-Related Assets” and “HELOC Portfolio,” respectively, below.

INVESTING AND HELOC ACTIVITIES

The following table details the assets associated with our investing and HELOC activities as of March 31, 2004, and December 31, 2003:


				March 31,			December 31,
				2004			2003


				(Dollars in thousands)
SFR mortgage loans held for investment				$	4,440,540		$	4,945,439
Consumer construction					1,225,347			1,145,526
Builder construction					500,490			484,397
HELOC					322,351			711,494
Income property					9,315			36,285
Mortgage-backed securities and agency notes:
	Trading securities:
		AAA-rated and agency interest-only strips			149,152			146,179
		AAA-rated principal-only securities			43,270			8,518
		Other investment grade securities			9,048			8,922
		Other non-investment grade securities			1,588			1,760
		Non-investment grade residual securities			47,948			58,253

			Subtotal — trading securities		251,006			223,632

	Available for sale securities:
		AAA-rated non-agency securities			2,576,496			1,407,984
		AAA-rated agency securities			21,288			25,193
		AAA-rated agency notes			—			143,689
		Other investment grade securities			23,325			26,926
		Other non-investment grade securities			16,903			10,182
		Non-investment grade HELOC residual securities			17,684			—

			Subtotal — available for sale securities		2,655,696			1,613,974

			Total mortgage-backed securities and agency notes		2,906,702			1,837,606

Mortgage servicing rights					414,358			443,688
Other assets					235,907			280,467

			Total	$	10,055,010		$	9,884,902

Percentage of securities portfolio rated investment grade					97	%		96	%
Percentage of securities portfolio rated AAA					96	%		94	%

As indicated above, our HELOC loan portfolio has decreased by approximately $389 million from December 31, 2003, to March 31, 2004, primarily due to the recharacterization of $500 million HELOC loans into mortgage-backed securities via an on-balance sheet securitization in March 2004. Additionally, our AAA-rated non-agency securities increased from $1.4 billion at December 31, 2003, to $2.6 billion at March 31, 2004, resulting from the recharacterization of $500 million HELOC loans and reclassification of $346 million of SFR mortgage loans that were securitized and retained as mortgage-backed securities available for sale during the quarter. Please refer to Investing Activities and HELOC Activities sections below for further discussions on SFR Mortgage and HELOC securitizations, respectively.

AAA-rated and agency interest-only strips, and non-investment grade residual securities and securities used to hedge these securities, are classified as trading securities. Changes in the fair value of these securities are recorded in earnings. All other mortgage-backed securities and HELOC residuals are classified as available for sale.

The following table shows average annualized net returns for all of our investing and HELOC activities, which is calculated by dividing the sum of net interest income after allocated interest expense (see “Note 4: Segment Reporting” in the accompanying notes to the consolidated financial statements for further information on our method of allocating interest expense to the operating segments) and provision for loan losses, service fee income and related net gains or losses by the average balance of investment assets. Service fee income includes contractual servicing fees, gross service fee income, amortization of MSRs, valuation adjustments and net hedging gains and losses. Gross service fee income is comprised of reinvestment income, prepayment and late fee income net of compensating interest paid to borrowers and investors.



	Three Months Ended

	March 31,			March 31,			December 31,
	2004			2003			2003


	(Dollars in thousands)
Net interest income after provision for loan losses	$	57,278		$	31,324		$	52,195
Service fee (loss) income		(3,144	)		2,383			(5,951	)
(Loss) on mortgage-backed securities, net		(4,987	)		(6,910	)		(6,037	)
Other income		4,004			2,493			3,156
Average balance of interest-earning assets and MSRs	$	9,698,243		$	6,398,441		$	9,367,980
Investing activities’ return on interest-earning assets and MSRs (annualized)		2.20	%		1.86	%		1.92	%

INVESTING ACTIVITIES

IndyMac’s Investment Portfolio Group complements the Company’s mortgage banking activities and serves to diversify the Company’s revenue stream through its investments in single-family residential mortgage loans, mortgage-backed securities and MSRs. The Investment Portfolio Group also invests in certain of the mortgage assets that are created through the securitization or sale of loans in the secondary market.

The Investment Portfolio Group’s investment in prime SFR loans, mortgage-backed securities and mortgage loan servicing also helps to provide a source of income to counterbalance the cyclical nature of mortgage production. Should loan production decline due to factors such as increasing interest rates, the value of the Investment Portfolio Group’s MSRs generally rises, as there is less incentive for borrowers to refinance at a higher interest rate. Similarly, when loan production increases, the value of the MSRs generally decrease. We believe this serves to stabilize the Company’s revenue stream through increased interest income and servicing fees when production slows.

In addition to the Investment Portfolio Group’s investments, certain investing activities through investments in construction loans also take place in IndyMac Mortgage Bank.

SFR Mortgage Loans Held for Investment

The Company’s portfolio of mortgage loans held for investment is comprised primarily of SFR mortgage loans, with a concentration in adjustable-rate and hybrid adjustable-rate mortgage loans to mitigate interest rate risk. The Company plans on increasing its portfolio of mortgage loans held for investment to achieve better balance in its investing activities relative to its mortgage banking activities, which tend to be more cyclical. During the quarter, the Company added $195 million of mortgage loans in accordance with this strategy; however, the portfolio actually declined relative to December 31, 2003. The decline resulted primarily from the Company’s decision to securitize $516 million of SFR mortgage loans held for investment during the first quarter and retain approximately 68% of these portfolio loans in the form of AAA-rated mortgage-backed securities, AAA-rated interest-only strips, and investment and non-investment grade securities. The Company plans to continue to securitize its SFR mortgage loans held for investment periodically, with the intent to retain most of the securities, to optimize return on equity, reduce hedging costs

and enhance the liquidity of the loan portfolio. The following table shows the composition of this portfolio as of March 31, 2004, and December 31, 2003 and relevant credit quality characteristics at March 31, 2004.


			March 31,			December 31,
			2004			2003


			(Dollars in thousands)
SFR mortgage loans held for investment			$	4,440,540		$	4,945,439
Average loan size			$	270		$	286
Non-performing loans as a percentage of SFR loans				0.47	%		0.38	%
Estimated average life in years(1)				2.4			3.1
Estimated average duration in years(2)				1.1			1.4
Yield				4.16	%		4.43	%
Fixed-rate mortgages				7	%		6	%
Adjustable-rate mortgages				46	%		39	%
Hybrid adjustable-rate mortgages				47	%		55	%
Additional Information as of March 31, 2004
Average FICO score(3)				707
Average loan to value ratio				73	%
Geographic distribution:
	Southern California			38	%
	Northern California			22	%
	Michigan			4	%
	New York			4	%
	Florida			3	%
	Georgia			3	%
	New Jersey			2	%
	Colorado			2	%
	Other (each individually less than 2%)			22	%

		Total		100	%

(1) Represents the estimated length of time, on average, the SFR loan portfolio will remain outstanding based on the Bank’s estimates for prepayments.

(2) Average duration measures the volatility of the value of a financial instrument in response to changes in interest rates and the corresponding changes in prepayments.

(3) FICO scores are the result of a credit scoring system developed by Fair Isaacs and Co. and are generally used by lenders to evaluate a borrower’s credit history. FICO scores of 700 or higher are generally considered in the mortgage industry to be very high quality borrowers with low risk of default, but in general, the secondary market will consider FICO scores of 620 or higher to be prime.

Mortgage-Backed Securities and Agency Notes

The Company’s portfolio of mortgage-backed securities and agency notes totaled $2.9 billion and $1.8 billion at March 31, 2004, and December 31, 2003, respectively. These securities are recorded at fair value. The Company invests in high quality mortgage-backed securities to provide net interest income. At March 31, 2004, 97% of the portfolio was rated AAA with an expected weighted-average life of 3.2 years. AAA-rated principal-only securities are retained from securitizations or purchased in the secondary market to hedge MSR related assets. The Company periodically trades its hedging instruments to rebalance its portfolio into instruments we believe will most effectively hedge the underlying asset, after considering changing market conditions.

The fair value of other investment grade and non-investment grade securities by credit rating as of March 31, 2004, and December 31, 2003, follows:


											December 31,
		March 31, 2004									2003

		Current		(Discount)
		Face		To Face			Amortized		Fair
		Value		Value			Cost		Value		Fair Value


		(In thousands)
Investment grade mortgage-backed securities:
	AAA	$	—	$	—		$	—	$	—	$	8,001
	AA		674		(7	)		667		678		—
	A		306		(22	)		284		289		—
	BBB		28,430		(1,508	)		26,922		27,655		24,198
	BBB-		4,000		(249	)		3,751		3,751		3,649

	Total other investment grade mortgage-backed securities	$	33,410	$	(1,786	)	$	31,624	$	32,373	$	35,848

Non-investment grade mortgage-backed securities:
	BB	$	14,751	$	(2,720	)	$	12,031	$	12,184	$	7,896
	B		5,194		(3,081	)		2,113		2,178		186
	CCC		—		—			—		—		1,165
	C		10,058		(7,588	)		2,470		2,960		1,934
	D		2,228		(1,605	)		623		623		676
	NR		4,150		(3,653	)		497		546		85

	Total other non-investment grade mortgage-backed securities	$	36,381	$	(18,647	)	$	17,734	$	18,491	$	11,942

At March 31, 2004, of the total other investment grade and non-investment grade mortgage-backed securities, $35.6 million was collateralized by prime loans, $13.7 million by subprime loans and $1.6 million by manufactured housing loans.

Mortgage Servicing and Mortgage Servicing Rights

In addition to its own loans, IndyMac serviced $32.1 billion of mortgage loans owned by others at March 31, 2004, with a weighted average coupon of 6.36%. In comparison, IndyMac serviced $30.8 billion of mortgage loans owned by others at December 31, 2003, with a weighted average coupon of 6.53%. The table below shows the activity in the servicing portfolios during the quarter ended March 31, 2004.


	Three Months
	Ended
	March 31, 2004


	(In millions)
Unpaid principal balance at beginning of period	$	30,774
Additions		4,691
Clean-up calls exercised		(319	)
Loan payments and prepayments		(3,024	)

Unpaid principal balance at March 31, 2004.	$	32,122

The capitalized value of MSRs totaled $414.4 million as of March 31, 2004 and $443.7 million as of December 31, 2003, reflecting a decrease of $29.3 million. The table below shows the activity in MSRs.



	Three Months Ended

	March 31,			March 31,			December 31,
	2004			2003			2003


	(Dollars in thousands)
Balance at beginning of period	$	443,688		$	300,539		$	406,917
Additions		50,753			67,742			51,447
Clean-up calls exercised		(3,790	)		(2,475	)		(3,754	)
Scheduled amortization		(22,860	)		(21,150	)		(20,049	)
Valuation (impairment) adjustment		(53,433	)		(1,112	)		9,127

Balance at end of period	$	414,358		$	343,544		$	443,688

Although we have been hedging our MSRs using interest rate swaps on an economic basis, we elected not to designate fair value hedge accounting on MSRs prior to January 1, 2004, and they were carried at lower of the initial carrying value, adjusted for amortization, or fair value. On January 1, 2004, we started to designate fair value hedges on certain selected tranches of MSRs. The changes in the fair value of the designated MSRs, and the fair value of the designated interest rate swaps, are recorded through income, if the hedging relationships are proven to be effective under the provisions of SFAS No. 133. This designation did not produce any difference in our reported quarterly income as the value of our MSRs decreased during the first quarter 2004.

Each quarter, we evaluate the MSRs for impairment in accordance with SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” We first stratify our MSRs based on predominant risk characteristics, underlying loan type, interest rate type, and interest rate band. Then, for each stratum, we determine the fair value of MSRs using our valuation models, which are validated quarterly by third party opinions of value. If the carrying value exceeds the fair value by individual stratum, a valuation allowance is recorded as a charge to service fee income in current earnings. However, if such impairment is determined to be other-than-temporary and the recoverability of the value is remote, we recognize a direct write-down. Unlike a valuation allowance, a direct write-down permanently reduces the carrying value of the MSR asset and the related valuation allowance, precluding subsequent reversals. For the three months ended March 31, 2004, the valuation allowance on MSRs totaled $90.2 million. The significant increase in the valuation adjustment was due to an increase in prepayment rates as a result of declines in market interest rates during the first quarter 2004.

AAA-Rated and Agency Interest-Only Strips and Residuals

We evaluate the carrying value of our AAA-rated and agency interest-only strips and residual securities by discounting estimated net future cash flows. For these securities, estimated net future cash flows are primarily based on assumptions related to prepayment speeds, in addition to expected credit loss assumptions on the residual securities.

A summary of the activity in the AAA-rated and agency interest-only strips and residual securities portfolios for the three months ended March 31, 2004 and 2003, and for the three months ended December 31, 2003, follows:



		Three Months Ended

		March 31,			March 31,			December 31,
		2004			2003			2003


		(Dollars in thousands)
AAA-rated interest-only strips
	Beginning balance	$	146,179		$	187,060		$	155,258
	Retained investments from securitizations		33,578			13,416			11,293
	Clean-up calls exercised		(1,151	)		(12,048	)		(13,936	)
	Cash received, net of accretion		(11,770	)		(14,071	)		(10,933	)
	Valuation (losses) gains before hedges		(17,684	)		(18,145	)		4,497

	Ending balance	$	149,152		$	156,212		$	146,179

Residual securities
	Beginning balance	$	58,253		$	78,740		$	54,743
	Retained investments from securitizations		18,706			14,626			4,853
	Sales		—			(10,525	)		—
	Clean-up calls exercised		159			—			—
	Cash received, net of accretion		(11,679	)		(6,865	)		(2,388	)
	Valuation gains before hedges		193			2,022			1,045

	Ending balance	$	65,632		$	77,998		$	58,253

Cash received, net of accretion, increased from $2.4 million for the quarter ended December 31, 2003 to $11.7 million for the quarter ended March 31, 2004, primarily due to receiving $10 million cash on residual securities from exercising clean-up calls.

Valuation of Servicing-Related Assets

MSRs, AAA-rated and agency interest-only strips and residual securities are recorded at fair market value. MSRs are further subject to lower of cost or market limitations. Relevant information and assumptions used to value the Company’s servicing related assets and residual securities at March 31, 2004, and December 31, 2003 are shown below.



	Actual															Valuation Assumptions

					Gross Wtd.			Servicing			3-Month			Weighted		Lifetime			3-Month						Remaining
	Book		Collateral		Average			Fee/Interest			Prepayment			Average		Prepayment			Prepayment			Discount			Cumulative
	Value		Balance		Coupon			Strip			Speeds			Multiple		Speeds(1)			Speeds(1)			Yield			Loss Rate(2)


	(Dollars in thousands)
March 31, 2004
AAA-rated/agency interest-only strips	$	149,152	$	13,559,779		6.68	%		0.43	%		33.7	%		2.56		20.1	%		35.9	%		9.1	%		N/A

Prime residual securities	$	23,183	$	3,903,460		6.94	%		1.89	%		55.6	%		0.31		27.5	%		37.6	%		15.9	%		0.5	%
Subprime and HELOC residual securities(3)		42,448	$	1,545,047		7.69	%		4.21	%		35.4	%		0.65		38.2	%		38.7	%		21.5	%		2.3	%

Total non-investment grade residual securities	$	65,631

MSRs(4)	$	414,358	$	32,121,562		6.36	%		0.32	%		29.2	%		3.97		18.9	%		32.1	%		9.0	%		N/A

December 31, 2003
AAA-rated/agency interest-only strips	$	146,179	$	13,640,307		6.90	%		0.38	%		34.0	%		2.81		17.2	%		35.5	%		9.8	%		N/A

Prime residual securities	$	25,614	$	3,506,638		7.00	%		1.48	%		60.0	%		0.49		26.3	%		36.0	%		15.8	%		0.5	%
Subprime residual securities		32,639	$	1,286,694		8.65	%		4.34	%		38.4	%		0.58		33.4	%		32.9	%		23.6	%		2.3	%

Total non-investment grade residual securities	$	58,253

MSRs	$	443,688	$	30,773,545		6.53	%		0.32	%		31.0	%		4.51		16.8	%		31.5	%		10.0	%		N/A

March 31, 2003
AAA-rated/agency interest-only strips	$	156,212	$	12,924,037		7.68	%		0.51	%		38.8	%		2.37		21.9	%		46.6	%		8.9	%		N/A

Prime residual securities	$	42,703	$	3,537,589		7.27	%		1.46	%		38.5	%		0.83		21.8	%		36.1	%		15.2	%		0.6	%
Subprime residual securities		35,295	$	1,636,487		9.34	%		4.04	%		34.0	%		0.53		33.3	%		35.7	%		22.9	%		2.6	%

Total non-investment grade residual securities	$	77,998

MSRs	$	343,544	$	29,834,709		7.27	%		0.33	%		39.5	%		3.49		21.2	%		42.9	%		9.5	%		N/A

(1) Assumed prepayment speeds are higher in the short term and lower in the long term based on the market forward curve for interest rates rising over the life of the asset.

(2) As a percentage of the original pool balance, the actual cumulative loss rate to date totaled 0.06% and 1.41% for prime and subprime residuals, respectively, at March 31, 2004.

(3) As of March 31, 2004, subprime and HELOC residual securities include residuals from the securitization of home equity loans in the amount of $17.7 million. Although our HELOC loans are to high credit quality, prime borrowers, the assumptions on HELOC-related residuals are similar to subprime as they are second trust deed loans.

(4) At March 31, 2004, the capitalized servicing asset was comprised of $32.1 billion of loans serviced for others. In addition to the loans serviced for others, we also service $6.8 billion of IndyMac-owned loans and loans subserviced for others on an interim basis for a total servicing portfolio of $38.9 billion.

The lifetime prepayment speeds represent the annual constant prepayment rate (“CPR”) we estimate for the remaining life of the collateral supporting the asset. For MSRs and AAA-rated and agency interest-only strips, we project prepayment rates using four-factor prepayment models, which incorporate relative weighted average note rate, seasoning, seasonality and burn-out of the pool of loans relative to expectations of future rates implied by the market forward LIBOR/swap curve.

The weighted average multiple for MSRs, AAA-rated and agency interest-only strips and residual securities represents the book value divided by the product of collateral balance and servicing fee/interest strip. While the weighted average life of such assets is a function of the undiscounted cash flows, the multiple is a function of the discounted cash flows. With regard to AAA-rated and agency interest-only strips, the marketplace frequently uses calculated multiples to assess the overall impact valuation assumptions have on

value. Collateral type, coupon, loan age and the size of the interest strip must be considered when comparing these multiples. The mix of collateral types supporting servicing-related assets is primarily non-conforming/conventional, which may make comparisons of the Company’s MSR multiples misleading relative to peer multiples whose product mix is different.

The prepayment speed assumptions have increased compared to December 31, 2003 due to a 42 basis-point drop in 10-year Treasury rates. The discount rate assumptions decreased reflecting the drop in benchmark rates and the shortening of the expected life of the underlying loans.

Hedging Interest Rate Risk on Servicing-Related Assets

With respect to the investment in servicing-related assets (AAA-rated and agency interest-only strips, non-investment grade residual securities and MSRs), the Company is exposed to interest rate risk as a result of other than predicted prepayment of loans. Our Investment Portfolio Group is responsible for the management of interest rate and prepayment risks in the Investment Portfolio, subject to policies and procedures established by, and oversight from, our management level Asset and Liability Committee (“ALCO”) and our Board of Directors level ALCO.

The objective of our hedging strategy is to mitigate the impact of changes in interest rates on the net economic value of the balance sheet and quarterly earnings, not to speculate on interest rates. As such, we manage the comprehensive interest rate risk of our servicing-related assets using financial instruments and our servicing portfolio retention efforts. Historically, we have hedged servicing-related assets using a mix of securities on our balance sheet, such as AAA-rated principal-only securities, buying and/or selling mortgage-backed or U.S. Treasury securities, as well as derivatives such as futures, floors, swaps, or options. Recently, we have added clean-up call revenues and retention programs to our overall servicing asset management program. As there are no hedge instruments that would be perfectly correlated with these hedged assets, we use a mix of the above instruments designed to correlate well with the hedged servicing assets and our anticipated servicing retention rates.

With interest rates continuing to be near historic low levels and the drop in 10-year Treasury rates of 42 basis-points, we recorded a $53.4 million valuation write-down in mortgage servicing assets, which was not fully offset by the derivative hedge gains. However, as shown in the servicing related assets segment results, our realization of $21.2 million income from clean-up calls and servicing portfolio retention resulted in a positive return for the portfolio during the quarter. These activities are a direct result of the ownership of servicing rights and we consider these activities when evaluating overall portfolio performance.

The following table breaks out the components of service fee (expense) income and the net loss on mortgage-backed securities.



			Three Months Ended

			March 31,			March 31,			December 31,
			2004			2003			2003


			(Dollars in thousands)
Service fee (expense) income:
	Gross service fee income		$	28,080		$	24,057		$	27,489
	Amortization			(22,860	)		(21,150	)		(20,049	)

	Service fee income net of amortization			5,220			2,907			7,440
	Valuation adjustments on MSRs			(53,433	)		(1,112	)		9,127
	Hedges gains (losses) on MSRs			45,069			588			(22,518	)

		Total service fee (expense) income	$	(3,144	)	$	2,383		$	(5,951	)

Net (loss) on mortgage-backed securities:
	Realized gain on available-for-sale securities		$	900		$	—		$	58
	Impairment on available-for-sale securities			(101	)		(580	)		(201	)
	Unrealized (loss) gain on AAA interest-only strips and residual securities			(17,492	)		(16,123	)		5,542
	Net gain (loss) on trading securities and other instruments used to hedge AAA interest-only strips and residual securities			11,706			9,793			(11,436	)

		Total (loss) on mortgage-backed securities, net	$	(4,987	)	$	(6,910	)	$	(6,037	)

Total Clean-up Call and Retention Program Income			$	21,192		$	10,900		$	29,346

The clean-up call and retention programs income is recognized as a component of gain on sale and net interest income in the Investment Portfolio Group’s mortgage banking activities. As shown in our segment results on page 9, the effect of the clean-up call and retention program activities allowed the mortgage servicing business to generate positive returns during the historical refinance boom periods.

The clean-up call and retention programs income totaled $21 million during the first quarter of 2004, an approximately $8 million reduction compared to the quarter ended December 31, 2003. The reduction is primarily due to the decrease in net interest income as the remaining call loans and loans acquired through retention programs had lower weighted average coupon rates.

As master servicer for our various securitizations, we maintain the right to call selected deals when the outstanding loan balances in the securitization trust decline to a specified level, typically 10% of the original collateral balance. During the quarter ended March 31, 2004, we sold approximately $291 million of called loans with a pretax gain of $9.5 million, and $370 million loans acquired through retention programs for a pretax gain of $5.3 million. We expect to exercise our option to call additional loans of approximately $344 million in 2004, the exact timing and amount of which is dependent upon the future interest rate environment and borrower prepayment behavior.

Construction Lending

IndyMac provides construction financing for individual consumers who are in the process of building their own home (consumer construction) and for residential subdivision developers (builder construction). With respect to consumer construction, the primary product is a construction-to-permanent residential mortgage loan. This product provides financing for the 9-12 month term of construction and automatically converts to a permanent mortgage loan at the end of construction. As a result, this product represents a hybrid activity between our investing activities and mortgage banking activities. The Company earns net interest income during the construction phase. When the loan converts to permanent status, the loan is transferred into the

Company’s pipeline of mortgage loans held for sale. These loans are typically fixed-rate loans. Consumer construction loan originations were comparable to the fourth quarter 2003, overcoming seasonal downturn pressure, and grew 28% over the same quarter of 2003. Overall, HCL enters 2004 as the second largest custom residential lender in the nation and the largest in California. Consumer construction loans outstanding at March 31, 2004, were $1,225.3 million, up 7% compared to the amount at December 31, 2003.

With respect to builder construction loans, our activities have been increasingly focused on those homebuilders that provide our mortgage loans to their customers when they sell the completed residence. Builder construction loans are typically based on prime rates. During the first quarter 2004, we entered into new tract construction commitments of $242 million, up 86%, or $112 million, from the first quarter 2003. Builder loans outstanding at March 31, 2004, including construction and land and other mortgage loans, was $660.0 million, resulting in a $55 million, or 9%, increase compared to December 31, 2003. A substantial portion of our builder construction loans is secured by corporate or personal guarantees of the builders as well as the real estate.

The following tables present further information on our construction loan portfolios.



	Three Months Ended


	March 31, 2004						December 31, 2003

	Consumer			Builder			Consumer			Builder
	Construction			Construction			Construction			Construction
	Loans			Loans			Loans			Loans


	(Dollars in thousands)
Construction loans	$	1,225,347		$	500,490		$	1,145,526		$	484,397
Land and other mortgage loans	$	161,963		$	159,536		$	87,045		$	120,751
Outstanding commitments	$	2,273,345		$	1,164,609		$	2,091,853		$	1,120,893
Average construction loan commitment	$	379		$	2,760		$	391		$	3,046
Non-performing loans		0.68	%		1.83	%		0.78	%		1.60	%
Yield		5.64	%		6.30	%		5.81	%		6.63	%
Fixed-rate loans		90	%		0	%		94	%		1	%
Adjustable-rate loans		10	%		98	%		6	%		97	%
Hybrid adjustable-rate loans		0	%		2	%		0	%		2	%

Additional Information as of March 31, 2004


		Consumer				Builder
		Construction				Construction
		Loans				Loans

Average loan to value ratio(1)			74	%			72	%
Average FICO score(2)			705				N/A
Geographic distribution(3)
	Southern California		31	%	Southern California		44	%
	Northern California		18	%	Northern California		25	%
	New York		6	%	Illinois		13	%
	Hawaii		5	%	Florida		5	%
	Florida		4	%
	Colorado		3	%
	Connecticut		3	%
	Washington		3	%
	Other (each individually< 2%)		27	%	Other (each individually< 2%)		13	%

	Total Consumer Construction		100	%	Total Builder Construction		100	%

(1) The average loan to value ratio is based on the estimated appraised value of the completed project compared to the commitment amount at March 31, 2004.

(2) FICO scores are not calculated for corporate entities and, therefore, are not applicable to the builder construction portfolio.

(3) Geographic distribution is based on outstanding balances. Some projects are continuing to be built out in states in which we no longer solicit new loans.

For information related to the Company’s balance of non-performing assets and related credit reserves, see discussion in “Credit Risk and Reserves” at page 37.

HELOC Portfolio

The Company financed $500 million in HELOC balances through a securitization trust. The trust issued AAA-rated asset-backed certificates that are guaranteed by a third party insurer. The Company pledged the certificates to secure $500 million of nonrecourse debt. As a result of this transaction, the net book value of the HELOCs was recharacterized as securities available for sale and servicing rights. The nonrecourse notes are reflected in other borrowings. The Company recognized no gain or loss on this secured financing transaction. The primary objectives of these transactions were to (1) lower our cost of funds, (2) improve our liquidity profile, and (3) improve our risk profile through the use of mortgage insurance.

The following table presents information on HELOCs as of and for the three months ended March 31, 2004, and December 31, 2003. All HELOC loans are adjustable rate loans and indexed to the prime rate.



	Three Months Ended

	March 31,			December 31,			Variance
	2004			2003			Percent


	(Dollars in thousands)
Outstanding book value	$	322,351		$	711,494			(54.69	)%
Outstanding commitments(1)	$	638,210		$	1,189,213			(46.33	)%
Average spread over prime		2.07	%		1.92	%		7.81	%
Average FICO score		711			710			0.14	%
Average CLTV ratio(2)		76	%		77	%		(1.30	)%


		Total Unpaid		Average Loan							30+ Days
		Principal		Commitment		Average Spread			Average		Delinquency
CLTV		Balance		Balance		Over Prime			FICO		Percentage


		(Dollars in thousands)
>= 96% &< = 100%		$	10,098	$	53		3.85	%		723		3.48	%
>= 91% &< = 95%			35,478		51		3.45	%		709		1.06	%
>= 81% &< = 90%			122,765		53		2.63	%		694		1.37	%
>= 71% &< = 80%			84,197		83		1.27	%		711		1.38	%
70%			69,813		85		1.08	%		728		1.10	%

	Total	$	322,351	$	68		2.07	%		711		1.34	%

(1) On funded loans.

(2) The CLTV combines the loan to value on both the first mortgage loan and the HELOC.

NET INTEREST INCOME

The following table sets forth information regarding our consolidated average balance sheets (all segments are combined), along with the total dollar amounts of interest income and interest expense and the weighted average interest rates for the periods presented. Average balances are calculated on a daily basis. Non-performing loans are included in the average balances for the periods presented. The allowance for loan losses is excluded from the average loan balances.



		Three Months Ended


		March 31, 2004							March 31, 2003							December 31, 2003

		Average				Yield			Average				Yield			Average				Yield
		Balance		Interest		Rate			Balance		Interest		Rate			Balance		Interest		Rate


		(Dollars in thousands)
Securities		$	2,105,468	$	26,855		5.13	%	$	1,920,645	$	20,961		4.43	%	$	2,038,330	$	26,395		5.14	%
Loans held for sale			3,688,650		54,746		5.97	%		2,867,547		45,201		6.39	%		3,376,349		54,743		6.43	%
Mortgage loans held for investment			5,608,258		58,042		4.16	%		2,759,900		35,962		5.28	%		5,314,934		59,360		4.43	%
Builder construction and income property			506,668		8,039		6.38	%		570,886		9,720		6.91	%		506,955		8,649		6.77	%
Consumer construction			1,140,371		15,995		5.64	%		839,772		14,396		6.95	%		1,076,853		15,765		5.81	%
Investment in Federal Home Loan Bank stock and other			337,478		2,882		3.43	%		181,268		1,957		4.38	%		317,133		2,917		3.65	%

	Total interest-earning assets		13,386,893		166,559		5.00	%		9,140,018		128,197		5.69	%		12,630,554		167,829		5.27	%

Other			1,161,479							894,643							1,177,305

	Total assets	$	14,548,372						$	10,034,661						$	13,807,859

Interest-bearing deposits		$	3,838,511		22,482		2.36	%	$	2,736,822		21,687		3.21	%	$	3,579,379		21,929		2.43	%
Advances from Federal Home Loan Bank			5,207,135		30,920		2.39	%		2,709,008		25,558		3.83	%		4,888,567		30,208		2.45	%
Other borrowings			3,532,004		19,224		2.19	%		2,812,407		17,927		2.59	%		3,268,244		17,747		2.15	%

	Total interest-bearing liabilities		12,577,650		72,626		2.32	%		8,258,237		65,172		3.20	%		11,736,190		69,884		2.36	%

Other			927,400							906,201							1,072,435

	Total liabilities		13,505,050							9,164,438							12,808,625
	Shareholders’ equity		1,043,322							870,223							999,234

	Total liabilities and shareholders’ equity	$	14,548,372						$	10,034,661						$	13,807,859

Net interest income				$	93,933						$	63,025						$	97,945

Net interest spread							2.68	%						2.49	%						2.91	%

Net interest margin							2.82	%						2.80	%						3.08	%

The net interest margin during the first quarter 2004 was comparable to that of the first quarter 2003 and compressed from fourth quarter 2003. The yield on interest earning assets declined during the first quarter due to high prepayment speeds, and compression of spread in mortgage rates and the 10-year treasury rate. The effect of the prepayments during the period was partially offset by recently acquired higher yielding clean-up call loans. The decrease in cost of funds was largely the result of the repricing of higher interest rate CDs and term FHLB advances to lower rates.

The dollar amounts of interest income and interest expense fluctuate depending upon changes in the average balances and interest rates of interest-earning assets and interest-bearing liabilities. The following table details changes attributable to (i) changes in volume (changes in average outstanding balances multiplied by the prior period’s rate), (ii) changes in the rate (changes in the average interest rate multiplied by the prior period’s volume), and (iii) changes in rate/volume (“mix”) (changes in rates times the changes in volume).



		Three Months Ended March 31, 2004 vs. 2003


		Increase/(Decrease) Due to

		Volume			Rate			Mix			Total Change


		(Dollars in thousands)
Interest income
Mortgage-backed securities		$	2,209		$	3,334		$	351		$	5,894
Loans held for sale			13,428			(2,994	)		(889	)		9,545
Mortgage loans held for investment			37,725			(7,635	)		(8,009	)		22,080
Builder construction and income property			(1,021	)		(737	)		77			(1,681	)
Consumer construction			5,317			(2,715	)		(1,003	)		1,599
Investment in Federal Home Loan Bank stock and other			1,721			(422	)		(370	)		925

	Total interest income		59,375			(11,169	)		(9,844	)		38,362
Interest expense
Interest-bearing deposits			8,984			(5,790	)		(2,399	)		795
Advances from Federal Home Loan Bank			23,979			(9,605	)		(9,012	)		5,362
Other borrowings			4,774			(2,746	)		(731	)		1,297

	Total interest expense		37,737			(18,141	)		(12,142	)		7,454

	Net interest income	$	21,638		$	6,972		$	2,298		$	30,908

OVERALL INTEREST RATE RISK MANAGEMENT

In addition to our hedging activities to mitigate the interest rate risk in our pipeline of mortgage loans held for sale and our investment in servicing-related assets, we perform extensive overall interest rate risk analyses. The primary measurement tool used to evaluate interest rate risk over the comprehensive balance sheet is a net portfolio value (“NPV”) analysis that simulates the effects changes in interest rates have on the fair value of shareholders’ equity.



		March 31, 2004								December 31, 2003


				Effect of Change								Effect of Change
				in Interest Rates								in Interest Rates

				Decrease			Increase					Decrease			Increase
		Fair Value		100 bps			100 bps			Fair Value		100 bps			100 bps


							(Dollars in thousands)
Cash and cash equivalents		$	200,096	$	200,096		$	200,096		$	111,203	$	111,203			$111,203
Trading securities			237,024		214,319			263,822			206,484		180,197			228,880
Available for sale securities			2,057,016		2,103,465			1,998,246			1,611,958		1,662,715			1,553,103
Loans held for sale			3,544,675		3,612,181			3,454,695			2,573,248		2,606,028			2,519,059
Loans held for investment			6,716,664		6,753,550			6,645,607			7,396,475		7,448,389			7,304,464
MSRs			414,358		302,239			506,825			443,688		311,777			534,672
Other assets			661,290		674,276			648,298			683,213		697,356			669,062
Derivatives			41,643		14,063			108,659			106,119		91,598			169,246

	Total assets	$	13,872,766	$	13,874,189		$	13,826,248		$	13,132,388	$	13,109,263			$13,089,689

Deposits		$	4,772,939	$	4,814,835		$	4,734,880		$	4,367,400	$	4,404,900			$4,335,433
Advances from Federal Home Loan Bank			4,790,378		4,822,174			4,757,471			4,949,477		4,979,962			4,919,147
Other borrowings			2,797,939		2,800,060			2,795,610			2,438,695		2,440,538			2,436,665
Other liabilities			160,390		160,493			160,267			156,711		156,800			156,599

	Total liabilities		12,521,646		12,597,562			12,448,228			11,912,283		11,982,200			11,847,844

Shareholders’ equity (NPV)		$	1,351,120	$	1,276,627		$	1,378,020		$	1,220,105	$	1,127,063			$1,241,845

% Change from base case					(5.51	)%		1.99	%				(7.63	)%		1.78	%

The increase in the net present value of equity from December 31, 2003, to March 31, 2004, is primarily due to retained earnings of $44.1 million and improvement in Loans HFI values. The March 31, 2004, results indicate that the Bank is better positioned for rising rates in an up 100 basis point scenario. It should be noted that this analysis does not reflect changes in volumes and profits from our mortgage banking operations that would be expected to result from the interest rate environment.

The assumptions inherent in our interest rate models include expected valuation changes in an instantaneous and parallel interest rate shock and assumptions as to the degree of correlation between our hedge positions and the hedged assets and liabilities. These assumptions may not accurately predict factors such as the spread-widening or spread-tightening risk that may result from changes in rates on either the Treasury or LIBOR/swap curve and mortgages. In addition, the sensitivity analysis described in the prior paragraph is limited by the fact that it is performed at a particular point in time and does not incorporate other factors that would impact our financial performance in these scenarios. These factors include, but are not limited to, expected increases in income associated with the expected increase in production volume that could result from a decrease in interest rates and changes in the asset, liability and derivative mix during interest rate changes. Consequently, the preceding simulation should not be viewed as a forecast, as it is reasonable to expect that actual results will vary significantly from the analyses discussed above.

The Company’s Board of Directors level and management level ALCOs monitor our hedging activities to determine whether the value of our hedge positions, their correlation to the balance sheet item being hedged, and the amounts being hedged, continue to provide adequate protection against interest rate risk. While there

can be no assurances that our interest rate management strategies will be effective, we believe we have adequate internal controls to monitor and manage our interest rate risk within reasonable levels.

CREDIT RISK AND RESERVES

GENERAL

The following table summarizes the Company’s allowance for loan losses/credit discounts and non-performing assets as of March 31, 2004.


									Total
					Allowance				Reserves as a			Non-			Net Charge
					For Loan		Credit		Percentage of			Performing			Offs/Net
Type of Loan			Book Value		Losses		Discounts		Book Value			Assets			REO (Gains)


			(Dollars in thousands)
Held for investment portfolio
SFR mortgage loans and HELOCs			$	4,697,377	$	19,313	$	—		0.41	%	$	14,402		$	925
Land and other mortgage				164,981		3,169		—		1.92	%		—			—
Builder construction and income property				509,805		12,689		—		2.49	%		12,057			—
Consumer construction				1,225,347		9,872		—		0.81	%		9,428			76

	Total core held for investment loans			6,597,510		45,043		—		0.68	%		35,887			1,001
	Discontinued product lines(1)			65,514		7,083		—		10.81	%		6,431			1,018

		Total held for investment portfolio		6,663,024	$	52,126		—		0.78	%		42,318			2,019

Held for sale portfolio				3,545,240			$	13,923		0.39	%		39,794			—

		Total loans	$	10,208,264									82,112		$	2,019

Foreclosed assets
Core portfolios													25,547		$	(460	)
Discontinued product lines													988			217

Total foreclosed assets													26,535		$	(243	)

Total non-performing assets												$	108,647

Total non-performing assets as a percentage of total assets													0.75	%

(1) Discontinued product lines include manufactured home loans and home improvement loans.

The following tables provide additional comparative data on non-performing assets relative to the allowance for loan losses.


				March 31,			March 31,			December 31,
				2004			2003			2003


				(Dollars in thousands)
Loans held for investment
	Portfolio loans
		SFR mortgage loans		$	14,402		$	10,862		$	12,414
		Land and other mortgage loans			—			2,730			71
		Builder construction			12,057			8,541			9,704
		Consumer construction			9,428			12,670			8,954

			Total portfolio non-performing loans		35,887			34,803			31,143
	Discontinued product lines				6,431			9,529			6,449

Total non-performing loans held for investment					42,318			44,332			37,592
Non-performing loans held for sale					39,794			25,734			38,855

			Total non-performing loans		82,112			70,066			76,447
Foreclosed assets					26,535			27,871			23,677

			Total non-performing assets	$	108,647		$	97,937		$	100,124

Total non-performing assets to total assets					0.75	%		1.03	%		0.76	%

Allowance for loan losses to non-performing loans held for investment					123	%		113	%		140	%

The following shows the activity in the allowance for loan losses during the indicated periods:



				Three Months Ended

				March 31,			March 31,			December 31,
				2004			2003			2003


				(Dollars in thousands)
Core portfolio loans
Balance, beginning of period				$	45,644		$	41,314		$	44,886
Provision for loan losses					400			1,525			2,250
Charge-offs net of recoveries SFR mortgage loans					(925	)		(1,166	)		(1,018	)
		Land and other mortgage loans			—			—			(11	)
		Consumer construction			(76	)		—			(102	)
		Builder construction			—			(149	)		(361	)

	Charge-offs net of recoveries				(1,001	)		(1,315	)		(1,492	)

Balance, end of period					45,043			41,524			45,644

Discontinued product lines
Balance, beginning of period					7,001			9,447			7,595
Provision for loan losses					1,100			1,575			1,250
	Charge-offs net of recoveries				(1,018	)		(2,300	)		(1,844	)

Balance, end of period					7,083			8,722			7,001

			Total allowance for loan losses	$	52,126		$	50,246		$	52,645

Annualized charge-offs to average loans					0.15	%		0.07	%		0.16	%
Core portfolio loans only:
Annualized charge-offs to average loans					0.07	%		0.05	%		0.07	%

Total credit-related reserves, including the allowance for loan losses and the market valuation reserves, amounted to $66.0 million at March 31, 2004, compared to $66.6 million at December 31, 2003. The allowance for loan losses of $52.1 million for loans held for investment at March 31, 2004, represented 0.78% of total loans held for investment. This compares to an allowance for loan losses of $50.2 million, or 1.20% of total loans held for investment, at March 31, 2003. Charge-offs were significantly improved during the first quarter 2004, both in our core and non-core portfolios. Total net charge-offs of $2.0 million for the first quarter 2004 were 44% lower than net charge-offs in the first quarter 2003. This improved credit performance combined with the fact that the substantial loan portfolio growth over the past twelve months consists predominantly of high quality SFR mortgage loans held for investment, which have low expected defaults and loss severities, support a lower ratio of allowance to total loans.

The ratio of non-performing assets to total assets was 0.75% at March 31, 2004, comparable to 0.76% at December 31, 2003. Total non-performing assets increased from $100.1 million at December 31, 2003 to $108.6 million at March 31, 2004, made up of a $5.7 million increase in non-performing loans and a $2.9 million increase in foreclosed assets. The increase in non-performing loans was driven by a $4.7 million increase in loans held for investment primarily due to two large loans from our builder construction portfolio. We do not expect to incur any losses from these two loans based on subsequent payment performance. The increase of $2.9 million in foreclosed assets was primarily due to foreclosed assets acquired through clean-up calls exercised during the first quarter 2004. Included in the non-performing loans held for investment balance at March 31, 2004 is a matured construction loan in amount of $8.1 million. Given the current value of the collateral and the credit of the guarantor, we do not expect to incur any losses on this loan at this time. The non-performing loans held for sale amounted to $39.8 million at March 31, 2004, approximately 56% of which are attributable to called loans.

With respect to the portfolio of loans held for investment in IndyMac’s core businesses, the allowance for loan losses at March 31, 2004 was $45.0 million or 0.68% of the loan balance, compared to the 0.62% of total loan balance at December 31, 2003.

With respect to IndyMac’s non-core liquidating portfolios, consisting primarily of manufactured housing and home improvement loans, net charge-offs totaled $1.0 million during the first quarter of 2004, down from the $2.3 million of net charge-offs on these portfolios during the first quarter of 2003. After provision for loan losses of $1.1 million, the allocated allowance for loan losses was $7.1 million, or 10.81% of the remaining principal balance of such liquidating portfolios, compared to the 10.07% reserve coverage at December 31, 2003, and coverage of 9.56% at March 31, 2003.

Our determination of the level of the allowance for loan losses and, correspondingly, the provision for loan losses, is based on management’s judgments and assumptions regarding various matters, including general economic conditions, loan portfolio composition, delinquency trends and prior loan loss experience. In assessing the adequacy of the allowance for loan losses, management reviews the performance in the portfolios of loans held for investment and the non-core portfolio of discontinued product lines.

While we consider the allowance for loan losses to be adequate based on information currently available, future adjustments to the allowance may be necessary due to changes in economic conditions, delinquency levels, foreclosure rates, or loss rates. The level of our allowance for loan losses is also subject to review by our federal regulator, the Office of Thrift Supervision (“OTS”). Our regulator may require that our allowance for loan losses be increased based on their evaluation of the information available to it at the time of its examination of the Bank.

With respect to mortgage loans held for sale, IndyMac does not provide an allowance for loan losses, pursuant to the applicable accounting rules. Instead, a component for credit risk related to loans held for sale is embedded in the market valuation for these loans. Market valuation reserve on loans held for sale totaled $13.9 million at March 31, 2004.

SECONDARY MARKET RESERVE

We generally do not sell loans with recourse in our loan sale activities. However, we can be required to repurchase loans from investors when our loan sales contain individual loans that are not in conformity with the representations and warranties we make at the time of sale. We have made significant investments in our pre-production and post-production quality control processes to identify potential systemic issues that could cause repurchases. We believe that these efforts have improved our production quality; however, possible increases in default rates due to an economic slowdown could cause the overall rate of repurchases to remain constant or even increase. Since inception in 1993, the Company has repurchased only a very small amount of loans from its securitization trusts. The increase in repurchase activity in recent years has been primarily a function of IndyMac’s diversification of its loan sale channels to whole loan and GSE sales. While sales through these channels generate enhanced cash flows, they tend to have a greater level of representation and warranty risk. The following table shows the amount of loans, including the unpaid principal balance related to indemnity payments to investors in lieu of repurchasing a loan, we have repurchased from each distribution channel, since the Company began active lending operations in January 1993.


			Amount				Percentage
			Repurchased		Total Sold		Repurchased


			(Dollars in millions)
Loans sold:
	GSEs and whole loans		$	116.4	$	57,732		0.20	%
	Securitization trusts			9.3		45,197		0.02	%

		Total	$	125.7	$	102,929		0.12	%

The Company maintains secondary market reserves for losses that could arise in connection with loans that we are required to repurchase from whole loan sales or securitization transactions. These reserves, which totaled $34.0 million at March 31, 2004, have two general components: reserves for repurchases arising from representation and warranty claims, and reserves for disputes with investors and vendors with respect to contractual obligations pertaining to mortgage operations. The table below shows the activity in the reserves during the three months ended March 31, 2004.


	(Dollars in
	thousands)

Balance, December 31, 2003.	$	34,000
Additions/provisions		8,486
Claims reimbursement and estimated discounts on loans held for sale/charge-offs		(9,096	)
Recoveries on previous claims		610

Balance, March 31, 2004.	$	34,000

Reserve levels are a function of expected losses based on actual pending claims and repurchase requests, historical experience, loan volume and loan sales distribution channels and the assessment of probable vendor or investor claims. While the ultimate amount of repurchases and claims is uncertain, we believe that the reserves are adequate. We will continue to evaluate the adequacy of our reserves and may continue to allocate a portion of our gain on sale proceeds to these reserves going forward. Changes in the level of provision to this reserve impacts the overall gain on sale margin from quarter to quarter. The entire balances of our secondary market reserves are included on the consolidated balance sheets as a component of other liabilities.

OPERATING EXPENSES

A summary of operating expenses follows:



	Three Months Ended

	March 31,		March 31,		December 31,
	2004		2003		2003


	(Dollars in thousands)
Salaries and related	$	63,038	$	53,094	$	55,706
Premises and equipment		9,593		8,306		9,864
Loan purchase costs		7,307		7,058		6,872
Professional services		5,073		4,610		5,429
Data processing		8,591		6,764		9,911
Office		5,979		5,260		5,509
Advertising and promotion		8,856		6,064		7,454
Operations and sale of foreclosed assets		2,135		956		1,316
Other		4,626		3,546		4,845

	$	115,198	$	95,658	$	106,906

General and administrative expenses, including salaries, increased during the quarter ended March 31, 2004, to $115.2 million, compared to $95.7 million during the same period in 2003. The increase was largely driven by increases in salaries and infrastructure and technology related expenses as a result of the Company’s increased mortgage loan production and operational expansions. Mortgage loan production increased 9% year over year, from $6.6 billion for the quarter ended March 31, 2003, to $7.1 billion for the quarter ended March 31, 2004. In a continuing effort to penetrate the market and gain market share, the Company also incurred costs to expand its sales force infrastructure with dedicated resources focused on new customer activation, customer training and support, and improving its conversion of loan submissions to fundings. As a result of the increased production volume and investments made in sales and customer service, the Company’s average full-time equivalent employees increased during the year by 19%, from 3,286 during the quarter ended March 31, 2003 to 3,921 during the quarter ended March 31, 2004. Additionally, the Company continues to increase its investment in direct marketing costs to further promote its new product offerings, subprime and HELOC products. Furthermore, during 2003 the Company made investments in data processing costs to (1) enhance its quality controls and compliance structure to ensure continued improvement in asset quality and support the growth of higher margin products; (2) strengthen its technology platform; and (3) enhance its customer service response performance.

DIVIDEND POLICY

IndyMac’s Board of Directors declared a cash dividend of $0.30 per share for the second quarter of 2004, up 20% from the dividend declared and paid in the first quarter of this year. The cash dividend is payable June 10, 2004, to shareholders of record on May 13, 2004.

FUTURE OUTLOOK

On average, U.S. mortgage debt outstanding has grown approximately 7% to 8% per year over the last 2 decades and is projected, based on economic demographics, to continue this level of approximate growth. At this rate, mortgage debt outstanding roughly doubles every decade. We believe, based on our confidence in our employees, hybrid thrift/ mortgage banking business model, capital strength and ability to gain market share, that we are positioned to grow earnings per share at a compounded growth rate of approximately 15% over the long run, or approximately double the rate of the industry. In fact, IndyMac’s historical track record has exceeded this target over the last eleven years with compounded annual growth of 27% under its current management team.

With that said, the past three years have been extraordinary years for the mortgage industry. Industry mortgage production has achieved historic highs as a result of historically low interest rates, which led to record refinancing of mortgages. The industry is in the midst of a major transition from these historic highs back to more normalized levels. The Mortgage Bankers Association of America is projecting that industry production will decline 33% in 2004. Given the significant industry transition, IndyMac expects that its earnings per share in 2004 will lag its long-term growth rate as we make this transition.

Declining interest rates in February gave rise to a mini refinance boom during the first quarter, translating to an improvement in the overall industry volumes and led to the significant increase in our pipeline of loans in process which will result in increased production volumes in the second quarter. However, economic indicators are now pointing to an improving economy and accordingly interest rates have significantly increased from those earlier lows. The volatility in interest rates continues to make forecasting more challenging and less precise. What does seem increasingly clear at this point is that while the overall industry volumes may be somewhat higher than originally anticipated at the start of the year, our industry will continue its transition to more normal levels over the course of this year. Given IndyMac’s performance in the first quarter, our strong pipeline as we enter the second quarter and our expectations for the remainder of this year, we now expect that earnings per share will range from $3.10 to $3.30 in 2004, a modest improvement in our outlook from three months earlier.

The 2004 earnings projection above represents a proforma number that excludes the impact to earnings and EPS for a prospective change in industry accounting for rate locks pursuant to Staff Accounting Bulletin (SAB) 105 published by the SEC during the first quarter with an effective implementation date of April 1, 2004. This change delays the revenue recognition on the pipeline of rate locks and funded loans by approximately one quarter and will have a one-time negative effect on earnings during the second quarter of this year. The impact of this change in accounting in the second quarter of this year is expected to range from $24 million to $27 million after tax, or $0.40 to $0.45 per share. IndyMac plans to report both GAAP and proforma EPS in the second quarter so that results can be evaluated on a consistent accounting basis. This change has no economic impact on IndyMac’s business or operations.

This “Future Outlook” section contains certain forward-looking statements. See the section of this Form 10-Q entitled “Forward Looking Statements” for a description of factors which may cause our actual results to differ from those anticipated.

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

During the quarter ended March 31, 2004, we had average total liquidity of $984.4 million, which is represented by unpledged liquid assets on hand plus amounts that may be immediately raised through the pledging of other available assets as collateral pursuant to committed financing facilities. We currently believe that our liquidity level is in excess of that necessary to satisfy our operating requirements and meet our obligations and commitments in a timely and cost effective manner.

PRINCIPAL SOURCES OF CASH

Our principal financing needs are to fund acquisitions of mortgage loans and our investment in mortgage loans, mortgage-backed securities and MSRs. Our primary sources of funds used to meet these financing needs are loan sales and securitizations, deposits, advances from the Federal Home Loan Bank, borrowings and retained earnings. The sources used vary depending on such factors as rates paid, collateral requirements, maturities and the impact on our capital.

Loan Sales and Securitizations

Our business model relies heavily upon selling the majority of our mortgage loans shortly after acquisition. The proceeds of these sales are a critical component of the liquidity necessary for our ongoing operations. During the three months ended March 31, 2004, we sold our loans through three channels: (1) GSEs; (2) private label securitizations; and (3) whole loan sales. If any of our sales channels were disrupted, our liquidity could be negatively impacted. Disruptions in our whole loan sales and mortgage securitization transactions can occur as a result of the performance of our existing securitizations, as well as economic events or other factors beyond our control.

Deposits/Retail Bank

We solicit deposits from the general public and institutions by offering a variety of accounts and rates through our network of 10 branches in Southern California, telebanking and Internet channels. Through our Web site 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.

Our deposit products include regular savings accounts, demand deposit accounts, money market accounts, certificates of deposit and individual retirement accounts.

The following table sets forth the balance of deposits, by deposit category, as of the following period ends.



		March 31, 2004					March 31, 2003					December 31, 2003

				% of					% of					% of
				Total					Total					Total
		Amount		Deposits			Amount		Deposits			Amount		Deposits


		(Dollars in thousands)
Non-interest-bearing checking		$	48,231		1	%	$	40,221		1	%	$	44,353		1	%
Interest-bearing checking			42,727		1	%		42,068		1	%		39,761		1	%
Savings			1,637,665		34	%		932,141		27	%		1,515,771		35	%
Custodial accounts			658,387		14	%		557,041		16	%		528,724		12	%

	Total core deposits		2,387,010		50	%		1,571,471		45	%		2,128,609		49	%
Certificates of deposit			2,362,759		50	%		1,904,710		55	%		2,222,164		51	%

	Total deposits	$	4,749,769		100	%	$	3,476,181		100	%	$	4,350,773		100	%

The increase in our savings deposits from $1,515.8 million at December 31, 2003 to $1,637.7 million at March 31, 2004, is mainly due to our continuing offer of the top tier money market products.

The following table sets forth the balance of deposits, by deposit channel, as of the following period ends:



		March 31, 2004					March 31, 2003					December 31, 2003

				% of					% of					% of
				Total					Total					Total
		Amount		Deposits			Amount		Deposits			Amount		Deposits


		(Dollars in thousands)
Branch		$	1,780,396		37	%	$	1,402,724		40	%	$	1,717,314		39	%
Telebanking			462,997		11	%		478,338		14	%		463,755		11	%
Internet			523,622		10	%		398,242		12	%		555,029		13	%
Money desk			1,324,367		28	%		639,836		18	%		1,085,951		25	%
Custodial			658,387		14	%		557,041		16	%		528,724		12	%

	Total deposits	$	4,749,769		100	%	$	3,476,181		100	%	$	4,350,773		100	%

Included in deposits at March 31, 2004, and December 31, 2003, were non-interest-bearing custodial accounts, primarily related to our GSE servicing portfolio, totaling $658.4 million and $528.7 million, respectively.

Advances from Federal Home Loan Bank

The Federal Home Loan Bank system functions as a borrowing source for regulated financial depositories and similar institutions that are engaged in residential housing finance. As a member of the FHLB of San Francisco, we are required to own capital stock of the FHLB and are authorized to apply for advances from the FHLB, on a secured basis, in amounts determined by reference to available collateral. SFR mortgage loans, agency and AAA-rated mortgage-backed securities are the principal collateral that may be used to secure these borrowings, although certain other types of loans and other assets may also be accepted pursuant to FHLB policies and statutory requirements. Currently, the Bank is approved for collateralized advances of up to $5.8 billion, of which $4.8 billion were outstanding at March 31, 2004. The FHLB offers several credit programs, each with its own fixed or floating interest rate, and a range of maturities.

Trust Preferred Securities and Warrants

On November 14, 2001, we completed an offering of Warrants and Income Redeemable Equity Securities (“WIRES”) to investors. Gross proceeds of the transaction were $175 million. The securities were offered as units consisting of a trust preferred security, issued by a trust formed by us, and a warrant to purchase IndyMac Bancorp’s common stock. In both the months of July and December 2003, we issued an additional $30 million of trust preferred securities, yielding 6.05% and 6.30%, respectively. The proceeds of these securities will also be used in operations. These securities did not contain any warrants on IndyMac Bancorp common stock.

Upon the adoption of FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin (ARB) No. 51, on July 1, 2003, the trusts have been deconsolidated from the financial statements of the Company. Trust preferred debentures, representing the liabilities due from IndyMac Bancorp to IndyMac Capital Trusts, amounted to $183.8 million and $183.6 million at March 31, 2004, and December 31, 2003, respectively. These debentures are included in Other Borrowings on the consolidated balance sheets.

Other Borrowings, Excluding Trust Preferred Debentures

Other borrowings, excluding trust preferred debentures, consist of loans and securities sold under committed financing facilities and uncommitted agreements to repurchase, CMO collateral and notes payable. Total other borrowings increased to $3,392.7 million at March 31, 2004, from $2,438.5 million at December 31, 2003. The increase of $954.2 million was primarily the result of additional draws on our credit facilities to fund mortgage loan originations, the issuance of $500 million non-recourse AAA-rated HELOC-backed notes during the first quarter 2004, and reductions of other borrowings that previously financed HELOC loans. Additionally, we continued to use borrowed funds to fund mortgage loans originated during the three months ended March 31, 2004.

At March 31, 2004, we had $3.9 billion in committed financing facilities, of which $2.2 billion was utilized. For the first quarter 2004, we had an average of $707.5 million in operating liquidity available for use, based on eligible collateral. Decisions by our lenders and investors to make additional funds available to us in the future will depend upon a number of factors. These include our compliance with the terms of existing credit arrangements, our financial performance, eligible collateral, changes in our credit rating, industry and market trends in our various businesses, the general availability and interest rates applicable to financing and investments, the lenders’ and/or investors’ own resources and policies concerning loans and investments and the relative attractiveness of alternative investment or lending opportunities. As of March 31, 2004, we believe we were in compliance with all representations, warranties and financial covenants under our borrowing facilities.

PRINCIPAL USES OF CASH

In addition to the financing sources discussed above, cash uses are funded by net cash flows from operations, sales of mortgage-backed securities and principal and interest payments on loans and securities. The amounts of net acquisitions of loans held for sale and trading securities included as components of net cash provided by (used in) operating activities totaled $1.4 million during the first quarter 2004 and $(131.0) million during first quarter 2003. Excluding the purchase and sale activity for loans held for sale and trading securities, the net cash provided by the Company’s operating activities totaled $112.2 million and $53.3 million for the quarters ended March 31, 2004 and 2003, respectively. During the third quarter 2003, the Company started to purchase swaptions and more caps and floors to hedge certain liabilities and servicing-related assets. The net (increase) decrease in premiums for these derivative instruments totaled $26.6 million and $(14.5) million for the quarters ended March 31, 2004 and 2003, respectively. The net cash provided by the Company’s operating activities before the activities for trading securities, loans held for sale and purchase of derivative instruments amounted to $85.6 million and $67.9 million for the quarters ended March 31, 2004 and 2003, respectively.

ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss was $(36.7) million at March 31, 2004, compared to $(26.5) million at December 31, 2003. This change was the net result of the decline in fair value of certain interest rate swaps and swaptions designated as cash flow hedges of floating rate borrowings exceeded the underlying gain in securities classified as available for sale. It should be noted that accumulated other comprehensive loss does not include the increases in the fair value of loans held for investment that are funded by borrowings that are hedged by a portion of these interest rate swaps and swaptions. Accumulated Other Comprehensive Loss is not a component of the determination of regulatory capital.

REGULATORY CAPITAL REQUIREMENTS

The Bank is subject to regulatory capital regulations administered by the federal banking agencies. In addition, as a condition to its approval of our acquisition of SGV Bancorp, Inc. in July 2000, the OTS required that the Bank hold Tier 1 (core) capital of at least 8% of adjusted total assets for three years following the consummation of the transaction and maintain a total risk-based capital position of at least 10% of total risk-weighted assets. This particular condition expired on July 1, 2003, and the Bank has committed to the OTS to maintain total risk-based capital and Tier 1 risk-based capital (core capital minus the deduction for low-level recourse and residual interests) equal to at least 10% and 6%, respectively, of total risk-weighted assets. As of March 31, 2004, the Bank met all of the requirements of a “well-capitalized” institution under the general regulatory capital regulations.

During 2001, the OTS issued guidance for subprime lending programs, which requires a lender to quantify the additional risks in its subprime lending activities and determine the appropriate amounts of allowances for loan losses and capital it needs to offset those risks. During the fourth quarter of 2003, the Company revised its approach to conform to this guidance, and this revised approach was accepted by the OTS. Whereas, in the past, subprime loans were determined based on increasing risk levels using secondary marketing and rating agency securitization models, the revised approach now generally classifies as subprime all loans in a first lien position with a FICO score less than 620 and all loans in a second lien position with a FICO score less than 660. As of December 31, 2003, loans meeting this revised definition were supported by capital equal to two times that of similar prime assets. We report our subprime loan calculation in an addendum to the Thrift Financial Report that we file with the OTS. As of March 31, 2004, subprime loans totaled $585.8 million as calculated for regulatory reporting purposes, of which $445.5 million were loans held for sale.

The following table presents the Bank’s actual and required capital ratios and the minimum required capital ratios to be categorized as “well-capitalized” at March 31, 2004. The impact of the additional risk weighting criteria related to subprime loans had the effect of reducing IndyMac’s total risk-based capital by 64 basis points as noted in the table below.


		As Reported			Adjusted for
		Pre-Subprime			Additional Subprime			Well-Capitalized
		Risk-Weighting			Risk-Weighting			Minimum

Capital Ratios:
	Tangible		7.50	%		7.50	%		2.00	%
	Tier 1 core		7.50	%		7.50	%		5.00	%
	Tier 1 risk-based		12.67	%		12.05	%		6.00	%
	Total risk-based		13.25	%		12.61	%		10.00	%

We believe that, under current regulations, the Bank will continue to meet its “well-capitalized” minimum capital requirements in the foreseeable future. The Bank’s regulatory capital compliance could be impacted, however, by a number of factors, such as changes to applicable regulations, adverse action by our regulators, changes in the our mix of assets, interest rate fluctuations, loan loss provisions and credit losses, or significant changes in the economy in areas where we have most of our loans. Any of these factors could cause our actual future results to vary from anticipated future results and consequently could have an adverse impact on the ability of the Bank to meet its future minimum capital requirements.

SHARE REPURCHASES

In June of 1999, our Board of Directors approved a $100 million share repurchase program, which has since been amended to increase to $500 million and include a special repurchase of 3,640,860 shares from Countrywide Credit Industries, Inc. 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 aggregated investment of $504.4 million. At March 31, 2004, we had $63.6 million of remaining capacity to repurchase under the current authorization from the Board of Directors. No share repurchases under this program were made during the first quarter 2004.

From time to time, we also repurchase shares from certain employees and officers under the Company’s internal benefit programs. The following table summarizes the share repurchase activities from our employees and officers during the first quarter of 2004:


	January		February		March		Total

Number of Shares		15,275		—		2,177		17,452
Weighted Average Price Per Share	$	29.84		—	$	35.23	$	30.51

OFF-BALANCE SHEET ARRANGEMENTS

In the ordinary course of our business, we engage in financial transactions that are not recorded on our balance sheet. These transactions are structured to manage our interest rate, credit or liquidity risks, diversify funding sources or to optimize our capital.

Substantially all of our off-balance sheet arrangements relate to the securitization of mortgage loans. Our mortgage loan securitizations are normally structured as sales in accordance with SFAS 140, which involves the transfer of the mortgage loans to “qualifying special-purpose entities” that are not subject to consolidation. In a securitization, an entity transferring the assets is able to convert those assets into cash. Special-purpose entities used in such securitizations obtain cash to acquire the assets by issuing securities to investors. We also, generally, have the right to repurchase mortgage loans from the special-purpose entity if the remaining outstanding balance of the mortgage loans falls to a level where the cost of servicing the loans exceeds the revenues we earn.

In connection with loan sales that are securitization transactions, there are $22.5 billion in loans owned by off-balance sheet trusts as of March 31, 2004. The trusts have issued bonds secured by these loans. We have no obligation to provide funding support to either the third party investors or the off-balance sheet trusts. The third party investors or the trusts generally have no recourse to our assets or us and have no ability to require us to repurchase their loans other than for non-credit-related recourse that can arise under standard representations and warranties. We maintain secondary market reserves for losses that could arise in connection with loans that we are required to repurchase from whole loan sales or securitization transactions.

We often retain certain interests, which may include subordinated classes of securities, MSRs, AAA-rated and agency interest-only strips and residual securities in the securitization trust. The performance of the loans in the trusts will impact our ability to realize the current estimated fair value of these assets that are included on our balance sheet.

Management does not believe that any of its off-balance sheet arrangements have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

AGGREGATE CONTRACTUAL OBLIGATIONS

The following table summarizes our material contractual obligations as of March 31, 2004. The payment amounts represent those amounts contractually due to the recipient and do not include any unamortized premiums or discounts, hedge basis adjustments, or other similar carrying value adjustments. There have been no material changes outside the ordinary course of our business in any specified contractual obligations during the first quarter 2004.



	Payment Due

	April 1, 2004		January 1,		January 1,
	through		2005 through		2008 through		After
	December 31,		December 31,		December 31,		December 31,
	2004		2007		2009		2009		Total


	(In thousands)
Deposits without a stated maturity	$	2,387,010	$	—	$	—	$	—	$	2,387,010
Custodial Accounts and Certificates of Deposits		1,610,280		746,807		5,672		—		2,362,759
FHLB Advances		3,654,923		875,000		230,000		—		4,759,923
Repurchase Agreements		2,894,573		—		—		—		2,894,573
HELOC Notes		—		497,964		—		—		497,964
CMOs		—		—		—		203		203
Trust Preferred		—		—		—		183,798		183,798
Accrued Interest Payable		29,119		—		—		—		29,119
Deferred Compensation		—		—		—		23,631		23,631
Operating Leases		9,214		36,601		18,469		6,616		70,900
Purchase Obligations		5,852		13,883		—		—		19,735

Total	$	10,590,971	$	2,170,255	$	254,141	$	214,248	$	13,229,615

A schedule of significant commitments at March 31, 2004, follows:


		Payment Due

		(Dollars in thousands)
Investment portfolio commitments to:
	Purchase loans pursuant to exercising clean up calls	$	242,745
Undisbursed loan commitments:
	Builder construction		507,306
	Consumer construction		939,064
	HELOCs		503,166
Letters of credit			8,466

Additionally, in connection with standard representations and warranties on loan sales and securitizations, we are occasionally required to repurchase loans or make certain payments to settle breaches of these representations and warranties. From inception of our active mortgage banking operations on January 1, 1993, through March 31, 2004, we have sold $102.9 billion in loans, and repurchased $125.7 million loans, or 0.12% of total loans sold. To provide for probable future losses related to loans sold, we have established a reserve based on estimated losses on actual pending claims and repurchase requests, historical experience, loan sales volume and loan sale distribution channels, which is included in other liabilities in the consolidated balance sheets. The balance in this reserve totaled $34 million at March 31, 2004. See the caption “Secondary Market Reserve” above for further information.

KEY OPERATING RISKS

Like all businesses, we assume a certain amount of risk in order to earn returns on our capital. The following is a summary discussion of key operating risks. For further information on these and other key operating risks, refer to IndyMac’s annual report on Form 10-K for the year ended December 31, 2003.

INTEREST RATE RISK

Due to the characteristics of our financial assets and liabilities and the nature of our business activities, our financial position and results of operations may be materially affected by changes in interest rates in various ways. While we have devised and implemented a comprehensive asset/liability management strategy that seeks, on an economic and an accounting basis, to mitigate significant fluctuations in our financial position and results of operations likely to be caused by market interest rate changes, there can be no assurance that this strategy (including assumptions concerning the correlation thought to exist among different types of instruments) or its implementation will be successful in any particular interest rate environment.

VALUATION RISK

In connection with the loan sale process, we retain certain assets for which the market is limited and illiquid. As a result, valuations are derived using complex modeling and significant assumptions and judgments, in the absence of third party market quotations or sale information to value such assets. The assets include AAA-rated and agency interest-only securities, MSRs, non-investment grade securities and residuals. In addition, from time to time, we may acquire these types of securities from third party issuers. These assets represented 4% of total assets and 61% of total equity at March 31, 2004. The fair value of these assets could vary significantly as market conditions change.

CREDIT RISK

A significant portion of our Investment Portfolio consists of prime residential SFR loans held for investment, and non-investment grade securities and residuals collateralized by mortgage loans. We also provide construction lending to consumers and developers to build residential properties which have a higher

credit risk profile than permanent mortgage loans. While the majority of our loans are to prime quality borrowers and secured by residential property, there is no guarantee that, in the event of borrower default, we will be able to recoup the full principal amount and interest due on a loan. We have adopted underwriting and loan quality monitoring systems, procedures and credit policies, including the establishment and review of the allowance for loan losses, that management believes are prudent and appropriate to minimize this risk by tracking loan performance, assessing the likelihood of nonperformance and diversifying our loan portfolio. Such policies and procedures, however, may not prevent unexpected losses that could adversely affect our results. In addition, while we have discontinued our home improvement and manufactured housing lending programs, we continue to liquidate portfolios of these loans, which have greater credit risk than that of our core mortgage loan portfolios. At March 31, 2004, the book value of these non-core portfolios was $58.4 million, net of reserves.

We also sell loans to GSEs, to outside investors, and to securitization trusts. In these instances, we are subject to repurchase risk in the event of breaches of representations or warranties we make in connection with the loan sales. While we have established what we believe to be adequate secondary marketing reserves, there can be no guarantee that the amount reserved is sufficient to cover all potential losses resulting from such repurchases.

LIQUIDITY RISK/ ACCESS TO CAPITAL MARKETS

We finance a substantial portion of our assets through deposits insured by the FDIC and through borrowings from the FHLB. We also obtain financing from investment and commercial banks. There is no guarantee that these sources of funds will continue to be available to us, or that our borrowings can be refinanced upon maturity, although we are not aware of any trends, events or uncertainties that we believe are reasonably likely to cause a decrease in our liquidity from these sources.

We utilize three sales channels to sell loans to the secondary market: whole loan sales, sales to the GSEs, and private-label securitizations. A disruption in the securitization market could adversely impact our ability to fund mortgage loans and our gains on sale, leading to a corresponding decrease in revenue and earnings. Likewise, a deterioration in the performance of our private-label securities could adversely impact the availability and pricing of future transactions.

GOVERNMENT REGULATION AND MONETARY POLICY

The banking industry in general is extensively regulated at the federal and state levels. Insured depository institutions and their holding companies are subject to comprehensive regulation and supervision by financial regulatory authorities covering all aspects of their organization, management and operations. The OTS and the FDIC are primarily responsible for the federal regulation and supervision of the Bank and its affiliated entities. In addition to their regulatory powers, these two agencies also have significant enforcement authority that they can use to address unsafe and unsound banking practices, violations of laws, and capital and operational deficiencies. Enforcement powers can be exercised in a number of ways, through either formal or informal actions. Informal enforcement actions customarily remain confidential between the regulator and the financial institution, while more formal enforcement actions are customarily publicly disclosed. Further, the Bank’s operations are subject to regulation at the state level, including a variety of consumer protection provisions. Banking institutions also are affected by the various monetary and fiscal policies of the U.S. government, including those of the Federal Reserve Board, and these policies can influence financial regulatory actions. Accordingly, the actions of those governmental authorities responsible for regulatory, fiscal and monetary affairs can have a significant impact on the activities of financial services firms such as ours.

The Company’s financial condition and results of operations are reported in accordance with U.S. GAAP. While not impacting economic results, future changes in accounting principles issued by the Financial Accounting Standards Board could impact our operational results as reported under U.S. GAAP.

Additionally, political conditions could impact the Company’s earnings. Acts or threats of war or terrorism, as well as actions taken by the U.S. or other governments in response to such acts or threats, could impact business and economic conditions in which the Company operates.

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.

The primary competition for our Mortgage Banking Group comes from banks and other financial institutions and mortgage companies. We seek to compete with financial institutions and mortgage companies through an emphasis on quality of service, diversified products and maximum use of technology.

OTHER RISKS

We are subject to various other risks, including changes in the demand for mortgage loans, which historically tends to decrease as interest rates increase. Also, a majority of our loan acquisitions are geographically concentrated in certain states, including California, New York, Florida and New Jersey. Any adverse economic conditions in these markets could cause the number of loans acquired to decrease and delinquencies to increase, causing a corresponding decline in revenues. Lastly, there are no guarantees as to our degree of success in managing loan portfolio concentrations, anticipating and taking advantage of technological advances, or executing upon our growth plans for our mortgage banking operations.

CRITICAL ACCOUNTING POLICIES

Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, we have identified six policies, that, due to the judgments, estimates and assumptions inherent in those policies are critical to an understanding of our financial statements. These policies relate to (a) the valuation of AAA-rated and agency interest-only strips; (b) the valuation of MSRs; (c) the valuation of non-investment grade securities and residuals; (d) derivatives and other hedging instruments; (e) the methodology for determining our allowance for loan losses; and (f) the valuation of our secondary market reserve. Management discusses these critical accounting policies and related judgments with IndyMac’s audit committee and external auditors on a quarterly basis. We believe that the judgments, estimates and assumptions used in the preparation of our consolidated financial statements are appropriate given the factual circumstances at the time. However, given the sensitivity of our consolidated financial statements to these critical accounting policies, the use of other judgments, estimates and assumptions could result in material differences in our results of operations or financial condition. For further information on the Company’s critical accounting policies and the impact of SAB No. 105 on our accounting policy for rate lock loan commitments, refer to IndyMac’s annual report on

Form 10-K for the year ended December 31, 2003 and Note 2 — Newly Issued Accounting Pronouncements, accompanying to the consolidated financial statements on page 53.


ITEM 3.	*QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK*

See “Overall Interest Rate Risk Management” above for quantitative and qualitative disclosure about market risk on page 36.


ITEM 1.	*FINANCIAL STATEMENTS (UNAUDITED)*

INDYMAC BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


					March 31,			December 31,
					2004			2003

					(Unaudited)

					(Dollars in thousands)
ASSETS
Cash and cash equivalents					$	200,863		$	115,485
Securities classified as trading ($107.0 million and $70.9 million pledged as collateral for borrowings at March 31, 2004 and December 31, 2003, respectively)						251,006			223,632
Mortgage-backed securities and agency notes available for sale, amortized cost of $2.6 billion and $1.6 billion at March 31, 2004 and December 31, 2003, respectively ($2.1 billion and $1.5 billion pledged as collateral for borrowings at March 31, 2004 and December 31, 2003, respectively)						2,655,696			1,613,974
Loans receivable:
	Loans held for sale
		Prime				2,993,512			2,196,488
		Subprime				381,287			295,008
		Consumer lot loans				156,518			81,752

			Total loans held for sale			3,531,317			2,573,248

	Loans held for investment
		SFR mortgage				4,440,540			4,945,439
		Consumer construction				1,225,347			1,145,526
		Builder construction				500,490			484,397
		HELOC				322,351			711,494
		Land and other mortgage				164,981			126,044
		Income property				9,315			36,285
	Allowance for loan losses					(52,126	)		(52,645	)

			Total loans held for investment			6,610,898			7,396,540

				Total loans receivable ($7.8 billion and $7.6 billion pledged as collateral for borrowings at March 31, 2004 and December 31, 2003, respectively)		10,142,215			9,969,788

Mortgage servicing rights						414,358			443,688
Investment in Federal Home Loan Bank stock, at cost						287,736			313,284
Interest receivable						60,928			51,758
Goodwill and other intangible assets						33,509			33,697
Foreclosed assets						26,535			23,677
Other assets						422,993			451,408

				Total assets	$	14,495,839		$	13,240,391

INDYMAC BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS — (Continued)


			March 31,			December 31,
			2004			2003

			(Unaudited)

			(Dollars in thousands)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits			$	4,749,769		$	4,350,773
Advances from Federal Home Loan Bank				4,759,923			4,934,911
Other borrowings				3,576,538			2,622,094
Other liabilities				354,305			315,182

		Total liabilities		13,440,535			12,222,960

Shareholders’ Equity
	Preferred stock — authorized, 10,000,000 shares of $0.01 par value; none issued			—			—
	Common stock — authorized, 200,000,000 shares of $0.01 par value; issued 86,953,278 shares (57,781,587 outstanding) at March 31, 2004, and issued 85,914,552 shares (56,760,313 outstanding) at December 31, 2003.			869			859
	Additional paid-in-capital			1,064,900			1,043,856
	Accumulated other comprehensive loss			(36,724	)		(26,454	)
	Retained earnings			546,030			518,408
	Treasury stock, 29,171,691 shares and 29,154,239 shares at March 31, 2004, and December 31, 2003, respectively			(519,771	)		(519,238	)

		Total shareholders’ equity		1,055,304			1,017,431

		Total liabilities and shareholders’ equity	$	14,495,839		$	13,240,391

The accompanying notes are an integral part of these statements.

INDYMAC BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS



			For the Three Months
			Ended March 31,

			2004			2003


			(Unaudited)
			(In thousands,
			except per share data)
Interest income
Mortgage-backed and other securities			$	26,855		$	20,961
Loans held for sale
	Prime			44,331			37,425
	Subprime			8,508			6,243
	Consumer lot loans			1,907			1,533

		Total loans held for sale		54,746			45,201
Loans held for investment
	SFR mortgage			49,218			29,514
	Consumer construction			15,995			14,396
	Builder construction			7,526			8,601
	HELOC			6,359			4,147
	Land and other mortgage			2,464			2,301
	Income property			514			1,119

		Total loans held for investment		82,076			60,078
Other				2,882			1,957

		Total interest income		166,559			128,197
Interest expense
Deposits				22,482			21,687
Advances from Federal Home Loan Bank				30,920			25,558
Borrowings				19,224			17,927

		Total interest expense		72,626			65,172

		Net interest income		93,933			63,025
Provision for loan losses				1,500			3,100

		Net interest income after provision for loan losses		92,433			59,925
Other income
	Gain on sale of loans			83,668			83,784
	Service fee (loss) income			(3,144	)		2,383
	Loss on mortgage-backed securities, net			(4,987	)		(6,910	)
	Fee and other income			16,722			17,727

		Total other income		92,259			96,984

		Net revenues		184,692			156,909
Other expense
	Operating expenses			115,198			95,658
	Amortization of other intangible assets			188			231

		Total other expense		115,386			95,889

Earnings before provision for income taxes				69,306			61,020
	Provision for income taxes			27,376			24,103

		Net earnings	$	41,930		$	36,917

Earnings per share
	Basic		$	0.74		$	0.67
	Diluted		$	0.70		$	0.66
Weighted average shares outstanding
	Basic			56,997			54,827
	Diluted			59,791			55,979
Dividend Declared per Share			$	0.30		$	0.10

The accompanying notes are an integral part of these statements.

INDYMAC BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME


								Accumulated
								Other
						Additional		Comprehensive						Total						Total
	Shares			Common		Paid-In-		Income			Retained			Comprehensive			Treasury			Shareholders’
	Outstanding			Stock		Capital		(Loss)			Earnings			Income			Stock			Equity


	(Unaudited)

	(Dollars in thousands)
Balance at December 31, 2002		54,829,486		$	840	$	1,007,936	$	(17,747	)	$	377,707					$	(518,771	)	$	849,965
Common stock options exercised		222,020			3		3,313		—			—		$	—			—			3,316
Directors’ and officers’ notes receivable		—			—		25		—			—			—			—			25
Deferred compensation, restricted stock		161,696			—		489		—			—			—			—			489
Net loss on mortgage- backed securities available for sale, net of tax		—			—		—		(558	)		—			(558	)		—			(558	)
Net unrealized loss on derivatives used in cash flow hedges, net of tax		—			—		—		(1,475	)		—			(1,475	)		—			(1,475	)
Purchases of common stock		(21,712	)		—		—		—			—			—			(406	)		(406	)
Cash dividends		—			—		—		—			(5,490	)		—			—			(5,490	)
Net earnings		—			—		—		—			36,917			36,917			—			36,917

Total comprehensive income		—			—		—		—			—		$	34,844			—			—

Balance at March 31, 2003		55,191,490		$	843	$	1,011,763	$	(19,780	)	$	409,134					$	(519,177	)	$	882,783

Balance at December 31, 2003		56,760,313		$	859	$	1,043,856	$	(26,454	)	$	518,408					$	(519,238	)	$	1,017,431
Common stock options exercised		944,774			10		20,507		—			—		$	—			—			20,517
Directors’ and officers’ notes receivable		—			—		33		—			—			—			—			33
Deferred compensation, restricted stock		93,952			—		504		—			—			—			—			504
Net gain on mortgage- backed securities available for sale, net of tax		—			—		—		11,849			—			11,849			—			11,849
Net unrealized loss on derivatives used in cash flow hedges, net of tax		—			—		—		(22,119	)		—			(22,119	)		—			(22,119	)
Purchases of common stock		(17,452	)		—		—		—			—			—			(533	)		(533	)
Cash dividends		—			—		—		—			(14,308	)		—			—			(14,308	)
Net earnings		—			—		—		—			41,930			41,930			—			41,930

Total comprehensive income		—			—		—		—			—		$	31,660			—			—

Balance at March 31, 2004		57,781,587		$	869	$	1,064,900	$	(36,724	)	$	546,030					$	(519,771	)	$	1,055,304

The accompanying notes are an integral part of these statements.

INDYMAC BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



				For the Three Months
				Ended March 31,

				2004			2003


				(Unaudited)
				(Dollars in thousands)
Cash flows from operating activities:
	Net earnings			$	41,930		$	36,917
	Adjustments to reconcile net earnings to net cash (used in) operating activities:
		Total amortization and depreciation			43,313			49,893
		Provision for valuation adjustment of mortgage servicing rights			53,433			1,112
		Gain on sale of loans			(83,668	)		(83,784	)
		Loss on mortgage-backed securities, net			4,987			6,910
		Provision for loan losses			1,500			3,100
		Net decrease (increase) in other assets and liabilities			24,076			53,731

			Net cash provided by operating activities before activity for trading securities, premiums paid for derivative instruments and loans held for sale		85,571			67,879
		Net (purchases of) and payment from trading securities			(5,199	)		527,366
		Net decrease (increase) on premiums for derivative instruments			26,613			(14,544	)
		Net purchases of loans held for sale			(1,025,454	)		(658,369	)

			Net cash (used in) operating activities		(918,469	)		(77,668	)

Cash flows from investing activities:
	Net (purchase of) payments from loans held for investment				(44,928	)		24,900
	Net (purchases of) and payments from mortgage-backed securities available for sale				(151,562	)		184,193
	Net decrease (increase) in investment in Federal Home Loan Bank stock, at cost				25,548			(37,390	)
	Net purchases of property, plant and equipment				(9,192	)		(5,096	)

			Net cash (used in) provided by investing activities		(180,134	)		166,607

Cash flows from financing activities:
	Net increase in deposits				398,996			335,679
	Net (decrease) increase in advances from Federal Home Loan Bank				(175,000	)		600,914
	Net increase (decrease) in borrowings				954,276			(1,089,776	)
	Net proceeds from stock options and notes receivable				20,550			3,829
	Cash dividends paid				(14,308	)		(5,490	)
	Purchases of common stock				(533	)		(406	)

			Net cash provided by (used in) financing activities		1,183,981			(155,250	)

Net increase (decrease) in cash and cash equivalents					85,378			(66,311	)
Cash and cash equivalents at beginning of period					115,485			196,720

Cash and cash equivalents at end of period				$	200,863		$	130,409

Supplemental cash flow information:
			Cash paid for interest	$	63,121		$	63,639

			Cash paid for income taxes	$	4,443		$	1,061

Supplemental disclosure of noncash investing and financing activities:
			Net transfer of loans held for sale to (from) loans held for investment	$	195,037		$	261,833

			Net transfer of loans held for investment to mortgage-backed securities available for sale	$	500,012		$	—

The accompanying notes are an integral part of these statements.

INDYMAC BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2004

(Unaudited)

Note 1 — Basis of Presentation

IndyMac Bancorp, Inc. is a savings and loan holding company. References to “IndyMac Bancorp” refer to the parent company alone while references to “IndyMac” or “we” refer to IndyMac Bancorp and its consolidated subsidiaries. Our primary business is single family residential mortgage lending, using a hybrid thrift business model including portfolio lending and thrift financing. We offer a wide array of home mortgage products using a technology-based approach, leveraged across multiple products, channels and customers.

The consolidated financial statements include the accounts of IndyMac Bancorp and its subsidiaries, including IndyMac Bank®, F.S.B. (“IndyMac Bank”). All significant intercompany balances and transactions with IndyMac’s consolidated subsidiaries have been eliminated in consolidation. The consolidated financial statements of IndyMac are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). The foregoing financial statements are unaudited; however, in the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods have been included. Operating results for the three months ended March 31, 2004, are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. For further information, refer to the consolidated financial statements and footnotes thereto included in IndyMac’s annual report on Form 10-K for the year ended December 31, 2003.

Note 2 — Newly Issued Accounting Pronouncement

On March 9, 2004, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 105, Application of Accounting Principles to Loan Commitments, which provides guidance regarding loan commitments that are accounted for as derivative instruments. In this Bulletin, the SEC determined that an interest rate lock commitment should generally be valued at zero at inception. The rate locks will continue to be adjusted for changes in value resulting from changes in market interest rates. The Company will adopt this new standard prospectively as of April 1, 2004. Under the new accounting guidance, the Company will no longer recognize any revenue at the inception of the rate lock. Profits inherent in the rate lock will be recognized at the time of the underlying loans are sold. The implementation of the standard is expected to have a one-time negative impact on gain on sales totaling approximately $24 to $27 million after tax in the second quarter of 2004. This amount is an estimate based on our current estimate of rate lock volume in the second quarter. The ultimate amount of the impact will be affected by actual rate lock volumes in the second quarter, as well as profit margins on such rate locks and the volume of loan sales during the quarter. The ultimate amount of the impact will not be known until the end of the second quarter. This accounting change affects the timing of revenue recognition and offsetting mark-to-market gains and losses, generally by one quarter or less, but not the ultimate amount of revenue recognized over time.

INDYMAC BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 3 — Securities

The following table details our securities classified as trading and securities available for sale as of March 31, 2004, and December 31, 2003.


			March 31,		December 31,
			2004		2003


			(Dollars in thousands)
Securities Classified as Trading:
	AAA-rated and agency interest-only strips		$	149,152	$	146,179
	AAA-rated principal-only securities			43,270		8,518
	Other investment grade securities			9,048		8,922
	Other non-investment grade securities			1,588		1,760
	Non-investment grade residual securities			47,948		58,253

		Total	$	251,006	$	223,632

Mortgage-Backed Securities and Agency Notes Classified as Available for Sale:
	AAA-rated non-agency securities		$	2,576,496	$	1,407,984
	AAA-rated agency securities			21,288		25,193
	AAA-rated agency notes			—		143,689
	Other investment grade securities			23,325		26,926
	Other non-investment grade securities			16,903		10,182
	Non-investment grade HELOC residual securities			17,684		—

		Total	$	2,655,696	$	1,613,974

The significant increase in AAA-rated non-agency securities from $1.4 billion at December 31, 2003 to $2.6 billion at March 31, 2004 was primarily due to the reclassification of approximately $500 million HELOC loans to securities and the retention of a $346 million senior note from our SFR mortgage loans held for investment securitization during the first quarter 2004.

Note 4 — Segment Reporting

IndyMac operates through its four main segments: IndyMac Mortgage Bank, IndyMac Consumer Bank, Home Equity Division, and Investment Portfolio Group. IndyMac Mortgage Bank is centered 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. The Home Equity Division was previously included in the IndyMac Consumer Bank segment and has been designated as a separate operating segment this quarter as this unit is now evaluated directly by our CEO in deciding resource allocations and assessing performance. IndyMac Consumer Bank provides the platform for the mortgage and deposit services that IndyMac offers directly to consumers. The Home Equity Division is a product focused division that supports the production of home equity products through all of IndyMac’s relationship and consumer direct production channels. The Investment Portfolio Group serves as the main link to customers whose mortgages we service. Through its investments in single-family residential mortgages, mortgage-backed securities and mortgage servicing rights, it serves a critical support function for IndyMac’s mortgage lending operations.

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 match-funded transfer pricing system to allocate net interest income to the operating segments. Each operating segment is allocated funding with maturities and

INDYMAC BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

interest rates matched with the expected lives, repricing frequencies and financing liquidities of the segment’s assets. Deposits receive a funding credit 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 Other. Also included in the Other are unallocated corporate costs such as corporate salaries and related expenses, excess capital, and non-recurring corporate items.

Segment information for the three months ended March 31, 2004 and 2003, was as follows:


		IndyMac		IndyMac		Home			Investment
		Mortgage		Consumer		Equity			Portfolio
		Bank		Bank		Division			Group		Other			Consolidated


		(Dollars in thousands)
Three months ended March 31, 2004
	Net interest income (expense)	$	49,705	$	10,481	$	746		$	42,393	$	(9,392	)	$	93,933
	Net revenues (loss)		117,512		34,870		1,088			44,888		(13,666	)		184,692
	Net earnings (loss)		39,251		5,873		107			19,798		(23,099	)		41,930
Assets as of March 31, 2004		$	4,928,905	$	564,555	$	578,981		$	7,824,628	$	598,770		$	14,495,839
Three months ended March 31, 2003
	Net interest income (expense)	$	45,793	$	7,652	$	(208	)	$	18,343	$	(8,555	)	$	63,025
	Net revenues (loss)		118,081		34,846		350			19,550		(15,918	)		156,909
	Net earnings (loss)		45,161		8,548		(339	)		5,960		(22,413	)		36,917
Assets as of March 31, 2003		$	3,710,148	$	647,990	$	39,547		$	4,724,595	$	354,312		$	9,476,592

Note 5 — Stock-Based Compensation

We have two stock incentive plans, the 2002 Incentive Plan, as amended and restated, and the 2000 Stock Incentive Plan, as amended (collectively, the “Plans”), which provide for the granting of non-qualified stock options, incentive stock options, restricted stock awards, performance stock awards, stock bonuses and other awards to our employees (including officers and directors). Options and awards are granted at the average market price of our stock on the grant date, vest over varying periods generally beginning at least one year from the date of grant, and expire ten years from the date of grant.

INDYMAC BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As permitted by SFAS 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), we continue to measure and recognize compensation expense using the intrinsic value method specified in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). As required under the provisions of SFAS 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” the following table discloses the pro forma net income and pro forma basic and diluted earnings per share had the fair value method been applied to all stock awards for the three months ended March 31, 2004 and 2003:



			Three Months Ended
			March 31,

			2004			2003


			(Dollars in thousands,
			except per share data)
Net Earnings
	As reported		$	41,930		$	36,917
		Stock-based compensation expense		(2,885	)		(5,010	)
		Tax effect		1,140			1,979

	Pro forma		$	40,185		$	33,886

Basic Earnings Per Share
	As reported		$	0.74		$	0.67
	Pro forma		$	0.71		$	0.62
Diluted Earnings Per Share
	As reported		$	0.70		$	0.66
	Pro forma		$	0.67		$	0.61

In addition, during the three months ended March 31, 2004 and 2003, we recognized compensation expense of $504 thousand ($305 thousand, net of taxes) and $489 thousand ($296 thousand, net of taxes), respectively, related to restricted stock awards. These expenses were included in net earnings as reported.

Note 6 — Defined Benefit Pension Plan Net Periodic Cost

The Company provided a defined benefit pension plan (the “DBP Plan”) to substantially all of our employees hired prior to January 1, 2003. The net periodic benefit cost of our DBP Plan, which is based on actuarial assumptions, is presented in the following table for the three months ended March 31, 2004 and 2003:



	Three Months
	Ended March 31,

	2004			2003


	(Dollars in
	thousands)
Service cost	$	1,209		$	932
Interest cost		323			222
Expected return on assets		(294	)		(165	)
Amortization of net (gain) loss		73			47
Amortization of prior service cost		14			14

Net periodic benefit costs	$	1,325		$	1,050

INDYMAC BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The actuarial assumptions used in accounting for the net periodic cost at March 31, 2004 and 2003 were as follows:



	Three Months
	Ended March 31,

	2004		2003

Assumed discount rate		6.00%		6.75%
Rate of compensation increase		4.00%		4.00%
Expected return on assets		7.50%		7.50%

The Company is expected to contribute $6 million to the DBP Plan in 2004, which will be made as a one lump sum payment later in the year. No contribution was made during the quarter ended March 31, 2004.

Note 7 — Legal Matters

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. CONTROLS AND PROCEDURES

As of March 31, 2004, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2004. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to March 31, 2004.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits


4.1		2000 Stock Incentive Plan, as amended
4.2		2002 Incentive Plan, as amended and Restated as of March 4, 2003, as amended
10.1		Employment Agreement dated March 15, 2004 between IndyMac Bank and John DelPonti.
31.1		Chief Executive Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Chief Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Chief Executive Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Chief Financial Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

The Company furnished a report on Form 8-K on January 29, 2004. Items included: Item 9. Regulation FD Disclosure, and Item 12. Disclosure of Results of Operations and Financial Condition — Press Release announcing results of operations and financial condition for the quarter ended December 31, 2003 and related webcast presentation.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pasadena, State of California, on April 27, 2004.



		INDYMAC BANCORP, INC. (Registrant)

		By:		/s/ MICHAEL W. PERRY Michael W. Perry Chairman of the Board of Directors and Chief Executive Officer
		By:		/s/ SCOTT KEYS Scott Keys Executive Vice President and Chief Financial Officer


(1)	Dividends declared per common share as a percentage of diluted earnings per share.

(2)	Defined as operating expenses divided by net interest income and other income.

(3)	Average equity divided by net interest income and other income.

(4)	Efficiency ratio multiplied by the capital to net revenue ratio.

(5)	Debt includes deposits.

(6)	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 12.61%, 13.76% and 12.29% for the quarters ended March 31, 2004, March 31, 2003 and December 31, 2003, respectively.

(7)	Represents the total loan portfolio excluding amounts of loans from discontinued product lines.

(8)	Represents entire servicing portfolio including IndyMac owned loans and loans subserviced for others on an interim basis.

(9)	Includes newly originated commitments on construction loans.


(1)	Mortgage servicing-related assets include the following: (i) MSRs, interest-only strips and residual securities, (ii) securities held as hedges of such assets, including principal-only securities, agency debentures and U.S. treasury bonds, (iii) loans acquired through clean-up calls or through the Investment Portfolio Group’s customer retention programs, and (iv) investment and non-investment grade securities.

(2)	Assets include all single-family residential loans held for investment other than discontinued products.

(3)	Assets include AAA-rated agency and private label MBS.

(4)	Discontinued products are home improvement and manufactured housing loans.


(1)	Fundings.

(2)	New commitments.

(3)	Includes rate lock commitments for loans in process plus loans that have been submitted for processing, but not yet rate locked.


(1)	Active customers are defined as customers who funded at least one loan during the period. The HCL division utilizes the B2B marketing relationships with mortgage brokers and mortgage bankers to produce consumer construction loans. As a result, there is some overlap of the two active customer statistics and new customers are reported under the B2B channel only. The sales and marketing personnel under the HCL division are primarily focused on marketing the consumer construction product directly to consumers.

(2)	Net new customers is the number of new customers signed up during the quarter less those terminated.


(1)	The amount represents the loans produced only by the Home Equity Division. HELOC loans produced by other business divisions totaled $209 million during the first quarter of 2004. HELOC loans produced by business divisions other than the Home Equity Division are included in the production volume of the respective originating business division.


(1)	Government-sponsored enterprises.

(2)	Loan production that IndyMac elected to retain in its investment portfolio.


(1)	Represents the estimated length of time, on average, the SFR loan portfolio will remain outstanding based on the Bank’s estimates for prepayments.

(2)	Average duration measures the volatility of the value of a financial instrument in response to changes in interest rates and the corresponding changes in prepayments.

(3)	FICO scores are the result of a credit scoring system developed by Fair Isaacs and Co. and are generally used by lenders to evaluate a borrower’s credit history. FICO scores of 700 or higher are generally considered in the mortgage industry to be very high quality borrowers with low risk of default, but in general, the secondary market will consider FICO scores of 620 or higher to be prime.


(1)	Assumed prepayment speeds are higher in the short term and lower in the long term based on the market forward curve for interest rates rising over the life of the asset.

(2)	As a percentage of the original pool balance, the actual cumulative loss rate to date totaled 0.06% and 1.41% for prime and subprime residuals, respectively, at March 31, 2004.

(3)	As of March 31, 2004, subprime and HELOC residual securities include residuals from the securitization of home equity loans in the amount of $17.7 million. Although our HELOC loans are to high credit quality, prime borrowers, the assumptions on HELOC-related residuals are similar to subprime as they are second trust deed loans.

(4)	At March 31, 2004, the capitalized servicing asset was comprised of $32.1 billion of loans serviced for others. In addition to the loans serviced for others, we also service $6.8 billion of IndyMac-owned loans and loans subserviced for others on an interim basis for a total servicing portfolio of $38.9 billion.


(1)	The average loan to value ratio is based on the estimated appraised value of the completed project compared to the commitment amount at March 31, 2004.

(2)	FICO scores are not calculated for corporate entities and, therefore, are not applicable to the builder construction portfolio.

(3)	Geographic distribution is based on outstanding balances. Some projects are continuing to be built out in states in which we no longer solicit new loans.


(1)	On funded loans.

(2)	The CLTV combines the loan to value on both the first mortgage loan and the HELOC.


(1)	Discontinued product lines include manufactured home loans and home improvement loans.