##### Table of Contents









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
    June 30, 2006

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.)
|                                                                  
|888 East Walnut Street, Pasadena, California                       |  | 91101-7211                          
|(Address of principal executive offices)                           |  | (Zip Code)                          

(Registrants telephone number, including area code)


(800) 669-2300


þ o


12b-2


þ o o


12b-2 o þ














---



##### 










FORM 10-Q
QUARTERLY REPORT


For the Period Ended June 30, 2006


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                                                                                            |                                                                              |      | 2  |   
|Summary of Business Segment Results                                                                   |                                                                              |      | 6  |   
|Product Profitability Analysis                                                                        |                                                                              |      | 12 |   
|Loan Production                                                                                       |                                                                              |      | 19 |   
|Loan Sales                                                                                            |                                                                              |      | 23 |   
|Mortgage Servicing and Other Retained
    Assets                                                      |                                                                              |      | 25 |   
|Mortgage-Backed Securities and Loans Held
    for Investment                                          |                                                                              |      | 32 |   
|Net Interest Margin                                                                                   |                                                                              |      | 38 |   
|Interest Rate Sensitivity                                                                             |                                                                              |      | 41 |   
|Credit Risk and Reserves                                                                              |                                                                              |      | 43 |   
|Expenses                                                                                              |                                                                              |      | 47 |   
|Share Repurchase Activities                                                                           |                                                                              |      | 48 |   
|Future Outlook                                                                                        |                                                                              |      | 48 |   
|Liquidity and Capital Resources                                                                       |                                                                              |      | 48 |   
|Off-Balance Sheet Arrangements                                                                        |                                                                              |      | 53 |   
|Aggregate Contractual Obligations                                                                     |                                                                              |      | 53 |   
|Critical Accounting Policies and
    Judgments                                                        |                                                                              |      | 53 |   
|Item 3. Quantitative and
    Qualitative Disclosures About Market Risk                                |                                                                              |      | 54 |   
|Item 1. Financial Statements
    (Unaudited)                                                          |                                                                              |      | 55 |   
|                                                                                                      | Consolidated Balance Sheets                                                  |      |    | 55 | 
|                                                                                                      | Consolidated Statements of Earnings                                          |      |    | 56 | 
|                                                                                                      | Consolidated Statements of
    Shareholders Equity and Comprehensive Income |      |    | 57 | 
|                                                                                                      | Consolidated Statements of Cash Flows                                        |      |    | 58 | 
|                                                                                                      | Notes to Consolidated Financial
    Statements                               |      |    | 59 | 
|Item 4. Controls and
    Procedures                                                                   |                                                                              |      | 67 |   
|                                                                                                     
|PART II. OTHER INFORMATION                                                                           
|Item 1. Legal Proceedings                                                                             |                                                                              |      | 68 |   
|Item 1A. Risk Factors                                                                                 |                                                                              |      | 68 |   
|Item 2. Unregistered Sales of
    Equity Securities and Use of Proceeds                               |                                                                              |      | 68 |   
|Item 4. Submission of Matters to a
    Vote of Security Holders                                       |                                                                              |      | 68 |   
|Item 5. Other Information                                                                             |                                                                              |      | 69 |   
|Item 6. Exhibits                                                                                      |                                                                              |      | 69 |   
|EXHIBIT 10.1                                                                                         
|EXHIBIT 10.2                                                                                         
|EXHIBIT 31.1                                                                                         
|EXHIBIT 31.2                                                                                         
|EXHIBIT 32.1                                                                                         
|EXHIBIT 32.2                                                                                         



1



---



##### Table of Contents






FORWARD-LOOKING STATEMENTS


10-Q 10-Q







|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS




HIGHLIGHTS


Share-Based Payment


2



---



##### Table of Contents





|                                                 |                                                              |                                              |   |         |                  |  |   |           |        |  |          |         |        |          |   |         |        |  |   |        |        | 
|------------------------------------------------ | ------------------------------------------------------------ | -------------------------------------------- | - | ------- | ---------------- |  | - | --------- | ------ |  | -------- | ------- | ------ | -------- | - | ------- | ------ |  | - | ------ | ------ | 
|                                                 |                                                              | Three Months Ended                           |   |         | Six Months Ended | 
|                                                 |                                                              |                                              |   |         |                  | 
|                                                 |                                                              | June 30,                                     |   |         | June 30,         |  |   | March 31, |        |  | June 30, |         |        | June 30, |  
|                                                 |                                                              | 2006                                         |   |         | 2005             |  |   | 2006      |        |  | 2006     |         |        | 2005     |  
|                                                 |                                                              |                                              |   |         |                  |  |   |           |        |  |          |         |        |          |  
|                                                 |                                                              | (Dollars in millions, except per share data) |  
|Select Balance Sheet Information (at period end) |                                                              |                                              |   |         |                  |  |   |           |        |  |          |         |        |          |   |         |        |  |   |       
|                                                 | Cash and cash equivalents                                    |                                              | $ | 165     |                  |  | $ | 354       |        |  | $        | 442     |        |          | $ | 165     |        |  | $ | 354    |       
|                                                 | Securities (trading and available for sale)                  |                                              |   | 4,890   |                  |  |   | 3,622     |        |  |          | 4,564   |        |          |   | 4,890   |        |  |   | 3,622  |       
|                                                 | Loans held for sale                                          |                                              |   | 6,493   |                  |  |   | 6,037     |        |  |          | 7,434   |        |          |   | 6,493   |        |  |   | 6,037  |       
|                                                 | Loans held for investment                                    |                                              |   | 8,773   |                  |  |   | 7,486     |        |  |          | 8,784   |        |          |   | 8,773   |        |  |   | 7,486  |       
|                                                 | Allowance for loan losses                                    |                                              |   | (58     | )                |  |   | (54       | )      |  |          | (57     | )      |          |   | (58     | )      |  |   | (54    | )     
|                                                 | Mortgage servicing rights                                    |                                              |   | 1,599   |                  |  |   | 739       |        |  |          | 1,354   |        |          |   | 1,599   |        |  |   | 739    |       
|                                                 | Other                                                        |                                              |   | 1,894   |                  |  |   | 1,232     |        |  |          | 1,682   |        |          |   | 1,894   |        |  |   | 1,232  |       
|                                                 | Total Assets                                                 |                                              |   | 23,756  |                  |  |   | 19,416    |        |  |          | 24,203  |        |          |   | 23,756  |        |  |   | 19,416 |       
|                                                 | Deposits                                                     |                                              |   | 9,352   |                  |  |   | 6,585     |        |  |          | 8,266   |        |          |   | 9,352   |        |  |   | 6,585  |       
|                                                 | Advances from Federal Home Loan Bank                         |                                              |   | 7,070   |                  |  |   | 7,598     |        |  |          | 7,995   |        |          |   | 7,070   |        |  |   | 7,598  |       
|                                                 | Other borrowings                                             |                                              |   | 4,165   |                  |  |   | 3,166     |        |  |          | 5,195   |        |          |   | 4,165   |        |  |   | 3,166  |       
|                                                 | Other liabilities                                            |                                              |   | 1,366   |                  |  |   | 646       |        |  |          | 1,104   |        |          |   | 1,366   |        |  |   | 646    |       
|                                                 | Total Liabilities                                            |                                              |   | 21,952  |                  |  |   | 17,995    |        |  |          | 22,560  |        |          |   | 21,952  |        |  |   | 17,995 |       
|                                                 | Shareholders Equity                                         |                                              |   | 1,804   |                  |  |   | 1,421     |        |  |          | 1,644   |        |          |   | 1,804   |        |  |   | 1,421  |       
|Income Statement                                 |                                                              |                                              |   |         |                  |  |   |           |        |  |          |         |        |          |   |         |        |  |   |       
|                                                 | Net interest income before provision for loan losses         |                                              | $ | 130     |                  |  | $ | 97        |        |  | $        | 127     |        |          | $ | 257     |        |  | $ | 202    |       
|                                                 | Provision for loan losses                                    |                                              |   | 2       |                  |  |   | 2         |        |  |          | 4       |        |          |   | 6       |        |  |   | 5      |       
|                                                 | Gain on sale of loans                                        |                                              |   | 202     |                  |  |   | 159       |        |  |          | 141     |        |          |   | 343     |        |  |   | 304    |       
|                                                 | Service fee income                                           |                                              |   | 27      |                  |  |   | 11        |        |  |          | 31      |        |          |   | 58      |        |  |   | 15     |       
|                                                 | Gain (loss) on mortgage-backed securities, net               |                                              |   | 8       |                  |  |   | 16        |        |  |          | (3      | )      |          |   | 6       |        |  |   | 11     |       
|                                                 | Fee and other income                                         |                                              |   | 12      |                  |  |   | 8         |        |  |          | 12      |        |          |   | 24      |        |  |   | 14     |       
|                                                 | Net revenues                                                 |                                              |   | 377     |                  |  |   | 289       |        |  |          | 305     |        |          |   | 682     |        |  |   | 542    |       
|                                                 | Operating expenses                                           |                                              |   | 204     |                  |  |   | 154       |        |  |          | 172     |        |          |   | 375     |        |  |   | 301    |       
|                                                 | Net earnings                                                 |                                              |   | 105     |                  |  |   | 82        |        |  |          | 80      |        |          |   | 185     |        |  |   | 145    |       
|                                                 | Basic earnings per share(1)                                  |                                              |   | 1.57    |                  |  |   | 1.31      |        |  |          | 1.24    |        |          |   | 2.82    |        |  |   | 2.34   |       
|                                                 | Diluted earnings per share(2)                                |                                              |   | 1.49    |                  |  |   | 1.24      |        |  |          | 1.18    |        |          |   | 2.68    |        |  |   | 2.22   |       
|Other Operating Data                             |                                                              |                                              |   |         |                  |  |   |           |        |  |          |         |        |          |   |         |        |  |   |       
|                                                 | Mortgage production                                          |                                              | $ | 20,060  |                  |  | $ | 14,199    |        |  | $        | 19,977  |        |          | $ | 40,037  |        |  | $ | 25,801 |       
|                                                 | Total loan production(9)                                     |                                              |   | 20,591  |                  |  |   | 14,793    |        |  |          | 20,340  |        |          |   | 40,931  |        |  |   | 26,748 |       
|                                                 | Mortgage industry share(10)                                  |                                              |   | 2.96    | %                |  |   | 1.81      | %      |  |          | 3.65    | %      |          |   | 3.27    | %      |  |   | 1.83   | %     
|                                                 | Pipeline of mortgage loans in process(11)                    |                                              |   | 12,527  |                  |  |   | 9,682     |        |  |          | 11,681  |        |          |   | 12,527  |        |  |   | 9,682  |       
|                                                 | Loans sold                                                   |                                              |   | 19,415  |                  |  |   | 11,534    |        |  |          | 16,708  |        |          |   | 36,123  |        |  |   | 21,188 |       
|                                                 | Loans sold/mortgage loans produced                           |                                              |   | 97      | %                |  |   | 81        | %      |  |          | 84      | %      |          |   | 90      | %      |  |   | 82     | %     
|                                                 | Loans serviced for others (as of quarter end)(8)             |                                              |   | 109,989 |                  |  |   | 63,676    |        |  |          | 96,512  |        |          |   | 109,989 |        |  |   | 63,676 |       
|                                                 | Total loans serviced (as of quarter end)                     |                                              |   | 117,417 |                  |  |   | 70,358    |        |  |          | 104,209 |        |          |   | 117,417 |        |  |   | 70,358 |       
|                                                 | Average full-time equivalent headcount                       |                                              |   | 7,861   |                  |  |   | 6,038     |        |  |          | 7,229   |        |          |   | 7,545   |        |  |   | 5,925  |       
|Other Per Share Data                             |                                                              |                                              |   |         |                  |  |   |           |        |  |          |         |        |          |   |         |        |  |   |       
|                                                 | Dividends declared per share                                 |                                              | $ | 0.46    |                  |  | $ | 0.38      |        |  | $        | 0.44    |        |          | $ | 0.90    |        |  | $ | 0.74   |       
|                                                 | Dividend payout ratio(3)                                     |                                              |   | 30.87   | %                |  |   | 30.65     | %      |  |          | 37.29   | %      |          |   | 33.58   | %      |  |   | 33.33  | %     
|                                                 | Book value per share at period end                           |                                              |   | 26.29   |                  |  |   | 22.38     |        |  |          | 25.00   |        |          |   | 26.29   |        |  |   | 22.38  |       
|                                                 | Closing price per share at period end                        |                                              |   | 45.85   |                  |  |   | 40.73     |        |  |          | 40.93   |        |          |   | 45.85   |        |  |   | 40.73  |       
|                                                 | Average Common Shares (in thousands)                         |                                              |   |         |                  |  |   |           |        |  |          |         |        |          |   |         |        |  |   |        |       
|                                                 |                                                              | Basic                                        |   |         | 66,483           |  |   |           | 62,304 |  |          |         | 64,310 |          |   |         | 65,402 |  |   |        | 62,052 | 
|                                                 |                                                              | Diluted                                      |   |         | 70,213           |  |   |           | 65,793 |  |          |         | 67,528 |          |   |         | 68,870 |  |   |        | 65,312 | 
|Performance Ratios                               |                                                              |                                              |   |         |                  |  |   |           |        |  |          |         |        |          |   |         |        |  |   |       
|                                                 | Return on average equity (ROE) (annualized)                |                                              |   | 24.09   | %                |  |   | 24.50     | %      |  |          | 20.26   | %      |          |   | 22.28   | %      |  |   | 22.45  | %     
|                                                 | Return on average assets(ROA) (annualized)                 |                                              |   | 1.51    | %                |  |   | 1.64      | %      |  |          | 1.22    | %      |          |   | 1.37    | %      |  |   | 1.52   | %     
|                                                 | Net interest income to pretax income after minority interest |                                              |   | 75.40   | %                |  |   | 72.34     | %      |  |          | 96.25   | %      |          |   | 84.44   | %      |  |   | 84.46  | %     
|                                                 | Net interest margin                                          |                                              |   | 2.12    | %                |  |   | 2.10      | %      |  |          | 2.15    | %      |          |   | 2.13    | %      |  |   | 2.29   | %     
|                                                 | Net interest margin, thrift.                                 |                                              |   | 2.01    | %                |  |   | 2.02      | %      |  |          | 2.06    | %      |          |   | 2.04    | %      |  |   | 2.18   | %     
|                                                 | Mortgage banking revenue (MBR) margin on loans
    sold(4) |                                              |   | 1.23    | %                |  |   | 1.63      | %      |  |          | 1.10    | %      |          |   | 1.17    | %      |  |   | 1.72   | %     
|                                                 | Efficiency ratio(5)                                          |                                              |   | 54      | %                |  |   | 53        | %      |  |          | 56      | %      |          |   | 55      | %      |  |   | 55     | %     
|                                                 | Operating expenses to loan production                        |                                              |   | 0.99    | %                |  |   | 1.04      | %      |  |          | 0.84    | %      |          |   | 0.92    | %      |  |   | 1.13   | %     

3



---



##### Table of Contents



|                                       |                                                                                      |                                              |   |        |                  |  |   |           |   |  |          |        |   |          |   |        |   |  |   |        |  
|-------------------------------------- | ------------------------------------------------------------------------------------ | -------------------------------------------- | - | ------ | ---------------- |  | - | --------- | - |  | -------- | ------ | - | -------- | - | ------ | - |  | - | ------ | -
|                                       |                                                                                      | Three Months Ended                           |   |        | Six Months Ended | 
|                                       |                                                                                      |                                              |   |        |                  | 
|                                       |                                                                                      | June 30,                                     |   |        | June 30,         |  |   | March 31, |   |  | June 30, |        |   | June 30, |  
|                                       |                                                                                      | 2006                                         |   |        | 2005             |  |   | 2006      |   |  | 2006     |        |   | 2005     |  
|                                       |                                                                                      |                                              |   |        |                  |  |   |           |   |  |          |        |   |          |  
|                                       |                                                                                      | (Dollars in millions, except per share data) |  
|Balance Sheet and Asset Quality Ratios |                                                                                      |                                              |   |        |                  |  |   |           |   |  |          |        |   |          |   |        |   |  |   |       
|                                       | Average interest-earning assets                                                      |                                              | $ | 24,681 |                  |  | $ | 18,561    |   |  | $        | 24,034 |   |          | $ | 24,357 |   |  | $ | 17,800 |  
|                                       | Average equity                                                                       |                                              |   | 1,742  |                  |  |   | 1,338     |   |  |          | 1,598  |   |          |   | 1,670  |   |  |   | 1,304  |  
|                                       | Debt to equity ratio(6)                                                              |                                              |   | 12.2:1 |                  |  |   | 12.7:1    |   |  |          | 13.7:1 |   |          |   | 12.2:1 |   |  |   | 12.7:1 |  
|                                       | Core capital ratio(7)                                                                |                                              |   | 8.24   | %                |  |   | 7.22      | % |  |          | 7.62   | % |          |   | 8.24   | % |  |   | 7.22   | %
|                                       | Risk-based capital ratio(7)                                                          |                                              |   | 11.97  | %                |  |   | 11.77     | % |  |          | 11.26  | % |          |   | 11.97  | % |  |   | 11.77  | %
|                                       | Non-performing assets to total assets                                                |                                              |   | 0.49   | %                |  |   | 0.38      | % |  |          | 0.43   | % |          |   | 0.49   | % |  |   | 0.38   | %
|                                       | Allowance for loan losses to total loans held for investment                         |                                              |   | 0.66   | %                |  |   | 0.72      | % |  |          | 0.65   | % |          |   | 0.66   | % |  |   | 0.72   | %
|                                       | Allowance for loan losses to non-performing loans held for
    investment            |                                              |   | 90.61  | %                |  |   | 126.03    | % |  |          | 106.12 | % |          |   | 90.61  | % |  |   | 126.03 | %
|Loan Loss Activity                     |                                                                                      |                                              |   |        |                  |  |   |           |   |  |          |        |   |          |   |        |   |  |   |       
|                                       | Allowance for loan losses to annualized net charge-offs                              |                                              |   | 8.8    | x                |  |   | 7.4       | x |  |          | 8.6    | x |          |   | 8.8    | x |  |   | 7.3x   |  
|                                       | Provision for loan losses to net charge-offs                                         |                                              |   | 136.06 | %                |  |   | 131.46    | % |  |          | 229.00 | % |          |   | 182.95 | % |  |   | 131.68 | %
|                                       | Net charge-offs (annualized) to average non-performing
    loans held for investment |                                              |   | 11.12  | %                |  |   | 16.96     | % |  |          | 13.71  | % |          |   | 12.33  | % |  |   | 16.17  | %
|                                       | Net charge-offs (annualized) to average loans held for
    investment                |                                              |   | 0.08   | %                |  |   | 0.10      | % |  |          | 0.08   | % |          |   | 0.08   | % |  |   | 0.10   | %






| |     |                                                                                                                                                                                                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Net earnings for the period divided by weighted average basic
    shares outstanding for the period.                                                                                                                                                                                    
|
| | (2) | Net earnings for the period divided by weighted average dilutive
    shares outstanding for the period.                                                                                                                                                                                 
|
| | (3) | Dividends declared per common share as a percentage of diluted
    earnings per share.                                                                                                                                                                                                  
|
| | (4) | Mortgage banking revenue margin is calculated using the sum of
    consolidated gain on sale of loans and the net interest income
    earned on loans held for sale by our mortgage banking production
    divisions divided by total loans sold.                                       
|
| | (5) | Defined as operating expenses divided by net interest income and
    other income.                                                                                                                                                                                                      
|
| | (6) | Debt includes deposits.                                                                                                                                                                                                                                                                 
|
| | (7) | IndyMac Bank, F.S.B. (excludes unencumbered cash at the Parent
    Company available for investment in Indymac Bank). Risk-based
    capital ratio is calculated based on the regulatory standard
    risk weighting adjusted for the additional risk weightings for
    subprime loans.
|
| | (8) | Represents the unpaid principal balance on loans sold with
    servicing retained by Indymac.                                                                                                                                                                                           
|
| | (9) | Includes newly originated commitments on construction loans.                                                                                                                                                                                                                            



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Our market share is calculated based on our total loan
    production, both purchased (correspondent and conduit) and
    originated (retail and wholesale), in all channels (the
    numerator) divided by the Mortgage Bankers Association
    (MBA) July 12, 2006 Mortgage Finance Long-Term
    Forecast estimate of the overall mortgage market (the
    denominator). As we review industry publications such as
    National Mortgage News, we have confirmed that our calculation
    is consistent with its methodologies for reporting market share
    of Indymac and our mortgage banking peers. It is important to
    note that these industry calculations cause purchased mortgages
    to be counted more than once, i.e., first when they are
    originated and again by the purchasers (through correspondent
    and conduit channels) of the mortgages. Therefore, our market
    share calculation may not be mathematically precise in the
    absolute sense, but it is consistent with industry calculations,
    which provide investors with a good view of our relative
    standing compared to the other top mortgage lending peers.
|    
|(11) | The amount includes $2.5 billion, $1.4 billion and
    $1.3 billion of non-specific rate locks on bulk purchases
    in our conduit channel at June 30, 2006, June 30, 2005
    and March 31, 2006, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

4



---



##### Table of Contents



SUMMARY OF OVERALL RESULTS


Three Months ended June 30, 2006








|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1) | Growth in average interest earning assets of 33% from
    $18.6 billion during the quarter ended June 30, 2005
    to $24.7 billion for the quarter ended June 30, 2006,
    leading to an increase in net interest income of 34% to
    $130.2 million. Indymacs net interest margin remained
    stable at 2.12% in the second quarter of 2006 compared to 2.10%
    in the second quarter of 2005.                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|2) | Growth in our mortgage production of 41% over the second quarter
    of 2005 to an all-time record of $20.1 billion,
    representing market share of 2.96% based on the industry volume
    published by the MBA on July 12, 2006. The increase in
    production led to an increase in loans sold, a key component of
    net revenue, to $19.4 billion, up 68% over the second
    quarter of 2005. This increase in loans sold mitigated the year
    over year decline in the revenue margin on sales, and gain on
    sale of loans of $201.7 million increased 27% over the
    second quarter of 2005. The MBR margin on loans sold was 1.23%
    in the second quarter of 2006, which was down from 1.63% in the
    second quarter of 2005, but reflects improvement from 1.10% in
    the first quarter of 2006.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Included in the gain on sale of loans in the second quarter of
    2006 were $9.7 million of losses related to the
    establishment of a reserve for fraud losses on certain lot
    loans. The Company discovered that 45 lot loans related to two
    developments in Michigan and Florida were the subject of
    criminal fraud on the part of the developers, brokers,
    appraisers and closing agents. Indymac has since performed a
    full portfolio review and implemented a series of product
    guideline changes, operational changes and fraud prevention
    actions to mitigate future occurrences of this kind. At this
    point Indymac believes that there are no further incidences of
    fraud in its existing book of lot loans of similar size or scope.



|   |                                                                                                                                                                                                                                                                                                                                                           
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3) | Service fee income of $27.2 million in the second quarter
    of 2006 grew 152% over the second quarter of 2005 driven by the
    73% increase in the principal amount of loans serviced for
    others during the second quarter to $110.0 billion at
    June 30, 2006 combined with slowing prepayments as
    long-term interest rates have increased.



Asset quality remains solid.


5



---



##### Table of Contents



Six Months ended June 30, 2006








|   |                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1) | Growth in average interest earning assets of 37% from
    $17.8 billion in the first half of 2005 to
    $24.4 billion in the first half of 2006, leading to an
    increase in net interest income of 27% to $257.4 million.
    Indymacs net interest margin declined to 2.13% from 2.29%
    somewhat mitigating the impact of the average earning asset
    growth.                              
|  
|2) | Growth in our mortgage production of 55% in the first half of
    2006 over the first half of 2005 to $40.0 billion, led to a
    70% increase in loans sold to $36.1 billion. The MBR margin
    on loans sold was 1.17% in the first half of 2006, down from
    1.72% in the first half of 2005 as the market reflects a more
    difficult environment in light of rising mortgage interest rates.
|  
|3) | Service fee income of $58.1 million in the first half of
    2006 grew 282% over the first half of 2005 driven by the
    increase in the principal amount of loans serviced for others
    combined with slowing prepayments as mortgage rates have
    increased.                                                                                                                                   






SUMMARY OF BUSINESS SEGMENT RESULTS


10-K 10-K),




|                     |  |                        |         |          |          |   |          |             |  |   |        |    |  |        |             |       |         |           |         |         |           |   |          |         |  |       |           |    |  |  |         |    |  |  |           |   
|-------------------- |  | ---------------------- | ------- | -------- | -------- | - | -------- | ----------- |  | - | ------ | -- |  | ------ | ----------- | ----- | ------- | --------- | ------- | ------- | --------- | - | -------- | ------- |  | ----- | --------- | -- |  |  | ------- | -- |  |  | --------- | --
|                     |  | Mortgage Banking       |         |          |          |   |          |             |  |   |        |    | 
|                     |  |                        |         |          |          |   |          |             |  |   |        |    | 
|                     |  |                        |         | MSRs and |          |   |          |             |  |   |        |    |  |        |             |       |        
|                     |  |                        |         | Other    |          |   | Mortgage |             |  |   |        |    |  |        |             | Total |         |           |         |         |          
|                     |  | Production             |         |          | Retained |   |          | Banking     |  |   |        |    |  |        | Elimination |       |         | Operating |         |         | Corporate |   |          | Company | 
|                     |  | Divisions              |         |          | Assets   |   |          | Overhead(1) |  |   | Total  |    |  | Thrift |             |       | & Other |           |         | Results |           |   | Overhead |         |  | Total |          
|                     |  |                        |         |          |          |   |          |             |  |   |        |    |  |        |             |       |         |           |         |         |           |   |          |         |  |       |          
|                     |  | (Dollars in thousands) |         |          |         
|Net Income Q206      |  | $                      | 85,149  |          |          | $ | 24,752   |             |  | $ | (8,543 | )  |  | $      | 101,358     |       |         | $         | 37,704  |         |           | $ | (7,139   | )       |  | $     | 131,923   |    |  |  | (27,264 | )  |  |  | 104,659   |   
|Net Income Q205      |  |                        | 76,868  |          |          |   | 9,254    |             |  |   | (7,446 | )  |  |        | 78,676      |       |         |           | 33,370  |         |           |   | (7,472   | )       |  |       | 104,574   |    |  |  | (22,860 | )  |  |  | 81,714    |   
|                     |  |                        |         |          |          |   |          |             |  |   |        |    |  |        |             |       |         |           |         |         |           |   |          |         |  |       |          
|$ Change             |  |                        | 8,281   |          |          |   | 15,498   |             |  |   | (1,097 | )  |  |        | 22,682      |       |         |           | 4,334   |         |           |   | 333      |         |  |       | 27,349    |    |  |  | (4,404  | )  |  |  | 22,945    |   
|% Change             |  |                        | 11      | %        |          |   | 167      | %           |  |   | (15    | )% |  |        | 29          | %     |         |           | 13      | %       |           |   | 4        | %       |  |       | 26        | %  |  |  | (19     | )% |  |  | 28        | % 
|Average Capital Q206 |  | $                      | 521,875 |          |          | $ | 363,809  |             |  | $ | 10,930 |    |  | $      | 896,614     |       |         | $         | 666,085 |         |           | $ | 46,573   |         |  | $     | 1,609,272 |    |  |  | 132,965 |    |  |  | 1,742,237 |   
|Average Capital Q205 |  |                        | 318,640 |          |          |   | 176,731  |             |  |   | 10,430 |    |  |        | 505,801     |       |         |           | 508,389 |         |           |   | 38,477   |         |  |       | 1,052,667 |    |  |  | 284,943 |    |  |  | 1,337,610 |   
|% Change             |  |                        | 64      | %        |          |   | 106      | %           |  |   | 5      | %  |  |        | 77          | %     |         |           | 31      | %       |           |   | 21       | %       |  |       | 53        | %  |  |  | (53     | )% |  |  | 30        | % 
|ROE Q206             |  |                        | 65      | %        |          |   | 27       | %           |  |   | N/A    |    |  |        | 45          | %     |         |           | 23      | %       |           |   | N/A      |         |  |       | 33        | %  |  |  | N/A     |    |  |  | 24        | % 
|ROE Q205             |  |                        | 97      | %        |          |   | 21       | %           |  |   | N/A    |    |  |        | 62          | %     |         |           | 26      | %       |           |   | N/A      |         |  |       | 40        | %  |  |  | N/A     |    |  |  | 25        | % 
|% Change             |  |                        | (32     | )%       |          |   | 30       | %           |  |   | N/A    |    |  |        | (27         | )%    |         |           | (14     | )%      |           |   | N/A      |         |  |       | (17       | )% |  |  | N/A     |    |  |  | (2        | )%






|    |                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Included production division overhead and servicing overhead of
    $6.1 million and $2.4 million, respectively, for the
    second quarter of 2006. For the second quarter of 2005, the
    production division overhead and servicing overhead were
    $5.0 million and $2.4 million, respectively.

6



---



##### Table of Contents



|                     |  |                                       |         |    |               |   |          |         |  |           |         |   |            |        |         |    |         |   |        |           |  |   |        |   |  |   |         |   
|-------------------- |  | ------------------------------------- | ------- | -- | ------------- | - | -------- | ------- |  | --------- | ------- | - | ---------- | ------ | ------- | -- | ------- | - | ------ | --------- |  | - | ------ | - |  | - | ------- | --
|                     |  | Mortgage Banking Production Divisions |        
|                     |  |                                       |        
|                     |  | Mortgage Professionals Group          |         |    |              
|                     |  |                                       |         |    |               |   | Consumer |         |  | Financial |         |   | Production |       
|                     |  | Wholesale                             |         |    | Correspondent |   |          | Conduit |  |           | Total   |   |            | Direct |         |    | Freedom |   |        | Divisions | 
|                     |  |                                       |         |    |               |   |          |         |  |           |         |   |            |        |         |    |         |   |        |           | 
|                     |  | (Dollars in thousands)                |        
|Net Income Q206      |  | $                                     | 47,370  |    |               | $ | 7,981    |         |  | $         | 17,990  |   |            | $      | 73,341  |    |         | $ | 668    |           |  | $ | 11,140 |   |  | $ | 85,149  |   
|Net Income Q205      |  |                                       | 56,490  |    |               |   | 11,026   |         |  |           | 4,551   |   |            |        | 72,067  |    |         |   | (434   | )         |  |   | 5,235  |   |  |   | 76,868  |   
|                     |  |                                       |         |    |               |   |          |         |  |           |         |   |            |        |         |    |         |   |        |           | 
|$ Change             |  | $                                     | (9,120  | )  |               | $ | (3,045   | )       |  | $         | 13,439  |   |            | $      | 1,274   |    |         | $ | 1,102  |           |  | $ | 5,905  |   |  | $ | 8,281   |   
|% Change             |  |                                       | (16     | )% |               |   | (28      | )%      |  |           | 295     | % |            |        | 2       | %  |         |   | 254    | %         |  |   | 113    | % |  |   | 11      | % 
|Average Capital Q206 |  | $                                     | 212,697 |    |               | $ | 53,252   |         |  | $         | 168,293 |   |            | $      | 434,242 |    |         | $ | 12,872 |           |  | $ | 74,761 |   |  | $ | 521,875 |   
|Average Capital Q205 |  |                                       | 130,677 |    |               |   | 25,074   |         |  |           | 88,957  |   |            |        | 244,708 |    |         |   | 13,784 |           |  |   | 60,148 |   |  |   | 318,640 |   
|% Change             |  |                                       | 63      | %  |               |   | 112      | %       |  |           | 89      | % |            |        | 77      | %  |         |   | (7     | )%        |  |   | 24     | % |  |   | 64      | % 
|ROE Q206             |  |                                       | 89      | %  |               |   | 60       | %       |  |           | 43      | % |            |        | 68      | %  |         |   | 21     | %         |  |   | 60     | % |  |   | 65      | % 
|ROE Q205             |  |                                       | 173     | %  |               |   | 176      | %       |  |           | 21      | % |            |        | 118     | %  |         |   | (13    | )%        |  |   | 35     | % |  |   | 97      | % 
|% Change             |  |                                       | (48     | )% |               |   | (66      | )%      |  |           | 109     | % |            |        | (43     | )% |         |   | 265    | %         |  |   | 71     | % |  |   | (32     | )%

|                     |  |                        |        |          |           |   |         |          |  |   |              |    |  |              |         |    |           |   |         |              |  |   |              |    |  |   |       |    |  |   |         |   
|-------------------- |  | ---------------------- | ------ | -------- | --------- | - | ------- | -------- |  | - | ------------ | -- |  | ------------ | ------- | -- | --------- | - | ------- | ------------ |  | - | ------------ | -- |  | - | ----- | -- |  | - | ------- | --
|                     |  | Thrift                 |       
|                     |  |                        |       
|                     |  |                        |        | Consumer |           |   |        
|                     |  | Mortgage-              |        |          | Prime SFR |   |         | Home     |  |   | Construction |    |  | Builder      |         |    |          
|                     |  | Backed                 |        |          | Mortgage  |   |         | Equity   |  |   | and Lot      |    |  | Construction |         |    | Warehouse |   |         | Discontinued |  |   |             
|                     |  | Securities             |        |          | Loans     |   |         | Division |  |   | Loans        |    |  | Financing    |         |    | Lending   |   |         | Products     |  |   | Total Thrift |   
|                     |  |                        |        |          |           |   |         |          |  |   |              |    |  |              |         |    |           |   |         |              |  |   |              |   
|                     |  | (Dollars in thousands) |       
|Net Income Q206      |  | $                      | 5,392  |          |           | $ | 10,821  |          |  | $ | 6,356        |    |  | $            | 7,849   |    |           | $ | 7,203   |              |  | $ | 24           |    |  | $ | 59    |    |  | $ | 37,704  |   
|Net Income Q205      |  |                        | 3,713  |          |           |   | 12,012  |          |  |   | 5,023        |    |  |              | 9,226   |    |           |   | 3,984   |              |  |   | (436         | )  |  |   | (152  | )  |  |   | 33,370  |   
|                     |  |                        |        |          |           |   |         |          |  |   |              |    |  |              |         |    |           |   |         |              |  |   |              |   
|$ Change             |  | $                      | 1,679  |          |           | $ | (1,191  | )        |  | $ | 1,333        |    |  | $            | (1,377  | )  |           | $ | 3,219   |              |  | $ | 460          |    |  | $ | 211   |    |  | $ | 4,334   |   
|% Change             |  |                        | 45     | %        |           |   | (10     | )%       |  |   | 27           | %  |  |              | (15     | )% |           |   | 81      | %            |  |   | 106          | %  |  |   | 139   | %  |  |   | 13      | % 
|Average Capital Q206 |  | $                      | 55,974 |          |           | $ | 223,102 |          |  | $ | 148,496      |    |  | $            | 120,104 |    |           | $ | 105,365 |              |  | $ | 9,331        |    |  | $ | 3,713 |    |  | $ | 666,085 |   
|Average Capital Q205 |  |                        | 39,476 |          |           |   | 205,707 |          |  |   | 84,073       |    |  |              | 100,859 |    |           |   | 72,508  |              |  |   | 1,329        |    |  |   | 4,437 |    |  |   | 508,389 |   
|% Change             |  |                        | 42     | %        |           |   | 8       | %        |  |   | 77           | %  |  |              | 19%     |    |           |   | 45      | %            |  |   | 602          | %  |  |   | (16   | )% |  |   | 31      | % 
|ROE Q206             |  |                        | 39     | %        |           |   | 19      | %        |  |   | 17           | %  |  |              | 26%     |    |           |   | 27      | %            |  |   | 1            | %  |  |   | 6     | %  |  |   | 23      | % 
|ROE Q205             |  |                        | 38     | %        |           |   | 23      | %        |  |   | 24           | %  |  |              | 37%     |    |           |   | 22      | %            |  |   | (132         | )% |  |   | (14   | )% |  |   | 26      | % 
|% Change             |  |                        | 2      | %        |           |   | (17     | )%       |  |   | (28          | )% |  |              | (29     | )% |           |   | 24      | %            |  |   | N/M          |    |  |   | 146   | %  |  |   | (14     | )%









7



---



##### Table of Contents



DETAIL CHANNEL SEGMENT RESULTS




|                                        |                               |                        |                   |          |                |        |          |             |        |        |        |        |         |        |             |         |            |           |            |         |           |        |            |        |         |         |            |         |         |         |         |        |         |         |            |         |         |         | 
|--------------------------------------- | ----------------------------- | ---------------------- | ----------------- | -------- | -------------- | ------ | -------- | ----------- | ------ | ------ | ------ | ------ | ------- | ------ | ----------- | ------- | ---------- | --------- | ---------- | ------- | --------- | ------ | ---------- | ------ | ------- | ------- | ---------- | ------- | ------- | ------- | ------- | ------ | ------- | ------- | ---------- | ------- | ------- | ------- | 
|                                        |                               | Mortgage Banking       |                   |          |                |        |          |             |        |        |        |        |         |        |            
|                                        |                               |                        |                   |          |                |        |          |             |        |        |        |        |         |        |            
|                                        |                               |                        |                   | MSRs and |                |        | Mortgage |             |        |        |        |        |         |        |             | Total   |            |           |            |         |          
|Three Months Ended                      |                               | Production             |                   |          | Other Retained |        |          | Banking     |        |        |        |        |         |        | Elimination |         |            | Operating |            |         | Corporate |        |            | Total  |        
|June 30, 2006                           |                               | Divisions              |                   |          | Assets         |        |          | Overhead(1) |        |        | Total  |        |         | Thrift |             |         | & Other(2) |           |            | Results |           |        | Overhead   |        |         | Company |           
|                                        |                               |                        |                   |          |                |        |          |             |        |        |        |        |         |        |             |         |            |           |            |         |           |        |            |        |         |         |           
|                                        |                               | (Dollars in thousands) |                  
|Operating Results                       |                               |                        |                   |          |                |        |          |             |        |        |        |        |         |        |             |         |            |           |            |         |           |        |            |        |         |         |            |         |         |         |         |        |         |         |            |        
|Net interest income                     |                               | $                      | 37,650            |          |                | $      | 16,799   |             |        | $      | 468    |        |         | $      | 54,917      |         |            | $         | 67,109     |         |           | $      | 10,083     |        |         | $       | 132,109    |         |         | $       | (1,955  | )      |         | $       | 130,154    |        
|Provision for loan losses               |                               |                        |                  |          |                |        |         |             |        |        |       |        |         |        |            |         |            |           | (2,230     | )       |           |        |           |        |         |         | (2,230     | )       |         |         |        |        |         |         | (2,230     | )      
|Gain (loss) on sale of loans            |                               |                        | 191,333           |          |                |        | 5,591    |             |        |        |       |        |         |        | 196,924     |         |            |           | 17,005     |         |           |        | (12,270    | )      |         |         | 201,659    |         |         |         |        |        |         |         | 201,659    |        
|Service fee income                      |                               |                        | 4,650             |          |                |        | 23,051   |             |        |        |       |        |         |        | 27,701      |         |            |           | 288        |         |           |        | (742       | )      |         |         | 27,247     |         |         |         |        |        |         |         | 27,247     |        
|Gain (loss) on securities               |                               |                        |                  |          |                |        | 6,506    |             |        |        |       |        |         |        | 6,506       |         |            |           | (1,251     | )       |           |        | 3,003      |        |         |         | 8,258      |         |         |         |        |        |         |         | 8,258      |        
|Other income                            |                               |                        | 484               |          |                |        | 1,222    |             |        |        | 725    |        |         |        | 2,431       |         |            |           | 9,445      |         |           |        | (150       | )      |         |         | 11,726     |         |         |         | 276     |        |         |         | 12,002     |        
|                                        |                               |                        |                   |          |                |        |          |             |        |        |        |        |         |        |             |         |            |           |            |         |           |        |            |        |         |         |           
|                                        | Net revenues (expense)        |                        |                   | 234,117  |                |        |          | 53,169      |        |        |        | 1,193  |         |        |             | 288,479 |            |           |            | 90,366  |           |        |            | (76    | )       |         |            | 378,769 |         |         |         | (1,679 | )       |         |            | 377,090 |        
|                                        | Operating expenses            |                        |                   | 152,837  |                |        |          | 13,944      |        |        |        | 15,313 |         |        |             | 182,094 |            |           |            | 32,646  |           |        |            | 12,005 |         |         |            | 226,745 |         |         |         | 43,901 |         |         |            | 270,646 |        
|                                        | Deferred expense under FAS 91 |                        |                   | (59,608  | )              |        |          | (1,687      | )      |        |        |       |         |        |             | (61,295 | )          |           |            | (4,599  | )         |        |            | (281   | )       |         |            | (66,175 | )       |         |         |       |         |         |            | (66,175 | )      
|                                        |                               |                        |                   |          |                |        |          |             |        |        |        |        |         |        |             |         |            |           |            |         |           |        |            |        |         |         |           
|                                        |                               | Pretax income (loss)   |                   |          | 140,888        |        |          |             | 40,912 |        |        |        | (14,120 | )      |             |         | 167,680    |           |            |         | 62,319    |        |            |        | (11,800 | )       |            |         | 218,199 |         |         |        | (45,580 | )       |            |         | 172,619 |        
|                                        |                               |                        |                   |          |                |        |          |             |        |        |        |        |         |        |             |         |            |           |            |         |           |        |            |        |         |         |           
|                                        |                               |                        | Net income (loss) |          | $              | 85,149 |          |             | $      | 24,752 |        |        | $       | (8,543 | )           |         | $          | 101,358   |            |         | $         | 37,704 |            |        | $       | (7,139  | )          |         | $       | 131,923 |         |        | $       | (27,264 | )          |         | $       | 104,659 | 
|                                        |                               |                        |                   |          |                |        |          |             |        |        |        |        |         |        |             |         |            |           |            |         |           |        |            |        |         |         |           
|Relevant Financial and Performance Data |                               |                        |                   |          |                |        |          |             |        |        |        |        |         |        |             |         |            |           |            |         |           |        |            |        |         |         |            |         |         |         |         |        |         |         |            |        
|Average interest-earning assets         |                               | $                      | 8,851,454         |          |                | $      | 840,191  |             |        | $      | 3,291  |        |         | $      | 9,694,936   |         |            | $         | 14,231,553 |         |           | $      | 740,001    |        |         | $       | 24,666,490 |         |         | $       | 14,087  |        |         | $       | 24,680,577 |        
|Allocated capital                       |                               | $                      | 521,875           |          |                | $      | 363,809  |             |        | $      | 10,930 |        |         | $      | 896,614     |         |            | $         | 666,085    |         |           | $      | 46,573     |        |         | $       | 1,609,272  |         |         |         | 132,965 |        |         |         | 1,742,237  |        
|Loans produced                          |                               | $                      | 18,712,491        |          |                | $      | 540,228  |             |        | $      |       |        |         | $      | 19,252,719  |         |            | $         | 1,337,863  |         |           | $      |           |        |         | $       | 20,590,582 |         |         | $       |        |        |         | $       | 20,590,582 |        
|Loans sold                              |                               | $                      | 19,743,413        |          |                | $      | 437,331  |             |        | $      |       |        |         | $      | 20,180,744  |         |            | $         | 1,269,497  |         |           | $      | (2,035,077 | )      |         | $       | 19,415,164 |         |         | $       |        |        |         | $       | 19,415,164 |        
|MBR margin                              |                               |                        | 1.16              | %        |                |        | 1.28     | %           |        |        | N/A    |        |         |        | 1.16        | %       |            |           | 1.34       | %       |           |        | N/A        |        |         |         | N/A        |         |         |         | N/A     |        |         |         | 1.23       | %      
|ROE                                     |                               |                        | 65                | %        |                |        | 27       | %           |        |        | N/A    |        |         |        | 45          | %       |            |           | 23         | %       |           |        | N/A        |        |         |         | 33         | %       |         |         | N/A     |        |         |         | 24         | %      
|ROA                                     |                               |                        | 3.77              | %        |                |        | 3.87     | %           |        |        | N/A    |        |         |        | 3.46        | %       |            |           | 1.05       | %       |           |        | N/A        |        |         |         | 1.95       | %       |         |         | N/A     |        |         |         | 1.51       | %      
|Net interest margin, thrift.            |                               |                        | N/A               |          |                |        | N/A      |             |        |        | N/A    |        |         |        | N/A         |         |            |           | 1.89       | %       |           |        | N/A        |        |         |         | N/A        |         |         |         | N/A     |        |         |         | 2.01       | %      
|Average FTE                             |                               |                        | 4,405             |          |                |        | 190      |             |        |        | 1,067  |        |         |        | 5,662       |         |            |           | 648        |         |           |        | 312        |        |         |         | 6,622      |         |         |         | 1,239   |        |         |         | 7,861      |        

|                                        |                               |                      |                   |         |         |        |         |        |        |       |        |        |         |        |            |         |         |        |            |        |        |        |            |        |         |        |            |         |         |         |         |        |         |         |            |         |         |        | 
|--------------------------------------- | ----------------------------- | -------------------- | ----------------- | ------- | ------- | ------ | ------- | ------ | ------ | ----- | ------ | ------ | ------- | ------ | ---------- | ------- | ------- | ------ | ---------- | ------ | ------ | ------ | ---------- | ------ | ------- | ------ | ---------- | ------- | ------- | ------- | ------- | ------ | ------- | ------- | ---------- | ------- | ------- | ------ | 
|Three Months Ended                      |                               |                      |                   |         |         |        |         |        |        |       |        |        |         |        |            |         |         |       
|June 30, 2005                           |                               |                      |                   |         |         |        |         |        |        |       |        |        |         |        |            |         |         |       
|                                        |                               |                      |                   |         |         |        |         |        |        |       |        |        |         |        |            |         |         |       
|Operating Results                       |                               |                      |                   |         |         |        |         |        |        |       |        |        |         |        |            |         |         |        |            |        |        |        |            |        |         |        |            |         |         |         |         |        |         |         |            |        
|Net interest income                     |                               | $                    | 23,785            |         |         | $      | 11,372  |        |        | $     | 40     |        |         | $      | 35,197     |         |         | $      | 53,842     |        |        | $      | 11,344     |        |         | $      | 100,383    |         |         | $       | (3,064  | )      |         | $       | 97,319     |        
|Provision for loan losses               |                               |                      |                  |         |         |        |        |        |        |       |       |        |         |        |           |         |         |        | (2,407     | )      |        |        |           |        |         |        | (2,407     | )       |         |         |        |        |         |         | (2,407     | )      
|Gain (loss) on sale of loans            |                               |                      | 169,949           |         |         |        | 1,254   |        |        |       |       |        |         |        | 171,203    |         |         |        | 14,325     |        |        |        | (26,151    | )      |         |        | 159,377    |         |         |         |        |        |         |         | 159,377    |        
|Service fee income                      |                               |                      | 3,035             |         |         |        | (4,184  | )      |        |       |       |        |         |        | (1,149     | )       |         |        | 1,754      |        |        |        | 10,194     |        |         |        | 10,799     |         |         |         |        |        |         |         | 10,799     |        
|Gain (loss) on securities               |                               |                      |                  |         |         |        | 14,361  |        |        |       |       |        |         |        | 14,361     |         |         |        | 1,005      |        |        |        | 485        |        |         |        | 15,851     |         |         |         |        |        |         |         | 15,851     |        
|Other income                            |                               |                      | 720               |         |         |        | 561     |        |        |       | 512    |        |         |        | 1,793      |         |         |        | 7,523      |        |        |        | (2,373     | )      |         |        | 6,943      |         |         |         | 789     |        |         |         | 7,732      |        
|                                        |                               |                      |                   |         |         |        |         |        |        |       |        |        |         |        |            |         |         |        |            |        |        |        |            |        |         |        |           
|                                        | Net revenues (expense)        |                      |                   | 197,489 |         |        |         | 23,364 |        |       |        | 552    |         |        |            | 221,405 |         |        |            | 76,042 |        |        |            | (6,501 | )       |        |            | 290,946 |         |         |         | (2,275 | )       |         |            | 288,671 |        
|                                        | Operating expenses            |                      |                   | 119,046 |         |        |         | 8,519  |        |       |        | 12,859 |         |        |            | 140,424 |         |        |            | 26,106 |        |        |            | 8,702  |         |        |            | 175,232 |         |         |         | 36,065 |         |         |            | 211,297 |        
|                                        | Deferred expense under FAS 91 |                      |                   | (48,638 | )       |        |         | (451   | )      |       |        |       |         |        |            | (49,089 | )       |        |            | (5,222 | )      |        |            | (2,853 | )       |        |            | (57,164 | )       |         |         |       |         |         |            | (57,164 | )      
|                                        |                               |                      |                   |         |         |        |         |        |        |       |        |        |         |        |            |         |         |        |            |        |        |        |            |        |         |        |           
|                                        |                               | Pretax income (loss) |                   |         | 127,081 |        |         |        | 15,296 |       |        |        | (12,307 | )      |            |         | 130,070 |        |            |        | 55,158 |        |            |        | (12,350 | )      |            |         | 172,878 |         |         |        | (38,340 | )       |            |         | 134,538 |       
|                                        |                               |                      |                   |         |         |        |         |        |        |       |        |        |         |        |            |         |         |        |            |        |        |        |            |        |         |        |           
|                                        |                               |                      | Net income (loss) |         | $       | 76,868 |         |        | $      | 9,254 |        |        | $       | (7,446 | )          |         | $       | 78,676 |            |        | $      | 33,370 |            |        | $       | (7,472 | )          |         | $       | 104,574 |         |        | $       | (22,860 | )          |         | $       | 81,714 | 
|                                        |                               |                      |                   |         |         |        |         |        |        |       |        |        |         |        |            |         |         |        |            |        |        |        |            |        |         |        |           
|Relevant Financial and Performance Data |                               |                      |                   |         |         |        |         |        |        |       |        |        |         |        |            |         |         |        |            |        |        |        |            |        |         |        |            |         |         |         |         |        |         |         |            |        
|Average interest-earning assets         |                               | $                    | 5,689,906         |         |         | $      | 555,790 |        |        | $     | 77     |        |         | $      | 6,245,773  |         |         | $      | 11,645,734 |        |        | $      | 652,469    |        |         | $      | 18,543,976 |         |         | $       | 16,805  |        |         | $       | 18,560,781 |        
|Allocated capital                       |                               | $                    | 318,640           |         |         | $      | 176,731 |        |        | $     | 10,430 |        |         | $      | 505,801    |         |         | $      | 508,389    |        |        | $      | 38,477     |        |         | $      | 1,052,667  |         |         | $       | 284,943 |        |         | $       | 1,337,610  |        
|Loans produced                          |                               | $                    | 13,196,407        |         |         | $      | 173,754 |        |        | $     |       |        |         | $      | 13,370,161 |         |         | $      | 1,422,746  |        |        | $      |           |        |         | $      | 14,792,907 |         |         | $       |        |        |         | $       | 14,792,907 |        
|Loans sold                              |                               | $                    | 11,673,671        |         |         | $      | 250,719 |        |        | $     |       |        |         | $      | 11,924,390 |         |         | $      | 864,989    |        |        | $      | (1,255,279 | )      |         | $      | 11,534,100 |         |         | $       |        |        |         | $       | 11,534,100 |        
|MBR margin                              |                               |                      | 1.66              | %       |         |        | 1.33    | %      |        |       | N/A    |        |         |        | 1.65       | %       |         |        | 1.98       | %      |        |        | N/A        |        |         |        | N/A        |         |         |         | N/A     |        |         |         | 1.63       | %      
|ROE                                     |                               |                      | 97                | %       |         |        | 21      | %      |        |       | N/A    |        |         |        | 62         | %       |         |        | 26         | %      |        |        | N/A        |        |         |        | 40         | %       |         |         | N/A     |        |         |         | 25         | %      
|ROA                                     |                               |                      | 5.29              | %       |         |        | 2.66    | %      |        |       | N/A    |        |         |        | 4.29       | %       |         |        | 1.15       | %      |        |        | N/A        |        |         |        | 2.12       | %       |         |         | N/A     |        |         |         | 1.64       | %      
|Net interest margin, thrift.            |                               |                      | N/A               |         |         |        | N/A     |        |        |       | N/A    |        |         |        | N/A        |         |         |        | 1.85       | %      |        |        | N/A        |        |         |        | N/A        |         |         |         | N/A     |        |         |         | 2.02       | %      
|Average FTE                             |                               |                      | 3,364             |         |         |        | 114     |        |        |       | 747    |        |         |        | 4,225      |         |         |        | 544        |        |        |        | 231        |        |         |        | 5,000      |         |         |         | 1,038   |        |         |         | 6,038      |        






|    |                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Included in the mortgage banking overhead was $6.1 million
    and $2.4 million production division overhead and servicing
    overhead, respectively, for the quarter ended June 30,
    2006. For the quarter ended June 30, 2005, the
    $7.4 million mortgage banking overhead included
    $5.0 million production division overhead and
    $2.4 million servicing overhead.
|   
|(2) | Included are eliminations, deposits, and treasury items, the
    details of which are provided on page 11.                                                                                                                                                                                                                                                                         

8



---



##### Table of Contents





|                                        |                                   |                                       |                   |         |               |           |           |          |        |       |            |        |        |        |            |         |           |        |         |           |       |     |           |        |        |        |            |         |         |        | 
|--------------------------------------- | --------------------------------- | ------------------------------------- | ----------------- | ------- | ------------- | --------- | --------- | -------- | ------ | ----- | ---------- | ------ | ------ | ------ | ---------- | ------- | --------- | ------ | ------- | --------- | ----- | --- | --------- | ------ | ------ | ------ | ---------- | ------- | ------- | ------ | 
|                                        |                                   | Mortgage Banking Production Divisions |                  
|                                        |                                   |                                       |                  
|                                        |                                   |                                       |                   |         |               | Financial |           |          |       
|                                        |                                   | Mortgage Professionals                |                   |         |               |           | Freedom   |          |        | Total |           
|Three Months Ended                      |                                   |                                       |                   |         | Consumer      |           |           | (Reverse |        |       | Production |       
|June 30, 2006                           |                                   | Wholesale                             |                   |         | Correspondent |           |           | Conduit  |        |       | Total      |        |        | Direct |            |         | Mortgage) |        |         | Divisions |      
|                                        |                                   |                                       |                   |         |               |           |           |          |        |       |            |        |        |        |            |         |           |        |         |           |      
|                                        |                                   | (Dollars in thousands)                |                  
|Operating Results                       |                                   |                                       |                   |         |               |           |           |          |        |       |            |        |        |        |            |         |           |        |         |           |       |     |           |        |        |        |            |        
|Net interest income                     |                                   | $                                     | 14,463            |         |               | $         | 3,375     |          |        | $     | 17,576     |        |        | $      | 35,414     |         |           | $      | 647     |           |       | $   | 1,589     |        |        | $      | 37,650     |        
|Provision for loan losses               |                                   |                                       |                  |         |               |           |          |          |        |       |           |        |        |        |           |         |           |        |        |           |       |     |          |        |        |        |           |        
|Gain (loss) on sale of loans            |                                   |                                       | 107,405           |         |               |           | 16,482    |          |        |       | 18,918     |        |        |        | 142,805    |         |           |        | 10,357  |           |       |     | 38,171    |        |        |        | 191,333    |        
|Service fee income                      |                                   |                                       |                  |         |               |           |          |          |        |       |           |        |        |        |           |         |           |        |        |           |       |     | 4,650     |        |        |        | 4,650      |        
|Gain (loss) on securities               |                                   |                                       |                  |         |               |           |          |          |        |       |           |        |        |        |           |         |           |        |        |           |       |     |          |        |        |        |           |        
|Other income                            |                                   |                                       |                  |         |               |           |          |          |        |       | (9         | )      |        |        | (9         | )       |           |        | 127     |           |       |     | 366       |        |        |        | 484        |        
|                                        |                                   |                                       |                   |         |               |           |           |          |        |       |            |        |        |        |            |         |           |        |         |           |      
|                                        | Net revenues (expense)            |                                       |                   | 121,868 |               |           |           | 19,857   |        |       |            | 36,485 |        |        |            | 178,210 |           |        |         | 11,131    |       |     |           | 44,776 |        |        |            | 234,117 |        
|                                        | Operating expenses                |                                       |                   | 82,330  |               |           |           | 12,862   |        |       |            | 6,750  |        |        |            | 101,942 |           |        |         | 16,231    |       |     |           | 34,664 |        |        |            | 152,837 |        
|                                        | Deferral of expenses under FAS 91 |                                       |                   | (38,759 | )             |           |           | (6,197   | )      |       |            |       |        |        |            | (44,956 | )         |        |         | (6,203    | )     |     |           | (8,449 | )      |        |            | (59,608 | )      
|                                        |                                   |                                       |                   |         |               |           |           |          |        |       |            |        |        |        |            |         |           |        |         |           |      
|                                        |                                   | Pretax income (loss)                  |                   |         | 78,297        |           |           |          | 13,192 |       |            |        | 29,735 |        |            |         | 121,224   |        |         |           | 1,103 |     |           |        | 18,561 |        |            |         | 140,888 |       
|                                        |                                   |                                       |                   |         |               |           |           |          |        |       |            |        |        |        |            |         |           |        |         |           |      
|                                        |                                   |                                       | Net income (loss) |         | $             | 47,370    |           |          | $      | 7,981 |            |        | $      | 17,990 |            |         | $         | 73,341 |         |           | $     | 668 |           |        | $      | 11,140 |            |         | $       | 85,149 | 
|                                        |                                   |                                       |                   |         |               |           |           |          |        |       |            |        |        |        |            |         |           |        |         |           |      
|Relevant Financial and Performance Data |                                   |                                       |                   |         |               |           |           |          |        |       |            |        |        |        |            |         |           |        |         |           |       |     |           |        |        |        |            |        
|Average interest-earning assets         |                                   | $                                     | 3,680,645         |         |               | $         | 919,027   |          |        | $     | 3,603,890  |        |        | $      | 8,203,562  |         |           | $      | 224,931 |           |       | $   | 422,961   |        |        | $      | 8,851,454  |        
|Allocated capital                       |                                   |                                       | 212,697           |         |               |           | 53,252    |          |        |       | 168,293    |        |        |        | 434,242    |         |           |        | 12,872  |           |       |     | 74,761    |        |        |        | 521,875    |        
|Loans produced                          |                                   |                                       | 8,825,462         |         |               |           | 2,527,672 |          |        |       | 5,471,341  |        |        |        | 16,824,475 |         |           |        | 551,455 |           |       |     | 1,336,561 |        |        |        | 18,712,491 |        
|Loans sold                              |                                   |                                       | 9,296,911         |         |               |           | 2,601,936 |          |        |       | 6,054,148  |        |        |        | 17,952,995 |         |           |        | 589,577 |           |       |     | 1,200,841 |        |        |        | 19,743,413 |        
|MBR margin                              |                                   |                                       | 1.31              | %       |               |           | 0.76      | %        |        |       | 0.60       | %      |        |        | 0.99       | %       |           |        | 1.87    | %         |       |     | 3.31      | %      |        |        | 1.16       | %      
|Pretax income/loan sold                 |                                   |                                       | 0.84              | %       |               |           | 0.51      | %        |        |       | 0.49       | %      |        |        | 0.68       | %       |           |        | 0.19    | %         |       |     | 1.55      | %      |        |        | 0.71       | %      
|ROE                                     |                                   |                                       | 89                | %       |               |           | 60        | %        |        |       | 43         | %      |        |        | 68         | %       |           |        | 21      | %         |       |     | 60        | %      |        |        | 65         | %      
|ROA                                     |                                   |                                       | 5.15              | %       |               |           | 3.48      | %        |        |       | 1.98       | %      |        |        | 3.57       | %       |           |        | 1.13    | %         |       |     | 7.66      | %      |        |        | 3.77       | %      
|Net interest margin                     |                                   |                                       | 1.58              | %       |               |           | 1.47      | %        |        |       | 1.96       | %      |        |        | 1.73       | %       |           |        | 1.15    | %         |       |     | 1.51      | %      |        |        | 1.71       | %      
|Average FTE                             |                                   |                                       | 2,392             |         |               |           | 229       |          |        |       | 146        |        |        |        | 2,767      |         |           |        | 369     |           |       |     | 1,269     |        |        |        | 4,405      |        

|                                        |                                   |                      |                   |         |        |        |           |        |        |        |           |        |       |       |            |         |         |        |         |        |      |      |         |        |       |       |            |         |         |        | 
|--------------------------------------- | --------------------------------- | -------------------- | ----------------- | ------- | ------ | ------ | --------- | ------ | ------ | ------ | --------- | ------ | ----- | ----- | ---------- | ------- | ------- | ------ | ------- | ------ | ---- | ---- | ------- | ------ | ----- | ----- | ---------- | ------- | ------- | ------ | 
|Three Months Ended                      |                                   |                      |                   |         |        |        |           |        |        |        |           |        |       |      
|June 30, 2005                           |                                   |                      |                   |         |        |        |           |        |        |        |           |        |       |      
|                                        |                                   |                      |                   |         |        |        |           |        |        |        |           |        |       |      
|Operating Results                       |                                   |                      |                   |         |        |        |           |        |        |        |           |        |       |       |            |         |         |        |         |        |      |      |         |        |       |       |            |        
|Net interest income                     |                                   | $                    | 9,695             |         |        | $      | 2,548     |        |        | $      | 9,953     |        |       | $     | 22,196     |         |         | $      | 1,087   |        |      | $    | 502     |        |       | $     | 23,785     |        
|Provision for loan losses               |                                   |                      |                  |         |        |        |          |        |        |        |          |        |       |       |           |         |         |        |        |        |      |      |        |        |       |       |           |        
|Gain (loss) on sale of loans            |                                   |                      | 116,145           |         |        |        | 19,246    |        |        |        | 1,317     |        |       |       | 136,708    |         |         |        | 16,013  |        |      |      | 17,228  |        |       |       | 169,949    |        
|Service fee income                      |                                   |                      |                  |         |        |        |          |        |        |        |          |        |       |       |           |         |         |        |        |        |      |      | 3,035   |        |       |       | 3,035      |        
|Gain (loss) on securities               |                                   |                      |                  |         |        |        |          |        |        |        |          |        |       |       |           |         |         |        |        |        |      |      |        |        |       |       |           |        
|Other income                            |                                   |                      | 4                 |         |        |        |          |        |        |        | 61        |        |       |       | 65         |         |         |        | (1      | )      |      |      | 656     |        |       |       | 720        |        
|                                        |                                   |                      |                   |         |        |        |           |        |        |        |           |        |       |       |            |         |         |        |         |        |     
|                                        | Net revenues (expense)            |                      |                   | 125,844 |        |        |           | 21,794 |        |        |           | 11,331 |       |       |            | 158,969 |         |        |         | 17,099 |      |      |         | 21,421 |       |       |            | 197,489 |        
|                                        | Operating expenses                |                      |                   | 65,399  |        |        |           | 7,877  |        |        |           | 3,809  |       |       |            | 77,085  |         |        |         | 24,471 |      |      |         | 17,490 |       |       |            | 119,046 |        
|                                        | Deferral of expenses under FAS 91 |                      |                   | (32,927 | )      |        |           | (4,307 | )      |        |           |       |       |       |            | (37,234 | )       |        |         | (6,654 | )    |      |         | (4,750 | )     |       |            | (48,638 | )      
|                                        |                                   |                      |                   |         |        |        |           |        |        |        |           |        |       |       |            |         |         |        |         |        |     
|                                        |                                   | Pretax income (loss) |                   |         | 93,372 |        |           |        | 18,224 |        |           |        | 7,522 |       |            |         | 119,118 |        |         |        | (718 | )    |         |        | 8,681 |       |            |         | 127,081 |       
|                                        |                                   |                      |                   |         |        |        |           |        |        |        |           |        |       |       |            |         |         |        |         |        |     
|                                        |                                   |                      | Net income (loss) |         | $      | 56,490 |           |        | $      | 11,026 |           |        | $     | 4,551 |            |         | $       | 72,067 |         |        | $    | (434 | )       |        | $     | 5,235 |            |         | $       | 76,868 | 
|                                        |                                   |                      |                   |         |        |        |           |        |        |        |           |        |       |       |            |         |         |        |         |        |     
|Relevant Financial and Performance Data |                                   |                      |                   |         |        |        |           |        |        |        |           |        |       |       |            |         |         |        |         |        |      |      |         |        |       |       |            |        
|Average interest-earning assets         |                                   | $                    | 2,769,263         |         |        | $      | 557,558   |        |        | $      | 1,979,241 |        |       | $     | 5,306,062  |         |         | $      | 277,301 |        |      | $    | 106,543 |        |       | $     | 5,689,906  |        
|Allocated capital                       |                                   |                      | 130,677           |         |        |        | 25,074    |        |        |        | 88,957    |        |       |       | 244,708    |         |         |        | 13,784  |        |      |      | 60,148  |        |       |       | 318,640    |        
|Loans produced                          |                                   |                      | 7,191,986         |         |        |        | 1,419,921 |        |        |        | 3,206,983 |        |       |       | 11,818,890 |         |         |        | 738,137 |        |      |      | 639,380 |        |       |       | 13,196,407 |        
|Loans sold                              |                                   |                      | 6,568,736         |         |        |        | 1,291,826 |        |        |        | 2,542,383 |        |       |       | 10,402,945 |         |         |        | 656,290 |        |      |      | 614,436 |        |       |       | 11,673,671 |        
|MBR margin                              |                                   |                      | 1.92              | %       |        |        | 1.69      | %      |        |        | 0.44      | %      |       |       | 1.53       | %       |         |        | 2.61    | %      |      |      | 2.89    | %      |       |       | 1.66       | %      
|Pretax income/loan sold                 |                                   |                      | 1.42              | %       |        |        | 1.41      | %      |        |        | 0.30      | %      |       |       | 1.15       | %       |         |        | (0.11   | )%     |      |      | 1.41    | %      |       |       | 1.09       | %      
|ROE                                     |                                   |                      | 173               | %       |        |        | 176       | %      |        |        | 21        | %      |       |       | 118        | %       |         |        | (13     | )%     |      |      | 35      | %      |       |       | 97         | %      
|ROA                                     |                                   |                      | 8.16              | %       |        |        | 7.91      | %      |        |        | 0.92      | %      |       |       | 5.43       | %       |         |        | (0.60   | )%     |      |      | 9.59    | %      |       |       | 5.29       | %      
|Net interest margin                     |                                   |                      | 1.40              | %       |        |        | 1.83      | %      |        |        | 2.02      | %      |       |       | 1.68       | %       |         |        | 1.57    | %      |      |      | 1.89    | %      |       |       | 1.68       | %      
|Average FTE                             |                                   |                      | 1,785             |         |        |        | 171       |        |        |        | 102       |        |       |       | 2,058      |         |         |        | 594     |        |      |      | 712     |        |       |       | 3,364      |        

9



---



##### Table of Contents





|                                        |                                   |                        |                   |          |           |       |           |          |        |        |              |        |        |              |           |        |           |       |           |              |        |       |              |       |    |    |        |     |    |    |            |        |        |        | 
|--------------------------------------- | --------------------------------- | ---------------------- | ----------------- | -------- | --------- | ----- | --------- | -------- | ------ | ------ | ------------ | ------ | ------ | ------------ | --------- | ------ | --------- | ----- | --------- | ------------ | ------ | ----- | ------------ | ----- | -- | -- | ------ | --- | -- | -- | ---------- | ------ | ------ | ------ | 
|                                        |                                   | Thrift                 |                  
|                                        |                                   |                        |                  
|                                        |                                   |                        |                   | Consumer |           |       |          
|                                        |                                   | Mortgage-              |                   |          | Prime SFR |       |           | Home     |        |        | Construction |        |        | Builder      |           |        |          
|Three Months Ended                      |                                   | Backed                 |                   |          | Mortgage  |       |           | Equity   |        |        | and Lot      |        |        | Construction |           |        | Warehouse |       |           | Discontinued |        |       |             
|June 30, 2006                           |                                   | Securities             |                   |          | Loans     |       |           | Division |        |        | Loans        |        |        | Financing    |           |        | Lending   |       |           | Products     |        |       | Total Thrift |      
|                                        |                                   |                        |                   |          |           |       |           |          |        |        |              |        |        |              |           |        |           |       |           |              |        |       |              |      
|                                        |                                   | (Dollars in thousands) |                  
|Operating Results                       |                                   |                        |                   |          |           |       |           |          |        |        |              |        |        |              |           |        |           |       |           |              |        |       |              |       |    |    |        |     |    |    |            |       
|Net interest income                     |                                   | $                      | 9,238             |          |           | $     | 18,723    |          |        | $      | 9,817        |        |        | $            | 12,211    |        |           | $     | 15,809    |              |        | $     | 728          |       |    | $  | 583    |     |    | $  | 67,109     |       
|Provision for loan losses               |                                   |                        |                  |          |           |       | (975      | )        |        |        |             |        |        |              | (625      | )      |           |       | (250      | )            |        |       |             |       |    |    | (380   | )   |    |    | (2,230     | )     
|Gain (loss) on sale of loans            |                                   |                        | (122              | )        |           |       | 765       |          |        |        | 5,280        |        |        |              | 11,093    |        |           |       |          |              |        |       |             |       |    |    | (11    | )   |    |    | 17,005     |       
|Service fee income                      |                                   |                        |                  |          |           |       |          |          |        |        | 288          |        |        |              |          |        |           |       |          |              |        |       |             |       |    |    |       |     |    |    | 288        |       
|Gain (loss) on securities               |                                   |                        | 72                |          |           |       |          |          |        |        | (1,787       | )      |        |              | 464       |        |           |       |          |              |        |       |             |       |    |    |       |     |    |    | (1,251     | )     
|Other income                            |                                   |                        | 11                |          |           |       | 429       |          |        |        | 2,262        |        |        |              | 5,934     |        |           |       | 376       |              |        |       | 433          |       |    |    |       |     |    |    | 9,445      |       
|                                        |                                   |                        |                   |          |           |       |           |          |        |        |              |        |        |              |           |        |           |       |           |              |        |       |              |      
|                                        | Net revenues (expense)            |                        |                   | 9,199    |           |       |           | 18,942   |        |        |              | 15,860 |        |              |           | 29,077 |           |       |           | 15,935       |        |       |              | 1,161 |    |    |        | 192 |    |    |            | 90,366 |       
|                                        | Operating expenses                |                        |                   | 286      |           |       |           | 1,056    |        |        |              | 5,682  |        |              |           | 18,413 |           |       |           | 5,993        |        |       |              | 1,122 |    |    |        | 94  |    |    |            | 32,646 |       
|                                        | Deferral of expenses under FAS 91 |                        |                   |         |           |       |           |         |        |        |              | (327   | )      |              |           | (2,309 | )         |       |           | (1,963       | )      |       |              |      |    |    |        |    |    |    |            | (4,599 | )     
|                                        |                                   |                        |                   |          |           |       |           |          |        |        |              |        |        |              |           |        |           |       |           |              |        |       |              |      
|                                        |                                   | Pretax income (loss)   |                   |          | 8,913     |       |           |          | 17,886 |        |              |        | 10,505 |              |           |        | 12,973    |       |           |              | 11,905 |       |              |       | 39 |    |        |     | 98 |    |            |        | 62,319 |       
|                                        |                                   |                        |                   |          |           |       |           |          |        |        |              |        |        |              |           |        |           |       |           |              |        |       |              |      
|                                        |                                   |                        | Net income (loss) |          | $         | 5,392 |           |          | $      | 10,821 |              |        | $      | 6,356        |           |        | $         | 7,849 |           |              | $      | 7,203 |              |       | $  | 24 |        |     | $  | 59 |            |        | $      | 37,704 | 
|                                        |                                   |                        |                   |          |           |       |           |          |        |        |              |        |        |              |           |        |           |       |           |              |        |       |              |      
|Relevant Financial and Performance Data |                                   |                        |                   |          |           |       |           |          |        |        |              |        |        |              |           |        |           |       |           |              |        |       |              |       |    |    |        |     |    |    |            |       
|Average interest-earning assets         |                                   | $                      | 3,027,166         |          |           | $     | 5,552,768 |          |        | $      | 1,959,586    |        |        | $            | 2,478,231 |        |           | $     | 1,077,306 |              |        | $     | 94,938       |       |    | $  | 41,558 |     |    | $  | 14,231,553 |       
|Allocated capital                       |                                   |                        | 55,974            |          |           |       | 223,102   |          |        |        | 148,496      |        |        |              | 120,104   |        |           |       | 105,365   |              |        |       | 9,331        |       |    |    | 3,713  |     |    |    | 666,085    |       
|Loans produced                          |                                   |                        |                  |          |           |       |          |          |        |        | 32,808       |        |        |              | 774,060   |        |           |       | 530,995   |              |        |       |             |       |    |    |       |     |    |    | 1,337,863  |       
|Loans sold                              |                                   |                        |                  |          |           |       | 2,845     |          |        |        | 615,834      |        |        |              | 650,818   |        |           |       |          |              |        |       |             |       |    |    |       |     |    |    | 1,269,497  |       
|ROE                                     |                                   |                        | 39                | %        |           |       | 19        | %        |        |        | 17           | %      |        |              | 26        | %      |           |       | 27        | %            |        |       | 1            | %     |    |    | 6      | %   |    |    | 23         | %     
|ROA                                     |                                   |                        | 0.70              | %        |           |       | 0.77      | %        |        |        | 1.26         | %      |        |              | 1.27      | %      |           |       | 2.70      | %            |        |       | 0.10         | %     |    |    | 0.65   | %   |    |    | 1.05       | %     
|Net interest margin                     |                                   |                        | 1.22              | %        |           |       | 1.35      | %        |        |        | 2.01         | %      |        |              | 1.98      | %      |           |       | 5.89      | %            |        |       | 3.08         | %     |    |    | 5.63   | %   |    |    | 1.89       | %     
|Efficiency ratio                        |                                   |                        | 3                 | %        |           |       | 5         | %        |        |        | 34           | %      |        |              | 54        | %      |           |       | 25        | %            |        |       | 97           | %     |    |    | 16     | %   |    |    | 30         | %     
|Average FTE                             |                                   |                        | 6                 |          |           |       | 14        |          |        |        | 77           |        |        |              | 426       |        |           |       | 101       |              |        |       | 24           |       |    |    |       |     |    |    | 648        |       

|                                        |                                   |                      |                   |       |       |       |           |        |        |        |           |        |       |       |           |        |        |       |         |        |       |       |        |     |      |      |        |     |      |      |            |        |        |        | 
|--------------------------------------- | --------------------------------- | -------------------- | ----------------- | ----- | ----- | ----- | --------- | ------ | ------ | ------ | --------- | ------ | ----- | ----- | --------- | ------ | ------ | ----- | ------- | ------ | ----- | ----- | ------ | --- | ---- | ---- | ------ | --- | ---- | ---- | ---------- | ------ | ------ | ------ | 
|Three Months Ended                      |                                   |                      |                   |       |       |       |           |        |        |        |           |        |       |       |           |       
|June 30, 2005                           |                                   |                      |                   |       |       |       |           |        |        |        |           |        |       |       |           |       
|                                        |                                   |                      |                   |       |       |       |           |        |        |        |           |        |       |       |           |       
|Operating Results                       |                                   |                      |                   |       |       |       |           |        |        |        |           |        |       |       |           |        |        |       |         |        |       |       |        |     |      |      |        |     |      |      |            |       
|Net interest income                     |                                   | $                    | 5,688             |       |       | $     | 17,778    |        |        | $      | 7,087     |        |       | $     | 12,696    |        |        | $     | 9,752   |        |       | $     | 49     |     |      | $    | 792    |     |      | $    | 53,842     |       
|Provision for loan losses               |                                   |                      |                  |       |       |       | (700      | )      |        |        |          |        |       |       | (573      | )      |        |       | (500    | )      |       |       | (84    | )   |      |      | (550   | )   |      |      | (2,407     | )     
|Gain (loss) on sale of loans            |                                   |                      |                  |       |       |       | 3,056     |        |        |        | 646       |        |       |       | 10,613    |        |        |       |        |        |       |       |       |     |      |      | 10     |     |      |      | 14,325     |       
|Service fee income                      |                                   |                      |                  |       |       |       | 278       |        |        |        | 1,476     |        |       |       |          |        |        |       |        |        |       |       |       |     |      |      |       |     |      |      | 1,754      |       
|Gain (loss) on securities               |                                   |                      | 724               |       |       |       |          |        |        |        | 397       |        |       |       | (116      | )      |        |       |        |        |       |       |       |     |      |      |       |     |      |      | 1,005      |       
|Other income                            |                                   |                      | (1                | )     |       |       |          |        |        |        | 1,788     |        |       |       | 5,521     |        |        |       | 138     |        |       |       | 76     |     |      |      | 1      |     |      |      | 7,523      |       
|                                        |                                   |                      |                   |       |       |       |           |        |        |        |           |        |       |       |           |        |        |       |         |        |       |       |        |    
|                                        | Net revenues (expense)            |                      |                   | 6,411 |       |       |           | 20,412 |        |        |           | 11,394 |       |       |           | 28,141 |        |       |         | 9,390  |       |       |        | 41  |      |      |        | 253 |      |      |            | 76,042 |       
|                                        | Operating expenses                |                      |                   | 274   |       |       |           | 557    |        |        |           | 3,672  |       |       |           | 15,693 |        |       |         | 4,644  |       |       |        | 762 |      |      |        | 504 |      |      |            | 26,106 |       
|                                        | Deferral of expenses under FAS 91 |                      |                   |      |       |       |           |       |        |        |           | (581   | )     |       |           | (2,802 | )      |       |         | (1,839 | )     |       |        |    |      |      |        |    |      |      |            | (5,222 | )     
|                                        |                                   |                      |                   |       |       |       |           |        |        |        |           |        |       |       |           |        |        |       |         |        |       |       |        |    
|                                        |                                   | Pretax income (loss) |                   |       | 6,137 |       |           |        | 19,855 |        |           |        | 8,303 |       |           |        | 15,250 |       |         |        | 6,585 |       |        |     | (721 | )    |        |     | (251 | )    |            |        | 55,158 |       
|                                        |                                   |                      |                   |       |       |       |           |        |        |        |           |        |       |       |           |        |        |       |         |        |       |       |        |    
|                                        |                                   |                      | Net income (loss) |       | $     | 3,713 |           |        | $      | 12,012 |           |        | $     | 5,023 |           |        | $      | 9,226 |         |        | $     | 3,984 |        |     | $    | (436 | )      |     | $    | (152 | )          |        | $      | 33,370 | 
|                                        |                                   |                      |                   |       |       |       |           |        |        |        |           |        |       |       |           |        |        |       |         |        |       |       |        |    
|Relevant Financial and Performance Data |                                   |                      |                   |       |       |       |           |        |        |        |           |        |       |       |           |        |        |       |         |        |       |       |        |     |      |      |        |     |      |      |            |       
|Average interest-earning assets         |                                   | $                    | 2,131,235         |       |       | $     | 5,050,001 |        |        | $      | 1,559,134 |        |       | $     | 2,091,337 |        |        | $     | 751,327 |        |       | $     | 12,800 |     |      | $    | 49,900 |     |      | $    | 11,645,734 |       
|Allocated capital                       |                                   |                      | 39,476            |       |       |       | 205,707   |        |        |        | 84,073    |        |       |       | 100,859   |        |        |       | 72,508  |        |       |       | 1,329  |     |      |      | 4,437  |     |      |      | 508,389    |       
|Loans produced                          |                                   |                      |                  |       |       |       |          |        |        |        | 55,716    |        |       |       | 772,804   |        |        |       | 594,226 |        |       |       |       |     |      |      |       |     |      |      | 1,422,746  |       
|Loans sold                              |                                   |                      |                  |       |       |       | 111,299   |        |        |        | 130,497   |        |       |       | 623,193   |        |        |       |        |        |       |       |       |     |      |      |       |     |      |      | 864,989    |       
|ROE                                     |                                   |                      | 38                | %     |       |       | 23        | %      |        |        | 24        | %      |       |       | 37        | %      |        |       | 22      | %      |       |       | (132   | )%  |      |      | (14    | )%  |      |      | 26         | %     
|ROA                                     |                                   |                      | 0.69              | %     |       |       | 0.95      | %      |        |        | 1.28      | %      |       |       | 1.77      | %      |        |       | 2.14    | %      |       |       | (12.09 | )%  |      |      | (1.42  | )%  |      |      | 1.15       | %     
|Net interest margin                     |                                   |                      | 1.07              | %     |       |       | 1.41      | %      |        |        | 1.82      | %      |       |       | 2.43      | %      |        |       | 5.21    | %      |       |       | 1.54   | %   |      |      | 6.37   | %   |      |      | 1.85       | %     
|Efficiency ratio                        |                                   |                      | 4                 | %     |       |       | 3         | %      |        |        | 27        | %      |       |       | 45        | %      |        |       | 28      | %      |       |       | 610    | %   |      |      | 63     | %   |      |      | 27         | %     
|Average FTE                             |                                   |                      | 5                 |       |       |       | 11        |        |        |        | 26        |        |       |       | 378       |        |        |       | 90      |        |       |       | 20     |     |      |      | 14     |     |      |      | 544        |       

10



---



##### Table of Contents





|                                        |                                   |                        |                   |       |          |               |         |            |          |        |            |        |        |        |     |   |       |   |        |       |        |      |            |        |         |        |  
|--------------------------------------- | --------------------------------- | ---------------------- | ----------------- | ----- | -------- | ------------- | ------- | ---------- | -------- | ------ | ---------- | ------ | ------ | ------ | --- | - | ----- | - | ------ | ----- | ------ | ---- | ---------- | ------ | ------- | ------ | -
|                                        |                                   |                        |                   |       |          | Eliminations  |         |            |         
|                                        |                                   |                        |                   |       |          |               |         |            |         
|                                        |                                   |                        |                   |       |          |               |         | MSR        |          |        |            |        |       
|Three months ended                      |                                   |                        |                   |       |          | Interdivision |         |            | Economic |        |            |        |        |       
|June 30, 2006                           |                                   | Deposits               |                   |       | Treasury |               |         | Loan Sales |          |        | Value      |        |        | Other  |     |   | Total |  
|                                        |                                   |                        |                   |       |          |               |         |            |          |        |            |        |        |        |     |   |       |  
|                                        |                                   | (Dollars in thousands) |                  
|Operating Results                       |                                   |                        |                   |       |          |               |         |            |          |        |            |        |        |        |     |   |       |   |        |       |        |      |            |       
|Net interest income                     |                                   | $                      |                  |       |          | $             | (859    | )          |          | $      | 7,568      |        |        | $      |    |   |       | $ | 3,374  |       |        | $    | 10,083     |       
|Provision for loan losses               |                                   |                        |                  |       |          |               |        |            |          |        |           |        |        |        |    |   |       |   |       |       |        |      |           |       
|Gain (loss) on sale of loans            |                                   |                        |                  |       |          |               |        |            |          |        | (12,270    | )      |        |        |    |   |       |   |       |       |        |      | (12,270    | )     
|Service fee income                      |                                   |                        |                  |       |          |               |        |            |          |        | (742       | )      |        |        |    |   |       |   |       |       |        |      | (742       | )     
|Gain (loss) on securities               |                                   |                        |                  |       |          |               |        |            |          |        | 3,003      |        |        |        |    |   |       |   |       |       |        |      | 3,003      |       
|Other income                            |                                   |                        | 883               |       |          |               | 180     |            |          |        |           |        |        |        |    |   |       |   | (1,213 | )     |        |      | (150       | )     
|                                        |                                   |                        |                   |       |          |               |         |            |          |        |            |        |        |        |     |   |       |  
|                                        | Net revenues (expense)            |                        |                   | 883   |          |               |         | (679       | )        |        |            | (2,441 | )      |        |     |  |       |   |        | 2,161 |        |      |            | (76    | )      
|                                        | Operating expenses                |                        |                   | 6,261 |          |               |         | 2,098      |          |        |            |       |        |        |     |  |       |   |        | 3,646 |        |      |            | 12,005 |        
|                                        | Deferral of expenses under FAS 91 |                        |                   |      |          |               |         |           |          |        |            |       |        |        |     |  |       |   |        | (281  | )      |      |            | (281   | )      
|                                        |                                   |                        |                   |       |          |               |         |            |          |        |            |        |        |        |     |   |       |  
|                                        |                                   | Pretax income (loss)   |                   |       | (5,378   | )             |         |            | (2,777   | )      |            |        | (2,441 | )      |     |   |      |   |        |       | (1,204 | )    |            |        | (11,800 | )     
|                                        |                                   |                        |                   |       |          |               |         |            |          |        |            |        |        |        |     |   |       |  
|                                        |                                   |                        | Net income (loss) |       | $        | (3,254        | )       |            | $        | (1,680 | )          |        | $      | (1,477 | )   |   | $     |  |        |       | $      | (728 | )          |        | $       | (7,139 | )
|                                        |                                   |                        |                   |       |          |               |         |            |          |        |            |        |        |        |     |   |       |  
|Relevant Financial and Performance Data |                                   |                        |                   |       |          |               |         |            |          |        |            |        |        |        |     |   |       |   |        |       |        |      |            |       
|Average interest-earning assets         |                                   | $                      | 176               |       |          | $             | 830,915 |            |          | $      | (91,090    | )      |        | $      |    |   |       | $ |       |       |        | $    | 740,001    |       
|Allocated capital                       |                                   | $                      | 2,154             |       |          | $             | 44,419  |            |          | $      |           |        |        | $      |    |   |       | $ |       |       |        | $    | 46,573     |       
|Loans produced                          |                                   | $                      |                  |       |          | $             |        |            |          | $      |           |        |        | $      |    |   |       | $ |       |       |        | $    |           |       
|Loans sold                              |                                   |                        | N/A               |       |          |               | N/A     |            |          | $      | (2,035,077 | )      |        |        | N/A |   |       |   | N/A    |       |        | $    | (2,035,077 | )     
|ROE                                     |                                   |                        | N/A               |       |          |               | N/A     |            |          |        | N/A        |        |        |        | N/A |   |       |   | N/A    |       |        |      | N/A        |       
|ROA                                     |                                   |                        | N/A               |       |          |               | N/A     |            |          |        | N/A        |        |        |        | N/A |   |       |   | N/A    |       |        |      | N/A        |       
|Net interest margin                     |                                   |                        | N/A               |       |          |               | N/A     |            |          |        | N/A        |        |        |        | N/A |   |       |   | N/A    |       |        |      | N/A        |       
|Efficiency ratio                        |                                   |                        | N/A               |       |          |               | N/A     |            |          |        | N/A        |        |        |        | N/A |   |       |   | N/A    |       |        |      | N/A        |       
|Average FTE                             |                                   |                        | 268               |       |          |               | 44      |            |          |        |           |        |        |        |    |   |       |   |       |       |        |      | 312        |       

|                                        |                                   |                      |                   |       |        |        |         |       |       |       |            |         |         |         |        |        |        |       |        |        |      |      |            |        |         |        |  
|--------------------------------------- | --------------------------------- | -------------------- | ----------------- | ----- | ------ | ------ | ------- | ----- | ----- | ----- | ---------- | ------- | ------- | ------- | ------ | ------ | ------ | ----- | ------ | ------ | ---- | ---- | ---------- | ------ | ------- | ------ | -
|Three months ended                      |                                   |                      |                   |       |        |        |         |       |       |       |            |        
|June 30, 2005                           |                                   |                      |                   |       |        |        |         |       |       |       |            |        
|                                        |                                   |                      |                   |       |        |        |         |       |       |       |            |        
|Operating Results                       |                                   |                      |                   |       |        |        |         |       |       |       |            |         |         |         |        |        |        |       |        |        |      |      |            |       
|Net interest income                     |                                   | $                    |                  |       |        | $      | 3,509   |       |       | $     | 4,670      |         |         | $       |       |        |        | $     | 3,165  |        |      | $    | 11,344     |       
|Provision for loan losses               |                                   |                      |                  |       |        |        |        |       |       |       |           |         |         |         |       |        |        |       |       |        |      |      |           |       
|Gain (loss) on sale of loans            |                                   |                      |                  |       |        |        |        |       |       |       | (26,151    | )       |         |         |       |        |        |       |       |        |      |      | (26,151    | )     
|Service fee income                      |                                   |                      |                  |       |        |        |        |       |       |       | (905       | )       |         |         | 11,099 |        |        |       |       |        |      |      | 10,194     |       
|Gain (loss) on securities               |                                   |                      |                  |       |        |        |        |       |       |       | 485        |         |         |         |       |        |        |       |       |        |      |      | 485        |       
|Other income                            |                                   |                      | 618               |       |        |        | 128     |       |       |       |           |         |         |         |       |        |        |       | (3,119 | )      |      |      | (2,373     | )     
|                                        |                                   |                      |                   |       |        |        |         |       |       |       |            |         |         |         |        |        |        |      
|                                        | Net revenues (expense)            |                      |                   | 618   |        |        |         | 3,637 |       |       |            | (21,901 | )       |         |        | 11,099 |        |       |        | 46     |      |      |            | (6,501 | )      
|                                        | Operating expenses                |                      |                   | 3,441 |        |        |         | 1,525 |       |       |            |        |         |         |        |       |        |       |        | 3,736  |      |      |            | 8,702  |        
|                                        | Deferral of expenses under FAS 91 |                      |                   |      |        |        |         |      |       |       |            |        |         |         |        |       |        |       |        | (2,853 | )    |      |            | (2,853 | )      
|                                        |                                   |                      |                   |       |        |        |         |       |       |       |            |         |         |         |        |        |        |      
|                                        |                                   | Pretax income (loss) |                   |       | (2,823 | )      |         |       | 2,112 |       |            |         | (21,901 | )       |        |        | 11,099 |       |        |        | (837 | )    |            |        | (12,350 | )     
|                                        |                                   |                      |                   |       |        |        |         |       |       |       |            |         |         |         |        |        |        |      
|                                        |                                   |                      | Net income (loss) |       | $      | (1,708 | )       |       | $     | 1,278 |            |         | $       | (13,250 | )      |        | $      | 6,715 |        |        | $    | (507 | )          |        | $       | (7,472 | )
|                                        |                                   |                      |                   |       |        |        |         |       |       |       |            |         |         |         |        |        |        |      
|Relevant Financial and Performance Data |                                   |                      |                   |       |        |        |         |       |       |       |            |         |         |         |        |        |        |       |        |        |      |      |            |       
|Average interest-earning assets         |                                   | $                    | 172               |       |        | $      | 711,067 |       |       | $     | (58,770    | )       |         | $       |       |        |        | $     |       |        |      | $    | 652,469    |       
|Allocated capital                       |                                   | $                    | 1,650             |       |        | $      | 36,827  |       |       | $     |           |         |         | $       |       |        |        | $     |       |        |      | $    | 38,477     |       
|Loans produced                          |                                   | $                    |                  |       |        | $      |        |       |       | $     |           |         |         | $       |       |        |        | $     |       |        |      | $    |           |       
|Loans sold                              |                                   |                      | N/A               |       |        |        | N/A     |       |       | $     | (1,255,279 | )       |         |         | N/A    |        |        |       |       |        |      | $    | (1,255,279 | )     
|ROE                                     |                                   |                      | N/A               |       |        |        | N/A     |       |       |       | N/A        |         |         |         | N/A    |        |        |       | N/A    |        |      |      | N/A        |       
|ROA                                     |                                   |                      | N/A               |       |        |        | N/A     |       |       |       | N/A        |         |         |         | N/A    |        |        |       | N/A    |        |      |      | N/A        |       
|Net interest margin                     |                                   |                      | N/A               |       |        |        | N/A     |       |       |       | N/A        |         |         |         | N/A    |        |        |       | N/A    |        |      |      | N/A        |       
|Efficiency ratio                        |                                   |                      | N/A               |       |        |        | N/A     |       |       |       | N/A        |         |         |         | N/A    |        |        |       | N/A    |        |      |      | N/A        |       
|Average FTE                             |                                   |                      | 200               |       |        |        | 31      |       |       |       |           |         |         |         |       |        |        |       |       |        |      |      | 231        |       

11



---



##### Table of Contents



Accounting Methodology for Reporting Segment Financial
Results






Accounting for Nonrefundable Fees and Costs Associated
with Originating or Acquiring Loans and Initial Direct Costs of
Leases









PRODUCT PROFITABILITY ANALYSIS


10-K,


12



---



##### Table of Contents





|                                 |                                   |                        |                   |         |            |        |           |             |        |        |            |        |        |          |           |        |          |       |         |         |        |        |         |        |         |         |            |         |         |         | 
|-------------------------------- | --------------------------------- | ---------------------- | ----------------- | ------- | ---------- | ------ | --------- | ----------- | ------ | ------ | ---------- | ------ | ------ | -------- | --------- | ------ | -------- | ----- | ------- | ------- | ------ | ------ | ------- | ------ | ------- | ------- | ---------- | ------- | ------- | ------- | 
|                                 |                                   |                        |                   |         |            | Home   |           |             |        |        |            |        |        |          |          
|                                 |                                   | Standard               |                   |         | Specialty  |        |           | Loans &     |        |        | Specialty  |        |        |          |           |        |          |      
|                                 |                                   | Consumer Home          |                   |         | Consumer   |        |           | Related     |        |        | Commercial |        |        |          |           |        |          | Total |        
|Three Months Ended June 30, 2006 |                                   | Loans                  |                   |         | Home Loans |        |           | Investments |        |        | Loans      |        |        | Treasury |           |        | Overhead |       |         | Company |       
|                                 |                                   |                        |                   |         |            |        |           |             |        |        |            |        |        |          |           |        |          |       |         |         |       
|                                 |                                   | (Dollars in thousands) |                  
|Operating Results                |                                   |                        |                   |         |            |        |           |             |        |        |            |        |        |          |           |        |          |       |         |         |        |        |         |        |         |         |            |        
|Net interest income              |                                   | $                      | 28,022            |         |            | $      | 36,329    |             |        | $      | 45,043     |        |        | $        | 20,101    |        |          | $     | (859    | )       |        | $      | 1,518   |        |         | $       | 130,154    |        
|Provision for loan losses        |                                   |                        |                  |         |            |        | (930      | )           |        |        | (975       | )      |        |          | (325      | )      |          |       |        |         |        |        |        |        |         |         | (2,230     | )      
|Gain (loss) on sale of loans     |                                   |                        | 157,203           |         |            |        | 38,222    |             |        |        | 6,234      |        |        |          |          |        |          |       |        |         |        |        |        |        |         |         | 201,659    |        
|Service fee income               |                                   |                        |                  |         |            |        | 6,238     |             |        |        | 20,521     |        |        |          |          |        |          |       |        |         |        |        | 488     |        |         |         | 27,247     |        
|Gain (loss) on securities        |                                   |                        |                  |         |            |        | (4,375    | )           |        |        | 12,633     |        |        |          |          |        |          |       |        |         |        |        |        |        |         |         | 8,258      |        
|Other income                     |                                   |                        |                  |         |            |        | 7,818     |             |        |        | 1,662      |        |        |          | 1,553     |        |          |       | 180     |         |        |        | 789     |        |         |         | 12,002     |        
|                                 |                                   |                        |                   |         |            |        |           |             |        |        |            |        |        |          |           |        |          |       |         |         |       
|                                 | Net revenue (expense)             |                        |                   | 185,225 |            |        |           | 83,302      |        |        |            | 85,118 |        |          |           | 21,329 |          |       |         | (679    | )      |        |         | 2,795  |         |         |            | 377,090 |        
|                                 | Variable expenses                 |                        |                   | 59,169  |            |        |           | 45,401      |        |        |            | 1,268  |        |          |           | 3,577  |          |       |         |        |        |        |         |       |         |         |            | 109,415 |        
|                                 | Deferral of expenses under FAS 91 |                        |                   | (43,663 | )          |        |           | (19,391     | )      |        |            | (1,081 | )      |          |           | (2,040 | )        |       |         |        |        |        |         |       |         |         |            | (66,175 | )      
|                                 | Fixed expenses                    |                        |                   | 48,459  |            |        |           | 23,768      |        |        |            | 12,822 |        |          |           | 4,963  |          |       |         | 2,098   |        |        |         | 69,121 |         |         |            | 161,231 |        
|                                 |                                   |                        |                   |         |            |        |           |             |        |        |            |        |        |          |           |        |          |       |         |         |       
|                                 |                                   | Pretax income (loss)   |                   |         | 121,260    |        |           |             | 33,524 |        |            |        | 72,109 |          |           |        | 14,829   |       |         |         | (2,777 | )      |         |        | (66,326 | )       |            |         | 172,619 |        
|                                 |                                   |                        |                   |         |            |        |           |             |        |        |            |        |        |          |           |        |          |       |         |         |       
|                                 |                                   |                        | Net income (loss) |         | $          | 73,363 |           |             | $      | 20,192 |            |        | $      | 43,626   |           |        | $        | 8,972 |         |         | $      | (1,680 | )       |        | $       | (39,814 | )          |         | $       | 104,659 | 
|                                 |                                   |                        |                   |         |            |        |           |             |        |        |            |        |        |          |           |        |          |       |         |         |       
|Balance Sheet Data               |                                   |                        |                   |         |            |        |           |             |        |        |            |        |        |          |           |        |          |       |         |         |        |        |         |        |         |         |            |        
|Average interest-earning assets  |                                   | $                      | 7,763,901         |         |            | $      | 5,324,900 |             |        | $      | 9,351,463  |        |        | $        | 1,423,150 |        |          | $     | 830,915 |         |        | $      | (13,752 | )      |         | $       | 24,680,577 |        
|Allocated capital                |                                   | $                      | 389,127           |         |            | $      | 358,963   |             |        | $      | 616,829    |        |        | $        | 134,241   |        |          | $     | 44,419  |         |        | $      | 198,658 |        |         | $       | 1,742,237  |        
|Performance Ratios               |                                   |                        |                   |         |            |        |           |             |        |        |            |        |        |          |           |        |          |       |         |         |        |        |         |        |         |         |            |        
|ROE                              |                                   |                        | 76                | %       |            |        | 23        | %           |        |        | 28         | %      |        |          | 27        | %      |          |       | N/A     |         |        |        | N/A     |        |         |         | 24         | %      
|Net interest margin              |                                   |                        | 1.45              | %       |            |        | 2.74      | %           |        |        | 1.93       | %      |        |          | 5.67      | %      |          |       | N/A     |         |        |        | N/A     |        |         |         | 2.12       | %      
|MBR margin                       |                                   |                        | 1.20              | %       |            |        | 1.36      | %           |        |        | 1.42       | %      |        |          | N/A       |        |          |       | N/A     |         |        |        | N/A     |        |         |         | 1.23       | %      
|Efficiency ratio                 |                                   |                        | 35                | %       |            |        | 59        | %           |        |        | 15         | %      |        |          | 30        | %      |          |       | N/A     |         |        |        | N/A     |        |         |         | 54         | %      
|Operating Data                   |                                   |                        |                   |         |            |        |           |             |        |        |            |        |        |          |           |        |          |       |         |         |        |        |         |        |         |         |            |        
|Loan production                  |                                   | $                      | 14,968,754        |         |            | $      | 4,628,706 |             |        | $      | 412,416    |        |        | $        | 580,706   |        |          | $     |        |         |        | $      |        |        |         | $       | 20,590,582 |        
|Loans sold                       |                                   | $                      | 15,412,389        |         |            | $      | 3,562,599 |             |        | $      | 440,176    |        |        | $        |          |        |          | $     |        |         |        | $      |        |        |         | $       | 19,415,164 |        

|                                 |                                   |                      |                   |         |        |        |           |         |        |        |           |        |        |        |         |        |       |       |         |       |       |       |         |        |         |         |            |         |         |        | 
|-------------------------------- | --------------------------------- | -------------------- | ----------------- | ------- | ------ | ------ | --------- | ------- | ------ | ------ | --------- | ------ | ------ | ------ | ------- | ------ | ----- | ----- | ------- | ----- | ----- | ----- | ------- | ------ | ------- | ------- | ---------- | ------- | ------- | ------ | 
|Three Months Ended June 30, 2005 |                                   |                      |                   |         |        |        |           |         |        |        |           |        |        |       
|                                 |                                   |                      |                   |         |        |        |           |         |        |        |           |        |        |       
|Operating Results                |                                   |                      |                   |         |        |        |           |         |        |        |           |        |        |        |         |        |       |       |         |       |       |       |         |        |         |         |            |        
|Net interest income              |                                   | $                    | 21,053            |         |        | $      | 24,631    |         |        | $      | 35,863    |        |        | $      | 12,104  |        |       | $     | 3,509   |       |       | $     | 159     |        |         | $       | 97,319     |        
|Provision for loan losses        |                                   |                      |                  |         |        |        | (988      | )       |        |        | (700      | )      |        |        | (719    | )      |       |       |        |       |       |       |        |        |         |         | (2,407     | )      
|Gain (loss) on sale of loans     |                                   |                      | 124,344           |         |        |        | 31,384    |         |        |        | 3,649     |        |        |        |        |        |       |       |        |       |       |       |        |        |         |         | 159,377    |        
|Service fee income               |                                   |                      |                  |         |        |        | 4,511     |         |        |        | 998       |        |        |        |        |        |       |       |        |       |       |       | 5,290   |        |         |         | 10,799     |        
|Gain (loss) on securities        |                                   |                      |                  |         |        |        | 281       |         |        |        | 15,570    |        |        |        |        |        |       |       |        |       |       |       |        |        |         |         | 15,851     |        
|Other income                     |                                   |                      |                  |         |        |        | 7,523     |         |        |        | 560       |        |        |        | 657     |        |       |       | 128     |       |       |       | (1,136  | )      |         |         | 7,732      |        
|                                 |                                   |                      |                   |         |        |        |           |         |        |        |           |        |        |        |         |        |       |       |         |       |      
|                                 | Net revenue (expense)             |                      |                   | 145,397 |        |        |           | 67,342  |        |        |           | 55,940 |        |        |         | 12,042 |       |       |         | 3,637 |       |       |         | 4,313  |         |         |            | 288,671 |        
|                                 | Variable expenses                 |                      |                   | 53,334  |        |        |           | 30,753  |        |        |           | 998    |        |        |         | 4,664  |       |       |         |      |       |       |         |       |         |         |            | 89,749  |        
|                                 | Deferral of expenses under FAS 91 |                      |                   | (41,080 | )      |        |           | (13,603 | )      |        |           | (451   | )      |        |         | (2,030 | )     |       |         |      |       |       |         |       |         |         |            | (57,164 | )      
|                                 | Fixed expenses                    |                      |                   | 39,923  |        |        |           | 13,599  |        |        |           | 7,976  |        |        |         | 2,149  |       |       |         | 1,525 |       |       |         | 56,376 |         |         |            | 121,548 |        
|                                 |                                   |                      |                   |         |        |        |           |         |        |        |           |        |        |        |         |        |       |       |         |       |      
|                                 |                                   | Pretax income (loss) |                   |         | 93,220 |        |           |         | 36,593 |        |           |        | 47,417 |        |         |        | 7,259 |       |         |       | 2,112 |       |         |        | (52,063 | )       |            |         | 134,538 |       
|                                 |                                   |                      |                   |         |        |        |           |         |        |        |           |        |        |        |         |        |       |       |         |       |      
|                                 |                                   |                      | Net income (loss) |         | $      | 56,398 |           |         | $      | 22,122 |           |        | $      | 28,688 |         |        | $     | 4,392 |         |       | $     | 1,278 |         |        | $       | (31,164 | )          |         | $       | 81,714 | 
|                                 |                                   |                      |                   |         |        |        |           |         |        |        |           |        |        |        |         |        |       |       |         |       |      
|Balance Sheet Data               |                                   |                      |                   |         |        |        |           |         |        |        |           |        |        |        |         |        |       |       |         |       |       |       |         |        |         |         |            |        
|Average interest-earning assets  |                                   | $                    | 5,423,384         |         |        | $      | 3,781,904 |         |        | $      | 7,713,653 |        |        | $      | 928,628 |        |       | $     | 711,067 |       |       | $     | 2,145   |        |         | $       | 18,560,781 |        
|Allocated capital                |                                   | $                    | 245,311           |         |        | $      | 199,188   |         |        | $      | 420,745   |        |        | $      | 86,855  |        |       | $     | 36,827  |       |       | $     | 348,684 |        |         | $       | 1,337,610  |        
|Performance Ratios               |                                   |                      |                   |         |        |        |           |         |        |        |           |        |        |        |         |        |       |       |         |       |       |       |         |        |         |         |            |        
|ROE                              |                                   |                      | 92                | %       |        |        | 45        | %       |        |        | 27        | %      |        |        | 20      | %      |       |       | N/A     |       |       |       | N/A     |        |         |         | 25         | %      
|Net interest margin              |                                   |                      | 1.56              | %       |        |        | 2.61      | %       |        |        | 1.86      | %      |        |        | 5.23    | %      |       |       | N/A     |       |       |       | N/A     |        |         |         | 2.10       | %      
|MBR margin                       |                                   |                      | 1.51              | %       |        |        | 2.37      | %       |        |        | 1.58      | %      |        |        | N/A     |        |       |       | N/A     |       |       |       | N/A     |        |         |         | 1.63       | %      
|Efficiency ratio                 |                                   |                      | 36                | %       |        |        | 45        | %       |        |        | 15        | %      |        |        | 37      | %      |       |       | N/A     |       |       |       | N/A     |        |         |         | 53         | %      
|Operating Data                   |                                   |                      |                   |         |        |        |           |         |        |        |           |        |        |        |         |        |       |       |         |       |       |       |         |        |         |         |            |        
|Loan production                  |                                   | $                    | 11,343,026        |         |        | $      | 2,615,401 |         |        | $      | 150,578   |        |        | $      | 683,902 |        |       | $     |        |       |       | $     |        |        |         | $       | 14,792,907 |        
|Loans sold                       |                                   | $                    | 9,613,043         |         |        | $      | 1,559,039 |         |        | $      | 362,018   |        |        | $      |        |        |       | $     |        |       |       | $     |        |        |         | $       | 11,534,100 |        

13



---



##### Table of Contents





|                                 |                                   |                                            |                   |        |       |     |            |          |         |        |         |        |       |       |            |         |         |        | 
|-------------------------------- | --------------------------------- | ------------------------------------------ | ----------------- | ------ | ----- | --- | ---------- | -------- | ------- | ------ | ------- | ------ | ----- | ----- | ---------- | ------- | ------- | ------ | 
|                                 |                                   | Standard Consumer Home Loans Held for Sale |                  
|                                 |                                   |                                            |                  
|                                 |                                   | Agency                                     |                   |        |      
|                                 |                                   | Conforming/                                |                   |        |      
|Three Months Ended June 30, 2006 |                                   | Jumbo                                      |                   |        | Alt-A |     |            | Subprime |         |        | Total   |       
|                                 |                                   |                                            |                   |        |       |     |            |          |         |        |         |       
|                                 |                                   | (Dollars in thousands)                     |                  
|Operating Results                |                                   |                                            |                   |        |       |     |            |          |         |        |         |        |       |       |            |        
|Net interest income              |                                   | $                                          | 1,685             |        |       | $   | 20,366     |          |         | $      | 5,971   |        |       | $     | 28,022     |        
|Provision for loan losses        |                                   |                                            |                  |        |       |     |           |          |         |        |        |        |       |       |           |        
|Gain (loss) on sale of loans     |                                   |                                            | 1,221             |        |       |     | 149,753    |          |         |        | 6,229   |        |       |       | 157,203    |        
|Service fee income               |                                   |                                            |                  |        |       |     |           |          |         |        |        |        |       |       |           |        
|Gain (loss) on securities        |                                   |                                            |                  |        |       |     |           |          |         |        |        |        |       |       |           |        
|Other income                     |                                   |                                            |                  |        |       |     |           |          |         |        |        |        |       |       |           |        
|                                 |                                   |                                            |                   |        |       |     |            |          |         |        |         |       
|                                 | Net revenues (expense)            |                                            |                   | 2,906  |       |     |            | 170,119  |         |        |         | 12,200 |       |       |            | 185,225 |        
|                                 | Variable expenses                 |                                            |                   | 2,672  |       |     |            | 49,918   |         |        |         | 6,579  |       |       |            | 59,169  |        
|                                 | Deferral of expenses under FAS 91 |                                            |                   | (1,974 | )     |     |            | (36,828  | )       |        |         | (4,861 | )     |       |            | (43,663 | )      
|                                 | Fixed expenses                    |                                            |                   | 2,312  |       |     |            | 41,866   |         |        |         | 4,281  |       |       |            | 48,459  |        
|                                 |                                   |                                            |                   |        |       |     |            |          |         |        |         |       
|                                 |                                   | Pretax income (loss)                       |                   |        | (104  | )   |            |          | 115,163 |        |         |        | 6,201 |       |            |         | 121,260 |       
|                                 |                                   |                                            |                   |        |       |     |            |          |         |        |         |       
|                                 |                                   |                                            | Net income (loss) |        | $     | (63 | )          |          | $       | 69,674 |         |        | $     | 3,752 |            |         | $       | 73,363 | 
|                                 |                                   |                                            |                   |        |       |     |            |          |         |        |         |       
|Balance Sheet Data               |                                   |                                            |                   |        |       |     |            |          |         |        |         |        |       |       |            |        
|Average interest-earning assets  |                                   | $                                          | 490,327           |        |       | $   | 6,304,512  |          |         | $      | 969,062 |        |       | $     | 7,763,901  |        
|Allocated capital                |                                   | $                                          | 20,619            |        |       | $   | 307,649    |          |         | $      | 60,859  |        |       | $     | 389,127    |        
|Performance Ratios               |                                   |                                            |                   |        |       |     |            |          |         |        |         |        |       |       |            |        
|ROE                              |                                   |                                            | (1                | )%     |       |     | 91         | %        |         |        | 25      | %      |       |       | 76         | %      
|Net interest margin              |                                   |                                            | 1.38              | %      |       |     | 1.30       | %        |         |        | 2.47    | %      |       |       | 1.45       | %      
|MBR margin                       |                                   |                                            | 0.68              | %      |       |     | 1.18       | %        |         |        | 2.36    | %      |       |       | 1.20       | %      
|Efficiency ratio                 |                                   |                                            | 104               | %      |       |     | 32         | %        |         |        | 49      | %      |       |       | 35         | %      
|Operating Data                   |                                   |                                            |                   |        |       |     |            |          |         |        |         |        |       |       |            |        
|Loan production                  |                                   | $                                          | 362,375           |        |       | $   | 14,127,829 |          |         | $      | 478,550 |        |       | $     | 14,968,754 |        
|Loans sold                       |                                   | $                                          | 429,994           |        |       | $   | 14,466,041 |          |         | $      | 516,354 |        |       | $     | 15,412,389 |        

|                                 |                                   |                      |                   |        |       |       |            |         |        |        |         |        |       |       |            |         |        |        | 
|-------------------------------- | --------------------------------- | -------------------- | ----------------- | ------ | ----- | ----- | ---------- | ------- | ------ | ------ | ------- | ------ | ----- | ----- | ---------- | ------- | ------ | ------ | 
|Three Months Ended June 30, 2005 |                                   |                      |                   |        |       |       |            |        
|                                 |                                   |                      |                   |        |       |       |            |        
|Operating Results                |                                   |                      |                   |        |       |       |            |         |        |        |         |        |       |       |            |        
|Net interest income              |                                   | $                    | 1,785             |        |       | $     | 14,622     |         |        | $      | 4,646   |        |       | $     | 21,053     |        
|Provision for loan losses        |                                   |                      |                  |        |       |       |           |         |        |        |        |        |       |       |           |        
|Gain (loss) on sale of loans     |                                   |                      | 3,973             |        |       |       | 109,288    |         |        |        | 11,083  |        |       |       | 124,344    |        
|Service fee income               |                                   |                      |                  |        |       |       |           |         |        |        |        |        |       |       |           |        
|Gain (loss) on securities        |                                   |                      |                  |        |       |       |           |         |        |        |        |        |       |       |           |        
|Other income                     |                                   |                      |                  |        |       |       |           |         |        |        |        |        |       |       |           |        
|                                 |                                   |                      |                   |        |       |       |            |         |        |        |         |       
|                                 | Net revenues (expense)            |                      |                   | 5,758  |       |       |            | 123,910 |        |        |         | 15,729 |       |       |            | 145,397 |       
|                                 | Variable expenses                 |                      |                   | 2,717  |       |       |            | 42,437  |        |        |         | 8,180  |       |       |            | 53,334  |       
|                                 | Deferral of expenses under FAS 91 |                      |                   | (2,107 | )     |       |            | (32,629 | )      |        |         | (6,344 | )     |       |            | (41,080 | )     
|                                 | Fixed expenses                    |                      |                   | 2,265  |       |       |            | 32,824  |        |        |         | 4,834  |       |       |            | 39,923  |       
|                                 |                                   |                      |                   |        |       |       |            |         |        |        |         |       
|                                 |                                   | Pretax income (loss) |                   |        | 2,883 |       |            |         | 81,278 |        |         |        | 9,059 |       |            |         | 93,220 |       
|                                 |                                   |                      |                   |        |       |       |            |         |        |        |         |       
|                                 |                                   |                      | Net income (loss) |        | $     | 1,744 |            |         | $      | 49,173 |         |        | $     | 5,481 |            |         | $      | 56,398 | 
|                                 |                                   |                      |                   |        |       |       |            |         |        |        |         |       
|Balance Sheet Data               |                                   |                      |                   |        |       |       |            |         |        |        |         |        |       |       |            |        
|Average interest-earning assets  |                                   | $                    | 329,056           |        |       | $     | 4,475,567  |         |        | $      | 618,761 |        |       | $     | 5,423,384  |        
|Allocated capital                |                                   | $                    | 13,619            |        |       | $     | 201,008    |         |        | $      | 30,684  |        |       | $     | 245,311    |        
|Performance Ratios               |                                   |                      |                   |        |       |       |            |         |        |        |         |        |       |       |            |        
|ROE                              |                                   |                      | 51                | %      |       |       | 98         | %       |        |        | 72      | %      |       |       | 92         | %      
|Net interest margin              |                                   |                      | 2.18              | %      |       |       | 1.31       | %       |        |        | 3.01    | %      |       |       | 1.56       | %      
|MBR margin                       |                                   |                      | 1.03              | %      |       |       | 1.49       | %       |        |        | 2.16    | %      |       |       | 1.51       | %      
|Efficiency ratio                 |                                   |                      | 50                | %      |       |       | 34         | %       |        |        | 42      | %      |       |       | 36         | %      
|Operating Data                   |                                   |                      |                   |        |       |       |            |         |        |        |         |        |       |       |            |        
|Loan production                  |                                   | $                    | 522,026           |        |       | $     | 10,277,637 |         |        | $      | 543,363 |        |       | $     | 11,343,026 |        
|Loans sold                       |                                   | $                    | 559,081           |        |       | $     | 8,326,606  |         |        | $      | 727,356 |        |       | $     | 9,613,043  |        

14



---



##### Table of Contents





|                                 |                                   |                                                               |                   |        |           |       |           |         |        |        |              |        |       |       |        |     |    |    |           |         |        |        | 
|-------------------------------- | --------------------------------- | ------------------------------------------------------------- | ----------------- | ------ | --------- | ----- | --------- | ------- | ------ | ------ | ------------ | ------ | ----- | ----- | ------ | --- | -- | -- | --------- | ------- | ------ | ------ | 
|                                 |                                   | Specialty Consumer Home Loans Held for Sale and/or Investment |                  
|                                 |                                   |                                                               |                  
|                                 |                                   | HELOCs/                                                       |                   |        | Reverse   |       |           |        
|Three Months Ended June 30, 2006 |                                   | Seconds                                                       |                   |        | Mortgages |       |           | CTP/Lot |        |        | Discontinued |        |       | Total |       
|                                 |                                   |                                                               |                   |        |           |       |           |         |        |        |              |        |       |       |       
|                                 |                                   | (Dollars in thousands)                                        |                  
|Operating Results                |                                   |                                                               |                   |        |           |       |           |         |        |        |              |        |       |       |        |     |    |    |           |        
|Net interest income              |                                   | $                                                             | 21,410            |        |           | $     | 1,589     |         |        | $      | 12,747       |        |       | $     | 583    |     |    | $  | 36,329    |        
|Provision for loan losses        |                                   |                                                               |                  |        |           |       |          |         |        |        | (550         | )      |       |       | (380   | )   |    |    | (930      | )      
|Gain (loss) on sale of loans     |                                   |                                                               | (5,228            | )      |           |       | 38,171    |         |        |        | 5,290        |        |       |       | (11    | )   |    |    | 38,222    |        
|Service fee income               |                                   |                                                               | 1,588             |        |           |       | 4,650     |         |        |        |             |        |       |       |       |     |    |    | 6,238     |        
|Gain (loss) on securities        |                                   |                                                               | (4,839            | )      |           |       |          |         |        |        | 464          |        |       |       |       |     |    |    | (4,375    | )      
|Other income                     |                                   |                                                               | 2,262             |        |           |       | 366       |         |        |        | 5,190        |        |       |       |       |     |    |    | 7,818     |        
|                                 |                                   |                                                               |                   |        |           |       |           |         |        |        |              |        |       |       |       
|                                 | Net revenues (expense)            |                                                               |                   | 15,193 |           |       |           | 44,776  |        |        |              | 23,141 |       |       |        | 192 |    |    |           | 83,302  |       
|                                 | Variable expenses                 |                                                               |                   | 14,403 |           |       |           | 20,948  |        |        |              | 10,050 |       |       |        |    |    |    |           | 45,401  |       
|                                 | Deferral of expenses under FAS 91 |                                                               |                   | (8,710 | )         |       |           | (8,449  | )      |        |              | (2,232 | )     |       |        |    |    |    |           | (19,391 | )     
|                                 | Fixed expenses                    |                                                               |                   | 3,020  |           |       |           | 13,716  |        |        |              | 6,938  |       |       |        | 94  |    |    |           | 23,768  |       
|                                 |                                   |                                                               |                   |        |           |       |           |         |        |        |              |        |       |       |       
|                                 |                                   | Pretax income (loss)                                          |                   |        | 6,480     |       |           |         | 18,561 |        |              |        | 8,385 |       |        |     | 98 |    |           |         | 33,524 |       
|                                 |                                   |                                                               |                   |        |           |       |           |         |        |        |              |        |       |       |       
|                                 |                                   |                                                               | Net income (loss) |        | $         | 3,920 |           |         | $      | 11,140 |              |        | $     | 5,073 |        |     | $  | 59 |           |         | $      | 20,192 | 
|                                 |                                   |                                                               |                   |        |           |       |           |         |        |        |              |        |       |       |       
|Balance Sheet Data               |                                   |                                                               |                   |        |           |       |           |         |        |        |              |        |       |       |        |     |    |    |           |        
|Average interest-earning assets  |                                   | $                                                             | 2,642,792         |        |           | $     | 422,961   |         |        | $      | 2,217,589    |        |       | $     | 41,558 |     |    | $  | 5,324,900 |        
|Allocated capital                |                                   | $                                                             | 229,181           |        |           | $     | 26,318    |         |        | $      | 99,751       |        |       | $     | 3,713  |     |    | $  | 358,963   |        
|Performance Ratios               |                                   |                                                               |                   |        |           |       |           |         |        |        |              |        |       |       |        |     |    |    |           |        
|ROE                              |                                   |                                                               | 7                 | %      |           |       | 170       | %       |        |        | 20           | %      |       |       | 6      | %   |    |    | 23        | %      
|Net interest margin              |                                   |                                                               | 3.25              | %      |           |       | 1.51      | %       |        |        | 2.31         | %      |       |       | 5.63   | %   |    |    | 2.74      | %      
|MBR margin                       |                                   |                                                               | 0.20              | %      |           |       | 3.31      | %       |        |        | 0.81         | %      |       |       | N/A    |     |    |    | 1.36      | %      
|Efficiency ratio                 |                                   |                                                               | 57                | %      |           |       | 59        | %       |        |        | 62           | %      |       |       | 16     | %   |    |    | 59        | %      
|Operating Data                   |                                   |                                                               |                   |        |           |       |           |         |        |        |              |        |       |       |        |     |    |    |           |        
|Loan production                  |                                   | $                                                             | 1,860,406         |        |           | $     | 1,336,561 |         |        | $      | 1,431,739    |        |       | $     |       |     |    | $  | 4,628,706 |        
|Loans sold                       |                                   | $                                                             | 1,710,940         |        |           | $     | 1,200,841 |         |        | $      | 650,818      |        |       | $     |       |     |    | $  | 3,562,599 |        

|                                 |                                   |                      |                   |        |        |       |         |        |       |       |           |        |        |        |        |     |      |      |           |         |        |        | 
|-------------------------------- | --------------------------------- | -------------------- | ----------------- | ------ | ------ | ----- | ------- | ------ | ----- | ----- | --------- | ------ | ------ | ------ | ------ | --- | ---- | ---- | --------- | ------- | ------ | ------ | 
|Three Months Ended June 30, 2005 |                                   |                      |                   |        |        |       |         |        |       |      
|                                 |                                   |                      |                   |        |        |       |         |        |       |      
|Operating Results                |                                   |                      |                   |        |        |       |         |        |       |       |           |        |        |        |        |     |      |      |           |        
|Net interest income              |                                   | $                    | 10,285            |        |        | $     | 502     |        |       | $     | 13,052    |        |        | $      | 792    |     |      | $    | 24,631    |        
|Provision for loan losses        |                                   |                      |                  |        |        |       |        |        |       |       | (438      | )      |        |        | (550   | )   |      |      | (988      | )      
|Gain (loss) on sale of loans     |                                   |                      | 2,637             |        |        |       | 17,228  |        |       |       | 11,509    |        |        |        | 10     |     |      |      | 31,384    |        
|Service fee income               |                                   |                      | 1,476             |        |        |       | 3,035   |        |       |       |          |        |        |        |       |     |      |      | 4,511     |        
|Gain (loss) on securities        |                                   |                      | 397               |        |        |       |        |        |       |       | (116      | )      |        |        |       |     |      |      | 281       |        
|Other income                     |                                   |                      | 1,788             |        |        |       | 656     |        |       |       | 5,078     |        |        |        | 1      |     |      |      | 7,523     |        
|                                 |                                   |                      |                   |        |        |       |         |        |       |       |           |        |        |        |       
|                                 | Net revenues (expense)            |                      |                   | 16,583 |        |       |         | 21,421 |       |       |           | 29,085 |        |        |        | 253 |      |      |           | 67,342  |       
|                                 | Variable expenses                 |                      |                   | 10,965 |        |       |         | 11,089 |       |       |           | 8,699  |        |        |        |    |      |      |           | 30,753  |       
|                                 | Deferral of expenses under FAS 91 |                      |                   | (6,242 | )      |       |         | (4,750 | )     |       |           | (2,611 | )      |        |        |    |      |      |           | (13,603 | )     
|                                 | Fixed expenses                    |                      |                   | 1,107  |        |       |         | 6,401  |       |       |           | 5,587  |        |        |        | 504 |      |      |           | 13,599  |       
|                                 |                                   |                      |                   |        |        |       |         |        |       |       |           |        |        |        |       
|                                 |                                   | Pretax income (loss) |                   |        | 10,753 |       |         |        | 8,681 |       |           |        | 17,410 |        |        |     | (251 | )    |           |         | 36,593 |       
|                                 |                                   |                      |                   |        |        |       |         |        |       |       |           |        |        |        |       
|                                 |                                   |                      | Net income (loss) |        | $      | 6,506 |         |        | $     | 5,235 |           |        | $      | 10,533 |        |     | $    | (152 | )         |         | $      | 22,122 | 
|                                 |                                   |                      |                   |        |        |       |         |        |       |       |           |        |        |        |       
|Balance Sheet Data               |                                   |                      |                   |        |        |       |         |        |       |       |           |        |        |        |        |     |      |      |           |        
|Average interest-earning assets  |                                   | $                    | 1,703,536         |        |        | $     | 106,543 |        |       | $     | 1,921,925 |        |        | $      | 49,900 |     |      | $    | 3,781,904 |        
|Allocated capital                |                                   | $                    | 95,696            |        |        | $     | 11,705  |        |       | $     | 87,350    |        |        | $      | 4,437  |     |      | $    | 199,188   |        
|Performance Ratios               |                                   |                      |                   |        |        |       |         |        |       |       |           |        |        |        |        |     |      |      |           |        
|ROE                              |                                   |                      | 27                | %      |        |       | 179     | %      |       |       | 48        | %      |        |        | (14    | )%  |      |      | 45        | %      
|Net interest margin              |                                   |                      | 2.42              | %      |        |       | 1.89    | %      |       |       | 2.72      | %      |        |        | 6.37   | %   |      |      | 2.61      | %      
|MBR margin                       |                                   |                      | 1.51              | %      |        |       | 2.89    | %      |       |       | 2.30      | %      |        |        | N/A    |     |      |      | 2.37      | %      
|Efficiency ratio                 |                                   |                      | 35                | %      |        |       | 59      | %      |       |       | 40        | %      |        |        | 63     | %   |      |      | 45        | %      
|Operating Data                   |                                   |                      |                   |        |        |       |         |        |       |       |           |        |        |        |        |     |      |      |           |        
|Loan production                  |                                   | $                    | 748,210           |        |        | $     | 639,380 |        |       | $     | 1,227,811 |        |        | $      |       |     |      | $    | 2,615,401 |        
|Loans sold                       |                                   | $                    | 321,410           |        |        | $     | 614,436 |        |       | $     | 623,193   |        |        | $      |       |     |      | $    | 1,559,039 |        

15



---



##### Table of Contents





|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |        |        |        |           |        |        |        | 
|-------------------------------- | --------------------------------- | ---------------------------------- | ----------------- | ------ | ------ | ------ | --------- | ---------- | ----- | ----- | --------- | ------ | ------ | ------ | --------- | ------ | ------ | ------ | 
|                                 |                                   | Home Loans and Related Investments |                  
|                                 |                                   |                                    |                  
|                                 |                                   | Retained Assets                    |                   |        |        |        | SFR Loans |            |       |      
|                                 |                                   | and Retention                      |                   |        |        |        | Held for  |            |       |      
|                                 |                                   | Activities                         |                   |        | MBS    |        |           | Investment |       |       | Total     |       
|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |       
|                                 |                                   | (Dollars in thousands)             |                  
|Three Months Ended June 30, 2006 |                                   |                                    |                   |        |        |        |           |            |       |       |           |        |        |        |           |       
|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |       
|Operating Results                |                                   |                                    |                   |        |        |        |           |            |       |       |           |        |        |        |           |       
|Net interest income              |                                   | $                                  | 15,327            |        |        | $      | 9,238     |            |       | $     | 20,478    |        |        | $      | 45,043    |       
|Provision for loan losses        |                                   |                                    |                  |        |        |        |          |            |       |       | (975      | )      |        |        | (975      | )     
|Gain (loss) on sale of loans     |                                   |                                    | 5,591             |        |        |        | (122      | )          |       |       | 765       |        |        |        | 6,234     |       
|Service fee income               |                                   |                                    | 20,521            |        |        |        |          |            |       |       |          |        |        |        | 20,521    |       
|Gain (loss) on securities        |                                   |                                    | 12,561            |        |        |        | 72        |            |       |       |          |        |        |        | 12,633    |       
|Other income                     |                                   |                                    | 1,222             |        |        |        | 11        |            |       |       | 429       |        |        |        | 1,662     |       
|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |       
|                                 | Net revenues (expense)            |                                    |                   | 55,222 |        |        |           | 9,199      |       |       |           | 20,697 |        |        |           | 85,118 |       
|                                 | Variable expenses                 |                                    |                   | 1,268  |        |        |           |           |       |       |           |       |        |        |           | 1,268  |       
|                                 | Deferral of expenses under FAS 91 |                                    |                   | (1,081 | )      |        |           |           |       |       |           |       |        |        |           | (1,081 | )     
|                                 | Fixed expenses                    |                                    |                   | 11,480 |        |        |           | 286        |       |       |           | 1,056  |        |        |           | 12,822 |       
|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |       
|                                 |                                   | Pretax income (loss)               |                   |        | 43,555 |        |           |            | 8,913 |       |           |        | 19,641 |        |           |        | 72,109 |       
|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |       
|                                 |                                   |                                    | Net income (loss) |        | $      | 26,351 |           |            | $     | 5,392 |           |        | $      | 11,883 |           |        | $      | 43,626 | 
|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |       
|Balance Sheet Data               |                                   |                                    |                   |        |        |        |           |            |       |       |           |        |        |        |           |       
|Average interest-earning assets  |                                   | $                                  | 790,692           |        |        | $      | 3,027,166 |            |       | $     | 5,533,605 |        |        | $      | 9,351,463 |       
|Allocated capital                |                                   | $                                  | 338,548           |        |        | $      | 55,974    |            |       | $     | 222,307   |        |        | $      | 616,829   |       
|Performance Ratios               |                                   |                                    |                   |        |        |        |           |            |       |       |           |        |        |        |           |       
|ROE                              |                                   |                                    | 31                | %      |        |        | 39        | %          |       |       | 21        | %      |        |        | 28        | %     
|Net interest margin              |                                   |                                    | 7.78              | %      |        |        | 1.22      | %          |       |       | 1.48      | %      |        |        | 1.93      | %     
|MBR margin                       |                                   |                                    | 1.28              | %      |        |        | N/A       |            |       |       | N/A       |        |        |        | 1.42      | %     
|Efficiency ratio                 |                                   |                                    | 21                | %      |        |        | 3         | %          |       |       | 5         | %      |        |        | 15        | %     
|Operating Data                   |                                   |                                    |                   |        |        |        |           |            |       |       |           |        |        |        |           |       
|Loan production                  |                                   | $                                  | 412,416           |        |        | $      |          |            |       | $     |          |        |        | $      | 412,416   |       
|Loans sold                       |                                   | $                                  | 437,331           |        |        | $      |          |            |       | $     | 2,845     |        |        | $      | 440,176   |       
|                                
|Three Months Ended June 30, 2005 |                                   |                                    |                   |        |        |        |           |            |       |       |           |        |        |        |           |       
|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |       
|Operating Results                |                                   |                                    |                   |        |        |        |           |            |       |       |           |        |        |        |           |       
|Net interest income              |                                   | $                                  | 11,372            |        |        | $      | 5,688     |            |       | $     | 18,803    |        |        | $      | 35,863    |       
|Provision for loan losses        |                                   |                                    |                  |        |        |        |          |            |       |       | (700      | )      |        |        | (700      | )     
|Gain (loss) on sale of loans     |                                   |                                    | 761               |        |        |        |          |            |       |       | 2,888     |        |        |        | 3,649     |       
|Service fee income               |                                   |                                    | 720               |        |        |        |          |            |       |       | 278       |        |        |        | 998       |       
|Gain (loss) on securities        |                                   |                                    | 14,846            |        |        |        | 724       |            |       |       |          |        |        |        | 15,570    |       
|Other income                     |                                   |                                    | 561               |        |        |        | (1        | )          |       |       |          |        |        |        | 560       |       
|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |       
|                                 | Net revenues (expense)            |                                    |                   | 28,260 |        |        |           | 6,411      |       |       |           | 21,269 |        |        |           | 55,940 |       
|                                 | Variable expenses                 |                                    |                   | 998    |        |        |           |           |       |       |           |       |        |        |           | 998    |       
|                                 | Deferral of expenses under FAS 91 |                                    |                   | (451   | )      |        |           |           |       |       |           |       |        |        |           | (451   | )     
|                                 | Fixed expenses                    |                                    |                   | 7,145  |        |        |           | 274        |       |       |           | 557    |        |        |           | 7,976  |       
|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |       
|                                 |                                   | Pretax income (loss)               |                   |        | 20,568 |        |           |            | 6,137 |       |           |        | 20,712 |        |           |        | 47,417 |       
|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |       
|                                 |                                   |                                    | Net income (loss) |        | $      | 12,444 |           |            | $     | 3,713 |           |        | $      | 12,531 |           |        | $      | 28,688 | 
|                                 |                                   |                                    |                   |        |        |        |           |            |       |       |           |       
|Balance Sheet Data               |                                   |                                    |                   |        |        |        |           |            |       |       |           |        |        |        |           |       
|Average interest-earning assets  |                                   | $                                  | 555,790           |        |        | $      | 2,131,235 |            |       | $     | 5,026,628 |        |        | $      | 7,713,653 |       
|Allocated capital                |                                   | $                                  | 176,731           |        |        | $      | 39,476    |            |       | $     | 204,538   |        |        | $      | 420,745   |       
|Performance Ratios               |                                   |                                    |                   |        |        |        |           |            |       |       |           |        |        |        |           |       
|ROE                              |                                   |                                    | 28                | %      |        |        | 38        | %          |       |       | 25        | %      |        |        | 27        | %     
|Net interest margin              |                                   |                                    | 8.21              | %      |        |        | 1.07      | %          |       |       | 1.50      | %      |        |        | 1.86      | %     
|MBR margin                       |                                   |                                    | 1.13              | %      |        |        | N/A       |            |       |       | N/A       |        |        |        | 1.58      | %     
|Efficiency ratio                 |                                   |                                    | 27                | %      |        |        | 4         | %          |       |       | 3         | %      |        |        | 15        | %     
|Operating Data                   |                                   |                                    |                   |        |        |        |           |            |       |       |           |        |        |        |           |       
|Loan production                  |                                   | $                                  | 150,578           |        |        | $      |          |            |       | $     |          |        |        | $      | 150,578   |       
|Loans sold                       |                                   | $                                  | 250,719           |        |        | $      |          |            |       | $     | 111,299   |        |        | $      | 362,018   |       

16



---



##### Table of Contents





|                                 |                                   |                                                |                   |       |             |       |           |         |        |       |        |       |    |    |           |        |        |       | 
|-------------------------------- | --------------------------------- | ---------------------------------------------- | ----------------- | ----- | ----------- | ----- | --------- | ------- | ------ | ----- | ------ | ----- | -- | -- | --------- | ------ | ------ | ----- | 
|                                 |                                   | Specialty Commercial Loans Held for Investment |                  
|                                 |                                   |                                                |                  
|                                 |                                   | Single                                         |                   |       |             |       | Warehouse |         |        |      
|                                 |                                   | Spec                                           |                   |       | Subdivision |       |           | Lending |        |       | Total  |      
|                                 |                                   |                                                |                   |       |             |       |           |         |        |       |        |      
|                                 |                                   | (Dollars in thousands)                         |                  
|Three Months Ended June 30, 2006 |                                   |                                                |                   |       |             |       |           |         |        |       |        |       |    |    |           |       
|                                 |                                   |                                                |                   |       |             |       |           |         |        |       |        |      
|Operating Results                |                                   |                                                |                   |       |             |       |           |         |        |       |        |       |    |    |           |       
|Net interest income              |                                   | $                                              | 3,564             |       |             | $     | 15,809    |         |        | $     | 728    |       |    | $  | 20,101    |       
|Provision for loan losses        |                                   |                                                | (75               | )     |             |       | (250      | )       |        |       |       |       |    |    | (325      | )     
|Gain (loss) on sale of loans     |                                   |                                                |                  |       |             |       |          |         |        |       |       |       |    |    |          |       
|Service fee income               |                                   |                                                |                  |       |             |       |          |         |        |       |       |       |    |    |          |       
|Gain (loss) on securities        |                                   |                                                |                  |       |             |       |          |         |        |       |       |       |    |    |          |       
|Other income                     |                                   |                                                | 744               |       |             |       | 376       |         |        |       | 433    |       |    |    | 1,553     |       
|                                 |                                   |                                                |                   |       |             |       |           |         |        |       |        |      
|                                 | Net revenues (expense)            |                                                |                   | 4,233 |             |       |           | 15,935  |        |       |        | 1,161 |    |    |           | 21,329 |       
|                                 | Variable expenses                 |                                                |                   | 873   |             |       |           | 2,704   |        |       |        |      |    |    |           | 3,577  |       
|                                 | Deferral of expenses under FAS 91 |                                                |                   | (77   | )           |       |           | (1,963  | )      |       |        |      |    |    |           | (2,040 | )     
|                                 | Fixed expenses                    |                                                |                   | 552   |             |       |           | 3,289   |        |       |        | 1,122 |    |    |           | 4,963  |       
|                                 |                                   |                                                |                   |       |             |       |           |         |        |       |        |      
|                                 |                                   | Pretax income (loss)                           |                   |       | 2,885       |       |           |         | 11,905 |       |        |       | 39 |    |           |        | 14,829 |      
|                                 |                                   |                                                |                   |       |             |       |           |         |        |       |        |      
|                                 |                                   |                                                | Net income (loss) |       | $           | 1,745 |           |         | $      | 7,203 |        |       | $  | 24 |           |        | $      | 8,972 | 
|                                 |                                   |                                                |                   |       |             |       |           |         |        |       |        |      
|Balance Sheet Data               |                                   |                                                |                   |       |             |       |           |         |        |       |        |       |    |    |           |       
|Average interest-earning assets  |                                   | $                                              | 250,906           |       |             | $     | 1,077,306 |         |        | $     | 94,938 |       |    | $  | 1,423,150 |       
|Allocated capital                |                                   | $                                              | 19,545            |       |             | $     | 105,365   |         |        | $     | 9,331  |       |    | $  | 134,241   |       
|Performance Ratios               |                                   |                                                |                   |       |             |       |           |         |        |       |        |       |    |    |           |       
|ROE                              |                                   |                                                | 36                | %     |             |       | 27        | %       |        |       | N/A    |       |    |    | 27        | %     
|Net interest margin              |                                   |                                                | 5.70              | %     |             |       | 5.89      | %       |        |       | N/A    |       |    |    | 5.67      | %     
|Efficiency ratio                 |                                   |                                                | 31                | %     |             |       | 25        | %       |        |       | N/A    |       |    |    | 30        | %     
|Operating Data                   |                                   |                                                |                   |       |             |       |           |         |        |       |        |       |    |    |           |       
|Loan production                  |                                   | $                                              | 49,711            |       |             | $     | 530,995   |         |        | $     |       |       |    | $  | 580,706   |       
|Loans sold                       |                                   | $                                              |                  |       |             | $     |          |         |        | $     |       |       |    | $  |          |       

|                                 |                                   |                      |                   |       |       |     |         |        |       |       |        |     |      |      |         |        |       |       | 
|-------------------------------- | --------------------------------- | -------------------- | ----------------- | ----- | ----- | --- | ------- | ------ | ----- | ----- | ------ | --- | ---- | ---- | ------- | ------ | ----- | ----- | 
|Three Months Ended June 30, 2005 |                                   |                      |                   |       |       |     |         |       
|                                 |                                   |                      |                   |       |       |     |         |       
|Operating Results                |                                   |                      |                   |       |       |     |         |        |       |       |        |     |      |      |         |       
|Net interest income              |                                   | $                    | 2,303             |       |       | $   | 9,752   |        |       | $     | 49     |     |      | $    | 12,104  |       
|Provision for loan losses        |                                   |                      | (135              | )     |       |     | (500    | )      |       |       | (84    | )   |      |      | (719    | )     
|Gain (loss) on sale of loans     |                                   |                      |                  |       |       |     |        |        |       |       |       |     |      |      |        |       
|Service fee income               |                                   |                      |                  |       |       |     |        |        |       |       |       |     |      |      |        |       
|Gain (loss) on securities        |                                   |                      |                  |       |       |     |        |        |       |       |       |     |      |      |        |       
|Other income                     |                                   |                      | 443               |       |       |     | 138     |        |       |       | 76     |     |      |      | 657     |       
|                                 |                                   |                      |                   |       |       |     |         |        |       |       |        |    
|                                 | Net revenues (expense)            |                      |                   | 2,611 |       |     |         | 9,390  |       |       |        | 41  |      |      |         | 12,042 |      
|                                 | Variable expenses                 |                      |                   | 908   |       |     |         | 3,756  |       |       |        |    |      |      |         | 4,664  |      
|                                 | Deferral of expenses under FAS 91 |                      |                   | (191  | )     |     |         | (1,839 | )     |       |        |    |      |      |         | (2,030 | )    
|                                 | Fixed expenses                    |                      |                   | 499   |       |     |         | 888    |       |       |        | 762 |      |      |         | 2,149  |      
|                                 |                                   |                      |                   |       |       |     |         |        |       |       |        |    
|                                 |                                   | Pretax income (loss) |                   |       | 1,395 |     |         |        | 6,585 |       |        |     | (721 | )    |         |        | 7,259 |      
|                                 |                                   |                      |                   |       |       |     |         |        |       |       |        |    
|                                 |                                   |                      | Net income (loss) |       | $     | 844 |         |        | $     | 3,984 |        |     | $    | (436 | )       |        | $     | 4,392 | 
|                                 |                                   |                      |                   |       |       |     |         |        |       |       |        |    
|Balance Sheet Data               |                                   |                      |                   |       |       |     |         |        |       |       |        |     |      |      |         |       
|Average interest-earning assets  |                                   | $                    | 164,501           |       |       | $   | 751,327 |        |       | $     | 12,800 |     |      | $    | 928,628 |       
|Allocated capital                |                                   | $                    | 13,018            |       |       | $   | 72,508  |        |       | $     | 1,329  |     |      | $    | 86,855  |       
|Performance Ratios               |                                   |                      |                   |       |       |     |         |        |       |       |        |     |      |      |         |       
|ROE                              |                                   |                      | 26                | %     |       |     | 22      | %      |       |       | N/A    |     |      |      | 20      | %     
|Net interest margin              |                                   |                      | 5.62              | %     |       |     | 5.21    | %      |       |       | N/A    |     |      |      | 5.23    | %     
|Efficiency ratio                 |                                   |                      | 44                | %     |       |     | 28      | %      |       |       | N/A    |     |      |      | 37      | %     
|Operating Data                   |                                   |                      |                   |       |       |     |         |        |       |       |        |     |      |      |         |       
|Loan production                  |                                   | $                    | 89,676            |       |       | $   | 594,226 |        |       | $     |       |     |      | $    | 683,902 |       
|Loans sold                       |                                   | $                    |                  |       |       | $   |        |        |       | $     |       |     |      | $    |        |       

17



---



##### Table of Contents





|                                 |                                   |                        |                   |       |        |        |        |            |         |        |              |       |        |                |         |        |         |         |         |        |         |         |  
|-------------------------------- | --------------------------------- | ---------------------- | ----------------- | ----- | ------ | ------ | ------ | ---------- | ------- | ------ | ------------ | ----- | ------ | -------------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | -
|Three Months Ended June 30, 2006 |                                   | Servicing OH           |                   |       | MB OH  |        |        | Deposit OH |         |        | Corporate OH |       |        | Total Overhead |        
|                                 |                                   |                        |                   |       |        |        |        |            |         |        |              |       |        |                |        
|                                 |                                   | (Dollars in thousands) |                  
|Operating Results                |                                   |                        |                   |       |        |        |        |            |         |        |              |       |        |                |         |        |         |         |         |       
|Net interest income              |                                   | $                      | (40               | )     |        | $      | 508    |            |         | $      | 3,313        |       |        | $              | (2,263  | )      |         | $       | 1,518   |       
|Provision for loan losses        |                                   |                        |                  |       |        |        |       |            |         |        |             |       |        |                |        |        |         |         |        |       
|Gain (loss) on sale of loans     |                                   |                        |                  |       |        |        |       |            |         |        |             |       |        |                |        |        |         |         |        |       
|Service fee income               |                                   |                        |                  |       |        |        |       |            |         |        |             |       |        |                | 488     |        |         |         | 488     |       
|Gain (loss) on securities        |                                   |                        |                  |       |        |        |       |            |         |        |             |       |        |                |        |        |         |         |        |       
|Other income                     |                                   |                        | 831               |       |        |        | (106   | )          |         |        | 883          |       |        |                | (819    | )      |         |         | 789     |       
|                                 |                                   |                        |                   |       |        |        |        |            |         |        |              |       |        |                |        
|                                 | Net revenues (expense)            |                        |                   | 791   |        |        |        | 402        |         |        |              | 4,196 |        |                |         | (2,594 | )       |         |         | 2,795  |        
|                                 | Variable expenses                 |                        |                   |      |        |        |        |           |         |        |              |      |        |                |         |       |         |         |         |       |        
|                                 | Deferral of expenses under FAS 91 |                        |                   |      |        |        |        |           |         |        |              |      |        |                |         |       |         |         |         |       |        
|                                 | Fixed expenses                    |                        |                   | 4,745 |        |        |        | 10,568     |         |        |              | 9,574 |        |                |         | 44,234 |         |         |         | 69,121 |        
|                                 |                                   |                        |                   |       |        |        |        |            |         |        |              |       |        |                |        
|                                 |                                   | Pretax income (loss)   |                   |       | (3,954 | )      |        |            | (10,166 | )      |              |       | (5,378 | )              |         |        | (46,828 | )       |         |        | (66,326 | )      
|                                 |                                   |                        |                   |       |        |        |        |            |         |        |              |       |        |                |        
|                                 |                                   |                        | Net income (loss) |       | $      | (2,392 | )      |            | $       | (6,150 | )            |       | $      | (3,254         | )       |        | $       | (28,018 | )       |        | $       | (39,814 | )
|                                 |                                   |                        |                   |       |        |        |        |            |         |        |              |       |        |                |        
|Balance Sheet Data               |                                   |                        |                   |       |        |        |        |            |         |        |              |       |        |                |         |        |         |         |         |       
|Average interest-earning assets  |                                   | $                      |                  |       |        | $      | 3,291  |            |         | $      | 176          |       |        | $              | (17,219 | )      |         | $       | (13,752 | )     
|Allocated capital                |                                   | $                      | 13                |       |        | $      | 10,917 |            |         | $      | 2,154        |       |        | $              | 185,574 |        |         | $       | 198,658 |       
|Performance Ratios               |                                   |                        |                   |       |        |        |        |            |         |        |              |       |        |                |         |        |         |         |         |       
|ROE                              |                                   |                        | N/A               |       |        |        | N/A    |            |         |        | N/A          |       |        |                | N/A     |        |         |         | N/A     |       
|Net interest margin              |                                   |                        | N/A               |       |        |        | N/A    |            |         |        | N/A          |       |        |                | N/A     |        |         |         | N/A     |       
|Efficiency ratio                 |                                   |                        | N/A               |       |        |        | N/A    |            |         |        | N/A          |       |        |                | N/A     |        |         |         | N/A     |       
|Operating Data                   |                                   |                        |                   |       |        |        |        |            |         |        |              |       |        |                |         |        |         |         |         |       
|Loan production                  |                                   | $                      |                  |       |        | $      |       |            |         | $      |             |       |        | $              |        |        |         | $       |        |       
|Loans sold                       |                                   | $                      |                  |       |        | $      |       |            |         | $      |             |       |        | $              |        |        |         | $       |        |       

|                                 |                                   |                      |                   |       |        |        |       |       |        |        |       |       |        |        |         |        |         |         |         |        |         |         |  
|-------------------------------- | --------------------------------- | -------------------- | ----------------- | ----- | ------ | ------ | ----- | ----- | ------ | ------ | ----- | ----- | ------ | ------ | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | -
|Three Months Ended June 30, 2005 |                                   |                      |                   |       |        |        |       |       |        |       
|                                 |                                   |                      |                   |       |        |        |       |       |        |       
|Operating Results                |                                   |                      |                   |       |        |        |       |       |        |        |       |       |        |        |         |        |         |         |         |       
|Net interest income              |                                   | $                    | (68               | )     |        | $      | 108   |       |        | $      | 3,462 |       |        | $      | (3,343  | )      |         | $       | 159     |       
|Provision for loan losses        |                                   |                      |                  |       |        |        |      |       |        |        |      |       |        |        |        |        |         |         |        |       
|Gain (loss) on sale of loans     |                                   |                      |                  |       |        |        |      |       |        |        |      |       |        |        |        |        |         |         |        |       
|Service fee income               |                                   |                      |                  |       |        |        |      |       |        |        |      |       |        |        | 5,290   |        |         |         | 5,290   |       
|Gain (loss) on securities        |                                   |                      |                  |       |        |        |      |       |        |        |      |       |        |        |        |        |         |         |        |       
|Other income                     |                                   |                      | 520               |       |        |        | (8    | )     |        |        | 618   |       |        |        | (2,266  | )      |         |         | (1,136  | )     
|                                 |                                   |                      |                   |       |        |        |       |       |        |        |       |       |        |        |        
|                                 | Net revenues (expense)            |                      |                   | 452   |        |        |       | 100   |        |        |       | 4,080 |        |        |         | (319   | )       |         |         | 4,313  |        
|                                 | Variable expenses                 |                      |                   |      |        |        |       |      |        |        |       |      |        |        |         |       |         |         |         |       |        
|                                 | Deferral of expenses under FAS 91 |                      |                   |      |        |        |       |      |        |        |       |      |        |        |         |       |         |         |         |       |        
|                                 | Fixed expenses                    |                      |                   | 4,475 |        |        |       | 8,384 |        |        |       | 6,903 |        |        |         | 36,614 |         |         |         | 56,376 |        
|                                 |                                   |                      |                   |       |        |        |       |       |        |        |       |       |        |        |        
|                                 |                                   | Pretax income (loss) |                   |       | (4,023 | )      |       |       | (8,284 | )      |       |       | (2,823 | )      |         |        | (36,933 | )       |         |        | (52,063 | )      
|                                 |                                   |                      |                   |       |        |        |       |       |        |        |       |       |        |        |        
|                                 |                                   |                      | Net income (loss) |       | $      | (2,434 | )     |       | $      | (5,012 | )     |       | $      | (1,708 | )       |        | $       | (22,010 | )       |        | $       | (31,164 | )
|                                 |                                   |                      |                   |       |        |        |       |       |        |        |       |       |        |        |        
|Balance Sheet Data               |                                   |                      |                   |       |        |        |       |       |        |        |       |       |        |        |         |        |         |         |         |       
|Average interest-earning assets  |                                   | $                    |                  |       |        | $      | 77    |       |        | $      | 172   |       |        | $      | 1,687   |        |         | $       | 2,145   |       
|Allocated capital                |                                   | $                    | 4,350             |       |        | $      | 6,080 |       |        | $      | 1,650 |       |        | $      | 336,604 |        |         | $       | 348,684 |       
|Performance Ratios               |                                   |                      |                   |       |        |        |       |       |        |        |       |       |        |        |         |        |         |         |         |       
|ROE                              |                                   |                      | N/A               |       |        |        | N/A   |       |        |        | N/A   |       |        |        | N/A     |        |         |         | N/A     |       
|Net interest margin              |                                   |                      | N/A               |       |        |        | N/A   |       |        |        | N/A   |       |        |        | N/A     |        |         |         | N/A     |       
|Efficiency ratio                 |                                   |                      | N/A               |       |        |        | N/A   |       |        |        | N/A   |       |        |        | N/A     |        |         |         | N/A     |       
|Operating Data                   |                                   |                      |                   |       |        |        |       |       |        |        |       |       |        |        |         |        |         |         |         |       
|Loan production                  |                                   | $                    |                  |       |        | $      |      |       |        | $      |      |       |        | $      |        |        |         | $       |        |       
|Loans sold                       |                                   | $                    |                  |       |        | $      |      |       |        | $      |      |       |        | $      |        |        |         | $       |        |       

18



---



##### Table of Contents






LOAN PRODUCTION












|                                               |                                           |                                      |        |        |          |   |        |         |       |  |           |    |    |         |        |        |        |  |     |     |    |  
|---------------------------------------------- | ----------------------------------------- | ------------------------------------ | ------ | ------ | -------- | - | ------ | ------- | ----- |  | --------- | -- | -- | ------- | ------ | ------ | ------ |  | --- | --- | -- | -
|                                               |                                           | As of and For the Three Months Ended |       
|                                               |                                           |                                      |       
|                                               |                                           | June 30,                             |        |        | June 30, |   |        | Percent |       |  | March 31, |    |    | Percent |       
|                                               |                                           | 2006                                 |        |        | 2005     |   |        | Change  |       |  | 2006      |    |    | Change  |       
|                                               |                                           |                                      |        |        |          |   |        |         |       |  |           |    |    |         |       
|                                               |                                           | (Dollars in millions)                |       
|Production and Pipeline by Purpose:            |                                           |                                      |        |        |          |   |        |         |       |  |           |    |    |         |        |        |        |  |     |    
|Mortgage loan production:                      |                                           |                                      |        |        |          |   |        |         |       |  |           |    |    |         |        |        |        |  |     |    
|Purchase transactions                          |                                           | $                                    | 8,284  |        |          | $ | 6,370  |         |       |  | 30        | %  |    | $       | 7,778  |        |        |  | 7   | %  
|Cash-out refinance transactions                |                                           |                                      | 9,373  |        |          |   | 6,336  |         |       |  | 48        | %  |    |         | 9,779  |        |        |  | (4  | )% 
|Rate/term refinance transactions               |                                           |                                      | 2,403  |        |          |   | 1,493  |         |       |  | 61        | %  |    |         | 2,420  |        |        |  | (1  | )% 
|                                               |                                           |                                      |        |        |          |   |        |         |       |  |           |    |    |         |       
|Total mortgage loan production                 |                                           | $                                    | 20,060 |        |          | $ | 14,199 |         |       |  | 41        | %  |    | $       | 19,977 |        |        |  | 0   | %  
|                                               |                                           |                                      |        |        |          |   |        |         |       |  |           |    |    |         |       
|% purchase and cash-out refinance transactions |                                           |                                      | 88     | %      |          |   | 89     | %       |       |  |           |    |    |         | 88     | %      |        |  |     |    
|Mortgage industry market share                 |                                           |                                      | 2.96   | %      |          |   | 1.81   | %       |       |  | 64        | %  |    |         | 3.65   | %      |        |  | (19 | )% 
|Mortgage pipeline:                             |                                           |                                      |        |        |          |   |        |         |       |  |           |    |    |         |        |        |        |  |     |    
|Purchase transactions                          |                                           | $                                    | 4,459  |        |          | $ | 3,681  |         |       |  | 21        | %  |    | $       | 4,517  |        |        |  | (1  | )% 
|Cash-out refinance transactions                |                                           |                                      | 4,062  |        |          |   | 3,457  |         |       |  | 18        | %  |    |         | 4,558  |        |        |  | (11 | )% 
|Rate/term refinance transactions               |                                           |                                      | 1,492  |        |          |   | 1,156  |         |       |  | 29        | %  |    |         | 1,349  |        |        |  | 11  | %  
|                                               |                                           |                                      |        |        |          |   |        |         |       |  |           |    |    |         |       
|                                               | Total specific rate locks                 |                                      |        | 10,013 |          |   |        | 8,294   |       |  |           | 21 | %  |         |        | 10,424 |        |  |     | (4  | )%
|                                               | Non-specific rate locks on bulk purchases |                                      |        | 2,514  |          |   |        | 1,388   |       |  |           | 81 | %  |         |        | 1,257  |        |  |     | 100 | % 
|                                               |                                           |                                      |        |        |          |   |        |         |       |  |           |    |    |         |       
|                                               |                                           | Total pipeline at period end         |        | $      | 12,527   |   |        | $       | 9,682 |  |           |    | 29 | %       |        | $      | 11,681 |  |     |     | 7  | %
|                                               |                                           |                                      |        |        |          |   |        |         |       |  |           |    |    |         |       

19



---



##### Table of Contents



|                                                                         |                           |                    |     |    |          |  |     |           |   |  |     |    |  
|------------------------------------------------------------------------ | ------------------------- | ------------------ | --- | -- | -------- |  | --- | --------- | - |  | --- | -- | -
|                                                                         |                           | Three Months Ended |    
|                                                                         |                           |                    |    
|                                                                         |                           | June 30,           |     |    | June 30, |  |     | March 31, |  
|                                                                         |                           | 2006               |     |    | 2005     |  |     | 2006      |  
|                                                                         |                           |                    |     |    |          |  |     |           |  
|Production by Amortization Type as a Percent of Mortgage
    Production: |                           |                    |     |    |          |  |     |           |   |  |     |   
|                                                                         | Fixed Rate Mortgages      |                    |     | 29 | %        |  |     | 26        | % |  |     | 30 | %
|                                                                         | Hybrid ARMs Interest Only |                    |     | 28 | %        |  |     | 23        | % |  |     | 23 | %
|                                                                         | ARMs and Hybrid ARMs      |                    |     | 22 | %        |  |     | 19        | % |  |     | 20 | %
|                                                                         | Option ARMs               |                    |     | 21 | %        |  |     | 32        | % |  |     | 27 | %
|                                                                         |                           |                    |     |    |          |  |     |           |  
|                                                                         |                           |                    | 100 | %  |          |  | 100 | %         |   |  | 100 | % 
|                                                                         |                           |                    |     |    |          |  |     |           |  

|                                                          |                   |                              |        |        |                  |  |        |         |        |  |           |     |    |         |        |        |          |  |    |          |    |   |         |        |        |  |        |        |        |  |     |     |    |  
|--------------------------------------------------------- | ----------------- | ---------------------------- | ------ | ------ | ---------------- |  | ------ | ------- | ------ |  | --------- | --- | -- | ------- | ------ | ------ | -------- |  | -- | -------- | -- | - | ------- | ------ | ------ |  | ------ | ------ | ------ |  | --- | --- | -- | -
|                                                          |                   | Three Months Ended           |        |        | Six Months Ended | 
|                                                          |                   |                              |        |        |                  | 
|                                                          |                   | June 30,                     |        |        | June 30,         |  |        | Percent |        |  | March 31, |     |    | Percent |        |        | June 30, |  |    | June 30, |    |   | Percent |       
|                                                          |                   | 2006                         |        |        | 2005             |  |        | Change  |        |  | 2006      |     |    | Change  |        |        | 2006     |  |    | 2005     |    |   | Change  |       
|                                                          |                   |                              |        |        |                  |  |        |         |        |  |           |     |    |         |        |        |          |  |    |          |    |   |         |       
|                                                          |                   | (Dollars in millions)        |       
|Total Production:                                         |                   |                              |        |        |                  |  |        |         |        |  |           |     |    |         |        |        |          |  |    |          |    |   |         |        |        |  |        |        |        |  |     |    
|Standard First Mortgage Products:                         |                   |                              |        |        |                  |  |        |         |        |  |           |     |    |         |        |        |          |  |    |          |    |   |         |        |        |  |        |        |        |  |     |    
|                                                          | Alt-A             |                              | $      | 14,881 |                  |  | $      | 10,845  |        |  |           | 37  | %  |         | $      | 15,116 |          |  |    | (2       | )% |   | $       | 29,997 |        |  | $      | 19,390 |        |  |     | 55  | % 
|                                                          | Jumbo             |                              |        | 209    |                  |  |        | 352     |        |  |           | (41 | )% |         |        | 333    |          |  |    | (37      | )% |   |         | 542    |        |  |        | 870    |        |  |     | (38 | )%
|                                                          | Agency conforming |                              |        | 244    |                  |  |        | 241     |        |  |           | 1   | %  |         |        | 279    |          |  |    | (13      | )% |   |         | 523    |        |  |        | 528    |        |  |     | (1  | )%
|                                                          | Subprime          |                              |        | 505    |                  |  |        | 452     |        |  |           | 12  | %  |         |        | 554    |          |  |    | (9       | )% |   |         | 1,059  |        |  |        | 937    |        |  |     | 13  | % 
|                                                          |                   |                              |        |        |                  |  |        |         |        |  |           |     |    |         |        |        |          |  |    |          |    |   |         |       
|Total standard first mortgage products (S&P evaluated)(1) |                   |                              | 15,839 |        |                  |  | 11,890 |         |        |  | 33        | %   |    |         | 16,282 |        |          |  | (3 | )%       |    |   | 32,121  |        |        |  | 21,725 |        |        |  | 48  | %  
|Specialty Consumer Home Mortgage Products:                |                   |                              |        |        |                  |  |        |         |        |  |           |     |    |         |        |        |          |  |    |          |    |   |         |        |        |  |        |        |        |  |     |    
|Home equity line of credit(2) / Seconds                   |                   |                              | 1,860  |        |                  |  | 753    |         |        |  | 147       | %   |    |         | 1,643  |        |          |  | 13 | %        |    |   | 3,503   |        |        |  | 1,314  |        |        |  | 167 | %  
|Reverse mortgages                                         |                   |                              | 1,337  |        |                  |  | 639    |         |        |  | 109       | %   |    |         | 1,118  |        |          |  | 20 | %        |    |   | 2,455   |        |        |  | 1,146  |        |        |  | 114 | %  
|Consumer construction(2)                                  |                   |                              | 1,024  |        |                  |  | 917    |         |        |  | 12        | %   |    |         | 934    |        |          |  | 10 | %        |    |   | 1,958   |        |        |  | 1,616  |        |        |  | 21  | %  
|                                                          |                   |                              |        |        |                  |  |        |         |        |  |           |     |    |         |        |        |          |  |    |          |    |   |         |       
|                                                          |                   | Subtotal mortgage production |        |        | 20,060           |  |        |         | 14,199 |  |           |     | 41 | %       |        |        | 19,977   |  |    |          | 0  | % |         |        | 40,037 |  |        |        | 25,801 |  |     |     | 55 | %
|Builder construction commitments(2)                       |                   |                              | 531    |        |                  |  | 594    |         |        |  | (11       | )%  |    |         | 363    |        |          |  | 46 | %        |    |   | 894     |        |        |  | 947    |        |        |  | (6  | )% 
|                                                          |                   |                              |        |        |                  |  |        |         |        |  |           |     |    |         |        |        |          |  |    |          |    |   |         |       
|                                                          |                   | Total production             |        | $      | 20,591           |  |        | $       | 14,793 |  |           |     | 39 | %       |        | $      | 20,340   |  |    |          | 1  | % |         | $      | 40,931 |  |        | $      | 26,748 |  |     |     | 53 | %
|                                                          |                   |                              |        |        |                  |  |        |         |        |  |           |     |    |         |        |        |          |  |    |          |    |   |         |       






|    |                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | While Indymac production is evaluated using the S&P Levels
    model, the data are not audited or endorsed by S&P. S&P
    evaluated production excludes second liens, HELOC, reverse
    mortgages, and construction loans.
|   
|(2) | Amount represents total commitments.                                                                                                                                                                                        

20



---



##### Table of Contents





|                                         |  |                       |      |   |               |   |         |                |  |  |            |         |  |           |        |   |            |  |      |   |  |   |        |  
|---------------------------------------- |  | --------------------- | ---- | - | ------------- | - | ------- | -------------- |  |  | ---------- | ------- |  | --------- | ------ | - | ---------- |  | ---- | - |  | - | ------ | -
|                                         |  | Three Months Ended    |     
|                                         |  |                       |     
|                                         |  | June 30, 2006         |      |   | June 30, 2005 |   |         | March 31, 2006 | 
|                                         |  |                       |      |   |               |   |         |                | 
|                                         |  | Average               |      |   |               |   | Average |                |  |  |            | Average |  |           |       
|                                         |  | Lifetime              |      |   | Percent of    |   |         | Lifetime       |  |  | Percent of |         |  | Lifetime  |        |   | Percent of | 
|                                         |  | Loss Rate             |      |   | Total         |   |         | Loss Rate      |  |  | Total      |         |  | Loss Rate |        |   | Total      | 
|                                         |  |                       |      |   |               |   |         |                |  |  |            |         |  |           |        |   |            | 
|                                         |  | (Dollars in millions) |     
|Volume by S&P Lifetime Loss Estimate(1): |  |                       |      |   |               |   |         |                |  |  |            |         |  |           |        |   |            |  |      |   |  |   |        |  
|Agency conforming equivalent (<45 bps)   |  |                       | 0.22 | % |               |   | 61      | %              |  |  | 0.22       | %       |  |           | 68     | % |            |  | 0.22 | % |  |   | 58     | %
|Prime Alt-A Equivalent (45-80 bps)       |  |                       | 0.59 | % |               |   | 25      | %              |  |  | 0.58       | %       |  |           | 25     | % |            |  | 0.59 | % |  |   | 28     | %
|Subprime Equivalent (>80 bps)            |  |                       | 1.67 | % |               |   | 14      | %              |  |  | 1.80       | %       |  |           | 7      | % |            |  | 1.57 | % |  |   | 14     | %
|                                         |  |                       |      |   |               |   |         |                |  |  |            |         |  |           |        |   |            | 
|Total S&P lifetime loss estimate         |  |                       | 0.51 | % |               |   | 100     | %              |  |  | 0.42       | %       |  |           | 100    | % |            |  | 0.51 | % |  |   | 100    | %
|                                         |  |                       |      |   |               |   |         |                |  |  |            |         |  |           |        |   |            | 
|Total S&P evaluated production           |  |                       |      |   |               | $ | 15,839  |                |  |  |            |         |  | $         | 11,890 |   |            |  |      |   |  | $ | 16,282 |  
|                                         |  |                       |      |   |               |   |         |                |  |  |            |         |  |           |        |   |            | 






|    |                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | While Indymac production is evaluated using the S&P Levels
    model, the data are not audited or endorsed by S&P. S&P
    evaluated production excludes second liens, HELOC, reverse
    mortgages, and construction loans.



|                         |            |          |  |    |          |   |  |           |     |   |  |    |     |  
|------------------------ | ---------- | -------- |  | -- | -------- | - |  | --------- | --- | - |  | -- | --- | -
|                         |            | June 30, |  |    | June 30, |   |  | March 31, |    
|                         |            | 2006     |  |    | 2005     |   |  | 2006      |    
|                         |            |          |  |    |          |   |  |           |    
|Geographic distribution: |            |          |  |    |          |   |  |           |     |   |  |   
|                         | California |          |  | 44 | %        |   |  | 44        | %   |   |  | 44 | %  
|                         | Florida    |          |  | 9  | %        |   |  | 7         | %   |   |  | 9  | %  
|                         | New York   |          |  | 6  | %        |   |  | 9         | %   |   |  | 6  | %  
|                         | Virginia   |          |  | 4  | %        |   |  | 4         | %   |   |  | 5  | %  
|                         | New Jersey |          |  | 4  | %        |   |  | 4         | %   |   |  | 4  | %  
|                         | Other      |          |  | 33 | %        |   |  | 32        | %   |   |  | 32 | %  
|                         |            |          |  |    |          |   |  |           |    
|                         |            | Total    |  |    | 100      | % |  |           | 100 | % |  |    | 100 | %
|                         |            |          |  |    |          |   |  |           |    

21



---



##### Table of Contents



|                            |                               |                                |                  |       |                  |        |  |         |        |        |           |     |    |         |   |       |          |        |  |          |     |    |         |       |        |        |  |       |        |        |  |     |     |    |  
|--------------------------- | ----------------------------- | ------------------------------ | ---------------- | ----- | ---------------- | ------ |  | ------- | ------ | ------ | --------- | --- | -- | ------- | - | ----- | -------- | ------ |  | -------- | --- | -- | ------- | ----- | ------ | ------ |  | ----- | ------ | ------ |  | --- | --- | -- | -
|                            |                               | Three Months Ended             |                  |       | Six Months Ended |       
|                            |                               |                                |                  |       |                  |       
|                            |                               | June 30,                       |                  |       | June 30,         |        |  | Percent |        |        | March 31, |     |    | Percent |   |       | June 30, |        |  | June 30, |     |    | Percent |      
|Volume by Divisions:        |                               | 2006                           |                  |       | 2005             |        |  | Change  |        |        | 2006      |     |    | Change  |   |       | 2006     |        |  | 2005     |     |    | Change  |      
|                            |                               |                                |                  |       |                  |        |  |         |        |        |           |     |    |         |   |       |          |        |  |          |     |    |         |      
|                            |                               | (Dollars in millions)          |                 
|Mortgage Loan Production:   |                               |                                |                  |       |                  |        |  |         |        |        |           |     |    |         |   |       |          |        |  |          |     |    |         |       |        |        |  |       |        |        |  |    
|                            | Mortgage Professionals        |                                |                  |       |                  |        |  |         |        |        |           |     |    |         |   |       |          |        |  |          |     |    |         |       |        |        |  |       |        |        |  |     |    
|                            |                               | Wholesale                      |                  | $     | 8,825            |        |  | $       | 7,192  |        |           |     | 23 | %       |   | $     | 8,781    |        |  |          | 1   | %  |         | $     | 17,606 |        |  | $     | 13,208 |        |  |     | 33  | % 
|                            |                               | Correspondent                  |                  |       | 2,528            |        |  |         | 1,420  |        |           |     | 78 | %       |   |       | 2,276    |        |  |          | 11  | %  |         |       | 4,804  |        |  |       | 2,313  |        |  |     | 108 | % 
|                            |                               | Conduit                        |                  |       | 5,471            |        |  |         | 3,207  |        |           |     | 71 | %       |   |       | 6,136    |        |  |          | (11 | )% |         |       | 11,607 |        |  |       | 5,812  |        |  |     | 100 | % 
|                            | Consumer Direct               |                                |                  | 552   |                  |        |  | 738     |        |        |           | (25 | )% |         |   | 525   |          |        |  | 5        | %   |    |         | 1,077 |        |        |  | 1,424 |        |        |  | (24 | )% 
|                            | Financial Freedom             |                                |                  | 1,337 |                  |        |  | 639     |        |        |           | 109 | %  |         |   | 1,118 |          |        |  | 20       | %   |    |         | 2,455 |        |        |  | 1,146 |        |        |  | 114 | %  
|                            | Servicing Retention           |                                |                  | 540   |                  |        |  | 174     |        |        |           | 210 | %  |         |   | 427   |          |        |  | 26       | %   |    |         | 967   |        |        |  | 396   |        |        |  | 144 | %  
|                            | Home Equity Division          |                                |                  | 33    |                  |        |  | 56      |        |        |           | (41 | )% |         |   | 30    |          |        |  | 10       | %   |    |         | 63    |        |        |  | 98    |        |        |  | (36 | )% 
|                            | Consumer Construction and Lot |                                |                  | 774   |                  |        |  | 773     |        |        |           | 0   | %  |         |   | 684   |          |        |  | 13       | %   |    |         | 1,458 |        |        |  | 1,404 |        |        |  | 4   | %  
|                            |                               |                                |                  |       |                  |        |  |         |        |        |           |     |    |         |   |       |          |        |  |          |     |    |         |      
|                            |                               | Total Mortgage Loan Production |                  |       | 20,060           |        |  |         | 14,199 |        |           |     | 41 | %       |   |       | 19,977   |        |  |          | 0   | %  |         |       | 40,037 |        |  |       | 25,801 |        |  |     | 55  | % 
|Commercial Loan Production: |                               |                                |                  |       |                  |        |  |         |        |        |           |     |    |         |   |       |          |        |  |          |     |    |         |       |        |        |  |       |        |        |  |    
|                            | Builder Construction          |                                |                  | 531   |                  |        |  | 594     |        |        |           | (11 | )% |         |   | 363   |          |        |  | 46       | %   |    |         | 894   |        |        |  | 947   |        |        |  | (6  | )% 
|                            |                               |                                |                  |       |                  |        |  |         |        |        |           |     |    |         |   |       |          |        |  |          |     |    |         |      
|                            |                               |                                | Total Production |       | $                | 20,591 |  |         | $      | 14,793 |           |     |    | 39      | % |       | $        | 20,340 |  |          |     | 1  | %       |       | $      | 40,931 |  |       | $      | 26,748 |  |     |     | 53 | %
|                            |                               |                                |                  |       |                  |        |  |         |        |        |           |     |    |         |   |       |          |        |  |          |     |    |         |      



|                                       |  |                    |       |  |          |  |       |         |  |  |           |   |  |         |       |  |  |  |    |  
|-------------------------------------- |  | ------------------ | ----- |  | -------- |  | ----- | ------- |  |  | --------- | - |  | ------- | ----- |  |  |  | -- | -
|                                       |  | Three Months Ended |      
|                                       |  |                    |      
|                                       |  | June 30,           |       |  | June 30, |  |       | Percent |  |  | March 31, |   |  | Percent |      
|                                       |  | 2006               |       |  | 2005     |  |       | Change  |  |  | 2006      |   |  | Change  |      
|                                       |  |                    |       |  |          |  |       |         |  |  |           |   |  |         |      
|Key Production Drivers:                |  |                    |       |  |          |  |       |         |  |  |           |   |  |         |       |  |  |  |    |  
|Active customers during the quarter(1) |  |                    | 7,472 |  |          |  | 6,191 |         |  |  | 21        | % |  |         | 7,174 |  |  |  | 4  | %
|Sales personnel                        |  |                    | 952   |  |          |  | 678   |         |  |  | 40        | % |  |         | 811   |  |  |  | 17 | %
|Number of regional offices             |  |                    | 15    |  |          |  | 10    |         |  |  | 50        | % |  |         | 13    |  |  |  | 15 | %






|    |                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------
|(1) | Active customers are defined as customers who funded at least
    one loan during the most recent
    90-day period.

22



---



##### Table of Contents






LOAN SALES




|                                |  |                       |        |   |                  |   |        |         |  |  |           |    |  |         |        |   |          |  |    |          |  |   |         |   |  |   |        |   |  |  |     |   
|------------------------------- |  | --------------------- | ------ | - | ---------------- | - | ------ | ------- |  |  | --------- | -- |  | ------- | ------ | - | -------- |  | -- | -------- |  | - | ------- | - |  | - | ------ | - |  |  | --- | --
|                                |  | Three Months Ended    |        |   | Six Months Ended |  
|                                |  |                       |        |   |                  |  
|                                |  | June 30,              |        |   | June 30,         |   |        | Percent |  |  | March 31, |    |  | Percent |        |   | June 30, |  |    | June 30, |  |   | Percent |  
|                                |  | 2006                  |        |   | 2005             |   |        | Change  |  |  | 2006      |    |  | Change  |        |   | 2006     |  |    | 2005     |  |   | Change  |  
|                                |  |                       |        |   |                  |   |        |         |  |  |           |    |  |         |        |   |          |  |    |          |  |   |         |  
|                                |  | (Dollars in millions) |       
|Total loans sold                |  | $                     | 19,415 |   |                  | $ | 11,534 |         |  |  | 68        | %  |  | $       | 16,708 |   |          |  | 16 | %        |  | $ | 36,123  |   |  | $ | 21,188 |   |  |  | 70  | % 
|Ratios:                         |  |                       |        |   |                  |   |        |         |  |  |           |    |  |         |        |   |          |  |    |          |  |   |         |   |  |   |        |   |  |  |     |   
|Gross MBR margin before hedging |  |                       | 0.99   | % |                  |   | 2.02   | %       |  |  | (51       | )% |  |         | 0.86   | % |          |  | 15 | %        |  |   | 0.93    | % |  |   | 1.80   | % |  |  | (48 | )%
|Net MBR margin after hedging    |  |                       | 1.23   | % |                  |   | 1.63   | %       |  |  | (24       | )% |  |         | 1.10   | % |          |  | 12 | %        |  |   | 1.17    | % |  |   | 1.72   | % |  |  | (32 | )%







|                       |                  |                    |      |      |          |  |      |           |   |  |      |      |  
|---------------------- | ---------------- | ------------------ | ---- | ---- | -------- |  | ---- | --------- | - |  | ---- | ---- | -
|                       |                  | Three Months Ended |     
|                       |                  |                    |     
|                       |                  | June 30,           |      |      | June 30, |  |      | March 31, |  
|MBR Margin by Channel: |                  | 2006               |      |      | 2005     |  |      | 2006      |  
|                       |                  |                    |      |      |          |  |      |           |  
|Wholesale              |                  |                    | 1.31 | %    |          |  | 1.92 | %         |   |  | 1.27 | %   
|Correspondent          |                  |                    | 0.76 | %    |          |  | 1.69 | %         |   |  | 0.66 | %   
|Conduit                |                  |                    | 0.60 | %    |          |  | 0.44 | %         |   |  | 0.40 | %   
|Consumer Direct        |                  |                    | 1.87 | %    |          |  | 2.61 | %         |   |  | 1.94 | %   
|Financial Freedom      |                  |                    | 3.31 | %    |          |  | 2.89 | %         |   |  | 2.83 | %   
|Other                  |                  |                    | 1.34 | %    |          |  | 1.98 | %         |   |  | 1.26 | %   
|                       | Total MBR margin |                    |      | 1.23 | %        |  |      | 1.63      | % |  |      | 1.10 | %

|                         |                  |                    |      |      |          |  |      |           |   |  |      |      |  
|------------------------ | ---------------- | ------------------ | ---- | ---- | -------- |  | ---- | --------- | - |  | ---- | ---- | -
|                         |                  | Three Months Ended |     
|                         |                  |                    |     
|                         |                  | June 30,           |      |      | June 30, |  |      | March 31, |  
|MBR Margin by Product:   |                  | 2006               |      |      | 2005     |  |      | 2006      |  
|                         |                  |                    |      |      |          |  |      |           |  
|Agency Conforming/ Jumbo |                  |                    | 0.68 | %    |          |  | 1.03 | %         |   |  | 0.58 | %   
|Alt-A                    |                  |                    | 1.18 | %    |          |  | 1.49 | %         |   |  | 0.94 | %   
|Subprime                 |                  |                    | 2.36 | %    |          |  | 2.16 | %         |   |  | 2.06 | %   
|HELOC/ Seconds           |                  |                    | 0.20 | %    |          |  | 1.51 | %         |   |  | 0.46 | %   
|Reverse Mortgages        |                  |                    | 3.31 | %    |          |  | 2.89 | %         |   |  | 2.83 | %   
|CTP/ Lot                 |                  |                    | 0.81 | %    |          |  | 2.30 | %         |   |  | 1.87 | %   
|Other                    |                  |                    | 1.41 | %    |          |  | 1.59 | %         |   |  | 1.56 | %   
|                         | Total MBR margin |                    |      | 1.23 | %        |  |      | 1.63      | % |  |      | 1.10 | %

23



---



##### Table of Contents





Accounting for Derivative Instruments and Hedging
Activities, Application of Accounting
Principles to Loan Commitments.




|                                                                        |                                    |                       |    |        |                  |  |    |              |   |  |              |        |   |              |    |        |   |  |    |        |  
|----------------------------------------------------------------------- | ---------------------------------- | --------------------- | -- | ------ | ---------------- |  | -- | ------------ | - |  | ------------ | ------ | - | ------------ | -- | ------ | - |  | -- | ------ | -
|                                                                        |                                    | Three Months Ended    |    |        | Six Months Ended | 
|                                                                        |                                    |                       |    |        |                  | 
|                                                                        |                                    | June 30,              |    |        | June 30,         |  |    | March 31,    |   |  | June 30,     |        |   | June 30,     |   
|                                                                        |                                    | 2006                  |    |        | 2005             |  |    | 2006         |   |  | 2006         |        |   | 2005         |   
|                                                                        |                                    | Distribution          |    |        | Distribution     |  |    | Distribution |   |  | Distribution |        |   | Distribution |   
|                                                                        |                                    | Percentages           |    |        | Percentages      |  |    | Percentages  |   |  | Percentages  |        |   | Percentages  |   
|                                                                        |                                    |                       |    |        |                  |  |    |              |   |  |              |        |   |              |   
|                                                                        |                                    | (Dollars in millions) |   
|Sales of government-sponsored enterprises (GSEs)
    equivalent loans |                                    |                       | 18 | %      |                  |  | 12 | %            |   |  | 21           | %      |   |              | 19 | %      |   |  | 15 | %     
|Private-label securitizations                                           |                                    |                       | 46 | %      |                  |  | 77 | %            |   |  | 38           | %      |   |              | 42 | %      |   |  | 65 | %     
|Whole loan sales, servicing retained                                    |                                    |                       | 33 | %      |                  |  | 5  | %            |   |  | 36           | %      |   |              | 35 | %      |   |  | 12 | %     
|Whole loan sales, servicing released                                    |                                    |                       | 2  | %      |                  |  | 3  | %            |   |  | 2            | %      |   |              | 2  | %      |   |  | 3  | %     
|                                                                        |                                    |                       |    |        |                  |  |    |              |   |  |              |        |   |              |   
|                                                                        | Subtotal sales                     |                       |    | 99     | %                |  |    | 97           | % |  |              | 97     | % |              |    | 98     | % |  |    | 95     | %
|Investment portfolio acquisitions                                       |                                    |                       | 1  | %      |                  |  | 3  | %            |   |  | 3            | %      |   |              | 2  | %      |   |  | 5  | %     
|                                                                        |                                    |                       |    |        |                  |  |    |              |   |  |              |        |   |              |   
|                                                                        | Total loan distribution percentage |                       |    | 100    | %                |  |    | 100          | % |  |              | 100    | % |              |    | 100    | % |  |    | 100    | %
|                                                                        |                                    |                       |    |        |                  |  |    |              |   |  |              |        |   |              |   
|                                                                        | Total loan distribution            |                       | $  | 19,631 |                  |  | $  | 11,844       |   |  | $            | 17,319 |   |              | $  | 36,951 |   |  | $  | 22,415 |  
|                                                                        |                                    |                       |    |        |                  |  |    |              |   |  |              |        |   |              |   





24



---



##### Table of Contents








MORTGAGE SERVICING AND OTHER RETAINED ASSETS


MORTGAGE SERVICING AND MORTGAGE SERVICING RIGHTS




|                                                |  |                       |         |   |                  |   |        |           |  |   |          |   |  |          |         |   |  |   |        |  
|----------------------------------------------- |  | --------------------- | ------- | - | ---------------- | - | ------ | --------- |  | - | -------- | - |  | -------- | ------- | - |  | - | ------ | -
|                                                |  | Three Months Ended    |         |   | Six Months Ended |  
|                                                |  |                       |         |   |                  |  
|                                                |  | June 30,              |         |   | June 30,         |   |        | March 31, |  |   | June 30, |   |  | June 30, |        
|                                                |  | 2006                  |         |   | 2005             |   |        | 2006      |  |   | 2006     |   |  | 2005     |        
|                                                |  |                       |         |   |                  |   |        |           |  |   |          |   |  |          |        
|                                                |  | (Dollars in millions) |        
|Unpaid principal balance at beginning of period |  | $                     | 96,512  |   |                  | $ | 55,995 |           |  | $ | 84,495   |   |  | $        | 84,495  |   |  | $ | 50,219 |  
|Additions                                       |  |                       | 19,422  |   |                  |   | 11,454 |           |  |   | 16,691   |   |  |          | 36,113  |   |  |   | 21,007 |  
|Clean-up calls exercised                        |  |                       | (31     | ) |                  |   | (60    | )         |  |   |         |   |  |          | (31     | ) |  |   | (113   | )
|Loan payments and prepayments                   |  |                       | (5,914  | ) |                  |   | (3,713 | )         |  |   | (4,674   | ) |  |          | (10,588 | ) |  |   | (7,437 | )
|                                                |  |                       |         |   |                  |   |        |           |  |   |          |   |  |          |        
|Unpaid principal balance at end of period       |  | $                     | 109,989 |   |                  | $ | 63,676 |           |  | $ | 96,512   |   |  | $        | 109,989 |   |  | $ | 63,676 |  
|                                                |  |                       |         |   |                  |   |        |           |  |   |          |   |  |          |        



|                                                     |                              |          |     |    |          |   |     |           |     |   |     |    |     |  
|---------------------------------------------------- | ---------------------------- | -------- | --- | -- | -------- | - | --- | --------- | --- | - | --- | -- | --- | -
|                                                     |                              | As of    |    
|                                                     |                              |          |    
|                                                     |                              | June 30, |     |    | June 30, |   |     | March 31, |    
|                                                     |                              | 2006     |     |    | 2005     |   |     | 2006      |    
|                                                     |                              |          |     |    |          |   |     |           |    
|By Product Type:                                     |                              |          |     |    |          |   |     |           |     |   |     |   
|                                                     | Fixed Rate Mortgages         |          |     | 35 | %        |   |     | 40        | %   |   |     | 36 | %  
|                                                     | Option ARMs                  |          |     | 25 | %        |   |     | 22        | %   |   |     | 25 | %  
|                                                     | Hybrid ARMs                  |          |     | 28 | %        |   |     | 25        | %   |   |     | 27 | %  
|                                                     | Reverse Mortgages (all ARMs) |          |     | 9  | %        |   |     | 9         | %   |   |     | 9  | %  
|                                                     | HELOCs                       |          |     | 2  | %        |   |     | 2         | %   |   |     | 2  | %  
|                                                     | Other                        |          |     | 1  | %        |   |     | 2         | %   |   |     | 1  | %  
|                                                     |                              |          |     |    |          |   |     |           |    
|                                                     |                              | Total    |     |    | 100      | % |     |           | 100 | % |     |    | 100 | %
|                                                     |                              |          |     |    |          |   |     |           |    
|Additional Information, Excluding Reverse Mortgages: |                              |          |     |    |          |   |     |           |     |   |     |   
|Weighted average FICO                                |                              |          | 698 |    |          |   | 697 |           |     |   | 698 |   
|Weighted average original LTV/ CLTV                  |                              |          | 72  | %  |          |   | 73  | %         |     |   | 73  | % 
|Average original loan size (in thousands)            |                              |          | 225 |    |          |   | 199 |           |     |   | 222 |   
|Percent of portfolio with prepayment penalty         |                              |          | 40  | %  |          |   | 32  | %         |     |   | 38  | % 
|By Geographic Distribution:                          |                              |          |     |    |          |   |     |           |     |   |     |   
|                                                     | California                   |          |     | 42 | %        |   |     | 42        | %   |   |     | 42 | %  
|                                                     | New York                     |          |     | 8  | %        |   |     | 10        | %   |   |     | 9  | %  
|                                                     | Florida                      |          |     | 8  | %        |   |     | 6         | %   |   |     | 8  | %  
|                                                     | New Jersey                   |          |     | 4  | %        |   |     | 5         | %   |   |     | 5  | %  
|                                                     | Virginia                     |          |     | 4  | %        |   |     | 3         | %   |   |     | 4  | %  
|                                                     | Other                        |          |     | 34 | %        |   |     | 34        | %   |   |     | 32 | %  
|                                                     |                              |          |     |    |          |   |     |           |    
|                                                     |                              | Total    |     |    | 100      | % |     |           | 100 | % |     |    | 100 | %
|                                                     |                              |          |     |    |          |   |     |           |    

25



---



##### Table of Contents





|                                                                                         |  |                        |           |   |                  |   |         |           |  |   |           |   |  |          |           |   |  |   |         |  
|---------------------------------------------------------------------------------------- |  | ---------------------- | --------- | - | ---------------- | - | ------- | --------- |  | - | --------- | - |  | -------- | --------- | - |  | - | ------- | -
|                                                                                         |  | Three Months Ended     |           |   | Six Months Ended |  
|                                                                                         |  |                        |           |   |                  |  
|                                                                                         |  | June 30,               |           |   | June 30,         |   |         | March 31, |  |   | June 30,  |   |  | June 30, |          
|                                                                                         |  | 2006                   |           |   | 2005             |   |         | 2006      |  |   | 2006      |   |  | 2005     |          
|                                                                                         |  |                        |           |   |                  |   |         |           |  |   |           |   |  |          |          
|                                                                                         |  | (Dollars in thousands) |          
|Balance at beginning of period                                                           |  | $                      | 1,354,433 |   |                  | $ | 734,238 |           |  | $ | 1,094,490 |   |  | $        | 1,094,490 |   |  | $ | 640,794 |  
|Cumulative-effect adjustment due to change in accounting for MSRs                        |  |                        |          |   |                  |   |        |           |  |   | 17,561    |   |  |          | 17,561    |   |  |   |        |  
|Additions                                                                                |  |                        | 268,542   |   |                  |   | 149,616 |           |  |   | 230,057   |   |  |          | 498,599   |   |  |   | 282,516 |  
|Transfers to prepayment penalty and/or AAA-rated and agency
    interest-only securities |  |                        |          |   |                  |   | (3,364  | )         |  |   |          |   |  |          |          |   |  |   | (8,491  | )
|Clean-up calls exercised                                                                 |  |                        | (274      | ) |                  |   | (471    | )         |  |   |          |   |  |          | (274      | ) |  |   | (1,867  | )
|Change in fair value due to run-off                                                      |  |                        | (88,261   | ) |                  |   | N/A     |           |  |   | (68,158   | ) |  |          | (156,419  | ) |  |   | N/A     |  
|Change in fair value due to market changes                                               |  |                        | 76,670    |   |                  |   | N/A     |           |  |   | 84,054    |   |  |          | 160,724   |   |  |   | N/A     |  
|Change in fair value due to application of external benchmarking
    policies            |  |                        | (12,289   | ) |                  |   | N/A     |           |  |   | (3,571    | ) |  |          | (15,860   | ) |  |   | N/A     |  
|Amortization                                                                             |  |                        |          |   |                  |   | (52,083 | )         |  |   | N/A       |   |  |          |          |   |  |   | (97,875 | )
|Valuation/impairment                                                                     |  |                        |          |   |                  |   | (89,092 | )         |  |   | N/A       |   |  |          |          |   |  |   | (76,233 | )
|                                                                                         |  |                        |           |   |                  |   |         |           |  |   |           |   |  |          |          
|Balance at end of period                                                                 |  | $                      | 1,598,821 |   |                  | $ | 738,844 |           |  | $ | 1,354,433 |   |  | $        | 1,598,821 |   |  | $ | 738,844 |  
|                                                                                         |  |                        |           |   |                  |   |         |           |  |   |           |   |  |          |          
|MSRs fair value as a percentage of unpaid principal balance (in
    bps)                 |  |                        | 145       |   |                  |   | 116     |           |  |   | 140       |   |  |          | 145       |   |  |   | 116     |  



26



---



##### Table of Contents





|                              |                                                                                      |                                    |   |         |        |  |  |          |    |  |     |         |        |           |  |     |     |  |   |         |        |  |  |     |    | 
|----------------------------- | ------------------------------------------------------------------------------------ | ---------------------------------- | - | ------- | ------ |  |  | -------- | -- |  | --- | ------- | ------ | --------- |  | --- | --- |  | - | ------- | ------ |  |  | --- | -- | 
|                              |                                                                                      | Three Months Ended                 |  
|                              |                                                                                      |                                    |  
|                              |                                                                                      | June 30,                           |   |         | BPS    |  |  | June 30, |    |  | BPS |         |        | March 31, |  |     | BPS | 
|                              |                                                                                      | 2006                               |   |         | UPB    |  |  | 2005     |    |  | UPB |         |        | 2006      |  |     | UPB | 
|                              |                                                                                      |                                    |   |         |        |  |  |          |    |  |     |         |        |           |  |     |     | 
|                              |                                                                                      | (Dollars in thousands)             |  
|Service fee (expense) income: |                                                                                      |                                    |   |         |        |  |  |          |    |  |     |         |        |           |  |     |     |  |   |         |        |  |  |    
|                              | Gross service fee income                                                             |                                    | $ | 117,787 |        |  |  | 45       |    |  | $   | 64,358  |        |           |  | 43  |     |  | $ | 98,193  |        |  |  | 44  |   
|                              | Change in value due to portfolio run offs/ Amortization                              |                                    |   | (88,261 | )      |  |  | (34      | )  |  |     | (52,083 | )      |           |  | (35 | )   |  |   | (68,158 | )      |  |  | (31 | ) 
|                              |                                                                                      |                                    |   |         |        |  |  |          |    |  |     |         |        |           |  |     |     | 
|                              | Service fee income, net of change in value due to portfolio
    run-off/amortization |                                    |   | 29,526  |        |  |  | 11       |    |  |     | 12,275  |        |           |  | 8   |     |  |   | 30,035  |        |  |  | 13  |   
|                              | Change in value due to application of external benchmarking
    policies             |                                    |   | (12,289 | )      |  |  | (5       | )  |  |     |        |        |           |  |    |     |  |   | (3,571  | )      |  |  | (2  | ) 
|                              | Valuation adjustment due to market changes                                           |                                    |   | 76,670  |        |  |  | 30       |    |  |     | (89,092 | )      |           |  | (60 | )   |  |   | 84,054  |        |  |  | 38  |   
|                              | Hedge (loss) gain on MSRs                                                            |                                    |   | (66,660 | )      |  |  | (26      | )  |  |     | 87,616  |        |           |  | 59  |     |  |   | (79,629 | )      |  |  | (36 | ) 
|                              |                                                                                      |                                    |   |         |        |  |  |          |    |  |     |         |        |           |  |     |     | 
|                              |                                                                                      | Total service fee (expense) income |   | $       | 27,247 |  |  |          | 10 |  |     | $       | 10,799 |           |  |     | 7   |  |   | $       | 30,889 |  |  |     | 13 | 
|                              |                                                                                      |                                    |   |         |        |  |  |          |    |  |     |         |        |           |  |     |     | 

|                              |                                                                                   |                                    |   |          |        |  |  |          |    |  |     |         |        |  |  |     |   | 
|----------------------------- | --------------------------------------------------------------------------------- | ---------------------------------- | - | -------- | ------ |  |  | -------- | -- |  | --- | ------- | ------ |  |  | --- | - | 
|                              |                                                                                   | Six Months Ended                   |  
|                              |                                                                                   |                                    |  
|                              |                                                                                   | June 30,                           |   |          | BPS    |  |  | June 30, |    |  | BPS |        
|                              |                                                                                   | 2006                               |   |          | UPB    |  |  | 2005     |    |  | UPB |        
|                              |                                                                                   |                                    |   |          |        |  |  |          |    |  |     |        
|                              |                                                                                   | (Dollars in thousands)             |  
|Service fee (expense) income: |                                                                                   |                                    |   |          |        |  |  |          |    |  |     |         |        |  |  |    
|                              | Gross service fee income                                                          |                                    | $ | 215,980  |        |  |  | 45       |    |  | $   | 119,347 |        |  |  | 42  |  
|                              | Change in value due to portfolio run offs/ Amortization                           |                                    |   | (156,419 | )      |  |  | (33      | )  |  |     | (97,875 | )      |  |  | (35 | )
|                              |                                                                                   |                                    |   |          |        |  |  |          |    |  |     |        
|                              | Service income, net of change in value due to portfolio run
    offs/amortization |                                    |   | 59,561   |        |  |  | 12       |    |  |     | 21,472  |        |  |  | 7   |  
|                              | Change in value due to application of external benchmarking
    policies          |                                    |   | (15,860  | )      |  |  | (3       | )  |  |     |        |        |  |  |    |  
|                              | Valuation adjustment due to market changes                                        |                                    |   | 160,724  |        |  |  | 33       |    |  |     | (76,233 | )      |  |  | (27 | )
|                              | Hedge (loss) gain on MSRs                                                         |                                    |   | (146,289 | )      |  |  | (30      | )  |  |     | 69,978  |        |  |  | 25  |  
|                              |                                                                                   |                                    |   |          |        |  |  |          |    |  |     |        
|                              |                                                                                   | Total service fee (expense) income |   | $        | 58,136 |  |  |          | 12 |  |     | $       | 15,217 |  |  |     | 5 | 
|                              |                                                                                   |                                    |   |          |        |  |  |          |    |  |     |        

OTHER RETAINED ASSETS




27



---



##### Table of Contents





|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |   |         |         |   |   |         |         |  
|---------------------------------------------- | ----------------- | ----------------------------------------- | - | ------- | ---------------- | - | - | --------- | ------- | - | -------- | ------- | ------- | -------- | - | ------- | ------- | - | - | ------- | ------- | -
|                                               |                   | Three Months Ended                        |   |         | Six Months Ended |  
|                                               |                   |                                           |   |         |                  |  
|                                               |                   | June 30,                                  |   |         | June 30,         |   |   | March 31, |         |   | June 30, |         |         | June 30, |  
|                                               |                   | 2006                                      |   |         | 2005             |   |   | 2006      |         |   | 2006     |         |         | 2005     |  
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|                                               |                   | (Dollars in thousands)                    |  
|AAA-rated and agency interest-only securities: |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |   |         |         |   |   |        
|                                               | Beginning balance |                                           | $ | 84,816  |                  |   | $ | 83,080    |         |   | $        | 78,731  |         |          | $ | 78,731  |         |   | $ | 90,658  |        
|                                               |                   | Retained investments from securitizations |   |         |                 |   |   |           | 4,106   |   |          |         | 5,196   |          |   |         | 5,196   |   |   |         | 4,106   |  
|                                               |                   | Sales                                     |   |         | (22,939          | ) |   |           |        |   |          |         |        |          |   |         | (22,939 | ) |   |         |        |  
|                                               |                   | Clean-up calls exercised                  |   |         | (107             | ) |   |           | (171    | ) |          |         |        |          |   |         | (107    | ) |   |         | (171    | )
|                                               |                   | Cash received, net of accretion           |   |         | (3,669           | ) |   |           | (5,669  | ) |          |         | (5,606  | )        |   |         | (9,275  | ) |   |         | (11,883 | )
|                                               |                   | Valuation gains (losses) before hedges    |   |         | 6,272            |   |   |           | (18,294 | ) |          |         | 6,495   |          |   |         | 12,767  |   |   |         | (19,658 | )
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|                                               | Ending balance    |                                           | $ | 64,373  |                  |   | $ | 63,052    |         |   | $        | 84,816  |         |          | $ | 64,373  |         |   | $ | 63,052  |        
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|Principal only securities:                     |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |   |         |         |   |   |        
|                                               | Beginning balance |                                           | $ | 12,820  |                  |   | $ | 1,113     |         |   | $        | 9,483   |         |          | $ | 9,483   |         |   | $ | 18,598  |        
|                                               |                   | Retained investments from securitizations |   |         | 3,445            |   |   |           |        |   |          |         | 4,224   |          |   |         | 7,669   |   |   |         | 1,419   |  
|                                               |                   | Purchases                                 |   |         | 121,281          |   |   |           |        |   |          |         |        |          |   |         | 121,281 |   |   |         |        |  
|                                               |                   | Sales                                     |   |         |                 |   |   |           | (1,106  | ) |          |         |        |          |   |         |        |   |   |         | (19,448 | )
|                                               |                   | Cash received, net of accretion           |   |         | (1,981           | ) |   |           | (7      | ) |          |         | 7       |          |   |         | (1,974  | ) |   |         | (473    | )
|                                               |                   | Valuation losses                          |   |         | (5,614           | ) |   |           |        |   |          |         | (894    | )        |   |         | (6,508  | ) |   |         | (96     | )
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|                                               | Ending balance    |                                           | $ | 129,951 |                  |   | $ |          |         |   | $        | 12,820  |         |          | $ | 129,951 |         |   | $ |        |        
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|Prepayment penalty securities:                 |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |   |         |         |   |   |        
|                                               | Beginning balance |                                           | $ | 66,949  |                  |   | $ | 45,649    |         |   | $        | 75,741  |         |          | $ | 75,741  |         |   | $ | 33,451  |        
|                                               |                   | Retained investments from securitizations |   |         | 13,466           |   |   |           | 1,749   |   |          |         | 8,591   |          |   |         | 22,057  |   |   |         | 10,142  |  
|                                               |                   | Transfer from MSRs                        |   |         |                 |   |   |           | 3,364   |   |          |         |        |          |   |         |        |   |   |         | 8,491   |  
|                                               |                   | Cash received, net of accretion           |   |         | (11,288          | ) |   |           | (4,162  | ) |          |         | (11,131 | )        |   |         | (22,419 | ) |   |         | (6,974  | )
|                                               |                   | Valuation (losses) gains                  |   |         | 10,909           |   |   |           | 15,683  |   |          |         | (6,252  | )        |   |         | 4,657   |   |   |         | 17,173  |  
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|                                               | Ending balance    |                                           | $ | 80,036  |                  |   | $ | 62,283    |         |   | $        | 66,949  |         |          | $ | 80,036  |         |   | $ | 62,283  |        
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|Residual securities(1):                        |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |   |         |         |   |   |        
|                                               | Beginning balance |                                           | $ | 205,128 |                  |   | $ | 131,374   |         |   | $        | 167,771 |         |          | $ | 167,771 |         |   | $ | 135,386 |        
|                                               |                   | Retained investments from securitizations |   |         | 43,933           |   |   |           | 18,150  |   |          |         | 41,876  |          |   |         | 85,809  |   |   |         | 18,180  |  
|                                               |                   | Impairments                               |   |         | (1,300           | ) |   |           |        |   |          |         |        |          |   |         | (1,300  | ) |   |         |        |  
|                                               |                   | Cash received, net of accretion           |   |         | (3,255           | ) |   |           | (8,948  | ) |          |         | (6,049  | )        |   |         | (9,304  | ) |   |         | (11,908 | )
|                                               |                   | Valuation (losses) gains before hedges    |   |         | (3,984           | ) |   |           | 5,218   |   |          |         | 1,530   |          |   |         | (2,454  | ) |   |         | 4,136   |  
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|                                               | Ending balance    |                                           | $ | 240,522 |                  |   | $ | 145,794   |         |   | $        | 205,128 |         |          | $ | 240,522 |         |   | $ | 145,794 |        
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|Investment-grade securities:                   |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |   |         |         |   |   |        
|                                               | Beginning balance |                                           |   | 145,499 |                  |   |   | 144,032   |         |   | $        | 92,120  |         |          |   | 92,120  |         |   | $ | 146,822 |        
|                                               |                   | Retained investments from securitizations |   |         | 25,808           |   |   |           |        |   |          |         | 14,801  |          |   |         | 40,609  |   |   |         | 33,924  |  
|                                               |                   | Purchases                                 |   |         | 23,974           |   |   |           |        |   |          |         | 41,023  |          |   |         | 64,997  |   |   |         |        |  
|                                               |                   | Impairment                                |   |         |                 |   |   |           | (24     | ) |          |         | (183    | )        |   |         | (183    | ) |   |         | (241    | )
|                                               |                   | Clean-up calls exercised                  |   |         | (1               | ) |   |           | 7       |   |          |         |        |          |   |         | (1      | ) |   |         | 7       |  
|                                               |                   | Sales                                     |   |         |                 |   |   |           | (48,721 | ) |          |         |        |          |   |         |        |   |   |         | (83,629 | )
|                                               |                   | Cash received, net of accretion           |   |         | (4,871           | ) |   |           | (788    | ) |          |         | (1,424  | )        |   |         | (6,295  | ) |   |         | (2,495  | )
|                                               |                   | Valuation losses before hedges            |   |         | (2,464           | ) |   |           | (160    | ) |          |         | (838    | )        |   |         | (3,302  | ) |   |         | (42     | )
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|                                               | Ending balance    |                                           | $ | 187,945 |                  |   | $ | 94,346    |         |   | $        | 145,499 |         |          | $ | 187,945 |         |   | $ | 94,436  |        
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|Non-Investment grade securities:               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |   |         |         |   |   |        
|                                               | Beginning balance |                                           | $ | 66,339  |                  |   | $ | 79,768    |         |   | $        | 57,712  |         |          | $ | 57,712  |         |   | $ | 83,052  |        
|                                               |                   | Retained investments from securitizations |   |         | 22,232           |   |   |           | 4,225   |   |          |         | 8,649   |          |   |         | 30,881  |   |   |         | 4,225   |  
|                                               |                   | Purchases                                 |   |         |                 |   |   |           | 1,523   |   |          |         |        |          |   |         |        |   |   |         | 1,523   |  
|                                               |                   | Impairment                                |   |         | (202             | ) |   |           | (54     | ) |          |         | (252    | )        |   |         | (454    | ) |   |         | (174    | )
|                                               |                   | Sales                                     |   |         |                 |   |   |           | (22,982 | ) |          |         |        |          |   |         |        |   |   |         | (26,986 | )
|                                               |                   | Cash received, net of accretion           |   |         | (111             | ) |   |           | (1,035  | ) |          |         | 207     |          |   |         | 96      |   |   |         | (321    | )
|                                               |                   | Valuation (losses) gains before hedges    |   |         | (213             | ) |   |           | (3,495  | ) |          |         | 23      |          |   |         | (190    | ) |   |         | (3,369  | )
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  
|                                               | Ending balance    |                                           | $ | 88,045  |                  |   | $ | 57,950    |         |   | $        | 66,339  |         |          | $ | 88,045  |         |   | $ | 57,950  |        
|                                               |                   |                                           |   |         |                  |   |   |           |         |   |          |         |         |          |  






|    |                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Included in the residual securities balance at June 30,
    2006 were $42.2 million of HELOC residuals retained from
    two separate guaranteed mortgage securitization transactions.
    There was no gain on sale of loans recognized in connection with
    these transactions.

28



---



##### Table of Contents





|                                                   |       |                                                             |   |         |            |  |   |           |              |      |            |        |         |            |   |        |         |  |   |        |        | 
|-------------------------------------------------- | ----- | ----------------------------------------------------------- | - | ------- | ---------- |  | - | --------- | ------------ | ---- | ---------- | ------ | ------- | ---------- | - | ------ | ------- |  | - | ------ | ------ | 
|                                                   |       | June 30, 2006                                               |   |         |           
|                                                   |       |                                                             |   |         |           
|                                                   |       |                                                             |   | Premium |            |  |   |           | December 31, |     
|                                                   |       | Current                                                     |   |         | (Discount) |  |   |           |              | 2005 |           
|                                                   |       | Face                                                        |   |         | to Face    |  |   | Amortized |              |      |            |        |         |           
|                                                   |       | Value                                                       |   |         | Value      |  |   | Cost      |              |      | Fair Value |        |         | Fair Value |  
|                                                   |       |                                                             |   |         |            |  |   |           |              |      |            |        |         |            |  
|                                                   |       | (Dollars in thousands)                                      |  
|Other investment grade mortgage-backed securities: |       |                                                             |   |         |            |  |   |           |              |      |            |        |         |            |   |        |         |  |   |       
|                                                   | AA    |                                                             | $ | 88,386  |            |  | $ | (1,123    | )            |      | $          | 87,263 |         |            | $ | 85,313 |         |  | $ | 21,787 |       
|                                                   | AA-   |                                                             |   | 14,096  |            |  |   | (287      | )            |      |            | 13,809 |         |            |   | 13,641 |         |  |   |       |       
|                                                   | A     |                                                             |   | 4,482   |            |  |   | (194      | )            |      |            | 4,288  |         |            |   | 4,240  |         |  |   | 239    |       
|                                                   | BBB   |                                                             |   | 27,286  |            |  |   | (1,372    | )            |      |            | 25,914 |         |            |   | 25,956 |         |  |   | 29,848 |       
|                                                   | BBB-  |                                                             |   | 65,133  |            |  |   | (5,207    | )            |      |            | 59,926 |         |            |   | 58,795 |         |  |   | 40,246 |       
|                                                   |       |                                                             |   |         |            |  |   |           |              |      |            |        |         |            |  
|                                                   |       | Total other investment grade mortgage-backed securities     |   | $       | 199,383    |  |   | $         | (8,183       | )    |            | $      | 191,200 |            |   | $      | 187,945 |  |   | $      | 92,120 | 
|                                                   |       |                                                             |   |         |            |  |   |           |              |      |            |        |         |            |  
|Non-investment grade mortgage-backed securities:   |       |                                                             |   |         |            |  |   |           |              |      |            |        |         |            |   |        |         |  |   |       
|                                                   | BB+   |                                                             | $ | 5,947   |            |  | $ | (940      | )            |      | $          | 5,007  |         |            | $ | 5,007  |         |  | $ |       |       
|                                                   | BB    |                                                             |   | 62,352  |            |  |   | (8,288    | )            |      |            | 54,064 |         |            |   | 54,462 |         |  |   | 36,873 |       
|                                                   | BB-   |                                                             |   | 22,022  |            |  |   | (1,160    | )            |      |            | 20,862 |         |            |   | 20,960 |         |  |   | 13,523 |       
|                                                   | B     |                                                             |   | 14,804  |            |  |   | (9,079    | )            |      |            | 5,725  |         |            |   | 6,771  |         |  |   | 6,458  |       
|                                                   | Other |                                                             |   | 9,905   |            |  |   | (9,401    | )            |      |            | 504    |         |            |   | 845    |         |  |   | 858    |       
|                                                   |       |                                                             |   |         |            |  |   |           |              |      |            |        |         |            |  
|                                                   |       | Total other non-investment grade mortgage-backed securities |   | $       | 115,030    |  |   | $         | (28,868      | )    |            | $      | 86,162  |            |   | $      | 88,045  |  |   | $      | 57,712 | 
|                                                   |       |                                                             |   |         |            |  |   |           |              |      |            |        |         |            |  





|                               |                                                                                                                                              |                                      |   |        |                  |  |   |           |        |  |          |        |        |          |   |        |       |  |   |         |        | 
|------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | - | ------ | ---------------- |  | - | --------- | ------ |  | -------- | ------ | ------ | -------- | - | ------ | ----- |  | - | ------- | ------ | 
|                               |                                                                                                                                              | Three Months Ended                   |   |        | Six Months Ended | 
|                               |                                                                                                                                              |                                      |   |        |                  | 
|                               |                                                                                                                                              | June 30,                             |   |        | June 30,         |  |   | March 31, |        |  | June 30, |        |        | June 30, |  
|                               |                                                                                                                                              | 2006                                 |   |        | 2005             |  |   | 2006      |        |  | 2006     |        |        | 2005     |  
|                               |                                                                                                                                              |                                      |   |        |                  |  |   |           |        |  |          |        |        |          |  
|                               |                                                                                                                                              | (Dollars in thousands)               |  
|Net gain (loss) on securities: |                                                                                                                                              |                                      |   |        |                  |  |   |           |        |  |          |        |        |          |   |        |       |  |   |        
|                               | Realized gain on available for sale securities                                                                                               |                                      | $ |       |                  |  | $ | 5,731     |        |  | $        |       |        |          | $ |       |       |  | $ | 5,381   |       
|                               | Impairment on available for sale securities                                                                                                  |                                      |   | (1,501 | )                |  |   | (78       | )      |  |          | (435   | )      |          |   | (1,936 | )     |  |   | (415    | )     
|                               | Unrealized gain (loss) on prepayment penalty securities                                                                                      |                                      |   | 10,909 |                  |  |   | 15,683    |        |  |          | (6,252 | )      |          |   | 4,657  |       |  |   | 17,174  |       
|                               | Unrealized gain (loss) on AAA-rated and agency interest-only and
    residual securities                                                     |                                      |   | 5,566  |                  |  |   | (12,826   | )      |  |          | 6,284  |        |          |   | 11,850 |       |  |   | (17,094 | )     
|                               | Net gain (loss) on trading securities and other instruments used
    to hedge AAA-rated and agency interest-only and residual
    securities |                                      |   | (6,716 | )                |  |   | 7,341     |        |  |          | (2,212 | )      |          |   | (8,928 | )     |  |   | 6,159   |       
|                               |                                                                                                                                              |                                      |   |        |                  |  |   |           |        |  |          |        |        |          |  
|                               |                                                                                                                                              | Total gain (loss) on securities, net |   | $      | 8,258            |  |   | $         | 15,851 |  |          | $      | (2,615 | )        |   | $      | 5,643 |  |   | $       | 11,205 | 
|                               |                                                                                                                                              |                                      |   |        |                  |  |   |           |        |  |          |        |        |          |  

29



---



##### Table of Contents



VALUATION OF MSRS, INTEREST-ONLY, PREPAYMENT PENALTY,


AND RESIDUAL SECURITIES




|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              |  |      |   |  |  |      |   |  |  |      |  
|---------------------------------------------- |  | ---------------------- | --------- | ---------- | --------------------- | - | ----------- | ------- |  | ------- | ------------ | - | -------- | ---------- | ---- | -------- | -------- |  | ------- | ---------- |  |  | ---------- | --------- |  | -------- | ---- | - | ------------ |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|                                               |  | 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     |  |  | Speeds     |           |  | Yield    |      |   | Loss Rate(1) | 
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|                                               |  | (Dollars in thousands) |          
|June 30, 2006                                  |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              |  |      |   |  |  |      |   |  |  |      |  
|MSRs                                           |  | $                      | 1,598,821 |            |                       | $ | 109,988,858 |         |  |         | 6.70         | % |          |            | 0.37 | %        |          |  | 18.5    | %          |  |  | 3.98       |           |  |          | 22.1 | % |              |  | 20.5 | % |  |  | 10.2 | % |  |  | N/A  |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|AAA-rated interest-only securities             |  | $                      | 64,373    |            |                       | $ | 4,512,539   |         |  |         | 6.61         | % |          |            | 0.41 | %        |          |  | 12.6    | %          |  |  | 3.47       |           |  |          | 13.5 | % |              |  | 16.4 | % |  |  | 15.0 | % |  |  | N/A  |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|Prepayment penalty securities                  |  | $                      | 80,036    |            |                       | $ | 16,388,466  |         |  |         | 6.79         | % |          |            | N/A  |          |          |  | 22.9    | %          |  |  | N/A        |           |  |          | 21.1 | % |              |  | 19.3 | % |  |  | 27.9 | % |  |  | N/A  |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|Lot loan residual securities                   |  |                        | 58,779    |            |                       | $ | 2,266,191   |         |  |         | 8.46         | % |          |            | 2.82 | %        |          |  | 34.0    | %          |  |  | 0.92       |           |  |          | 40.0 | % |              |  | 38.2 | % |  |  | 22.7 | % |  |  | 0.37 | %
|HELOC residual securities                      |  |                        | 87,434    |            |                       | $ | 2,299,992   |         |  |         | 9.02         | % |          |            | 3.01 | %        |          |  | 48.9    | %          |  |  | 1.26       |           |  |          | 49.7 | % |              |  | 48.2 | % |  |  | 19.4 | % |  |  | 0.67 | %
|Subprime residual securities                   |  |                        | 94,309    |            |                       | $ | 6,659,194   |         |  |         | 7.90         | % |          |            | 1.72 | %        |          |  | 28.4    | %          |  |  | 0.83       |           |  |          | 37.9 | % |              |  | 31.1 | % |  |  | 24.9 | % |  |  | 3.15 | %
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|Total non-investment grade residual securities |  | $                      | 240,522   |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              |  |      |   |  |  |      |   |  |  |      |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|March 31, 2006                                 |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              |  |      |   |  |  |      |   |  |  |      |  
|MSRs                                           |  | $                      | 1,354,433 |            |                       | $ | 96,511,574  |         |  |         | 6.43         | % |          |            | 0.37 | %        |          |  | 17.6    | %          |  |  | 3.82       |           |  |          | 21.0 | % |              |  | 17.5 | % |  |  | 10.3 | % |  |  | N/A  |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|AAA-rated and agency interest- only securities |  | $                      | 84,816    |            |                       | $ | 7,708,837   |         |  |         | 6.62         | % |          |            | 0.39 | %        |          |  | 15.6    | %          |  |  | 2.86       |           |  |          | 20.7 | % |              |  | 18.2 | % |  |  | 10.2 | % |  |  | N/A  |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|Prepayment penalty securities                  |  | $                      | 66,949    |            |                       | $ | 14,528,867  |         |  |         | 6.61         | % |          |            | N/A  |          |          |  | 17.4    | %          |  |  | N/A        |           |  |          | 20.9 | % |              |  | 22.1 | % |  |  | 10.5 | % |  |  | N/A  |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|Prime residual securities                      |  | $                      | 3,954     |            |                       | $ | 1,117,251   |         |  |         | 6.19         | % |          |            | N/M  |          |          |  | 72.1    | %          |  |  | N/M        |           |  |          | 45.4 | % |              |  | 51.6 | % |  |  | 15.0 | % |  |  | 0.18 | %
|Lot loan residual securities                   |  |                        | 50,649    |            |                       | $ | 1,103,266   |         |  |         | 8.02         | % |          |            | 2.79 | %        |          |  | 29.3    | %          |  |  | 1.64       |           |  |          | 42.7 | % |              |  | 41.4 | % |  |  | 22.1 | % |  |  | 0.37 | %
|HELOC residual securities                      |  |                        | 80,819    |            |                       | $ | 1,929,000   |         |  |         | 8.64         | % |          |            | 2.70 | %        |          |  | 48.1    | %          |  |  | 1.55       |           |  |          | 50.2 | % |              |  | 48.2 | % |  |  | 19.2 | % |  |  | 0.74 | %
|Subprime residual securities                   |  |                        | 69,706    |            |                       | $ | 5,726,600   |         |  |         | 7.53         | % |          |            | 1.72 | %        |          |  | 24.7    | %          |  |  | 0.71       |           |  |          | 37.5 | % |              |  | 30.4 | % |  |  | 24.9 | % |  |  | 3.11 | %
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|Total non-investment grade residual securities |  | $                      | 205,128   |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              |  |      |   |  |  |      |   |  |  |      |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|December 31, 2005                              |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              |  |      |   |  |  |      |   |  |  |      |  
|MSRs                                           |  | $                      | 1,094,490 |            |                       | $ | 84,495,133  |         |  |         | 6.19         | % |          |            | 0.37 | %        |          |  | 21.7    | %          |  |  | 3.54       |           |  |          | 21.4 | % |              |  | 16.2 | % |  |  | 10.7 | % |  |  | N/A  |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|AAA-rated and agency interest- only securities |  | $                      | 78,731    |            |                       | $ | 7,583,643   |         |  |         | 6.63         | % |          |            | 0.38 | %        |          |  | 27.5    | %          |  |  | 2.73       |           |  |          | 20.3 | % |              |  | 22.7 | % |  |  | 8.0  | % |  |  | N/A  |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|Prepayment penalty securities                  |  | $                      | 75,741    |            |                       | $ | 13,657,946  |         |  |         | 6.30         | % |          |            | N/A  |          |          |  | 22.7    | %          |  |  | N/A        |           |  |          | 23.7 | % |              |  | 20.3 | % |  |  | 9.0  | % |  |  | N/A  |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|Prime residual securities                      |  | $                      | 2,438     |            |                       | $ | 1,183,361   |         |  |         | 5.85         | % |          |            | 0.61 | %        |          |  | 60.0    | %          |  |  | 0.34       |           |  |          | 46.3 | % |              |  | 51.4 | % |  |  | 15.0 | % |  |  | 0.18 | %
|Lot loan residual securities                   |  |                        | 41,066    |            |                       | $ | 939,005     |         |  |         | 7.55         | % |          |            | 2.90 | %        |          |  | 33.2    | %          |  |  | 1.51       |           |  |          | 43.1 | % |              |  | 41.4 | % |  |  | 21.6 | % |  |  | 0.36 | %
|HELOC residual securities                      |  |                        | 66,041    |            |                       | $ | 1,430,473   |         |  |         | 8.26         | % |          |            | 3.18 | %        |          |  | 55.8    | %          |  |  | 1.45       |           |  |          | 44.0 | % |              |  | 49.6 | % |  |  | 19.0 | % |  |  | 0.87 | %
|Subprime residual securities                   |  |                        | 58,226    |            |                       | $ | 4,831,675   |         |  |         | 7.40         | % |          |            | 2.17 | %        |          |  | 28.9    | %          |  |  | 0.55       |           |  |          | 37.1 | % |              |  | 29.4 | % |  |  | 24.9 | % |  |  | 2.94 | %
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 
|Total non-investment grade residual securities |  | $                      | 167,771   |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              |  |      |   |  |  |      |   |  |  |      |  
|                                               |  |                        |           |            |                       |   |             |         |  |         |              |   |          |            |      |          |          |  |         |            |  |  |            |           |  |          |      |   |              | 






|    |                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As a percentage of the original pool balance, the actual
    cumulative loss rate to date totaled 0.25% and 0.51% for HELOC
    and subprime loans, respectively, at June 30, 2006. No loss
    has been incurred on lot loans as of June 30, 2006.

30



---



##### Table of Contents











HEDGING INTEREST RATE RISK ON SERVICING-RELATED ASSETS








31



---



##### Table of Contents









|                                          |  |                        |         |   |           |  |        |             |  |  |         |   |  |  |         |  
|----------------------------------------- |  | ---------------------- | ------- | - | --------- |  | ------ | ----------- |  |  | ------- | - |  |  | ------- | -
|                                          |  | Servicing              |         |   | AAA IO    |  |        | Credit Risk |  |  |        
|For the Three Months Ended June 30, 2006: |  | Portfolio              |         |   | Portfolio |  |        | Portfolio   |  |  | Total   |  
|                                          |  |                        |         |   |           |  |        |             |  |  |         |  
|                                          |  | (Dollars in thousands) |        
|Net earnings                              |  | $                      | 18,672  |   |           |  | 811    |             |  |  | 5,269   |   |  |  | 24,752  |  
|Average capital deployed                  |  | $                      | 241,190 |   |           |  | 12,578 |             |  |  | 110,041 |   |  |  | 363,809 |  
|Return on equity                          |  |                        | 31      | % |           |  | 26     | %           |  |  | 19      | % |  |  | 27      | %




MORTGAGE-BACKED SECURITIES AND LOANS HELD FOR INVESTMENT








|                                      |                                     |                                                     |                                   |                                            |              |           |           |           |           |           |           | 
|------------------------------------- | ----------------------------------- | --------------------------------------------------- | --------------------------------- | ------------------------------------------ | ------------ | --------- | --------- | --------- | --------- | --------- | --------- | 
|                                      |                                     | June 30,                                            |                                   |                                            | December 31, |          
|                                      |                                     | 2006                                                |                                   |                                            | 2005         |          
|                                      |                                     |                                                     |                                   |                                            |              |          
|                                      |                                     | (Dollars in thousands)                              |                                  
|Loans held for investment:            |                                     |                                                     |                                   |                                            |              |           |           |          
|                                      | SFR mortgage                        |                                                     | $                                 | 5,427,609                                  |              |           | $         | 5,441,521 |          
|                                      | Consumer construction               |                                                     |                                   | 1,860,622                                  |              |           |           | 1,656,963 |          
|                                      | Builder construction                |                                                     |                                   | 1,013,279                                  |              |           |           | 838,772   |          
|                                      | HELOC                               |                                                     |                                   | 29,972                                     |              |           |           | 31,882    |          
|                                      | Land and other mortgage             |                                                     |                                   | 320,053                                    |              |           |           | 260,615   |          
|                                      | Revolving warehouse lines of credit |                                                     |                                   | 121,292                                    |              |           |           | 48,616    |          
|                                      |                                     |                                                     |                                   |                                            |              |          
|                                      |                                     |                                                     | Total  loans held for investment |                                            | $            | 8,772,827 |           |           | $         | 8,278,369 |          
|                                      |                                     |                                                     |                                   |                                            |              |          
|AAA-rated mortgage-backed securities: |                                     |                                                     |                                   |                                            |              |           |           |          
|                                      |                                     | AAA-rated non-agency securities, trading            |                                   | $                                          | 73,434       |           |           | $         | 52,633    |          
|                                      |                                     | AAA-rated non-agency securities, available for sale |                                   |                                            | 3,972,977    |           |           |           | 3,524,952 |          
|                                      |                                     | AAA-rated agency securities, available for sale     |                                   |                                            | 52,701       |           |           |           | 43,014    |          
|                                      |                                     |                                                     |                                   |                                            |              |          
|                                      |                                     |                                                     |                                   | Total AAA-rated mortgage-backed securities |              | $         | 4,099,112 |           |           | $         | 3,620,599 | 
|                                      |                                     |                                                     |                                   |                                            |              |          

32



---



##### Table of Contents



SFR MORTGAGE LOANS HELD FOR INVESTMENT






|                                                    |                     |                        |           |    |           |   |           |              |     |   |           |    |     |  
|--------------------------------------------------- | ------------------- | ---------------------- | --------- | -- | --------- | - | --------- | ------------ | --- | - | --------- | -- | --- | -
|                                                    |                     | June 30,               |           |    | March 31, |   |           | December 31, |    
|                                                    |                     | 2006                   |           |    | 2006      |   |           | 2005         |    
|                                                    |                     |                        |           |    |           |   |           |              |    
|                                                    |                     | (Dollars in thousands) |          
|SFR mortgage loans held for investment (book value) |                     | $                      | 5,427,609 |    |           | $ | 5,663,142 |              |     | $ | 5,441,521 |   
|Average loan size                                   |                     | $                      | 290       |    |           | $ | 292       |              |     | $ | 292       |   
|Non-performing loans as a percentage of SFR loans   |                     |                        | 0.86      | %  |           |   | 0.69      | %            |     |   | 0.62      | % 
|Estimated average life in years(1)                  |                     |                        | 2.3       |    |           |   | 2.3       |              |     |   | 2.4       |   
|Estimated average net duration in months(2)         |                     |                        | (0.7      | )  |           |   | 0.8       |              |     |   | 0.1       |   
|Annualized yield                                    |                     |                        | 5.74      | %  |           |   | 5.61      | %            |     |   | 5.06      | % 
|Percent of loans with active prepayment penalty     |                     |                        | 40        | %  |           |   | 40        | %            |     |   | 35        | % 
|Fixed-rate mortgages                                |                     |                        | 6         | %  |           |   | 6         | %            |     |   | 6         | % 
|Option ARMs                                         |                     |                        | 24        | %  |           |   | 24        | %            |     |   | 25        | % 
|Adjustable rate mortgages                           |                     |                        | 3         | %  |           |   | 3         | %            |     |   | 4         | % 
|Hybrid ARMs                                         |                     |                        | 16        | %  |           |   | 16        | %            |     |   | 16        | % 
|Hybrid ARMs interest only                           |                     |                        | 51        | %  |           |   | 51        | %            |     |   | 49        | % 
|Additional Information:                             |                     |                        |           |    |           |   |           |              |     |   |           |   
|Average FICO score(3)                               |                     |                        | 713       |    |           |   | 713       |              |     |   | 715       |   
|Original average loan to value ratio                |                     |                        | 73        | %  |           |   | 73        | %            |     |   | 72        | % 
|Current average loan to value ratio(4)              |                     |                        | 58        | %  |           |   | 59        | %            |     |   | 58        | % 
|Geographic distribution of top five states:         |                     |                        |           |    |           |   |           |              |     |   |           |   
|                                                    | Southern California |                        |           | 31 | %         |   |           | 31           | %   |   |           | 32 | %  
|                                                    | Northern California |                        |           | 21 | %         |   |           | 21           | %   |   |           | 21 | %  
|                                                    | Florida             |                        |           | 6  | %         |   |           | 6            | %   |   |           | 5  | %  
|                                                    | Michigan            |                        |           | 4  | %         |   |           | 4            | %   |   |           | 4  | %  
|                                                    | New York            |                        |           | 3  | %         |   |           | 4            | %   |   |           | 4  | %  
|                                                    | Virginia            |                        |           | 3  | %         |   |           | 3            | %   |   |           | 3  | %  
|                                                    | Other               |                        |           | 32 | %         |   |           | 31           | %   |   |           | 31 | %  
|                                                    |                     |                        |           |    |           |   |           |              |    
|                                                    |                     | Total                  |           |    | 100       | % |           |              | 100 | % |           |    | 100 | %
|                                                    |                     |                        |           |    |           |   |           |              |    






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the estimated length of time, on average, the SFR
    loan portfolio will remain outstanding based on the
    Companys estimates for prepayments.                                                                                                                                                                                                                                                                    
|   
|(2) | Average net duration measures the expected change in the value
    of a financial instrument in response to changes in interest
    rates, taking into consideration the impact of the related
    hedges. The negative net duration implies an increase in value
    as rates rise while the positive net duration implies a decrease
    in value.                                                                             
|   
|(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.
|   
|(4) | Current average
    loan-to-value ratio is
    estimated based on the Office of the Federal Housing Enterprise
    Oversight House Price Index Metropolitan Statistical Area data
    on a loan level basis.                                                                                                                                                                                                                     

33



---



##### Table of Contents



loan-to loan-to


CONSUMER CONSTRUCTION


construction-to


34



---



##### Table of Contents





|                                                |                             |                        |           |     |           |   |           |              |   |   |           |     |  
|----------------------------------------------- | --------------------------- | ---------------------- | --------- | --- | --------- | - | --------- | ------------ | - | - | --------- | --- | -
|                                                |                             | As of                  |          
|                                                |                             |                        |          
|                                                |                             | June 30,               |           |     | March 31, |   |           | December 31, |  
|                                                |                             | 2006                   |           |     | 2006      |   |           | 2005         |  
|                                                |                             |                        |           |     |           |   |           |              |  
|                                                |                             | (Dollars in thousands) |          
|Construction loans (book value)                 |                             | $                      | 1,860,622 |     |           | $ | 1,726,226 |              |   | $ | 1,656,963 |    
|Lot, land and other mortgage loans (book value) |                             |                        | 79,727    |     |           |   | 92,687    |              |   |   | 107,164   |    
|Total commitments                               |                             |                        | 3,214,385 |     |           |   | 3,034,222 |              |   |   | 2,949,430 |    
|Average loan commitment                         |                             |                        | 467       |     |           |   | 453       |              |   |   | 442       |    
|Non-performing loans                            |                             |                        | 0.67      | %   |           |   | 0.70      | %            |   |   | 0.51      | %  
|Annualized yield on construction loans          |                             |                        | 6.59      | %   |           |   | 6.14      | %            |   |   | 5.67      | %  
|Fixed-rate loans                                |                             |                        | 97        | %   |           |   | 96        | %            |   |   | 96        | %  
|Adjustable-rate loans                           |                             |                        | 3         | %   |           |   | 4         | %            |   |   | 4         | %  
|Additional Information:                         |                             |                        |           |     |           |   |           |              |   |   |           |    
|Average loan-to-value ratio(1)                  |                             |                        | 75        | %   |           |   | 75        | %            |   |   | 75        | %  
|Average FICO score                              |                             |                        | 714       |     |           |   | 713       |              |   |   | 713       |    
|Geographic distribution of top five states:     |                             |                        |           |     |           |   |           |              |   |   |           |    
|                                                | Southern California         |                        |           | 28  | %         |   |           | 29           | % |   |           | 29  | %
|                                                | Northern California         |                        |           | 16  | %         |   |           | 17           | % |   |           | 18  | %
|                                                | Florida                     |                        |           | 9   | %         |   |           | 9            | % |   |           | 8   | %
|                                                | Hawaii                      |                        |           | 4   | %         |   |           | 5            | % |   |           | 5   | %
|                                                | Washington                  |                        |           | 4   | %         |   |           | 3            | % |   |           | 3   | %
|                                                | Colorado                    |                        |           | 3   | %         |   |           | 3            | % |   |           | 3   | %
|                                                | Other                       |                        |           | 36  | %         |   |           | 34           | % |   |           | 34  | %
|                                                |                             |                        |           |     |           |   |           |              |  
|                                                | Total Consumer Construction |                        |           | 100 | %         |   |           | 100          | % |   |           | 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 the date indicated.

HOME EQUITY DIVISION






35



---



##### Table of Contents





|                                 |  |                        |           |   |           |   |           |              |  |   |           |  
|-------------------------------- |  | ---------------------- | --------- | - | --------- | - | --------- | ------------ |  | - | --------- | -
|                                 |  | June 30,               |           |   | March 31, |   |           | December 31, | 
|                                 |  | 2006                   |           |   | 2006      |   |           | 2005         | 
|                                 |  |                        |           |   |           |   |           |              | 
|                                 |  | (Dollars in thousands) |          
|Outstanding balance (book value) |  | $                      | 759,527   |   |           | $ | 666,848   |              |  | $ | 786,922   |  
|Total commitments(1)             |  |                        | 1,907,873 |   |           |   | 1,534,414 |              |  |   | 1,493,415 |  
|Average spread over prime        |  |                        | 1.26      | % |           |   | 1.23      | %            |  |   | 1.47      | %
|Average FICO score               |  |                        | 734       |   |           |   | 728       |              |  |   | 728       |  
|Average CLTV ratio(2)            |  |                        | 77        | % |           |   | 77        | %            |  |   | 78        | %

Additional Information as of June 30, 2006


|            |       |                        |         |              |            |   |     |                |  |  |          |      |   |             |     |     |  |  |      |      |  
|----------- | ----- | ---------------------- | ------- | ------------ | ---------- | - | --- | -------------- |  |  | -------- | ---- | - | ----------- | --- | --- |  |  | ---- | ---- | -
|            |       |                        |         | Average Loan |            |   |     |                |  |  | 30+ Days |     
|            |       | Outstanding            |         |              | Commitment |   |     | Average Spread |  |  | Average  |      |   | Delinquency |    
|CLTV        |       | Balance                |         |              | Balance    |   |     | Over Prime     |  |  | FICO     |      |   | Percentage  |    
|            |       |                        |         |              |            |   |     |                |  |  |          |      |   |             |    
|            |       | (Dollars in thousands) |        
|96% to 100% |       | $                      | 100,909 |              |            | $ | 120 |                |  |  | 2.11     | %    |   |             | 730 |     |  |  | 1.50 | %   
|91% to 95%  |       |                        | 86,927  |              |            |   | 104 |                |  |  | 2.11     | %    |   |             | 714 |     |  |  | 0.23 | %   
|81% to 90%  |       |                        | 293,590 |              |            |   | 91  |                |  |  | 1.59     | %    |   |             | 714 |     |  |  | 0.68 | %   
|71% to 80%  |       |                        | 152,513 |              |            |   | 158 |                |  |  | 0.46     | %    |   |             | 741 |     |  |  | 0.56 | %   
|70% or less |       |                        | 125,588 |              |            |   | 159 |                |  |  | 0.20     | %    |   |             | 751 |     |  |  | 0.50 | %   
|            |       |                        |         |              |            |   |     |                |  |  |          |      |   |             |    
|            | Total |                        | $       | 759,527      |            |   | $   | 125            |  |  |          | 1.26 | % |             |     | 734 |  |  |      | 0.68 | %
|            |       |                        |         |              |            |   |     |                |  |  |          |      |   |             |    






|    |                                                                                       
|--- | --------------------------------------------------------------------------------------
|(1) | On funded loans.                                                                      
|   
|(2) | The CLTV combines the loan to value on both the first mortgage
    loan and the HELOC.

BUILDER CONSTRUCTION




loan-to


36



---



##### Table of Contents





|                                                          |                            |                        |           |     |           |   |           |              |   |   |           |     |  
|--------------------------------------------------------- | -------------------------- | ---------------------- | --------- | --- | --------- | - | --------- | ------------ | - | - | --------- | --- | -
|                                                          |                            | As of                  |          
|                                                          |                            |                        |          
|                                                          |                            | June 30,               |           |     | March 31, |   |           | December 31, |  
|                                                          |                            | 2006                   |           |     | 2006      |   |           | 2005         |  
|                                                          |                            |                        |           |     |           |   |           |              |  
|                                                          |                            | (Dollars in thousands) |          
|Construction loans (book value)                           |                            | $                      | 1,013,279 |     |           | $ | 972,241   |              |   | $ | 838,772   |    
|Land and other mortgage loans (book value)                |                            |                        | 307,282   |     |           |   | 303,745   |              |   |   | 252,427   |    
|Total commitments(1)                                      |                            |                        | 2,368,149 |     |           |   | 2,263,630 |              |   |   | 2,181,698 |    
|Average loan commitments, excluding single-spec portfolio |                            |                        | 10,602    |     |           |   | 10,832    |              |   |   | 10,824    |    
|Average loan commitments, single-spec portfolio           |                            |                        | 404       |     |           |   | 396       |              |   |   | 387       |    
|Non-performing loans                                      |                            |                        | 0.23      | %   |           |   | 0.15      | %            |   |   | 0.04      | %  
|Annualized yield on construction loans                    |                            |                        | 10.21     | %   |           |   | 9.56      | %            |   |   | 10.01     | %  
|Additional Information:                                   |                            |                        |           |     |           |   |           |              |   |   |           |    
|Average loan-to-value ratio(2)                            |                            |                        | 71        | %   |           |   | 70        | %            |   |   | 71        | %  
|Geographic distribution of top five states:               |                            |                        |           |     |           |   |           |              |   |   |           |    
|                                                          | Southern California        |                        |           | 36  | %         |   |           | 38           | % |   |           | 40  | %
|                                                          | Northern California        |                        |           | 16  | %         |   |           | 16           | % |   |           | 17  | %
|                                                          | Florida                    |                        |           | 12  | %         |   |           | 10           | % |   |           | 9   | %
|                                                          | Illinois                   |                        |           | 10  | %         |   |           | 11           | % |   |           | 9   | %
|                                                          | Oregon                     |                        |           | 5   | %         |   |           | 4            | % |   |           | 3   | %
|                                                          | New York                   |                        |           | 4   | %         |   |           | 4            | % |   |           | 4   | %
|                                                          | Other                      |                        |           | 17  | %         |   |           | 17           | % |   |           | 18  | %
|                                                          |                            |                        |           |     |           |   |           |              |  
|                                                          | Total Builder Construction |                        |           | 100 | %         |   |           | 100          | % |   |           | 100 | %
|                                                          |                            |                        |           |     |           |   |           |              |  






|    |                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes 85% of commitments in construction and land/model loans
    and 15% of single-spec portfolio at June 30, 2006.                                                
|   
|(2) | The average
    loan-to-value ratio is
    based on the estimated appraised value of the completed project
    compared to the commitment amount at the date indicated.



WAREHOUSE LENDING DIVISION




|                                 |  |                        |         |  |           |   |         |              |  |   |         | 
|-------------------------------- |  | ---------------------- | ------- |  | --------- | - | ------- | ------------ |  | - | ------- | 
|                                 |  | As of                  |        
|                                 |  |                        |        
|                                 |  | June 30,               |         |  | March 31, |   |         | December 31, | 
|                                 |  | 2006                   |         |  | 2006      |   |         | 2005         | 
|                                 |  |                        |         |  |           |   |         |              | 
|                                 |  | (Dollars in thousands) |        
|Outstanding balance (book value) |  | $                      | 121,292 |  |           | $ | 78,331  |              |  | $ | 48,616  | 
|Total commitments                |  |                        | 468,000 |  |           |   | 342,000 |              |  |   | 201,000 | 

37



---



##### Table of Contents






NET INTEREST MARGIN




|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |            |            |  |   |         |         |  |  |      |      |  
|---------------------------------------------------- | ------------------------------------------ | ---------------------- | ---------- | ---------- | ------------- | - | ------- | -------------- |  | ------- | ------- | ---- | - | -------- | --------- | ---------- | ---- | ------- | ------ | ------- |  |  | -------- | ---- | - | ---- | ---------- | ---------- |  | - | ------- | ------- |  |  | ---- | ---- | -
|                                                     |                                            | Three Months Ended     |           
|                                                     |                                            |                        |           
|                                                     |                                            | June 30, 2006          |            |            | June 30, 2005 |   |         | March 31, 2006 | 
|                                                     |                                            |                        |            |            |               |   |         |                | 
|                                                     |                                            | Average                |            |            |               |   | Yield/  |                |  | Average |         |      |   |          | Yield/    |            |      | Average |        |         |  |  | Yield/   |     
|                                                     |                                            | Balance                |            |            | Interest      |   |         | Rate           |  |         | Balance |      |   | Interest |           |            | Rate |         |        | Balance |  |  | Interest |      |   | Rate |           
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|                                                     |                                            | (Dollars in thousands) |           
|Assets                                              
|Securities                                           |                                            | $                      | 4,596,115  |            |               | $ | 80,998  |                |  |         | 7.07    | %    |   | $        | 3,563,331 |            |      | $       | 47,701 |         |  |  | 5.37     | %    |   | $    | 4,130,581  |            |  | $ | 66,483  |         |  |  | 6.53 | %   
|Loans held for sale                                  |                                            |                        | 10,532,302 |            |               |   | 181,079 |                |  |         | 6.90    | %    |   |          | 6,844,841 |            |      |         | 87,756 |         |  |  | 5.14     | %    |   |      | 10,626,563 |            |  |   | 173,561 |         |  |  | 6.62 | %   
|Mortgage loans held for investment                   |                                            |                        | 6,016,878  |            |               |   | 86,092  |                |  |         | 5.74    | %    |   |          | 5,312,117 |            |      |         | 62,253 |         |  |  | 4.70     | %    |   |      | 5,945,154  |            |  |   | 82,179  |         |  |  | 5.61 | %   
|Builder construction and income property             |                                            |                        | 993,145    |            |               |   | 25,280  |                |  |         | 10.21   | %    |   |          | 727,731   |            |      |         | 15,535 |         |  |  | 8.56     | %    |   |      | 902,822    |            |  |   | 21,284  |         |  |  | 9.56 | %   
|Consumer construction                                |                                            |                        | 1,707,957  |            |               |   | 28,079  |                |  |         | 6.59    | %    |   |          | 1,398,654 |            |      |         | 19,372 |         |  |  | 5.56     | %    |   |      | 1,614,253  |            |  |   | 24,443  |         |  |  | 6.14 | %   
|Investment in Federal Home Loan Bank stock and other |                                            |                        | 834,180    |            |               |   | 10,683  |                |  |         | 5.14    | %    |   |          | 714,107   |            |      |         | 7,043  |         |  |  | 3.96     | %    |   |      | 814,800    |            |  |   | 9,896   |         |  |  | 4.93 | %   
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|                                                     | Total interest-earning assets              |                        |            | 24,680,577 |               |   |         | 412,211        |  |         |         | 6.70 | % |          |           | 18,560,781 |      |         |        | 239,660 |  |  |          | 5.18 | % |      |            | 24,034,173 |  |   |         | 377,846 |  |  |      | 6.38 | %
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|Other                                                |                                            |                        | 3,089,392  |            |               |   |         |                |  |         |         |      |   |          | 1,458,118 |            |      |         |        |         |  |  |          |      |   |      | 2,482,990  |            |  |   |         |         |  |  |      |     
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|                                                     | Total assets                               |                        | $          | 27,769,969 |               |   |         |                |  |         |         |      |   |          | $         | 20,018,899 |      |         |        |         |  |  |          |      |   |      | $          | 26,517,163 |  |   |         |         |  |  |      |      |  
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|                                                    
|Liabilities and shareholders equity                
|Interest-bearing deposits                            |                                            | $                      | 8,211,312  |            |               |   | 92,840  |                |  |         | 4.53    | %    |   | $        | 5,693,146 |            |      |         | 44,326 |         |  |  | 3.12     | %    |   | $    | 7,322,611  |            |  |   | 74,243  |         |  |  | 4.11 | %   
|Advances from Federal Home Loan Bank                 |                                            |                        | 9,775,167  |            |               |   | 110,468 |                |  |         | 4.53    | %    |   |          | 8,216,382 |            |      |         | 64,091 |         |  |  | 3.13     | %    |   |      | 9,975,973  |            |  |   | 103,609 |         |  |  | 4.21 | %   
|Other borrowings                                     |                                            |                        | 5,923,472  |            |               |   | 78,749  |                |  |         | 5.33    | %    |   |          | 3,594,252 |            |      |         | 33,924 |         |  |  | 3.79     | %    |   |      | 5,951,582  |            |  |   | 72,784  |         |  |  | 4.96 | %   
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|                                                     | Total interest-bearing liabilities         |                        |            | 23,909,951 |               |   |         | 282,057        |  |         |         | 4.73 | % |          |           | 17,503,780 |      |         |        | 142,341 |  |  |          | 3.26 | % |      |            | 23,250,166 |  |   |         | 250,636 |  |  |      | 4.37 | %
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|Other                                                |                                            |                        | 2,117,781  |            |               |   |         |                |  |         |         |      |   |          | 1,177,509 |            |      |         |        |         |  |  |          |      |   |      | 1,668,691  |            |  |   |         |         |  |  |      |     
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|                                                     | Total liabilities                          |                        |            | 26,027,732 |               |   |         |                |  |         |         |      |   |          |           | 18,681,289 |      |         |        |         |  |  |          |      |   |      |            | 24,918,857 |  |   |         |         |  |  |      |      |  
|                                                     | Shareholders equity                       |                        |            | 1,742,237  |               |   |         |                |  |         |         |      |   |          |           | 1,337,610  |      |         |        |         |  |  |          |      |   |      |            | 1,598,306  |  |   |         |         |  |  |      |      |  
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|                                                     | Total liabilities and shareholders equity |                        | $          | 27,769,969 |               |   |         |                |  |         |         |      |   |          | $         | 20,018,899 |      |         |        |         |  |  |          |      |   |      | $          | 26,517,163 |  |   |         |         |  |  |      |      |  
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|Net interest income                                  |                                            |                        |            |            |               | $ | 130,154 |                |  |         |         |      |   |          |           |            |      | $       | 97,319 |         |  |  |          |      |   |      |            |            |  | $ | 127,210 |         |  |  |      |     
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|Net interest spread                                  |                                            |                        |            |            |               |   |         |                |  |         | 1.97    | %    |   |          |           |            |      |         |        |         |  |  | 1.92     | %    |   |      |            |            |  |   |         |         |  |  | 2.01 | %   
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           
|Net interest margin                                  |                                            |                        |            |            |               |   |         |                |  |         | 2.12    | %    |   |          |           |            |      |         |        |         |  |  | 2.10     | %    |   |      |            |            |  |   |         |         |  |  | 2.15 | %   
|                                                     |                                            |                        |            |            |               |   |         |                |  |         |         |      |   |          |           |            |      |         |        |         |  |  |          |      |   |      |           

38



---



##### Table of Contents



|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |   |         |         |  |  |      |      |  
|---------------------------------------------------- | ------------------------------------------ | ---------------------- | ---------- | ---------- | ------------- | - | ------- | ------- |  | ------- | ------- | ---- | - | -------- | --------- | ---------- | ---- | - | ------- | ------- |  |  | ---- | ---- | -
|                                                     |                                            | Six Months Ended       |           
|                                                     |                                            |                        |           
|                                                     |                                            | June 30, 2006          |            |            | June 30, 2005 |  
|                                                     |                                            |                        |            |            |               |  
|                                                     |                                            | Average                |            |            |               |   | Yield   |         |  | Average |         |      |   |          | Yield     |           
|                                                     |                                            | Balance                |            |            | Interest      |   |         | Rate    |  |         | Balance |      |   | Interest |           |            | Rate |  
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|                                                     |                                            | (Dollars in thousands) |           
|Assets                                              
|Securities                                           |                                            | $                      | 4,363,348  |            |               | $ | 147,481 |         |  |         | 6.82    | %    |   | $        | 3,610,581 |            |      | $ | 99,025  |         |  |  | 5.53 | %   
|Loans held for sale                                  |                                            |                        | 10,579,433 |            |               |   | 354,640 |         |  |         | 6.76    | %    |   |          | 6,446,224 |            |      |   | 167,139 |         |  |  | 5.23 | %   
|Mortgage loans held for investment                   |                                            |                        | 5,981,016  |            |               |   | 168,271 |         |  |         | 5.67    | %    |   |          | 5,101,192 |            |      |   | 119,227 |         |  |  | 4.71 | %   
|Builder construction and income property             |                                            |                        | 947,984    |            |               |   | 46,564  |         |  |         | 9.91    | %    |   |          | 691,869   |            |      |   | 28,528  |         |  |  | 8.31 | %   
|Consumer construction                                |                                            |                        | 1,661,105  |            |               |   | 52,522  |         |  |         | 6.38    | %    |   |          | 1,384,987 |            |      |   | 38,657  |         |  |  | 5.63 | %   
|Investment in Federal Home Loan Bank stock and other |                                            |                        | 824,490    |            |               |   | 20,579  |         |  |         | 5.03    | %    |   |          | 565,070   |            |      |   | 11,436  |         |  |  | 4.08 | %   
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|                                                     | Total interest-earning assets              |                        |            | 24,357,376 |               |   |         | 790,057 |  |         |         | 6.54 | % |          |           | 17,799,923 |      |   |         | 464,012 |  |  |      | 5.26 | %
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|Other                                                |                                            |                        | 2,786,190  |            |               |   |         |         |  |         |         |      |   |          | 1,493,623 |            |      |   |         |         |  |  |      |     
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|                                                     | Total assets                               |                        | $          | 27,143,566 |               |   |         |         |  |         |         |      |   |          | $         | 19,293,546 |      |   |         |         |  |  |      |      |  
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|                                                    
|Liabilities and shareholders equity                
|Interest-bearing deposits                            |                                            | $                      | 7,766,962  |            |               |   | 167,083 |         |  |         | 4.34    | %    |   | $        | 5,475,782 |            |      |   | 80,218  |         |  |  | 2.95 | %   
|Advances from Federal Home Loan Bank                 |                                            |                        | 9,875,570  |            |               |   | 214,077 |         |  |         | 4.37    | %    |   |          | 7,758,242 |            |      |   | 116,804 |         |  |  | 3.04 | %   
|Other borrowings                                     |                                            |                        | 5,937,527  |            |               |   | 151,533 |         |  |         | 5.15    | %    |   |          | 3,614,636 |            |      |   | 64,497  |         |  |  | 3.60 | %   
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|                                                     | Total interest-bearing liabilities         |                        |            | 23,580,059 |               |   |         | 532,693 |  |         |         | 4.56 | % |          |           | 16,848,660 |      |   |         | 261,519 |  |  |      | 3.13 | %
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|Other                                                |                                            |                        | 1,893,236  |            |               |   |         |         |  |         |         |      |   |          | 1,141,155 |            |      |   |         |         |  |  |      |     
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|                                                     | Total liabilities                          |                        |            | 25,473,295 |               |   |         |         |  |         |         |      |   |          |           | 17,989,815 |      |   |         |         |  |  |      |      |  
|                                                     | Shareholders equity                       |                        |            | 1,670,271  |               |   |         |         |  |         |         |      |   |          |           | 1,303,731  |      |   |         |         |  |  |      |      |  
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|                                                     | Total liabilities and shareholders equity |                        | $          | 27,143,566 |               |   |         |         |  |         |         |      |   |          | $         | 19,293,546 |      |   |         |         |  |  |      |      |  
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|Net interest income                                  |                                            |                        |            |            |               | $ | 257,364 |         |  |         |         |      |   |          |           |            |      | $ | 202,493 |         |  |  |      |     
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|Net interest spread                                  |                                            |                        |            |            |               |   |         |         |  |         | 1.98    | %    |   |          |           |            |      |   |         |         |  |  | 2.13 | %   
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  
|Net interest margin                                  |                                            |                        |            |            |               |   |         |         |  |         | 2.13    | %    |   |          |           |            |      |   |         |         |  |  | 2.29 | %   
|                                                     |                                            |                        |            |            |               |   |         |         |  |         |         |      |   |          |           |            |      |  





|                         |               |                       |        |        |               |   |    |                |  |  |         |      |   |          |        |        |          |   |    |         |  |  |          |      |   |          |        |        |  |   |    |     |  |  |      |      |  
|------------------------ | ------------- | --------------------- | ------ | ------ | ------------- | - | -- | -------------- |  |  | ------- | ---- | - | -------- | ------ | ------ | -------- | - | -- | ------- |  |  | -------- | ---- | - | -------- | ------ | ------ |  | - | -- | --- |  |  | ---- | ---- | -
|                         |               | Three Months Ended    |       
|                         |               |                       |       
|                         |               | June 30, 2006         |        |        | June 30, 2005 |   |    | March 31, 2006 | 
|                         |               |                       |        |        |               |   |    |                | 
|                         |               | Average               |        |        | Net           |   |    | Net            |  |  | Average |      |   | Net      |        |        | Net      |   |    | Average |  |  | Net      |      |   | Net      |       
|                         |               | Earning               |        |        | Interest      |   |    | Interest       |  |  | Earning |      |   | Interest |        |        | Interest |   |    | Earning |  |  | Interest |      |   | Interest |       
|                         |               | Assets                |        |        | Income        |   |    | Margin         |  |  | Assets  |      |   | Income   |        |        | Margin   |   |    | Assets  |  |  | Income   |      |   | Margin   |       
|                         |               |                       |        |        |               |   |    |                |  |  |         |      |   |          |        |        |          |   |    |         |  |  |          |      |   |          |       
|                         |               | (Dollars in millions) |       
|By Segment:              |               |                       |        |        |               |   |    |                |  |  |         |      |   |          |        |        |          |   |    |         |  |  |          |      |   |          |        |        |  |   |    |     |  |  |      |     
|Thrift segment and other |               | $                     | 14,986 |        |               | $ | 75 |                |  |  | 2.01    | %    |   | $        | 12,315 |        |          | $ | 62 |         |  |  | 2.02     | %    |   | $        | 14,456 |        |  | $ | 73 |     |  |  | 2.06 | %   
|Mortgage banking segment |               |                       | 9,695  |        |               |   | 55 |                |  |  | 2.27    | %    |   |          | 6,246  |        |          |   | 35 |         |  |  | 2.26     | %    |   |          | 9,578  |        |  |   | 54 |     |  |  | 2.28 | %   
|                         |               |                       |        |        |               |   |    |                |  |  |         |      |   |          |        |        |          |   |    |         |  |  |          |      |   |          |       
|                         | Total Company |                       | $      | 24,681 |               |   | $  | 130            |  |  |         | 2.12 | % |          | $      | 18,561 |          |   | $  | 97      |  |  |          | 2.10 | % |          | $      | 24,034 |  |   | $  | 127 |  |  |      | 2.15 | %
|                         |               |                       |        |        |               |   |    |                |  |  |         |      |   |          |        |        |          |   |    |         |  |  |          |      |   |          |       

10-year


39



---



##### Table of Contents





|                         |               |                       |        |        |               |   |     |          |  |  |         |      |   |          |        |        |          |   |     |     |  |  |      |      |  
|------------------------ | ------------- | --------------------- | ------ | ------ | ------------- | - | --- | -------- |  |  | ------- | ---- | - | -------- | ------ | ------ | -------- | - | --- | --- |  |  | ---- | ---- | -
|                         |               | Six Months Ended      |       
|                         |               |                       |       
|                         |               | June 30, 2006         |        |        | June 30, 2005 |  
|                         |               |                       |        |        |               |  
|                         |               | Average               |        |        | Net           |   |     | Net      |  |  | Average |      |   | Net      |        |        | Net      |  
|                         |               | Earning               |        |        | Interest      |   |     | Interest |  |  | Earning |      |   | Interest |        |        | Interest |  
|                         |               | Assets                |        |        | Income        |   |     | Margin   |  |  | Assets  |      |   | Income   |        |        | Margin   |  
|                         |               |                       |        |        |               |   |     |          |  |  |         |      |   |          |        |        |          |  
|                         |               | (Dollars in millions) |       
|By Segment:              |               |                       |        |        |               |   |     |          |  |  |         |      |   |          |        |        |          |   |     |     |  |  |      |     
|Thrift segment and other |               | $                     | 14,720 |        |               | $ | 148 |          |  |  | 2.04    | %    |   | $        | 11,850 |        |          | $ | 128 |     |  |  | 2.18 | %   
|Mortgage banking segment |               |                       | 9,637  |        |               |   | 109 |          |  |  | 2.27    | %    |   |          | 5,950  |        |          |   | 74  |     |  |  | 2.51 | %   
|                         |               |                       |        |        |               |   |     |          |  |  |         |      |   |          |        |        |          |  
|                         | Total Company |                       | $      | 24,357 |               |   | $   | 257      |  |  |         | 2.13 | % |          | $      | 17,800 |          |   | $   | 202 |  |  |      | 2.29 | %
|                         |               |                       |        |        |               |   |     |          |  |  |         |      |   |          |        |        |          |  





| |   |                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------
| |  | changes in volume (changes in average outstanding balances
    multiplied by the prior periods rate),     
|
| |  | changes in the rate (changes in the average interest rate
    multiplied by the prior periods volume), and
|
| |  | changes in rate/volume (mix) (changes in rates times
    the changes in volume).                         

|                                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |        |        |        |   |         |         |        | 
|----------------------------------------- | ---------------------------------------------------- | -------------------------- | ------------------- | ------- | ------- | ------ | - | ------ | ------- | ------ | ------------ | ------ | ------ | ------ | - | ------- | ------- | ------ | 
|                                          |                                                      | Increase/(Decrease) Due to |                    
|                                          |                                                      |                            |                    
|                                          |                                                      | Volume                     |                     |         | Rate    |        |   | Mix    |         |        | Total Change |       
|                                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |       
|                                          |                                                      | (Dollars in thousands)     |                    
|Three Months Ended June 30, 2006 vs. 2005 |                                                      |                            |                     |         |         |        |   |        |         |        |              |        |        |        |   |        
|Interest income:                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |        |        |        |   |        
|                                          | Mortgage-backed securities                           |                            | $                   | 13,825  |         |        | $ | 15,096 |         |        | $            | 4,376  |        |        | $ | 33,297  |        
|                                          | Loans held for sale                                  |                            |                     | 47,276  |         |        |   | 29,925 |         |        |              | 16,122 |        |        |   | 93,323  |        
|                                          | Mortgage loans held for investment                   |                            |                     | 8,259   |         |        |   | 13,755 |         |        |              | 1,825  |        |        |   | 23,839  |        
|                                          | Builder construction and income property             |                            |                     | 5,666   |         |        |   | 2,989  |         |        |              | 1,090  |        |        |   | 9,745   |        
|                                          | Consumer construction                                |                            |                     | 4,284   |         |        |   | 3,622  |         |        |              | 801    |        |        |   | 8,707   |        
|                                          | Investment in Federal Home Loan Bank stock and other |                            |                     | 1,184   |         |        |   | 2,102  |         |        |              | 354    |        |        |   | 3,640   |        
|                                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |       
|                                          |                                                      | Total interest income      |                     |         | 80,494  |        |   |        | 67,489  |        |              |        | 24,568 |        |   |         | 172,551 |       
|Interest expense:                         |                                                      |                            |                     |         |         |        |   |        |         |        |              |        |        |        |   |        
|                                          | Interest-bearing deposits                            |                            |                     | 19,606  |         |        |   | 20,043 |         |        |              | 8,865  |        |        |   | 48,514  |        
|                                          | Advances from Federal Home Loan Bank                 |                            |                     | 12,159  |         |        |   | 28,761 |         |        |              | 5,457  |        |        |   | 46,377  |        
|                                          | Other borrowings                                     |                            |                     | 21,984  |         |        |   | 13,859 |         |        |              | 8,982  |        |        |   | 44,825  |        
|                                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |       
|                                          |                                                      | Total interest expense     |                     |         | 53,749  |        |   |        | 62,663  |        |              |        | 23,304 |        |   |         | 139,716 |       
|                                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |       
|                                          |                                                      |                            | Net interest income |         | $       | 26,745 |   |        | $       | 4,826  |              |        | $      | 1,264  |   |         | $       | 32,835 | 
|                                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |       
|Six Months Ended June 30, 2006 vs. 2005   |                                                      |                            |                     |         |         |        |   |        |         |        |              |        |        |        |   |        
|Interest income:                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |        |        |        |   |        
|                                          | Mortgage-backed securities                           |                            | $                   | 20,646  |         |        | $ | 23,013 |         |        | $            | 4,797  |        |        | $ | 48,456  |        
|                                          | Loans held for sale                                  |                            |                     | 107,167 |         |        |   | 48,949 |         |        |              | 31,385 |        |        |   | 187,501 |        
|                                          | Mortgage loans held for investment                   |                            |                     | 20,564  |         |        |   | 24,291 |         |        |              | 4,189  |        |        |   | 49,044  |        
|                                          | Builder construction and income property             |                            |                     | 10,560  |         |        |   | 5,456  |         |        |              | 2,020  |        |        |   | 18,036  |        
|                                          | Consumer construction                                |                            |                     | 7,707   |         |        |   | 5,135  |         |        |              | 1,023  |        |        |   | 13,865  |        
|                                          | Investment in Federal Home Loan Bank stock and other |                            |                     | 5,250   |         |        |   | 2,668  |         |        |              | 1,225  |        |        |   | 9,143   |        
|                                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |       
|                                          |                                                      | Total interest income      |                     |         | 171,894 |        |   |        | 109,512 |        |              |        | 44,639 |        |   |         | 326,045 |       
|Interest expense:                         |                                                      |                            |                     |         |         |        |   |        |         |        |              |        |        |        |   |        
|                                          | Interest-bearing deposits                            |                            |                     | 33,565  |         |        |   | 37,577 |         |        |              | 15,723 |        |        |   | 86,865  |        
|                                          | Advances from Federal Home Loan Bank                 |                            |                     | 31,877  |         |        |   | 51,375 |         |        |              | 14,021 |        |        |   | 97,273  |        
|                                          | Other borrowings                                     |                            |                     | 41,448  |         |        |   | 27,753 |         |        |              | 17,835 |        |        |   | 87,036  |        
|                                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |       
|                                          |                                                      | Total interest expense     |                     |         | 106,890 |        |   |        | 116,705 |        |              |        | 47,579 |        |   |         | 271,174 |       
|                                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |       
|                                          |                                                      |                            | Net interest income |         | $       | 65,004 |   |        | $       | (7,193 | )            |        | $      | (2,940 | ) |         | $       | 54,871 | 
|                                          |                                                      |                            |                     |         |         |        |   |        |         |        |              |       

40



---



##### Table of Contents






INTEREST RATE SENSITIVITY






|                                     |                   |                        |           |                     |                   |   |           |            |                     |   |            |            |  |         |           |            |         |   |           |            |  |   |           |            | 
|------------------------------------ | ----------------- | ---------------------- | --------- | ------------------- | ----------------- | - | --------- | ---------- | ------------------- | - | ---------- | ---------- |  | ------- | --------- | ---------- | ------- | - | --------- | ---------- |  | - | --------- | ---------- | 
|                                     |                   | June 30, 2006          |           |                     | December 31, 2005 |  
|                                     |                   |                        |           |                     |                   |  
|                                     |                   |                        |           | Effect of Change in |                   |   |           |            | Effect of Change in |  
|                                     |                   |                        |           | Interest Rates      |                   |   |           |            | 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            |                   | $                      | 164,917   |                     |                   | $ | 164,917   |            |                     | $ | 164,917    |            |  | $       | 442,059   |            |         | $ | 442,059   |            |  | $ | 442,059   |           
|Trading securities                   |                   |                        | 603,338   |                     |                   |   | 633,645   |            |                     |   | 572,810    |            |  |         | 342,545   |            |         |   | 348,982   |            |  |   | 323,577   |           
|Available for sale securities        |                   |                        | 3,322,798 |                     |                   |   | 3,400,960 |            |                     |   | 3,228,365  |            |  |         | 2,680,955 |            |         |   | 2,727,144 |            |  |   | 2,613,690 |           
|Loans held for sale                  |                   |                        | 6,499,288 |                     |                   |   | 6,575,264 |            |                     |   | 6,394,915  |            |  |         | 6,057,556 |            |         |   | 6,111,131 |            |  |   | 5,972,194 |           
|Loans held for investment            |                   |                        | 8,703,193 |                     |                   |   | 8,776,417 |            |                     |   | 8,606,936  |            |  |         | 8,213,754 |            |         |   | 8,279,424 |            |  |   | 8,119,628 |           
|MSRs                                 |                   |                        | 1,598,821 |                     |                   |   | 1,352,937 |            |                     |   | 1,754,996  |            |  |         | 1,114,630 |            |         |   | 930,932   |            |  |   | 1,239,189 |           
|Other assets                         |                   |                        | 1,616,635 |                     |                   |   | 1,724,734 |            |                     |   | 1,630,842  |            |  |         | 1,372,896 |            |         |   | 1,436,900 |            |  |   | 1,391,549 |           
|                                     |                   |                        |           |                     |                   |   |           |            |                     |   |            |            |  |         |           |            |         |  
|                                     | Total assets      |                        | $         | 22,508,990          |                   |   | $         | 22,628,874 |                     |   | $          | 22,353,781 |  |         | $         | 20,224,395 |         |   | $         | 20,276,572 |  |   | $         | 20,101,886 | 
|                                     |                   |                        |           |                     |                   |   |           |            |                     |   |            |            |  |         |           |            |         |  
|Deposits                             |                   | $                      | 9,392,297 |                     |                   | $ | 9,436,316 |            |                     | $ | 9,349,236  |            |  | $       | 7,629,227 |            |         | $ | 7,665,078 |            |  | $ | 7,594,015 |           
|Advances from Federal Home Loan Bank |                   |                        | 7,061,128 |                     |                   |   | 7,086,323 |            |                     |   | 6,987,895  |            |  |         | 6,966,946 |            |         |   | 6,993,439 |            |  |   | 6,940,884 |           
|Other borrowings                     |                   |                        | 2,807,709 |                     |                   |   | 2,808,951 |            |                     |   | 2,806,469  |            |  |         | 2,990,570 |            |         |   | 2,992,630 |            |  |   | 2,988,513 |           
|Other liabilities                    |                   |                        | 591,036   |                     |                   |   | 591,514   |            |                     |   | 590,559    |            |  |         | 433,995   |            |         |   | 434,287   |            |  |   | 433,705   |           
|                                     |                   |                        |           |                     |                   |   |           |            |                     |   |            |            |  |         |           |            |         |  
|                                     | Total liabilities |                        |           | 19,852,170          |                   |   |           | 19,923,104 |                     |   |            | 19,734,159 |  |         |           | 18,020,738 |         |   |           | 18,085,434 |  |   |           | 17,957,117 | 
|Shareholders equity (NPV)           |                   | $                      | 2,656,820 |                     |                   | $ | 2,705,770 |            |                     | $ | 2,619,622  |            |  | $       | 2,203,657 |            |         | $ | 2,191,138 |            |  | $ | 2,144,769 |           
|                                     |                   |                        |           |                     |                   |   |           |            |                     |   |            |            |  |         |           |            |         |  
|% Change from base case              |                   |                        |           |                     |                   |   | 1.84      | %          |                     |   | (1.40      | )%         |  |         |           |            |         |   | (0.57     | )%         |  |   | (2.67     | )%        
|                                     |                   |                        |           |                     |                   |   |           |            |                     |   |            |            |  |         |           |            |         |  







41



---



##### Table of Contents











42



---



##### Table of Contents






CREDIT RISK AND RESERVES




|                                                            |                                                |                                      |           |           |            |                        |        |                |        |               |            |      |            |        |        |          |             |        |          |             |         |  |   |     |       |  |   |       |       | 
|----------------------------------------------------------- | ---------------------------------------------- | ------------------------------------ | --------- | --------- | ---------- | ---------------------- | ------ | -------------- | ------ | ------------- | ---------- | ---- | ---------- | ------ | ------ | -------- | ----------- | ------ | -------- | ----------- | ------- |  | - | --- | ----- |  | - | ----- | ----- | 
|                                                            |                                                |                                      |           |           |            |                        |        | Total Reserves |        |               |            |      | QTD Net    |        |        | YTD Net  |            
|                                                            |                                                |                                      |           | Allowance |            |                        |        |                | as a   |               |            | Non- |            |        | Charge |          |             | Charge |         
|                                                            |                                                |                                      |           | For Loan  |            |                        | Credit |                |        | Percentage of |            |      | Performing |        |        | Offs/Net |             |        | Offs/Net |            
|Type of Loan                                                |                                                | Book Value                           |           |           | Losses     |                        |        | Discounts(2)   |        |               | Book Value |      |            | Assets |        |          | REO (Gains) |        |          | REO (Gains) |        
|                                                            |                                                |                                      |           |           |            |                        |        |                |        |               |            |      |            |        |        |          |             |        |          |             |        
|                                                            |                                                |                                      |           |           |            | (Dollars in thousands) |        |                |        |               |           
|Held for investment portfolio                               |                                                |                                      |           |           |            |                        |        |                |        |               |            |      |            |        |        |          |             |        |          |             |         |  |   |     |       |  |   |      
|                                                            | SFR mortgage loans and HELOCs                  |                                      | $         | 5,417,429 |            |                        | $      | 22,438         |        |               | $          |     |            |        |        | 0.41     | %           |        | $        | 44,310      |         |  | $ | 158 |       |  | $ | 578   |      
|                                                            | Land and other mortgage loans                  |                                      |           | 320,053   |            |                        |        | 4,512          |        |               |            |     |            |        |        | 1.41     | %           |        |          | 3,742       |         |  |   |    |       |  |   |      |      
|                                                            | Builder construction and income property loans |                                      |           | 1,013,279 |            |                        |        | 14,316         |        |               |            |     |            |        |        | 1.41     | %           |        |          | 3,003       |         |  |   | 39  |       |  |   | 195   |      
|                                                            | Consumer construction loans                    |                                      |           | 1,860,622 |            |                        |        | 10,422         |        |               |            |     |            |        |        | 0.56     | %           |        |          | 8,817       |         |  |   | 816 |       |  |   | 1,044 |      
|                                                            | Revolving warehouse lines of credit            |                                      |           | 121,292   |            |                        |        | 188            |        |               |            |     |            |        |        | 0.15     | %           |        |          |            |         |  |   |    |       |  |   |      |      
|                                                            |                                                |                                      |           |           |            |                        |        |                |        |               |            |      |            |        |        |          |             |        |          |             |        
|                                                            |                                                | Total core held for investment loans |           |           | 8,732,675  |                        |        |                | 51,876 |               |            |      |           |        |        |          | 0.59        | %      |          |             | 59,872  |  |   |     | 1,013 |  |   |       | 1,817 | 
|                                                            | Discontinued product lines(1)                  |                                      |           | 40,152    |            |                        |        | 6,036          |        |               |            |     |            |        |        | 15.03    | %           |        |          | 4,041       |         |  |   | 626 |       |  |   | 1,491 |      
|                                                            |                                                |                                      |           |           |            |                        |        |                |        |               |            |      |            |        |        |          |             |        |          |             |        
|                                                            |                                                | Total held for investment portfolio  |           |           | 8,772,827  |                        |        | $              | 57,912 |               |            |      |           |        |        |          | 0.66        | %      |          |             | 63,913  |  |   |     | 1,639 |  |   |       | 3,308 | 
|                                                            |                                                |                                      |           |           |            |                        |        |                |        |               |            |      |            |        |        |          |             |        |          |             |        
|Held for sale portfolio                                     |                                                |                                      | 6,510,614 |           |            |                        |        |                |        | $             | 17,474     |      |            |        | 0.27   | %        |             |        | 40,728   |             |         |  |  |     |       |  |  |      
|                                                            |                                                |                                      |           |           |            |                        |        |                |        |               |            |      |            |        |        |          |             |        |          |             |        
|                                                            |                                                | Total loans                          |           | $         | 15,283,441 |                        |        |                |        |               |            |      |            |        |        |          |             |        |          |             | 104,641 |  |   | $   | 1,639 |  |   | $     | 3,308 | 
|                                                            |                                                |                                      |           |           |            |                        |        |                |        |               |            |      |            |        |        |          |             |        |          |             |        
|Foreclosed assets                                           |                                                |                                      |           |           |            |                        |        |                |        |               |            |      |            |        |        |          |             |        |          |             |         |  |   |     |       |  |   |      
|Core portfolios                                             |                                                |                                      | 11,376    |           |            | $                      | 1,226  |                |        | $             | 1,582      |     
|Discontinued product lines                                  |                                                |                                      | 623       |           |            |                        | 6      |                |        |               | (3         | )   
|                                                            |                                                |                                      |           |           |            |                        |        |                |       
|Total foreclosed assets                                     |                                                |                                      | 11,999    |           |            | $                      | 1,232  |                |        | $             | 1,579      |     
|                                                            |                                                |                                      |           |           |            |                        |        |                |       
|Total non-performing assets                                 |                                                | $                                    | 116,640   |           |            |                        |        |                |        |               |            |     
|                                                            |                                                |                                      |           |           |            |                        |        |                |       
|Total non-performing assets as a percentage of total assets |                                                |                                      | 0.49      | %         |            |                        |        |                |        |               |            |     
|                                                            |                                                |                                      |           |           |            |                        |        |                |       






|    |                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------
|(1) | Discontinued product lines include manufactured home loans and
    home improvement, which were discontinued during 1999.
|   
|(2) | The amount represents the lower of cost or market adjustments on
    non-performing loans in the held for sale portfolio.

43



---



##### Table of Contents





|                                            |                 |                                                                           |                                                |   |          |         |        |              |        |        |       |   |        |        | 
|------------------------------------------- | --------------- | ------------------------------------------------------------------------- | ---------------------------------------------- | - | -------- | ------- | ------ | ------------ | ------ | ------ | ----- | - | ------ | ------ | 
|                                            |                 | June 30,                                                                  |                                                |   | June 30, |         |        | December 31, |       
|                                            |                 | 2006                                                                      |                                                |   | 2005     |         |        | 2005         |       
|                                            |                 |                                                                           |                                                |   |          |         |        |              |       
|                                            |                 | (Dollars in thousands)                                                    |                                               
|Loans held for investment:                  |                 |                                                                           |                                                |   |          |         |        |              |        |        |       |  
|                                            | Portfolio loans |                                                                           |                                                |   |          |         |        |              |        |        |       |   |       
|                                            |                 | SFR mortgage loans                                                        |                                                | $ | 44,310   |         |        | $            | 22,890 |        |       | $ | 28,335 |       
|                                            |                 | Land and other mortgage loans                                             |                                                |   | 3,742    |         |        |              | 74     |        |       |   | 197    |       
|                                            |                 | Builder construction and income property loans                            |                                                |   | 3,003    |         |        |              | 6,552  |        |       |   | 430    |       
|                                            |                 | Consumer construction loans                                               |                                                |   | 8,817    |         |        |              | 8,506  |        |       |   | 8,819  |       
|                                            |                 |                                                                           |                                                |   |          |         |        |              |       
|                                            |                 |                                                                           | Total portfolio non-performing loans           |   |          | 59,872  |        |              |        | 38,022 |       |   |        | 37,781 | 
|                                            |                 | Discontinued product lines                                                |                                                |   | 4,041    |         |        |              | 4,880  |        |       |   | 5,623  |       
|                                            |                 |                                                                           |                                                |   |          |         |        |              |       
|                                            |                 |                                                                           | Total non-performing loans held for investment |   | $        | 63,913  |        |              | $      | 42,902 |       |   | $      | 43,404 | 
|                                            |                 |                                                                           |                                                |   |          |         |        |              |       
|                                            |                 | Allowance for loan losses to non-performing loans held for
    investment |                                                |   | 91       | %       |        |              | 126    | %      |       |   | 127    | %     
|                                            |                 |                                                                           |                                                |   |          |         |        |              |       
|                                            |                 | Non-performing loans held for sale                                        |                                                |   | 40,728   |         |        |              | 19,865 |        |       |   | 20,805 |       
|                                            |                 |                                                                           |                                                |   |          |         |        |              |       
|                                            |                 |                                                                           | Total non-performing loans                     |   |          | 104,641 |        |              |        | 62,767 |       |   |        | 64,209 | 
|Foreclosed assets                           |                 |                                                                           | 11,999                                         |   |          |         | 11,319 |              |        |        | 8,817 |  
|                                            |                 |                                                                           |                                                |   |          |         |        |              |       
|                                            |                 |                                                                           | Total non-performing assets                    |   | $        | 116,640 |        |              | $      | 74,086 |       |   | $      | 73,026 | 
|                                            |                 |                                                                           |                                                |   |          |         |        |              |       
|Total non-performing assets to total assets |                 |                                                                           | 0.49                                           | % |          |         | 0.38   | %            |        |        | 0.34  | %
|                                            |                 |                                                                           |                                                |   |          |         |        |              |       



|                                                            |                               |                        |        |      |                  |   |        |          |   |   |          |        |   |   |        |        |  
|----------------------------------------------------------- | ----------------------------- | ---------------------- | ------ | ---- | ---------------- | - | ------ | -------- | - | - | -------- | ------ | - | - | ------ | ------ | -
|                                                            |                               | Three Months Ended     |        |      | Six Months Ended |  
|                                                            |                               |                        |        |      |                  |  
|                                                            |                               | June 30,               |        |      | June 30,         |   |        | June 30, |   |   | June 30, |       
|                                                            |                               | 2006                   |        |      | 2005             |   |        | 2006     |   |   | 2005     |       
|                                                            |                               |                        |        |      |                  |   |        |          |   |   |          |       
|                                                            |                               | (Dollars in thousands) |       
|Balance, beginning of period                                |                               | $                      | 57,321 |      |                  | $ | 53,493 |          |   | $ | 55,168   |        |   | $ | 52,891 |       
|Provision for loan losses                                   |                               |                        | 2,230  |      |                  |   | 2,407  |          |   |   | 6,052    |        |   |   | 4,897  |       
|Charge-offs net of recoveries:                              |                               |                        |        |      |                  |   |        |          |   |   |          |        |   |   |        |       
|                                                            | SFR mortgage loans            |                        |        | (158 | )                |   |        | (254     | ) |   |          | (578   | ) |   |        | (1,075 | )
|                                                            | Land and other mortgage loans |                        |        |     |                  |   |        | (41      | ) |   |          |       |   |   |        | (41    | )
|                                                            | Builder construction          |                        |        | (39  | )                |   |        | (72      | ) |   |          | (195   | ) |   |        | (72    | )
|                                                            | Consumer construction         |                        |        | (816 | )                |   |        | (375     | ) |   |          | (1,044 | ) |   |        | (870   | )
|                                                            | Discontinued product lines    |                        |        | (626 | )                |   |        | (1,089   | ) |   |          | (1,491 | ) |   |        | (1,661 | )
|                                                            |                               |                        |        |      |                  |   |        |          |   |   |          |       
|Charge-offs net of recoveries                               |                               |                        | (1,639 | )    |                  |   | (1,831 | )        |   |   | (3,308   | )      |   |   | (3,719 | )     
|                                                            |                               |                        |        |      |                  |   |        |          |   |   |          |       
|Balance, end of period                                      |                               | $                      | 57,912 |      |                  | $ | 54,069 |          |   | $ | 57,912   |        |   | $ | 54,069 |       
|                                                            |                               |                        |        |      |                  |   |        |          |   |   |          |       
|Annualized charge-offs to average loans held for investment |                               |                        | 0.08   | %    |                  |   | 0.10   | %        |   |   | 0.08     | %      |   |   | 0.10   | %     
|Charge-offs to quarterly production                         |                               |                        | 0.01   | %    |                  |   | 0.01   | %        |   |   | 0.01     | %      |   |   | 0.01   | %     



44



---



##### Table of Contents













SECONDARY MARKET RESERVE




45



---



##### Table of Contents





|                      |       |                       |       |       |            |   |            |             |  |  |      |      |  
|--------------------- | ----- | --------------------- | ----- | ----- | ---------- | - | ---------- | ----------- |  |  | ---- | ---- | -
|                      |       | Amount                |       |       |            |   | Percentage |            
|                      |       | Repurchased           |       |       | Total Sold |   |            | Repurchased | 
|                      |       |                       |       |       |            |   |            |             | 
|                      |       | (Dollars in millions) |      
|Loans sold:           |       |                       |       |       |            |   |            |             |  |  |      |     
|GSEs and whole loans  |       | $                     | 373.5 |       |            | $ | 97,995     |             |  |  | 0.38 | %   
|Securitization trusts |       |                       | 22.8  |       |            |   | 119,484    |             |  |  | 0.02 | %   
|                      |       |                       |       |       |            |   |            |             | 
|                      | Total |                       | $     | 396.3 |            |   | $          | 217,479     |  |  |      | 0.18 | %
|                      |       |                       |       |       |            |   |            |             | 





|                              |  |                        |        |   |        |   |        |  
|----------------------------- |  | ---------------------- | ------ | - | ------ | - | ------ | -
|                              |  | Three                  |        |   | Six    |  
|                              |  | Months                 |        |   | Months |  
|                              |  |                        |        |   |        |  
|                              |  | (Dollars in thousands) |       
|Balance, beginning of period  |  | $                      | 30,413 |   |        | $ | 27,638 |  
|Additions/provisions          |  |                        | 10,246 |   |        |   | 14,773 |  
|Actual losses/mark-to-market  |  |                        | (5,258 | ) |        |   | (7,784 | )
|Recoveries on previous claims |  |                        | 1      |   |        |   | 775    |  
|                              |  |                        |        |   |        |  
|Balance, June 30, 2006        |  | $                      | 35,402 |   |        | $ | 35,402 |  
|                              |  |                        |        |   |        |  



46



---



##### Table of Contents






EXPENSES


GENERAL




|                                         |                          |                        |         |         |                  |   |         |           |  |   |          |         |  |          |          |         |  |   |          |         | 
|---------------------------------------- | ------------------------ | ---------------------- | ------- | ------- | ---------------- | - | ------- | --------- |  | - | -------- | ------- |  | -------- | -------- | ------- |  | - | -------- | ------- | 
|                                         |                          | Three Months Ended     |         |         | Six Months Ended |  
|                                         |                          |                        |         |         |                  |  
|                                         |                          | June 30,               |         |         | June 30,         |   |         | March 31, |  |   | June 30, |         |  | June 30, |         
|                                         |                          | 2006                   |         |         | 2005             |   |         | 2006      |  |   | 2006     |         |  | 2005     |         
|                                         |                          |                        |         |         |                  |   |         |           |  |   |          |         |  |          |         
|                                         |                          | (Dollars in thousands) |        
|Salaries and related                     |                          | $                      | 179,280 |         |                  | $ | 141,178 |           |  | $ | 152,558  |         |  | $        | 331,838  |         |  | $ | 265,445  |        
|Premises and equipment                   |                          |                        | 20,113  |         |                  |   | 13,542  |           |  |   | 16,972   |         |  |          | 37,085   |         |  |   | 26,122   |        
|Loan purchase and servicing costs        |                          |                        | 13,149  |         |                  |   | 10,601  |           |  |   | 12,906   |         |  |          | 26,055   |         |  |   | 20,247   |        
|Professional services                    |                          |                        | 8,158   |         |                  |   | 6,202   |           |  |   | 8,108    |         |  |          | 16,266   |         |  |   | 13,158   |        
|Data processing                          |                          |                        | 15,758  |         |                  |   | 11,404  |           |  |   | 14,275   |         |  |          | 30,033   |         |  |   | 21,349   |        
|Office and related                       |                          |                        | 17,602  |         |                  |   | 12,697  |           |  |   | 15,095   |         |  |          | 32,697   |         |  |   | 22,856   |        
|Advertising and promotion                |                          |                        | 12,409  |         |                  |   | 10,608  |           |  |   | 11,217   |         |  |          | 23,626   |         |  |   | 21,758   |        
|Operations and sale of foreclosed assets |                          |                        | 385     |         |                  |   | (889    | )         |  |   | 542      |         |  |          | 927      |         |  |   | 712      |        
|Litigation settlement                    |                          |                        |        |         |                  |   | 3,000   |           |  |   |         |         |  |          |         |         |  |   | 9,000    |        
|Other                                    |                          |                        | 3,005   |         |                  |   | 2,488   |           |  |   | 3,319    |         |  |          | 6,324    |         |  |   | 5,049    |        
|Deferral of expenses under FAS 91        |                          |                        | (66,175 | )       |                  |   | (57,164 | )         |  |   | (63,226  | )       |  |          | (129,401 | )       |  |   | (104,335 | )      
|                                         |                          |                        |         |         |                  |   |         |           |  |   |          |         |  |          |         
|                                         | Total operating expenses |                        |         | 203,684 |                  |   |         | 153,667   |  |   |          | 171,766 |  |          |          | 375,450 |  |   |          | 301,361 | 
|Amortization of other intangible assets  |                          |                        | 130     |         |                  |   | 150     |           |  |   | 134      |         |  |          | 264      |         |  |   | 307      |        
|                                         |                          |                        |         |         |                  |   |         |           |  |   |          |         |  |          |         
|                                         | Total expenses           |                        | $       | 203,814 |                  |   | $       | 153,817   |  |   | $        | 171,900 |  |          | $        | 375,714 |  |   | $        | 301,668 | 
|                                         |                          |                        |         |         |                  |   |         |           |  |   |          |         |  |          |         









47



---



##### Table of Contents






SHARE REPURCHASE ACTIVITIES




|                |       |              |     |     |                |                 |                  |                     |              |                         |                      |   |  |   |      |  | 
|--------------- | ----- | ------------ | --- | --- | -------------- | --------------- | ---------------- | ------------------- | ------------ | ----------------------- | -------------------- | - |  | - | ---- |  | 
|                |       |              |     |     |                |                 |                  | Maximum Approximate |             
|                |       |              |     |     |                | Total Number of |                  |                     | Dollar Value |                        
|                |       | Total        |     |     |                |                 | Shares Purchased |                     |              | (in millions) of Shares |                     
|                |       | Number of    |     |     | Weighted       |                 |                  | as Part of Publicly |              |                         | that May Yet Be      |  
|                |       | Shares       |     |     | Average Price  |                 |                  | Announced Plans or  |              |                         | Purchased Under the  |  
|Calendar Month: |       | Purchased(1) |     |     | Paid Per Share |                 |                  | Programs            |              |                         | Plans or Programs(2) |  
|                |       |              |     |     |                |                 |                  |                     |              |                         |                      |  
|April 2006      |       |              | 418 |     |                | $               | 41.31            |                     |              |                         |                     |   |  | $ | 63.6 | 
|May 2006        |       |              | 279 |     |                |                 | 38.77            |                     |              |                         |                     |   |  |   | 63.6 | 
|June 2006       |       |              | 15  |     |                |                 | 47.33            |                     |              |                         |                     |   |  | $ | 63.6 | 
|                |       |              |     |     |                |                 |                  |                     |              |                         |                      |  
|                | Total |              |     | 712 |                |                 | $                | 40.44               |              |                         |                      |  |  |   |      |  | 
|                |       |              |     |     |                |                 |                  |                     |              |                         |                      |  






|    |                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | All shares purchased during the periods indicated were purchased
    pursuant to the Companys stock incentive plans at the
    then-current market prices.                                                                                                            
|   
|(2) | Our Board of Directors approved a $100 million share
    repurchase program in June of 1999, which was subsequently
    increased by the Board in $100 million increments to a
    total of $500 million in April, August and October 2000,
    May 2001 and July 2002.




FUTURE OUTLOOK








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




48



---



##### Table of Contents





PRINCIPAL SOURCES OF CASH


Loan Sales and Securitizations






Advances from Federal Home Loan Bank






Deposits/Retail Bank




www.indymacbank.com, 24-hours




49



---



##### Table of Contents





|                              |                     |                        |           |           |               |  |     |                   |   |   |           |           |  |        |     |     |      |   |           |           |  |  |     |     |  
|----------------------------- | ------------------- | ---------------------- | --------- | --------- | ------------- |  | --- | ----------------- | - | - | --------- | --------- |  | ------ | --- | --- | ---- | - | --------- | --------- |  |  | --- | --- | -
|                              |                     | June 30, 2006          |           |           | June 30, 2005 |  |     | December 31, 2005 |  
|                              |                     |                        |           |           |               |  |     |                   |  
|Deposit Category              |                     | Amount                 |           |           | Rate          |  |     | Amount            |   |   | Rate      |           |  | Amount |     |     | Rate |  
|                              |                     |                        |           |           |               |  |     |                   |   |   |           |           |  |        |     |     |      |  
|                              |                     | (Dollars in thousands) |          
|Non-interest-bearing checking |                     | $                      | 68,988    |           |               |  | 0.0 | %                 |   | $ | 63,848    |           |  |        | 0.0 | %   |      | $ | 63,308    |           |  |  | 0.0 | %  
|Interest-bearing checking     |                     |                        | 53,113    |           |               |  | 1.2 | %                 |   |   | 51,566    |           |  |        | 1.2 | %   |      |   | 55,479    |           |  |  | 1.3 | %  
|Savings                       |                     |                        | 1,606,540 |           |               |  | 4.5 | %                 |   |   | 1,276,499 |           |  |        | 2.9 | %   |      |   | 1,194,963 |           |  |  | 3.6 | %  
|Custodial accounts            |                     |                        | 617,773   |           |               |  | 0.0 | %                 |   |   | 636,469   |           |  |        | 0.0 | %   |      |   | 493,936   |           |  |  | 0.0 | %  
|                              |                     |                        |           |           |               |  |     |                   |   |   |           |           |  |        |     |     |      |  
|                              | Total core deposits |                        |           | 2,346,414 |               |  |     | 3.1               | % |   |           | 2,028,382 |  |        |     | 1.8 | %    |   |           | 1,807,686 |  |  |     | 2.4 | %
|Certificates of deposit       |                     |                        | 7,005,457 |           |               |  | 4.7 | %                 |   |   | 4,556,150 |           |  |        | 3.3 | %   |      |   | 5,864,238 |           |  |  | 4.0 | %  
|                              |                     |                        |           |           |               |  |     |                   |   |   |           |           |  |        |     |     |      |  
|                              | Total deposits      |                        | $         | 9,351,871 |               |  |     | 4.3               | % |   | $         | 6,584,532 |  |        |     | 2.8 | %    |   | $         | 7,671,924 |  |  |     | 3.6 | %
|                              |                     |                        |           |           |               |  |     |                   |   |   |           |           |  |        |     |     |      |  

|                |                |                        |           |           |          |  |    |        |       |   |           |           |  |        |    |     |          |   |           |           |  |  |    |     |  
|--------------- | -------------- | ---------------------- | --------- | --------- | -------- |  | -- | ------ | ----- | - | --------- | --------- |  | ------ | -- | --- | -------- | - | --------- | --------- |  |  | -- | --- | -
|                |                |                        |           | % of      |          |  |    |        | % of  |   |           |           |  | % of   |   
|                |                |                        |           | Total     |          |  |    |        | Total |   |           |           |  | Total  |   
|Deposit Channel |                | Amount                 |           |           | Deposits |  |    | Amount |       |   | Deposits  |           |  | Amount |    |     | Deposits |  
|                |                |                        |           |           |          |  |    |        |       |   |           |           |  |        |    |     |          |  
|                |                | (Dollars in thousands) |          
|Branch          |                | $                      | 4,206,638 |           |          |  | 45 | %      |       | $ | 2,868,298 |           |  |        | 44 | %   |          | $ | 3,322,752 |           |  |  | 43 | %  
|Internet        |                |                        | 1,004,474 |           |          |  | 11 | %      |       |   | 664,079   |           |  |        | 10 | %   |          |   | 798,518   |           |  |  | 10 | %  
|Telebanking     |                |                        | 1,171,650 |           |          |  | 13 | %      |       |   | 760,710   |           |  |        | 12 | %   |          |   | 934,572   |           |  |  | 12 | %  
|Money desk      |                |                        | 2,351,336 |           |          |  | 25 | %      |       |   | 1,654,976 |           |  |        | 25 | %   |          |   | 2,122,146 |           |  |  | 28 | %  
|Custodial       |                |                        | 617,773   |           |          |  | 6  | %      |       |   | 636,469   |           |  |        | 9  | %   |          |   | 493,936   |           |  |  | 7  | %  
|                |                |                        |           |           |          |  |    |        |       |   |           |           |  |        |    |     |          |  
|                | Total deposits |                        | $         | 9,351,871 |          |  |    | 100    | %     |   | $         | 6,584,532 |  |        |    | 100 | %        |   | $         | 7,671,924 |  |  |    | 100 | %
|                |                |                        |           |           |          |  |    |        |       |   |           |           |  |        |    |     |          |  

Trust Preferred Securities and Warrants






|              |  |                        |        |               |  |  |      |  
|------------- |  | ---------------------- | ------ | ------------- |  |  | ---- | -
|              |  | Amount                 |        | Interest Rate
|              |  |                        |        |              
|              |  | (Dollars in thousands)
|June 2006     |  | $                      | 90,000 |               |  |  | 7.35 | %
|December 2005 |  |                        | 90,000 |               |  |  | 6.31 | %
|December 2004 |  |                        | 30,000 |               |  |  | 5.83 | %
|December 2003 |  |                        | 30,000 |               |  |  | 6.30 | %
|July 2003     |  |                        | 30,000 |               |  |  | 6.05 | %

50



---



##### Table of Contents



3-month


Consolidation of Variable Interest Entities, an
Interpretation of Accounting Research Bulletin (ARB)
No. 51,


Other Borrowings, Excluding Subordinated Debentures
Underlying Trust Preferred Securities








Direct Stock Purchase Plan




PRINCIPAL USES OF CASH




51



---



##### Table of Contents





REGULATORY CAPITAL REQUIREMENTS










|                  |  |                |       |   |                     |  |       |                  |  |  |       |  
|----------------- |  | -------------- | ----- | - | ------------------- |  | ----- | ---------------- |  |  | ----- | -
|                  |  | As Reported    |       |   | Adjusted for        |  |       |                 
|                  |  | Pre-Subprime   |       |   | Additional Subprime |  |       | Well-Capitalized | 
|                  |  | Risk-Weighting |       |   | Risk-Weighting      |  |       | Minimum          | 
|                  |  |                |       |   |                     |  |       |                  | 
|Capital Ratios:   |  |                |       |   |                     |  |       |                  |  |  |       |  
|Tier 1 core       |  |                | 8.24  | % |                     |  | 8.24  | %                |  |  | 5.00  | %
|Tier 1 risk-based |  |                | 11.66 | % |                     |  | 11.57 | %                |  |  | 6.00  | %
|Total risk-based  |  |                | 12.06 | % |                     |  | 11.97 | %                |  |  | 10.00 | %



52



---



##### Table of Contents






OFF-BALANCE SHEET ARRANGEMENTS















AGGREGATE CONTRACTUAL OBLIGATIONS


10-K. 10-K





CRITICAL ACCOUNTING POLICIES AND JUDGMENTS






53



---



##### Table of Contents










|        |                                                               
|------- | --------------------------------------------------------------
|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK



54



---



##### Table of Contents








|        |                     
|------- | --------------------
|ITEM 1. | FINANCIAL STATEMENTS

INDYMAC BANCORP, INC. AND SUBSIDIARIES





CONSOLIDATED BALANCE SHEETS


|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |           |           |           |            |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | --------- | ------------ | --------- | --------- | --------- | ---------- | --------- | 
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | June 30,                                                                                                                                                   |                                 |           | December 31, |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | 2006                                                                                                                                                       |                                 |           | 2005         |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | (Unaudited)                                                                                                                                                |                                 |           |             
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | (Dollars in thousands)                                                                                                                                     |                                
|Assets                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |           |           |          
|Cash and cash equivalents                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                  | $                                                                                                                                                          | 165,178                         |           |              | $         | 442,525   |          
|Securities classified as trading ($229.3 million and
    $96.8 million pledged as collateral for borrowings at
    June 30, 2006 and December 31, 2005, respectively)                                                                                                                       |                                                                                                                                                                                                                                  |                                                                                                                                                            | 608,495                         |           |              |           | 348,962   |          
|Securities classified as available for sale, amortized cost of
    $4.4 billion and $3.8 billion at June 30, 2006
    and December 31, 2005, respectively ($3.1 billion and
    $2.7 billion pledged as collateral for borrowings at
    June 30, 2006 and December 31, 2005, respectively) |                                                                                                                                                                                                                                  |                                                                                                                                                            | 4,281,489                       |           |              |           | 3,753,195 |          
|Loans receivable:                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |           |           |          
|                                                                                                                                                                                                                                                                                            | Loans held for sale                                                                                                                                                                                                              |                                                                                                                                                            |                                 |           |              |           |           |           |           
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | SFR mortgage                                                                                                                                               |                                 |           | 5,696,629    |           |           |           | 5,170,168  |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | HELOC                                                                                                                                                      |                                 |           | 729,555      |           |           |           | 755,040    |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | Consumer lot loans                                                                                                                                         |                                 |           | 66,956       |           |           |           | 98,976     |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            | Total loans held for sale       |           |              | 6,493,140 |           |           |            | 6,024,184 | 
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          
|                                                                                                                                                                                                                                                                                            | Loans held for investment                                                                                                                                                                                                        |                                                                                                                                                            |                                 |           |              |           |           |           |           
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | SFR mortgage                                                                                                                                               |                                 |           | 5,427,609    |           |           |           | 5,441,521  |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | Consumer construction                                                                                                                                      |                                 |           | 1,860,622    |           |           |           | 1,656,963  |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | Builder construction                                                                                                                                       |                                 |           | 1,013,279    |           |           |           | 838,772    |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | HELOC                                                                                                                                                      |                                 |           | 29,972       |           |           |           | 31,882     |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | Land and other mortgage                                                                                                                                    |                                 |           | 320,053      |           |           |           | 260,615    |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | Revolving warehouse lines of credit                                                                                                                        |                                 |           | 121,292      |           |           |           | 48,616     |          
|                                                                                                                                                                                                                                                                                            | Allowance for loan losses                                                                                                                                                                                                        |                                                                                                                                                            |                                 | (57,912   | )            |           |           | (55,168   | )         
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            | Total loans held for investment |           |              | 8,714,915 |           |           |            | 8,223,201 | 
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | Total loans receivable ($11.1 billion and
    $10.2 billion pledged as collateral for borrowings at
    June 30, 2006 and December 31, 2005, respectively) |                                 |           | 15,208,055   |           |           |           | 14,247,385 |          
|Mortgage servicing rights                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                  |                                                                                                                                                            | 1,598,821                       |           |              |           | 1,094,490 |          
|Investment in Federal Home Loan Bank stock                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                  |                                                                                                                                                            | 578,737                         |           |              |           | 556,262   |          
|Interest receivable                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                  |                                                                                                                                                            | 157,809                         |           |              |           | 131,644   |          
|Goodwill and other intangible assets                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                  |                                                                                                                                                            | 80,583                          |           |              |           | 80,847    |          
|Foreclosed assets                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                  |                                                                                                                                                            | 11,999                          |           |              |           | 8,817     |          
|Other assets                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                                                                                                                                            | 1,065,276                       |           |              |           | 788,172   |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | Total assets                                                                                                                                               |                                 | $         | 23,756,442   |           |           | $         | 21,452,299 |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          
|                                                                                                                                                                                                                                                                                           
|Liabilities and Shareholders Equity                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |           |           |          
|Deposits                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                  | $                                                                                                                                                          | 9,351,871                       |           |              | $         | 7,671,924 |          
|Advances from Federal Home Loan Bank                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                  |                                                                                                                                                            | 7,069,800                       |           |              |           | 6,953,000 |          
|Other borrowings                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            | 4,164,540                       |           |              |           | 4,367,270 |          
|Other liabilities                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                  |                                                                                                                                                            | 1,366,050                       |           |              |           | 916,664   |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | Total liabilities                                                                                                                                          |                                 |           | 21,952,261   |           |           |           | 19,908,858 |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          
|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 97,860,464 shares (68,620,208
    outstanding) at June 30, 2006, and issued
    93,436,622 shares (64,246,767 outstanding) at
    December 31, 2005 |                                                                                                                                                            |                                 | 979       |              |           |           | 934       |           
|                                                                                                                                                                                                                                                                                            | Additional paid-in-capital                                                                                                                                                                                                       |                                                                                                                                                            |                                 | 1,455,909 |              |           |           | 1,318,751 |           
|                                                                                                                                                                                                                                                                                            | Accumulated other comprehensive loss                                                                                                                                                                                             |                                                                                                                                                            |                                 | (24,841   | )            |           |           | (15,157   | )         
|                                                                                                                                                                                                                                                                                            | Retained earnings                                                                                                                                                                                                                |                                                                                                                                                            |                                 | 894,557   |              |           |           | 759,330   |           
|                                                                                                                                                                                                                                                                                            | Treasury stock, 29,240,256 shares and
    29,189,855 shares at June 30, 2006 and
    December 31, 2005, respectively                                                                                                             |                                                                                                                                                            |                                 | (522,423  | )            |           |           | (520,417  | )         
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | Total shareholders equity                                                                                                                                 |                                 |           | 1,804,181    |           |           |           | 1,543,441  |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | Total liabilities and shareholders equity                                                                                                                 |                                 | $         | 23,756,442   |           |           | $         | 21,452,299 |          
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                                                                                                                                            |                                 |           |              |          



55



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF EARNINGS


|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |         |         |         |         |         |        |         |         | 
|------------------------------------ | ----------------------------------------------------------------- | -------------------------- | ------------------------------- | --------------------------------------------------- | ------------------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------ | ------- | ------- | 
|                                     |                                                                   | For the Three Months       |                                 |                                                     | For the Six Months |        
|                                     |                                                                   | Ended June 30,             |                                 |                                                     | Ended June 30,     |        
|                                     |                                                                   |                            |                                 |                                                     |                    |        
|                                     |                                                                   | 2006                       |                                 |                                                     | 2005               |         |         | 2006    |        |         | 2005    |        
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   | (Unaudited)                |                                
|                                     |                                                                   | (Dollars in thousands,     |                                
|                                     |                                                                   | except per share data)     |                                
|Interest income                      |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |         |         |         |         |        
|Mortgage-backed and other securities |                                                                   | $                          | 80,998                          |                                                     |                    | $       | 47,701  |         |        | $       | 147,481 |         |         | $       | 99,025  |        
|Loans held for sale                  |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |         |         |         |         |        
|                                     | SFR mortgage                                                      |                            |                                 | 159,645                                             |                    |         |         | 78,878  |        |         |         | 313,042 |         |         |         | 150,672 |       
|                                     | HELOC                                                             |                            |                                 | 18,915                                              |                    |         |         | 6,002   |        |         |         | 36,660  |         |         |         | 12,354  |       
|                                     | Consumer lot loans                                                |                            |                                 | 2,519                                               |                    |         |         | 2,876   |        |         |         | 4,938   |         |         |         | 4,113   |       
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   |                            | Total loans held for sale       |                                                     |                    | 181,079 |         |         |        | 87,756  |         |         |         | 354,640 |         |         |        | 167,139 |        
|Loans held for investment            |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |         |         |         |         |        
|                                     | SFR mortgage                                                      |                            |                                 | 75,853                                              |                    |         |         | 57,850  |        |         |         | 149,648 |         |         |         | 110,602 |       
|                                     | Consumer construction                                             |                            |                                 | 28,079                                              |                    |         |         | 19,372  |        |         |         | 52,522  |         |         |         | 38,657  |       
|                                     | Builder construction                                              |                            |                                 | 25,280                                              |                    |         |         | 15,535  |        |         |         | 46,564  |         |         |         | 28,528  |       
|                                     | Land and other mortgage                                           |                            |                                 | 7,944                                               |                    |         |         | 3,694   |        |         |         | 14,792  |         |         |         | 7,331   |       
|                                     | HELOC                                                             |                            |                                 | 627                                                 |                    |         |         | 541     |        |         |         | 1,241   |         |         |         | 1,124   |       
|                                     | Revolving warehouse lines of credit                               |                            |                                 | 1,668                                               |                    |         |         | 168     |        |         |         | 2,590   |         |         |         | 170     |       
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   |                            | Total loans held for investment |                                                     |                    | 139,451 |         |         |        | 97,160  |         |         |         | 267,357 |         |         |        | 186,412 |        
|Other                                |                                                                   |                            | 10,683                          |                                                     |                    |         | 7,043   |         |        |         | 20,579  |         |         |         | 11,436  |        
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   |                            | Total interest income           |                                                     |                    | 412,211 |         |         |        | 239,660 |         |         |         | 790,057 |         |         |        | 464,012 |        
|Interest expense                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |         |         |         |         |        
|                                     | Deposits                                                          |                            |                                 | 92,840                                              |                    |         |         | 44,326  |        |         |         | 167,083 |         |         |         | 80,218  |       
|                                     | Advances from Federal Home Loan Bank                              |                            |                                 | 110,468                                             |                    |         |         | 64,091  |        |         |         | 214,077 |         |         |         | 116,804 |       
|                                     | Other borrowings                                                  |                            |                                 | 78,749                                              |                    |         |         | 33,924  |        |         |         | 151,533 |         |         |         | 64,497  |       
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   |                            | Total interest expense          |                                                     |                    | 282,057 |         |         |        | 142,341 |         |         |         | 532,693 |         |         |        | 261,519 |        
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   |                            |                                 | Net interest income                                 |                    |         | 130,154 |         |        |         | 97,319  |         |         |         | 257,364 |         |        |         | 202,493 | 
|Provision for loan losses            |                                                                   |                            | 2,230                           |                                                     |                    |         | 2,407   |         |        |         | 6,052   |         |         |         | 4,897   |        
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   |                            |                                 | Net interest income after provision for loan losses |                    |         | 127,924 |         |        |         | 94,912  |         |         |         | 251,312 |         |        |         | 197,596 | 
|Other income                         |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |         |         |         |         |        
|                                     | Gain on sale of loans                                             |                            |                                 | 201,659                                             |                    |         |         | 159,377 |        |         |         | 342,858 |         |         |         | 303,699 |       
|                                     | Service fee income                                                |                            |                                 | 27,247                                              |                    |         |         | 10,799  |        |         |         | 58,136  |         |         |         | 15,217  |       
|                                     | Gain on mortgage-backed securities, net                           |                            |                                 | 8,258                                               |                    |         |         | 15,851  |        |         |         | 5,643   |         |         |         | 11,205  |       
|                                     | Fee and other income                                              |                            |                                 | 12,002                                              |                    |         |         | 7,732   |        |         |         | 23,676  |         |         |         | 14,303  |       
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   |                            | Total other income              |                                                     |                    | 249,166 |         |         |        | 193,759 |         |         |         | 430,313 |         |         |        | 344,424 |        
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   |                            |                                 | Net revenues                                        |                    |         | 377,090 |         |        |         | 288,671 |         |         |         | 681,625 |         |        |         | 542,020 | 
|Other expense                        |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |         |         |         |         |        
|                                     | Operating expenses                                                |                            |                                 | 203,684                                             |                    |         |         | 153,667 |        |         |         | 375,450 |         |         |         | 301,361 |       
|                                     | Amortization of other intangible assets                           |                            |                                 | 130                                                 |                    |         |         | 150     |        |         |         | 264     |         |         |         | 307     |       
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   |                            | Total other expense             |                                                     |                    | 203,814 |         |         |        | 153,817 |         |         |         | 375,714 |         |         |        | 301,668 |        
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     | Earnings before provision for income taxes and minority interests |                            |                                 | 173,276                                             |                    |         |         | 134,854 |        |         |         | 305,911 |         |         |         | 240,352 |       
|                                     |                                                                   | Provision for income taxes |                                 |                                                     | 67,960             |         |         |         | 52,824 |         |         |         | 120,279 |         |         |         | 94,597 |        
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   |                            |                                 | Net earnings before minority interests              |                    |         | 105,316 |         |        |         | 82,030  |         |         |         | 185,632 |         |        |         | 145,755 | 
|                                     | Minority interests                                                |                            |                                 | 657                                                 |                    |         |         | 316     |        |         |         | 1,124   |         |         |         | 591     |       
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|                                     |                                                                   |                            |                                 | Net earnings                                        |                    | $       | 104,659 |         |        | $       | 81,714  |         |         | $       | 184,508 |         |        | $       | 145,164 | 
|                                     |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |        
|Earnings per share:                  |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |         |         |         |         |        
|                                     | Basic                                                             |                            | $                               | 1.57                                                |                    |         | $       | 1.31    |        |         | $       | 2.82    |         |         | $       | 2.34    |       
|                                     | Diluted                                                           |                            | $                               | 1.49                                                |                    |         | $       | 1.24    |        |         | $       | 2.68    |         |         | $       | 2.22    |       
|Weighted-average shares outstanding: |                                                                   |                            |                                 |                                                     |                    |         |         |         |        |         |         |         |         |         |         |        
|                                     | Basic                                                             |                            |                                 | 66,483                                              |                    |         |         | 62,304  |        |         |         | 65,402  |         |         |         | 62,052  |       
|                                     | Diluted                                                           |                            |                                 | 70,213                                              |                    |         |         | 65,793  |        |         |         | 68,870  |         |         |         | 65,312  |       
|Dividends declared per share         |                                                                   | $                          | 0.46                            |                                                     |                    | $       | 0.38    |         |        | $       | 0.90    |         |         | $       | 0.74    |        



56



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
COMPREHENSIVE INCOME


|                                                                                      |  |                        |            |   |        |            |     |             |       |   |               |  |  |          |         |   |               |   |         |          |  |   |               |   |  |   |          |   |  |   |           |  
|------------------------------------------------------------------------------------- |  | ---------------------- | ---------- | - | ------ | ---------- | --- | ----------- | ----- | - | ------------- |  |  | -------- | ------- | - | ------------- | - | ------- | -------- |  | - | ------------- | - |  | - | -------- | - |  | - | --------- | -
|                                                                                      |  |                        |            |   |        |            |     | Accumulated |       |   |               |  |  |          |         |   |              
|                                                                                      |  |                        |            |   |        | Additional |     |             | Other |   |               |  |  | Total    |         |   |               |   | Total   |         
|                                                                                      |  | Shares                 |            |   | Common |            |     | Paid-In-    |       |   | Comprehensive |  |  | Retained |         |   | Comprehensive |   |         | Treasury |  |   | Shareholders |  
|                                                                                      |  | Outstanding            |            |   | Stock  |            |     | Capital     |       |   | Loss          |  |  | Earnings |         |   | Income        |   |         | Stock    |  |   | Equity        |  
|                                                                                      |  |                        |            |   |        |            |     |             |       |   |               |  |  |          |         |   |               |   |         |          |  |   |               |  
|                                                                                      |  | (Unaudited)            |           
|                                                                                      |  | (Dollars in thousands) |           
|Balance at December 31, 2004                                                          |  |                        | 61,995,480 |   |        | $          | 912 |             |       | $ | 1,186,682     |  |  | $        | (20,304 | ) |               | $ | 616,516 |          |  | $ |              |   |  | $ | (519,835 | ) |  | $ | 1,263,971 |  
|Cumulative-effect adjustment due to change in accounting for
    common stock options |  |                        |           |   |        |            |    |             |       |   | 68,111        |  |  |          |        |   |               |   | (51,811 | )        |  |   |              |   |  |   |         |   |  |   | 16,300    |  
|                                                                                      |  |                        |            |   |        |            |     |             |       |   |               |  |  |          |         |   |               |   |         |          |  |   |               |  
|Balance at December 31, 2004, retrospectively adjusted
    (see Note 2)               |  |                        | 61,995,480 |   |        |            | 912 |             |       |   | 1,254,793     |  |  |          | (20,304 | ) |               |   | 564,705 |          |  |   |              |   |  |   | (519,835 | ) |  |   | 1,280,271 |  
|Exercises of common stock options                                                     |  |                        | 1,265,135  |   |        |            | 12  |             |       |   | 28,591        |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   |         |   |  |   | 28,603    |  
|Compensation expenses for common stock options                                        |  |                        |           |   |        |            |    |             |       |   | 6,282         |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   |         |   |  |   | 6,282     |  
|Net officers notes receivable payments                                               |  |                        |           |   |        |            |    |             |       |   | 16            |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   |         |   |  |   | 16        |  
|Deferred compensation, restricted stock, net of forfeitures and
    amortization      |  |                        | 267,204    |   |        |            | 3   |             |       |   | 2,543         |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   |         |   |  |   | 2,546     |  
|Net unrealized loss on mortgage-backed securities available for
    sale              |  |                        |           |   |        |            |    |             |       |   |              |  |  |          | 13      |   |               |   |        |          |  |   | 13            |   |  |   |         |   |  |   | 13        |  
|Net unrealized gain on derivatives used in cash flow hedges                           |  |                        |           |   |        |            |    |             |       |   |              |  |  |          | 5,258   |   |               |   |        |          |  |   | 5,258         |   |  |   |         |   |  |   | 5,258     |  
|Purchases of common stock                                                             |  |                        | (15,860    | ) |        |            |    |             |       |   |              |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   | (558     | ) |  |   | (558      | )
|Cash dividends                                                                        |  |                        |           |   |        |            |    |             |       |   |              |  |  |          |        |   |               |   | (46,239 | )        |  |   |              |   |  |   |         |   |  |   | (46,239   | )
|Net earnings, retrospectively adjusted (see Note 2)                                   |  |                        |           |   |        |            |    |             |       |   |              |  |  |          |        |   |               |   | 145,164 |          |  |   | 145,164       |   |  |   |         |   |  |   | 145,164   |  
|                                                                                      |  |                        |            |   |        |            |     |             |       |   |               |  |  |          |         |   |               |   |         |          |  |   |               |  
|Total comprehensive income                                                            |  |                        |           |   |        |            |    |             |       |   |              |  |  |          |        |   |               |   |        |          |  | $ | 150,435       |   |  |   |         |   |  |   |          |  
|                                                                                      |  |                        |            |   |        |            |     |             |       |   |               |  |  |          |         |   |               |   |         |          |  |   |               |  
|Balance at June 30, 2005, retrospectively adjusted                                    |  |                        | 63,511,959 |   |        | $          | 927 |             |       | $ | 1,292,225     |  |  | $        | (15,033 | ) |               | $ | 663,630 |          |  |   |               |   |  | $ | (520,393 | ) |  | $ | 1,421,356 |  
|                                                                                      |  |                        |            |   |        |            |     |             |       |   |               |  |  |          |         |   |               |   |         |          |  |   |               |  
|Balance at December 31, 2005                                                          |  |                        | 64,246,767 |   |        | $          | 934 |             |       | $ | 1,242,500     |  |  | $        | (15,157 | ) |               | $ | 818,241 |          |  | $ |              |   |  | $ | (520,417 | ) |  | $ | 1,526,101 |  
|Cumulative-effect adjustment due to change in accounting for
    common stock options |  |                        |           |   |        |            |    |             |       |   | 76,251        |  |  |          |        |   |               |   | (58,911 | )        |  |   |              |   |  |   |         |   |  |   | 17,340    |  
|                                                                                      |  |                        |            |   |        |            |     |             |       |   |               |  |  |          |         |   |               |   |         |          |  |   |               |  
|Balance at December 31, 2005, retrospectively
    adjusted                            |  |                        | 64,246,767 |   |        |            | 934 |             |       |   | 1,318,751     |  |  |          | (15,157 | ) |               |   | 759,330 |          |  |   |              |   |  |   | (520,417 | ) |  |   | 1,543,441 |  
|Cumulative-effect adjustment due to change in accounting for MSRs                     |  |                        |           |   |        |            |    |             |       |   |              |  |  |          |        |   |               |   | 10,624  |          |  |   |              |   |  |   |         |   |  |   | 10,624    |  
|Issuance of common stock                                                              |  |                        | 1,747,675  |   |        |            | 18  |             |       |   | 73,408        |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   |         |   |  |   | 73,426    |  
|Exercises of common stock options                                                     |  |                        | 641,310    |   |        |            | 6   |             |       |   | 17,789        |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   |         |   |  |   | 17,795    |  
|Exercises of warrants                                                                 |  |                        | 1,653,898  |   |        |            | 17  |             |       |   | 36,269        |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   |         |   |  |   | 36,286    |  
|Compensation expenses for common stock options                                        |  |                        |           |   |        |            |    |             |       |   | 4,963         |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   |         |   |  |   | 4,963     |  
|Net officers notes receivable payments                                               |  |                        |           |   |        |            |    |             |       |   | 82            |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   |         |   |  |   | 82        |  
|Deferred compensation, restricted stock, net of forfeitures and
    amortization      |  |                        | 380,959    |   |        |            | 4   |             |       |   | 4,647         |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   |         |   |  |   | 4,651     |  
|Net unrealized loss on mortgage-backed securities available for
    sale              |  |                        |           |   |        |            |    |             |       |   |              |  |  |          | (25,168 | ) |               |   |        |          |  |   | (25,168       | ) |  |   |         |   |  |   | (25,168   | )
|Net unrealized gain on derivatives used in cash flow hedges                           |  |                        |           |   |        |            |    |             |       |   |              |  |  |          | 15,484  |   |               |   |        |          |  |   | 15,484        |   |  |   |         |   |  |   | 15,484    |  
|Purchases of common stock                                                             |  |                        | (50,401    | ) |        |            |    |             |       |   |              |  |  |          |        |   |               |   |        |          |  |   |              |   |  |   | (2,006   | ) |  |   | (2,006    | )
|Cash dividends                                                                        |  |                        |           |   |        |            |    |             |       |   |              |  |  |          |        |   |               |   | (59,905 | )        |  |   |              |   |  |   |         |   |  |   | (59,905   | )
|Net earnings                                                                          |  |                        |           |   |        |            |    |             |       |   |              |  |  |          |        |   |               |   | 184,508 |          |  |   | 184,508       |   |  |   |         |   |  |   | 184,508   |  
|                                                                                      |  |                        |            |   |        |            |     |             |       |   |               |  |  |          |         |   |               |   |         |          |  |   |               |  
|Total comprehensive income                                                            |  |                        |           |   |        |            |    |             |       |   |              |  |  |          |        |   |               |   |        |          |  | $ | 174,824       |   |  |   |         |   |  |   |          |  
|                                                                                      |  |                        |            |   |        |            |     |             |       |   |               |  |  |          |         |   |               |   |         |          |  |   |               |  
|Balance at June 30, 2006                                                              |  |                        | 68,620,208 |   |        | $          | 979 |             |       | $ | 1,455,909     |  |  | $        | (24,841 | ) |               | $ | 894,557 |          |  |   |               |   |  | $ | (522,423 | ) |  | $ | 1,804,181 |  
|                                                                                      |  |                        |            |   |        |            |     |             |       |   |               |  |  |          |         |   |               |   |         |          |  |   |               |  



57



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                            |                                                                                                              |                                                                              |                                           |            |          |            |         |            |          |            |  
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------- | ----------------------------------------- | ---------- | -------- | ---------- | ------- | ---------- | -------- | ---------- | -
|                                                                            |                                                                                                              | For the Six Months Ended                                                     |                                          
|                                                                            |                                                                                                              | June 30,                                                                     |                                          
|                                                                            |                                                                                                              |                                                                              |                                          
|                                                                            |                                                                                                              | 2006                                                                         |                                           |            | 2005     |           
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|                                                                            |                                                                                                              | (Unaudited)                                                                  |                                          
|                                                                            |                                                                                                              | (Dollars in thousands)                                                       |                                          
|Cash flows from operating activities:                                       |                                                                                                              |                                                                              |                                           |            |          |            |         |           
|                                                                            | Net earnings                                                                                                 |                                                                              | $                                         | 184,508    |          |            | $       | 145,164    |         
|                                                                            | Adjustments to reconcile net earnings to net cash used in
    operating activities:                          |                                                                              |                                           |            |          |            |         |            |         
|                                                                            |                                                                                                              | Gain on sale of loans                                                        |                                           |            | (342,858 | )          |         |            | (303,699 | )         
|                                                                            |                                                                                                              | Compensation expenses related to stock options and restricted
    stocks     |                                           |            | 9,614    |            |         |            | 8,827    |           
|                                                                            |                                                                                                              | Other amortization and depreciation                                          |                                           |            | 31,058   |            |         |            | 26,001   |           
|                                                                            |                                                                                                              | Change in valuation of mortgage servicing rights, including
    amortization |                                           |            | 11,554   |            |         |            | 174,108  |           
|                                                                            |                                                                                                              | Gain on mortgage-backed securities, net                                      |                                           |            | (5,643   | )          |         |            | (11,205  | )         
|                                                                            |                                                                                                              | Provision for loan losses                                                    |                                           |            | 6,052    |            |         |            | 4,897    |           
|                                                                            |                                                                                                              | Net increase in deferred tax liability                                       |                                           |            | 158,111  |            |         |            | 26,409   |           
|                                                                            |                                                                                                              | Net decrease in other assets and liabilities                                 |                                           |            | 69,275   |            |         |            | 64,025   |           
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|                                                                            | Net cash provided by operating activities before activity for
    trading securities and loans held for sale |                                                                              |                                           | 121,671    |          |            |         | 134,527    |         
|                                                                            | Net sales of trading securities                                                                              |                                                                              |                                           | 32,242     |          |            |         | 57,051     |         
|                                                                            | Net purchases and originations of loans held for sale                                                        |                                                                              |                                           | (2,333,293 | )        |            |         | (2,957,793 | )       
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|                                                                            |                                                                                                              |                                                                              | Net cash used in operating activities     |            |          | (2,179,380 | )       |            |          | (2,766,215 | )
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|Cash flows from investing activities:                                       |                                                                                                              |                                                                              |                                           |            |          |            |         |           
|                                                                            | Net sales of and payments from loans held for investment                                                     |                                                                              |                                           | 319,827    |          |            |         | 511,523    |         
|                                                                            | Purchases of mortgage-backed securities available for sale                                                   |                                                                              |                                           | (377,157   | )        |            |         | (314,494   | )       
|                                                                            | Proceeds from sales of and principal payments from
    mortgage-backed securities available for sale         |                                                                              |                                           | 384,915    |          |            |         | 465,054    |         
|                                                                            | Net increase in investment in Federal Home Loan Bank stock,
    at cost                                      |                                                                              |                                           | (22,475    | )        |            |         | (93,853    | )       
|                                                                            | Net decrease (increase) in real estate investment                                                            |                                                                              |                                           | 702        |          |            |         | (25,435    | )       
|                                                                            | Net purchases of property, plant and equipment                                                               |                                                                              |                                           | (47,654    | )        |            |         | (38,552    | )       
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|                                                                            |                                                                                                              |                                                                              | Net cash provided by investing activities |            |          | 258,158    |         |            |          | 504,243    |  
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|Cash flows from financing activities:                                       |                                                                                                              |                                                                              |                                           |            |          |            |         |           
|                                                                            | Net increase in deposits                                                                                     |                                                                              |                                           | 1,678,082  |          |            |         | 840,042    |         
|                                                                            | Net increase in advances from Federal Home Loan Bank                                                         |                                                                              |                                           | 116,800    |          |            |         | 1,436,000  |         
|                                                                            | Net (decrease) increase in borrowings                                                                        |                                                                              |                                           | (306,685   | )        |            |         | 1,925      |         
|                                                                            | Net proceeds from issuance of common stock                                                                   |                                                                              |                                           | 73,426     |          |            |         |           |         
|                                                                            | Net proceeds from issuance of trust preferred securities                                                     |                                                                              |                                           | 90,000     |          |            |         |           |         
|                                                                            | Net proceeds from stock options, warrants and notes receivable                                               |                                                                              |                                           | 54,163     |          |            |         | 28,619     |         
|                                                                            | Cash dividends paid                                                                                          |                                                                              |                                           | (59,905    | )        |            |         | (46,239    | )       
|                                                                            | Purchases of common stock                                                                                    |                                                                              |                                           | (2,006     | )        |            |         | (558       | )       
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|                                                                            |                                                                                                              |                                                                              | Net cash provided by financing activities |            |          | 1,643,875  |         |            |          | 2,259,789  |  
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|Net decrease in cash and cash equivalents                                   |                                                                                                              |                                                                              | (277,347                                  | )          |          |            | (2,183  | )         
|Cash and cash equivalents at beginning of period                            |                                                                                                              |                                                                              | 442,525                                   |            |          |            | 356,157 |           
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|Cash and cash equivalents at end of period                                  |                                                                                                              | $                                                                            | 165,178                                   |            |          | $          | 353,974 |           
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|Supplemental cash flow information:                                         |                                                                                                              |                                                                              |                                           |            |          |            |         |           
|                                                                            | Cash paid for interest                                                                                       |                                                                              | $                                         | 517,197    |          |            | $       | 247,516    |         
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|                                                                            | Cash (received) paid for income taxes                                                                        |                                                                              | $                                         | (48,905    | )        |            | $       | 35,596     |         
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|Supplemental disclosure of non-cash investing and financing
    activities: |                                                                                                              |                                                                              |                                           |            |          |            |         |           
|                                                                            | Net transfer of loans held for sale to loans held for investment                                             |                                                                              | $                                         | 840,902    |          |            | $       | 1,278,265  |         
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           
|                                                                            | Net transfer of mortgage servicing rights to trading securities                                              |                                                                              | $                                         |           |          |            | $       | 8,491      |         
|                                                                            |                                                                                                              |                                                                              |                                           |            |          |           



58



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2006


(Unaudited)


NOTE 1  BASIS OF PRESENTATION




10-K.


NOTE 2  NEWLY ADOPTED AND NEW ACCOUNTING
PRONOUNCEMENTS


Share-Based Payment Accounting for Stock-Based
Compensation Accounting for Stock Issued to Employees,


|                                             |  |                                       |        |  |         |   |        |         |  |   |         |  |  |          |        |  |  |   |         | 
|-------------------------------------------- |  | ------------------------------------- | ------ |  | ------- | - | ------ | ------- |  | - | ------- |  |  | -------- | ------ |  |  | - | ------- | 
|                                             |  | Q1 2005                               |        |  | Q2 2005 |   |        | Q3 2005 |  |   | Q4 2005 |  |  | YTD 2005 |       
|                                             |  |                                       |        |  |         |   |        |         |  |   |         |  |  |          |       
|                                             |  | (In thousands, except per share data) |       
|Reported net earnings                        |  | $                                     | 65,476 |  |         | $ | 83,146 |         |  | $ | 79,275  |  |  | $        | 72,329 |  |  | $ | 300,226 | 
|Retrospective application of SFAS No. 123(R) |  |                                       | 2,026  |  |         |   | 1,432  |         |  |   | 1,749   |  |  |          | 1,891  |  |  |   | 7,098   | 
|                                             |  |                                       |        |  |         |   |        |         |  |   |         |  |  |          |       
|Adjusted net earnings                        |  | $                                     | 63,450 |  |         | $ | 81,714 |         |  | $ | 77,526  |  |  | $        | 70,438 |  |  | $ | 293,128 | 
|Adjusted average dilutive shares             |  |                                       | 64,830 |  |         |   | 65,793 |         |  |   | 67,100  |  |  |          | 66,737 |  |  |   | 66,115  | 
|Reported dilutive earnings per share         |  | $                                     | 1.01   |  |         | $ | 1.26   |         |  | $ | 1.18    |  |  | $        | 1.09   |  |  | $ | 4.54    | 
|Adjusted dilutive earnings per share         |  | $                                     | 0.98   |  |         | $ | 1.24   |         |  | $ | 1.16    |  |  | $        | 1.06   |  |  | $ | 4.43    | 

Accounting for Certain Hybrid Financial
Instruments


59



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Determining the Variability to be
Considered When Applying FASB Interpretation
No. 46(R)


06-2, Accounting for Sabbatical Leave and Other Similar
Benefits, Accounting for Compensated Absences. Accounting Changes and
Error Corrections,


60



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


NOTE 3  MORTGAGE-BACKED SECURITIES AND AGENCY
NOTES




|                                                                     |                                               |                                                                            |   |           |              |  |   |           |           | 
|-------------------------------------------------------------------- | --------------------------------------------- | -------------------------------------------------------------------------- | - | --------- | ------------ |  | - | --------- | --------- | 
|                                                                     |                                               | June 30,                                                                   |   |           | December 31, | 
|                                                                     |                                               | 2006                                                                       |   |           | 2005         | 
|                                                                     |                                               |                                                                            |   |           |              | 
|                                                                     |                                               | (Dollars in thousands)                                                     |  
|Mortgage-backed securities  Trading                                 |                                               |                                                                            |   |           |              |  |   |          
|                                                                     | AAA-rated non-agency securities               |                                                                            | $ | 73,434    |              |  | $ | 52,633    |          
|                                                                     | AAA-rated and agency interest-only securities |                                                                            |   | 64,373    |              |  |   | 78,731    |          
|                                                                     | AAA-rated principal-only securities           |                                                                            |   | 129,951   |              |  |   | 9,483     |          
|                                                                     | Prepayment penalty securities                 |                                                                            |   | 80,036    |              |  |   | 75,741    |          
|                                                                     | Other investment grade securities             |                                                                            |   | 27,060    |              |  |   | 8,830     |          
|                                                                     | Other non-investment grade securities         |                                                                            |   | 35,349    |              |  |   | 4,480     |          
|                                                                     | Non-investment grade residual securities      |                                                                            |   | 198,292   |              |  |   | 119,064   |          
|                                                                     |                                               |                                                                            |   |           |              | 
|                                                                     |                                               | Total mortgage-backed securities  Trading                                 |   | $         | 608,495      |  |   | $         | 348,962   | 
|                                                                     |                                               |                                                                            |   |           |              | 
|Mortgage-backed securities and agency notes 
    Available for sale |                                               |                                                                            |   |           |              |  |   |          
|                                                                     | AAA-rated non-agency securities               |                                                                            | $ | 3,972,977 |              |  | $ | 3,524,952 |          
|                                                                     | AAA-rated agency securities                   |                                                                            |   | 52,701    |              |  |   | 43,014    |          
|                                                                     | Other investment grade securities             |                                                                            |   | 160,885   |              |  |   | 83,290    |          
|                                                                     | Other non-investment grade securities         |                                                                            |   | 52,696    |              |  |   | 53,232    |          
|                                                                     | Non-investment grade residual securities      |                                                                            |   | 42,230    |              |  |   | 48,707    |          
|                                                                     |                                               |                                                                            |   |           |              | 
|                                                                     |                                               | Total mortgage-backed securities and agency notes 
    Available for sale |   | $         | 4,281,489    |  |   | $         | 3,753,195 | 
|                                                                     |                                               |                                                                            |   |           |              | 



|                                 |                                   |                                       |   |         |                      |   |            |           |           |  |            |            |         |        |   |           |            |  |   |         |         |   |   |           |           | 
|-------------------------------- | --------------------------------- | ------------------------------------- | - | ------- | -------------------- | - | ---------- | --------- | --------- |  | ---------- | ---------- | ------- | ------ | - | --------- | ---------- |  | - | ------- | ------- | - | - | --------- | --------- | 
|                                 |                                   | As of June 30, 2006                   |  
|                                 |                                   |                                       |  
|                                 |                                   | Less Than 12 Months                   |   |         | 12 Months or Greater |   |            | Total     |          
|                                 |                                   |                                       |   |         |                      |   |            |           |          
|                                 |                                   | Unrealized                            |   |         |                      |   | Unrealized |           |           |  |            | Unrealized |         |        |  
|                                 |                                   | Losses                                |   |         | Fair Value           |   |            | Losses    |           |  | Fair Value |            |         | Losses |   |           | Fair Value | 
|                                 |                                   |                                       |   |         |                      |   |            |           |           |  |            |            |         |        |   |           |            | 
|                                 |                                   | (Dollars in thousands)                |  
|Securities  Available for Sale: |                                   |                                       |   |         |                      |   |            |           |           |  |            |            |         |        |   |           |            |  |   |         |         |   |   |          
|                                 | AAA-rated agency securities       |                                       | $ | (968    | )                    |   | $          | 48,493    |           |  | $          | (6         | )       |        | $ | 185       |            |  | $ | (974    | )       |   | $ | 48,678    |          
|                                 | AAA-rated non-agency securities   |                                       |   | (17,649 | )                    |   |            | 1,411,677 |           |  |            | (61,712    | )       |        |   | 1,455,125 |            |  |   | (79,361 | )       |   |   | 2,866,802 |          
|                                 | Other investment grade securities |                                       |   | (3,748  | )                    |   |            | 130,354   |           |  |            |           |         |        |   |          |            |  |   | (3,748  | )       |   |   | 130,354   |          
|                                 | Residuals                         |                                       |   | (501    | )                    |   |            | 19,488    |           |  |            |           |         |        |   |          |            |  |   | (501    | )       |   |   | 19,488    |          
|                                 |                                   |                                       |   |         |                      |   |            |           |           |  |            |            |         |        |   |           |            | 
|                                 |                                   | Total Securities  Available for Sale |   | $       | (22,866              | ) |            | $         | 1,610,012 |  |            | $          | (61,718 | )      |   | $         | 1,455,310  |  |   | $       | (84,584 | ) |   | $         | 3,065,322 | 
|                                 |                                   |                                       |   |         |                      |   |            |           |           |  |            |            |         |        |   |           |            | 



61



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


NOTE 4  SEGMENT REPORTING






|                                 |                        |                        |           |         |                 |   |           |        |  |   |            |         |  |         |           |         |   |   |            |         | 
|-------------------------------- | ---------------------- | ---------------------- | --------- | ------- | --------------- | - | --------- | ------ |  | - | ---------- | ------- |  | ------- | --------- | ------- | - | - | ---------- | ------- | 
|                                 |                        | Mortgage Banking       |           |         |                 |   |           |        | 
|                                 |                        |                        |           |         |                 |   |           |        | 
|                                 |                        | Production             |           |         | MSRs and        |   |           |        |  |   |            | Total   | 
|                                 |                        | Divisions              |           |         | Retained Assets |   |           | Thrift |  |   | Other      |         |  | Company |          
|                                 |                        |                        |           |         |                 |   |           |        |  |   |            |         |  |         |          
|                                 |                        | (Dollars in thousands) |          
|Three months ended June 30, 2006 |                        |                        |           |         |                 |   |           |        |  |   |            |         |  |         |           |         |   |   |            |        
|                                 | Net interest income    |                        | $         | 37,650  |                 |   | $         | 16,799 |  |   | $          | 67,109  |  |         | $         | 8,596   |   |   | $          | 130,154 | 
|                                 | Net revenues (expense) |                        |           | 234,117 |                 |   |           | 53,169 |  |   |            | 90,366  |  |         |           | (562    | ) |   |            | 377,090 | 
|                                 | Net earnings (loss)    |                        |           | 85,149  |                 |   |           | 24,752 |  |   |            | 37,704  |  |         |           | (42,946 | ) |   |            | 104,659 | 
|Allocated average capital        |                        |                        | 521,875   |         |                 |   | 363,809   |        |  |   | 666,085    |         |  |         | 190,468   |         |   |   | 1,742,237  |        
|Assets as of June 30, 2006       |                        | $                      | 5,418,369 |         |                 | $ | 2,838,080 |        |  | $ | 14,319,453 |         |  | $       | 1,180,540 |         |   | $ | 23,756,442 |        
|Return on equity                 |                        |                        | 65        | %       |                 |   | 27        | %      |  |   | 23         | %       |  |         | N/A       |         |   |   | 24         | %      
|Three months ended June 30, 2005 |                        |                        |           |         |                 |   |           |        |  |   |            |         |  |         |           |         |   |   |            |        
|                                 | Net interest income    |                        | $         | 23,785  |                 |   | $         | 11,372 |  |   | $          | 53,842  |  |         | $         | 8,320   |   |   | $          | 97,319  | 
|                                 | Net revenues (expense) |                        |           | 197,489 |                 |   |           | 23,364 |  |   |            | 76,042  |  |         |           | (8,224  | ) |   |            | 288,671 | 
|                                 | Net earnings (loss)    |                        |           | 76,868  |                 |   |           | 9,254  |  |   |            | 33,370  |  |         |           | (37,778 | ) |   |            | 81,714  | 
|Allocated average capital        |                        |                        | 318,640   |         |                 |   | 176,731   |        |  |   | 508,389    |         |  |         | 333,850   |         |   |   | 1,337,610  |        
|Assets as of June 30, 2005       |                        | $                      | 5,326,759 |         |                 | $ | 1,415,839 |        |  | $ | 11,618,839 |         |  | $       | 1,054,450 |         |   | $ | 19,415,887 |        
|Return on equity                 |                        |                        | 97        | %       |                 |   | 21        | %      |  |   | 26         | %       |  |         | N/A       |         |   |   | 25         | %      
|Six months ended June 30, 2006   |                        |                        |           |         |                 |   |           |        |  |   |            |         |  |         |           |         |   |   |            |        
|                                 | Net interest income    |                        | $         | 80,901  |                 |   | $         | 27,310 |  |   | $          | 134,967 |  |         | $         | 14,186  |   |   | $          | 257,364 | 
|                                 | Net revenues (expense) |                        |           | 416,627 |                 |   |           | 92,723 |  |   |            | 178,690 |  |         |           | (6,415  | ) |   |            | 681,625 | 
|                                 | Net earnings (loss)    |                        |           | 149,334 |                 |   |           | 42,246 |  |   |            | 76,931  |  |         |           | (84,003 | ) |   |            | 184,508 | 
|Allocated average capital        |                        |                        | 516,384   |         |                 |   | 324,242   |        |  |   | 653,354    |         |  |         | 176,291   |         |   |   | 1,670,271  |        
|Assets as of June 30, 2006       |                        | $                      | 5,418,369 |         |                 | $ | 2,838,080 |        |  | $ | 14,319,453 |         |  | $       | 1,180,540 |         |   | $ | 23,756,442 |        
|Return on equity                 |                        |                        | 58        | %       |                 |   | 26        | %      |  |   | 24         | %       |  |         | N/A       |         |   |   | 22         | %      
|Six months ended June 30, 2005   |                        |                        |           |         |                 |   |           |        |  |   |            |         |  |         |           |         |   |   |            |        
|                                 | Net interest income    |                        | $         | 49,115  |                 |   | $         | 25,020 |  |   | $          | 111,924 |  |         | $         | 16,434  |   |   | $          | 202,493 | 
|                                 | Net revenues (expense) |                        |           | 374,431 |                 |   |           | 41,151 |  |   |            | 148,580 |  |         |           | (22,142 | ) |   |            | 542,020 | 
|                                 | Net earnings (loss)    |                        |           | 143,153 |                 |   |           | 15,740 |  |   |            | 66,522  |  |         |           | (80,251 | ) |   |            | 145,164 | 
|Allocated average capital        |                        |                        | 298,201   |         |                 |   | 179,817   |        |  |   | 484,330    |         |  |         | 341,383   |         |   |   | 1,303,731  |        
|Assets as of June 30, 2005       |                        | $                      | 5,326,759 |         |                 | $ | 1,415,839 |        |  | $ | 11,618,839 |         |  | $       | 1,054,450 |         |   | $ | 19,415,887 |        
|Return on equity                 |                        |                        | 97        | %       |                 |   | 18        | %      |  |   | 28         | %       |  |         | N/A       |         |   |   | 22         | %      

62



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


NOTE 5  STOCK-BASED COMPENSATION








Share-Based Payment






|                                          |  |      |              |   |      |  |              |  
|----------------------------------------- |  | ---- | ------------ | - | ---- |  | ------------ | -
|                                          |  | 2006 |              |   | 2005 | 
|                                          |  |      |              |   |      | 
|Expected volatility                       |  |      | 28.11- 28.44 | % |      |  | 28.77- 29.42 | %
|Expected dividends                        |  |      | 4.00-4.60    | % |      |  | 3.72-4.07    | %
|Weighted average expected term (in years) |  |      | 6.89-7.34    |   |      |  | 5.00         |  
|Risk-free rate                            |  |      | 4.54-4.73    | % |      |  | 4.16-4.54    | %

63



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                        |  |        |           |           |       |          |             |      |  |            |                |  |  |   |        | 
|--------------------------------------- |  | ------ | --------- | --------- | ----- | -------- | ----------- | ---- |  | ---------- | -------------- |  |  | - | ------ | 
|                                        |  |        |           |           |       | Weighted |             |      | 
|                                        |  |        |           | Weighted- |       |          | Average     |      |  |           
|                                        |  |        |           | Average   |       |          | Remaining   |      |  | Aggregate  |               
|                                        |  |        |           | Exercise  |       |          | Contractual |      |  | Fair Value |               
|Options:                                |  | Shares |           |           | Price |          |             | Term |  |            | (In thousands) | 
|                                        |  |        |           |           |       |          |             |      |  |            |                | 
|Options outstanding at March 31, 2006   |  |        | 8,454,894 |           |       | $        | 26.20       |      |  |            |                |  |  |   |        | 
|Options granted                         |  |        |          |           |       |          |            |      |  |            |                |  |  |   |        | 
|Options exercised                       |  |        | (460,230  | )         |       |          | 22.59       |      |  |            |                |  |  |   |        | 
|Options canceled, forfeited and expired |  |        | (25,392   | )         |       |          | 36.62       |      |  |            |                |  |  |   |        | 
|                                        |  |        |           |           |       |          |             |      |  |            |                | 
|Options outstanding at June 30, 2006    |  |        | 7,969,272 |           |       | $        | 26.37       |      |  |            | 6.26           |  |  | $ | 60,455 | 
|                                        |  |        |           |           |       |          |             |      |  |            |                | 
|Options exercisable at June 30, 2006    |  |        | 5,807,703 |           |       | $        | 23.65       |      |  |            | 5.46           |  |  | $ | 42,995 | 
|                                        |  |        |           |           |       |          |             |      |  |            |                | 

|                                         |  |        |           |           |       |          |             |      |  |            |                |  |  |   |        | 
|---------------------------------------- |  | ------ | --------- | --------- | ----- | -------- | ----------- | ---- |  | ---------- | -------------- |  |  | - | ------ | 
|                                         |  |        |           |           |       | Weighted |             |      | 
|                                         |  |        |           | Weighted- |       |          | Average     |      |  |           
|                                         |  |        |           | Average   |       |          | Remaining   |      |  | Aggregate  |               
|                                         |  |        |           | Exercise  |       |          | Contractual |      |  | Fair Value |               
|Options:                                 |  | Shares |           |           | Price |          |             | Term |  |            | (In thousands) | 
|                                         |  |        |           |           |       |          |             |      |  |            |                | 
|Options outstanding at December 31, 2005 |  |        | 7,851,820 |           |       | $        | 24.82       |      |  |            |                |  |  |   |        | 
|Options granted                          |  |        | 788,140   |           |       |          | 39.11       |      |  |            |                |  |  |   |        | 
|Options exercised                        |  |        | (640,144  | )         |       |          | 22.55       |      |  |            |                |  |  |   |        | 
|Options canceled, forfeited and expired  |  |        | (30,544   | )         |       |          | 36.31       |      |  |            |                |  |  |   |        | 
|                                         |  |        |           |           |       |          |             |      |  |            |                | 
|Options outstanding at June 30, 2006     |  |        | 7,969,272 |           |       | $        | 26.37       |      |  |            | 6.26           |  |  | $ | 60,455 | 
|                                         |  |        |           |           |       |          |             |      |  |            |                | 
|Options exercisable at June 30, 2006     |  |        | 5,807,703 |           |       | $        | 23.65       |      |  |            | 5.46           |  |  | $ | 42,995 | 
|                                         |  |        |           |           |       |          |             |      |  |            |                | 



64



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                |  |        |            |            |           |   |      | 
|------------------------------- |  | ------ | ---------- | ---------- | --------- | - | ---- | 
|                                |  |        |            | Weighted-  |          
|                                |  |        |            | Average    |          
|                                |  |        |            | Grant-Date |          
|                                |  |        |            | Fair Value |          
|Nonvested Options:              |  | Shares |            |            | Per Share |  
|                                |  |        |            |            |           |  
|Nonvested at December 31, 2005  |  |        | 2,660,324  |            |           | $ | 7.54 | 
|Granted                         |  |        | 788,140    |            |           |   | 9.13 | 
|Vested                          |  |        | (1,258,408 | )          |           |   | 7.60 | 
|Canceled, forfeited and expired |  |        | (28,487    | )          |           |   | 8.26 | 
|                                |  |        |            |            |           |  
|Nonvested at June 30, 2006      |  |        | 2,161,569  |            |           | $ | 8.08 | 
|                                |  |        |            |            |           |  









|                            |  |        |         |            |           |   |       | 
|--------------------------- |  | ------ | ------- | ---------- | --------- | - | ----- | 
|                            |  |        |         | Weighted-  |          
|                            |  |        |         | Average    |          
|                            |  |        |         | Grant-Date |          
|                            |  |        |         | Fair Value |          
|Restricted Stock:           |  | Shares |         |            | Per Share |  
|                            |  |        |         |            |           |  
|Nonvested at March 31, 2006 |  |        | 789,365 |            |           | $ | 37.50 | 
|Granted                     |  |        | 41,193  |            |           |   | 48.06 | 
|Vested                      |  |        | (6,487  | )          |           |   | 36.70 | 
|Canceled and forfeited      |  |        | (24,210 | )          |           |   | 37.53 | 
|                            |  |        |         |            |           |  
|Nonvested at June 30, 2006  |  |        | 799,861 |            |           | $ | 38.05 | 
|                            |  |        |         |            |           |  

65



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                               |  |        |          |            |           |   |       | 
|------------------------------ |  | ------ | -------- | ---------- | --------- | - | ----- | 
|                               |  |        |          | Weighted-  |          
|                               |  |        |          | Average    |          
|                               |  |        |          | Grant-Date |          
|                               |  |        |          | Fair Value |          
|Restricted Stock:              |  | Shares |          |            | Per Share |  
|                               |  |        |          |            |           |  
|Nonvested at December 31, 2005 |  |        | 582,401  |            |           | $ | 32.59 | 
|Granted                        |  |        | 417,049  |            |           |   | 40.08 | 
|Vested                         |  |        | (164,922 | )          |           |   | 24.19 | 
|Canceled and forfeited         |  |        | (34,667  | )          |           |   | 37.47 | 
|                               |  |        |          |            |           |  
|Nonvested at June 30, 2006     |  |        | 799,861  |            |           | $ | 38.05 | 
|                               |  |        |          |            |           |  

NOTE 6  DEFINED BENEFIT PENSION PLAN NET
PERIODIC COST






|                                   |  |                        |       |   |            |   |       |      |  |   |        |   |  |   |       |  
|---------------------------------- |  | ---------------------- | ----- | - | ---------- | - | ----- | ---- |  | - | ------ | - |  | - | ----- | -
|                                   |  | Three Months           |       |   | Six Months |  
|                                   |  | Ended                  |       |   | Ended      |  
|                                   |  | June 30,               |       |   | June 30,   |  
|                                   |  |                        |       |   |            |  
|                                   |  | 2006                   |       |   | 2005       |   |       | 2006 |  |   | 2005   |  
|                                   |  |                        |       |   |            |   |       |      |  |   |        |  
|                                   |  | (Dollars in thousands) |      
|Service cost                       |  | $                      | 1,575 |   |            | $ | 1,486 |      |  | $ | 3,150  |   |  | $ | 2,972 |  
|Interest cost                      |  |                        | 568   |   |            |   | 453   |      |  |   | 1,136  |   |  |   | 906   |  
|Expected return on assets          |  |                        | (582  | ) |            |   | (440  | )    |  |   | (1,164 | ) |  |   | (880  | )
|Recognized actuarial loss          |  |                        | 81    |   |            |   | 85    |      |  |   | 162    |   |  |   | 170   |  
|Amortization of prior service cost |  |                        | 14    |   |            |   | 14    |      |  |   | 28     |   |  |   | 28    |  
|                                   |  |                        |       |   |            |   |       |      |  |   |        |  
|Net periodic expense               |  | $                      | 1,656 |   |            | $ | 1,598 |      |  | $ | 3,312  |   |  | $ | 3,196 |  
|                                   |  |                        |       |   |            |   |       |      |  |   |        |  



|                              |  |              |      |   |      |  |      |  
|----------------------------- |  | ------------ | ---- | - | ---- |  | ---- | -
|                              |  | Three Months |     
|                              |  | Ended        |     
|                              |  | June 30,     |     
|                              |  |              |     
|                              |  | 2006         |      |   | 2005 | 
|                              |  |              |      |   |      | 
|Assumed discount rate         |  |              | 6.00 | % |      |  | 6.00 | %
|Rate of compensation increase |  |              | 4.00 | % |      |  | 4.00 | %
|Expected return on assets     |  |              | 7.50 | % |      |  | 7.50 | %



66



---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


NOTE 7  LEGAL MATTERS


Accounting for
Contingencies


NOTE 8  SUBSEQUENT EVENTS











|        |                        
|------- | -----------------------
|ITEM 4. | CONTROLS AND PROCEDURES

13a-15 15d-15 10-Q




67



---



##### Table of Contents






PART II.     OTHER
INFORMATION







|        |                  
|------- | -----------------
|ITEM 1. | LEGAL PROCEEDINGS

Accounting for
Contingencies







|         |             
|-------- | ------------
|ITEM 1A. | RISK FACTORS

10-Q







|        |                                                                
|------- | ---------------------------------------------------------------
|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
    PROCEEDS








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



|                            |  |            |            |  |                 |  |           | 
|--------------------------- |  | ---------- | ---------- |  | --------------- |  | --------- | 
|                            |  | Shares For |            |  | Shares Withheld | 
|                            |  |            |            |  |                 | 
|Michael W. Perry            |  |            | 58,588,047 |  |                 |  | 1,456,186 | 
|Louis E. Caldera            |  |            | 59,209,796 |  |                 |  | 834,437   | 
|Lyle E. Gramley             |  |            | 59,343,518 |  |                 |  | 700,715   | 
|Hugh M. Grant               |  |            | 59,357,876 |  |                 |  | 686,357   | 
|Patrick C. Haden            |  |            | 59,394,884 |  |                 |  | 649,349   | 
|Terrance G. Hodel           |  |            | 59,393,067 |  |                 |  | 651,166   | 
|Robert L. Hunt II           |  |            | 59,393,180 |  |                 |  | 651,053   | 
|Senator John Seymour (ret.) |  |            | 59,155,913 |  |                 |  | 888,320   | 
|Bruce G. Willison           |  |            | 59,381,764 |  |                 |  | 662,469   | 



|                                     |  |            |            | 
|------------------------------------ |  | ---------- | ---------- | 
|                                     |  | Number of  |           
|                                     |  | Votes Cast |           
|                                     |  |            |           
|For                                  |  |            | 38,795,271 | 
|Against                              |  |            | 8,008,833  | 
|Abstain (including broker non-votes) |  |            | 13,240,129 | 

68



---



##### Table of Contents





|        |  |            |            | 
|------- |  | ---------- | ---------- | 
|        |  | Number of  |           
|        |  | Votes Cast |           
|        |  |            |           
|For     |  |            | 59,356,284 | 
|Against |  |            | 624,514    | 
|Abstain |  |            | 63,435     | 






|        |                  
|------- | -----------------
|ITEM 5. | OTHER INFORMATION








|        |         
|------- | --------
|ITEM 6. | EXHIBITS

|     |  |                                                                                                                                                          
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | IndyMac Bancorp, Inc. and IndyMac Bank, F.S.B. Board
    Compensation Policy and Stock Ownership Requirements, revised
    April 25, 2006.               
|10.2 |  | IndyMac Bancorp, Inc. Amended Director Emeritus Plan effective
    as of May 24, 2006.                                                                   
|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.

69



---



##### Table of Contents



SIGNATURE






| |                      
| | ---------------------
| | 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

70