##### 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 March 31,
    2004                                               
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to                                                 

Commission file number 1-8972

IndyMac Bancorp, Inc.

(Exact name of registrant as specified in its
charter)


|                                                                                            |  |                                         
|------------------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                                    |  | 95-3983415                              
|(State or other jurisdiction of
    incorporation or organization)                          |  | (I.R.S. Employer
    Identification No.)
|                                                                                           
|155 North Lake Avenue,
    Pasadena, California(Address of principal executive
    offices) |  | 91101-7211(Zip Code)                    

Registrants telephone number, including
area code:

(800) 669-2300


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

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

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

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



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FORM 10-Q QUARTERLY REPORT

For the Period Ended March 31,
2004


TABLE OF CONTENTS

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



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FORWARD-LOOKING STATEMENTS

This Form 10-Q contains statements that may
be deemed to be forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include statements regarding our
projected financial condition and results of operations, plans,
objectives, future performance and business. Forward-looking
statements typically include the words anticipate,
believe, estimate, expect,
project, plan, forecast,
intend and other similar expressions. These
statements reflect our current views with respect to future
events and financial performance. They are subject to risks and
uncertainties that could cause future results to differ
materially from historical results or from the results
anticipated. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of
their dates or as of the date hereof if no other date is
identified. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise. For further information
on our key operating risks, refer to IndyMacs annual
report on Form 10-K for the year ended December 31,
2003.

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




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



HIGHLIGHTS FOR THE QUARTER

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

|                 |                                                         |                                              |   |           |        |              |   |       |        |  |   |       |        | 
|---------------- | ------------------------------------------------------- | -------------------------------------------- | - | --------- | ------ | ------------ | - | ----- | ------ |  | - | ----- | ------ | 
|                 |                                                         |                                             
|                 |                                                         | Three Months Ended                          
|                 |                                                         |                                             
|                 |                                                         | March 31,                                    |   | March 31, |        | December 31,
|                 |                                                         | 2004                                         |   | 2003      |        | 2003        
|                 |                                                         |                                              |   |           |        |             
|                 |                                                         |                                             
|                 |                                                         | (Dollars in millions, except per share data)
|Income Statement |                                                         |                                              |   |           |        |              |   |       |        |  |   |      
|                 | Net interest income after provision for loan
    losses |                                              | $ | 92        |        |              | $ | 60    |        |  | $ | 94    |       
|                 | Gain on sale of loans                                   |                                              | $ | 84        |        |              | $ | 84    |        |  | $ | 80    |       
|                 | Other income                                            |                                              | $ | 9         |        |              | $ | 13    |        |  | $ | 4     |       
|                 | Net revenues                                            |                                              | $ | 185       |        |              | $ | 157   |        |  | $ | 178   |       
|                 | Operating expenses                                      |                                              | $ | 115       |        |              | $ | 96    |        |  | $ | 107   |       
|                 | Net earnings                                            |                                              | $ | 42        |        |              | $ | 37    |        |  | $ | 43    |       
|Per Share Data   |                                                         |                                              |   |           |        |              |   |       |        |  |   |      
|                 | Basic earnings per share                                |                                              | $ | 0.74      |        |              | $ | 0.67  |        |  | $ | 0.78  |       
|                 | Diluted earnings per share                              |                                              | $ | 0.70      |        |              | $ | 0.66  |        |  | $ | 0.75  |       
|                 | Dividends paid per share                                |                                              | $ | 0.25      |        |              | $ | 0.10  |        |  | $ | 0.20  |       
|                 | Book value per share at end of quarter                  |                                              | $ | 18.26     |        |              | $ | 15.99 |        |  | $ | 17.93 |       
|                 | Closing price per share                                 |                                              | $ | 36.29     |        |              | $ | 19.45 |        |  | $ | 29.79 |       
|                 | Average common shares (in thousands)                    |                                              |   |           |        |              |   |       |        |  |   |       |       
|                 |                                                         | Basic                                        |   |           | 56,997 |              |   |       | 54,827 |  |   |       | 55,878 | 
|                 |                                                         | Diluted                                      |   |           | 59,791 |              |   |       | 55,979 |  |   |       | 58,024 | 

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|                                           |                                                                          |                                              |   |           |   |              |   |        |   |  |   |        |  
|------------------------------------------ | ------------------------------------------------------------------------ | -------------------------------------------- | - | --------- | - | ------------ | - | ------ | - |  | - | ------ | -
|                                           |                                                                          |                                             
|                                           |                                                                          | Three Months Ended                          
|                                           |                                                                          |                                             
|                                           |                                                                          | March 31,                                    |   | March 31, |   | December 31,
|                                           |                                                                          | 2004                                         |   | 2003      |   | 2003        
|                                           |                                                                          |                                              |   |           |   |             
|                                           |                                                                          |                                             
|                                           |                                                                          | (Dollars in millions, except per share data)
|Performance Ratios                         |                                                                          |                                              |   |           |   |              |   |        |   |  |   |       
|                                           | Return on average equity (annualized)                                    |                                              |   | 16.16     | % |              |   | 17.20  | % |  |   | 17.20  | %
|                                           | Return on average assets (annualized)                                    |                                              |   | 1.16      | % |              |   | 1.49   | % |  |   | 1.24   | %
|                                           | Dividend payout ratio(1)                                                 |                                              |   | 35.71     | % |              |   | 14.93  | % |  |   | 26.67  | %
|                                           | Net interest income to pretax income                                     |                                              |   | 135.53    | % |              |   | 103.29 | % |  |   | 137.70 | %
|                                           | Average cost of funds                                                    |                                              |   | 2.32      | % |              |   | 3.20   | % |  |   | 2.36   | %
|                                           | Net interest margin                                                      |                                              |   | 2.82      | % |              |   | 2.80   | % |  |   | 3.08   | %
|                                           | Efficiency ratio(2)                                                      |                                              |   | 62        | % |              |   | 60     | % |  |   | 59     | %
|                                           | Capital to net revenue ratio(3)                                          |                                              |   | 1.40      | % |              |   | 1.36   | % |  |   | 1.37   | %
|                                           | Capital adjusted efficiency ratio(4)                                     |                                              |   | 87        | % |              |   | 81     | % |  |   | 81     | %
|                                           | Operating expenses to loan production                                    |                                              |   | 1.61      | % |              |   | 1.45   | % |  |   | 1.63   | %
|Balance Sheet and Asset Quality
    Ratios |                                                                          |                                              |   |           |   |              |   |        |   |  |   |       
|                                           | Debt to equity ratio(5)                                                  |                                              |   | 12.7:1    |   |              |   | 9.7:1  |   |  |   | 12.0:1 |  
|                                           | Core capital ratio(6)                                                    |                                              |   | 7.50      | % |              |   | 9.14   | % |  |   | 7.56   | %
|                                           | Risk-based capital ratio(6)                                              |                                              |   | 13.25     | % |              |   | 14.83  | % |  |   | 12.95  | %
|                                           | Non-performing assets to total assets                                    |                                              |   | 0.75      | % |              |   | 1.03   | % |  |   | 0.76   | %
|                                           | Allowance for loan losses to total loans held for
    investment         |                                              |   | 0.78      | % |              |   | 1.20   | % |  |   | 0.71   | %
|                                           | Allowance for loan losses and other reserves to
    non-performing loans |                                              |   | 80        | % |              |   | 83     | % |  |   | 87     | %
|                                           | Allowance for loan losses to annualized net
    charge-offs              |                                              |   | 645       | % |              |   | 347    | % |  |   | 395    | %
|                                           | Provision for loan losses to net charge-offs                             |                                              |   | 74.3      | % |              |   | 85.8   | % |  |   | 104.9  | %
|                                           | Provision to net charge-offs (core loan
    portfolio)(7)                |                                              |   | 40.0      | % |              |   | 115.9  | % |  |   | 150.8  | %
|Other Selected Items                       |                                                                          |                                              |   |           |   |              |   |        |   |  |   |       
|                                           | Loans serviced(8)                                                        |                                              | $ | 38,930    |   |              | $ | 30,944 |   |  | $ | 36,858 |  
|                                           | Loan production(9)                                                       |                                              | $ | 7,146     |   |              | $ | 6,585  |   |  | $ | 6,577  |  
|                                           | Pipeline of mortgage loans in process                                    |                                              | $ | 5,949     |   |              | $ | 6,044  |   |  | $ | 4,116  |  
|                                           | Loans sold                                                               |                                              | $ | 4,907     |   |              | $ | 5,524  |   |  | $ | 4,641  |  
|                                           | Net margin on sale of loans                                              |                                              |   | 1.71      | % |              |   | 1.52   | % |  |   | 1.72   | %



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|    |                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Dividends declared per common share as a
    percentage of diluted earnings per share.                                                                                                                                                                                                                                                                                                                        
|   
|(2) | Defined as operating expenses divided by net
    interest income and other income.                                                                                                                                                                                                                                                                                                                            
|   
|(3) | Average equity divided by net interest income and
    other income.                                                                                                                                                                                                                                                                                                                                           
|   
|(4) | Efficiency ratio multiplied by the capital to net
    revenue ratio.                                                                                                                                                                                                                                                                                                                                          
|   
|(5) | Debt includes deposits.                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(6) | IndyMac Bank, F.S.B. (excludes unencumbered cash
    at the Parent Company available for investment in IndyMac Bank).
    Risk based capital ratio is based on the regulatory standard
    risk weighting. With IndyMacs additional subprime risk
    weightings, the ratios are 12.61%, 13.76% and 12.29% for the
    quarters ended March 31, 2004, March 31, 2003 and
    December 31, 2003, respectively.
|   
|(7) | Represents the total loan portfolio excluding
    amounts of loans from discontinued product lines.                                                                                                                                                                                                                                                                                                           
|   
|(8) | Represents entire servicing portfolio including
    IndyMac owned loans and loans subserviced for others on an
    interim basis.                                                                                                                                                                                                                                                                             
|   
|(9) | Includes newly originated commitments on
    construction loans.                                                                                                                                                                                                                                                                                                                                              

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OVERALL RESULTS

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

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




OUR BUSINESS

IndyMac is structured to achieve synergies among
its operations and enhance customer service. Operating through
its four main segments, IndyMac Mortgage Bank, IndyMac Consumer
Bank, Home Equity Division and the Investment Portfolio Group,
the common denominator of the Companys business is
providing consumers with single-family residential mortgages
through relationships with each segments core customers.
IndyMac Mortgage Bank is focused on providing consumers with
mortgage products through relationships with the Companys
business customers  mortgage brokers, mortgage
bankers, financial institutions, real estate professionals and
homebuilders. IndyMac Consumer Bank provides the platform for
the mortgage and deposit services that IndyMac offers directly
to consumers The Home Equity Division was previously included in
the Consumer Bank Segment and has been designated as a separate
operating segment this quarter as this unit is now evaluated
directly by our CEO in deciding resource allocations and
assessing performance. The Home Equity Division is a product
focused division that supports the production of home equity
lines of credit (HELOCs) and other home equity products through
all of IndyMacs relationship and consumer direct
production channels. The Investment Portfolio Group serves as
the main link to customers whose mortgages we service. Through
its investments in single-family residential (SFR)
mortgages, mortgage-backed securities (MBS) and
mortgage servicing rights (MSRs), the Investment
Portfolio Group generates core spread and fee income and
provides critical support to IndyMacs mortgage lending
operations.

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

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##### Table of Contents



The following tables summarize the Companys
financial results for the three months ended March 31,
2004, illustrating the revenues earned in its mortgage banking
activities, investing and HELOC activities by each of its
divisions. The profitability of each operating segment is
measured on a fully-leveraged basis after allocating capital
based on regulatory capital rules. The Company uses a fund
transfer pricing (FTP) system to allocate interest
income and expense to the operating segments. Each operating
segment is allocated funding with maturities and interest rates
matched with the expected lives and repricing frequencies of the
segments assets. The Retail Bank division within the
Consumer Banking Group receives a funding credit for deposits
using a similar methodology. The difference between these
allocations and the Companys actual net interest income
and capital levels resulting from centralized management of
funding costs is reported in the Treasury unit. Corporate
overhead costs related to managing the Company as a whole are
not allocated to the operating segments.

5



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##### Table of Contents



The following table summarizes the segment
financial highlights for the three months ended March 31,
2004:

|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |         |         |        |        | 
|------------------------------------------------------- | ---------------------- | ---------------------- | -------------------------- | ----------------- | ------ | ----------- | ------- | ---------- | ----- | ----- | ------- | ------- | --- | --- | --------- | ------ | ------ | ------ | ------- | ------- | ------- | ------- | ---------- | ------- | ------- | ------ | ------ | 
|                                                        |                        |                        |                            |                   |        |             |         | Investment |       |       |         |        
|                                                        |                        | Mortgage               |                            | Consumer          |        | Home Equity |         | Portfolio  |       |       |         | Total  
|                                                        |                        | Bank                   |                            | Bank              |        | Division    |         | Group      |       | Other |         | Company
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |        
|                                                        |                        |                       
|                                                        |                        | (Dollars in thousands)
|Operating Results                                       |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|Mortgage Banking Activities                             |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|Net interest income                                     |                        | $                      | 29,632                     |                   |        | $           | 4,488   |            |       | $     |        |         |     | $   | 7,680     |        |        | $      |        |         |         | $       | 41,800     |        
|Gain (loss) on sale of loans                            |                        |                        | 57,773                     |                   |        |             | 20,347  |            |       |       |        |         |     |     | 13,810    |        |        |        | (8,262  | )       |         |         | 83,668     |        
|Other income (expense)                                  |                        |                        | 8,646                      |                   |        |             | 3,326   |            |       |       |        |         |     |     | (2        | )      |        |        | 137     |         |         |         | 12,107     |        
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|                                                        | Net revenues (expense) |                        |                            | 96,051            |        |             |         | 28,161     |       |       |         |        |     |     |           | 21,488 |        |        |         | (8,125  | )       |         |            | 137,575 |        
|                                                        | Operating expenses     |                        |                            | 42,217            |        |             |         | 19,850     |       |       |         |        |     |     |           | 687    |        |        |         |        |         |         |            | 62,754  |        
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|                                                        |                        | Pretax income (loss)   |                            |                   | 53,834 |             |         |            | 8,311 |       |         |         |    |     |           |        | 20,801 |        |         |         | (8,125  | )       |            |         | 74,821  |       
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|Investing Activities                                    |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|Net interest income                                     |                        |                        | 17,127                     |                   |        |             |        |            |       |       |        |         |     |     | 34,713    |        |        |        | 1,958   |         |         |         | 53,798     |        
|Provision for loan losses                               |                        |                        | (200                       | )                 |        |             |        |            |       |       |        |         |     |     | (1,197    | )      |        |        | (3      | )       |         |         | (1,400     | )      
|Service fee (expense) income                            |                        |                        |                           |                   |        |             |        |            |       |       |        |         |     |     | (5,562    | )      |        |        | 2,223   |         |         |         | (3,339     | )      
|(Loss) gain on sale of securities                       |                        |                        |                           |                   |        |             |        |            |       |       |        |         |     |     | (5,793    | )      |        |        | 806     |         |         |         | (4,987     | )      
|Other income                                            |                        |                        | 1,341                      |                   |        |             |        |            |       |       |        |         |     |     | 1,239     |        |        |        | 708     |         |         |         | 3,288      |        
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|                                                        | Net revenues           |                        |                            | 18,268            |        |             |         |           |       |       |         |        |     |     |           | 23,400 |        |        |         | 5,692   |         |         |            | 47,360  |        
|                                                        | Operating expenses     |                        |                            | 9,995             |        |             |         |           |       |       |         |        |     |     |           | 11,478 |        |        |         |        |         |         |            | 21,473  |        
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|                                                        |                        | Pretax income          |                            |                   | 8,273  |             |         |            |      |       |         |         |    |     |           |        | 11,922 |        |         |         | 5,692   |         |            |         | 25,887  |       
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|HELOC Activities                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|Net interest income                                     |                        |                        | 2,946                      |                   |        |             | 1,288   |            |       |       | 746     |         |     |     |          |        |        |        |        |         |         |         | 4,980      |        
|Provision for loan losses                               |                        |                        | (72                        | )                 |        |             | (24     | )          |       |       | (4      | )       |     |     |          |        |        |        |        |         |         |         | (100       | )      
|Service fee income                                      |                        |                        |                           |                   |        |             |        |            |       |       | 195     |         |     |     |          |        |        |        |        |         |         |         | 195        |        
|Other income                                            |                        |                        | 319                        |                   |        |             | 246     |            |       |       | 151     |         |     |     |          |        |        |        |        |         |         |         | 716        |        
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|                                                        | Net revenues           |                        |                            | 3,193             |        |             |         | 1,510      |       |       |         | 1,088   |     |     |           |       |        |        |         |        |         |         |            | 5,791   |        
|                                                        | Operating expenses     |                        |                            | 422               |        |             |         | 277        |       |       |         | 911     |     |     |           |       |        |        |         |        |         |         |            | 1,610   |        
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|                                                        |                        | Pretax income          |                            |                   | 2,771  |             |         |            | 1,233 |       |         |         | 177 |     |           |        |       |        |         |         |        |         |            |         | 4,181   |       
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|Financing and Other Activities                          |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|Net interest income (loss)                              |                        |                        |                           |                   |        |             | 4,705   |            |       |       |        |         |     |     |          |        |        |        | (11,350 | )       |         |         | (6,645     | )      
|Other income                                            |                        |                        |                           |                   |        |             | 494     |            |       |       |        |         |     |     |          |        |        |        | 117     |         |         |         | 611        |        
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|                                                        | Net revenues (expense) |                        |                            |                  |        |             |         | 5,199      |       |       |         |        |     |     |           |       |        |        |         | (11,233 | )       |         |            | (6,034  | )      
|                                                        | Operating expenses     |                        |                            |                  |        |             |         | 5,035      |       |       |         |        |     |     |           |       |        |        |         | 24,514  |         |         |            | 29,549  |        
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|                                                        |                        | Pretax income (loss)   |                            |                   |       |             |         |            | 164   |       |         |         |    |     |           |        |       |        |         |         | (35,747 | )       |            |         | (35,583 | )     
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|                                                        |                        |                        | Total pretax income (loss) |                   |        | 64,878      |         |            |       | 9,708 |         |         |     | 177 |           |        |        | 32,723 |         |         |         | (38,180 | )          |         |         | 69,306 |       
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|                                                        |                        |                        |                            | Net income (loss) |        | $           | 39,251  |            |       | $     | 5,873   |         |     | $   | 107       |        |        | $      | 19,798  |         |         | $       | (23,099    | )       |         | $      | 41,930 | 
|                                                        |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|Ratios                                                  |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|Percentage of assets                                    |                        |                        | 33.61                      | %                 |        |             | 4.88    | %          |       |       | 0.78    | %       |     |     | 55.99     | %      |        |        | 4.74    | %       |         |         | 100        | %      
|Percentage of total revenue (expense)                   |                        |                        | 63.63                      | %                 |        |             | 18.88   | %          |       |       | 0.59    | %       |     |     | 24.30     | %      |        |        | (7.40   | )%      |         |         | 100        | %      
|Percentage of pretax income (loss)                      |                        |                        | 93.61                      | %                 |        |             | 14.01   | %          |       |       | 0.26    | %       |     |     | 47.22     | %      |        |        | (55.10  | )%      |         |         | 100        | %      
|Balance Sheet Data                                      |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|Average interest-earning assets(1)                      |                        | $                      | 4,800,908                  |                   |        | $           | 666,902 |            |       | $     | 104,253 |         |     | $   | 7,489,153 |        |        | $      | 325,677 |         |         | $       | 13,386,893 |        
|Average total assets                                    |                        | $                      | 4,889,239                  |                   |        | $           | 709,612 |            |       | $     | 113,104 |         |     | $   | 8,145,785 |        |        | $      | 690,632 |         |         | $       | 14,548,372 |        
|Allocated capital                                       |                        | $                      | 324,541                    |                   |        | $           | 50,406  |            |       | $     | 10,040  |         |     | $   | 478,766   |        |        | $      | 179,569 |         |         | $       | 1,043,322  |        
|Capital allocated to mortgage banking activities        |                        | $                      | 156,107                    |                   |        | $           | 27,147  |            |       | $     |        |         |     | $   | 18,877    |        |        | $      |        |         |         | $       | 202,131    |        
|Capital allocated to investing activities               |                        | $                      | 134,090                    |                   |        | $           |        |            |       | $     |        |         |     | $   | 459,889   |        |        | $      |        |         |         | $       | 593,979    |        
|Capital allocated to HELOC activities                   |                        | $                      | 34,344                     |                   |        | $           | 22,019  |            |       | $     | 10,040  |         |     | $   |          |        |        | $      |        |         |         | $       | 66,403     |        
|Capital allocated to financing and other
    activities |                        | $                      |                           |                   |        | $           | 1,240   |            |       | $     |        |         |     | $   |          |        |        | $      | 179,569 |         |         | $       | 180,809    |        
|Allocated capital/total average assets                  |                        |                        | 6.64                       | %                 |        |             | 7.10    | %          |       |       | 8.88    | %       |     |     | 5.88      | %      |        |        | 26.00   | %       |         |         | 7.17       | %      
|Loans Produced                                          |                        | $                      | 5,862,720                  |                   |        | $           | 967,021 |            |       | $     | 34,716  |         |     | $   | 281,642   |        |        | $      |        |         |         | $       | 7,146,099  |        
|Purchase mortgages                                      |                        |                        | 46                         | %                 |        |             | 10      | %          |       |       | N/A     |         |     |     | 0         | %      |        |        | N/A     |         |         |         | 39         | %      
|Cash out refinance mortgages                            |                        |                        | 35                         | %                 |        |             | 57      | %          |       |       | N/A     |         |     |     | 0         | %      |        |        | N/A     |         |         |         | 37         | %      
|Rate and term refinance mortgages                       |                        |                        | 19                         | %                 |        |             | 33      | %          |       |       | N/A     |         |     |     | 100       | %      |        |        | N/A     |         |         |         | 24         | %      
|Performance Ratios                                      |                        |                        |                            |                   |        |             |         |            |       |       |         |         |     |     |           |        |        |        |         |         |         |         |            |        
|Return on equity (ROE)                                  |                        |                        | 49                         | %                 |        |             | 47      | %          |       |       | 4       | %       |     |     | 17        | %      |        |        | N/A     |         |         |         | 16         | %      
|ROE  mortgage banking activities                       |                        |                        | 84                         | %                 |        |             | 74      | %          |       |       |        |         |     |     | 268       | %      |        |        | N/A     |         |         |         | 90         | %      
|ROE  investing activities                              |                        |                        | 15                         | %                 |        |             |        |            |       |       |        |         |     |     | 6         | %      |        |        | N/A     |         |         |         | 11         | %      
|ROE  HELOC activities                                  |                        |                        | 20                         | %                 |        |             | 14      | %          |       |       | 4       | %       |     |     |          |        |        |        | N/A     |         |         |         | 15         | %      
|ROE  financing and other activities                    |                        |                        |                           |                   |        |             | 32      | %          |       |       |        |         |     |     |          |        |        |        | N/A     |         |         |         | (48        | )%     
|Return on assets (ROA)                                  |                        |                        | 3.23                       | %                 |        |             | 3.33    | %          |       |       | 0.38    | %       |     |     | 0.98      | %      |        |        | N/A     |         |         |         | 1.16       | %      
|Net interest margin                                     |                        |                        | 4.16                       | %                 |        |             | 6.32    | %          |       |       | 2.88    | %       |     |     | 2.28      | %      |        |        | N/A     |         |         |         | 2.82       | %      
|Efficiency ratio                                        |                        |                        | 45                         | %                 |        |             | 72      | %          |       |       | 83      | %       |     |     | 26        | %      |        |        | N/A     |         |         |         | 62         | %      
|Capital adjusted efficiency ratio                       |                        |                        | 31                         | %                 |        |             | 26      | %          |       |       | 192     | %       |     |     | 69        | %      |        |        | N/A     |         |         |         | 87         | %      
|Average FTE                                             |                        |                        | 1,947                      |                   |        |             | 857     |            |       |       | 15      |         |     |     | 481       |        |        |        | 621     |         |         |         | 3,921      |        



---

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

6



---



##### Table of Contents



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

|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |        |        |        |        | 
|------------------------------------------------------- | ------------------ | ------------------------- | -------------------------- | ----------------- | ------ | ------ | ------- | ----- | ------ | ------ | --------- | ------ | ----- | ------ | ------- | ----- | ----- | ----- | --------- | ------ | ------ | ------ | ------ | 
|                                                        |                    |                          
|                                                        |                    | Relationship Businesses 
|                                                        |                    | IndyMac Mortgage Bank    
|                                                        |                    |                          
|                                                        |                    | B2B                       |                            | B2R               |        | HCL    |         | HBD   |        | Total 
|                                                        |                    |                           |                            |                   |        |        |         |       |        |       
|                                                        |                    |                          
|                                                        |                    | (Dollars in thousands)   
|Operating Results                                       |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|Mortgage Banking Activities                             |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|Net interest income                                     |                    | $                         | 24,332                     |                   |        | $      | 546     |       |        | $      | 3,880     |        |       | $      | 874     |       |       | $     | 29,632    |       
|Gain on sale of loans                                   |                    |                           | 50,573                     |                   |        |        | 1,664   |       |        |        | 3,866     |        |       |        | 1,670   |       |       |       | 57,773    |       
|Other income                                            |                    |                           | 6,393                      |                   |        |        | 253     |       |        |        | 1,761     |        |       |        | 239     |       |       |       | 8,646     |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|                                                        | Net revenues       |                           |                            | 81,298            |        |        |         | 2,463 |        |        |           | 9,507  |       |        |         | 2,783 |       |       |           | 96,051 |       
|                                                        | Operating expenses |                           |                            | 35,737            |        |        |         | 3,585 |        |        |           | 779    |       |        |         | 2,116 |       |       |           | 42,217 |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|                                                        |                    | Pretax income (loss)      |                            |                   | 45,561 |        |         |       | (1,122 | )      |           |        | 8,728 |        |         |       | 667   |       |           |        | 53,834 |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|Investing Activities                                    |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|Net interest income                                     |                    |                           |                           |                   |        |        |        |       |        |        | 10,297    |        |       |        | 6,830   |       |       |       | 17,127    |       
|Provision for loan losses                               |                    |                           |                           |                   |        |        |        |       |        |        | (100      | )      |       |        | (100    | )     |       |       | (200      | )     
|Service fee income                                      |                    |                           |                           |                   |        |        |        |       |        |        |          |        |       |        |        |       |       |       |          |       
|Loss on sale of securities                              |                    |                           |                           |                   |        |        |        |       |        |        |          |        |       |        |        |       |       |       |          |       
|Other income                                            |                    |                           |                           |                   |        |        |        |       |        |        | 1,241     |        |       |        | 100     |       |       |       | 1,341     |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|                                                        | Net revenues       |                           |                            |                  |        |        |         |      |        |        |           | 11,438 |       |        |         | 6,830 |       |       |           | 18,268 |       
|                                                        | Operating expenses |                           |                            |                  |        |        |         |      |        |        |           | 7,968  |       |        |         | 2,027 |       |       |           | 9,995  |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|                                                        |                    | Pretax income             |                            |                   |       |        |         |       |       |        |           |        | 3,470 |        |         |       | 4,803 |       |           |        | 8,273  |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|HELOC Activities                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|Net interest income                                     |                    |                           | 2,707                      |                   |        |        | 126     |       |        |        | 39        |        |       |        | 74      |       |       |       | 2,946     |       
|Provision for loan losses                               |                    |                           | (67                        | )                 |        |        | (3      | )     |        |        | (1        | )      |       |        | (1      | )     |       |       | (72       | )     
|Service fee income                                      |                    |                           |                           |                   |        |        |        |       |        |        |          |        |       |        |        |       |       |       |          |       
|Other income                                            |                    |                           | 284                        |                   |        |        | 21      |       |        |        | 9         |        |       |        | 5       |       |       |       | 319       |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|                                                        | Net revenues       |                           |                            | 2,924             |        |        |         | 144   |        |        |           | 47     |       |        |         | 78    |       |       |           | 3,193  |       
|                                                        | Operating expenses |                           |                            | 378               |        |        |         | 30    |        |        |           | 6      |       |        |         | 8     |       |       |           | 422    |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|                                                        |                    | Pretax income             |                            |                   | 2,546  |        |         |       | 114    |        |           |        | 41    |        |         |       | 70    |       |           |        | 2,771  |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|Financing and Other Activities                          |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|Net interest income                                     |                    |                           |                           |                   |        |        |        |       |        |        |          |        |       |        |        |       |       |       |          |       
|Other income                                            |                    |                           |                           |                   |        |        |        |       |        |        |          |        |       |        |        |       |       |       |          |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|                                                        | Net revenues       |                           |                            |                  |        |        |         |      |        |        |           |       |       |        |         |      |       |       |           |       |       
|                                                        | Operating expenses |                           |                            |                  |        |        |         |      |        |        |           |       |       |        |         |      |       |       |           |       |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|                                                        |                    | Pretax income             |                            |                   |       |        |         |       |       |        |           |        |      |        |         |       |      |       |           |        |       |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|                                                        |                    |                           | Total pretax income (loss) |                   |        | 48,107 |         |       |        | (1,008 | )         |        |       | 12,239 |         |       |       | 5,540 |           |        |        | 64,878 |       
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|                                                        |                    |                           |                            | Net income (loss) |        | $      | 29,105  |       |        | $      | (610      | )      |       | $      | 7,405   |       |       | $     | 3,351     |        |        | $      | 39,251 | 
|                                                        |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|Ratios                                                  |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|Percentage of assets                                    |                    |                           | 17.80                      | %                 |        |        | 0.54    | %     |        |        | 10.49     | %      |       |        | 4.78    | %     |       |       | 33.61     | %     
|Percentage of total revenue                             |                    |                           | 45.60                      | %                 |        |        | 1.41    | %     |        |        | 11.37     | %      |       |        | 5.25    | %     |       |       | 63.63     | %     
|Percentage of pretax income (loss)                      |                    |                           | 69.41                      | %                 |        |        | (1.45   | )%    |        |        | 17.66     | %      |       |        | 7.99    | %     |       |       | 93.61     | %     
|Balance Sheet Data                                      |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|Average interest-earning assets                         |                    | $                         | 2,514,066                  |                   |        | $      | 76,873  |       |        | $      | 1,519,899 |        |       | $      | 690,070 |       |       | $     | 4,800,908 |       
|Average total assets                                    |                    | $                         | 2,590,331                  |                   |        | $      | 78,492  |       |        | $      | 1,525,436 |        |       | $      | 694,980 |       |       | $     | 4,889,239 |       
|Allocated capital                                       |                    | $                         | 169,220                    |                   |        | $      | 5,157   |       |        | $      | 80,078    |        |       | $      | 70,086  |       |       | $     | 324,541   |       
|Capital allocated to mortgage banking activities        |                    | $                         | 137,902                    |                   |        | $      | 3,277   |       |        | $      | 10,009    |        |       | $      | 4,919   |       |       | $     | 156,107   |       
|Capital allocated to investing activities               |                    | $                         |                           |                   |        | $      |        |       |        | $      | 69,654    |        |       | $      | 64,436  |       |       | $     | 134,090   |       
|Capital allocated to HELOC activities                   |                    | $                         | 31,318                     |                   |        | $      | 1,880   |       |        | $      | 415       |        |       | $      | 731     |       |       | $     | 34,344    |       
|Capital allocated to financing and other
    activities |                    | $                         |                           |                   |        | $      |        |       |        | $      |          |        |       | $      |        |       |       | $     |          |       
|Allocated capital/total average assets                  |                    |                           | 6.53                       | %                 |        |        | 6.57    | %     |        |        | 5.25      | %      |       |        | 10.08   | %     |       |       | 6.64      | %     
|Loans Produced                                          |                    | $                         | 4,472,381                  |                   |        | $      | 109,027 |       |        | $      | 872,339   |        |       | $      | 408,973 |       |       | $     | 5,862,720 |       
|Purchase mortgages                                      |                    |                           | 34                         | %                 |        |        | 51      | %     |        |        | 99        | %      |       |        | 84      | %     |       |       | 46        | %     
|Cash out refinance mortgages                            |                    |                           | 43                         | %                 |        |        | 34      | %     |        |        | 0         | %      |       |        | 11      | %     |       |       | 35        | %     
|Rate and term refinance mortgages                       |                    |                           | 23                         | %                 |        |        | 15      | %     |        |        | 1         | %      |       |        | 5       | %     |       |       | 19        | %     
|Performance Ratios                                      |                    |                           |                            |                   |        |        |         |       |        |        |           |        |       |        |         |       |       |       |           |       
|Return on equity (ROE)                                  |                    |                           | 69                         | %                 |        |        | (48     | )%    |        |        | 37        | %      |       |        | 19      | %     |       |       | 49        | %     
|ROE  mortgage banking activities                       |                    |                           | 80                         | %                 |        |        | (83     | )%    |        |        | 212       | %      |       |        | 33      | %     |       |       | 84        | %     
|ROE  investing activities                              |                    |                           |                           |                   |        |        |        |       |        |        | 12        | %      |       |        | 18      | %     |       |       | 15        | %     
|ROE  HELOC activities                                  |                    |                           | 20                         | %                 |        |        | 15      | %     |        |        | 24        | %      |       |        | 23      | %     |       |       | 20        | %     
|ROE  financing and other activities                    |                    |                           |                           |                   |        |        |        |       |        |        |          |        |       |        |        |       |       |       |          |       
|Return on assets (ROA)                                  |                    |                           | 4.52                       | %                 |        |        | (3.13   | )%    |        |        | 1.95      | %      |       |        | 1.94    | %     |       |       | 3.23      | %     
|Net interest margin                                     |                    |                           | 4.33                       | %                 |        |        | 3.52    | %     |        |        | 3.76      | %      |       |        | 4.53    | %     |       |       | 4.16      | %     
|Efficiency ratio                                        |                    |                           | 43                         | %                 |        |        | 139     | %     |        |        | 41        | %      |       |        | 42      | %     |       |       | 45        | %     
|Capital adjusted efficiency ratio                       |                    |                           | 22                         | %                 |        |        | 68      | %     |        |        | 39        | %      |       |        | 76      | %     |       |       | 31        | %     
|Average FTE                                             |                    |                           | 1,378                      |                   |        |        | 134     |       |        |        | 278       |        |       |        | 157     |       |       |       | 1,947     |       

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

7



---



##### Table of Contents



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

|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |       |     |     |     | 
|------------------------------------------------------- | ------------------ | ---------------------------- | ------------------- | ----------- | ----- | ----- | ------ | -------- | --- | --- | ------- | ------ | ----- | ----- | ------- | ----- | --- | --- | --- | 
|                                                        |                    |                              |                     |            
|                                                        |                    | Consumer Direct Businesses  |                     |            
|                                                        |                    | IndyMac Consumer Bank        |                     |            
|                                                        |                    |                              |                     | Home Equity
|                                                        |                    | B2C                          |                     | Retail Bank |       | Total |        | Division
|                                                        |                    |                              |                     |             |       |       |        |         
|                                                        |                    |                             
|                                                        |                    | (Dollars in thousands)      
|Operating Results                                       |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|Mortgage Banking Activities                             |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|Net interest income                                     |                    | $                            | 4,171               |             |       | $     | 317    |          |     | $   | 4,488   |        |       | $     |        |      
|Gain on sale of loans                                   |                    |                              | 18,706              |             |       |       | 1,641  |          |     |     | 20,347  |        |       |       |        |      
|Other income                                            |                    |                              | 3,132               |             |       |       | 194    |          |     |     | 3,326   |        |       |       |        |      
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|                                                        | Net revenues       |                              |                     | 26,009      |       |       |        | 2,152    |     |     |         | 28,161 |       |       |         |      |    
|                                                        | Operating expenses |                              |                     | 18,362      |       |       |        | 1,488    |     |     |         | 19,850 |       |       |         |      |    
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|                                                        |                    | Pretax income                |                     |             | 7,647 |       |        |          | 664 |     |         |        | 8,311 |       |         |       |    |    
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|Investing Activities                                    |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|Net interest income                                     |                    |                              |                    |             |       |       |       |          |     |     |        |        |       |       |        |      
|Provision for loan losses                               |                    |                              |                    |             |       |       |       |          |     |     |        |        |       |       |        |      
|Service fee income                                      |                    |                              |                    |             |       |       |       |          |     |     |        |        |       |       |        |      
|Loss on sale of securities                              |                    |                              |                    |             |       |       |       |          |     |     |        |        |       |       |        |      
|Other income                                            |                    |                              |                    |             |       |       |       |          |     |     |        |        |       |       |        |      
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|                                                        | Net revenues       |                              |                     |            |       |       |        |         |     |     |         |       |       |       |         |      |    
|                                                        | Operating expenses |                              |                     |            |       |       |        |         |     |     |         |       |       |       |         |      |    
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|                                                        |                    | Pretax income                |                     |             |      |       |        |          |    |     |         |        |      |       |         |       |    |    
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|HELOC Activities                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|Net interest income                                     |                    |                              | 1,158               |             |       |       | 130    |          |     |     | 1,288   |        |       |       | 746     |      
|Provision for loan losses                               |                    |                              | (21                 | )           |       |       | (3     | )        |     |     | (24     | )      |       |       | (4      | )    
|Service fee income                                      |                    |                              |                    |             |       |       |       |          |     |     |        |        |       |       | 195     |      
|Other income                                            |                    |                              | 226                 |             |       |       | 20     |          |     |     | 246     |        |       |       | 151     |      
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|                                                        | Net revenues       |                              |                     | 1,363       |       |       |        | 147      |     |     |         | 1,510  |       |       |         | 1,088 |    
|                                                        | Operating expenses |                              |                     | 248         |       |       |        | 29       |     |     |         | 277    |       |       |         | 911   |    
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|                                                        |                    | Pretax income                |                     |             | 1,115 |       |        |          | 118 |     |         |        | 1,233 |       |         |       | 177 |    
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|Financing and Other Activities                          |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|Net interest income                                     |                    |                              |                    |             |       |       | 4,705  |          |     |     | 4,705   |        |       |       |        |      
|Other income                                            |                    |                              |                    |             |       |       | 494    |          |     |     | 494     |        |       |       |        |      
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|                                                        | Net revenues       |                              |                     |            |       |       |        | 5,199    |     |     |         | 5,199  |       |       |         |      |    
|                                                        | Operating expenses |                              |                     |            |       |       |        | 5,035    |     |     |         | 5,035  |       |       |         |      |    
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|                                                        |                    | Pretax income                |                     |             |      |       |        |          | 164 |     |         |        | 164   |       |         |       |    |    
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|                                                        |                    |                              | Total pretax income |             |       | 8,762 |        |          |     | 946 |         |        |       | 9,708 |         |       |     | 177 |    
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|                                                        |                    |                              |                     | Net income  |       | $     | 5,301  |          |     | $   | 572     |        |       | $     | 5,873   |       |     | $   | 107 | 
|                                                        |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|Ratios                                                  |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|Percentage of assets                                    |                    |                              | 4.31                | %           |       |       | 0.57   | %        |     |     | 4.88    | %      |       |       | 0.78    | %    
|Percentage of total revenue                             |                    |                              | 14.82               | %           |       |       | 4.06   | %        |     |     | 18.88   | %      |       |       | 0.59    | %    
|Percentage of pretax income                             |                    |                              | 12.64               | %           |       |       | 1.36   | %        |     |     | 14.01   | %      |       |       | 0.26    | %    
|Balance Sheet Data                                      |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|Average interest-earning assets                         |                    | $                            | 605,488             |             |       | $     | 61,414 |          |     | $   | 666,902 |        |       | $     | 104,253 |      
|Average total assets                                    |                    | $                            | 626,627             |             |       | $     | 82,985 |          |     | $   | 709,612 |        |       | $     | 113,104 |      
|Allocated capital                                       |                    | $                            | 45,212              |             |       | $     | 5,194  |          |     | $   | 50,406  |        |       | $     | 10,040  |      
|Capital allocated to mortgage banking activities        |                    | $                            | 25,478              |             |       | $     | 1,669  |          |     | $   | 27,147  |        |       | $     |        |      
|Capital allocated to investing activities               |                    | $                            |                    |             |       | $     |       |          |     | $   |        |        |       | $     |        |      
|Capital allocated to HELOC activities                   |                    | $                            | 19,735              |             |       | $     | 2,284  |          |     | $   | 22,019  |        |       | $     | 10,040  |      
|Capital allocated to financing and other
    activities |                    | $                            |                    |             |       | $     | 1,240  |          |     | $   | 1,240   |        |       | $     |        |      
|Allocated capital/total average assets                  |                    |                              | 7.22                | %           |       |       | 6.26   | %        |     |     | 7.10    | %      |       |       | 8.88    | %    
|Loans Produced(1)                                       |                    | $                            | 878,494             |             |       | $     | 88,527 |          |     | $   | 967,021 |        |       | $     | 34,716  |      
|Purchase mortgages                                      |                    |                              | 8                   | %           |       |       | 26     | %        |     |     | 10      | %      |       |       | N/A     |      
|Cash out refinance mortgages                            |                    |                              | 58                  | %           |       |       | 51     | %        |     |     | 57      | %      |       |       | N/A     |      
|Rate and term refinance mortgages                       |                    |                              | 34                  | %           |       |       | 23     | %        |     |     | 33      | %      |       |       | N/A     |      
|Performance Ratios                                      |                    |                              |                     |             |       |       |        |          |     |     |         |        |       |       |         |      
|Return on equity (ROE)                                  |                    |                              | 47                  | %           |       |       | 44     | %        |     |     | 47      | %      |       |       | 4       | %    
|ROE  mortgage banking activities                       |                    |                              | 73                  | %           |       |       | 97     | %        |     |     | 74      | %      |       |       |        |      
|ROE  investing activities                              |                    |                              |                    |             |       |       |       |          |     |     |        |        |       |       |        |      
|ROE  HELOC activities                                  |                    |                              | 14                  | %           |       |       | 13     | %        |     |     | 14      | %      |       |       | 4       | %    
|ROE  financing and other activities                    |                    |                              |                    |             |       |       | 32     | %        |     |     | 32      | %      |       |       |        |      
|Return on assets (ROA)                                  |                    |                              | 3.40                | %           |       |       | N/A    |          |     |     | 3.33    | %      |       |       | 0.38    | %    
|Net interest margin                                     |                    |                              | 3.54                | %           |       |       | N/A    |          |     |     | 6.32    | %      |       |       | 2.88    | %    
|Efficiency ratio                                        |                    |                              | 68                  | %           |       |       | 87     | %        |     |     | 72      | %      |       |       | 83      | %    
|Capital adjusted efficiency ratio                       |                    |                              | 28                  | %           |       |       | 15     | %        |     |     | 26      | %      |       |       | 192     | %    
|Average FTE                                             |                    |                              | 599                 |             |       |       | 258    |          |     |     | 857     |        |       |       | 15      |      

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

8



---



##### Table of Contents



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

|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |        |        |        |        | 
|------------------------------------------------------- | ---------------------- | -------------------------- | -------------------------- | ----------------- | ------- | ------ | --------- | ------------ | ------ | ------ | --------- | ----- | ----- | ----- | ------ | ----- | ------ | ------ | --------- | ------ | ------ | ------ | ------ | 
|                                                        |                        |                           
|                                                        |                        | Investment Portfolio Group
|                                                        |                        |                           
|                                                        |                        | Mortgage                   |                            |                  
|                                                        |                        | Servicing-Related          |                            | SFR Mortgage      |         |        |           | Discontinued |        |       
|                                                        |                        | Assets(1)                  |                            | Loans(2)          |         | MBS(3) |           | Products(4)  |        | Total 
|                                                        |                        |                            |                            |                   |         |        |           |              |        |       
|                                                        |                        |                           
|                                                        |                        | (Dollars in thousands)    
|Operating Results                                       |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|Mortgage Banking Activities                             |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|Net interest income                                     |                        | $                          | 7,680                      |                   |         | $      |          |              |        | $      |          |       |       | $     |       |       |        | $      | 7,680     |       
|Gain on sale of loans                                   |                        |                            | 13,514                     |                   |         |        | 296       |              |        |        |          |       |       |       |       |       |        |        | 13,810    |       
|Other (loss) income                                     |                        |                            | (2                         | )                 |         |        |          |              |        |        |          |       |       |       |       |       |        |        | (2        | )     
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|                                                        | Net revenues           |                            |                            | 21,192            |         |        |           | 296          |        |        |           |      |       |       |        |      |        |        |           | 21,488 |       
|                                                        | Operating expenses     |                            |                            | 687               |         |        |           |             |        |        |           |      |       |       |        |      |        |        |           | 687    |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|                                                        |                        | Pretax income              |                            |                   | 20,505  |        |           |              | 296    |        |           |       |      |       |        |       |       |        |           |        | 20,801 |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|Investing Activities                                    |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|Net interest income                                     |                        |                            | 7,234                      |                   |         |        | 18,334    |              |        |        | 8,044     |       |       |       | 1,101  |       |        |        | 34,713    |       
|Provision for loan losses                               |                        |                            |                           |                   |         |        | (97       | )            |        |        |          |       |       |       | (1,100 | )     |        |        | (1,197    | )     
|Service fee expense                                     |                        |                            | (5,562                     | )                 |         |        |          |              |        |        |          |       |       |       |       |       |        |        | (5,562    | )     
|(Loss) gain on sale of securities                       |                        |                            | (6,693                     | )                 |         |        |          |              |        |        | 900       |       |       |       |       |       |        |        | (5,793    | )     
|Other income                                            |                        |                            | 484                        |                   |         |        | 755       |              |        |        |          |       |       |       |       |       |        |        | 1,239     |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|                                                        | Net (expense) revenues |                            |                            | (4,537            | )       |        |           | 18,992       |        |        |           | 8,944 |       |       |        | 1     |        |        |           | 23,400 |       
|                                                        | Operating expenses     |                            |                            | 9,203             |         |        |           | 918          |        |        |           | 305   |       |       |        | 1,052 |        |        |           | 11,478 |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|                                                        |                        | Pretax (loss) income       |                            |                   | (13,740 | )      |           |              | 18,074 |        |           |       | 8,639 |       |        |       | (1,051 | )      |           |        | 11,922 |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|HELOC Activities                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|Net interest income                                     |                        |                            |                           |                   |         |        |          |              |        |        |          |       |       |       |       |       |        |        |          |       
|Provision for loan losses                               |                        |                            |                           |                   |         |        |          |              |        |        |          |       |       |       |       |       |        |        |          |       
|Service fee income                                      |                        |                            |                           |                   |         |        |          |              |        |        |          |       |       |       |       |       |        |        |          |       
|Other income                                            |                        |                            |                           |                   |         |        |          |              |        |        |          |       |       |       |       |       |        |        |          |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|                                                        | Net revenues           |                            |                            |                  |         |        |           |             |        |        |           |      |       |       |        |      |        |        |           |       |       
|                                                        | Operating expenses     |                            |                            |                  |         |        |           |             |        |        |           |      |       |       |        |      |        |        |           |       |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|                                                        |                        | Pretax income              |                            |                   |        |        |           |              |       |        |           |       |      |       |        |       |       |        |           |        |       |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|Financing and Other Activities                          |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|Net interest income                                     |                        |                            |                           |                   |         |        |          |              |        |        |          |       |       |       |       |       |        |        |          |       
|Other income                                            |                        |                            |                           |                   |         |        |          |              |        |        |          |       |       |       |       |       |        |        |          |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|                                                        | Net revenues           |                            |                            |                  |         |        |           |             |        |        |           |      |       |       |        |      |        |        |           |       |       
|                                                        | Operating expenses     |                            |                            |                  |         |        |           |             |        |        |           |      |       |       |        |      |        |        |           |       |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|                                                        |                        | Pretax income              |                            |                   |        |        |           |              |       |        |           |       |      |       |        |       |       |        |           |        |       |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|                                                        |                        |                            | Total pretax income (loss) |                   |         | 6,765  |           |              |        | 18,370 |           |       |       | 8,639 |        |       |        | (1,051 | )         |        |        | 32,723 |       
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|                                                        |                        |                            |                            | Net income (loss) |         | $      | 4,093     |              |        | $      | 11,114    |       |       | $     | 5,227  |       |        | $      | (636      | )      |        | $      | 19,798 | 
|                                                        |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|Ratios                                                  |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|Percentage of assets                                    |                        |                            | 11.13                      | %                 |         |        | 33.34     | %            |        |        | 11.11     | %     |       |       | 0.42   | %     |        |        | 55.99     | %     
|Percentage of total revenue                             |                        |                            | 9.02                       | %                 |         |        | 10.44     | %            |        |        | 4.84      | %     |       |       | 0.00   | %     |        |        | 24.30     | %     
|Percentage of pretax income (loss)                      |                        |                            | 9.76                       | %                 |         |        | 26.51     | %            |        |        | 12.47     | %     |       |       | (1.52  | )%    |        |        | 47.22     | %     
|Balance Sheet Data                                      |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|Average interest-earning assets                         |                        | $                          | 991,723                    |                   |         | $      | 4,839,307 |              |        | $      | 1,590,575 |       |       | $     | 67,548 |       |        | $      | 7,489,153 |       
|Average total assets                                    |                        | $                          | 1,618,683                  |                   |         | $      | 4,850,752 |              |        | $      | 1,615,815 |       |       | $     | 60,535 |       |        | $      | 8,145,785 |       
|Allocated capital                                       |                        | $                          | 200,874                    |                   |         | $      | 234,973   |              |        | $      | 37,009    |       |       | $     | 5,910  |       |        | $      | 478,766   |       
|Capital allocated to mortgage banking activities        |                        | $                          | 18,877                     |                   |         | $      |          |              |        | $      |          |       |       | $     |       |       |        | $      | 18,877    |       
|Capital allocated to investing activities               |                        | $                          | 181,997                    |                   |         | $      | 234,973   |              |        | $      | 37,009    |       |       | $     | 5,910  |       |        | $      | 459,889   |       
|Capital allocated to HELOC activities                   |                        | $                          |                           |                   |         | $      |          |              |        | $      |          |       |       | $     |       |       |        | $      |          |       
|Capital allocated to financing and other
    activities |                        | $                          |                           |                   |         | $      |          |              |        | $      |          |       |       | $     |       |       |        | $      |          |       
|Allocated capital/ total average assets                 |                        |                            | 12.41                      | %                 |         |        | 4.84      | %            |        |        | 2.29      | %     |       |       | 9.76   | %     |        |        | 5.88      | %     
|Loans Produced                                          |                        | $                          | 281,642                    |                   |         | $      |          |              |        | $      |          |       |       | $     |       |       |        | $      | 281,642   |       
|Performance Ratios                                      |                        |                            |                            |                   |         |        |           |              |        |        |           |       |       |       |        |       |        |        |           |       
|Return on equity (ROE)                                  |                        |                            | 8                          | %                 |         |        | 19        | %            |        |        | 57        | %     |       |       | (43    | )%    |        |        | 17        | %     
|ROE  mortgage banking activities                       |                        |                            | 264                        | %                 |         |        |          |              |        |        |          |       |       |       |       |       |        |        | 268       | %     
|ROE  investing activities                              |                        |                            | (18                        | )%                |         |        | 19        | %            |        |        | 57        | %     |       |       | (43    | )%    |        |        | 6         | %     
|ROE  HELOC activities                                  |                        |                            |                           |                   |         |        |          |              |        |        |          |       |       |       |       |       |        |        |          |       
|ROE  financing and other activities                    |                        |                            |                           |                   |         |        |          |              |        |        |          |       |       |       |       |       |        |        |          |       
|Return on assets (ROA)                                  |                        |                            | 1.02                       | %                 |         |        | 0.92      | %            |        |        | 1.30      | %     |       |       | (4.23  | )%    |        |        | 0.98      | %     
|Net interest margin                                     |                        |                            | 6.05                       | %                 |         |        | 1.52      | %            |        |        | 2.03      | %     |       |       | 6.56   | %     |        |        | 2.28      | %     
|Efficiency ratio                                        |                        |                            | 59                         | %                 |         |        | 5         | %            |        |        | 3         | %     |       |       | 96     | %     |        |        | 26        | %     
|Capital adjusted efficiency ratio                       |                        |                            | 179                        | %                 |         |        | 14        | %            |        |        | 4         | %     |       |       | 128    | %     |        |        | 69        | %     
|Average FTE                                             |                        |                            | 437                        |                   |         |        | 11        |              |        |        | 4         |       |       |       | 29     |       |        |        | 481       |       



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Mortgage servicing-related assets include the
    following: (i) MSRs, interest-only strips and residual
    securities, (ii) securities held as hedges of such assets,
    including principal-only securities, agency debentures and
    U.S. treasury bonds, (iii) loans acquired through
    clean-up calls or through the Investment Portfolio Groups
    customer retention programs, and (iv) investment and
    non-investment grade securities.
|   
|(2) | Assets include all single-family residential
    loans held for investment other than discontinued products.                                                                                                                                                                                                                                                                                                                                             
|   
|(3) | Assets include AAA-rated agency and private label
    MBS.                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(4) | Discontinued products are home improvement and
    manufactured housing loans.                                                                                                                                                                                                                                                                                                                                                                           

9



---



##### Table of Contents



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

|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |         |         |        |        | 
|------------------------------------------------------- | ---------------------- | ---------------------- | -------------------------- | ----------------- | ------- | --------- | ---------- | ------------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | ------ | ------ | ---------- | ------- | ------- | ------ | ------ | 
|                                                        |                        | Treasury               |                            |                   |         | Corporate |            |              |         | Total  
|                                                        |                        | Group(1)               |                            | Subtotal          |         | Overhead  |            | Eliminations |         | Company
|                                                        |                        |                        |                            |                   |         |           |            |              |         |        
|                                                        |                        |                       
|                                                        |                        | (Dollars in thousands)
|Operating Results                                       |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|Mortgage Banking Activities                             |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|Net interest income                                     |                        | $                      |                           |                   |         | $         | 41,800     |              |         | $       |        |        |         | $       |        |        |        | $      | 41,800     |        
|Gain (loss) on sale of loans                            |                        |                        |                           |                   |         |           | 91,930     |              |         |         |        |        |         |         | (8,262  | )      |        |        | 83,668     |        
|Other income                                            |                        |                        |                           |                   |         |           | 11,970     |              |         |         |        |        |         |         | 137     |        |        |        | 12,107     |        
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|                                                        | Net revenues (expense) |                        |                            |                  |         |           |            | 145,700      |         |         |         |       |         |         |         | (8,125 | )      |        |            | 137,575 |        
|                                                        | Operating expenses     |                        |                            |                  |         |           |            | 62,754       |         |         |         |       |         |         |         |       |        |        |            | 62,754  |        
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|                                                        |                        | Pretax income (loss)   |                            |                   |        |           |            |              | 82,946  |         |         |        |        |         |         |        | (8,125 | )      |            |         | 74,821  |       
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|Investing Activities                                    |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|Net interest income                                     |                        |                        |                           |                   |         |           | 51,840     |              |         |         |        |        |         |         | 1,958   |        |        |        | 53,798     |        
|Provision for loan losses                               |                        |                        |                           |                   |         |           | (1,397     | )            |         |         |        |        |         |         | (3      | )      |        |        | (1,400     | )      
|Service fee (expense) income                            |                        |                        |                           |                   |         |           | (5,562     | )            |         |         |        |        |         |         | 2,223   |        |        |        | (3,339     | )      
|(Loss) gain on sale of securities                       |                        |                        |                           |                   |         |           | (5,793     | )            |         |         |        |        |         |         | 806     |        |        |        | (4,987     | )      
|Other income                                            |                        |                        |                           |                   |         |           | 2,580      |              |         |         | 708     |        |         |         |        |        |        |        | 3,288      |        
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|                                                        | Net revenues           |                        |                            |                  |         |           |            | 41,668       |         |         |         | 708    |         |         |         | 4,984  |        |        |            | 47,360  |        
|                                                        | Operating expenses     |                        |                            |                  |         |           |            | 21,473       |         |         |         |       |         |         |         |       |        |        |            | 21,473  |        
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|                                                        |                        | Pretax income          |                            |                   |        |           |            |              | 20,195  |         |         |        | 708     |         |         |        | 4,984  |        |            |         | 25,887  |       
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|HELOC Activities                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|Net interest income                                     |                        |                        |                           |                   |         |           | 4,980      |              |         |         |        |        |         |         |        |        |        |        | 4,980      |        
|Provision for loan losses                               |                        |                        |                           |                   |         |           | (100       | )            |         |         |        |        |         |         |        |        |        |        | (100       | )      
|Service fee income                                      |                        |                        |                           |                   |         |           | 195        |              |         |         |        |        |         |         |        |        |        |        | 195        |        
|Other income                                            |                        |                        |                           |                   |         |           | 716        |              |         |         |        |        |         |         |        |        |        |        | 716        |        
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|                                                        | Net revenues           |                        |                            |                  |         |           |            | 5,791        |         |         |         |       |         |         |         |       |        |        |            | 5,791   |        
|                                                        | Operating expenses     |                        |                            |                  |         |           |            | 1,610        |         |         |         |       |         |         |         |       |        |        |            | 1,610   |        
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|                                                        |                        | Pretax income          |                            |                   |        |           |            |              | 4,181   |         |         |        |        |         |         |        |       |        |            |         | 4,181   |       
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|Financing and Other Activities                          |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|Net interest loss                                       |                        |                        | (10,682                    | )                 |         |           | (5,977     | )            |         |         | (668    | )      |         |         |        |        |        |        | (6,645     | )      
|Other income                                            |                        |                        | 114                        |                   |         |           | 608        |              |         |         |        |        |         |         | 3       |        |        |        | 611        |        
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|                                                        | Net (expense) revenues |                        |                            | (10,568           | )       |           |            | (5,369       | )       |         |         | (668   | )       |         |         | 3      |        |        |            | (6,034  | )      
|                                                        | Operating expenses     |                        |                            | 873               |         |           |            | 5,908        |         |         |         | 23,641 |         |         |         |       |        |        |            | 29,549  |        
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|                                                        |                        | Pretax (loss) income   |                            |                   | (11,441 | )         |            |              | (11,277 | )       |         |        | (24,309 | )       |         |        | 3      |        |            |         | (35,583 | )     
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|                                                        |                        |                        | Total pretax (loss) income |                   |         | (11,441   | )          |              |         | 96,045  |         |        |         | (23,601 | )       |        |        | (3,138 | )          |         |         | 69,306 |       
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|                                                        |                        |                        |                            | Net (loss) income |         | $         | (6,922     | )            |         | $       | 58,107  |        |         | $       | (14,279 | )      |        | $      | (1,898     | )       |         | $      | 41,930 | 
|                                                        |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|Ratios                                                  |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|Percentage of assets                                    |                        |                        | 3.55                       | %                 |         |           | 98.81      | %            |         |         | 1.19    | %      |         |         | 0.00    | %      |        |        | 100        | %      
|Percentage of total (expense) revenue                   |                        |                        | (5.72                      | )%                |         |           | 101.68     | %            |         |         | 0.02    | %      |         |         | (1.70   | )%     |        |        | 100        | %      
|Percentage of pretax (loss) income                      |                        |                        | (16.51                     | )%                |         |           | 138.59     | %            |         |         | (34.06  | )%     |         |         | (4.53   | )%     |        |        | 100        | %      
|Balance Sheet Data                                      |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|Average interest-earning assets                         |                        | $                      | 317,084                    |                   |         | $         | 13,378,300 |              |         | $       | 8,593   |        |         | $       |        |        |        | $      | 13,386,893 |        
|Average total assets                                    |                        | $                      | 516,485                    |                   |         | $         | 14,374,225 |              |         | $       | 174,147 |        |         | $       |        |        |        | $      | 14,548,372 |        
|Allocated capital                                       |                        | $                      | 27,378                     |                   |         | $         | 891,131    |              |         | $       | 152,191 |        |         | $       |        |        |        | $      | 1,043,322  |        
|Capital allocated to mortgage banking activities        |                        | $                      |                           |                   |         | $         | 202,131    |              |         | $       |        |        |         | $       |        |        |        | $      | 202,131    |        
|Capital allocated to investing activities               |                        | $                      |                           |                   |         | $         | 593,979    |              |         | $       |        |        |         | $       |        |        |        | $      | 593,979    |        
|Capital allocated to HELOC activities                   |                        | $                      |                           |                   |         | $         | 66,403     |              |         | $       |        |        |         | $       |        |        |        | $      | 66,403     |        
|Capital allocated to financing and other
    activities |                        | $                      | 27,378                     |                   |         | $         | 28,618     |              |         | $       | 152,191 |        |         | $       |        |        |        | $      | 180,809    |        
|Allocated capital/ total average assets                 |                        |                        | 5.30                       | %                 |         |           | 6.20       | %            |         |         | 87.39   | %      |         |         |        |        |        |        | 7.17       | %      
|Loans Produced                                          |                        | $                      |                           |                   |         | $         | 7,146,099  |              |         | $       |        |        |         | $       |        |        |        | $      | 7,146,099  |        
|Purchase mortgages                                      |                        |                        | N/A                        |                   |         |           | N/A        |              |         |         | N/A     |        |         |         | N/A     |        |        |        | 39         | %      
|Cash out refinance mortgages                            |                        |                        | N/A                        |                   |         |           | N/A        |              |         |         | N/A     |        |         |         | N/A     |        |        |        | 37         | %      
|Rate and term refinance mortgages                       |                        |                        | N/A                        |                   |         |           | N/A        |              |         |         | N/A     |        |         |         | N/A     |        |        |        | 24         | %      
|Performance Ratios                                      |                        |                        |                            |                   |         |           |            |              |         |         |         |        |         |         |         |        |        |        |            |        
|Return on equity (ROE)                                  |                        |                        | N/A                        |                   |         |           | 26         | %            |         |         | N/A     |        |         |         | N/A     |        |        |        | 16         | %      
|ROE  mortgage banking                                  |                        |                        | N/A                        |                   |         |           | 100        | %            |         |         | N/A     |        |         |         | N/A     |        |        |        | 90         | %      
|ROE  investing activities                              |                        |                        | N/A                        |                   |         |           | 8          | %            |         |         | N/A     |        |         |         | N/A     |        |        |        | 11         | %      
|ROE  HELOC activities                                  |                        |                        | N/A                        |                   |         |           | 15         | %            |         |         | N/A     |        |         |         | N/A     |        |        |        | 15         | %      
|ROE  financing and other activities                    |                        |                        | N/A                        |                   |         |           | (96        | )%           |         |         | N/A     |        |         |         | N/A     |        |        |        | (48        | )%     
|Return on assets (ROA)                                  |                        |                        | N/A                        |                   |         |           | 1.63       | %            |         |         | N/A     |        |         |         | N/A     |        |        |        | 1.16       | %      
|Net interest margin                                     |                        |                        | N/A                        |                   |         |           | 2.79       | %            |         |         | N/A     |        |         |         | N/A     |        |        |        | 2.82       | %      
|Efficiency ratio                                        |                        |                        | N/A                        |                   |         |           | 48         | %            |         |         | N/A     |        |         |         | N/A     |        |        |        | 62         | %      
|Capital adjusted efficiency ratio                       |                        |                        | N/A                        |                   |         |           | 57         | %            |         |         | N/A     |        |         |         | N/A     |        |        |        | 87         | %      
|Average FTE                                             |                        |                        | 25                         |                   |         |           | 3,325      |              |         |         | 596     |        |         |         | N/A     |        |        |        | 3,921      |        



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

10



---



##### Table of Contents



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

|                                  |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|--------------------------------- |  | ----------------------------------------------- | ------ | --- |  | --- | ------ | --- |  | ----- | ------ | -- |  | - | ----- | -- |  | - | ------ | --
|                                  |  |                                                
|                                  |  | Relationship Businesses  IndyMac Mortgage Bank
|                                  |  |                                                
|                                  |  | B2B                                             |        | B2R |  | HCL |        | HBD |  | Total
|                                  |  |                                                 |        |     |  |     |        |     |  |      
|                                  |  |                                                
|                                  |  | (Dollars in thousands)                         
|Mortgage Banking Activities       |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q1 04  Pretax income (loss)      |  | $                                               | 45,561 |     |  | $   | (1,122 | )   |  | $     | 8,728  |    |  | $ | 667   |    |  | $ | 53,834 |   
|Q4 03  Pretax income (loss)      |  |                                                 | 44,648 |     |  |     | (159   | )   |  |       | 13,161 |    |  |   | 1,087 |    |  |   | 58,737 |   
|Annualized Percent Change         |  |                                                 | 8      | %   |  |     | (2,423 | )%  |  |       | (135   | )% |  |   | (155  | )% |  |   | (33    | )%
|Q1 03  Pretax income (loss)      |  |                                                 | 55,221 |     |  |     | (197   | )   |  |       | 8,363  |    |  |   | 882   |    |  |   | 64,269 |   
|Percent Change                    |  |                                                 | (17    | )%  |  |     | (470   | )%  |  |       | 4      | %  |  |   | (24   | )% |  |   | (16    | )%
|Investing Activities              |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q1 04  Pretax income             |  |                                                 |       |     |  |     |       |     |  |       | 3,470  |    |  |   | 4,803 |    |  |   | 8,273  |   
|Q4 03 Pretax income              |  |                                                 |       |     |  |     |       |     |  |       | 3,467  |    |  |   | 5,076 |    |  |   | 8,543  |   
|Annualized Percent Change         |  |                                                 | NM     |     |  |     | NM     |     |  |       | 0      | %  |  |   | (22   | )% |  |   | (13    | )%
|Q1 03  Pretax income             |  |                                                 |       |     |  |     |       |     |  |       | 3,820  |    |  |   | 5,491 |    |  |   | 9,311  |   
|Percent Change                    |  |                                                 | NM     |     |  |     | NM     |     |  |       | (9     | )% |  |   | (13   | )% |  |   | (11    | )%
|HELOC Activities                  |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q1 04  Pretax income             |  |                                                 | 2,546  |     |  |     | 114    |     |  |       | 41     |    |  |   | 70    |    |  |   | 2,771  |   
|Q4 03  Pretax income             |  |                                                 | 1,634  |     |  |     | 55     |     |  |       | 34     |    |  |   | 41    |    |  |   | 1,764  |   
|Annualized Percent Change         |  |                                                 | 223    | %   |  |     | 429    | %   |  |       | 82     | %  |  |   | 283   | %  |  |   | 228    | % 
|Q1 03  Pretax income             |  |                                                 | 928    |     |  |     | 79     |     |  |       | 52     |    |  |   | 7     |    |  |   | 1,066  |   
|Percent Change                    |  |                                                 | 174    | %   |  |     | 44     | %   |  |       | (21    | )% |  |   | 900   | %  |  |   | 160    | % 
|Financing and Other Activities    |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q1 04  Pretax income             |  |                                                 |       |     |  |     |       |     |  |       |       |    |  |   |      |    |  |   |       |   
|Q4 03  Pretax income             |  |                                                 |       |     |  |     |       |     |  |       |       |    |  |   |      |    |  |   |       |   
|Q1 03  Pretax income             |  |                                                 |       |     |  |     |       |     |  |       |       |    |  |   |      |    |  |   |       |   
|Net Income                        |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q1 04  Net income (loss)         |  |                                                 | 29,105 |     |  |     | (610   | )   |  |       | 7,405  |    |  |   | 3,351 |    |  |   | 39,251 |   
|Q4 03  Net income (loss)         |  |                                                 | 28,001 |     |  |     | (63    | )   |  |       | 10,081 |    |  |   | 3,753 |    |  |   | 41,772 |   
|Annualized Percent Change         |  |                                                 | 16     | %   |  |     | (3,473 | )%  |  |       | (106   | )% |  |   | (43   | )% |  |   | (24    | )%
|Q1 03  Net income (loss)         |  |                                                 | 33,970 |     |  |     | (71    | )   |  |       | 7,402  |    |  |   | 3,860 |    |  |   | 45,161 |   
|Percent Change                    |  |                                                 | (14    | )%  |  |     | (759   | )%  |  |       | 0      | %  |  |   | (13   | )% |  |   | (13    | )%
|Performance Ratios                |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q1 04                             |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|ROE                               |  |                                                 | 69     | %   |  |     | (48    | )%  |  |       | 37     | %  |  |   | 19    | %  |  |   | 49     | % 
|ROA                               |  |                                                 | 4.52   | %   |  |     | (3.13  | )%  |  |       | 1.95   | %  |  |   | 1.94  | %  |  |   | 3.23   | % 
|NIM                               |  |                                                 | 4.33   | %   |  |     | 3.52   | %   |  |       | 3.76   | %  |  |   | 4.53  | %  |  |   | 4.16   | % 
|Efficiency ratio                  |  |                                                 | 43     | %   |  |     | 139    | %   |  |       | 41     | %  |  |   | 42    | %  |  |   | 45     | % 
|Capital adjusted efficiency ratio |  |                                                 | 22     | %   |  |     | 68     | %   |  |       | 39     | %  |  |   | 76    | %  |  |   | 31     | % 
|Average FTE                       |  |                                                 | 1,378  |     |  |     | 134    |     |  |       | 278    |    |  |   | 157   |    |  |   | 1,947  |   
|Q4 03                             |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|ROE                               |  |                                                 | 73     | %   |  |     | (4     | )%  |  |       | 55     | %  |  |   | 23    | %  |  |   | 56     | % 
|ROA                               |  |                                                 | 4.77   | %   |  |     | (0.30  | )%  |  |       | 2.95   | %  |  |   | 2.32  | %  |  |   | 3.76   | % 
|NIM                               |  |                                                 | 4.24   | %   |  |     | 4.23   | %   |  |       | 4.06   | %  |  |   | 4.90  | %  |  |   | 4.28   | % 
|Efficiency ratio                  |  |                                                 | 41     | %   |  |     | 102    | %   |  |       | 35     | %  |  |   | 37    | %  |  |   | 41     | % 
|Capital adjusted efficiency ratio |  |                                                 | 20     | %   |  |     | 44     | %   |  |       | 25     | %  |  |   | 60    | %  |  |   | 26     | % 
|Average FTE                       |  |                                                 | 1,411  |     |  |     | 146    |     |  |       | 258    |    |  |   | 137   |    |  |   | 1,952  |   
|Q1 03                             |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|ROE                               |  |                                                 | 95     | %   |  |     | (4     | )%  |  |       | 49     | %  |  |   | 22    | %  |  |   | 65     | % 
|ROA                               |  |                                                 | 6.28   | %   |  |     | (0.26  | )%  |  |       | 2.67   | %  |  |   | 2.33  | %  |  |   | 4.47   | % 
|NIM                               |  |                                                 | 4.66   | %   |  |     | 4.04   | %   |  |       | 4.39   | %  |  |   | 4.94  | %  |  |   | 4.62   | % 
|Efficiency ratio                  |  |                                                 | 34     | %   |  |     | 102    | %   |  |       | 35     | %  |  |   | 33    | %  |  |   | 36     | % 
|Capital adjusted efficiency ratio |  |                                                 | 14     | %   |  |     | 41     | %   |  |       | 28     | %  |  |   | 58    | %  |  |   | 22     | % 
|Average FTE                       |  |                                                 | 1,074  |     |  |     | 145    |     |  |       | 211    |    |  |   | 90    |    |  |   | 1,520  |   

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

11



---



##### Table of Contents



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

|                                  |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|--------------------------------- |  | ---------------------------- | ------ | ----------- |  | ----- | ------ | -------- |  | - | ------ | -- |  | - | ----- | --
|                                  |  |                              |        |            
|                                  |  | Consumer Direct Businesses  |        |            
|                                  |  | IndyMac Consumer Bank        |        |            
|                                  |  |                              |        | Home Equity
|                                  |  | B2C                          |        | Retail Bank |  | Total |        | Division
|                                  |  |                              |        |             |  |       |        |         
|                                  |  |                             
|                                  |  | (Dollars in thousands)      
|Mortgage Banking Activities       |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q1 04  Pretax income             |  | $                            | 7,647  |             |  | $     | 664    |          |  | $ | 8,311  |    |  | $ |      |   
|Q4 03  Pretax income             |  |                              | 8,406  |             |  |       | 368    |          |  |   | 8,774  |    |  |   |      |   
|Annualized Percent Change         |  |                              | (36    | )%          |  |       | 322    | %        |  |   | (21    | )% |  |   |      |   
|Q1 03  Pretax income             |  |                              | 16,249 |             |  |       | 674    |          |  |   | 16,923 |    |  |   |      |   
|Percent Change                    |  |                              | (53    | )%          |  |       | (1     | )%       |  |   | (51    | )% |  |   |      |   
|Investing Activities              |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q1 04  Pretax income             |  |                              |       |             |  |       |       |          |  |   |       |    |  |   |      |   
|Q4 03  Pretax income             |  |                              |       |             |  |       |       |          |  |   |       |    |  |   |      |   
|Annualized Percent Change         |  |                              | NM     |             |  |       | NM     |          |  |   |        | %  |  |   |      |   
|Q1 03  Pretax income             |  |                              |       |             |  |       |       |          |  |   |       |    |  |   |      |   
|Percent Change                    |  |                              | NM     |             |  |       | NM     |          |  |   |        | %  |  |   |      |   
|HELOC Activities                  |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q1 04  Pretax income             |  |                              | 1,115  |             |  |       | 118    |          |  |   | 1,233  |    |  |   | 177   |   
|Q4 03  Pretax income             |  |                              | 604    |             |  |       | 45     |          |  |   | 649    |    |  |   | 153   |   
|Annualized Percent Change         |  |                              | 338    | %           |  |       | 649    | %        |  |   | 360    | %  |  |   | 63    | % 
|Q1 03  Pretax income             |  |                              | 472    |             |  |       | 78     |          |  |   | 550    |    |  |   | (560  | ) 
|Percent Change                    |  |                              | 136    | %           |  |       | 51     | %        |  |   | 124    | %  |  |   | 132   | % 
|Financing and Other Activities    |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q1 04  Pretax income             |  |                              |       |             |  |       | 164    |          |  |   | 164    |    |  |   |      |   
|Q4 03  Pretax income             |  |                              |       |             |  |       | 209    |          |  |   | 209    |    |  |   |      |   
|Q1 03  Pretax loss               |  |                              |       |             |  |       | (3,344 | )        |  |   | (3,344 | )  |  |   |      |   
|Net Income                        |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q1 04  Net income                |  |                              | 5,301  |             |  |       | 572    |          |  |   | 5,873  |    |  |   | 107   |   
|Q4 03  Net income                |  |                              | 5,451  |             |  |       | 376    |          |  |   | 5,827  |    |  |   | 93    |   
|Annualized Percent Change         |  |                              | (11    | )%          |  |       | 209    | %        |  |   | 3      | %  |  |   | 60    | % 
|Q1 03  Net income (loss)         |  |                              | 10,116 |             |  |       | (1,568 | )        |  |   | 8,548  |    |  |   | (339  | ) 
|Percent Change                    |  |                              | (48    | )%          |  |       | 136    | %        |  |   | (31    | )% |  |   | 132   | % 
|Performance Ratios                |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q1 04                             |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|ROE                               |  |                              | 47     | %           |  |       | 44     | %        |  |   | 47     | %  |  |   | 4     | % 
|ROA                               |  |                              | 3.40   | %           |  |       |       |          |  |   | 3.33   | %  |  |   | 0.38  | % 
|NIM                               |  |                              | 3.54   | %           |  |       |       |          |  |   | 6.32   | %  |  |   | 2.88  | % 
|Efficiency ratio                  |  |                              | 68     | %           |  |       | 87     | %        |  |   | 72     | %  |  |   | 83    | % 
|Capital adjusted efficiency ratio |  |                              | 28     | %           |  |       | 15     | %        |  |   | 26     | %  |  |   | 192   | % 
|Average FTE                       |  |                              | 599    |             |  |       | 258    |          |  |   | 857    |    |  |   | 15    |   
|Q4 03                             |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|ROE                               |  |                              | 50     | %           |  |       | 31     | %        |  |   | 48     | %  |  |   | 5     | % 
|ROA                               |  |                              | 3.51   | %           |  |       | NM     |          |  |   | 3.33   | %  |  |   | 0.46  | % 
|NIM                               |  |                              | 3.60   | %           |  |       | NM     |          |  |   | 6.61   | %  |  |   | 3.15  | % 
|Efficiency ratio                  |  |                              | 63     | %           |  |       | 91     | %        |  |   | 69     | %  |  |   | 62    | % 
|Capital adjusted efficiency ratio |  |                              | 27     | %           |  |       | 15     | %        |  |   | 25     | %  |  |   | 184   | % 
|Average FTE                       |  |                              | 613    |             |  |       | 251    |          |  |   | 864    |    |  |   | 15    |   
|Q1 03                             |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|ROE                               |  |                              | 94     | %           |  |       | (73    | )%       |  |   | 66     | %  |  |   | (84   | )%
|ROA                               |  |                              | 6.54   | %           |  |       | NM     |          |  |   | 4.97   | %  |  |   | (8.49 | )%
|NIM                               |  |                              | 3.89   | %           |  |       | NM     |          |  |   | 4.75   | %  |  |   | (7.55 | )%
|Efficiency ratio                  |  |                              | 46     | %           |  |       | 176    | %        |  |   | 59     | %  |  |   | 226   | % 
|Capital adjusted efficiency ratio |  |                              | 16     | %           |  |       | 114    | %        |  |   | 22     | %  |  |   | 229   | % 
|Average FTE                       |  |                              | 553    |             |  |       | 202    |          |  |   | 755    |    |  |   | 9     |   

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

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

12



---



##### Table of Contents



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

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



---

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

13



---



##### Table of Contents



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

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

14



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##### Table of Contents






MORTGAGE BANKING ACTIVITIES




Loan Production

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

Total production by loan type was as follows:

|                                     |                   |                              |       |           |       |         |       |              |       |         |     |     |    |   |       |       |       |  |     |     |    |  
|------------------------------------ | ----------------- | ---------------------------- | ----- | --------- | ----- | ------- | ----- | ------------ | ----- | ------- | --- | --- | -- | - | ----- | ----- | ----- |  | --- | --- | -- | -
|                                     |                   |                             
|                                     |                   | Three Months Ended          
|                                     |                   |                             
|                                     |                   | March 31,                    |       | March 31, |       | Percent |       | December 31, |       | Percent
|                                     |                   | 2004                         |       | 2003      |       | Change  |       | 2003         |       | Change 
|                                     |                   |                              |       |           |       |         |       |              |       |        
|                                     |                   |                             
|                                     |                   | (Dollars in millions)       
|Volume by product                    |                   |                              |       |           |       |         |       |              |       |         |     |     |    |   |       |       |       |  |     |    
|Prime(1)                             |                   |                              |       |           |       |         |       |              |       |         |     |     |    |   |       |       |       |  |     |    
|                                     | Alt-A             |                              | $     | 4,584     |       |         | $     | 3,017        |       |         |     | 52  | %  |   | $     | 3,893 |       |  |     | 18  | % 
|                                     | Agency conforming |                              |       | 608       |       |         |       | 1,421        |       |         |     | (57 | )% |   |       | 701   |       |  |     | (13 | )%
|                                     | Jumbo             |                              |       | 407       |       |         |       | 1,013        |       |         |     | (60 | )% |   |       | 368   |       |  |     | 11  | % 
|Subprime(1)                          |                   |                              | 458   |           |       |         | 384   |              |       |         | 19  | %   |    |   | 486   |       |       |  | (6  | )% 
|Home equity line of credit(2)        |                   |                              | 244   |           |       |         | 180   |              |       |         | 36  | %   |    |   | 259   |       |       |  | (6  | )% 
|Consumer construction(2)             |                   |                              | 603   |           |       |         | 440   |              |       |         | 37  | %   |    |   | 586   |       |       |  | 3   | %  
|                                     |                   |                              |       |           |       |         |       |              |       |         |     |     |    |   |       |       |       |  |     |    
|                                     |                   | Subtotal mortgage production |       |           | 6,904 |         |       |              | 6,455 |         |     |     | 7  | % |       |       | 6,293 |  |     |     | 10 | %
|Subdivision construction commitments |                   |                              | 242   |           |       |         | 130   |              |       |         | 86  | %   |    |   | 284   |       |       |  | (15 | )% 
|                                     |                   |                              |       |           |       |         |       |              |       |         |     |     |    |   |       |       |       |  |     |    
|                                     |                   | Total production volume      |       | $         | 7,146 |         |       | $            | 6,585 |         |     |     | 9  | % |       | $     | 6,577 |  |     |     | 9  | %
|                                     |                   |                              |       |           |       |         |       |              |       |         |     |     |    |   |       |       |       |  |     |    
|Mortgage  Web-based
    production  |                   | $                            | 4,319 |           |       | $       | 4,920 |              |       |         | (12 | )%  |    | $ | 4,270 |       |       |  | 1   | %  
|Mortgage pipeline at period end(3)   |                   | $                            | 5,949 |           |       | $       | 6,044 |              |       |         | (2  | )%  |    | $ | 4,116 |       |       |  | 45  | %  



---



|    |                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|(1) | Fundings.                                                                                                                               
|   
|(2) | New commitments.                                                                                                                        
|   
|(3) | Includes rate lock commitments for loans in
    process plus loans that have been submitted for processing, but
    not yet rate locked.

15



---



##### Table of Contents



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

|                                 |  |                                  |       |           |  |         |       |              |  |         |     |    |  |   |       |   |  |  |    |   
|-------------------------------- |  | -------------------------------- | ----- | --------- |  | ------- | ----- | ------------ |  | ------- | --- | -- |  | - | ----- | - |  |  | -- | --
|                                 |  |                                 
|                                 |  | As of and for the Quarters Ended
|                                 |  |                                 
|                                 |  | March 31,                        |       | March 31, |  | Percent |       | December 31, |  | Percent
|                                 |  | 2004                             |       | 2003      |  | Change  |       | 2003         |  | Change 
|                                 |  |                                  |       |           |  |         |       |              |  |        
|                                 |  |                                 
|                                 |  | (Dollars in millions)           
|Mortgage loan production:        |  |                                  |       |           |  |         |       |              |  |         |     |    |  |   |       |   |  |  |    |   
|Purchase transactions            |  | $                                | 2,669 |           |  | $       | 1,854 |              |  |         | 44  | %  |  | $ | 2,720 |   |  |  | (2 | )%
|Cash-out refinance transactions  |  |                                  | 2,562 |           |  |         | 2,531 |              |  |         | 1   | %  |  |   | 2,335 |   |  |  | 10 | % 
|Rate/term refinance transactions |  |                                  | 1,673 |           |  |         | 2,070 |              |  |         | (19 | )% |  |   | 1,238 |   |  |  | 35 | % 
|                                 |  |                                  |       |           |  |         |       |              |  |         |     |    |  |   |       |   |  |  |    |   
|Total mortgage loan production   |  | $                                | 6,904 |           |  | $       | 6,455 |              |  |         | 7   | %  |  | $ | 6,293 |   |  |  | 10 | % 
|                                 |  |                                  |       |           |  |         |       |              |  |         |     |    |  |   |       |   |  |  |    |   
|% purchase transactions          |  |                                  | 39    | %         |  |         | 29    | %            |  |         |     |    |  |   | 43    | % |  |  |    |   
|Mortgage pipeline:               |  |                                  |       |           |  |         |       |              |  |         |     |    |  |   |       |   |  |  |    |   
|Purchase transactions            |  | $                                | 2,249 |           |  | $       | 1,439 |              |  |         | 56  | %  |  | $ | 1,586 |   |  |  | 42 | % 
|Cash-out refinance transactions  |  |                                  | 1,900 |           |  |         | 2,423 |              |  |         | (22 | )% |  |   | 1,568 |   |  |  | 21 | % 
|Rate/term refinance transactions |  |                                  | 1,800 |           |  |         | 2,182 |              |  |         | (18 | )% |  |   | 962   |   |  |  | 87 | % 
|                                 |  |                                  |       |           |  |         |       |              |  |         |     |    |  |   |       |   |  |  |    |   
|Mortgage pipeline at period end  |  | $                                | 5,949 |           |  | $       | 6,044 |              |  |         | (2  | )% |  | $ | 4,116 |   |  |  | 45 | % 
|                                 |  |                                  |       |           |  |         |       |              |  |         |     |    |  |   |       |   |  |  |    |   
|% purchase transactions          |  |                                  | 38    | %         |  |         | 24    | %            |  |         |     |    |  |   | 39    | % |  |  |    |   




Mortgage Production by Division and
Channel

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

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

16



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##### Table of Contents



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

|                                                                                   |                                                  |                                                 |      |       |       |     |     |     |     |       |      |     |     |   |     |     |     |   |      |       |       |  
|---------------------------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------------- | ---- | ----- | ----- | --- | --- | --- | --- | ----- | ---- | --- | --- | - | --- | --- | --- | - | ---- | ----- | ----- | -
|                                                                                   |                                                  |                                                
|                                                                                   |                                                  | Relationship Businesses                       
|                                                                                   |                                                  | IndyMac Mortgage Bank                          
|                                                                                   |                                                  |                                                
|                                                                                   |                                                  | B2B                                             |      | B2R   |       | HCL |     | HBD |     | Total
|                                                                                   |                                                  |                                                 |      |       |       |     |     |     |     |      
|                                                                                   |                                                  |                                                
|                                                                                   |                                                  | (Dollars in millions)                          
|Volume by Channel and Customer
    Source                                          |                                                  |                                                 |      |       |       |     |     |     |     |       |      |     |     |   |     |     |     |   |      |      
|                                                                                   | Wholesale                                        |                                                 | $    | 2,123 |       |     | $   |    |     |       | $    | 432 |     |   | $   |    |     |   | $    | 2,555 |      
|                                                                                   | Correspondent/ Mortgage bankers                  |                                                 |      | 1,108 |       |     |     |    |     |       |      | 269 |     |   |     |    |     |   |      | 1,377 |      
|                                                                                   | Correspondent/ Financial institutions            |                                                 |      | 71    |       |     |     |    |     |       |      |    |     |   |     |    |     |   |      | 71    |      
|                                                                                   | Conduit                                          |                                                 |      | 1,170 |       |     |     |    |     |       |      |    |     |   |     |    |     |   |      | 1,170 |      
|                                                                                   | Realtors                                         |                                                 |      |      |       |     |     | 109 |     |       |      |    |     |   |     |    |     |   |      | 109   |      
|                                                                                   | Builder/ Builder affiliates                      |                                                 |      |      |       |     |     |    |     |       |      | 38  |     |   |     | 167 |     |   |      | 205   |      
|                                                                                   | Consumer direct marketing by HCL                 |                                                 |      |      |       |     |     |    |     |       |      | 133 |     |   |     |    |     |   |      | 133   |      
|                                                                                   |                                                  |                                                 |      |       |       |     |     |     |     |       |      |     |     |   |     |     |     |   |      |      
|                                                                                   |                                                  | Subtotal mortgage production                    |      |       | 4,472 |     |     |     | 109 |       |      |     | 872 |   |     |     | 167 |   |      |       | 5,620 |  
|                                                                                   | Builder and subdivision construction commitments |                                                 |      |      |       |     |     |    |     |       |      |    |     |   |     | 242 |     |   |      | 242   |      
|                                                                                   |                                                  |                                                 |      |       |       |     |     |     |     |       |      |     |     |   |     |     |     |   |      |      
|                                                                                   |                                                  | Total relationship businesses production volume |      | $     | 4,472 |     |     | $   | 109 |       |      | $   | 872 |   |     | $   | 409 |   |      | $     | 5,862 |  
|                                                                                   |                                                  |                                                 |      |       |       |     |     |     |     |       |      |     |     |   |     |     |     |   |      |      
|Percentage of total production                                                     |                                                  |                                                 | 62.6 | %     |       |     | 1.5 | %   |     |       | 12.2 | %   |     |   | 5.8 | %   |     |   | 82.1 | %    
|                                                                                   |                                                  | Total production first quarter 2003.            |      | $     | 4,003 |     |     | $   | 246 |       |      | $   | 681 |   |     | $   | 222 |   |      | $     | 5,152 |  
|                                                                                   |                                                  | Total production fourth quarter 2003.           |      | $     | 4,096 |     |     | $   | 133 |       |      | $   | 863 |   |     | $   | 411 |   |      | $     | 5,503 |  
|Composition of mortgage production                                                 |                                                  |                                                 |      |       |       |     |     |     |     |       |      |     |     |   |     |     |     |   |      |      
|                                                                                   |                                                  | Purchase transactions                           |      |       | 34    | %   |     |     | 51  | %     |      |     | 99  | % |     |     | 84  | % |      |       | 46    | %
|                                                                                   |                                                  | Cash-out refinance transactions                 |      |       | 43    | %   |     |     | 34  | %     |      |     | 0   | % |     |     | 11  | % |      |       | 35    | %
|                                                                                   |                                                  | Rate/term refinance transactions                |      |       | 23    | %   |     |     | 15  | %     |      |     | 1   | % |     |     | 5   | % |      |       | 19    | %
|Key Performance Indicators for the Three
    Months
    Ended March 31, 2004       |                                                  |                                                 |      |       |       |     |     |     |     |       |      |     |     |   |     |     |     |   |      |      
|Active Customers:(1)                                                               |                                                  |                                                 |      |       |       |     |     |     |     |       |      |     |     |   |     |     |     |   |      |      
|                                                                                   | Average monthly active customers                 |                                                 |      | 2,060 |       |     |     | 123 |     |       |      | 325 |     |   |     | 35  |     |   |      | 2,543 |      
|                                                                                   | Active customers during the quarter              |                                                 |      | 3,609 |       |     |     | 264 |     |       |      | 777 |     |   |     | 61  |     |   |      | 4,711 |      
|                                                                                   | Net new customers during the quarter(2)          |                                                 |      | 731   |       |     |     | 255 |     |       |      | N/A |     |   |     | 17  |     |   |      | 1,003 |      
|Sales personnel                                                                    |                                                  |                                                 | 417  |       |       |     | 69  |     |     |       | 88   |     |     |   | 45  |     |     |   | 619  |      
|Cost per funded mortgage loan (bps)                                                |                                                  |                                                 | 76   |       |       |     | 369 |     |     |       | 98   |     |     |   | 165 |     |     |   | N/A  |      
|Percentage Change for the Three Months Ended
    March 31, 2004 vs. March 31, 2003 |                                                  |                                                 |      |       |       |     |     |     |     |       |      |     |     |   |     |     |     |   |      |      
|Active Customers:(1)                                                               |                                                  |                                                 |      |       |       |     |     |     |     |       |      |     |     |   |     |     |     |   |      |      
|                                                                                   | Average monthly active customers                 |                                                 |      | 3     | %     |     |     | (45 | )%  |       |      | 64  | %   |   |     | 40  | %   |   |      | 4     | %    
|                                                                                   | Active customers during the quarter              |                                                 |      | 14    | %     |     |     | (42 | )%  |       |      | 60  | %   |   |     | 53  | %   |   |      | 14    | %    
|Sales personnel                                                                    |                                                  |                                                 | 34   | %     |       |     | 2   | %   |     |       | 47   | %   |     |   | 137 | %   |     |   | 36   | %    
|Cost per funded mortgage loan (bps)                                                |                                                  |                                                 | 0    | %     |       |     | 78  | %   |     |       | 27   | %   |     |   | 46  | %   |     |   | N/A  |      



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Active customers are defined as customers who
    funded at least one loan during the period. The HCL division
    utilizes the B2B marketing relationships with mortgage brokers
    and mortgage bankers to produce consumer construction loans. As
    a result, there is some overlap of the two active customer
    statistics and new customers are reported under the B2B channel
    only. The sales and marketing personnel under the HCL division
    are primarily focused on marketing the consumer construction
    product directly to consumers.
|   
|(2) | Net new customers is the number of new customers
    signed up during the quarter less those terminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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

17



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##### Table of Contents



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


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

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

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

|                                                |                                   |                                         |       |        |     |            |     |             |    |           |       |     |     |   |     |     |    |   |     |     |     | 
|----------------------------------------------- | --------------------------------- | --------------------------------------- | ----- | ------ | --- | ---------- | --- | ----------- | -- | --------- | ----- | --- | --- | - | --- | --- | -- | - | --- | --- | --- | 
|                                                |                                   |                                         |       |        |     |           
|                                                |                                   | Consumer Direct Businesses             |       |        |     |           
|                                                |                                   | IndyMac Consumer Bank                   |       |        |     |           
|                                                |                                   |                                         |       | Home   |     | Investment
|                                                |                                   |                                         |       | Retail |     |            |     | Equity      |    | Portfolio
|                                                |                                   | B2C                                     |       | Bank   |     | Total      |     | Division(1) |    | Group    
|                                                |                                   |                                         |       |        |     |            |     |             |    |          
|                                                |                                   |                                        
|                                                |                                   | (Dollars in millions)                  
|Volume by Channel and Source                    |                                   |                                         |       |        |     |            |     |             |    |           |       |     |     |   |     |     |    |   |     |    
|Web-based Production:                           |                                   |                                         |       |        |     |            |     |             |    |           |       |     |     |   |     |     |    |   |     |    
|                                                | Direct at www.indymacmortgage.com |                                         | $     | 109    |     |            | $   |            |    |           | $     | 109 |     |   | $   |    |    |   | $   |    |    
|                                                | Indirect Web-based leads          |                                         |       | 139    |     |            |     |            |    |           |       | 139 |     |   |     |    |    |   |     |    |    
|Cross-marketing and portfolio refinancing       |                                   |                                         | 447   |        |     |            | 34  |             |    |           | 481   |     |     |   |    |     |    |   | 282 |    
|Direct telemarketing and affinity relationships |                                   |                                         | 183   |        |     |            |    |             |    |           | 183   |     |     |   | 35  |     |    |   |    |    
|Retail banking branches                         |                                   |                                         |      |        |     |            | 55  |             |    |           | 55    |     |     |   |    |     |    |   |    |    
|                                                |                                   |                                         |       |        |     |            |     |             |    |           |       |     |     |   |     |     |    |   |     |    
|                                                |                                   | Total consumer direct production volume |       | $      | 878 |            |     | $           | 89 |           |       | $   | 967 |   |     | $   | 35 |   |     | $   | 282 | 
|                                                |                                   |                                         |       |        |     |            |     |             |    |           |       |     |     |   |     |     |    |   |     |    
|Percentage of total production                  |                                   |                                         | 12.3  | %      |     |            | 1.2 | %           |    |           | 13.5  | %   |     |   | 0.5 | %   |    |   | 3.9 | %  
|Total production first quarter 2003.            |                                   | $                                       | 1,314 |        |     | $          | 78  |             |    | $         | 1,392 |     |     | $ | 41  |     |    |   | N/A |    
|Total production fourth quarter 2003.           |                                   | $                                       | 802   |        |     | $          | 73  |             |    | $         | 875   |     |     | $ | 57  |     |    | $ | 135 |    
|Composition of mortgage production:             |                                   |                                         |       |        |     |            |     |             |    |           |       |     |     |   |     |     |    |   |     |    
|                                                | Purchase transactions             |                                         |       | 8      | %   |            |     | 26          | %  |           |       | 10  | %   |   |     | N/A |    |   |     | 0   | %  
|                                                | Cash-out refinance transactions   |                                         |       | 58     | %   |            |     | 51          | %  |           |       | 57  | %   |   |     | N/A |    |   |     | 0   | %  
|                                                | Rate/term refinance transactions  |                                         |       | 34     | %   |            |     | 23          | %  |           |       | 33  | %   |   |     | N/A |    |   |     | 100 | %  



---



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

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##### Table of Contents



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




Loan Sales

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

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

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

19



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##### Table of Contents



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

|                                  |  |                       |      |           |  |         |      |              |  |         |    |   |  |   |      |   |  |  |     |   
|--------------------------------- |  | --------------------- | ---- | --------- |  | ------- | ---- | ------------ |  | ------- | -- | - |  | - | ---- | - |  |  | --- | --
|                                  |  |                      
|                                  |  | Three Months Ended   
|                                  |  |                      
|                                  |  | March 31,             |      | March 31, |  | Percent |      | December 31, |  | Percent
|                                  |  | 2004                  |      | 2003      |  | Change  |      | 2003         |  | Change 
|                                  |  |                       |      |           |  |         |      |              |  |        
|                                  |  |                      
|                                  |  | (Dollars in millions)
|Gross gain on mortgage loan sales |  | $                     | 126  |           |  | $       | 118  |              |  |         | 7  | % |  | $ | 97   |   |  |  | 30  | % 
|Gross margin before hedging       |  |                       | 2.58 | %         |  |         | 2.14 | %            |  |         | 21 | % |  |   | 2.09 | % |  |  | 23  | % 
|Hedging (losses)                  |  | $                     | (42  | )         |  | $       | (34  | )            |  |         | 26 | % |  | $ | (17  | ) |  |  | 153 | % 
|Net gains on sale                 |  | $                     | 84   |           |  | $       | 84   |              |  |         | 0  | % |  | $ | 80   |   |  |  | 5   | % 
|Net margin after hedging          |  |                       | 1.71 | %         |  |         | 1.52 | %            |  |         | 13 | % |  |   | 1.72 | % |  |  | (1  | )%

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

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

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

20



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##### Table of Contents



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

|                                      |  |                                   |       |                                      |  |        |      |             |  |              |      |        |  |   |       |  |  |   |      |  |  |  |      |  
|------------------------------------- |  | --------------------------------- | ----- | ------------------------------------ |  | ------ | ---- | ----------- |  | ------------ | ---- | ------ |  | - | ----- |  |  | - | ---- |  |  |  | ---- | -
|                                      |  |                                   |       |                                     
|                                      |  | Three Months Ended March 31, 2004 |       | Three Months Ended December 31, 2003
|Gain on Sale Margins                  |  |                                   |       |                                     
|by Product Type                       |  | Amount Sold                       |       | Gain on Sale                         |  | Margin |      | Amount Sold |  | Gain on Sale |      | Margin
|                                      |  |                                   |       |                                      |  |        |      |             |  |              |      |       
|                                      |  |                                  
|                                      |  | (Dollars in millions)            
|Alt-A and Jumbo                       |  | $                                 | 3,463 |                                      |  | $      | 53.9 |             |  |              | 1.56 | %      |  | $ | 2,815 |  |  | $ | 48.6 |  |  |  | 1.73 | %
|Agency conforming                     |  |                                   | 725   |                                      |  |        | 6.5  |             |  |              | 0.89 | %      |  |   | 1,061 |  |  |   | 12.3 |  |  |  | 1.16 | %
|Subprime                              |  |                                   | 426   |                                      |  |        | 14.9 |             |  |              | 3.50 | %      |  |   | 286   |  |  |   | 7.1  |  |  |  | 2.48 | %
|Loans acquired through clean-up calls |  |                                   | 293   |                                      |  |        | 8.4  |             |  |              | 2.86 | %      |  |   | 325   |  |  |   | 8.7  |  |  |  | 2.68 | %
|Lot loan and income property          |  |                                   |      |                                      |  |        |     |             |  |              |     | %      |  |   | 154   |  |  |   | 3.2  |  |  |  | 2.08 | %
|                                      |  |                                   |       |                                      |  |        |      |             |  |              |      |        |  |   |       |  |  |   |      |  |  |  |      |  
|Total gain on sale of loans           |  | $                                 | 4,907 |                                      |  | $      | 83.7 |             |  |              | 1.71 | %      |  | $ | 4,641 |  |  | $ | 79.9 |  |  |  | 1.72 | %
|                                      |  |                                   |       |                                      |  |        |      |             |  |              |      |        |  |   |       |  |  |   |      |  |  |  |      |  

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

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

|                               |  |                        |           |            |  |           |      |            |  |              |           |            |  |  |      |   |  |   |           |  |  |  |      |  
|------------------------------ |  | ---------------------- | --------- | ---------- |  | --------- | ---- | ---------- |  | ------------ | --------- | ---------- |  |  | ---- | - |  | - | --------- |  |  |  | ---- | -
|                               |  |                       
|                               |  | Three Months Ended    
|                               |  |                       
|                               |  | March 31,              |           | % of loans |  | March 31, |      | % of loans |  | December 31, |           | % of loans
|                               |  | 2004                   |           | sold       |  | 2003      |      | sold       |  | 2003         |           | sold      
|                               |  |                        |           |            |  |           |      |            |  |              |           |           
|                               |  |                       
|                               |  | (Dollars in thousands)
|Gain on sale of loans          |  | $                      | 83,668    |            |  |           | 1.70 | %          |  | $            | 83,784    |            |  |  | 1.51 | % |  | $ | 79,883    |  |  |  | 1.72 | %
|Net interest income            |  |                        | 41,800    |            |  |           | 0.85 | %          |  |              | 36,441    |            |  |  | 0.66 | % |  |   | 45,856    |  |  |  | 0.99 | %
|Fee income                     |  |                        | 12,107    |            |  |           | 0.25 | %          |  |              | 14,791    |            |  |  | 0.27 | % |  |   | 12,170    |  |  |  | 0.26 | %
|                               |  |                        |           |            |  |           |      |            |  |              |           |            |  |  |      |   |  |   |           |  |  |  |      |  
|Total mortgage banking revenue |  | $                      | 137,575   |            |  |           | 2.80 | %          |  | $            | 135,016   |            |  |  | 2.44 | % |  | $ | 137,909   |  |  |  | 2.97 | %
|                               |  |                        |           |            |  |           |      |            |  |              |           |            |  |  |      |   |  |   |           |  |  |  |      |  
|Loans sold                     |  | $                      | 4,906,724 |            |  |           |      |            |  | $            | 5,523,701 |            |  |  |      |   |  | $ | 4,641,318 |  |  |  |      |  
|                               |  |                        |           |            |  |           |      |            |  |              |           |            |  |  |      |   |  |   |           |  |  |  |      |  

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

|                                     |                         |                       |       |              |  |           |    |              |   |              |       |              |  |  |    |     |   |   |       |       |  |  |    |     |  
|------------------------------------ | ----------------------- | --------------------- | ----- | ------------ |  | --------- | -- | ------------ | - | ------------ | ----- | ------------ |  |  | -- | --- | - | - | ----- | ----- |  |  | -- | --- | -
|                                     |                         |                      
|                                     |                         | Three Months Ended   
|                                     |                         |                      
|                                     |                         | March 31,             |       | Distribution |  | March 31, |    | Distribution |   | December 31, |       | Distribution
|                                     |                         | 2004                  |       | Percentages  |  | 2003      |    | Percentages  |   | 2003         |       | Percentages 
|                                     |                         |                       |       |              |  |           |    |              |   |              |       |             
|                                     |                         |                      
|                                     |                         | (Dollars in millions)
|Sales to the GSEs(1)                 |                         | $                     | 2,304 |              |  |           | 45 | %            |   | $            | 3,464 |              |  |  | 58 | %   |   | $ | 2,777 |       |  |  | 42 | %  
|Private-label securitizations        |                         |                       | 1,085 |              |  |           | 21 | %            |   |              | 1,471 |              |  |  | 25 | %   |   |   | 1,018 |       |  |  | 16 | %  
|Whole loan sales                     |                         |                       | 1,518 |              |  |           | 30 | %            |   |              | 589   |              |  |  | 10 | %   |   |   | 846   |       |  |  | 13 | %  
|                                     |                         |                       |       |              |  |           |    |              |   |              |       |              |  |  |    |     |   |   |       |       |  |  |    |    
|                                     | Subtotal sales          |                       |       | 4,907        |  |           |    | 96           | % |              |       | 5,524        |  |  |    | 93  | % |   |       | 4,641 |  |  |    | 71  | %
|Investment portfolio acquisitions(2) |                         |                       | 195   |              |  |           | 4  | %            |   |              | 403   |              |  |  | 7  | %   |   |   | 1,911 |       |  |  | 29 | %  
|                                     |                         |                       |       |              |  |           |    |              |   |              |       |              |  |  |    |     |   |   |       |       |  |  |    |    
|                                     | Total loan distribution |                       | $     | 5,102        |  |           |    | 100          | % |              | $     | 5,927        |  |  |    | 100 | % |   | $     | 6,552 |  |  |    | 100 | %
|                                     |                         |                       |       |              |  |           |    |              |   |              |       |              |  |  |    |     |   |   |       |       |  |  |    |    

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---



|    |                                                                                
|--- | -------------------------------------------------------------------------------
|(1) | Government-sponsored enterprises.                                              
|   
|(2) | Loan production that IndyMac elected to retain in
    its investment portfolio.

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

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INVESTING AND HELOC ACTIVITIES

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

|                                                              |                                |                                                |                                                   |              |           |            |           |   |           |           | 
|------------------------------------------------------------- | ------------------------------ | ---------------------------------------------- | ------------------------------------------------- | ------------ | --------- | ---------- | --------- | - | --------- | --------- | 
|                                                              |                                | March 31,                                      |                                                   | December 31,
|                                                              |                                | 2004                                           |                                                   | 2003        
|                                                              |                                |                                                |                                                   |             
|                                                              |                                |                                               
|                                                              |                                | (Dollars in thousands)                        
|SFR mortgage loans held for
    investment                    |                                | $                                              | 4,440,540                                         |              |           | $          | 4,945,439 |  
|Consumer construction                                         |                                |                                                | 1,225,347                                         |              |           |            | 1,145,526 |  
|Builder construction                                          |                                |                                                | 500,490                                           |              |           |            | 484,397   |  
|HELOC                                                         |                                |                                                | 322,351                                           |              |           |            | 711,494   |  
|Income property                                               |                                |                                                | 9,315                                             |              |           |            | 36,285    |  
|Mortgage-backed securities and agency
    notes:              |                                |                                                |                                                   |              |           |            |           |  
|                                                              | Trading securities:            |                                                |                                                   |              |           |            |           |   |          
|                                                              |                                | AAA-rated and agency interest-only strips      |                                                   |              | 149,152   |            |           |   | 146,179   |          
|                                                              |                                | AAA-rated principal-only securities            |                                                   |              | 43,270    |            |           |   | 8,518     |          
|                                                              |                                | Other investment grade securities              |                                                   |              | 9,048     |            |           |   | 8,922     |          
|                                                              |                                | Other non-investment grade securities          |                                                   |              | 1,588     |            |           |   | 1,760     |          
|                                                              |                                | Non-investment grade residual securities       |                                                   |              | 47,948    |            |           |   | 58,253    |          
|                                                              |                                |                                                |                                                   |              |           |            |           |  
|                                                              |                                |                                                | Subtotal  trading securities                     |              |           | 251,006    |           |   |           | 223,632   | 
|                                                              |                                |                                                |                                                   |              |           |            |           |  
|                                                              | Available for sale securities: |                                                |                                                   |              |           |            |           |   |          
|                                                              |                                | AAA-rated non-agency securities                |                                                   |              | 2,576,496 |            |           |   | 1,407,984 |          
|                                                              |                                | AAA-rated agency securities                    |                                                   |              | 21,288    |            |           |   | 25,193    |          
|                                                              |                                | AAA-rated agency notes                         |                                                   |              |          |            |           |   | 143,689   |          
|                                                              |                                | Other investment grade securities              |                                                   |              | 23,325    |            |           |   | 26,926    |          
|                                                              |                                | Other non-investment grade securities          |                                                   |              | 16,903    |            |           |   | 10,182    |          
|                                                              |                                | Non-investment grade HELOC residual securities |                                                   |              | 17,684    |            |           |   |          |          
|                                                              |                                |                                                |                                                   |              |           |            |           |  
|                                                              |                                |                                                | Subtotal  available for sale securities          |              |           | 2,655,696  |           |   |           | 1,613,974 | 
|                                                              |                                |                                                |                                                   |              |           |            |           |  
|                                                              |                                |                                                | Total mortgage-backed securities and agency notes |              |           | 2,906,702  |           |   |           | 1,837,606 | 
|                                                              |                                |                                                |                                                   |              |           |            |           |  
|Mortgage servicing rights                                     |                                |                                                | 414,358                                           |              |           |            | 443,688   |  
|Other assets                                                  |                                |                                                | 235,907                                           |              |           |            | 280,467   |  
|                                                              |                                |                                                |                                                   |              |           |            |           |  
|                                                              |                                |                                                | Total                                             |              | $         | 10,055,010 |           |   | $         | 9,884,902 | 
|                                                              |                                |                                                |                                                   |              |           |            |           |  
|Percentage of securities portfolio rated
    investment grade |                                |                                                | 97                                                | %            |           |            | 96        | %
|Percentage of securities portfolio rated AAA                  |                                |                                                | 96                                                | %            |           |            | 94        | %

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

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

23



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

|                                                                                  |  |                        |           |           |  |              |           |   |  |   |           |  
|--------------------------------------------------------------------------------- |  | ---------------------- | --------- | --------- |  | ------------ | --------- | - |  | - | --------- | -
|                                                                                  |  |                       
|                                                                                  |  | Three Months Ended    
|                                                                                  |  |                       
|                                                                                  |  | March 31,              |           | March 31, |  | December 31,
|                                                                                  |  | 2004                   |           | 2003      |  | 2003        
|                                                                                  |  |                        |           |           |  |             
|                                                                                  |  |                       
|                                                                                  |  | (Dollars in thousands)
|Net interest income after provision for loan
    losses                           |  | $                      | 57,278    |           |  | $            | 31,324    |   |  | $ | 52,195    |  
|Service fee (loss) income                                                         |  |                        | (3,144    | )         |  |              | 2,383     |   |  |   | (5,951    | )
|(Loss) on mortgage-backed securities, net                                         |  |                        | (4,987    | )         |  |              | (6,910    | ) |  |   | (6,037    | )
|Other income                                                                      |  |                        | 4,004     |           |  |              | 2,493     |   |  |   | 3,156     |  
|Average balance of interest-earning assets and
    MSRs                           |  | $                      | 9,698,243 |           |  | $            | 6,398,441 |   |  | $ | 9,367,980 |  
|Investing activities return on
    interest-earning assets and MSRs (annualized) |  |                        | 2.20      | %         |  |              | 1.86      | % |  |   | 1.92      | %
|                                                                                  |  |                        |           |           |  |              |           |   |  |   |           |  




INVESTING ACTIVITIES

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

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

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

SFR Mortgage Loans Held for
Investment

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

24



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


|                                                  |                                        |                        |           |              |     |   |           |   |  | 
|------------------------------------------------- | -------------------------------------- | ---------------------- | --------- | ------------ | --- | - | --------- | - |  | 
|                                                  |                                        | March 31,              |           | December 31,
|                                                  |                                        | 2004                   |           | 2003        
|                                                  |                                        |                        |           |             
|                                                  |                                        |                       
|                                                  |                                        | (Dollars in thousands)
|SFR mortgage loans held for investment            |                                        | $                      | 4,440,540 |              |     | $ | 4,945,439 |  
|Average loan size                                 |                                        | $                      | 270       |              |     | $ | 286       |  
|Non-performing loans as a percentage of SFR loans |                                        |                        | 0.47      | %            |     |   | 0.38      | %
|Estimated average life in years(1)                |                                        |                        | 2.4       |              |     |   | 3.1       |  
|Estimated average duration in years(2)            |                                        |                        | 1.1       |              |     |   | 1.4       |  
|Yield                                             |                                        |                        | 4.16      | %            |     |   | 4.43      | %
|Fixed-rate mortgages                              |                                        |                        | 7         | %            |     |   | 6         | %
|Adjustable-rate mortgages                         |                                        |                        | 46        | %            |     |   | 39        | %
|Hybrid adjustable-rate mortgages                  |                                        |                        | 47        | %            |     |   | 55        | %
|Additional Information as of March 31,
    2004  
|Average FICO score(3)                             |                                        |                        | 707       |              |     |   |           |  
|Average loan to value ratio                       |                                        |                        | 73        | %            |     |   |           |  
|Geographic distribution:                          |                                        |                        |           |              |     |   |           |  
|                                                  | Southern California                    |                        |           | 38           | %   |   |           |   | 
|                                                  | Northern California                    |                        |           | 22           | %   |   |           |   | 
|                                                  | Michigan                               |                        |           | 4            | %   |   |           |   | 
|                                                  | New York                               |                        |           | 4            | %   |   |           |   | 
|                                                  | Florida                                |                        |           | 3            | %   |   |           |   | 
|                                                  | Georgia                                |                        |           | 3            | %   |   |           |   | 
|                                                  | New Jersey                             |                        |           | 2            | %   |   |           |   | 
|                                                  | Colorado                               |                        |           | 2            | %   |   |           |   | 
|                                                  | Other (each individually less than 2%) |                        |           | 22           | %   |   |           |   | 
|                                                  |                                        |                        |           |              |     |   |           |  
|                                                  |                                        | Total                  |           |              | 100 | % |           |   |  | 
|                                                  |                                        |                        |           |              |     |   |           |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the estimated length of time, on
    average, the SFR loan portfolio will remain outstanding based on
    the Banks estimates for prepayments.                                                                                                                                                                                                                                                                       
|   
|(2) | Average duration measures the volatility of the
    value of a financial instrument in response to changes in
    interest rates and the corresponding changes in prepayments.                                                                                                                                                                                                                                                   
|   
|(3) | FICO scores are the result of a credit scoring
    system developed by Fair Isaacs and Co. and are generally used
    by lenders to evaluate a borrowers credit history. FICO
    scores of 700 or higher are generally considered in the mortgage
    industry to be very high quality borrowers with low risk of
    default, but in general, the secondary market will consider FICO
    scores of 620 or higher to be prime.

Mortgage-Backed Securities and Agency
Notes

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

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

|                                                     |                                                                 |                |   |              |  |           |   |         |   |            |   |        |  |  |   |        |  |  |   |        | 
|---------------------------------------------------- | --------------------------------------------------------------- | -------------- | - | ------------ |  | --------- | - | ------- | - | ---------- | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                                     |                                                                 |                |   | December 31,
|                                                     |                                                                 | March 31, 2004 |   | 2003        
|                                                     |                                                                 |                |   |             
|                                                     |                                                                 | Current        |   | (Discount)   |  |           |   |        
|                                                     |                                                                 | Face           |   | To Face      |  | Amortized |   | Fair    |   |           
|                                                     |                                                                 | Value          |   | Value        |  | Cost      |   | Value   |   | Fair Value
|                                                     |                                                                 |                |   |              |  |           |   |         |   |           
|                                                     |                                                                 |               
|                                                     |                                                                 | (In thousands)
|Investment grade mortgage-backed
    securities:     |                                                                 |                |   |              |  |           |   |         |   |            |   |        |  |  |   |        |  |  |   |       
|                                                     | AAA                                                             |                | $ |             |  |           | $ |        |   |            | $ |       |  |  | $ |       |  |  | $ | 8,001  | 
|                                                     | AA                                                              |                |   | 674          |  |           |   | (7      | ) |            |   | 667    |  |  |   | 678    |  |  |   |       | 
|                                                     | A                                                               |                |   | 306          |  |           |   | (22     | ) |            |   | 284    |  |  |   | 289    |  |  |   |       | 
|                                                     | BBB                                                             |                |   | 28,430       |  |           |   | (1,508  | ) |            |   | 26,922 |  |  |   | 27,655 |  |  |   | 24,198 | 
|                                                     | BBB-                                                            |                |   | 4,000        |  |           |   | (249    | ) |            |   | 3,751  |  |  |   | 3,751  |  |  |   | 3,649  | 
|                                                     |                                                                 |                |   |              |  |           |   |         |   |            |   |        |  |  |   |        |  |  |   |       
|                                                     | Total other investment grade mortgage-backed
    securities     |                | $ | 33,410       |  |           | $ | (1,786  | ) |            | $ | 31,624 |  |  | $ | 32,373 |  |  | $ | 35,848 | 
|                                                     |                                                                 |                |   |              |  |           |   |         |   |            |   |        |  |  |   |        |  |  |   |       
|Non-investment grade mortgage-backed
    securities: |                                                                 |                |   |              |  |           |   |         |   |            |   |        |  |  |   |        |  |  |   |       
|                                                     | BB                                                              |                | $ | 14,751       |  |           | $ | (2,720  | ) |            | $ | 12,031 |  |  | $ | 12,184 |  |  | $ | 7,896  | 
|                                                     | B                                                               |                |   | 5,194        |  |           |   | (3,081  | ) |            |   | 2,113  |  |  |   | 2,178  |  |  |   | 186    | 
|                                                     | CCC                                                             |                |   |             |  |           |   |        |   |            |   |       |  |  |   |       |  |  |   | 1,165  | 
|                                                     | C                                                               |                |   | 10,058       |  |           |   | (7,588  | ) |            |   | 2,470  |  |  |   | 2,960  |  |  |   | 1,934  | 
|                                                     | D                                                               |                |   | 2,228        |  |           |   | (1,605  | ) |            |   | 623    |  |  |   | 623    |  |  |   | 676    | 
|                                                     | NR                                                              |                |   | 4,150        |  |           |   | (3,653  | ) |            |   | 497    |  |  |   | 546    |  |  |   | 85     | 
|                                                     |                                                                 |                |   |              |  |           |   |         |   |            |   |        |  |  |   |        |  |  |   |       
|                                                     | Total other non-investment grade mortgage-backed
    securities |                | $ | 36,381       |  |           | $ | (18,647 | ) |            | $ | 17,734 |  |  | $ | 18,491 |  |  | $ | 11,942 | 
|                                                     |                                                                 |                |   |              |  |           |   |         |   |            |   |        |  |  |   |        |  |  |   |       

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

Mortgage Servicing and Mortgage Servicing
Rights

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

|                                                |  |                |        |  
|----------------------------------------------- |  | -------------- | ------ | -
|                                                |  | Three Months  
|                                                |  | Ended         
|                                                |  | March 31, 2004
|                                                |  |               
|                                                |  |               
|                                                |  | (In millions) 
|Unpaid principal balance at beginning of period |  | $              | 30,774 |  
|Additions                                       |  |                | 4,691  |  
|Clean-up calls exercised                        |  |                | (319   | )
|Loan payments and prepayments                   |  |                | (3,024 | )
|                                                |  |                |        |  
|Unpaid principal balance at March 31, 2004.     |  | $              | 32,122 |  
|                                                |  |                |        |  

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

|                                  |  |                        |         |           |  |              |         |   |  |   |         |  
|--------------------------------- |  | ---------------------- | ------- | --------- |  | ------------ | ------- | - |  | - | ------- | -
|                                  |  |                       
|                                  |  | Three Months Ended    
|                                  |  |                       
|                                  |  | March 31,              |         | March 31, |  | December 31,
|                                  |  | 2004                   |         | 2003      |  | 2003        
|                                  |  |                        |         |           |  |             
|                                  |  |                       
|                                  |  | (Dollars in thousands)
|Balance at beginning of period    |  | $                      | 443,688 |           |  | $            | 300,539 |   |  | $ | 406,917 |  
|Additions                         |  |                        | 50,753  |           |  |              | 67,742  |   |  |   | 51,447  |  
|Clean-up calls exercised          |  |                        | (3,790  | )         |  |              | (2,475  | ) |  |   | (3,754  | )
|Scheduled amortization            |  |                        | (22,860 | )         |  |              | (21,150 | ) |  |   | (20,049 | )
|Valuation (impairment) adjustment |  |                        | (53,433 | )         |  |              | (1,112  | ) |  |   | 9,127   |  
|                                  |  |                        |         |           |  |              |         |   |  |   |         |  
|Balance at end of period          |  | $                      | 414,358 |           |  | $            | 343,544 |   |  | $ | 443,688 |  
|                                  |  |                        |         |           |  |              |         |   |  |   |         |  

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

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

AAA-Rated and Agency Interest-Only Strips
and Residuals

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

27



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

|                               |                                           |                        |   |           |   |              |   |         |   |  |   |         |  
|------------------------------ | ----------------------------------------- | ---------------------- | - | --------- | - | ------------ | - | ------- | - |  | - | ------- | -
|                               |                                           |                       
|                               |                                           | Three Months Ended    
|                               |                                           |                       
|                               |                                           | March 31,              |   | March 31, |   | December 31,
|                               |                                           | 2004                   |   | 2003      |   | 2003        
|                               |                                           |                        |   |           |   |             
|                               |                                           |                       
|                               |                                           | (Dollars in thousands)
|AAA-rated interest-only strips |                                           |                        |   |           |   |              |   |         |   |  |   |        
|                               | Beginning balance                         |                        | $ | 146,179   |   |              | $ | 187,060 |   |  | $ | 155,258 |  
|                               | Retained investments from securitizations |                        |   | 33,578    |   |              |   | 13,416  |   |  |   | 11,293  |  
|                               | Clean-up calls exercised                  |                        |   | (1,151    | ) |              |   | (12,048 | ) |  |   | (13,936 | )
|                               | Cash received, net of accretion           |                        |   | (11,770   | ) |              |   | (14,071 | ) |  |   | (10,933 | )
|                               | Valuation (losses) gains before hedges    |                        |   | (17,684   | ) |              |   | (18,145 | ) |  |   | 4,497   |  
|                               |                                           |                        |   |           |   |              |   |         |   |  |   |        
|                               | Ending balance                            |                        | $ | 149,152   |   |              | $ | 156,212 |   |  | $ | 146,179 |  
|                               |                                           |                        |   |           |   |              |   |         |   |  |   |        
|Residual securities            |                                           |                        |   |           |   |              |   |         |   |  |   |        
|                               | Beginning balance                         |                        | $ | 58,253    |   |              | $ | 78,740  |   |  | $ | 54,743  |  
|                               | Retained investments from securitizations |                        |   | 18,706    |   |              |   | 14,626  |   |  |   | 4,853   |  
|                               | Sales                                     |                        |   |          |   |              |   | (10,525 | ) |  |   |        |  
|                               | Clean-up calls exercised                  |                        |   | 159       |   |              |   |        |   |  |   |        |  
|                               | Cash received, net of accretion           |                        |   | (11,679   | ) |              |   | (6,865  | ) |  |   | (2,388  | )
|                               | Valuation gains before hedges             |                        |   | 193       |   |              |   | 2,022   |   |  |   | 1,045   |  
|                               |                                           |                        |   |           |   |              |   |         |   |  |   |        
|                               | Ending balance                            |                        | $ | 65,632    |   |              | $ | 77,998  |   |  | $ | 58,253  |  
|                               |                                           |                        |   |           |   |              |   |         |   |  |   |        

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

28



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##### Table of Contents



Valuation of Servicing-Related
Assets

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

|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|---------------------------------------------- |  | ---------------------- | ------- | --------------------- |  | --------- | ---------- | ------------ |  | ---------- | ---- | -------- |  | ---------- | ---- | ---------- |  | --------- | ---- | ------------ |  |  | ---- |  |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | --- | -
|                                               |  |                        |         |                      
|                                               |  | Actual                 |         | Valuation Assumptions
|                                               |  |                        |         |                      
|                                               |  |                        |         | Gross Wtd.            |  | Servicing |            | 3-Month      |  | Weighted   |      | Lifetime |  | 3-Month    |      |            |  | Remaining
|                                               |  | Book                   |         | Collateral            |  | Average   |            | Fee/Interest |  | Prepayment |      | Average  |  | Prepayment |      | Prepayment |  | Discount  |      | Cumulative  
|                                               |  | Value                  |         | Balance               |  | Coupon    |            | Strip        |  | Speeds     |      | Multiple |  | Speeds(1)  |      | Speeds(1)  |  | Yield     |      | Loss Rate(2)
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |             
|                                               |  |                       
|                                               |  | (Dollars in thousands)
|March 31, 2004                                 |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|AAA-rated/agency interest-only strips          |  | $                      | 149,152 |                       |  | $         | 13,559,779 |              |  |            | 6.68 | %        |  |            | 0.43 | %          |  |           | 33.7 | %            |  |  | 2.56 |  |  |  | 20.1 | % |  |  | 35.9 | % |  |  | 9.1  | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Prime residual securities                      |  | $                      | 23,183  |                       |  | $         | 3,903,460  |              |  |            | 6.94 | %        |  |            | 1.89 | %          |  |           | 55.6 | %            |  |  | 0.31 |  |  |  | 27.5 | % |  |  | 37.6 | % |  |  | 15.9 | % |  |  | 0.5 | %
|Subprime and HELOC residual securities(3)      |  |                        | 42,448  |                       |  | $         | 1,545,047  |              |  |            | 7.69 | %        |  |            | 4.21 | %          |  |           | 35.4 | %            |  |  | 0.65 |  |  |  | 38.2 | % |  |  | 38.7 | % |  |  | 21.5 | % |  |  | 2.3 | %
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Total non-investment grade residual securities |  | $                      | 65,631  |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|MSRs(4)                                        |  | $                      | 414,358 |                       |  | $         | 32,121,562 |              |  |            | 6.36 | %        |  |            | 0.32 | %          |  |           | 29.2 | %            |  |  | 3.97 |  |  |  | 18.9 | % |  |  | 32.1 | % |  |  | 9.0  | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|December 31, 2003                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|AAA-rated/agency interest-only strips          |  | $                      | 146,179 |                       |  | $         | 13,640,307 |              |  |            | 6.90 | %        |  |            | 0.38 | %          |  |           | 34.0 | %            |  |  | 2.81 |  |  |  | 17.2 | % |  |  | 35.5 | % |  |  | 9.8  | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Prime residual securities                      |  | $                      | 25,614  |                       |  | $         | 3,506,638  |              |  |            | 7.00 | %        |  |            | 1.48 | %          |  |           | 60.0 | %            |  |  | 0.49 |  |  |  | 26.3 | % |  |  | 36.0 | % |  |  | 15.8 | % |  |  | 0.5 | %
|Subprime residual securities                   |  |                        | 32,639  |                       |  | $         | 1,286,694  |              |  |            | 8.65 | %        |  |            | 4.34 | %          |  |           | 38.4 | %            |  |  | 0.58 |  |  |  | 33.4 | % |  |  | 32.9 | % |  |  | 23.6 | % |  |  | 2.3 | %
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Total non-investment grade residual securities |  | $                      | 58,253  |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|MSRs                                           |  | $                      | 443,688 |                       |  | $         | 30,773,545 |              |  |            | 6.53 | %        |  |            | 0.32 | %          |  |           | 31.0 | %            |  |  | 4.51 |  |  |  | 16.8 | % |  |  | 31.5 | % |  |  | 10.0 | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|March 31, 2003                                 |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|AAA-rated/agency interest-only strips          |  | $                      | 156,212 |                       |  | $         | 12,924,037 |              |  |            | 7.68 | %        |  |            | 0.51 | %          |  |           | 38.8 | %            |  |  | 2.37 |  |  |  | 21.9 | % |  |  | 46.6 | % |  |  | 8.9  | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Prime residual securities                      |  | $                      | 42,703  |                       |  | $         | 3,537,589  |              |  |            | 7.27 | %        |  |            | 1.46 | %          |  |           | 38.5 | %            |  |  | 0.83 |  |  |  | 21.8 | % |  |  | 36.1 | % |  |  | 15.2 | % |  |  | 0.6 | %
|Subprime residual securities                   |  |                        | 35,295  |                       |  | $         | 1,636,487  |              |  |            | 9.34 | %        |  |            | 4.04 | %          |  |           | 34.0 | %            |  |  | 0.53 |  |  |  | 33.3 | % |  |  | 35.7 | % |  |  | 22.9 | % |  |  | 2.6 | %
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Total non-investment grade residual securities |  | $                      | 77,998  |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|MSRs                                           |  | $                      | 343,544 |                       |  | $         | 29,834,709 |              |  |            | 7.27 | %        |  |            | 0.33 | %          |  |           | 39.5 | %            |  |  | 3.49 |  |  |  | 21.2 | % |  |  | 42.9 | % |  |  | 9.5  | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  



---



|    |                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Assumed prepayment speeds are higher in the short
    term and lower in the long term based on the market forward
    curve for interest rates rising over the life of the asset.                                                                                                                                                                            
|   
|(2) | As a percentage of the original pool balance, the
    actual cumulative loss rate to date totaled 0.06% and 1.41% for
    prime and subprime residuals, respectively, at March 31,
    2004.                                                                                                                                                                 
|   
|(3) | As of March 31, 2004, subprime and HELOC
    residual securities include residuals from the securitization of
    home equity loans in the amount of $17.7 million. Although
    our HELOC loans are to high credit quality, prime borrowers, the
    assumptions on HELOC-related residuals are similar to subprime
    as they are second trust deed loans.
|   
|(4) | At March 31, 2004, the capitalized servicing
    asset was comprised of $32.1 billion of loans serviced for
    others. In addition to the loans serviced for others, we also
    service $6.8 billion of IndyMac-owned loans and loans
    subserviced for others on an interim basis for a total servicing
    portfolio of $38.9 billion.                 

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

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

29



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##### Table of Contents



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


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

Hedging Interest Rate Risk on
Servicing-Related Assets

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

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

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

30



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##### Table of Contents



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

|                                                 |                                                                                                                                    |                                                 |        |           |        |              |        |         |        |   |        |         |        |  
|------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ------ | --------- | ------ | ------------ | ------ | ------- | ------ | - | ------ | ------- | ------ | -
|                                                 |                                                                                                                                    |                                                
|                                                 |                                                                                                                                    | Three Months Ended                             
|                                                 |                                                                                                                                    |                                                
|                                                 |                                                                                                                                    | March 31,                                       |        | March 31, |        | December 31,
|                                                 |                                                                                                                                    | 2004                                            |        | 2003      |        | 2003        
|                                                 |                                                                                                                                    |                                                 |        |           |        |             
|                                                 |                                                                                                                                    |                                                
|                                                 |                                                                                                                                    | (Dollars in thousands)                         
|Service fee (expense) income:                    |                                                                                                                                    |                                                 |        |           |        |              |        |         |        |   |        |        
|                                                 | Gross service fee income                                                                                                           |                                                 | $      | 28,080    |        |              | $      | 24,057  |        |   | $      | 27,489  |       
|                                                 | Amortization                                                                                                                       |                                                 |        | (22,860   | )      |              |        | (21,150 | )      |   |        | (20,049 | )     
|                                                 |                                                                                                                                    |                                                 |        |           |        |              |        |         |        |   |        |        
|                                                 | Service fee income net of amortization                                                                                             |                                                 |        | 5,220     |        |              |        | 2,907   |        |   |        | 7,440   |       
|                                                 | Valuation adjustments on MSRs                                                                                                      |                                                 |        | (53,433   | )      |              |        | (1,112  | )      |   |        | 9,127   |       
|                                                 | Hedges gains (losses) on MSRs                                                                                                      |                                                 |        | 45,069    |        |              |        | 588     |        |   |        | (22,518 | )     
|                                                 |                                                                                                                                    |                                                 |        |           |        |              |        |         |        |   |        |        
|                                                 |                                                                                                                                    | Total service fee (expense) income              |        | $         | (3,144 | )            |        | $       | 2,383  |   |        | $       | (5,951 | )
|                                                 |                                                                                                                                    |                                                 |        |           |        |              |        |         |        |   |        |        
|Net (loss) on mortgage-backed securities:        |                                                                                                                                    |                                                 |        |           |        |              |        |         |        |   |        |        
|                                                 | Realized gain on available-for-sale securities                                                                                     |                                                 | $      | 900       |        |              | $      |        |        |   | $      | 58      |       
|                                                 | Impairment on available-for-sale securities                                                                                        |                                                 |        | (101      | )      |              |        | (580    | )      |   |        | (201    | )     
|                                                 | Unrealized (loss) gain on AAA interest-only
    strips and residual securities                                                     |                                                 |        | (17,492   | )      |              |        | (16,123 | )      |   |        | 5,542   |       
|                                                 | Net gain (loss) on trading securities and other
    instruments used to hedge AAA interest-only strips and residual
    securities |                                                 |        | 11,706    |        |              |        | 9,793   |        |   |        | (11,436 | )     
|                                                 |                                                                                                                                    |                                                 |        |           |        |              |        |         |        |   |        |        
|                                                 |                                                                                                                                    | Total (loss) on mortgage-backed securities, net |        | $         | (4,987 | )            |        | $       | (6,910 | ) |        | $       | (6,037 | )
|                                                 |                                                                                                                                    |                                                 |        |           |        |              |        |         |        |   |        |        
|Total Clean-up Call and Retention Program Income |                                                                                                                                    | $                                               | 21,192 |           |        | $            | 10,900 |         |        | $ | 29,346 |        

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

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

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




Construction Lending

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

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


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

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

|                                     |  |                        |           |                   |  |              |           |              |  |   |           |   |  |   |           |  
|------------------------------------ |  | ---------------------- | --------- | ----------------- |  | ------------ | --------- | ------------ |  | - | --------- | - |  | - | --------- | -
|                                     |  |                       
|                                     |  | Three Months Ended    
|                                     |  |                       
|                                     |  |                        |           |                  
|                                     |  | March 31, 2004         |           | December 31, 2003
|                                     |  |                        |           |                  
|                                     |  | Consumer               |           | Builder           |  | Consumer     |           | Builder     
|                                     |  | Construction           |           | Construction      |  | Construction |           | Construction
|                                     |  | Loans                  |           | Loans             |  | Loans        |           | Loans       
|                                     |  |                        |           |                   |  |              |           |             
|                                     |  |                       
|                                     |  | (Dollars in thousands)
|Construction loans                   |  | $                      | 1,225,347 |                   |  | $            | 500,490   |              |  | $ | 1,145,526 |   |  | $ | 484,397   |  
|Land and other mortgage loans        |  | $                      | 161,963   |                   |  | $            | 159,536   |              |  | $ | 87,045    |   |  | $ | 120,751   |  
|Outstanding commitments              |  | $                      | 2,273,345 |                   |  | $            | 1,164,609 |              |  | $ | 2,091,853 |   |  | $ | 1,120,893 |  
|Average construction loan commitment |  | $                      | 379       |                   |  | $            | 2,760     |              |  | $ | 391       |   |  | $ | 3,046     |  
|Non-performing loans                 |  |                        | 0.68      | %                 |  |              | 1.83      | %            |  |   | 0.78      | % |  |   | 1.60      | %
|Yield                                |  |                        | 5.64      | %                 |  |              | 6.30      | %            |  |   | 5.81      | % |  |   | 6.63      | %
|Fixed-rate loans                     |  |                        | 90        | %                 |  |              | 0         | %            |  |   | 94        | % |  |   | 1         | %
|Adjustable-rate loans                |  |                        | 10        | %                 |  |              | 98        | %            |  |   | 6         | % |  |   | 97        | %
|Hybrid adjustable-rate loans         |  |                        | 0         | %                 |  |              | 2         | %            |  |   | 0         | % |  |   | 2         | %

Additional Information as of March 31,
2004

|                               |                               |              |     |     |   |              |                               |  |     |     |  
|------------------------------ | ----------------------------- | ------------ | --- | --- | - | ------------ | ----------------------------- |  | --- | --- | -
|                               |                               | Consumer     |     |     |   | Builder     
|                               |                               | Construction |     |     |   | Construction
|                               |                               | Loans        |     |     |   | Loans       
|                               |                               |              |     |     |   |             
|Average loan to value ratio(1) |                               |              | 74  | %   |   |              |                               |  | 72  | %  
|Average FICO score(2)          |                               |              | 705 |     |   |              |                               |  | N/A |    
|Geographic distribution(3)     |                               |              |     |     |   |              |                               |  |     |    
|                               | Southern California           |              |     | 31  | % |              | Southern California           |  |     | 44  | %
|                               | Northern California           |              |     | 18  | % |              | Northern California           |  |     | 25  | %
|                               | New York                      |              |     | 6   | % |              | Illinois                      |  |     | 13  | %
|                               | Hawaii                        |              |     | 5   | % |              | Florida                       |  |     | 5   | %
|                               | Florida                       |              |     | 4   | % |              |                               |  |     |     |  
|                               | Colorado                      |              |     | 3   | % |              |                               |  |     |     |  
|                               | Connecticut                   |              |     | 3   | % |              |                               |  |     |     |  
|                               | Washington                    |              |     | 3   | % |              |                               |  |     |     |  
|                               | Other (each individually< 2%) |              |     | 27  | % |              | Other (each individually< 2%) |  |     | 13  | %
|                               |                               |              |     |     |   |              |                               |  |     |    
|                               | Total Consumer Construction   |              |     | 100 | % |              | Total Builder Construction    |  |     | 100 | %
|                               |                               |              |     |     |   |              |                               |  |     |    

32



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---



|    |                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The average loan to value ratio is based on the
    estimated appraised value of the completed project compared to
    the commitment amount at March 31, 2004.  
|   
|(2) | FICO scores are not calculated for corporate
    entities and, therefore, are not applicable to the builder
    construction portfolio.                          
|   
|(3) | Geographic distribution is based on outstanding
    balances. Some projects are continuing to be built out in states
    in which we no longer solicit new loans.

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




HELOC Portfolio

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

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

|                           |  |                        |         |              |  |          |           |   |  |  |        |   
|-------------------------- |  | ---------------------- | ------- | ------------ |  | -------- | --------- | - |  |  | ------ | --
|                           |  |                       
|                           |  | Three Months Ended    
|                           |  |                       
|                           |  | March 31,              |         | December 31, |  | Variance
|                           |  | 2004                   |         | 2003         |  | Percent 
|                           |  |                        |         |              |  |         
|                           |  |                       
|                           |  | (Dollars in thousands)
|Outstanding book value     |  | $                      | 322,351 |              |  | $        | 711,494   |   |  |  | (54.69 | )%
|Outstanding commitments(1) |  | $                      | 638,210 |              |  | $        | 1,189,213 |   |  |  | (46.33 | )%
|Average spread over prime  |  |                        | 2.07    | %            |  |          | 1.92      | % |  |  | 7.81   | % 
|Average FICO score         |  |                        | 711     |              |  |          | 710       |   |  |  | 0.14   | % 
|Average CLTV ratio(2)      |  |                        | 76      | %            |  |          | 77        | % |  |  | (1.30  | )%

|                 |       |                        |         |              |  |                |    |         |  |             |      |      |   |  |     |     |  |  |      |      |  
|---------------- | ----- | ---------------------- | ------- | ------------ |  | -------------- | -- | ------- |  | ----------- | ---- | ---- | - |  | --- | --- |  |  | ---- | ---- | -
|                 |       | Total Unpaid           |         | Average Loan |  |                |    |         |  | 30+ Days   
|                 |       | Principal              |         | Commitment   |  | Average Spread |    | Average |  | Delinquency
|CLTV             |       | Balance                |         | Balance      |  | Over Prime     |    | FICO    |  | Percentage 
|                 |       |                        |         |              |  |                |    |         |  |            
|                 |       |                       
|                 |       | (Dollars in thousands)
|>= 96% &< = 100% |       | $                      | 10,098  |              |  | $              | 53 |         |  |             | 3.85 | %    |   |  | 723 |     |  |  | 3.48 | %   
|>= 91% &< = 95%  |       |                        | 35,478  |              |  |                | 51 |         |  |             | 3.45 | %    |   |  | 709 |     |  |  | 1.06 | %   
|>= 81% &< = 90%  |       |                        | 122,765 |              |  |                | 53 |         |  |             | 2.63 | %    |   |  | 694 |     |  |  | 1.37 | %   
|>= 71% &< = 80%  |       |                        | 84,197  |              |  |                | 83 |         |  |             | 1.27 | %    |   |  | 711 |     |  |  | 1.38 | %   
|70%              |       |                        | 69,813  |              |  |                | 85 |         |  |             | 1.08 | %    |   |  | 728 |     |  |  | 1.10 | %   
|                 |       |                        |         |              |  |                |    |         |  |             |      |      |   |  |     |     |  |  |      |     
|                 | Total |                        | $       | 322,351      |  |                | $  | 68      |  |             |      | 2.07 | % |  |     | 711 |  |  |      | 1.34 | %
|                 |       |                        |         |              |  |                |    |         |  |             |      |      |   |  |     |     |  |  |      |     



---



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

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##### Table of Contents






NET INTEREST INCOME

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

|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |      |  
|-------------------------------------------------------- | ------------------------------------------ | ---------------------- | --------- | -------------- |  | ----------------- | ------ | ------- |  | -------- | ---- | ----- | - | ------- | --------- | ---------- |  | ----- | ------ | ------- |  |  | ---- | ---- | - | - | --------- | ---------- |  | - | ------ | ------- |  |  | ---- | ---- | -
|                                                         |                                            |                       
|                                                         |                                            | Three Months Ended    
|                                                         |                                            |                       
|                                                         |                                            |                        |           |                |  |                  
|                                                         |                                            | March 31, 2004         |           | March 31, 2003 |  | December 31, 2003
|                                                         |                                            |                        |           |                |  |                  
|                                                         |                                            | Average                |           |                |  | Yield             |        | Average |  |          |      | Yield |   | Average |           |            |  | Yield
|                                                         |                                            | Balance                |           | Interest       |  | Rate              |        | Balance |  | Interest |      | Rate  |   | Balance |           | Interest   |  | Rate 
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |      
|                                                         |                                            |                       
|                                                         |                                            | (Dollars in thousands)
|Securities                                               |                                            | $                      | 2,105,468 |                |  | $                 | 26,855 |         |  |          | 5.13 | %     |   | $       | 1,920,645 |            |  | $     | 20,961 |         |  |  | 4.43 | %    |   | $ | 2,038,330 |            |  | $ | 26,395 |         |  |  | 5.14 | %   
|Loans held for sale                                      |                                            |                        | 3,688,650 |                |  |                   | 54,746 |         |  |          | 5.97 | %     |   |         | 2,867,547 |            |  |       | 45,201 |         |  |  | 6.39 | %    |   |   | 3,376,349 |            |  |   | 54,743 |         |  |  | 6.43 | %   
|Mortgage loans held for investment                       |                                            |                        | 5,608,258 |                |  |                   | 58,042 |         |  |          | 4.16 | %     |   |         | 2,759,900 |            |  |       | 35,962 |         |  |  | 5.28 | %    |   |   | 5,314,934 |            |  |   | 59,360 |         |  |  | 4.43 | %   
|Builder construction and income property                 |                                            |                        | 506,668   |                |  |                   | 8,039  |         |  |          | 6.38 | %     |   |         | 570,886   |            |  |       | 9,720  |         |  |  | 6.91 | %    |   |   | 506,955   |            |  |   | 8,649  |         |  |  | 6.77 | %   
|Consumer construction                                    |                                            |                        | 1,140,371 |                |  |                   | 15,995 |         |  |          | 5.64 | %     |   |         | 839,772   |            |  |       | 14,396 |         |  |  | 6.95 | %    |   |   | 1,076,853 |            |  |   | 15,765 |         |  |  | 5.81 | %   
|Investment in Federal Home Loan Bank stock and
    other |                                            |                        | 337,478   |                |  |                   | 2,882  |         |  |          | 3.43 | %     |   |         | 181,268   |            |  |       | 1,957  |         |  |  | 4.38 | %    |   |   | 317,133   |            |  |   | 2,917  |         |  |  | 3.65 | %   
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total interest-earning assets              |                        |           | 13,386,893     |  |                   |        | 166,559 |  |          |      | 5.00  | % |         |           | 9,140,018  |  |       |        | 128,197 |  |  |      | 5.69 | % |   |           | 12,630,554 |  |   |        | 167,829 |  |  |      | 5.27 | %
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Other                                                    |                                            |                        | 1,161,479 |                |  |                   |        |         |  |          |      |       |   |         | 894,643   |            |  |       |        |         |  |  |      |      |   |   | 1,177,305 |            |  |   |        |         |  |  |      |     
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total assets                               |                        | $         | 14,548,372     |  |                   |        |         |  |          |      |       |   |         | $         | 10,034,661 |  |       |        |         |  |  |      |      |   |   | $         | 13,807,859 |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Interest-bearing deposits                                |                                            | $                      | 3,838,511 |                |  |                   | 22,482 |         |  |          | 2.36 | %     |   | $       | 2,736,822 |            |  |       | 21,687 |         |  |  | 3.21 | %    |   | $ | 3,579,379 |            |  |   | 21,929 |         |  |  | 2.43 | %   
|Advances from Federal Home Loan Bank                     |                                            |                        | 5,207,135 |                |  |                   | 30,920 |         |  |          | 2.39 | %     |   |         | 2,709,008 |            |  |       | 25,558 |         |  |  | 3.83 | %    |   |   | 4,888,567 |            |  |   | 30,208 |         |  |  | 2.45 | %   
|Other borrowings                                         |                                            |                        | 3,532,004 |                |  |                   | 19,224 |         |  |          | 2.19 | %     |   |         | 2,812,407 |            |  |       | 17,927 |         |  |  | 2.59 | %    |   |   | 3,268,244 |            |  |   | 17,747 |         |  |  | 2.15 | %   
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total interest-bearing liabilities         |                        |           | 12,577,650     |  |                   |        | 72,626  |  |          |      | 2.32  | % |         |           | 8,258,237  |  |       |        | 65,172  |  |  |      | 3.20 | % |   |           | 11,736,190 |  |   |        | 69,884  |  |  |      | 2.36 | %
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Other                                                    |                                            |                        | 927,400   |                |  |                   |        |         |  |          |      |       |   |         | 906,201   |            |  |       |        |         |  |  |      |      |   |   | 1,072,435 |            |  |   |        |         |  |  |      |     
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total liabilities                          |                        |           | 13,505,050     |  |                   |        |         |  |          |      |       |   |         |           | 9,164,438  |  |       |        |         |  |  |      |      |   |   |           | 12,808,625 |  |   |        |         |  |  |      |      |  
|                                                         | Shareholders equity                       |                        |           | 1,043,322      |  |                   |        |         |  |          |      |       |   |         |           | 870,223    |  |       |        |         |  |  |      |      |   |   |           | 999,234    |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total liabilities and shareholders equity |                        | $         | 14,548,372     |  |                   |        |         |  |          |      |       |   |         | $         | 10,034,661 |  |       |        |         |  |  |      |      |   |   | $         | 13,807,859 |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Net interest income                                      |                                            |                        |           |                |  | $                 | 93,933 |         |  |          |      |       |   |         |           |            |  | $     | 63,025 |         |  |  |      |      |   |   |           |            |  | $ | 97,945 |         |  |  |      |     
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Net interest spread                                      |                                            |                        |           |                |  |                   |        |         |  |          | 2.68 | %     |   |         |           |            |  |       |        |         |  |  | 2.49 | %    |   |   |           |            |  |   |        |         |  |  | 2.91 | %   
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Net interest margin                                      |                                            |                        |           |                |  |                   |        |         |  |          | 2.82 | %     |   |         |           |            |  |       |        |         |  |  | 2.80 | %    |   |   |           |            |  |   |        |         |  |  | 3.08 | %   
|                                                         |                                            |                        |           |                |  |                   |        |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     

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

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##### Table of Contents



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

|                                                         |                        |                                            |        |        |  |     |        |              |   |   |        |         |   |   |        |        | 
|-------------------------------------------------------- | ---------------------- | ------------------------------------------ | ------ | ------ |  | --- | ------ | ------------ | - | - | ------ | ------- | - | - | ------ | ------ | 
|                                                         |                        |                                           
|                                                         |                        | Three Months Ended March 31, 2004 vs. 2003
|                                                         |                        |                                           
|                                                         |                        |                                           
|                                                         |                        | Increase/(Decrease) Due to                
|                                                         |                        |                                           
|                                                         |                        | Volume                                     |        | Rate   |  | Mix |        | Total Change
|                                                         |                        |                                            |        |        |  |     |        |             
|                                                         |                        |                                           
|                                                         |                        | (Dollars in thousands)                    
|Interest income                                          |                        |                                            |        |        |  |     |        |              |   |   |        |         |   |   |        |       
|Mortgage-backed securities                               |                        | $                                          | 2,209  |        |  | $   | 3,334  |              |   | $ | 351    |         |   | $ | 5,894  |       
|Loans held for sale                                      |                        |                                            | 13,428 |        |  |     | (2,994 | )            |   |   | (889   | )       |   |   | 9,545  |       
|Mortgage loans held for investment                       |                        |                                            | 37,725 |        |  |     | (7,635 | )            |   |   | (8,009 | )       |   |   | 22,080 |       
|Builder construction and income property                 |                        |                                            | (1,021 | )      |  |     | (737   | )            |   |   | 77     |         |   |   | (1,681 | )     
|Consumer construction                                    |                        |                                            | 5,317  |        |  |     | (2,715 | )            |   |   | (1,003 | )       |   |   | 1,599  |       
|Investment in Federal Home Loan Bank stock and
    other |                        |                                            | 1,721  |        |  |     | (422   | )            |   |   | (370   | )       |   |   | 925    |       
|                                                         |                        |                                            |        |        |  |     |        |              |   |   |        |         |   |   |        |       
|                                                         | Total interest income  |                                            |        | 59,375 |  |     |        | (11,169      | ) |   |        | (9,844  | ) |   |        | 38,362 | 
|Interest expense                                         |                        |                                            |        |        |  |     |        |              |   |   |        |         |   |   |        |       
|Interest-bearing deposits                                |                        |                                            | 8,984  |        |  |     | (5,790 | )            |   |   | (2,399 | )       |   |   | 795    |       
|Advances from Federal Home Loan Bank                     |                        |                                            | 23,979 |        |  |     | (9,605 | )            |   |   | (9,012 | )       |   |   | 5,362  |       
|Other borrowings                                         |                        |                                            | 4,774  |        |  |     | (2,746 | )            |   |   | (731   | )       |   |   | 1,297  |       
|                                                         |                        |                                            |        |        |  |     |        |              |   |   |        |         |   |   |        |       
|                                                         | Total interest expense |                                            |        | 37,737 |  |     |        | (18,141      | ) |   |        | (12,142 | ) |   |        | 7,454  | 
|                                                         |                        |                                            |        |        |  |     |        |              |   |   |        |         |   |   |        |       
|                                                         | Net interest income    |                                            | $      | 21,638 |  |     | $      | 6,972        |   |   | $      | 2,298   |   |   | $      | 30,908 | 
|                                                         |                        |                                            |        |        |  |     |        |              |   |   |        |         |   |   |        |       

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OVERALL INTEREST RATE RISK
MANAGEMENT

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

|                                     |                   |                |           |                   |  |                        |           |                   |  |          |           |            |  |   |           |            |  |   |           |            |  |  |            |             | 
|------------------------------------ | ----------------- | -------------- | --------- | ----------------- |  | ---------------------- | --------- | ----------------- |  | -------- | --------- | ---------- |  | - | --------- | ---------- |  | - | --------- | ---------- |  |  | ---------- | ----------- | 
|                                     |                   |                |           |                  
|                                     |                   | March 31, 2004 |           | December 31, 2003
|                                     |                   |                |           |                  
|                                     |                   |                |           |                   |  |                        |           |                  
|                                     |                   |                |           | Effect of Change  |  |                        |           | Effect of Change 
|                                     |                   |                |           | in Interest Rates |  |                        |           | in Interest Rates
|                                     |                   |                |           |                   |  |                        |           |                  
|                                     |                   |                |           | Decrease          |  | Increase               |           |                   |  | Decrease |           | Increase  
|                                     |                   | Fair Value     |           | 100 bps           |  | 100 bps                |           | Fair Value        |  | 100 bps  |           | 100 bps   
|                                     |                   |                |           |                   |  |                        |           |                   |  |          |           |           
|                                     |                   |                |           |                   |  |                        |           |                   |  |         
|                                     |                   |                |           |                   |  | (Dollars in thousands) |           |                   |  |         
|Cash and cash equivalents            |                   | $              | 200,096   |                   |  | $                      | 200,096   |                   |  | $        | 200,096   |            |  | $ | 111,203   |            |  | $ | 111,203   |            |  |  | $111,203   |            
|Trading securities                   |                   |                | 237,024   |                   |  |                        | 214,319   |                   |  |          | 263,822   |            |  |   | 206,484   |            |  |   | 180,197   |            |  |  | 228,880    |            
|Available for sale securities        |                   |                | 2,057,016 |                   |  |                        | 2,103,465 |                   |  |          | 1,998,246 |            |  |   | 1,611,958 |            |  |   | 1,662,715 |            |  |  | 1,553,103  |            
|Loans held for sale                  |                   |                | 3,544,675 |                   |  |                        | 3,612,181 |                   |  |          | 3,454,695 |            |  |   | 2,573,248 |            |  |   | 2,606,028 |            |  |  | 2,519,059  |            
|Loans held for investment            |                   |                | 6,716,664 |                   |  |                        | 6,753,550 |                   |  |          | 6,645,607 |            |  |   | 7,396,475 |            |  |   | 7,448,389 |            |  |  | 7,304,464  |            
|MSRs                                 |                   |                | 414,358   |                   |  |                        | 302,239   |                   |  |          | 506,825   |            |  |   | 443,688   |            |  |   | 311,777   |            |  |  | 534,672    |            
|Other assets                         |                   |                | 661,290   |                   |  |                        | 674,276   |                   |  |          | 648,298   |            |  |   | 683,213   |            |  |   | 697,356   |            |  |  | 669,062    |            
|Derivatives                          |                   |                | 41,643    |                   |  |                        | 14,063    |                   |  |          | 108,659   |            |  |   | 106,119   |            |  |   | 91,598    |            |  |  | 169,246    |            
|                                     |                   |                |           |                   |  |                        |           |                   |  |          |           |            |  |   |           |            |  |   |           |            |  |  |            |            
|                                     | Total assets      |                | $         | 13,872,766        |  |                        | $         | 13,874,189        |  |          | $         | 13,826,248 |  |   | $         | 13,132,388 |  |   | $         | 13,109,263 |  |  |            | $13,089,689 | 
|                                     |                   |                |           |                   |  |                        |           |                   |  |          |           |            |  |   |           |            |  |   |           |            |  |  |            |            
|Deposits                             |                   | $              | 4,772,939 |                   |  | $                      | 4,814,835 |                   |  | $        | 4,734,880 |            |  | $ | 4,367,400 |            |  | $ | 4,404,900 |            |  |  | $4,335,433 |            
|Advances from Federal Home Loan Bank |                   |                | 4,790,378 |                   |  |                        | 4,822,174 |                   |  |          | 4,757,471 |            |  |   | 4,949,477 |            |  |   | 4,979,962 |            |  |  | 4,919,147  |            
|Other borrowings                     |                   |                | 2,797,939 |                   |  |                        | 2,800,060 |                   |  |          | 2,795,610 |            |  |   | 2,438,695 |            |  |   | 2,440,538 |            |  |  | 2,436,665  |            
|Other liabilities                    |                   |                | 160,390   |                   |  |                        | 160,493   |                   |  |          | 160,267   |            |  |   | 156,711   |            |  |   | 156,800   |            |  |  | 156,599    |            
|                                     |                   |                |           |                   |  |                        |           |                   |  |          |           |            |  |   |           |            |  |   |           |            |  |  |            |            
|                                     | Total liabilities |                |           | 12,521,646        |  |                        |           | 12,597,562        |  |          |           | 12,448,228 |  |   |           | 11,912,283 |  |   |           | 11,982,200 |  |  |            | 11,847,844  | 
|                                     |                   |                |           |                   |  |                        |           |                   |  |          |           |            |  |   |           |            |  |   |           |            |  |  |            |            
|Shareholders equity (NPV)           |                   | $              | 1,351,120 |                   |  | $                      | 1,276,627 |                   |  | $        | 1,378,020 |            |  | $ | 1,220,105 |            |  | $ | 1,127,063 |            |  |  | $1,241,845 |            
|                                     |                   |                |           |                   |  |                        |           |                   |  |          |           |            |  |   |           |            |  |   |           |            |  |  |            |            
|% Change from base case              |                   |                |           |                   |  |                        | (5.51     | )%                |  |          | 1.99      | %          |  |   |           |            |  |   | (7.63     | )%         |  |  | 1.78       | %          
|                                     |                   |                |           |                   |  |                        |           |                   |  |          |           |            |  |   |           |            |  |   |           |            |  |  |            |            

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

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

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

36



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





CREDIT RISK AND RESERVES



GENERAL

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

|                                                                |                                      |                                     |           |           |            |           |        |               |        |            |        |             |   |  |      |       |      |   |        |        |        |   |     |       |       | 
|--------------------------------------------------------------- | ------------------------------------ | ----------------------------------- | --------- | --------- | ---------- | --------- | ------ | ------------- | ------ | ---------- | ------ | ----------- | - |  | ---- | ----- | ---- | - | ------ | ------ | ------ | - | --- | ----- | ----- | 
|                                                                |                                      |                                     |           |           |            |           |        | Total         |        |            |        |            
|                                                                |                                      |                                     |           | Allowance |            |           |        | Reserves as a |        | Non-       |        | Net Charge 
|                                                                |                                      |                                     |           | For Loan  |            | Credit    |        | Percentage of |        | Performing |        | Offs/Net   
|Type of Loan                                                    |                                      | Book Value                          |           | Losses    |            | Discounts |        | Book Value    |        | Assets     |        | REO (Gains)
|                                                                |                                      |                                     |           |           |            |           |        |               |        |            |        |            
|                                                                |                                      |                                    
|                                                                |                                      | (Dollars in thousands)             
|Held for investment portfolio                                   |                                      |                                     |           |           |            |           |        |               |        |            |        |             |   |  |      |       |      |   |        |        |        |   |     |      
|SFR mortgage loans and HELOCs                                   |                                      | $                                   | 4,697,377 |           |            | $         | 19,313 |               |        | $          |       |             |   |  | 0.41 | %     |      | $ | 14,402 |        |        | $ | 925 |      
|Land and other mortgage                                         |                                      |                                     | 164,981   |           |            |           | 3,169  |               |        |            |       |             |   |  | 1.92 | %     |      |   |       |        |        |   |    |      
|Builder construction and income property                        |                                      |                                     | 509,805   |           |            |           | 12,689 |               |        |            |       |             |   |  | 2.49 | %     |      |   | 12,057 |        |        |   |    |      
|Consumer construction                                           |                                      |                                     | 1,225,347 |           |            |           | 9,872  |               |        |            |       |             |   |  | 0.81 | %     |      |   | 9,428  |        |        |   | 76  |      
|                                                                |                                      |                                     |           |           |            |           |        |               |        |            |        |             |   |  |      |       |      |   |        |        |        |   |     |      
|                                                                | Total core held for investment loans |                                     |           | 6,597,510 |            |           |        | 45,043        |        |            |        |            |   |  |      | 0.68  | %    |   |        | 35,887 |        |   |     | 1,001 |      
|                                                                | Discontinued product lines(1)        |                                     |           | 65,514    |            |           |        | 7,083         |        |            |        |            |   |  |      | 10.81 | %    |   |        | 6,431  |        |   |     | 1,018 |      
|                                                                |                                      |                                     |           |           |            |           |        |               |        |            |        |             |   |  |      |       |      |   |        |        |        |   |     |      
|                                                                |                                      | Total held for investment portfolio |           |           | 6,663,024  |           |        | $             | 52,126 |            |        |             |  |  |      |       | 0.78 | % |        |        | 42,318 |   |     |       | 2,019 | 
|                                                                |                                      |                                     |           |           |            |           |        |               |        |            |        |             |   |  |      |       |      |   |        |        |        |   |     |      
|Held for sale portfolio                                         |                                      |                                     | 3,545,240 |           |            |           |        |               |        | $          | 13,923 |             |   |  | 0.39 | %     |      |   | 39,794 |        |        |   |    |      
|                                                                |                                      |                                     |           |           |            |           |        |               |        |            |        |             |   |  |      |       |      |   |        |        |        |   |     |      
|                                                                |                                      | Total loans                         |           | $         | 10,208,264 |           |        |               |        |            |        |             |   |  |      |       |      |   |        |        | 82,112 |   |     | $     | 2,019 | 
|                                                                |                                      |                                     |           |           |            |           |        |               |        |            |        |             |   |  |      |       |      |   |        |        |        |   |     |      
|Foreclosed assets                                               |                                      |                                     |           |           |            |           |        |               |        |            |        |             |   |  |      |       |      |   |        |        |        |   |     |      
|Core portfolios                                                 |                                      |                                     | 25,547    |           |            | $         | (460   | )            
|Discontinued product lines                                      |                                      |                                     | 988       |           |            |           | 217    |              
|                                                                |                                      |                                     |           |           |            |           |        |              
|Total foreclosed assets                                         |                                      |                                     | 26,535    |           |            | $         | (243   | )            
|                                                                |                                      |                                     |           |           |            |           |        |              
|Total non-performing assets                                     |                                      | $                                   | 108,647   |           |            |           |        |              
|                                                                |                                      |                                     |           |           |            |           |        |              
|Total non-performing assets as a percentage of
    total assets |                                      |                                     | 0.75      | %         |            |           |        |              
|                                                                |                                      |                                     |           |           |            |           |        |              



---



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

37



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##### Table of Contents



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

|                                                                          |                            |                               |                                      |           |        |              |        |       |        |        |        |       |        |         | 
|------------------------------------------------------------------------- | -------------------------- | ----------------------------- | ------------------------------------ | --------- | ------ | ------------ | ------ | ----- | ------ | ------ | ------ | ----- | ------ | ------- | 
|                                                                          |                            | March 31,                     |                                      | March 31, |        | December 31,
|                                                                          |                            | 2004                          |                                      | 2003      |        | 2003        
|                                                                          |                            |                               |                                      |           |        |             
|                                                                          |                            |                              
|                                                                          |                            | (Dollars in thousands)       
|Loans held for investment                                                 |                            |                               |                                      |           |        |              |        |       |        |        |        |      
|                                                                          | Portfolio loans            |                               |                                      |           |        |              |        |       |        |        |        |       |       
|                                                                          |                            | SFR mortgage loans            |                                      | $         | 14,402 |              |        | $     | 10,862 |        |        | $     | 12,414 |        
|                                                                          |                            | Land and other mortgage loans |                                      |           |       |              |        |       | 2,730  |        |        |       | 71     |        
|                                                                          |                            | Builder construction          |                                      |           | 12,057 |              |        |       | 8,541  |        |        |       | 9,704  |        
|                                                                          |                            | Consumer construction         |                                      |           | 9,428  |              |        |       | 12,670 |        |        |       | 8,954  |        
|                                                                          |                            |                               |                                      |           |        |              |        |       |        |        |        |      
|                                                                          |                            |                               | Total portfolio non-performing loans |           |        | 35,887       |        |       |        | 34,803 |        |       |        | 31,143  | 
|                                                                          | Discontinued product lines |                               |                                      | 6,431     |        |              |        | 9,529 |        |        |        | 6,449 |       
|                                                                          |                            |                               |                                      |           |        |              |        |       |        |        |        |      
|Total non-performing loans held for investment                            |                            |                               | 42,318                               |           |        |              | 44,332 |       |        |        | 37,592 |      
|Non-performing loans held for sale                                        |                            |                               | 39,794                               |           |        |              | 25,734 |       |        |        | 38,855 |      
|                                                                          |                            |                               |                                      |           |        |              |        |       |        |        |        |      
|                                                                          |                            |                               | Total non-performing loans           |           |        | 82,112       |        |       |        | 70,066 |        |       |        | 76,447  | 
|Foreclosed assets                                                         |                            |                               | 26,535                               |           |        |              | 27,871 |       |        |        | 23,677 |      
|                                                                          |                            |                               |                                      |           |        |              |        |       |        |        |        |      
|                                                                          |                            |                               | Total non-performing assets          |           | $      | 108,647      |        |       | $      | 97,937 |        |       | $      | 100,124 | 
|                                                                          |                            |                               |                                      |           |        |              |        |       |        |        |        |      
|Total non-performing assets to total assets                               |                            |                               | 0.75                                 | %         |        |              | 1.03   | %     |        |        | 0.76   | %    
|                                                                          |                            |                               |                                      |           |        |              |        |       |        |        |        |      
|Allowance for loan losses to non-performing loans
    held for investment |                            |                               | 123                                  | %         |        |              | 113    | %     |        |        | 140    | %    
|                                                                          |                            |                               |                                      |           |        |              |        |       |        |        |        |      

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

|                                                 |                               |                               |                                 |           |     |              |        |        |      |        |        |        |      |        | 
|------------------------------------------------ | ----------------------------- | ----------------------------- | ------------------------------- | --------- | --- | ------------ | ------ | ------ | ---- | ------ | ------ | ------ | ---- | ------ | 
|                                                 |                               |                              
|                                                 |                               | Three Months Ended           
|                                                 |                               |                              
|                                                 |                               | March 31,                     |                                 | March 31, |     | December 31,
|                                                 |                               | 2004                          |                                 | 2003      |     | 2003        
|                                                 |                               |                               |                                 |           |     |             
|                                                 |                               |                              
|                                                 |                               | (Dollars in thousands)       
|Core portfolio loans                             |                               |                               |                                 |           |     |              |        |        |      |        |        |       
|Balance, beginning of period                     |                               | $                             | 45,644                          |           |     | $            | 41,314 |        |      | $      | 44,886 |       
|Provision for loan losses                        |                               |                               | 400                             |           |     |              | 1,525  |        |      |        | 2,250  |       
|Charge-offs net of recoveries SFR mortgage loans |                               |                               | (925                            | )         |     |              | (1,166 | )      |      |        | (1,018 | )     
|                                                 |                               | Land and other mortgage loans |                                 |           |    |              |        |        |     |        |        |        | (11  | )     
|                                                 |                               | Consumer construction         |                                 |           | (76 | )            |        |        |     |        |        |        | (102 | )     
|                                                 |                               | Builder construction          |                                 |           |    |              |        |        | (149 | )      |        |        | (361 | )     
|                                                 |                               |                               |                                 |           |     |              |        |        |      |        |        |       
|                                                 | Charge-offs net of recoveries |                               |                                 | (1,001    | )   |              |        | (1,315 | )    |        |        | (1,492 | )   
|                                                 |                               |                               |                                 |           |     |              |        |        |      |        |        |       
|Balance, end of period                           |                               |                               | 45,043                          |           |     |              | 41,524 |        |      |        | 45,644 |       
|                                                 |                               |                               |                                 |           |     |              |        |        |      |        |        |       
|Discontinued product lines                       |                               |                               |                                 |           |     |              |        |        |      |        |        |       
|Balance, beginning of period                     |                               |                               | 7,001                           |           |     |              | 9,447  |        |      |        | 7,595  |       
|Provision for loan losses                        |                               |                               | 1,100                           |           |     |              | 1,575  |        |      |        | 1,250  |       
|                                                 | Charge-offs net of recoveries |                               |                                 | (1,018    | )   |              |        | (2,300 | )    |        |        | (1,844 | )   
|                                                 |                               |                               |                                 |           |     |              |        |        |      |        |        |       
|Balance, end of period                           |                               |                               | 7,083                           |           |     |              | 8,722  |        |      |        | 7,001  |       
|                                                 |                               |                               |                                 |           |     |              |        |        |      |        |        |       
|                                                 |                               |                               | Total allowance for loan losses |           | $   | 52,126       |        |        | $    | 50,246 |        |        | $    | 52,645 | 
|                                                 |                               |                               |                                 |           |     |              |        |        |      |        |        |       
|Annualized charge-offs to average loans          |                               |                               | 0.15                            | %         |     |              | 0.07   | %      |      |        | 0.16   | %     
|Core portfolio loans only:                       |                               |                               |                                 |           |     |              |        |        |      |        |        |       
|Annualized charge-offs to average loans          |                               |                               | 0.07                            | %         |     |              | 0.05   | %      |      |        | 0.07   | %     

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

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

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

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

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

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

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

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SECONDARY MARKET RESERVE

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

|            |                       |                       |   |            |       |             |   |        |         |  |  |      |      |  
|----------- | --------------------- | --------------------- | - | ---------- | ----- | ----------- | - | ------ | ------- |  |  | ---- | ---- | -
|            |                       | Amount                |   |            |       | Percentage 
|            |                       | Repurchased           |   | Total Sold |       | Repurchased
|            |                       |                       |   |            |       |            
|            |                       |                      
|            |                       | (Dollars in millions)
|Loans sold: |                       |                       |   |            |       |             |   |        |         |  |  |     
|            | GSEs and whole loans  |                       | $ | 116.4      |       |             | $ | 57,732 |         |  |  | 0.20 | %   
|            | Securitization trusts |                       |   | 9.3        |       |             |   | 45,197 |         |  |  | 0.02 | %   
|            |                       |                       |   |            |       |             |   |        |         |  |  |     
|            |                       | Total                 |   | $          | 125.7 |             |   | $      | 102,929 |  |  |      | 0.12 | %
|            |                       |                       |   |            |       |             |   |        |         |  |  |     

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

|                                                                                    |  |             |        |  
|----------------------------------------------------------------------------------- |  | ----------- | ------ | -
|                                                                                    |  | (Dollars in
|                                                                                    |  | thousands) 
|                                                                                    |  |            
|Balance, December 31, 2003.                                                         |  | $           | 34,000 |  
|Additions/provisions                                                                |  |             | 8,486  |  
|Claims reimbursement and estimated discounts on
    loans held for sale/charge-offs |  |             | (9,096 | )
|Recoveries on previous claims                                                       |  |             | 610    |  
|                                                                                    |  |             |        |  
|Balance, March 31, 2004.                                                            |  | $           | 34,000 |  
|                                                                                    |  |             |        |  

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

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OPERATING EXPENSES

A summary of operating expenses follows:

|                                         |  |                        |         |           |  |              |        |  |  |   |         | 
|---------------------------------------- |  | ---------------------- | ------- | --------- |  | ------------ | ------ |  |  | - | ------- | 
|                                         |  |                       
|                                         |  | Three Months Ended    
|                                         |  |                       
|                                         |  | March 31,              |         | March 31, |  | December 31,
|                                         |  | 2004                   |         | 2003      |  | 2003        
|                                         |  |                        |         |           |  |             
|                                         |  |                       
|                                         |  | (Dollars in thousands)
|Salaries and related                     |  | $                      | 63,038  |           |  | $            | 53,094 |  |  | $ | 55,706  | 
|Premises and equipment                   |  |                        | 9,593   |           |  |              | 8,306  |  |  |   | 9,864   | 
|Loan purchase costs                      |  |                        | 7,307   |           |  |              | 7,058  |  |  |   | 6,872   | 
|Professional services                    |  |                        | 5,073   |           |  |              | 4,610  |  |  |   | 5,429   | 
|Data processing                          |  |                        | 8,591   |           |  |              | 6,764  |  |  |   | 9,911   | 
|Office                                   |  |                        | 5,979   |           |  |              | 5,260  |  |  |   | 5,509   | 
|Advertising and promotion                |  |                        | 8,856   |           |  |              | 6,064  |  |  |   | 7,454   | 
|Operations and sale of foreclosed assets |  |                        | 2,135   |           |  |              | 956    |  |  |   | 1,316   | 
|Other                                    |  |                        | 4,626   |           |  |              | 3,546  |  |  |   | 4,845   | 
|                                         |  |                        |         |           |  |              |        |  |  |   |         | 
|                                         |  | $                      | 115,198 |           |  | $            | 95,658 |  |  | $ | 106,906 | 
|                                         |  |                        |         |           |  |              |        |  |  |   |         | 

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




DIVIDEND POLICY

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




FUTURE OUTLOOK

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

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

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

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

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




LIQUIDITY AND CAPITAL RESOURCES




OVERVIEW

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




PRINCIPAL SOURCES OF CASH

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

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Loan Sales and
Securitizations

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

Deposits/Retail Bank

We solicit deposits from the general public and
institutions by offering a variety of accounts and rates through
our network of 10 branches in Southern California,
telebanking and Internet channels. Through our Web site at
www.indymacbank.com, consumers can access their accounts
24-hours a day, seven days a week. Online banking allows
customers to access their accounts, view balances, transfer
funds between accounts, view transactions, download account
information and pay their bills conveniently from any computer
terminal.

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

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

|                              |                     |                        |           |                |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |     |  
|----------------------------- | ------------------- | ---------------------- | --------- | -------------- |  | ----------------- | -- | -------- | - | ------ | --------- | --------- |  |  | -- | --- | - | - | --------- | --------- |  |  | -- | --- | -
|                              |                     |                        |           |                |  |                  
|                              |                     | March 31, 2004         |           | March 31, 2003 |  | December 31, 2003
|                              |                     |                        |           |                |  |                  
|                              |                     |                        |           | % of           |  |                   |    | % of     |   |        |           | % of     
|                              |                     |                        |           | Total          |  |                   |    | Total    |   |        |           | Total    
|                              |                     | Amount                 |           | Deposits       |  | Amount            |    | Deposits |   | Amount |           | Deposits 
|                              |                     |                        |           |                |  |                   |    |          |   |        |           |          
|                              |                     |                       
|                              |                     | (Dollars in thousands)
|Non-interest-bearing checking |                     | $                      | 48,231    |                |  |                   | 1  | %        |   | $      | 40,221    |           |  |  | 1  | %   |   | $ | 44,353    |           |  |  | 1  | %  
|Interest-bearing checking     |                     |                        | 42,727    |                |  |                   | 1  | %        |   |        | 42,068    |           |  |  | 1  | %   |   |   | 39,761    |           |  |  | 1  | %  
|Savings                       |                     |                        | 1,637,665 |                |  |                   | 34 | %        |   |        | 932,141   |           |  |  | 27 | %   |   |   | 1,515,771 |           |  |  | 35 | %  
|Custodial accounts            |                     |                        | 658,387   |                |  |                   | 14 | %        |   |        | 557,041   |           |  |  | 16 | %   |   |   | 528,724   |           |  |  | 12 | %  
|                              |                     |                        |           |                |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    
|                              | Total core deposits |                        |           | 2,387,010      |  |                   |    | 50       | % |        |           | 1,571,471 |  |  |    | 45  | % |   |           | 2,128,609 |  |  |    | 49  | %
|Certificates of deposit       |                     |                        | 2,362,759 |                |  |                   | 50 | %        |   |        | 1,904,710 |           |  |  | 55 | %   |   |   | 2,222,164 |           |  |  | 51 | %  
|                              |                     |                        |           |                |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    
|                              | Total deposits      |                        | $         | 4,749,769      |  |                   |    | 100      | % |        | $         | 3,476,181 |  |  |    | 100 | % |   | $         | 4,350,773 |  |  |    | 100 | %
|                              |                     |                        |           |                |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    

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

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

|            |                |                        |           |                |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |     |  
|----------- | -------------- | ---------------------- | --------- | -------------- |  | ----------------- | -- | -------- | - | ------ | --------- | --------- |  |  | -- | --- | - | - | --------- | --------- |  |  | -- | --- | -
|            |                |                        |           |                |  |                  
|            |                | March 31, 2004         |           | March 31, 2003 |  | December 31, 2003
|            |                |                        |           |                |  |                  
|            |                |                        |           | % of           |  |                   |    | % of     |   |        |           | % of     
|            |                |                        |           | Total          |  |                   |    | Total    |   |        |           | Total    
|            |                | Amount                 |           | Deposits       |  | Amount            |    | Deposits |   | Amount |           | Deposits 
|            |                |                        |           |                |  |                   |    |          |   |        |           |          
|            |                |                       
|            |                | (Dollars in thousands)
|Branch      |                | $                      | 1,780,396 |                |  |                   | 37 | %        |   | $      | 1,402,724 |           |  |  | 40 | %   |   | $ | 1,717,314 |           |  |  | 39 | %  
|Telebanking |                |                        | 462,997   |                |  |                   | 11 | %        |   |        | 478,338   |           |  |  | 14 | %   |   |   | 463,755   |           |  |  | 11 | %  
|Internet    |                |                        | 523,622   |                |  |                   | 10 | %        |   |        | 398,242   |           |  |  | 12 | %   |   |   | 555,029   |           |  |  | 13 | %  
|Money desk  |                |                        | 1,324,367 |                |  |                   | 28 | %        |   |        | 639,836   |           |  |  | 18 | %   |   |   | 1,085,951 |           |  |  | 25 | %  
|Custodial   |                |                        | 658,387   |                |  |                   | 14 | %        |   |        | 557,041   |           |  |  | 16 | %   |   |   | 528,724   |           |  |  | 12 | %  
|            |                |                        |           |                |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    
|            | Total deposits |                        | $         | 4,749,769      |  |                   |    | 100      | % |        | $         | 3,476,181 |  |  |    | 100 | % |   | $         | 4,350,773 |  |  |    | 100 | %
|            |                |                        |           |                |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    

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

Advances from Federal Home Loan
Bank

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

Trust Preferred Securities and
Warrants

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

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

Other Borrowings, Excluding Trust Preferred
Debentures

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

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

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PRINCIPAL USES OF CASH

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




ACCUMULATED OTHER COMPREHENSIVE LOSS

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




REGULATORY CAPITAL REQUIREMENTS

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

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

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

|                |                   |                |  |                     |   |                  |  |       |   |  |  |       |  
|--------------- | ----------------- | -------------- |  | ------------------- | - | ---------------- |  | ----- | - |  |  | ----- | -
|                |                   | As Reported    |  | Adjusted for        |   |                 
|                |                   | Pre-Subprime   |  | Additional Subprime |   | Well-Capitalized
|                |                   | Risk-Weighting |  | Risk-Weighting      |   | Minimum         
|                |                   |                |  |                     |   |                 
|Capital Ratios: |                   |                |  |                     |   |                  |  |       |   |  |  |      
|                | Tangible          |                |  | 7.50                | % |                  |  | 7.50  | % |  |  | 2.00  | %
|                | Tier 1 core       |                |  | 7.50                | % |                  |  | 7.50  | % |  |  | 5.00  | %
|                | Tier 1 risk-based |                |  | 12.67               | % |                  |  | 12.05 | % |  |  | 6.00  | %
|                | Total risk-based  |                |  | 13.25               | % |                  |  | 12.61 | % |  |  | 10.00 | %

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




SHARE REPURCHASES

In June of 1999, our Board of Directors approved
a $100 million share repurchase program, which has since
been amended to increase to $500 million and include a
special repurchase of 3,640,860 shares from Countrywide
Credit Industries, Inc. From the share repurchase programs
inception through December 31, 2002, we repurchased
28 million shares in open market transactions and from
Countrywide at an average price of approximately $18.02 per
share, for an aggregated investment of $504.4 million. At
March 31, 2004, we had $63.6 million of remaining
capacity to repurchase under the current authorization from the
Board of Directors. No share repurchases under this program were
made during the first quarter 2004.

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

|                                 |  |         |        |          |  |       |   |       |  |   |       |  |  |   |        | 
|-------------------------------- |  | ------- | ------ | -------- |  | ----- | - | ----- |  | - | ----- |  |  | - | ------ | 
|                                 |  | January |        | February |  | March |   | Total
|                                 |  |         |        |          |  |       |   |      
|Number of Shares                 |  |         | 15,275 |          |  |       |  |       |  |   | 2,177 |  |  |   | 17,452 | 
|Weighted Average Price Per Share |  | $       | 29.84  |          |  |       |  |       |  | $ | 35.23 |  |  | $ | 30.51  | 




OFF-BALANCE SHEET ARRANGEMENTS

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

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

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

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

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




AGGREGATE CONTRACTUAL OBLIGATIONS

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

|                                                |  |                |            |              |  |              |           |              |  |       |         |  |  |   |         |  |  |   |            | 
|----------------------------------------------- |  | -------------- | ---------- | ------------ |  | ------------ | --------- | ------------ |  | ----- | ------- |  |  | - | ------- |  |  | - | ---------- | 
|                                                |  |               
|                                                |  | Payment Due   
|                                                |  |               
|                                                |  | April 1, 2004  |            | January 1,   |  | January 1,   |           |             
|                                                |  | through        |            | 2005 through |  | 2008 through |           | After        |  |      
|                                                |  | December 31,   |            | December 31, |  | December 31, |           | December 31, |  |      
|                                                |  | 2004           |            | 2007         |  | 2009         |           | 2009         |  | Total
|                                                |  |                |            |              |  |              |           |              |  |      
|                                                |  |               
|                                                |  | (In thousands)
|Deposits without a stated maturity              |  | $              | 2,387,010  |              |  | $            |          |              |  | $     |        |  |  | $ |        |  |  | $ | 2,387,010  | 
|Custodial Accounts and Certificates of Deposits |  |                | 1,610,280  |              |  |              | 746,807   |              |  |       | 5,672   |  |  |   |        |  |  |   | 2,362,759  | 
|FHLB Advances                                   |  |                | 3,654,923  |              |  |              | 875,000   |              |  |       | 230,000 |  |  |   |        |  |  |   | 4,759,923  | 
|Repurchase Agreements                           |  |                | 2,894,573  |              |  |              |          |              |  |       |        |  |  |   |        |  |  |   | 2,894,573  | 
|HELOC Notes                                     |  |                |           |              |  |              | 497,964   |              |  |       |        |  |  |   |        |  |  |   | 497,964    | 
|CMOs                                            |  |                |           |              |  |              |          |              |  |       |        |  |  |   | 203     |  |  |   | 203        | 
|Trust Preferred                                 |  |                |           |              |  |              |          |              |  |       |        |  |  |   | 183,798 |  |  |   | 183,798    | 
|Accrued Interest Payable                        |  |                | 29,119     |              |  |              |          |              |  |       |        |  |  |   |        |  |  |   | 29,119     | 
|Deferred Compensation                           |  |                |           |              |  |              |          |              |  |       |        |  |  |   | 23,631  |  |  |   | 23,631     | 
|Operating Leases                                |  |                | 9,214      |              |  |              | 36,601    |              |  |       | 18,469  |  |  |   | 6,616   |  |  |   | 70,900     | 
|Purchase Obligations                            |  |                | 5,852      |              |  |              | 13,883    |              |  |       |        |  |  |   |        |  |  |   | 19,735     | 
|                                                |  |                |            |              |  |              |           |              |  |       |         |  |  |   |         |  |  |   |            | 
|Total                                           |  | $              | 10,590,971 |              |  | $            | 2,170,255 |              |  | $     | 254,141 |  |  | $ | 214,248 |  |  | $ | 13,229,615 | 
|                                                |  |                |            |              |  |              |           |              |  |       |         |  |  |   |         |  |  |   |            | 

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

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

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




KEY OPERATING RISKS

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




INTEREST RATE RISK

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




VALUATION RISK

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




CREDIT RISK

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

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


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




LIQUIDITY RISK/ ACCESS TO CAPITAL
MARKETS

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

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




GOVERNMENT REGULATION AND MONETARY
POLICY

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

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

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




COMPETITION

We face significant competition in acquiring and
selling loans. In our mortgage banking operations, we compete
with other mortgage bankers, GSEs, established third party
lending programs, investment banking firms, banks, savings and
loan associations, and other lenders and entities purchasing
mortgage assets. With regard to mortgage-backed securities
issued through our mortgage banking operations, we face
competition from other investment opportunities available to
prospective investors. We estimate our market share of the
U.S. mortgage market to be approximately 1%. A number of
our competitors have significantly larger market share and
financial resources. We seek to compete with financial
institutions and mortgage companies through an emphasis on
quality of service, diversified products and maximum use of
technology.

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

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




OTHER RISKS

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




CRITICAL ACCOUNTING POLICIES

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

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







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

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

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|        |                                     
|------- | ------------------------------------
|ITEM 1. | FINANCIAL STATEMENTS
    (UNAUDITED)

INDYMAC BANCORP, INC. AND
SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                                                                                                                                                     |                           |                         |                                 |                                                                                                                                                           |           |           |            |         |           |           |            | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ----------------------- | ------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | --------- | ---------- | ------- | --------- | --------- | ---------- | 
|                                                                                                                                                                                                                                                                                                                     |                           | March 31,               |                                 | December 31,                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                     |                           | 2004                    |                                 | 2003                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                     |                           |                         |                                 |                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                     |                           | (Unaudited)             |                                 |                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                     |                           |                        
|                                                                                                                                                                                                                                                                                                                     |                           | (Dollars in thousands) 
|ASSETS                                                                                                                                                                                                                                                                                                              
|Cash and cash equivalents                                                                                                                                                                                                                                                                                            |                           | $                       | 200,863                         |                                                                                                                                                           |           | $         | 115,485    |        
|Securities classified as trading
    ($107.0 million and $70.9 million pledged as
    collateral for borrowings at March 31, 2004 and
    December 31, 2003, respectively)                                                                                                                                           |                           |                         | 251,006                         |                                                                                                                                                           |           |           | 223,632    |        
|Mortgage-backed securities and agency notes
    available for sale, amortized cost of $2.6 billion and
    $1.6 billion at March 31, 2004 and December 31,
    2003, respectively ($2.1 billion and $1.5 billion
    pledged as collateral for borrowings at March 31, 2004 and
    December 31, 2003, respectively) |                           |                         | 2,655,696                       |                                                                                                                                                           |           |           | 1,613,974  |        
|Loans receivable:                                                                                                                                                                                                                                                                                                    |                           |                         |                                 |                                                                                                                                                           |           |           |            |        
|                                                                                                                                                                                                                                                                                                                     | Loans held for sale       |                         |                                 |                                                                                                                                                           |           |           |            |         |          
|                                                                                                                                                                                                                                                                                                                     |                           | Prime                   |                                 |                                                                                                                                                           | 2,993,512 |           |            |         | 2,196,488 |          
|                                                                                                                                                                                                                                                                                                                     |                           | Subprime                |                                 |                                                                                                                                                           | 381,287   |           |            |         | 295,008   |          
|                                                                                                                                                                                                                                                                                                                     |                           | Consumer lot loans      |                                 |                                                                                                                                                           | 156,518   |           |            |         | 81,752    |          
|                                                                                                                                                                                                                                                                                                                     |                           |                         |                                 |                                                                                                                                                           |           |           |            |        
|                                                                                                                                                                                                                                                                                                                     |                           |                         | Total loans held for sale       |                                                                                                                                                           |           | 3,531,317 |            |         |           | 2,573,248 |           
|                                                                                                                                                                                                                                                                                                                     |                           |                         |                                 |                                                                                                                                                           |           |           |            |        
|                                                                                                                                                                                                                                                                                                                     | Loans held for investment |                         |                                 |                                                                                                                                                           |           |           |            |         |          
|                                                                                                                                                                                                                                                                                                                     |                           | SFR mortgage            |                                 |                                                                                                                                                           | 4,440,540 |           |            |         | 4,945,439 |          
|                                                                                                                                                                                                                                                                                                                     |                           | Consumer construction   |                                 |                                                                                                                                                           | 1,225,347 |           |            |         | 1,145,526 |          
|                                                                                                                                                                                                                                                                                                                     |                           | Builder construction    |                                 |                                                                                                                                                           | 500,490   |           |            |         | 484,397   |          
|                                                                                                                                                                                                                                                                                                                     |                           | HELOC                   |                                 |                                                                                                                                                           | 322,351   |           |            |         | 711,494   |          
|                                                                                                                                                                                                                                                                                                                     |                           | Land and other mortgage |                                 |                                                                                                                                                           | 164,981   |           |            |         | 126,044   |          
|                                                                                                                                                                                                                                                                                                                     |                           | Income property         |                                 |                                                                                                                                                           | 9,315     |           |            |         | 36,285    |          
|                                                                                                                                                                                                                                                                                                                     | Allowance for loan losses |                         |                                 | (52,126                                                                                                                                                   | )         |           |            | (52,645 | )        
|                                                                                                                                                                                                                                                                                                                     |                           |                         |                                 |                                                                                                                                                           |           |           |            |        
|                                                                                                                                                                                                                                                                                                                     |                           |                         | Total loans held for investment |                                                                                                                                                           |           | 6,610,898 |            |         |           | 7,396,540 |           
|                                                                                                                                                                                                                                                                                                                     |                           |                         |                                 |                                                                                                                                                           |           |           |            |        
|                                                                                                                                                                                                                                                                                                                     |                           |                         |                                 | Total loans receivable ($7.8 billion and
    $7.6 billion pledged as collateral for borrowings at
    March 31, 2004 and December 31, 2003, respectively) |           |           | 10,142,215 |         |           |           | 9,969,788  | 
|                                                                                                                                                                                                                                                                                                                     |                           |                         |                                 |                                                                                                                                                           |           |           |            |        
|Mortgage servicing rights                                                                                                                                                                                                                                                                                            |                           |                         | 414,358                         |                                                                                                                                                           |           |           | 443,688    |        
|Investment in Federal Home Loan Bank stock, at
    cost                                                                                                                                                                                                                                                              |                           |                         | 287,736                         |                                                                                                                                                           |           |           | 313,284    |        
|Interest receivable                                                                                                                                                                                                                                                                                                  |                           |                         | 60,928                          |                                                                                                                                                           |           |           | 51,758     |        
|Goodwill and other intangible assets                                                                                                                                                                                                                                                                                 |                           |                         | 33,509                          |                                                                                                                                                           |           |           | 33,697     |        
|Foreclosed assets                                                                                                                                                                                                                                                                                                    |                           |                         | 26,535                          |                                                                                                                                                           |           |           | 23,677     |        
|Other assets                                                                                                                                                                                                                                                                                                         |                           |                         | 422,993                         |                                                                                                                                                           |           |           | 451,408    |        
|                                                                                                                                                                                                                                                                                                                     |                           |                         |                                 |                                                                                                                                                           |           |           |            |        
|                                                                                                                                                                                                                                                                                                                     |                           |                         |                                 | Total assets                                                                                                                                              |           | $         | 14,495,839 |         |           | $         | 13,240,391 | 
|                                                                                                                                                                                                                                                                                                                     |                           |                         |                                 |                                                                                                                                                           |           |           |            |        

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INDYMAC BANCORP, INC. AND
SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS 
(Continued)

|                                         |                                                                                                                                                                                                                                |                                            |           |              |            |   |           |           |            | 
|---------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | --------- | ------------ | ---------- | - | --------- | --------- | ---------- | 
|                                         |                                                                                                                                                                                                                                | March 31,                                  |           | December 31,
|                                         |                                                                                                                                                                                                                                | 2004                                       |           | 2003        
|                                         |                                                                                                                                                                                                                                |                                            |           |             
|                                         |                                                                                                                                                                                                                                | (Unaudited)                                |           |             
|                                         |                                                                                                                                                                                                                                |                                           
|                                         |                                                                                                                                                                                                                                | (Dollars in thousands)                    
|LIABILITIES AND SHAREHOLDERS
    EQUITY
|Deposits                                 |                                                                                                                                                                                                                                | $                                          | 4,749,769 |              |            | $ | 4,350,773 |          
|Advances from Federal Home Loan Bank     |                                                                                                                                                                                                                                |                                            | 4,759,923 |              |            |   | 4,934,911 |          
|Other borrowings                         |                                                                                                                                                                                                                                |                                            | 3,576,538 |              |            |   | 2,622,094 |          
|Other liabilities                        |                                                                                                                                                                                                                                |                                            | 354,305   |              |            |   | 315,182   |          
|                                         |                                                                                                                                                                                                                                |                                            |           |              |            |   |           |          
|                                         |                                                                                                                                                                                                                                | Total liabilities                          |           |              | 13,440,535 |   |           |           | 12,222,960 | 
|                                         |                                                                                                                                                                                                                                |                                            |           |              |            |   |           |          
|Shareholders Equity                     |                                                                                                                                                                                                                                |                                            |           |              |            |   |           |          
|                                         | Preferred stock  authorized, 10,000,000
    shares of $0.01 par value; none issued                                                                                                                                            |                                            |           |             |            |   |           |          |           
|                                         | Common stock  authorized, 200,000,000
    shares of $0.01 par value; issued 86,953,278 shares (57,781,587
    outstanding) at March 31, 2004, and issued 85,914,552
    shares (56,760,313 outstanding) at December 31, 2003. |                                            |           | 869          |            |   |           | 859       |           
|                                         | Additional paid-in-capital                                                                                                                                                                                                     |                                            |           | 1,064,900    |            |   |           | 1,043,856 |           
|                                         | Accumulated other comprehensive loss                                                                                                                                                                                           |                                            |           | (36,724      | )          |   |           | (26,454   | )         
|                                         | Retained earnings                                                                                                                                                                                                              |                                            |           | 546,030      |            |   |           | 518,408   |           
|                                         | Treasury stock, 29,171,691 shares and 29,154,239
    shares at March 31, 2004, and December 31, 2003,
    respectively                                                                                                         |                                            |           | (519,771     | )          |   |           | (519,238  | )         
|                                         |                                                                                                                                                                                                                                |                                            |           |              |            |   |           |          
|                                         |                                                                                                                                                                                                                                | Total shareholders equity                 |           |              | 1,055,304  |   |           |           | 1,017,431  | 
|                                         |                                                                                                                                                                                                                                |                                            |           |              |            |   |           |          
|                                         |                                                                                                                                                                                                                                | Total liabilities and shareholders equity |           | $            | 14,495,839 |   |           | $         | 13,240,391 | 
|                                         |                                                                                                                                                                                                                                |                                            |           |              |            |   |           |          

The accompanying notes are an integral part of
these statements.

53



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES




CONSOLIDATED STATEMENTS OF EARNINGS

|                                           |                                         |                                                         |        |         |         |   |        |        |         | 
|------------------------------------------ | --------------------------------------- | ------------------------------------------------------- | ------ | ------- | ------- | - | ------ | ------ | ------- | 
|                                           |                                         |                                                        
|                                           |                                         | For the Three Months                                   
|                                           |                                         | Ended March 31,                                        
|                                           |                                         |                                                        
|                                           |                                         | 2004                                                    |        | 2003   
|                                           |                                         |                                                         |        |        
|                                           |                                         |                                                        
|                                           |                                         | (Unaudited)                                            
|                                           |                                         | (In thousands,                                         
|                                           |                                         | except per share data)                                 
|Interest income                            |                                         |                                                         |        |         |         |   |        |       
|Mortgage-backed and other securities       |                                         | $                                                       | 26,855 |         |         | $ | 20,961 |       
|Loans held for sale                        |                                         |                                                         |        |         |         |   |        |       
|                                           | Prime                                   |                                                         |        | 44,331  |         |   |        | 37,425 |        
|                                           | Subprime                                |                                                         |        | 8,508   |         |   |        | 6,243  |        
|                                           | Consumer lot loans                      |                                                         |        | 1,907   |         |   |        | 1,533  |        
|                                           |                                         |                                                         |        |         |         |   |        |       
|                                           |                                         | Total loans held for sale                               |        |         | 54,746  |   |        |        | 45,201  | 
|Loans held for investment                  |                                         |                                                         |        |         |         |   |        |       
|                                           | SFR mortgage                            |                                                         |        | 49,218  |         |   |        | 29,514 |        
|                                           | Consumer construction                   |                                                         |        | 15,995  |         |   |        | 14,396 |        
|                                           | Builder construction                    |                                                         |        | 7,526   |         |   |        | 8,601  |        
|                                           | HELOC                                   |                                                         |        | 6,359   |         |   |        | 4,147  |        
|                                           | Land and other mortgage                 |                                                         |        | 2,464   |         |   |        | 2,301  |        
|                                           | Income property                         |                                                         |        | 514     |         |   |        | 1,119  |        
|                                           |                                         |                                                         |        |         |         |   |        |       
|                                           |                                         | Total loans held for investment                         |        |         | 82,076  |   |        |        | 60,078  | 
|Other                                      |                                         |                                                         | 2,882  |         |         |   | 1,957  |       
|                                           |                                         |                                                         |        |         |         |   |        |       
|                                           |                                         | Total interest income                                   |        |         | 166,559 |   |        |        | 128,197 | 
|Interest expense                           |                                         |                                                         |        |         |         |   |        |       
|Deposits                                   |                                         |                                                         | 22,482 |         |         |   | 21,687 |       
|Advances from Federal Home Loan Bank       |                                         |                                                         | 30,920 |         |         |   | 25,558 |       
|Borrowings                                 |                                         |                                                         | 19,224 |         |         |   | 17,927 |       
|                                           |                                         |                                                         |        |         |         |   |        |       
|                                           |                                         | Total interest expense                                  |        |         | 72,626  |   |        |        | 65,172  | 
|                                           |                                         |                                                         |        |         |         |   |        |       
|                                           |                                         | Net interest income                                     |        |         | 93,933  |   |        |        | 63,025  | 
|Provision for loan losses                  |                                         |                                                         | 1,500  |         |         |   | 3,100  |       
|                                           |                                         |                                                         |        |         |         |   |        |       
|                                           |                                         | Net interest income after provision for loan
    losses |        |         | 92,433  |   |        |        | 59,925  | 
|Other income                               |                                         |                                                         |        |         |         |   |        |       
|                                           | Gain on sale of loans                   |                                                         |        | 83,668  |         |   |        | 83,784 |        
|                                           | Service fee (loss) income               |                                                         |        | (3,144  | )       |   |        | 2,383  |        
|                                           | Loss on mortgage-backed securities, net |                                                         |        | (4,987  | )       |   |        | (6,910 | )      
|                                           | Fee and other income                    |                                                         |        | 16,722  |         |   |        | 17,727 |        
|                                           |                                         |                                                         |        |         |         |   |        |       
|                                           |                                         | Total other income                                      |        |         | 92,259  |   |        |        | 96,984  | 
|                                           |                                         |                                                         |        |         |         |   |        |       
|                                           |                                         | Net revenues                                            |        |         | 184,692 |   |        |        | 156,909 | 
|Other expense                              |                                         |                                                         |        |         |         |   |        |       
|                                           | Operating expenses                      |                                                         |        | 115,198 |         |   |        | 95,658 |        
|                                           | Amortization of other intangible assets |                                                         |        | 188     |         |   |        | 231    |        
|                                           |                                         |                                                         |        |         |         |   |        |       
|                                           |                                         | Total other expense                                     |        |         | 115,386 |   |        |        | 95,889  | 
|                                           |                                         |                                                         |        |         |         |   |        |       
|Earnings before provision for income taxes |                                         |                                                         | 69,306 |         |         |   | 61,020 |       
|                                           | Provision for income taxes              |                                                         |        | 27,376  |         |   |        | 24,103 |        
|                                           |                                         |                                                         |        |         |         |   |        |       
|                                           |                                         | Net earnings                                            |        | $       | 41,930  |   |        | $      | 36,917  | 
|                                           |                                         |                                                         |        |         |         |   |        |       
|Earnings per share                         |                                         |                                                         |        |         |         |   |        |       
|                                           | Basic                                   |                                                         | $      | 0.74    |         |   | $      | 0.67   |        
|                                           | Diluted                                 |                                                         | $      | 0.70    |         |   | $      | 0.66   |        
|Weighted average shares outstanding        |                                         |                                                         |        |         |         |   |        |       
|                                           | Basic                                   |                                                         |        | 56,997  |         |   |        | 54,827 |        
|                                           | Diluted                                 |                                                         |        | 59,791  |         |   |        | 55,979 |        
|Dividend Declared per Share                |                                         | $                                                       | 0.30   |         |         | $ | 0.10   |       

The accompanying notes are an integral part of
these statements.

54



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES



CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY AND COMPREHENSIVE INCOME


|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|--------------------------------------------------------------------------- |  | ---------------------- | ---------- | ------ |  | ---------- | --- | ------------- |  | -------- | --------- | ------------- |  | -------- | ------- | ------------- |  | - | ------- | - |  | - | ------- | - |  | - | -------- | - |  | - | --------- | -
|                                                                            |  |                        |            |        |  |            |     | Accumulated   |  |          |           |               |  |          |         |              
|                                                                            |  |                        |            |        |  |            |     | Other         |  |          |           |               |  |          |         |              
|                                                                            |  |                        |            |        |  | Additional |     | Comprehensive |  |          |           | Total         |  |          |         | Total        
|                                                                            |  | Shares                 |            | Common |  | Paid-In-   |     | Income        |  | Retained |           | Comprehensive |  | Treasury |         | Shareholders
|                                                                            |  | Outstanding            |            | Stock  |  | Capital    |     | (Loss)        |  | Earnings |           | Income        |  | Stock    |         | Equity       
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |              
|                                                                            |  |                       
|                                                                            |  | (Unaudited)           
|                                                                            |  |                       
|                                                                            |  | (Dollars in thousands)
|Balance at December 31, 2002                                                |  |                        | 54,829,486 |        |  | $          | 840 |               |  | $        | 1,007,936 |               |  | $        | (17,747 | )             |  | $ | 377,707 |   |  |   |         |   |  | $ | (518,771 | ) |  | $ | 849,965   |  
|Common stock options exercised                                              |  |                        | 222,020    |        |  |            | 3   |               |  |          | 3,313     |               |  |          |        |               |  |   |        |   |  | $ |        |   |  |   |         |   |  |   | 3,316     |  
|Directors and officers notes
    receivable                               |  |                        |           |        |  |            |    |               |  |          | 25        |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   |         |   |  |   | 25        |  
|Deferred compensation, restricted stock                                     |  |                        | 161,696    |        |  |            |    |               |  |          | 489       |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   |         |   |  |   | 489       |  
|Net loss on mortgage- backed securities available
    for sale, net of tax  |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | (558    | )             |  |   |        |   |  |   | (558    | ) |  |   |         |   |  |   | (558      | )
|Net unrealized loss on derivatives used in cash
    flow hedges, net of tax |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | (1,475  | )             |  |   |        |   |  |   | (1,475  | ) |  |   |         |   |  |   | (1,475    | )
|Purchases of common stock                                                   |  |                        | (21,712    | )      |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   | (406     | ) |  |   | (406      | )
|Cash dividends                                                              |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   | (5,490  | ) |  |   |        |   |  |   |         |   |  |   | (5,490    | )
|Net earnings                                                                |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   | 36,917  |   |  |   | 36,917  |   |  |   |         |   |  |   | 36,917    |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|Total comprehensive income                                                  |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |   |  | $ | 34,844  |   |  |   |         |   |  |   |          |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|Balance at March 31, 2003                                                   |  |                        | 55,191,490 |        |  | $          | 843 |               |  | $        | 1,011,763 |               |  | $        | (19,780 | )             |  | $ | 409,134 |   |  |   |         |   |  | $ | (519,177 | ) |  | $ | 882,783   |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|Balance at December 31, 2003                                                |  |                        | 56,760,313 |        |  | $          | 859 |               |  | $        | 1,043,856 |               |  | $        | (26,454 | )             |  | $ | 518,408 |   |  |   |         |   |  | $ | (519,238 | ) |  | $ | 1,017,431 |  
|Common stock options exercised                                              |  |                        | 944,774    |        |  |            | 10  |               |  |          | 20,507    |               |  |          |        |               |  |   |        |   |  | $ |        |   |  |   |         |   |  |   | 20,517    |  
|Directors and officers notes
    receivable                               |  |                        |           |        |  |            |    |               |  |          | 33        |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   |         |   |  |   | 33        |  
|Deferred compensation, restricted stock                                     |  |                        | 93,952     |        |  |            |    |               |  |          | 504       |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   |         |   |  |   | 504       |  
|Net gain on mortgage- backed securities available
    for sale, net of tax  |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | 11,849  |               |  |   |        |   |  |   | 11,849  |   |  |   |         |   |  |   | 11,849    |  
|Net unrealized loss on derivatives used in cash
    flow hedges, net of tax |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | (22,119 | )             |  |   |        |   |  |   | (22,119 | ) |  |   |         |   |  |   | (22,119   | )
|Purchases of common stock                                                   |  |                        | (17,452    | )      |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   | (533     | ) |  |   | (533      | )
|Cash dividends                                                              |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   | (14,308 | ) |  |   |        |   |  |   |         |   |  |   | (14,308   | )
|Net earnings                                                                |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   | 41,930  |   |  |   | 41,930  |   |  |   |         |   |  |   | 41,930    |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|Total comprehensive income                                                  |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |   |  | $ | 31,660  |   |  |   |         |   |  |   |          |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|Balance at March 31, 2004                                                   |  |                        | 57,781,587 |        |  | $          | 869 |               |  | $        | 1,064,900 |               |  | $        | (36,724 | )             |  | $ | 546,030 |   |  |   |         |   |  | $ | (519,771 | ) |  | $ | 1,055,304 |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  

The accompanying notes are an integral part of
these statements.

55



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##### Table of Contents








INDYMAC BANCORP, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |            |          |          |  
|-------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | ---------- | --------- | ------- | ---------- | -------- | -------- | -
|                                                                           |                                                                                        |                                                                    
|                                                                           |                                                                                        | For the Three Months                                               
|                                                                           |                                                                                        | Ended March 31,                                                    
|                                                                           |                                                                                        |                                                                    
|                                                                           |                                                                                        | 2004                                                                |                                                                                                                                                            | 2003    
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |         
|                                                                           |                                                                                        |                                                                    
|                                                                           |                                                                                        | (Unaudited)                                                        
|                                                                           |                                                                                        | (Dollars in thousands)                                             
|Cash flows from operating
    activities:                                  |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|                                                                           | Net earnings                                                                           |                                                                     | $                                                                                                                                                          | 41,930   |            |           | $       | 36,917     |         
|                                                                           | Adjustments to reconcile net earnings to net cash
    (used in) operating activities:  |                                                                     |                                                                                                                                                            |          |            |           |         |            |         
|                                                                           |                                                                                        | Total amortization and depreciation                                 |                                                                                                                                                            |          | 43,313     |           |         |            | 49,893   |         
|                                                                           |                                                                                        | Provision for valuation adjustment of mortgage
    servicing rights |                                                                                                                                                            |          | 53,433     |           |         |            | 1,112    |         
|                                                                           |                                                                                        | Gain on sale of loans                                               |                                                                                                                                                            |          | (83,668    | )         |         |            | (83,784  | )       
|                                                                           |                                                                                        | Loss on mortgage-backed securities, net                             |                                                                                                                                                            |          | 4,987      |           |         |            | 6,910    |         
|                                                                           |                                                                                        | Provision for loan losses                                           |                                                                                                                                                            |          | 1,500      |           |         |            | 3,100    |         
|                                                                           |                                                                                        | Net decrease (increase) in other assets and
    liabilities         |                                                                                                                                                            |          | 24,076     |           |         |            | 53,731   |         
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|                                                                           |                                                                                        |                                                                     | Net cash provided by operating activities before
    activity for trading securities, premiums paid for derivative
    instruments and loans held for sale |          |            | 85,571    |         |            |          | 67,879   |  
|                                                                           |                                                                                        | Net (purchases of) and payment from trading
    securities          |                                                                                                                                                            |          | (5,199     | )         |         |            | 527,366  |         
|                                                                           |                                                                                        | Net decrease (increase) on premiums for
    derivative instruments  |                                                                                                                                                            |          | 26,613     |           |         |            | (14,544  | )       
|                                                                           |                                                                                        | Net purchases of loans held for sale                                |                                                                                                                                                            |          | (1,025,454 | )         |         |            | (658,369 | )       
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|                                                                           |                                                                                        |                                                                     | Net cash (used in) operating activities                                                                                                                    |          |            | (918,469  | )       |            |          | (77,668  | )
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|Cash flows from investing
    activities:                                  |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|                                                                           | Net (purchase of) payments from loans held for
    investment                          |                                                                     |                                                                                                                                                            | (44,928  | )          |           |         | 24,900     |         
|                                                                           | Net (purchases of) and payments from
    mortgage-backed securities available for sale |                                                                     |                                                                                                                                                            | (151,562 | )          |           |         | 184,193    |         
|                                                                           | Net decrease (increase) in investment in
    Federal Home Loan Bank stock, at cost     |                                                                     |                                                                                                                                                            | 25,548   |            |           |         | (37,390    | )       
|                                                                           | Net purchases of property, plant and equipment                                         |                                                                     |                                                                                                                                                            | (9,192   | )          |           |         | (5,096     | )       
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|                                                                           |                                                                                        |                                                                     | Net cash (used in) provided by investing
    activities                                                                                                    |          |            | (180,134  | )       |            |          | 166,607  |  
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|Cash flows from financing
    activities:                                  |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|                                                                           | Net increase in deposits                                                               |                                                                     |                                                                                                                                                            | 398,996  |            |           |         | 335,679    |         
|                                                                           | Net (decrease) increase in advances from
    Federal Home Loan Bank                    |                                                                     |                                                                                                                                                            | (175,000 | )          |           |         | 600,914    |         
|                                                                           | Net increase (decrease) in borrowings                                                  |                                                                     |                                                                                                                                                            | 954,276  |            |           |         | (1,089,776 | )       
|                                                                           | Net proceeds from stock options and notes
    receivable                               |                                                                     |                                                                                                                                                            | 20,550   |            |           |         | 3,829      |         
|                                                                           | Cash dividends paid                                                                    |                                                                     |                                                                                                                                                            | (14,308  | )          |           |         | (5,490     | )       
|                                                                           | Purchases of common stock                                                              |                                                                     |                                                                                                                                                            | (533     | )          |           |         | (406       | )       
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|                                                                           |                                                                                        |                                                                     | Net cash provided by (used in) financing
    activities                                                                                                    |          |            | 1,183,981 |         |            |          | (155,250 | )
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|Net increase (decrease) in cash and cash
    equivalents                   |                                                                                        |                                                                     | 85,378                                                                                                                                                     |          |            |           | (66,311 | )         
|Cash and cash equivalents at beginning of period                           |                                                                                        |                                                                     | 115,485                                                                                                                                                    |          |            |           | 196,720 |           
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|Cash and cash equivalents at end of period                                 |                                                                                        | $                                                                   | 200,863                                                                                                                                                    |          |            | $         | 130,409 |           
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|Supplemental cash flow information:                                        |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|                                                                           |                                                                                        |                                                                     | Cash paid for interest                                                                                                                                     |          | $          | 63,121    |         |            | $        | 63,639   |  
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|                                                                           |                                                                                        |                                                                     | Cash paid for income taxes                                                                                                                                 |          | $          | 4,443     |         |            | $        | 1,061    |  
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|Supplemental disclosure of noncash investing
    and financing activities: |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|                                                                           |                                                                                        |                                                                     | Net transfer of loans held for sale to
    (from) loans held for investment                                                                                |          | $          | 195,037   |         |            | $        | 261,833  |  
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           
|                                                                           |                                                                                        |                                                                     | Net transfer of loans held for investment to
    mortgage-backed securities available for sale                                                             |          | $          | 500,012   |         |            | $        |         |  
|                                                                           |                                                                                        |                                                                     |                                                                                                                                                            |          |            |           |         |           

The accompanying notes are an integral part of
these statements.

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INDYMAC BANCORP, INC. AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

March 31, 2004


(Unaudited)


Note 1  Basis of
Presentation

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

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

Note 2  Newly Issued
Accounting Pronouncement

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

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INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 3  Securities

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

|                                                                                  |                                                |                        |   |              |           |  |   |           |           | 
|--------------------------------------------------------------------------------- | ---------------------------------------------- | ---------------------- | - | ------------ | --------- |  | - | --------- | --------- | 
|                                                                                  |                                                | March 31,              |   | December 31,
|                                                                                  |                                                | 2004                   |   | 2003        
|                                                                                  |                                                |                        |   |             
|                                                                                  |                                                |                       
|                                                                                  |                                                | (Dollars in thousands)
|Securities Classified as Trading:                                                 |                                                |                        |   |              |           |  |   |          
|                                                                                  | AAA-rated and agency interest-only strips      |                        | $ | 149,152      |           |  | $ | 146,179   |          
|                                                                                  | AAA-rated principal-only securities            |                        |   | 43,270       |           |  |   | 8,518     |          
|                                                                                  | Other investment grade securities              |                        |   | 9,048        |           |  |   | 8,922     |          
|                                                                                  | Other non-investment grade securities          |                        |   | 1,588        |           |  |   | 1,760     |          
|                                                                                  | Non-investment grade residual securities       |                        |   | 47,948       |           |  |   | 58,253    |          
|                                                                                  |                                                |                        |   |              |           |  |   |          
|                                                                                  |                                                | Total                  |   | $            | 251,006   |  |   | $         | 223,632   | 
|                                                                                  |                                                |                        |   |              |           |  |   |          
|Mortgage-Backed Securities and Agency Notes
    Classified as Available for Sale: |                                                |                        |   |              |           |  |   |          
|                                                                                  | AAA-rated non-agency securities                |                        | $ | 2,576,496    |           |  | $ | 1,407,984 |          
|                                                                                  | AAA-rated agency securities                    |                        |   | 21,288       |           |  |   | 25,193    |          
|                                                                                  | AAA-rated agency notes                         |                        |   |             |           |  |   | 143,689   |          
|                                                                                  | Other investment grade securities              |                        |   | 23,325       |           |  |   | 26,926    |          
|                                                                                  | Other non-investment grade securities          |                        |   | 16,903       |           |  |   | 10,182    |          
|                                                                                  | Non-investment grade HELOC residual securities |                        |   | 17,684       |           |  |   |          |          
|                                                                                  |                                                |                        |   |              |           |  |   |          
|                                                                                  |                                                | Total                  |   | $            | 2,655,696 |  |   | $         | 1,613,974 | 
|                                                                                  |                                                |                        |   |              |           |  |   |          

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

Note 4  Segment
Reporting

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

The profitability of each operating segment is
measured on a fully-leveraged basis after allocating capital
based on regulatory capital rules. The Company uses a
match-funded transfer pricing system to allocate net interest
income to the operating segments. Each operating segment is
allocated funding with maturities and

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INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

interest rates matched with the expected lives,
repricing frequencies and financing liquidities of the
segments assets. Deposits receive a funding credit using a
similar methodology. The difference between these allocations
and the Companys actual net interest income and capital
levels resulting from centralized management of funding costs is
reported in the Other. Also included in the Other are
unallocated corporate costs such as corporate salaries and
related expenses, excess capital, and non-recurring corporate
items.

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

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

Note 5  Stock-Based
Compensation

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

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INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

|                           |             |                                  |   |        |        |   |   |        |        |  
|-------------------------- | ----------- | -------------------------------- | - | ------ | ------ | - | - | ------ | ------ | -
|                           |             |                                 
|                           |             | Three Months Ended              
|                           |             | March 31,                       
|                           |             |                                 
|                           |             | 2004                             |   | 2003  
|                           |             |                                  |   |       
|                           |             |                                 
|                           |             | (Dollars in thousands,          
|                           |             | except per share data)          
|Net Earnings               |             |                                  |   |        |        |   |   |       
|                           | As reported |                                  | $ | 41,930 |        |   | $ | 36,917 |       
|                           |             | Stock-based compensation expense |   |        | (2,885 | ) |   |        | (5,010 | )
|                           |             | Tax effect                       |   |        | 1,140  |   |   |        | 1,979  |  
|                           |             |                                  |   |        |        |   |   |       
|                           | Pro forma   |                                  | $ | 40,185 |        |   | $ | 33,886 |       
|                           |             |                                  |   |        |        |   |   |       
|Basic Earnings Per Share   |             |                                  |   |        |        |   |   |       
|                           | As reported |                                  | $ | 0.74   |        |   | $ | 0.67   |       
|                           | Pro forma   |                                  | $ | 0.71   |        |   | $ | 0.62   |       
|Diluted Earnings Per Share |             |                                  |   |        |        |   |   |       
|                           | As reported |                                  | $ | 0.70   |        |   | $ | 0.66   |       
|                           | Pro forma   |                                  | $ | 0.67   |        |   | $ | 0.61   |       

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

Note 6  Defined Benefit
Pension Plan Net Periodic Cost

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

|                                   |  |                 |       |      |  |   |       |  
|---------------------------------- |  | --------------- | ----- | ---- |  | - | ----- | -
|                                   |  |                
|                                   |  | Three Months   
|                                   |  | Ended March 31,
|                                   |  |                
|                                   |  | 2004            |       | 2003
|                                   |  |                 |       |     
|                                   |  |                
|                                   |  | (Dollars in    
|                                   |  | thousands)     
|Service cost                       |  | $               | 1,209 |      |  | $ | 932   |  
|Interest cost                      |  |                 | 323   |      |  |   | 222   |  
|Expected return on assets          |  |                 | (294  | )    |  |   | (165  | )
|Amortization of net (gain) loss    |  |                 | 73    |      |  |   | 47    |  
|Amortization of prior service cost |  |                 | 14    |      |  |   | 14    |  
|                                   |  |                 |       |      |  |   |       |  
|Net periodic benefit costs         |  | $               | 1,325 |      |  | $ | 1,050 |  
|                                   |  |                 |       |      |  |   |       |  

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INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

|                              |  |                 |       |      |  |  |       | 
|----------------------------- |  | --------------- | ----- | ---- |  |  | ----- | 
|                              |  |                
|                              |  | Three Months   
|                              |  | Ended March 31,
|                              |  |                
|                              |  | 2004            |       | 2003
|                              |  |                 |       |     
|Assumed discount rate         |  |                 | 6.00% |      |  |  | 6.75% | 
|Rate of compensation increase |  |                 | 4.00% |      |  |  | 4.00% | 
|Expected return on assets     |  |                 | 7.50% |      |  |  | 7.50% | 

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

Note 7  Legal
Matters

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

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

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ITEM 4.     CONTROLS
AND PROCEDURES

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



PART II.     OTHER
INFORMATION



ITEM 1.     LEGAL
PROCEEDINGS

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

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




ITEM 6.     EXHIBITS
AND REPORTS ON FORM 8-K

(a) Exhibits

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

(b) Reports on Form 8-K

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

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SIGNATURES

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

| |  |                                        |  |                                                                                                       
| |  | -------------------------------------- |  | ------------------------------------------------------------------------------------------------------
|
| |  | INDYMAC BANCORP, INC.
    (Registrant)
|
| |  | By:                                    |  | /s/ MICHAEL W. PERRYMichael W. PerryChairman of the Board of Directors
    and Chief Executive Officer
| |  | By:                                    |  | /s/ SCOTT KEYSScott KeysExecutive Vice President
    and Chief Financial Officer                      

63