##### 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 1934For the quarterly period ended
    September 30, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number 1-8972
  Indymac Bancorp, Inc.
 (Exact name of registrant as
    specified in its charter)
   Delaware

95-3983415(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)888 East Walnut Street,
    Pasadena, California

91101-7211(Zip Code)(Address of principal executive
    offices)    (Registrants telephone number, including area code)
 (800) 669-2300
   þ o
  Rule 12b-2
  þ o o
  Rule 12b-2 o þ




---



##### 



FORM 10-Q
    QUARTERLY REPORT
    For the Period Ended September 30, 2006
  TABLE OF
    CONTENTS
  
  PagePART I.  FINANCIAL
    INFORMATIONForward-Looking
    Statements


2Item 2.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


2Highlights


2Summary of Business
    Segment Results


7Product
    Profitability Analysis


13Loan
    Production


23Loan
    Sales


28Mortgage Servicing
    and Other Retained Assets


30Mortgage-Backed
    Securities and Loans Held for Investment


39Net Interest
    Margin


45Interest Rate
    Sensitivity


48Credit Risk and
    Reserves


50Expenses


54Share Repurchase
    Activities


55Future
    Outlook


55Liquidity and
    Capital Resources


55Off-Balance Sheet
    Arrangements


59Aggregate
    Contractual Obligations


60Critical Accounting
    Policies and Judgments


60Regulatory
    Updates


60Item 3.

Quantitative and
    Qualitative Disclosures About Market Risk


61Item 1.

Financial
    Statements (Unaudited)


62Consolidated
    Balance Sheets


62Consolidated
    Statements of Earnings


64Consolidated
    Statements of Shareholders Equity and Comprehensive
    Income


65Consolidated
    Statements of Cash Flows


66Notes to
    Consolidated Financial Statements


67Item 4.

Controls and
    Procedures


76PART II.  OTHER
    INFORMATIONItem 1.

Legal
    Proceedings


76Item 1A.

Risk
    Factors


76Item 2.

Unregistered
    Sales of Equity Securities and Use of Proceeds


76Item 5.

Other
    Information


76Item 6.

Exhibits


77EXHIBIT 4.1EXHIBIT 4.2EXHIBIT 10.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   1




---



##### Table of Contents



FORWARD-LOOKING
    STATEMENTS  Form 10-Q Form 10-Q
 ITEM 2.MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS HIGHLIGHTS  Share-Based Payment
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,


June 30,


September 30,


September 30,2006


2005


2006


2006


2005(Dollars in millions, except per share data)Select Balance Sheet
    Information (at period end)Cash and cash equivalents

$
521


$
308


$
165


$
521


$
308Securities (trading and available
    for sale)


4,950



3,740



4,890



4,950



3,740Loans held for sale


8,341



5,366



6,493



8,341



5,366Loans held for investment


10,030



7,977



8,773



10,030



7,977Allowance for loan losses


(61
)


(56
)


(58
)


(61
)


(56
)Mortgage servicing rights


1,631



941



1,599



1,631



941Other


1,973



1,352



1,894



1,973



1,352Total Assets


27,385



19,628



23,756



27,385



19,628Deposits


10,111



7,261



9,352



10,111



7,261Advances from Federal Home
    Loan Bank


9,333



6,621



7,070



9,333



6,621Other borrowings


4,595



3,585



4,165



4,595



3,585Other liabilities


1,409



664



1,366



1,409



664Total Liabilities


25,448



18,131



21,952



25,448



18,131Shareholders
    Equity


1,938



1,497



1,804



1,938



1,497 2




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,


June 30,


September 30,


September 30,2006


2005


2006


2006


2005(Dollars in millions, except per share data)Income StatementNet interest income before
    provision for loan losses

$
137


$
113


$
130


$
394


$
315Provision for loan losses


5



4



2



11



8Gain on sale of loans


160



151



202



503



455Service fee income


21



10



27



79



26Gain on mortgage-backed
    securities, net


19



1



8



25



12Fee and other income


14



11



12



37



26Net revenues


346



283



377



1,027



825Operating expenses


203



154



204



578



455Net earnings


86



78



105



271



223Basic earnings per share(1)


1.25



1.23



1.57



4.07



3.57Diluted earnings per share(2)


1.19



1.16



1.49



3.87



3.38Other Operating DataMortgage production

$
23,968


$
16,950


$
20,060


$
64,005


$
42,751Total loan production(3)


24,439



17,489



20,591



65,370



44,237Mortgage industry share(4)


3.87
%


1.95
%


2.78
%


3.31
%


1.85
%Pipeline of mortgage loans in
    process(5)


14,556



10,333



12,527



14,556



10,333Loans sold


19,508



15,539



19,415



55,632



36,727Loans sold/mortgage loans produced


81
%


92
%


97
%


87
%


86
%Mortgage loans serviced for others
    (as of quarter end)(6)


124,395



73,787



109,989



124,395



73,787Total mortgage loans serviced (as
    of quarter end)


130,807



80,484



117,417



130,807



80,484Average full-time equivalent
    headcount


8,186



6,376



7,861



7,759



6,076   3




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,


June 30,


September 30,


September 30,2006


2005


2006


2006


2005(Dollars in millions, except per share data)Other Per Share DataDividends declared per share

$
0.48


$
0.40


$
0.46


$
1.38


$
1.14Dividend payout ratio(7)


40
%


34
%


31
%


36
%


34
%Book value per share at period end


27.35



23.32



26.29



27.35



23.32Closing price per share at period
    end


41.16



39.58



45.85



41.16



39.58Average Common Shares (in
    thousands)Basic


68,866



63,268



66,483



66,570



62,460Diluted


72,286



67,100



70,213



70,009



65,908Performance RatiosReturn on average equity
    (ROE) (annualized)


18.27
%


21.73
%


24.09
%


20.82
%


22.20
%Return on average assets
    (ROA) (annualized)


1.17
%


1.35
%


1.51
%


1.30
%


1.45
%Net interest income to pretax
    income after minority interest


95.97
%


87.95
%


75.40
%


88.11
%


85.67
%Net interest margin


2.13
%


2.12
%


2.12
%


2.13
%


2.22
%Net interest margin, thrift


2.02
%


2.07
%


2.01
%


2.03
%


2.14
%Mortgage banking revenue
    (MBR) margin on loans sold(8)


1.03
%


1.22
%


1.23
%


1.12
%


1.51
%Efficiency ratio(9)


58
%


54
%


54
%


56
%


55
%Operating expenses to loan
    production


0.83
%


0.88
%


0.99
%


0.88
%


1.03
%Balance Sheet and Asset Quality
    RatiosAverage interest-earning assets

$
25,507


$
21,122


$
24,681


$
24,734


$
18,989Average equity


1,871



1,415



1,742



1,738



1,341Debt to equity ratio(10)


13.1:1



12.1:1



12.2:1



13.1:1



12.1:1Core capital ratio(11)


7.60
%


7.51
%


8.24
%


7.60
%


7.51
%Risk-based capital ratio(11)


11.62
%


11.58
%


11.97
%


11.62
%


11.58
%Non-performing assets to total
    assets


0.51
%


0.36
%


0.49
%


0.51
%


0.36
%Allowance for loan losses to total
    loans held for investment


0.61
%


0.70
%


0.66
%


0.61
%


0.70
%Allowance for loan losses to
    non-performing loans held for investment


77.43
%


127.24
%


90.61
%


77.43
%


127.24
%Loan Loss ActivityAllowance for loan losses to
    annualized net charge-offs


8.2
x


6.7
x


8.8
x


8.8
x


7.2xProvision for loan losses to net
    charge-offs


267.45
%


170.93
%


136.06
%


213.42
%


145.69
%Net charge-offs (annualized) to
    average non-performing loans held for investment


10.45
%


19.08
%


11.12
%


11.29
%


16.62
%Net charge-offs (annualized) to
    average loans held for investment


0.08
%


0.11
%


0.08
%


0.08
%


0.11
%     (1)
    
    Net earnings for the period divided by weighted average basic
    shares outstanding for the period. 4




---



##### Table of Contents



(2)
    
    Net earnings for the period divided by weighted average dilutive
    shares outstanding for the period.(3)
    
    Includes newly originated commitments on construction loans.(4)
    
    Our market share is calculated based on our total loan
    production, both purchased (correspondent and conduit) and
    originated (retail and wholesale), in all channels (the
    numerator) divided by the Mortgage Bankers Association
    (MBA) October 24, 2006 Mortgage Finance
    Long-Term Forecast estimate of the overall mortgage market (the
    denominator). As we review industry publications such as
    National Mortgage News, we have confirmed that our calculation
    is consistent with its methodologies for reporting market share
    of Indymac and our mortgage banking peers. It is important to
    note that these industry calculations cause purchased mortgages
    to be counted more than once, i.e., first when they are
    originated and again by the purchasers (through correspondent
    and conduit channels) of the mortgages. Therefore, our market
    share calculation may not be mathematically precise, but it is
    consistent with industry calculations, which provide investors
    with a good view of our relative standing compared to the other
    top mortgage lending peers.(5)
    
    The amount includes $2.8 billion, $1.6 billion and
    $2.5 billion of non-specific rate locks on bulk purchases
    in our conduit channel at September 30, 2006,
    September 30, 2005 and June 30, 2006, respectively.(6)
    
    Represents the unpaid principal balance on loans sold with
    servicing retained by Indymac.(7)
    
    Dividends declared per common share as a percentage of diluted
    earnings per share.(8)
    
    Mortgage banking revenue margin is calculated using the sum of
    consolidated gain on sale of loans and the net interest income
    earned on loans held for sale by our mortgage banking production
    divisions divided by total loans sold.(9)
    
    Defined as operating expenses divided by net interest income and
    other income.(10)
    
    Debt includes deposits.(11)
    
    Ratio is for Indymac Bank and excludes unencumbered cash at the
    Parent Company available for investment in Indymac Bank.
    Risk-based capital ratio is calculated based on the regulatory
    standard risk weighting adjusted for the additional risk
    weightings for subprime loans.  SUMMARY
    OF OVERALL RESULTS
  Three
    Months ended September 30, 2006
         5




---



##### Table of Contents



Nine
    Months ended September 30, 2006
           6




---



##### Table of Contents



SUMMARY
    OF BUSINESS SEGMENT RESULTS  Form 10-K 10-K),
  quarter-over-quarter
  Mortgage BankingMSRs andOther


Mortgage











TotalProduction


Retained


Banking








Elimination


Operating


Corporate


TotalDivisions


Assets


Overhead(1)


Total


Thrift


& Other


Results


Overhead


Company(Dollars in thousands)Net Income Q306

$
68,635


$
30,404


$
(8,899
)

$
90,140


$
35,232


$
(12,641
)

$
112,731


$
(26,551
)

$
86,180Net Income Q305


64,817



9,564



(6,119
)


68,262



36,239



(4,015
)


100,486



(22,960
)


77,526$ Change


3,818



20,840



(2,780
)


21,878



(1,007
)


(8,626
)


12,245



(3,591
)


8,654% Change


6
%


218
%


(45
)%


32
%


(3
)%


(215
)%


12
%


(16
)%


11
%Average Capital Q306

$
509,136


$
401,545


$
10,677


$
921,358


$
687,962


$
1,939


$
1,611,259


$
260,120


$
1,871,379Average Capital Q305


415,031



189,744



10,762



615,537



546,094



1,440



1,163,071



252,290



1,415,361% Change


23
%


112
%


(1
)%


50
%


26
%


35
%


39
%


3
%


32
%ROE Q306


53
%


30
%


N/A



39
%


20
%


N/A



28
%


N/A



18
%ROE Q305


62
%


20
%


N/A



44
%


26
%


N/A



34
%


N/A



22
%% Change


(14
)%


50
%


N/A



(12
)%


(23
)%


N/A



(19
)%


N/A



(16
)%     (1)
    
    Included production division overhead and servicing overhead of
    $6.2 million and $2.7 million, respectively, for the
    third quarter of 2006. For the third quarter of 2005, the
    production division overhead and servicing overhead were
    $4.2 million and $1.9 million, respectively.  Mortgage Banking Production DivisionsMortgage Professionals Group


Consumer


Financial


ProductionWholesale


Correspondent


Conduit


Total


Direct


Freedom


Divisions(Dollars in thousands)Net Income Q306

$
31,800


$
3,194


$
17,256


$
52,250


$
103


$
16,282


$
68,635Net Income Q305


43,769



8,839



4,365



56,973



864



6,980



64,817$ Change

$
(11,969
)

$
(5,645
)

$
12,891


$
(4,723
)

$
(761
)

$
9,302


$
3,818% Change


(27
)%


(64
)%


295
%


(8
)%


(88
)%


133
%


6
%Average Capital Q306

$
192,689


$
42,780


$
149,894


$
385,363


$
8,822


$
114,951


$
509,136Average Capital Q305


172,731



33,623



125,371



331,725



18,206



65,100



415,031% Change


12
%


27
%


20
%


16
%


(52
)%


77
%


23
%ROE Q306


65
%


30
%


46
%


54
%


5
%


56
%


53
%ROE Q305


101
%


104
%


14
%


68
%


19
%


43
%


62
%% Change


(35
)%


(72
)%


231
%


(21
)%


(75
)%


32
%


(14
)%   7




---



##### Table of Contents



ThriftConsumerMortgage-


Prime SFR


Home


Construction


BuilderBacked


Mortgage


Equity


and Lot


Construction


Warehouse


DiscontinuedSecurities


Loans


Division


Loans


Financing


Lending


Products


Total Thrift(Dollars in thousands)Net Income Q306

$
3,991


$
11,036


$
5,918


$
6,652


$
7,193


$
211


$
231


$
35,232Net Income Q305


4,802



12,856



5,553



7,695



5,447



(138
)


24



36,239$ Change

$
(811
)

$
(1,820
)

$
365


$
(1,043
)

$
1,746


$
349


$
207


$
(1,007
)% Change


(17
)%


(14
)%


7
%


(14
)%


32
%


253
%


863
%


(3
)%Average Capital Q306

$
61,628


$
220,811


$
151,013


$
130,975


$
108,408


$
11,583


$
3,544


$
687,962Average Capital Q305


39,787



208,202



98,744



106,799



84,970



3,301



4,291



546,094% Change


55
%


6
%


53
%


23
%


28
%


251
%


(17
)%


26
%ROE Q306


26
%


20
%


16
%


20
%


26
%


7
%


26
%


20
%ROE Q305


48
%


24
%


22
%


29
%


25
%


(17
)%


2
%


26
%% Change


(46
)%


(19
)%


(30
)%


(30
)%


4
%


N/M



N/M



(23
)%     year-over-year, year-over-year.
     8




---



##### Table of Contents



DETAIL
    CHANNEL SEGMENT RESULTS
    Mortgage BankingMSRsandOther


Mortgage











TotalProduction


Retained


Banking








Elimination


Operating


Corporate


TotalDivisions


Assets


Overhead(1)


Total


Thrift


& Other(2)


Results


Overhead


Company(Dollars in thousands)Three Months Ended
    September 30, 2006Operating ResultsNet interest income

$
41,218


$
17,429


$
(188
)

$
58,459


$
67,185


$
13,140


$
138,784


$
(2,073
)

$
136,711Provision for loan losses


















(4,988
)






(4,988
)






(4,988
)Gain (loss) on sale of loans


157,271



9,392







166,663



16,558



(22,996
)


160,225







160,225Service fee income


5,599



15,434







21,033



(397
)


422



21,058







21,058Gain (loss) on securities






21,745







21,745



(4,147
)


1,370



18,968







18,968Other income


303



1,653



846



2,802



10,631



(610
)


12,823



777



13,600Net revenues (expense)


204,391



65,653



658



270,702



84,842



(8,674
)


346,870



(1,296
)


345,574Operating expenses


149,728



17,526



15,367



182,621



31,099



12,937



226,657



42,669



269,326Deferred expense under SFAS 91


(58,860
)


(2,128
)






(60,988
)


(4,492
)


(718
)


(66,198
)






(66,198
)Pretax income (loss)


113,523



50,255



(14,709
)


149,069



58,235



(20,893
)


186,411



(43,965
)


142,446Net income (loss)

$
68,635


$
30,404


$
(8,899
)

$
90,140


$
35,232


$
(12,641
)

$
112,731


$
(26,551
)

$
86,180Relevant Financial and
    Performance DataAverage interest-earning assets

$
9,152,748


$
963,760


$
41


$
10,116,549


$
15,181,876


$
(93,621
)

$
25,204,804


$
302,213


$
25,507,017Allocated capital


509,136



401,545



10,677



921,358



687,962



1,939



1,611,259



260,120



1,871,379Loans produced


22,446,264



721,019



N/A



23,167,283



1,271,893



N/A



24,439,176



N/A



24,439,176Loans sold


20,562,308



654,023



N/A



21,216,331



1,281,971



(2,990,126
)


19,508,176



N/A



19,508,176MBR margin


0.97
%


1.44
%


N/A



0.98
%


1.29
%


N/A



N/A



N/A



1.03
%ROE


53
%


30
%


N/A



39
%


20
%


N/A



28
%


N/A



18
%ROA


2.89
%


4.23
%


N/A



2.88
%


0.91
%


N/A



1.61
%


N/A



1.17
%Net interest margin, thrift.


N/A



N/A



N/A



N/A



1.76
%


N/A



N/A



N/A



2.02
%Average FTE


4,652



182



1,074



5,908



650



324



6,882



1,304



8,186Three Months Ended
    September 30, 2005Operating ResultsNet interest income

$
34,695


$
11,242


$
(5
)

$
45,932


$
60,076


$
10,168


$
116,176


$
(3,357
)

$
112,819Provision for loan losses


















(3,528
)






(3,528
)






(3,528
)Gain (loss) on sale of loans


137,241



7,642







144,883



14,458



(8,255
)


151,086







151,086Service fee income


3,384



5,796







9,180



1,568



(444
)


10,304







10,304Gain (loss) on securities






(390
)






(390
)


412



706



728







728Other income


145



731



622



1,498



8,880



192



10,570



715



11,285Net revenues (expense)


175,465



25,021



617



201,103



81,866



2,367



285,336



(2,642
)


282,694Operating expenses


122,089



9,920



10,730



142,739



27,460



9,711



179,910



35,301



215,211Deferred expense under SFAS 91


(53,878
)


(708
)






(54,586
)


(5,496
)


(707
)


(60,789
)






(60,789
)Pretax income (loss)


107,254



15,809



(10,113
)


112,950



59,902



(6,637
)


166,215



(37,943
)


128,272Net income (loss)

$
64,817


$
9,564


$
(6,119
)

$
68,262


$
36,239


$
(4,015
)

$
100,486


$
(22,960
)

$
77,526Relevant Financial and
    Performance DataAverage interest-earning assets

$
7,767,105


$
519,850


$
51


$
8,287,006


$
12,082,104


$
(88,062
)

$
20,281,048


$
840,492


$
21,121,540Allocated capital


415,031



189,744



10,762



615,537



546,094



1,440



1,163,071



252,290



1,415,361Loans produced


15,745,797



330,439







16,076,236



1,412,830







17,489,066







17,489,066Loans sold


16,057,236



321,746







16,378,982



1,120,033



(1,959,806
)


15,539,209



N/A



15,539,209MBR margin


1.07
%


2.81
%


N/A



1.10
%


1.49
%


N/A



N/A



N/A



1.22
%ROE


62
%


20
%


N/A



44
%


26
%


N/A



34
%


N/A



22
%ROA


3.24
%


2.68
%


N/A



2.86
%


1.19
%


N/A



1.85
%


N/A



1.35
%Net interest margin, thrift.


N/A



N/A



N/A



N/A



1.97
%


N/A



N/A



N/A



2.07
%Average FTE


3,593



156



817



4,566



601



247



5,414



962



6,376     (1)
    
    Included production division overhead and servicing overhead of
    $6.2 million and $2.7 million, respectively, for the
    third quarter of 2006. For the third quarter of 2005, the
    production division overhead and servicing overhead were
    $4.2 million and $1.9 million, respectively.(2)
    
    Included are eliminations, deposits, and treasury items, the
    details of which are provided on page 12. 9




---



##### Table of Contents



Mortgage Banking Production DivisionsFinancialFreedom


TotalMortgage Professionals Group


Consumer


(Reverse


ProductionWholesale


Correspondent


Conduit


Total


Direct


Mortgage)


Divisions(Dollars in thousands)Three Months Ended
    September 30, 2006Operating ResultsNet interest income

$
15,939


$
3,577


$
18,327


$
37,843


$
507


$
2,868


$
41,218Provision for loan losses


























Gain (loss) on sale of loans


79,916



7,897



17,905



105,718



6,005



45,548



157,271Service fee income






















5,599



5,599Gain (loss) on securities


























Other income










(153
)


(153
)


269



187



303Net revenues (expense)


95,855



11,474



36,079



143,408



6,781



54,202



204,391Operating expenses


83,575



11,962



7,557



103,094



11,829



34,805



149,728Deferral of expenses under
    SFAS 91


(40,282
)


(5,767
)






(46,049
)


(5,219
)


(7,592
)


(58,860
)Pretax income (loss)


52,562



5,279



28,522



86,363



171



26,989



113,523Net income (loss)

$
31,800


$
3,194


$
17,256


$
52,250


$
103


$
16,282


$
68,635Relevant Financial and
    Performance DataAverage interest-earning assets

$
3,734,539


$
830,710


$
3,609,638


$
8,174,887


$
176,232


$
801,629


$
9,152,748Allocated capital


192,689



42,780



149,894



385,363



8,822



114,951



509,136Loans produced


9,280,817



2,503,012



9,078,589



20,862,418



455,643



1,128,203



22,446,264Loans sold


9,050,759



2,385,091



7,600,746



19,036,596



454,060



1,071,652



20,562,308MBR margin


1.06
%


0.48
%


0.48
%


0.75
%


1.43
%


4.52
%


0.97
%Pretax income/loan sold


0.58
%


0.22
%


0.38
%


0.45
%


0.04
%


2.52
%


0.55
%ROE


65
%


30
%


46
%


54
%


5
%


56
%


53
%ROA


3.37
%


1.52
%


1.87
%


2.52
%


0.22
%


6.42
%


2.89
%Net interest margin


1.69
%


1.71
%


2.01
%


1.84
%


1.14
%


1.42
%


1.79
%Average FTE


2,507



246



147



2,900



387



1,365



4,652Three Months Ended
    September 30, 2005Operating ResultsNet interest income

$
15,845


$
3,863


$
12,719


$
32,427


$
1,534


$
734


$
34,695Provision for loan losses


























Gain (loss) on sale of loans


86,078



14,309



(552
)


99,835



15,550



21,856



137,241Service fee income






















3,384



3,384Gain (loss) on securities


























Other income










31



31



88



26



145Net revenues (expense)


101,923



18,172



12,198



132,293



17,172



26,000



175,465Operating expenses


64,427



8,562



4,983



77,972



23,393



20,724



122,089Deferral of expenses under
    SFAS 91


(34,850
)


(5,000
)






(39,850
)


(7,649
)


(6,379
)


(53,878
)Pretax income (loss)


72,346



14,610



7,215



94,171



1,428



11,655



107,254Net income (loss)

$
43,769


$
8,839


$
4,365


$
56,973


$
864


$
6,980


$
64,817Relevant Financial and
    Performance DataAverage interest-earning assets


3,686,819



741,485



2,808,114



7,236,418



377,158



153,529



7,767,105Allocated capital


172,731



33,623



125,371



331,725



18,206



65,100



415,031Loans produced


7,749,550



1,651,558



4,718,369



14,119,477



791,707



834,613



15,745,797Loans sold


7,689,017



1,628,396



5,179,806



14,497,219



780,010



780,007



16,057,236MBR margin


1.33
%


1.12
%


0.23
%


0.91
%


2.19
%


2.90
%


1.07
%Pretax income/loan sold


0.94
%


0.90
%


0.14
%


0.65
%


0.18
%


1.49
%


0.67
%ROE


101
%


104
%


14
%


68
%


19
%


43
%


62
%ROA


4.70
%


4.72
%


0.61
%


3.12
%


0.88
%


9.76
%


3.24
%Net interest margin


1.71
%


2.07
%


1.80
%


1.78
%


1.61
%


1.90
%


1.77
%Average FTE


1,870



222



116



2,208



561



824



3,593  10




---



##### Table of Contents



ThriftConsumerMortgage-


Prime SFR


Home


Construction


BuilderBacked


Mortgage


Equity


and Lot


Construction


Warehouse


DiscontinuedSecurities


Loans


Division


Loans


Financing


Lending


Products


Total Thrift(Dollars in thousands)Three Months Ended
    September 30, 2006Operating ResultsNet interest income

$
7,418


$
20,430


$
10,851


$
10,454


$
16,488


$
1,035


$
509


$
67,185Provision for loan losses






(2,000
)






(720
)


(2,200
)


(18
)


(50
)


(4,988
)Gain (loss) on sale of loans






748



5,788



10,022















16,558Service fee income










(397
)


















(397
)Gain (loss) on securities


(493
)






(3,607
)


(47
)














(4,147
)Other income


(14
)


429



2,392



6,655



703



466







10,631Net revenues (expense)


6,911



19,607



15,027



26,364



14,991



1,483



459



84,842Operating expenses


315



1,365



5,607



17,690



4,911



1,134



77



31,099Deferral of expenses under
    SFAS 91










(361
)


(2,321
)


(1,810
)










(4,492
)Pretax income (loss)


6,596



18,242



9,781



10,995



11,890



349



382



58,235Net income (loss)

$
3,991


$
11,036


$
5,918


$
6,652


$
7,193


$
211


$
231


$
35,232Relevant Financial and
    Performance DataAverage interest-earning assets

$
3,527,766


$
5,851,294


$
1,947,724


$
2,568,007


$
1,112,338


$
135,511


$
39,236


$
15,181,876Allocated capital


61,628



220,811



151,013



130,975



108,408



11,583



3,544



687,962Loans produced










29,806



770,937



471,150











1,271,893Loans sold










635,366



646,605















1,281,971ROE


26
%


20
%


16
%


20
%


26
%


7
%


26
%


20
%ROA


0.44
%


0.74
%


1.17
%


1.03
%


2.58
%


0.62
%


2.67
%


0.91
%Net interest margin


0.83
%


1.39
%


2.21
%


1.62
%


5.88
%


3.03
%


5.15
%


1.76
%Efficiency ratio


5
%


6
%


35
%


57
%


18
%


76
%


15
%


30
%Average FTE


6



14



76



416



111



27







650Three Months Ended
    September 30, 2005Operating ResultsNet interest income

$
8,217


$
19,559


$
8,724


$
10,781


$
11,779


$
253


$
763


$
60,076Provision for loan losses






(1,800
)






(1,197
)






(31
)


(500
)


(3,528
)Gain (loss) on sale of loans






4,023



870



9,565















14,458Service fee income






344



1,223







1











1,568Gain (loss) on securities










(654
)


1,066















412Other income










2,527



5,895



314



145



(1
)


8,880Net revenues (expense)


8,217



22,126



12,690



26,110



12,094



367



262



81,866Operating expenses


279



876



4,059



16,563



4,866



595



222



27,460Deferral of expenses under
    SFAS 91










(548
)


(3,172
)


(1,776
)










(5,496
)Pretax income (loss)


7,938



21,250



9,179



12,719



9,004



(228
)


40



59,902Net income (loss)

$
4,802


$
12,856


$
5,553


$
7,695


$
5,447


$
(138
)

$
24


$
36,239Relevant Financial and
    Performance DataAverage interest-earning assets

$
2,189,352


$
5,075,925


$
1,686,216


$
2,198,570


$
850,653


$
33,155


$
48,233


$
12,082,104Allocated capital


39,787



208,202



98,744



106,799



84,970



3,301



4,291



546,094Loans produced










57,561



816,358



538,911











1,412,830Loans sold






298,618



169,791



651,624















1,120,033ROE


48
%


24
%


22
%


29
%


25
%


(17
)%


2
%


26
%ROA


0.87
%


1.00
%


1.28
%


1.38
%


2.57
%


(1.64
)%


0.23
%


1.19
%Net interest margin


1.49
%


1.53
%


2.05
%


1.95
%


5.49
%


3.03
%


6.28
%


1.97
%Efficiency ratio


3
%


4
%


28
%


49
%


26
%


149
%


29
%


26
%Average FTE


6



11



37



421



97



19



10



601  11




---



##### Table of Contents



EliminationsInterdivision


MSR EconomicDeposits


Treasury


Loan Sales


Value


Other


Total(Dollars in thousands)Three months ended
    September 30, 2006Operating ResultsNet interest income

$



$
18


$
8,290


$



$
4,832


$
13,140Provision for loan losses






















Gain (loss) on sale of loans










(22,996
)










(22,996
)Service fee income










422











422Gain (loss) on securities










1,370











1,370Other income


896



150











(1,656
)


(610
)Net revenues (expense)


896



168



(12,914
)






3,176



(8,674
)Operating expenses


7,173



2,227











3,537



12,937Deferral of expenses under
    SFAS 91


















(718
)


(718
)Pretax income (loss)


(6,277
)


(2,059
)


(12,914
)






357



(20,893
)Net income (loss)

$
(3,798
)

$
(1,246
)

$
(7,813
)

$



$
216


$
(12,641
)Relevant Financial and
    Performance DataAverage interest-earning assets

$
172


$



$
(93,793
)

$



$



$
(93,621
)Allocated capital


1,939



















1,939Loans produced






















Loans sold


N/A



N/A



(2,990,126
)


N/A



N/A



(2,990,126
)ROE


N/A



N/A



N/A



N/A



N/A



N/AROA


N/A



N/A



N/A



N/A



N/A



N/ANet interest margin


N/A



N/A



N/A



N/A



N/A



N/AEfficiency ratio


N/A



N/A



N/A



N/A



N/A



N/AAverage FTE


277



47















324Three months ended
    September 30, 2005Operating ResultsNet interest income

$



$
810


$
5,355


$



$
4,003


$
10,168Provision for loan losses






















Gain (loss) on sale of loans










(10,055
)






1,800



(8,255
)Service fee income










1,966



(2,410
)






(444
)Gain (loss) on securities










706











706Other income


679



156











(643
)


192Net revenues (expense)


679



966



(2,028
)


(2,410
)


5,160



2,367Operating expenses


3,559



1,687











4,465



9,711Deferral of expenses under
    SFAS 91


















(707
)


(707
)Pretax income (loss)


(2,880
)


(721
)


(2,028
)


(2,410
)


1,402



(6,637
)Net income (loss)

$
(1,742
)

$
(436
)

$
(1,227
)

$
(1,458
)

$
848


$
(4,015
)Relevant Financial and
    Performance DataAverage interest-earning assets

$
175


$



$
(88,237
)

$



$



$
(88,062
)Allocated capital


1,440



















1,440Loans produced






















Loans sold


N/A



N/A



(1,959,806
)


N/A



N/A



(1,959,806
)ROE


N/A



N/A



N/A



N/A



N/A



N/AROA


N/A



N/A



N/A



N/A



N/A



N/ANet interest margin


N/A



N/A



N/A



N/A



N/A



N/AEfficiency ratio


N/A



N/A



N/A



N/A



N/A



N/AAverage FTE


211



36















247  12




---



##### Table of Contents



Accounting
    Methodology for Reporting Segment Financial
    Results
      Accounting for Nonrefundable Fees and Costs Associated
    with Originating or Acquiring Loans and Initial Direct Costs of
    Leases
  Accounting for Servicing of Financial Assets,
   PRODUCT
    PROFITABILITY ANALYSIS  and/or 10-K,
 13




---



##### Table of Contents



HomeStandard


Specialty


Loans &


SpecialtyConsumer


Consumer


Related


Commercial








TotalHome Loans


Home Loans


Investments


Loans


Treasury


Overhead


Company(Dollars in thousands)Three Months Ended
    September 30, 2006Operating ResultsNet interest income

$
30,746


$
38,672


$
44,141


$
20,768


$
18


$
2,366


$
136,711Provision for loan losses






(566
)


(2,000
)


(2,422
)










(4,988
)Gain (loss) on sale of loans


87,979



62,106



10,140















160,225Service fee income






6,965



13,572











521



21,058Gain (loss) on securities






(3,945
)


22,913















18,968Other income






8,379



1,760



2,332



150



979



13,600Net revenue (expense)


118,725



111,611



90,526



20,678



168



3,866



345,574Variable expenses


57,213



42,428



4,098



2,225











105,964Deferral of expenses under
    SFAS 91


(44,393
)


(18,371
)


(1,538
)


(1,896
)










(66,198
)Fixed expenses


48,004



25,262



14,013



5,110



2,227



68,746



163,362Pretax income (loss)


57,901



62,292



73,953



15,239



(2,059
)


(64,880
)


142,446Net income (loss)

$
35,030


$
37,640


$
44,742


$
9,219


$
(1,246
)

$
(39,205
)

$
86,180Balance Sheet DataAverage interest-earning assets

$
7,762,761


$
5,737,934


$
10,237,788


$
1,498,138


$



$
270,396


$
25,507,017Allocated capital

$
346,735


$
386,649


$
641,818


$
138,726


$



$
357,451


$
1,871,379Performance RatiosROE


40
%


39
%


28
%


26
%


N/A



N/A



18
%Net interest margin


1.57
%


2.67
%


1.71
%


5.50
%


N/A



N/A



2.13
%MBR margin


0.76
%


2.27
%


1.55
%


N/A



N/A



N/A



1.03
%Efficiency ratio


51
%


44
%


18
%


24
%


N/A



N/A



58
%Operating DataLoan production

$
19,032,639


$
4,278,249


$
606,713


$
521,575


$



$



$
24,439,176Loans sold

$
15,612,563


$
3,241,590


$
654,023


$



$



$



$
19,508,176 14




---



##### Table of Contents



HomeStandard


Specialty


Loans &


SpecialtyConsumer


Consumer


Related


Commercial








TotalHome Loans


Home Loans


Investments


Loans


Treasury


Overhead


Company(Dollars in thousands)Three Months Ended
    September 30, 2005Operating ResultsNet interest income

$
28,211


$
28,153


$
40,778


$
14,905


$
810


$
(38
)

$
112,819Provision for loan losses






(1,546
)


(1,800
)


(182
)










(3,528
)Gain (loss) on sale of loans


103,657



35,608



11,821















151,086Service fee income






4,607



8,106



1







(2,410
)


10,304Gain (loss) on securities






412



316















728Other income






7,819



731



1,087



156



1,492



11,285Net revenue (expense)


131,868



75,053



59,952



15,811



966



(956
)


282,694Variable expenses


58,609



33,506



1,019



4,756











97,890Deferral of expenses under
    SFAS 91


(43,060
)


(15,033
)


(708
)


(1,988
)










(60,789
)Fixed expenses


35,137



14,684



9,482



2,276



1,687



54,055



117,321Pretax income (loss)


81,182



41,896



50,159



10,767



(721
)


(55,011
)


128,272Net income (loss)

$
49,115


$
25,275


$
30,345


$
6,514


$
(436
)

$
(33,287
)

$
77,526Balance Sheet DataAverage interest-earning assets

$
7,201,582


$
4,277,106


$
7,762,950


$
1,077,261


$



$
802,641


$
21,121,540Allocated capital

$
315,106


$
243,051


$
436,624


$
103,738


$



$
316,842


$
1,415,361Performance RatiosROE


62
%


41
%


28
%


25
%


N/A



N/A



22
%Net interest margin


1.55
%


2.61
%


2.08
%


5.49
%


N/A



N/A



2.12
%MBR margin


1.01
%


2.46
%


2.13
%


N/A



N/A



N/A



1.22
%Efficiency ratio


38
%


43
%


16
%


32
%


N/A



N/A



54
%Operating DataLoan production

$
13,283,041


$
3,295,823


$
274,372


$
635,830


$



$



$
17,489,066Loans sold

$
13,118,592


$
1,800,253


$
620,364


$



$



$



$
15,539,209  15




---



##### Table of Contents



Standard Consumer Home Loans Held for SaleAgencyConforming


Alt-A


Subprime


Total(Dollars in thousands)Three Months Ended
    September 30, 2006Operating ResultsNet interest income

$
393


$
21,316


$
9,037


$
30,746Provision for loan losses














Gain (loss) on sale of loans


333



82,500



5,146



87,979Service fee income














Gain (loss) on securities














Other income














Net revenues (expense)


726



103,816



14,183



118,725Variable expenses


1,593



48,241



7,379



57,213Deferral of expenses under
    SFAS 91


(1,236
)


(37,431
)


(5,726
)


(44,393
)Fixed expenses


1,202



42,350



4,452



48,004Pretax income (loss)


(833
)


50,656



8,078



57,901Net income (loss)

$
(504
)

$
30,647


$
4,887


$
35,030Balance Sheet DataAverage interest-earning assets

$
102,987


$
6,221,229


$
1,438,545


$
7,762,761Allocated capital

$
4,186


$
255,304


$
87,245


$
346,735Performance RatiosROE


(48
)%


48
%


22
%


40
%Net interest margin


1.51
%


1.36
%


2.49
%


1.57
%MBR margin


0.48
%


0.70
%


2.30
%


0.76
%Efficiency ratio


215
%


51
%


43
%


51
%Operating DataLoan production

$
177,832


$
18,143,707


$
711,100


$
19,032,639Loans sold

$
150,317


$
14,846,766


$
615,480


$
15,612,563Three Months Ended
    September 30, 2005Operating ResultsNet interest income

$
765


$
20,455


$
6,991


$
28,211Provision for loan losses














Gain (loss) on sale of loans


1,572



95,868



6,217



103,657Service fee income














Gain (loss) on securities














Other income














Net revenues (expense)


2,337



116,323



13,208



131,868Variable expenses


2,957



48,422



7,230



58,609Deferral of expenses under
    SFAS 91


(2,171
)


(35,638
)


(5,251
)


(43,060
)Fixed expenses


1,427



29,827



3,883



35,137Pretax income (loss)


124



73,712



7,346



81,182Net income (loss)

$
75


$
44,596


$
4,444


$
49,115 16




---



##### Table of Contents



Standard Consumer Home Loans Held for SaleAgencyConforming


Alt-A


Subprime


Total(Dollars in thousands)Balance Sheet DataAverage interest-earning assets

$
149,465


$
6,175,572


$
876,545


$
7,201,582Allocated capital

$
6,413


$
263,788


$
44,905


$
315,106Performance RatiosROE


5
%


67
%


39
%


62
%Net interest margin


2.03
%


1.31
%


3.16
%


1.55
%MBR margin


0.76
%


0.95
%


2.56
%


1.01
%Efficiency ratio


95
%


37
%


44
%


38
%Operating DataLoan production

$
276,263


$
12,373,817


$
632,961


$
13,283,041Loans sold

$
308,799


$
12,294,644


$
515,149


$
13,118,592   and/or
  Specialty Consumer Home Loans Held for Sale
    and/or
    InvestmentHELOCs/


ReverseSeconds


Mortgages


CTP/Lot


Discontinued


Total(Dollars in thousands)Three Months Ended
    September 30, 2006Operating ResultsNet interest income

$
23,771


$
2,868


$
11,524


$
509


$
38,672Provision for loan losses










(516
)


(50
)


(566
)Gain (loss) on sale of loans


3,885



45,548



12,673







62,106Service fee income


1,366



5,599











6,965Gain (loss) on securities


(3,898
)






(47
)






(3,945
)Other income


2,700



187



5,492







8,379Net revenues (expense)


27,824



54,202



29,126



459



111,611Variable expenses


13,444



20,319



8,665







42,428Deferral of expenses under
    SFAS 91


(8,544
)


(7,592
)


(2,235
)






(18,371
)Fixed expenses


2,964



14,486



7,735



77



25,262Pretax income (loss)


19,960



26,989



14,961



382



62,292Net income (loss)

$
12,076


$
16,282


$
9,051


$
231


$
37,640Balance Sheet DataAverage interest-earning assets

$
2,589,343


$
801,629


$
2,307,726


$
39,236


$
5,737,934Allocated capital

$
237,260


$
34,404


$
111,441


$
3,544


$
386,649Performance RatiosROE


20
%


188
%


32
%


26
%


39
%Net interest margin


3.64
%


1.42
%


1.98
%


5.15
%


2.67
%MBR margin


0.83
%


4.52
%


1.96
%


N/A



2.27
%Efficiency ratio


28
%


50
%


48
%


15
%


44
%Operating DataLoan production

$
1,839,049


$
1,128,203


$
1,310,997


$



$
4,278,249Loans sold

$
1,523,333


$
1,071,652


$
646,605


$



$
3,241,590 17




---



##### Table of Contents



Specialty Consumer Home Loans Held for Sale
    and/or
    InvestmentHELOCs/


ReverseSeconds


Mortgages


CTP/Lot


Discontinued


Total(Dollars in thousands)Three Months Ended
    September 30, 2005Operating ResultsNet interest income

$
15,798


$
734


$
10,858


$
763


$
28,153Provision for loan losses










(1,046
)


(500
)


(1,546
)Gain (loss) on sale of loans


3,597



21,856



10,155







35,608Service fee income


1,223



3,384











4,607Gain (loss) on securities


(654
)






1,066







412Other income


2,527



26



5,267



(1
)


7,819Net revenues (expense)


22,491



26,000



26,300



262



75,053Variable expenses


11,244



14,236



8,026







33,506Deferral of expenses under
    SFAS 91


(5,694
)


(6,379
)


(2,960
)






(15,033
)Fixed expenses


1,008



6,488



6,966



222



14,684Pretax income (loss)


15,933



11,655



14,268



40



41,896Net income (loss)

$
9,639


$
6,980


$
8,632


$
24


$
25,275Balance Sheet DataAverage interest-earning assets

$
2,078,870


$
153,529


$
1,996,474


$
48,233


$
4,277,106Allocated capital

$
131,635


$
16,657


$
90,468


$
4,291


$
243,051Performance RatiosROE


29
%


166
%


38
%


2
%


41
%Net interest margin


3.01
%


1.90
%


2.16
%


6.28
%


2.61
%MBR margin


2.54
%


2.90
%


1.90
%


N/A



2.46
%Efficiency ratio


29
%


55
%


44
%


29
%


43
%Operating DataLoan production

$
1,106,109


$
834,613


$
1,355,101


$



$
3,295,823Loans sold

$
368,622


$
780,007


$
651,624


$



$
1,800,253  18




---



##### Table of Contents



Home Loans and Related InvestmentsRetained Assets





SFR Loansand Retention





Held forActivities


MBS


Investment


Total(Dollars in thousands)Three Months Ended
    September 30, 2006Operating ResultsNet interest income

$
14,803


$
7,418


$
21,920


$
44,141Provision for loan losses










(2,000
)


(2,000
)Gain (loss) on sale of loans


9,392







748



10,140Service fee income


13,572











13,572Gain (loss) on securities


23,406



(493
)






22,913Other income


1,345



(14
)


429



1,760Net revenues (expense)


62,518



6,911



21,097



90,526Variable expenses


4,098











4,098Deferral of expenses under
    SFAS 91


(1,538
)










(1,538
)Fixed expenses


12,333



315



1,365



14,013Pretax income (loss)


47,625



6,596



19,732



73,953Net income (loss)

$
28,813


$
3,991


$
11,938


$
44,742Balance Sheet DataAverage interest-earning assets

$
878,038


$
3,527,766


$
5,831,984


$
10,237,788Allocated capital

$
360,151


$
61,628


$
220,039


$
641,818Performance RatiosROE


32
%


26
%


22
%


28
%Net interest margin


6.69
%


0.83
%


1.49
%


1.71
%MBR margin


1.44
%


N/A



N/A



1.55
%Efficiency ratio


24
%


5
%


6
%


18
%Operating DataLoan production

$
606,713


$



$



$
606,713Loans sold

$
654,023


$



$



$
654,023 19




---



##### Table of Contents



Home Loans and Related InvestmentsRetained Assets





SFR Loansand Retention





Held forActivities


MBS


Investment


Total(Dollars in thousands)Three Months Ended
    September 30, 2005Operating ResultsNet interest income

$
11,242


$
8,217


$
21,319


$
40,778Provision for loan losses










(1,800
)


(1,800
)Gain (loss) on sale of loans


7,604







4,217



11,821Service fee income


7,762







344



8,106Gain (loss) on securities


316











316Other income


731











731Net revenues (expense)


27,655



8,217



24,080



59,952Variable expenses


1,019











1,019Deferral of expenses under
    SFAS 91


(708
)










(708
)Fixed expenses


8,327



279



876



9,482Pretax income (loss)


19,017



7,938



23,204



50,159Net income (loss)

$
11,505


$
4,802


$
14,038


$
30,345Balance Sheet DataAverage interest-earning assets

$
519,850


$
2,189,352


$
5,053,748


$
7,762,950Allocated capital

$
189,744


$
39,787


$
207,093


$
436,624Performance RatiosROE


24
%


48
%


27
%


28
%Net interest margin


8.58
%


1.49
%


1.67
%


2.08
%MBR margin


2.79
%


N/A



N/A



2.13
%Efficiency ratio


31
%


3
%


3
%


16
%Operating DataLoan production

$
274,372


$



$



$
274,372Loans sold

$
321,746


$



$
298,618


$
620,364  20




---



##### Table of Contents



Specialty Commercial Loans Held for InvestmentSingle





WarehouseSpec


Subdivision


Lending


Total(Dollars in thousands)Three Months Ended
    September 30, 2006Operating ResultsNet interest income

$
3,245


$
16,488


$
1,035


$
20,768Provision for loan losses


(204
)


(2,200
)


(18
)


(2,422
)Gain (loss) on sale of loans














Service fee income














Gain (loss) on securities














Other income


1,163



703



466



2,332Net revenues (expense)


4,204



14,991



1,483



20,678Variable expenses


709



1,516







2,225Deferral of expenses under
    SFAS 91


(86
)


(1,810
)






(1,896
)Fixed expenses


581



3,395



1,134



5,110Pretax income (loss)


3,000



11,890



349



15,239Net income (loss)

$
1,815


$
7,193


$
211


$
9,219Balance Sheet DataAverage interest-earning assets

$
250,289


$
1,112,338


$
135,511


$
1,498,138Allocated capital

$
18,735


$
108,408


$
11,583


$
138,726Performance RatiosROE


38
%


26
%


N/A



26
%Net interest margin


5.14
%


5.88
%


N/A



5.50
%Efficiency ratio


27
%


18
%


N/A



24
%Operating DataLoan production

$
50,425


$
471,150


$



$
521,575Loans sold

$



$



$



$
Three Months Ended
    September 30, 2005Operating ResultsNet interest income

$
2,873


$
11,779


$
253


$
14,905Provision for loan losses


(151
)






(31
)


(182
)Gain (loss) on sale of loans














Service fee income






1







1Gain (loss) on securities














Other income


628



314



145



1,087Net revenues (expense)


3,350



12,094



367



15,811Variable expenses


887



3,869







4,756Deferral of expenses under
    SFAS 91


(212
)


(1,776
)






(1,988
)Fixed expenses


684



997



595



2,276Pretax income (loss)


1,991



9,004



(228
)


10,767Net income (loss)

$
1,205


$
5,447


$
(138
)

$
6,514 21




---



##### Table of Contents



Specialty Commercial Loans Held for InvestmentSingle





WarehouseSpec


Subdivision


Lending


Total(Dollars in thousands)Balance Sheet DataAverage interest-earning assets

$
193,453


$
850,653


$
33,155


$
1,077,261Allocated capital

$
15,467


$
84,970


$
3,301


$
103,738Performance RatiosROE


31
%


25
%


N/A



25
%Net interest margin


5.89
%


5.49
%


N/A



5.49
%Efficiency ratio


39
%


26
%


N/A



32
%Operating DataLoan production

$
96,919


$
538,911


$



$
635,830Loans sold

$



$



$



$
     TotalServicing OH


MB OH


Deposit OH


Corporate OH


Overhead(Dollars in thousands)Three Months Ended
    September 30, 2006Operating ResultsNet interest income

$
(115
)

$
(73
)

$
3,954


$
(1,400
)

$
2,366Provision for loan losses


















Gain (loss) on sale of loans


















Service fee income














521



521Gain (loss) on securities


















Other income


730



116



896



(763
)


979Net revenues (expense)


615



43



4,850



(1,642
)


3,866Variable expenses


















Deferral of expenses under
    SFAS 91


















Fixed expenses


5,104



10,263



11,127



42,252



68,746Pretax income (loss)


(4,489
)


(10,220
)


(6,277
)


(43,894
)


(64,880
)Net income (loss)

$
(2,716
)

$
(6,183
)

$
(3,798
)

$
(26,508
)

$
(39,205
)Balance Sheet DataAverage interest-earning assets

$



$
41


$
172


$
270,183


$
270,396Allocated capital

$
177


$
10,500


$
1,939


$
344,835


$
357,451Performance RatiosROE


N/A



N/A



N/A



N/A



N/ANet interest margin


N/A



N/A



N/A



N/A



N/AEfficiency ratio


N/A



N/A



N/A



N/A



N/AOperating DataLoan production

$



$



$



$



$
Loans sold

$



$



$



$



$
 22




---



##### Table of Contents



TotalServicing OH


MB OH


Deposit OH


Corporate OH


Overhead(Dollars in thousands)Three Months Ended
    September 30, 2005Operating ResultsNet interest income

$
(55
)

$
50


$
3,729


$
(3,762
)

$
(38
)Provision for loan losses


















Gain (loss) on sale of loans


















Service fee income














(2,410
)


(2,410
)Gain (loss) on securities


















Other income


634



(12
)


679



191



1,492Net revenues (expense)


579



38



4,408



(5,981
)


(956
)Variable expenses


















Deferral of expenses under
    SFAS 91


















Fixed expenses


3,760



6,970



7,288



36,037



54,055Pretax income (loss)


(3,181
)


(6,932
)


(2,880
)


(42,018
)


(55,011
)Net income (loss)

$
(1,925
)

$
(4,194
)

$
(1,742
)

$
(25,426
)

$
(33,287
)Balance Sheet DataAverage interest-earning assets

$



$
51


$
175


$
802,415


$
802,641Allocated capital

$
3,941


$
6,821


$
1,440


$
304,640


$
316,842Performance RatiosROE


N/A



N/A



N/A



N/A



N/ANet interest margin


N/A



N/A



N/A



N/A



N/AEfficiency ratio


N/A



N/A



N/A



N/A



N/AOperating DataLoan production

$



$



$



$



$
Loans sold

$



$



$



$



$
  LOAN
    PRODUCTION         23




---



##### Table of Contents



As of and for the Three Months EndedSeptember 30,


September 30,


%


June 30,


%2006


2005


Change


2006


Change(Dollars in millions)Production and Pipeline by
    Purpose:Mortgage loan
    production:Purchase transactions

$
9,682


$
7,425



30
%

$
8,284



17
%Cash-out refinance transactions


10,656



7,790



37
%


9,373



14
%Rate/term refinance transactions


3,630



1,735



109
%


2,403



51
%Total mortgage loan production

$
23,968


$
16,950



41
%

$
20,060



19
%% purchase and cash-out
    refinance transactions


85
%


90
%






88
%Mortgage industry market
    share


3.87
%


1.95
%


98
%


2.78
%


39
%Mortgage pipeline:Purchase transactions

$
4,595


$
3,654



26
%

$
4,459



3
%Cash-out refinance transactions


5,210



3,945



32
%


4,062



28
%Rate/term refinance transactions


1,930



1,346



43
%


1,492



29
%Total specific rate locks


11,735



8,945



31
%


10,013



17
%Non-specific rate locks on bulk
    purchases


2,821



1,388



103
%


2,514



12
%Total pipeline at period end

$
14,556


$
10,333



41
%

$
12,527



16
%   Three Months EndedSeptember 30,


September 30,


June 30,2006


2005


2006Production by Interest Rate
    Type as a Percentage of Mortgage Production:Fixed rate mortgages


20
%


23
%


20
%Interest-only loans


39
%


30
%


37
%ARMs


11
%


12
%


15
%Intermediate term fixed rate loans


7
%


9
%


7
%Pay option ARMS


23
%


26
%


21
%100
%


100
%


100
%   24




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,


%


June 30,


%


September 30,


September 30,


%2006


2005


Change


2006


Change


2006


2005


Change(Dollars in millions)Production by Product
    Type:Standard First Mortgage Products:Alt-A

$
19,103


$
13,016



47
%

$
15,090



27
%

$
49,642


$
33,276



49
%Agency conforming


260



315



(17
)%


244



7
%


783



843



(7
)%Subprime


729



639



14
%


505



44
%


1,788



1,576



13
%Total standard first mortgage
    products (S&P evaluated)(1)


20,092



13,970



44
%


15,839



27
%


52,213



35,695



46
%Specialty Consumer Home Mortgage
    Products:Home equity line of credit(2)
    /Seconds


1,840



1,106



66
%


1,860



(1
)%


5,343



2,420



121
%Reverse mortgages


1,128



835



35
%


1,337



(16
)%


3,583



1,981



81
%Consumer construction(2)


908



1,039



(13
)%


1,024



(11
)%


2,866



2,655



8
%Subtotal mortgage production


23,968



16,950



41
%


20,060



19
%


64,005



42,751



50
%Builder construction commitments(2)


471



539



(13
)%


531



(11
)%


1,365



1,486



(8
)%Total production

$
24,439


$
17,489



40
%

$
20,591



19
%

$
65,370


$
44,237



48
%     Three Months EndedSeptember 30, 2006


September 30, 2005


June 30, 2006Average





Average





AverageLifetime


% of


Lifetime


% of


Lifetime


% ofLoss Rate


Total


Loss Rate


Total


Loss Rate


Total(Dollars in millions)Production by S&P Lifetime
    Loss Estimate(1):Agency conforming equivalent
    (<48 bps)


0.23
%


48
%


0.21
%


54
%


0.22
%


48
%Prime Alt-A equivalent
    (48-135 bps)


0.76
%


44
%


0.75
%


40
%


0.76
%


45
%Subprime equivalent
    (>135 bps)


4.82
%


8
%


4.84
%


6
%


4.16
%


7
%Total S&P lifetime loss
    estimate


0.82
%


100
%


0.72
%


100
%


0.74
%


100
%Total S&P evaluated production





$
20,092






$
13,970






$
15,839   25




---



##### Table of Contents



Three Months EndedSeptember 30, 2006


September 30, 2005


June 30, 2006Production


FICO


CLTV(3)


Production


FICO


CLTV(3)


Production


FICO


CLTV(3)Total production

$
24,439



N/A



N/A


$
17,489



N/A



N/A


$
20,591



N/A



N/ALess:Home equity line of
    credit(2)/Seconds


1,840



716



87%



1,106



704



88%



1,860



716



86%Reverse mortgages


1,128



N/A



53%



835



N/A



53%



1,337



N/A



53%Consumer construction(2)


908



722



76%



1,039



721



74%



1,024



724



77%Builder construction commitments


471



N/A



74%



539



N/A



71%



531



N/A



82%Total S&P evaluated production

$
20,092



702



81%


$
13,970



703



77%


$
15,839



702



80%     (1)
    
    While Indymac production is evaluated using the S&P Levels
    model, the data are not audited or endorsed by S&P. S&P
    evaluated production excludes second liens, HELOC, reverse
    mortgages, and construction loans.(2)
    
    Amount represents total commitments.(3)
    
    Combined loan-to-value ratio for loans in the second lien
    position is used to calculate weighted average original
    loan-to-value ratio for the portfolio.        September 30,


September 30,


June 30,2006


2005


2006Production by Geographic
    Distribution:California


45
%


43
%


44
%Florida


8
%


8
%


9
%New York


6
%


6
%


6
%Virginia


4
%


5
%


4
%New Jersey


4
%


4
%


4
%Other


33
%


34
%


33
%Total


100
%


100
%


100
%     26




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,


%


June 30,


%


September 30,


September 30,


%2006


2005


Change


2006


Change


2006


2005


Change(Dollars in millions)Production by
    Divisions:Mortgage Loan
    Production:Mortgage Professionals Group
    Wholesale(1)

$
9,281


$
7,749



20
%

$
8,825



5
%

$
26,887


$
20,957



28
%Correspondent


2,503



1,652



52
%


2,528



(1
)%


7,307



3,965



84
%Conduit


9,078



4,718



92
%


5,471



66
%


20,685



10,530



96
%Consumer Direct


456



792



(42
)%


552



(17
)%


1,533



2,216



(31
)%Financial Freedom


1,128



835



35
%


1,337



(16
)%


3,583



1,981



81
%Servicing Retention


721



330



118
%


540



34
%


1,688



726



133
%Home Equity Division


30



58



(48
)%


33



(9
)%


93



156



(40
)%Consumer Construction and Lot


771



816



(6
)%


774



0
%


2,229



2,220



0
%Total Mortgage Loan Production


23,968



16,950



41
%


20,060



19
%


64,005



42,751



50
%Commercial Loan
    Production:Builder Construction


471



539



(13
)%


531



(11
)%


1,365



1,486



(8
)%Total Production

$
24,439


$
17,489



40
%

$
20,591



19
%

$
65,370


$
44,237



48
%     (1)
    
    Wholesale channel includes $898 million, $378 million,
    and $709 million of production from emerging
    bankers/brokers sales for the quarters ended September 30,
    2006 and 2005 and June 30, 2006. The emerging
    bankers/brokers sales force focuses on small and geographically
    remote mortgage brokers through centralized in-house sales
    personnel instead of field sales personnel.    Three Months EndedSeptember 30,


September 30,


%


June 30,


%2006


2005


Change


2006


ChangeKey Production
    Drivers:Active customers during the
    quarter(1)


7,686



6,473



19
%


7,472



3
%Sales personnel


992



692



43
%


952



4
%Number of regional offices


16



11



45
%


15



7
%     (1)
    
    Active customers are defined as customers who funded at least
    one loan during the most recent
    90-day
    period. 27




---



##### Table of Contents



LOAN
    SALES    Three Months Ended


Nine Months EndedSeptember 30,


September 30,


%


June 30,


%


September 30,


September 30,


%2006


2005


Change


2006


Change


2006


2005


Change(Dollars in millions)Total loans sold

$
19,508


$
15,539



26
%

$
19,415



0
%

$
55,632


$
36,727



51
%Ratios:Gross MBR margin before hedging


1.44
%


0.91
%


57
%


0.99
%


45
%


1.11
%


1.43
%


(22
)%Net MBR margin after hedging


1.03
%


1.22
%


(15
)%


1.23
%


(16
)%


1.12
%


1.51
%


(25
)%     non-accrual
    Three Months EndedSeptember 30,


September 30,


June 30,2006


2005


2006MBR Margin by
    Channel:Wholesale


1.06
%


1.33
%


1.31
%Correspondent


0.48
%


1.12
%


0.76
%Conduit


0.48
%


0.23
%


0.60
%Consumer Direct


1.43
%


2.19
%


1.87
%Financial Freedom


4.52
%


2.90
%


3.31
%Other


1.29
%


1.49
%


1.34
%Total MBR margin


1.03
%


1.22
%


1.23
%MBR Margin by
    Product:Agency Conforming


0.48
%


0.76
%


0.63
%Alt-A


0.70
%


0.95
%


1.17
%Subprime


2.30
%


2.56
%


2.36
%HELOC/Seconds


0.83
%


2.54
%


0.20
%Reverse Mortgages


4.52
%


2.90
%


3.31
%CTP/Lot


1.96
%


1.90
%


0.81
%Other


1.55
%


2.13
%


1.41
%Total MBR margin


1.03
%


1.22
%


1.23
%  28




---



##### Table of Contents



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


Nine Months EndedSeptember 30,


September 30,


June 30,


September 30,


September 30,2006


2005


2006


2006


2005(Dollars in millions)Distribution of Loan Sales by
    ChannelSales of government-sponsored
    enterprises (GSEs) equivalent loans


16
%


17
%


18
%


18
%


16
%Private-label securitizations


38
%


60
%


46
%


40
%


63
%Whole loan sales, servicing retained


38
%


16
%


33
%


36
%


13
%Whole loan sales, servicing released


1
%


2
%


2
%


2
%


3
%Subtotal sales


93
%


95
%


99
%


96
%


95
%Investment portfolio acquisitions


7
%


5
%


1
%


4
%


5
%Total loan distribution percentage


100
%


100
%


100
%


100
%


100
%Total loan distribution

$
20,914


$
16,283


$
19,631


$
57,870


$
38,698      29




---



##### Table of Contents



MORTGAGE
    SERVICING AND OTHER RETAINED ASSETS MORTGAGE
    SERVICING AND MORTGAGE SERVICING RIGHTS
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,


June 30,


September 30,


September 30,2006


2005


2006


2006


2005(Dollars in millions)Unpaid principal balance at
    beginning of period

$
109,989


$
63,676


$
96,512


$
84,495


$
50,219Additions


20,709



15,561



19,422



56,822



36,567Clean-up
    calls exercised










(31
)


(31
)


(113
)Loan payments and prepayments


(6,303
)


(5,450
)


(5,914
)


(16,891
)


(12,886
)Unpaid principal balance at end of
    period

$
124,395


$
73,787


$
109,989


$
124,395


$
73,787     As ofSeptember 30,


September 30,


June 30,2006


2005


2006By Product Type:Fixed rate mortgages


34
%


37
%


35
%Intermediate term fixed rate loans


29
%


26
%


28
%Pay option ARMs


25
%


25
%


25
%Reverse mortgages (all ARMs)


9
%


9
%


9
%HELOCs


2
%


2
%


2
%Other


1
%


1
%


1
%Total


100
%


100
%


100
%Additional Information,
    Excluding Reverse Mortgages:Weighted average FICO


703



699



703Weighted average original LTV(1)


73
%


73
%


72
%Average original loan size (in
    thousands)


228



210



225Percentage of portfolio with
    prepayment penalty


42
%


34
%


40
%By Geographic Distribution:California


42
%


42
%


42
%New York


8
%


9
%


8
%Florida


8
%


7
%


8
%New Jersey


4
%


5
%


4
%Virginia


4
%


3
%


4
%Other


34
%


34
%


34
%Total


100
%


100
%


100
%     (1)
    
    Combined
    loan-to-value
    ratio for loans in the second lien position is used to calculate
    weighted average original
    loan-to-value
    ratio for the portfolio.(2)
    
    Capitalized MSRs totaled $1.63 billion as of
    September 30, 2006 and $1.60 billion as of
    June 30, 2006, an increase of $32.5 million. The
    activities in MSRs follow: 30




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,


June 30,


September 30,


September 30,2006


2005


2006


2006


2005(Dollars in thousands)Balance at beginning of period

$
1,598,821


$
738,844


$
1,354,433


$
1,094,490


$
640,794Cumulative-effect adjustment due
    to change in accounting for MSRs














17,561



Additions from loan sale or
    securitization


258,249



212,857



268,515



756,821



489,821Purchase or assumption


8,631



(89
)


27



8,658



5,463Transfers to prepayment penalty
    and/or
    AAA-rated and agency interest-only securities


(2,601
)










(2,601
)


(8,491
)Clean-up
    calls exercised






(730
)


(274
)


(274
)


(2,597
)Change in fair value due to run-off


(97,714
)


N/A



(88,261
)


(254,133
)


N/AChange in fair value due to market
    changes


(133,471
)


N/A



76,670



27,253



N/AChange in fair value due to
    application of external benchmarking policies


(599
)


N/A



(12,289
)


(16,459
)


N/AAmortization






(60,911
)










(158,786
)Valuation/impairment






50,635











(25,598
)Balance at end of period

$
1,631,316


$
940,606


$
1,598,821


$
1,631,316


$
940,606MSRs fair value as a percentage of
    unpaid principal balance (in bps)


131



127



145



131



127    31




---



##### Table of Contents



Three Months EndedSeptember 30,


BPS


September 30,


BPS


June 30,


BPS2006


UPB


2005


UPB


2006


UPB(Dollars in thousands)Service fee (expense)
    income:Gross service fee income

$
133,818



46


$
75,246



44


$
117,787



45Change in value due to portfolio
    run offs/Amortization


(97,714
)


(33
)


(60,912
)


(36
)


(88,261
)


(34
)Service fee income, net of change
    in value due to portfolio run-off/amortization


36,104



13



14,334



8



29,526



11Change in value due to application
    of external benchmarking policies


(599
)














(12,289
)


(5
)Valuation adjustment due to market
    changes


(133,471
)


(46
)


50,635



30



76,670



30Hedge gain (loss) on MSRs


119,024



41



(54,665
)


(32
)


(66,660
)


(26
)Total service fee
    income

$
21,058



8


$
10,304



6


$
27,247



10   Nine Months EndedSeptember 30,


BPS


September 30,


BPS2006


UPB


2005


UPB(Dollars in thousands)Service fee (expense)
    income:Gross service fee income

$
349,798



45


$
194,592



43Change in value due to portfolio
    run offs/Amortization


(254,133
)


(33
)


(158,787
)


(35
)Service income, net of change in
    value due to portfolio run offs/amortization


95,665



12



35,805



8Change in value due to application
    of external benchmarking policies


(16,459
)


(2
)






Valuation adjustment due to market
    changes


27,253



4



(25,598
)


(6
)Hedge (loss) gain on MSRs


(27,265
)


(4
)


15,314



3Total service fee
    income

$
79,194



10


$
25,521



5  32




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,


June 30,


September 30,


September 30,2006


2005


2006


2006


2005(Dollars in thousands)Valuation adjustment due to market
    changes

$
(134,070
)

$
50,635


$
64,381


$
10,794


$
(25,598
)Hedge gain (loss) on MSRs


119,024



(54,665
)


(66,660
)


(27,265
)


15,314Unrealized (loss) gain on
    AAA-rated and agency interest-only securities and residual
    securities


(504
)


(518
)


5,566



11,346



(17,612
)Unrealized gain (loss) on
    principal-only securities


5,008



5



(5,614
)


(1,500
)


(91
)Unrealized gain on prepayment
    penalty securities


13,250



1,310



10,909



17,907



18,484Other


1,476



(604
)


(1,102
)


(944
)


5,651Net (loss) gain on MSRs, AAA-rated
    and agency interest-only securities, residual securities, and
    hedges

$
4,184


$
(3,837
)

$
7,480


$
10,338


$
(3,852
)    33




---



##### Table of Contents



OTHER
    RETAINED ASSETS
      Three Months Ended


Nine Months EndedSeptember 30,


September 30,


June 30,


September 30,


September 30,2006


2005


2006


2006


2005(Dollars in thousands)AAA-rated and agency
    interest-only securities:Beginning balance

$
64,373


$
63,052


$
84,816


$
78,731


$
90,658Retained investments from
    securitizations


15,057



11,558







20,253



15,664Sales










(22,939
)


(22,939
)


Clean-up
    calls exercised










(107
)


(107
)


(171
)Cash received, net of accretion


(2,361
)


(5,469
)


(3,669
)


(11,636
)


(17,352
)Valuation gains (losses) before
    hedges


(8,629
)


4,864



6,272



4,138



(14,794
)Ending balance

$
68,440


$
74,005


$
64,373


$
68,440


$
74,005Principal-only
    securities:Beginning balance

$
129,951


$



$
12,820


$
9,483


$
18,598Retained investments from
    securitizations


3,238



2,351



3,445



10,907



3,770Purchases










121,281



121,281



Sales


(100,761
)










(100,761
)


(19,448
)Cash received, net of accretion


(2,278
)


(5
)


(1,981
)


(4,252
)


(478
)Valuation gains (losses) before
    hedges


5,008



5



(5,614
)


(1,500
)


(91
)Ending balance

$
35,158


$
2,351


$
129,951


$
35,158


$
2,351Prepayment penalty
    securities:Beginning balance

$
80,036


$
62,283


$
66,949


$
75,741


$
33,451Retained investments from
    securitizations


13,801



20,998



13,466



35,858



31,140Transfer from MSRs/residual
    securities


3,642











3,642



8,491Cash received, net of accretion


(12,307
)


(8,413
)


(11,288
)


(34,726
)


(15,388
)Valuation gains (losses) before
    hedges


13,250



1,310



10,909



17,907



18,484Ending balance

$
98,422


$
76,178


$
80,036


$
98,422


$
76,178Residual
    securities(1):Beginning balance

$
240,522


$
145,794


$
205,128


$
167,771


$
135,386Retained investments from
    securitizations


23,608



17,404



43,933



109,417



35,584Transfer to prepayment penalty
    securities


(1,041
)










(1,041
)


Impairments


(3,626
)






(1,300
)


(4,926
)


Cash received, net of accretion


(6,431
)


(3,414
)


(3,255
)


(15,735
)


(15,322
)Valuation gains (losses) before
    hedges


8,626



(5,450
)


(3,984
)


6,172



(1,314
)Ending balance

$
261,658


$
154,334


$
240,522


$
261,658


$
154,334 34




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,


June 30,


September 30,


September 30,2006


2005


2006


2006


2005(Dollars in thousands)Investment-grade
    securities:Beginning balance

$
187,945


$
94,346


$
145,499


$
92,120


$
146,822Retained investments from
    securitizations


3,092







25,808



43,701



33,924Purchases


7,369







23,974



72,366



Impairment






(87
)






(183
)


(328
)Clean-up
    calls exercised










(1
)


(1
)


7Sales


(7,039
)










(7,039
)


(83,629
)Cash received, net of accretion


(1,142
)


139



(4,871
)


(7,437
)


(2,356
)Valuation gains (losses) before
    hedges


2,970



(958
)


(2,464
)


(332
)


(1,000
)Ending balance

$
193,195


$
93,440


$
187,945


$
193,195


$
93,440Non-Investment grade
    securities:Beginning balance

$
88,045


$
57,950


$
66,339


$
57,712


$
83,052Retained investments from
    securitizations


3,324



5,503



22,232



34,205



9,728Purchases


















1,523Impairment


(156
)


(51
)


(202
)


(610
)


(225
)Sales


(12,401
)


(10,344
)






(12,401
)


(37,330
)Cash received, net of accretion


296



(24
)


(111
)


392



(345
)Valuation gains (losses) before
    hedges


(830
)


7



(213
)


(1,020
)


(3,362
)Ending balance

$
78,278


$
53,041


$
88,045


$
78,278


$
53,041     (1)
    
    Included in the residual securities balance at
    September 30, 2006 were $38.8 million of HELOC
    residuals retained from two separate guaranteed mortgage
    securitization transactions. There was no gain on sale of loans
    recognized in connection with these transactions. 35




---



##### Table of Contents



September 30, 2006PremiumCurrent


(Discount)








December 31,Face


to Face


Amortized





2005Value


Value


Cost


Fair Value


Fair Value(Dollars in thousands)Other investment grade
    mortgage-backed securities:AA+

$
7,445


$
(73
)

$
7,372


$
7,522


$
AA


87,813



(1,080
)


86,733



86,967



21,787AA-


14,065



(354
)


13,711



14,171



A


4,468



(187
)


4,281



4,360



239BBB


22,274



(1,219
)


21,055



21,088



29,848BBB-


65,670



(5,275
)


60,395



59,087



40,246Total other investment grade
    mortgage-backed securities

$
201,735


$
(8,188
)

$
193,547


$
193,195


$
92,120Non-investment grade
    mortgage-backed securities:BB+

$
8,456


$
(1,222
)

$
7,234


$
7,234


$
BB


54,613



(7,150
)


47,463



47,850



36,873BB-


22,021



(1,002
)


21,019



21,093



13,523B


6,651



(5,330
)


1,321



1,703



6,458Other


5,265



(4,983
)


282



398



858Total other non-investment grade
    mortgage-backed securities

$
97,006


$
(19,687
)

$
77,319


$
78,278


$
57,712       Three Months Ended


Nine Months EndedSeptember 30,


September 30,


June 30,


September 30,


September 30,2006


2005


2006


2006


2005(Dollars in thousands)Net gain (loss) on
    securities:Realized gain on available for
    sale securities

$
3,520


$
673


$



$
3,520


$
6,054Impairment on available for sale
    securities


(3,782
)


(138
)


(1,501
)


(5,718
)


(553
)Unrealized gain on prepayment
    penalty securities


13,250



1,310



10,909



17,907



18,484Unrealized (loss) gain on
    AAA-rated and agency interest-only and residual securities


(504
)


(518
)


5,566



11,346



(17,612
)Net gain (loss) on trading
    securities and other instruments used to hedge AAA-rated and
    agency interest-only and residual securities


6,484



(599
)


(6,716
)


(2,444
)


5,560Total gain on securities, net

$
18,968


$
728


$
8,258


$
24,611


$
11,933  36




---



##### Table of Contents



VALUATION
    OF MSRs, INTEREST-ONLY, PREPAYMENT PENALTY,
    AND RESIDUAL SECURITIES
    Actual


Valuation AssumptionsGross Wtd.


Servicing


3-Month


Weighted


Lifetime


3-Month





RemainingBook


Collateral


Average


Fee/Interest


Prepayment


Average


Prepayment


Prepayment


Discount


CumulativeValue


Balance


Coupon


Strip


Speeds


Multiple


Speeds


Speeds


Yield


Loss Rate(1)(Dollars in thousands)September 30,
    2006MSRs

$
1,631,316


$
124,394,943



6.96
%


0.37
%


18.2
%


3.59



24.8
%


18.2
%


9.6
%


N/AAAA-rated interest-only securities

$
68,440


$
4,424,080



6.68
%


0.52
%


12.7
%


2.95



16.7
%


17.2
%


13.6
%


N/APrepayment penalty securities

$
98,422


$
19,441,542



7.17
%


N/A



23.0
%


N/A



25.3
%


18.8
%


22.9
%


N/ALot loan residual securities

$
66,133


$
2,262,810



8.95
%


3.50
%


34.9
%


0.83



39.8
%


38.6
%


23.7
%


0.37
%HELOC residual securities


95,745


$
2,661,610



9.65
%


3.21
%


44.5
%


1.12



50.0
%


48.7
%


20.3
%


0.76
%Subprime residual securities


99,780


$
6,650,080



8.19
%


2.15
%


27.0
%


0.70



38.9
%


33.4
%


23.6
%


3.69
%Total non-investment grade residual
    securities

$
261,658June 30, 2006MSRs

$
1,598,821


$
109,988,858



6.70
%


0.37
%


18.5
%


3.98



22.1
%


20.5
%


10.2
%


N/AAAA-rated interest-only securities

$
64,373


$
4,512,539



6.61
%


0.41
%


12.6
%


3.47



13.5
%


16.4
%


15.0
%


N/APrepayment penalty securities

$
80,036


$
16,388,466



6.79
%


N/A



22.9
%


N/A



21.1
%


19.3
%


27.9
%


N/ALot loan residual securities


58,779


$
2,266,191



8.46
%


2.82
%


34.0
%


0.92



40.0
%


38.2
%


22.7
%


0.37
%HELOC residual securities


87,434


$
2,299,992



9.02
%


3.01
%


48.9
%


1.26



49.7
%


48.2
%


19.4
%


0.67
%Subprime residual securities


94,309


$
6,659,194



7.90
%


1.72
%


28.4
%


0.83



37.9
%


31.1
%


24.9
%


3.15
%Total non-investment grade residual
    securities

$
240,522December 31, 2005MSRs

$
1,094,490


$
84,495,133



6.19
%


0.37
%


21.7
%


3.54



21.4
%


16.2
%


10.7
%


N/AAAA-rated and agency interest-only
    securities

$
78,731


$
7,583,643



6.63
%


0.38
%


27.5
%


2.73



20.3
%


22.7
%


8.0
%


N/APrepayment penalty securities

$
75,741


$
13,657,946



6.30
%


N/A



22.7
%


N/A



23.7
%


20.3
%


9.0
%


N/APrime residual securities

$
2,438


$
1,183,361



5.85
%


0.61
%


60.0
%


0.34



46.3
%


51.4
%


15.0
%


0.18
%Lot loan residual securities


41,066


$
939,005



7.55
%


2.90
%


33.2
%


1.51



43.1
%


41.4
%


21.6
%


0.36
%HELOC residual securities


66,041


$
1,430,473



8.26
%


3.18
%


55.8
%


1.45



44.0
%


49.6
%


19.0
%


0.87
%Subprime residual securities


58,226


$
4,831,675



7.40
%


2.17
%


28.9
%


0.55



37.1
%


29.4
%


24.9
%


2.94
%Total non-investment grade residual
    securities

$
167,771     (1)
    
    As a percentage of the original pool balance, the actual
    cumulative loss rate to date totaled 0.29% and 0.39% for HELOC
    and subprime loans, respectively, at September 30, 2006. No
    loss has been incurred on lot loans as of September 30,
    2006. 37




---



##### Table of Contents



HEDGING
    INTEREST RATE RISK ON SERVICING-RELATED ASSETS
      value-at-risk
   38




---



##### Table of Contents



Servicing


AAA IO


Credit RiskFor the Three Months Ended September 30, 2006:

Portfolio


Portfolio


Portfolio


Total(Dollars in thousands)Net earnings

$
19,406



517



10,481



30,404Average capital deployed

$
259,680



9,784



132,081



401,545Return on equity


30
%


21
%


31
%


30
%  MORTGAGE-BACKED
    SECURITIES AND LOANS HELD FOR INVESTMENT        September 30,


December 31,2006


2005(Dollars in thousands)Loans held for
    investment:SFR mortgage

$
6,462,610


$
5,441,521Consumer construction


1,985,738



1,656,963Builder construction


1,018,891



838,772HELOC


28,815



31,882Land and other mortgage


366,984



260,615Revolving warehouse lines of credit


166,948



48,616Total  loans held for
    investment

$
10,029,986


$
8,278,369AAA-rated mortgage-backed
    securities:AAA-rated non-agency securities,
    trading

$
33,829


$
52,633AAA-rated non-agency securities,
    available for sale


4,130,995



3,524,952AAA-rated agency securities,
    available for sale


50,084



43,014Total AAA-rated mortgage-backed
    securities

$
4,214,908


$
3,620,599  39




---



##### Table of Contents



SFR
    MORTGAGE LOANS HELD FOR INVESTMENT
      September 30,


June 30,


December 31,2006


2006


2005(Dollars in thousands)SFR mortgage loans held for
    investment (book value)

$
6,462,610


$
5,427,609


$
5,441,521Average loan size

$
304


$
290


$
292Non-performing loans as a
    percentage of SFR loans


0.90
%


0.86
%


0.62
%Estimated average life in years(1)


2.4



2.3



2.4Estimated average net duration in
    months(2)


(1.0
)


(0.7
)


0.1Annualized yield


6.00
%


5.74
%


5.06
%Percentage of loans with active
    prepayment penalty


34
%


40
%


35
%Interest-only loans


61
%


51
%


49
%Pay option ARMs


18
%


24
%


25
%Intermediate term fixed rate loans


14
%


16
%


16
%Fixed-rate mortgages


5
%


6
%


6
%ARMs


2
%


3
%


4
%Additional
    Information:Average FICO score(3)


716



713



715Original average loan to value
    ratio


73
%


73
%


72
%Current average loan to value
    ratio(4)


59
%


58
%


58
%Geographic distribution of top
    five states:Southern California


32
%


31
%


32
%Northern California


20
%


21
%


21
%Total California


52
%


52
%


53
%Florida


6
%


6
%


5
%New York


4
%


3
%


4
%Michigan


3
%


4
%


4
%Virginia


3
%


3
%


3
%Other


32
%


32
%


31
%Total


100
%


100
%


100
%     (1)
    
    Represents the estimated length of time, on average, the SFR
    loan portfolio will remain outstanding based on the
    Companys estimates for prepayments.(2)
    
    Average net duration measures the expected change in the value
    of a financial instrument in response to changes in interest
    rates, taking into consideration the impact of the related
    hedges. The negative net duration implies an increase in value
    as rates rise while the positive net duration implies a decrease
    in value.(3)
    
    FICO scores are the result of a credit scoring system developed
    by Fair Isaacs and Co. and are generally used by lenders to
    evaluate a borrowers credit history. FICO scores of 700 or
    higher are generally considered in the mortgage industry to be
    very high quality borrowers with low risk of default, but in
    general, the secondary market will consider FICO scores of 620
    or higher to be prime. 40




---



##### Table of Contents



(4)
    
    Current average
    loan-to-value
    ratio is estimated based on the Office of the Federal Housing
    Enterprise Oversight House Price Index Metropolitan Statistical
    Area data on a loan level basis.  loan-to-value loan-to-value
  CONSUMER
    CONSTRUCTION
  construction-to-permanent
   41




---



##### Table of Contents



As ofSeptember 30,


June 30,


December 31,2006


2006


2005(Dollars in thousands)Consumer construction loans (book
    value)

$
1,985,738


$
1,860,622


$
1,656,963Lot, land and other mortgage loans
    (book value)


41,201



79,727



107,164Total commitments


3,342,008



3,214,385



2,949,430Average loan commitment


484



467



442Non-performing loans


0.75
%


0.67
%


0.51
%Fixed-rate loans


89
%


95
%


96
%Adjustable-rate loans


11
%


5
%


4
%Additional
    Information:Average
    loan-to-value
    ratio(1)


73
%


73
%


72
%Average FICO score


714



714



713Geographic distribution of top
    five states:Southern California


27
%


28
%


29
%Northern California


16
%


16
%


18
%Total California


43
%


44
%


47
%Florida


9
%


9
%


8
%Washington


4
%


4
%


3
%Arizona


3
%


3
%


3
%Colorado


3
%


3
%


3
%Other


38
%


37
%


36
%Total Consumer Construction


100
%


100
%


100
%     (1)
    
    The average
    loan-to-value
    ratio is based on the estimated appraised value of the completed
    project compared to the commitment amount at the date indicated.  HOME
    EQUITY DIVISION
     42




---



##### Table of Contents



September 30,


June 30,


December 31,2006


2006


2005(Dollars in thousands)Outstanding balance (book value)

$
765,760


$
759,527


$
786,922Total commitments(1)


2,115,407



1,907,873



1,493,415Average spread over prime


1.17
%


1.26
%


1.47
%Average FICO score


736



734



728Average original CLTV ratio(2)


77
%


77
%


78
%   Additional
    Information as of September 30, 2006
  Average Loan








30+ DaysOutstanding


Commitment


Average Spread


Average


DelinquencyCLTV

Balance


Balance


Over Prime


FICO


Percentage(Dollars in thousands)96% to 100%

$
80,904


$
116



2.05
%


731



3.03
%91% to 95%


99,220



99



2.10
%


713



0.62
%81% to 90%


304,942



92



1.48
%


718



0.92
%71% to 80%


161,165



165



0.35
%


745



0.50
%70% or less


119,529



158



0.15
%


752



0.83
%Total

$
765,760


$
126



1.17
%


736



1.00
%     (1)
    
    On funded loans.(2)
    
    The CLTV combines the loan-to-value on both the first mortgage
    loan and the HELOC.  BUILDER
    CONSTRUCTION
       43




---



##### Table of Contents



loan-to-value
    As ofSeptember 30,


June 30,


December 31,2006


2006


2005(Dollars in thousands)Construction loans (book value)

$
1,018,891


$
1,013,279


$
838,772Land and other mortgage loans
    (book value)


350,496



307,282



252,427Total commitments(1)


2,445,632



2,368,149



2,181,698Average loan commitments(2)


11,135



10,602



10,824Percentage of homes under
    construction or completed  pre-sold(3)


55
%


62
%


66
%Median sales price of homes(3)


403



394



377Non-performing loans


0.25
%


0.23
%


0.04
%Additional
    Information:Average
    loan-to-value
    ratio(4)


72
%


71
%


71
%Geographic distribution of top
    five states:Southern California


37
%


36
%


40
%Northern California


17
%


16
%


17
%Total California


54
%


52
%


57
%Florida


11
%


12
%


9
%Illinois


8
%


10
%


9
%Oregon


5
%


5
%


3
%New York


4
%


4
%


4
%Other


18
%


17
%


18
%Total Builder Construction


100
%


100
%


100
%     (1)
    
    86% of the balance represents commitments in construction and
    land/model loans and 14% represents the single-spec portfolio at
    September 30, 2006.(2)
    
    In calculating the average loans commitments, total commitments
    of $352.3 million, $364.4 million, and
    $385.0 million of single-spec loans at September 30,
    2006, June 30, 2006 and December 31, 2005, are
    excluded. Average loan commitments for the single-spec portfolio
    are $418 thousand, $404 thousand and $387 thousand at
    September 30, 2006, June 30, 2006, and
    December 31, 2005, respectively.(3)
    
    Amounts are for construction loans from homebuilder division
    only.(4)
    
    The average
    loan-to-value
    ratio is based on the estimated appraised value of the completed
    project compared to the commitment amount at the date indicated.  WAREHOUSE
    LENDING DIVISION
   44




---



##### Table of Contents



As ofSeptember 30,


June 30,


December 31,2006


2006


2005(Dollars in thousands)Outstanding balance (book value)

$
166,948


$
121,292


$
48,616Total commitments


637,000



468,000



201,000    NET
    INTEREST MARGIN    Three Months EndedSeptember 30, 2006


September 30, 2005


June 30, 2006Average





Yield/


Average





Yield/


Average





Yield/Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate(Dollars in thousands)AssetsSecurities

$
4,889,155


$
86,212



7.00
%

$
3,589,084


$
52,624



5.82
%

$
4,596,115


$
80,998



7.07
%Loans held for sale


10,825,266



196,924



7.22
%


9,065,447



125,969



5.51
%


10,532,302



181,079



6.90
%Mortgage loans held for investment


6,079,803



92,005



6.00
%


5,392,079



66,566



4.90
%


6,016,878



86,092



5.74
%Builder construction and income
    property


1,023,421



27,396



10.62
%


797,853



18,086



8.99
%


993,145



25,280



10.21
%Consumer construction


1,835,164



32,087



6.94
%


1,468,487



20,440



5.52
%


1,707,957



28,079



6.59
%Investment in Federal Home Loan
    Bank stock and other


854,208



12,127



5.63
%


808,590



8,098



3.97
%


834,180



10,683



5.14
%Total interest-earning assets


25,507,017



446,751



6.95
%


21,121,540



291,783



5.48
%


24,680,577



412,211



6.70
%Mortgage servicing assets


1,552,295











792,300











1,434,234Other


2,080,669











931,074











1,655,158Total assets

$
29,139,981










$
22,844,914










$
27,769,969Liabilities and
    shareholders equityInterest-bearing deposits

$
9,208,481



113,758



4.90
%

$
6,108,016



52,261



3.39
%

$
8,211,312



92,840



4.53
%Advances from Federal Home
    Loan Bank


9,783,887



115,769



4.69
%


9,061,905



76,907



3.37
%


9,775,167



110,468



4.53
%Other borrowings


5,682,601



80,513



5.62
%


4,806,036



49,796



4.11
%


5,923,472



78,749



5.33
%Total interest-bearing liabilities


24,674,969



310,040



4.99
%


19,975,957



178,964



3.55
%


23,909,951



282,057



4.73
%Other


2,593,633











1,453,596











2,117,781Total liabilities


27,268,602











21,429,553











26,027,732Shareholders equity


1,871,379











1,415,361











1,742,237Total liabilities and
    shareholders equity

$
29,139,981










$
22,844,914










$
27,769,969Net interest income





$
136,711










$
112,819










$
130,154Net interest spread










1.96
%










1.93
%










1.97
%Net interest margin










2.13
%










2.12
%










2.12
%   45




---



##### Table of Contents



Nine Months EndedSeptember 30, 2006


September 30, 2005Average





Yield


Average





YieldBalance


Interest


Rate


Balance


Interest


Rate(Dollars in thousands)AssetsSecurities

$
4,541,302


$
233,693



6.88
%

$
3,603,369


$
151,649



5.63
%Loans held for sale


10,650,644



551,564



6.92
%


7,319,273



293,108



5.35
%Mortgage loans held for investment


6,014,437



260,276



5.79
%


5,198,156



185,793



4.78
%Builder construction and income
    property


973,663



73,960



10.16
%


727,197



46,614



8.57
%Consumer construction


1,719,823



84,609



6.58
%


1,412,820



59,097



5.59
%Investment in Federal Home
    Loan Bank stock and other


834,396



32,706



5.24
%


727,884



19,534



3.59
%Total interest-earning assets


24,734,265



1,236,808



6.69
%


18,988,699



755,795



5.32
%Mortgage servicing assets


1,377,586











722,629Other


1,695,257











766,007Total assets

$
27,807,108










$
20,477,335Liabilities and
    shareholders equityInterest-bearing deposits

$
8,255,056



280,841



4.55
%

$
5,686,527



132,479



3.11
%Advances from Federal Home
    Loan Bank


9,839,691



329,846



4.48
%


8,192,796



193,711



3.16
%Other borrowings


5,844,576



232,046



5.31
%


4,011,769



114,293



3.81
%Total interest-bearing liabilities


23,939,323



842,733



4.71
%


17,891,092



440,483



3.29
%Other


2,129,600











1,245,302Total liabilities


26,068,923











19,136,394Shareholders equity


1,738,185











1,340,941Total liabilities and
    shareholders equity

$
27,807,108










$
20,477,335Net interest income





$
394,075










$
315,312Net interest spread










1.98
%










2.03
%Net interest margin










2.13
%










2.22
%     Three Months EndedSeptember 30, 2006


September 30, 2005


June 30, 2006Average


Net


Net


Average


Net


Net


Average


Net


NetEarning


Interest


Interest


Earning


Interest


Interest


Earning


Interest


InterestAssets


Income


Margin


Assets


Income


Margin


Assets


Income


Margin(Dollars in millions)By Segment:Thrift segment and other

$
15,390


$
78



2.02
%

$
12,835


$
67



2.07
%

$
14,986


$
75



2.01
%Mortgage banking segment


10,117



59



2.29
%


8,287



46



2.20
%


9,695



55



2.27
%Total Company

$
25,507


$
137



2.13
%

$
21,122


$
113



2.12
%

$
24,681


$
130



2.12
%     46




---



##### Table of Contents



Nine Months EndedSeptember 30, 2006


September 30, 2005Average


Net


Net


Average


Net


NetEarning


Interest


Interest


Earning


Interest


InterestAssets


Income


Margin


Assets


Income


Margin(Dollars in millions)By Segment:Thrift segment and other

$
14,946


$
227



2.03
%

$
12,170


$
195



2.14
%Mortgage banking segment


9,788



167



2.28
%


6,819



120



2.35
%Total Company

$
24,734


$
394



2.13
%

$
18,989


$
315



2.22
%   10-year
    Increase/(Decrease) Due toVolume(1)


Rate(2)


Mix(3)


Total Change(Dollars in thousands)Three Months Ended
    September 30, 2006 vs. 2005Interest income:Mortgage-backed securities

$
19,062


$
10,664


$
3,862


$
33,588Loans held for sale


24,454



38,942



7,559



70,955Mortgage loans held for investment


8,490



15,032



1,917



25,439Builder construction and income
    property


5,113



3,272



925



9,310Consumer construction


5,104



5,236



1,307



11,647Investment in Federal Home
    Loan Bank stock and other


457



3,381



191



4,029Total interest income


62,680



76,527



15,761



154,968Interest expense:Interest-bearing deposits


26,528



23,195



11,774



61,497Advances from Federal Home
    Loan Bank


6,127



30,319



2,416



38,862Other borrowings


10,304



17,836



2,577



30,717Total interest expense


42,959



71,350



16,767



131,076Net interest income

$
19,721


$
5,177


$
(1,006
)

$
23,892Nine Months Ended
    September 30, 2006 vs. 2005Interest income:Mortgage-backed securities

$
39,473


$
33,779


$
8,792


$
82,044Loans held for sale


133,408



85,934



39,114



258,456Mortgage loans held for investment


29,176



39,159



6,148



74,483Builder construction and income
    property


15,799



8,625



2,922



27,346Consumer construction


12,842



10,409



2,261



25,512Investment in Federal Home
    Loan Bank stock and other


2,858



8,997



1,317



13,172Total interest income


233,556



186,903



60,554



481,013 47




---



##### Table of Contents



Increase/(Decrease) Due toVolume(1)


Rate(2)


Mix(3)


Total Change(Dollars in thousands)Interest expense:Interest-bearing deposits


59,839



60,979



27,544



148,362Advances from Federal Home
    Loan Bank


38,939



80,928



16,268



136,135Other borrowings


52,843



44,768



20,142



117,753Total interest expense


151,621



186,675



63,954



402,250Net interest income

$
81,935


$
228


$
(3,400
)

$
78,763     (1)
    
    Changes in volume are calculated by taking changes in average
    outstanding balances multiplied by the prior periods rate.(2)
    
    Changes in the rate are calculated by taking changes in the
    average interest rate multiplied by the prior periods
    volume.(3)
    
    Changes in rate/volume (mix) are calculated by
    taking changes in rates times the changes in volume. INTEREST
    RATE SENSITIVITY      September 30, 2006


December 31, 2005Effect of Change in





Effect of Change inInterest Rates





Interest RatesFair


Decrease


Increase





Decrease


IncreaseValue


100 bps


100 bps


Fair Value


100 bps


100 bps(Dollars in thousands)Cash and cash equivalents

$
520,281


$
520,281


$
520,281


$
442,059


$
442,059


$
442,059Trading securities


525,235



554,541



515,428



342,545



348,982



323,577Available for sale securities


3,550,483



3,615,966



3,454,607



2,680,955



2,727,144



2,613,690Loans held for sale


8,388,857



8,466,224



8,277,630



6,057,556



6,111,131



5,972,194Loans held for investment


10,034,597



10,097,319



9,927,328



8,213,754



8,279,424



8,119,628MSRs


1,631,316



1,269,914



1,892,303



1,114,630



930,932



1,239,189Other assets


1,775,749



2,030,785



1,636,356



1,372,896



1,436,900



1,391,549Total assets

$
26,426,518


$
26,555,030


$
26,223,933


$
20,224,395


$
20,276,572


$
20,101,886Deposits

$
10,126,232


$
10,171,064


$
10,082,405


$
7,629,227


$
7,665,078


$
7,594,015Advances from Federal Home Loan Bank


9,328,093



9,417,285



9,239,242



6,966,946



6,993,439



6,940,884Other borrowings


3,315,142



3,316,516



3,313,771



2,990,570



2,992,630



2,988,513Other liabilities


683,146



683,146



683,146



433,995



434,287



433,705Total liabilities


23,452,613



23,588,011



23,318,564



18,020,738



18,085,434



17,957,117Shareholders equity (NPV)

$
2,973,905


$
2,967,019


$
2,905,369


$
2,203,657


$
2,191,138


$
2,144,769% Change from base case






(0.23
)%


(2.30
)%






(0.57
)%


(2.67
)%  48




---



##### Table of Contents



49




---



##### Table of Contents



CREDIT
    RISK AND RESERVES    TotalReservesas





QTD


YTDa





Net


NetAllowance





Percentage





Charge


ChargeFor





of


Non-


Offs/Net


Offs/NetLoan


Credit


Book


Performing


REO


REOType of Loan

Book Value


Losses


Discounts(1)


Value


Assets


(Gains)


(Gains)(Dollars in thousands)Held for sale
    portfolio

$
8,361,627






$
20,705



0.25
%

$
42,717


$



$
Held for investment
    portfolioSFR mortgage loans and HELOCs


6,453,348


$
23,324







0.36
%


56,256



1,114



1,692Land and other mortgage loans


366,984



6,188







1.69
%


5,810







Builder construction and income
    property loans


1,018,891



14,906







1.46
%


3,462



108



303Consumer construction loans


1,985,738



10,541







0.53
%


9,421



427



1,471Revolving warehouse lines of credit


166,948



206







0.12
%










Total core held for investment loans


9,991,909



55,165







0.55
%


74,949



1,649



3,466Discontinued product lines(2)


38,077



5,870







15.42
%


3,882



216



1,707Total held for investment portfolio


10,029,986


$
61,035







0.61
%


78,831



1,865



5,173Total loans

$
18,391,613














$
121,548


$
1,865


$
5,173Foreclosed assetsCore portfolios

$
17,870


$
(1,234
)

$
(2,816
)Discontinued product lines


628



7



10Total foreclosed assets

$
18,498


$
(1,227
)

$
(2,806
)Total non-performing assets

$
140,046Total non-performing assets as a
    percentage of total assets


0.51
%     (1)
    
    The amount represents the lower of cost or market adjustments on
    non-performing loans in the held for sale portfolio.(2)
    
    Discontinued product lines include manufactured home loans and
    home improvement loans, which were discontinued in 1999. 50




---



##### Table of Contents



September 30,


September 30,


December 31,2006


2005


2005(Dollars in thousands)Loans held for sale before market
    valuation reserves

$
63,422


$
25,292


$
31,050Mark valuation reserves


(20,705
)


(7,832
)


(10,245
)Net non-performing loans held for
    sale


42,717



17,460



20,805Loans held for investment:Portfolio loansSFR mortgage loans

$
56,256


$
25,983


$
28,335Land and other mortgage loans


5,810







197Builder construction and income
    property loans


3,462



4,162



430Consumer construction loans


9,421



8,183



8,819Total portfolio non-performing
    loans


74,949



38,328



37,781Discontinued product lines


3,882



5,318



5,623Total non-performing loans held
    for investment

$
78,831


$
43,646


$
43,404Total non-performing loans


121,548



61,106



64,209Foreclosed assets


18,498



9,217



8,817Total non-performing assets

$
140,046


$
70,323


$
73,026Allowance for loan losses to
    non-performing loans held for investment


77
%


127
%


127
%Total non-performing assets to
    total assets


0.51
%


0.36
%


0.34
%     Three Months Ended


Nine Months EndedSeptember 30,


September 30,


September 30,


September 30,2006


2005


2006


2005(Dollars in thousands)Balance, beginning of period

$
57,912


$
54,069


$
55,168


$
52,891Provision for loan losses


4,988



3,528



11,040



8,425Charge-offs net of recoveries:SFR mortgage loans


(1,114
)


(145
)


(1,692
)


(1,220
)Land and other mortgage loans






(127
)






(168
)Builder construction


(108
)






(303
)


(72
)Consumer construction


(427
)


(567
)


(1,471
)


(1,437
)Discontinued product lines


(216
)


(1,225
)


(1,707
)


(2,886
)Charge-offs net of recoveries


(1,865
)


(2,064
)


(5,173
)


(5,783
)Balance, end of period

$
61,035


$
55,533


$
61,035


$
55,533Annualized charge-offs to average
    loans held for investment


0.08
%


0.11
%


0.08
%


0.11
%Charge-offs to quarterly production


0.01
%


0.01
%


0.01
%


0.01
%    51




---



##### Table of Contents



SECONDARY
    MARKET RESERVE
   52




---



##### Table of Contents



Nine Months EndedSeptember 30,


September 30,2006


2005(Dollars in millions)Loans sold:GSEs and whole loans

$
32,227


$
12,520Securitization trusts


23,405



24,207Total

$
55,632


$
36,727Total repurchases(1)

$
102


$
94Repurchase as a percentage of
    total loans sold during the period


0.18
%


0.26
%Repurchase losses to loans sold
    during the period


0.023
%


0.035
%     (1)
    
    Amounts exclude repurchases that are administrative in nature
    and generally are re-sold immediately at little or no loss.      Three


NineMonths


Months(Dollars in thousands)Balance, beginning of period

$
35,402


$
27,638Additions/provisions


9,374



24,147Actual
    losses/mark-to-market


(14,639
)


(22,423
)Recoveries on previous claims


53



828Balance, September 30, 2006

$
30,190


$
30,190Secondary market reserve to loans
    sold  UPB outstanding(1)


0.028
%


0.028
%     (1)
    
    Loans sold  UPB outstanding represents current
    outstanding principal balances on loans sold after
    January 1, 2004, excluding HELOCs and reverse mortgages.   53




---



##### Table of Contents



EXPENSES  GENERAL
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,


June 30,


September 30,


September 30,2006


2005


2006


2006


2005(Dollars in thousands)Salaries and related

$
177,564


$
142,352


$
179,280


$
509,402


$
407,796Premises and equipment


19,955



14,010



20,113



57,039



40,133Loan purchase and servicing costs


14,246



10,779



13,149



40,301



31,026Professional services


8,263



7,759



8,158



24,529



20,917Data processing


16,831



11,142



15,758



46,864



32,491Office and related


17,423



13,098



17,602



50,120



35,954Advertising and promotion


10,742



11,648



12,409



34,368



33,406Operations and sale of foreclosed
    assets


557



1,227



385



1,484



1,939Litigation settlement


















9,000Other


3,315



2,634



3,005



9,640



7,683Deferral of expenses under
    SFAS 91


(66,198
)


(60,789
)


(66,175
)


(195,599
)


(165,124
)Total operating expenses


202,698



153,860



203,684



578,148



455,221Amortization of other intangible
    assets


430



145



130



694



452Total expenses

$
203,128


$
154,005


$
203,814


$
578,842


$
455,673        54




---



##### Table of Contents



SHARE
    REPURCHASE ACTIVITIES    MaximumApproximateTotal Number of


Dollar ValueTotal





Shares Purchased


(in millions) of SharesNumber of


Weighted


as Part of Publicly


that May Yet BeShares


Average Price


Announced Plans or


Purchased Under theCalendar Month:

Purchased(1)


Paid per Share


Programs


Plans or Programs(2)July 2006


119


$
43.64






$
63.6August 2006


399



41.84







63.6September 2006


809



41.01







63.6Total


1,327


$
41.50



     (1)
    
    All shares purchased during the periods indicated represent
    withholding of a portion of shares to cover taxes in connection
    with vesting of restricted stocks or exercise of stock options.(2)
    
    Our Board of Directors previously approved a $500 million
    share repurchase program. Since its inception in 1999, we have
    repurchased a total of 28.0 million shares through this
    program. FUTURE
    OUTLOOK        This Future Outlook section contains certain
    forward-looking statements. See the section of this
    Form 10-Q
    entitled Forward-Looking Statements for a
    description of factors which may cause our actual results to
    differ from those anticipated.
 LIQUIDITY
    AND CAPITAL RESOURCES  OVERVIEW
   55




---



##### Table of Contents



PRINCIPAL
    SOURCES OF CASH
  Loan
    Sales and Securitizations
      Advances
    from Federal Home Loan Bank
        Deposits/Retail
    Bank
  www.indymacbank.com accounts 24-hours
 56




---



##### Table of Contents



September 30,


September 30,


December 31,2006


2005


2005Deposit Category

Amount


Rate


Amount


Rate


Amount


Rate(Dollars in thousands)Non-interest-bearing checking

$
71,013



0.0
%

$
64,079



0.0
%

$
63,308



0.0
%Interest-bearing checking


51,333



1.2
%


55,021



1.3
%


55,479



1.3
%Savings


1,696,859



4.9
%


1,219,710



3.1
%


1,194,963



3.6
%Custodial accounts


651,421



0.0
%


658,958



0.0
%


493,936



0.0
%Total core deposits


2,470,626



3.4
%


1,997,768



1.9
%


1,807,686



2.4
%Certificates of deposit


7,640,393



5.0
%


5,263,182



3.6
%


5,864,238



4.0
%Total deposits

$
10,111,019



4.6
%

$
7,260,950



3.1
%

$
7,671,924



3.6
%   % of





% of





% ofTotal





Total





TotalDeposit Channel

Amount


Deposits


Amount


Deposits


Amount


DepositsBranch

$
4,729,699



47
%

$
3,059,462



42
%

$
3,322,752



43
%Internet


1,121,653



11
%


714,837



10
%


798,518



10
%Telebanking


1,249,974



12
%


835,145



12
%


934,572



12
%Money desk


2,358,272



23
%


1,992,548



27
%


2,122,146



28
%Custodial


651,421



7
%


658,958



9
%


493,936



7
%Total deposits

$
10,111,019



100
%

$
7,260,950



100
%

$
7,671,924



100
%   Trust Preferred
    Securities and Warrants
  and/or
    Face Amount


Interest Rate(Dollars in thousands)September 2006

$
38,000



6.96
%June 2006


90,000



7.35
%December 2005


90,000



6.31
%December 2004


30,000



5.83
%December 2003


30,000



6.30
%July 2003


30,000



6.05
%  57




---



##### Table of Contents



3-month
  Consolidation of Variable Interest Entities, an
    Interpretation of Accounting Research Bulletin (ARB)
    No. 51,
  Other
    Borrowings, Excluding Subordinated Debentures Underlying
    Trust Preferred Securities
    P-1 A-1+
  and/or
  Direct
    Stock Purchase Plan
    PRINCIPAL
    USES OF CASH
   58




---



##### Table of Contents



REGULATORY
    CAPITAL REQUIREMENTS
          Adjusted forAs Reported


Additional SubprimePre-Subprime Risk-Weighting


Risk-Weighting


Well-Capitalized MinimumCapital Ratios:Tier 1 core


7.60
%


7.60
%


5.00
%Tier 1 risk-based


11.31
%


11.24
%


6.00
%Total risk-based


11.70
%


11.62
%


10.00
%    OFF-BALANCE
    SHEET ARRANGEMENTS     59




---



##### Table of Contents



AGGREGATE
    CONTRACTUAL OBLIGATIONS  10-K. 10-K
 CRITICAL
    ACCOUNTING POLICIES AND JUDGMENTS  and/or
   REGULATORY
    UPDATES   60




---



##### Table of Contents



construction-to-permanent
  ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   61




---



##### Table of Contents



ITEM 1.
    FINANCIAL
    STATEMENTS  INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  September 30,


December 31,2006


2005(Unaudited)(Dollars in thousands)ASSETSCash and cash equivalents

$
521,428


$
442,525Securities classified as trading
    ($142.4 million and $96.8 million pledged as
    collateral for borrowings at September 30, 2006 and
    December 31, 2005, respectively)


527,579



348,962Securities classified as available
    for sale, amortized cost of $4.4 billion and
    $3.8 billion at September 30, 2006 and
    December 31, 2005, respectively ($3.5 billion and
    $2.7 billion pledged as collateral for borrowings at
    September 30, 2006 and December 31, 2005, respectively)


4,422,480



3,753,195Loans receivable:Loans held for saleSFR mortgage


7,579,265



5,170,168HELOC


736,945



755,040Consumer lot loans


24,712



98,976Total loans held for sale


8,340,922



6,024,184Loans held for investmentSFR mortgage


6,462,610



5,441,521Consumer construction


1,985,738



1,656,963Builder construction


1,018,891



838,772HELOC


28,815



31,882Land and other mortgage


366,984



260,615Revolving warehouse lines of credit


166,948



48,616Allowance for loan losses


(61,035
)


(55,168
)Total loans held for investment


9,968,951



8,223,201Total loans receivable
    ($13.1 billion and $10.2 billion pledged as collateral
    for borrowings at September 30, 2006 and December 31,
    2005, respectively)


18,309,873



14,247,385Mortgage servicing rights


1,631,316



1,094,490Investment in Federal Home
    Loan Bank stock


636,650



556,262Interest receivable


207,868



131,644Goodwill and other intangible
    assets


113,037



80,847Foreclosed assets


18,498



8,817Other assets


996,754



788,172Total assets

$
27,385,483


$
21,452,299  62




---



##### Table of Contents



INDYMAC BANCORP, INC. AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS  (Continued)
  September 30,


December 31,2006


2005(Unaudited)(Dollars in thousands)LIABILITIES AND
    SHAREHOLDERS EQUITYDeposits

$
10,111,019


$
7,671,924Advances from Federal Home
    Loan Bank


9,332,800



6,953,000Other borrowings


4,594,920



4,367,270Other liabilities


1,408,912



916,664Total liabilities


25,447,651



19,908,858Shareholders EquityPreferred 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 100,100,243 shares (70,858,660 outstanding) at
    September 30, 2006, and issued 93,436,622 shares
    (64,246,767 outstanding) at December 31, 2005


1,001



934Additional
    paid-in-capital


1,533,528



1,318,751Accumulated other comprehensive
    loss


(21,377
)


(15,157
)Retained earnings


947,158



759,330Treasury stock,
    29,241,583 shares and 29,189,855 shares at
    September 30, 2006 and December 31, 2005, respectively


(522,478
)


(520,417
)Total shareholders equity


1,937,832



1,543,441Total liabilities and
    shareholders equity

$
27,385,483


$
21,452,299    63




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF EARNINGS
  For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,2006


2005


2006


2005(Unaudited)(Dollars in thousands, except per share data)Interest incomeMortgage-backed and other securities

$
86,212


$
52,624


$
233,693


$
151,649Loans held for saleSFR mortgage


172,898



114,267



485,940



264,939HELOC


21,888



9,288



58,548



21,642Consumer lot loans


2,138



2,414



7,076



6,527Total loans held for sale


196,924



125,969



551,564



293,108Loans held for investmentSFR mortgage


80,623



60,906



230,271



171,508Consumer construction


32,087



20,440



84,609



59,097Builder construction


27,396



18,086



73,960



46,614Land and other mortgage


8,211



4,651



23,003



11,982HELOC


622



535



1,863



1,659Revolving warehouse lines of credit


2,549



474



5,139



644Total loans held for investment


151,488



105,092



418,845



291,504Other


12,127



8,098



32,706



19,534Total interest income


446,751



291,783



1,236,808



755,795Interest expenseDeposits


113,758



52,261



280,841



132,479Advances from Federal Home
    Loan Bank


115,769



76,907



329,846



193,711Other borrowings


80,513



49,796



232,046



114,293Total interest expense


310,040



178,964



842,733



440,483Net interest income


136,711



112,819



394,075



315,312Provision for loan
    losses


4,988



3,528



11,040



8,425Net interest income after provision
    for loan losses


131,723



109,291



383,035



306,887Other incomeGain on sale of loans


160,225



151,086



503,083



454,785Service fee income


21,058



10,304



79,194



25,521Gain on mortgage-backed securities,
    net


18,968



728



24,611



11,933Fee and other income


13,600



11,285



37,276



25,588Total other income


213,851



173,403



644,164



517,827Net revenues


345,574



282,694



1,027,199



824,714Other expenseOperating expenses


202,698



153,860



578,148



455,221Amortization of other intangible
    assets


430



145



694



452Total other expense


203,128



154,005



578,842



455,673Earnings before provision for
    income taxes and minority interests


142,446



128,689



448,357



369,041Provision for income taxes


56,266



50,746



176,545



145,343Net earnings before minority
    interests


86,180



77,943



271,812



223,698Minority interests






417



1,124



1,008Net earnings

$
86,180


$
77,526


$
270,688


$
222,690Earnings per share:Basic

$
1.25


$
1.23


$
4.07


$
3.57Diluted

$
1.19


$
1.16


$
3.87


$
3.38Weighted-average shares
    outstanding:Basic


68,866



63,268



66,570



62,460Diluted


72,286



67,100



70,009



65,908Dividends declared per
    share

$
0.48


$
0.40


$
1.38


$
1.14    64




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE
    INCOME
  AccumulatedAdditional


Other





Total





TotalShares


Common


Paid-In-


Comprehensive


Retained


Comprehensive


Treasury


ShareholdersOutstanding


Stock


Capital


Loss


Earnings


Income


Stock


Equity(Unaudited)(Dollars in thousands)Balance at December 31,
    2004


61,995,480


$
912


$
1,186,682


$
(20,304
)

$
616,516


$



$
(519,835
)

$
1,263,971Cumulative-effect adjustment due to
    change in accounting for common stock options










68,111







(51,811
)










16,300Balance at December 31,
    2004, retrospectively adjusted (see Note 2)


61,995,480



912



1,254,793



(20,304
)


564,705







(519,835
)


1,280,271Exercises of common stock options


1,800,610



18



42,727



















42,745Exercises of warrants


138,794



1



3,035



















3,036Compensation expenses for common
    stock options










9,211



















9,211Net officers notes receivable
    payments










25



















25Deferred compensation, restricted
    stock, and amortization net of forfeitures


265,450



3



3,872



















3,875Net unrealized loss on
    mortgage-backed securities available for sale














(11,688
)






(11,688
)






(11,688
)Net unrealized gain on derivatives
    used in cash flow hedges














18,833







18,833







18,833Purchases of common stock


(16,352
)






















(579
)


(579
)Cash dividends


















(71,786
)










(71,786
)Net earnings, retrospectively
    adjusted (see Note 2)


















222,690



222,690







222,690Total comprehensive income





















$
229,835







Balance at September 30,
    2005, retrospectively adjusted


64,183,982


$
934


$
1,313,663


$
(13,159
)

$
715,609






$
(520,414
)

$
1,496,633Balance at December 31,
    2005


64,246,767


$
934


$
1,242,500


$
(15,157
)

$
818,241


$



$
(520,417
)

$
1,526,101Cumulative-effect adjustment due to
    change in accounting for common stock options










76,251







(58,911
)










17,340Balance at December 31,
    2005, retrospectively adjusted


64,246,767



934



1,318,751



(15,157
)


759,330







(520,417
)


1,543,441Cumulative-effect adjustment due to
    change in accounting for MSRs


















10,624











10,624Issuance of common stock


2,969,165



30



123,696



















123,726Exercises of common stock options


800,993



8



21,807



















21,815Exercises of warrants


2,466,974



25



54,125



















54,150Compensation expenses for common
    stock options










7,386



















7,386Net officers notes receivable
    payments










100



















100Deferred compensation, restricted
    stock, and amortization net of forfeitures


426,489



4



7,663



















7,667Net unrealized gain on
    mortgage-backed securities available for sale














7,816







7,816







7,816Net unrealized loss on derivatives
    used in cash flow hedges














(14,036
)






(14,036
)






(14,036
)Purchases of common stock


(51,728
)






















(2,061
)


(2,061
)Cash dividends


















(93,484
)










(93,484
)Net earnings


















270,688



270,688







270,688Total comprehensive income





















$
264,468







Balance at September 30,
    2006


70,858,660


$
1,001


$
1,533,528


$
(21,377
)

$
947,158






$
(522,478
)

$
1,937,832    65




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Nine MonthsEnded September 30,2006


2005(Unaudited)(Dollars in thousands)Cash flows from operating
    activities:Net earnings

$
270,688


$
222,690Adjustments to reconcile net
    earnings to net cash used in operating activities:Gain on sale of loans


(503,083
)


(454,785
)Compensation expenses related to
    stock options and restricted stocks


15,053



13,086Other amortization and depreciation


54,240



38,916Change in valuation of mortgage
    servicing rights, including amortization


243,339



184,384Gain on mortgage-backed securities,
    net


(24,611
)


(11,933
)Provision for loan losses


11,040



8,425Net increase in deferred tax
    liability


186,127



113,585Net decrease (increase) in other
    assets and liabilities


38,742



(10,732
)Net cash provided by operating
    activities before activity for trading securities and loans held
    for sale


291,535



103,636Net sales of trading securities


245,560



74,550Net purchases and originations of
    loans held for sale


(5,933,894
)


(3,177,009
)Net cash used in operating
    activities


(5,396,799
)


(2,998,823
)Cash flows from investing
    activities:Net sales of and payments from
    loans held for investment


463,732



763,209Purchases of mortgage-backed
    securities available for sale


(570,884
)


(602,285
)Proceeds from sales of and
    principal payments from mortgage-backed securities available for
    sale


652,610



660,467Net increase in investment in
    Federal Home Loan Bank stock, at cost


(80,388
)


(148,140
)Net decrease (increase) in real
    estate investment


7,483



(27,495
)Net purchases of property, plant
    and equipment


(74,465
)


(63,082
)Purchase of Financial Freedom
    minority interest


(40,000
)


Net cash provided by investing
    activities


358,088



582,674Cash flows from financing
    activities:Net increase in deposits


2,436,235



1,515,565Net increase in advances from
    Federal Home Loan Bank


2,379,800



459,000Net increase in borrowings


97,920



419,991Net proceeds from issuance of
    common stock


123,726



Net proceeds from issuance of trust
    preferred securities


128,000



Redemption of trust preferred
    securities


(28,587
)


Net proceeds from stock options,
    warrants and notes receivable


76,065



45,806Cash dividends paid


(93,484
)


(71,786
)Purchases of common stock


(2,061
)


(579
)Net cash provided by financing
    activities


5,117,614



2,367,997Net increase (decrease) in cash and
    cash equivalents


78,903



(48,152
)Cash and cash equivalents at
    beginning of period


442,525



356,157Cash and cash equivalents at end of
    period

$
521,428


$
308,005Supplemental cash flow
    information:Cash paid for interest

$
779,203


$
394,625Cash (received) paid for income
    taxes

$
(48,685
)

$
69,935Supplemental disclosure of
    non-cash investing and financing activities:Net transfer of loans held for sale
    to loans held for investment

$
2,258,617


$
2,032,052Net transfer of mortgage servicing
    rights to trading securities

$
2,601


$
8,491    66




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2006
    (Unaudited)
  NOTE 1 
    BASIS OF PRESENTATION
    Business
    Combination.
  10-K.
  NOTE 2 
    NEWLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS
  Share-Based Payment Accounting for Stock-Based
    Compensation Accounting for Stock Issued to Employees,
  Q1 2005


Q2 2005


Q3 2005


Q4 2005


YTD 2005(In thousands, except per share data)Reported net earnings

$
65,476


$
83,146


$
79,275


$
72,329


$
300,226Retrospective application of
    SFAS No. 123(R)


2,026



1,432



1,749



1,891



7,098Adjusted net earnings

$
63,450


$
81,714


$
77,526


$
70,438


$
293,128Adjusted average dilutive shares


64,830



65,793



67,100



66,737



66,115Reported dilutive earnings per
    share

$
1.01


$
1.26


$
1.18


$
1.09


$
4.54Adjusted dilutive earnings per
    share

$
0.98


$
1.24


$
1.16


$
1.06


$
4.43    67




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounting for Certain Hybrid Financial
    Instruments
  Determining the Variability to be
    Considered in Applying FASB Interpretation
    No. 46(R)
  Issue 06-2, Accounting for Sabbatical Leave and Other Similar
    Benefits, Accounting for Compensated Absences (EITF 06-2). EITF 06-2 Accounting Changes and Error
    Corrections,
  Accounting for Uncertainty in Income Taxes Accounting for Income Taxes.
  Fair Value Measurements
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans
 68




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      NOTE 3 
    MORTGAGE-BACKED SECURITIES AND AGENCY NOTES
    September 30,


December 31,2006


2005(Dollars in thousands)Mortgage-backed
    securities  TradingAAA-rated non-agency securities

$
33,829


$
52,633AAA-rated and agency interest-only
    securities


68,440



78,731AAA-rated principal-only securities


35,158



9,483Prepayment penalty securities


98,422



75,741Other investment grade securities


29,906



8,830Other non-investment grade
    securities


38,999



4,480Non-investment grade residual
    securities


222,825



119,064Total mortgage-backed
    securities  Trading

$
527,579


$
348,962Mortgage-backed securities and
    agency notes  Available for saleAAA-rated non-agency securities

$
4,130,995


$
3,524,952AAA-rated agency securities


50,084



43,014Other investment grade securities


163,289



83,290Other non-investment grade
    securities


39,279



53,232Non-investment grade residual
    securities


38,833



48,707Total mortgage-backed securities
    and agency notes  Available for sale

$
4,422,480


$
3,753,195  69




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    As of September 30, 2006Less Than 12 Months


12 Months or Greater


TotalUnrealized





Unrealized





UnrealizedLosses


Fair Value


Losses


Fair Value


Losses


Fair Value(Dollars in thousands)Securities  Available
    for Sale:AAA-rated agency securities

$
(308
)

$
32,069


$
(5
)

$
184


$
(313
)

$
32,253AAA-rated non-agency securities


(177
)


129,915



(40,660
)


1,740,227



(40,837
)


1,870,142Other investment grade securities


(412
)


20,017



(2,049
)


26,749



(2,461
)


46,766Total Securities 
    Available for Sale

$
(897
)

$
182,001


$
(42,714
)

$
1,767,160


$
(43,611
)

$
1,949,161     NOTE 4 
    SEGMENT REPORTING
      Mortgage BankingMSRs andProduction


Retained








TotalDivisions


Assets


Thrift


Other


Company(Dollars in thousands)Three months ended
    September 30, 2006Net interest income

$
41,218


$
17,429


$
67,185


$
10,879


$
136,711Net revenues (expense)


204,391



65,653



84,842



(9,312
)


345,574Net earnings (loss)


68,635



30,404



35,232



(48,091
)


86,180Allocated average capital


509,136



401,545



687,962



272,736



1,871,379Assets as of September 30,
    2006

$
7,687,438


$
2,797,416


$
15,952,532


$
948,097


$
27,385,483Return on equity


53
%


30
%


20
%


N/A



18
%Three months ended
    September 30, 2005Net interest income

$
34,695


$
11,242


$
60,076


$
6,806


$
112,819Net revenues (expense)


175,465



25,021



81,866



342



282,694Net earnings (loss)


64,817



9,564



36,239



(33,094
)


77,526Allocated average capital


415,031



189,744



546,094



264,492



1,415,361Assets as of September 30,
    2005

$
4,618,997


$
1,559,104


$
12,359,345


$
1,090,298


$
19,627,744Return on equity


62
%


20
%


26
%


N/A



22
% 70




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Mortgage BankingMSRs andProduction


Retained








TotalDivisions


Assets


Thrift


Other


Company(Dollars in thousands)Nine months ended
    September 30, 2006Net interest income

$
122,119


$
44,739


$
202,152


$
25,065


$
394,075Net revenues (expense)


621,018



158,376



263,532



(15,727
)


1,027,199Net earnings (loss)


217,969



72,650



112,163



(132,094
)


270,688Allocated average capital


513,941



350,293



665,017



208,934



1,738,185Assets as of September 30,
    2006

$
7,687,438


$
2,797,416


$
15,952,532


$
948,097


$
27,385,483Return on equity


57
%


28
%


23
%


N/A



21
%Nine months ended
    September 30, 2005Net interest income

$
83,810


$
36,262


$
172,000


$
23,240


$
315,312Net revenues (expense)


549,896



66,172



230,446



(21,800
)


824,714Net earnings (loss)


207,970



25,304



102,761



(113,345
)


222,690Allocated average capital


337,572



183,162



505,144



315,063



1,340,941Assets as of September 30,
    2005

$
4,618,997


$
1,559,104


$
12,359,345


$
1,090,298


$
19,627,744Return on equity


82
%


18
%


27
%


N/A



22
%   NOTE 5 
    STOCK-BASED COMPENSATION
        Share-Based Payment
 71




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2006


2005Expected volatility


28.11-28.44
%


27.55-29.42
%Expected dividends


4.00-4.60
%


3.52-4.07
%Weighted average expected term (in
    years)


6.89-7.34



5.00Risk-free rate


4.54-4.73
%


4.16-4.54
%       WeightedWeighted-


AverageAverage


RemainingExercise


Contractual


AggregateOptions:

Shares


Price


Term


Fair Value(In thousands)Options outstanding at
    June 30, 2006


7,969,272


$
26.37Options granted






Options exercised


(157,440
)


25.15Options canceled, forfeited and
    expired


(29,293
)


35.94Options outstanding at
    September 30, 2006


7,782,539


$
26.36



6.04


$
59,132Options exercisable at
    September 30, 2006


5,724,701


$
23.74



5.29


$
42,504   72




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  WeightedWeighted-


AverageAverage


RemainingExercise


Contractual


AggregateOptions:

Shares


Price


Term


Fair Value(In thousands)Options outstanding at
    December 31, 2005


7,851,820


$
24.82Options granted


788,140



39.11Options exercised


(797,584
)


23.06Options canceled, forfeited and
    expired


(59,837
)


36.13Options outstanding at
    September 30, 2006


7,782,539


$
26.36



6.04


$
59,132Options exercisable at
    September 30, 2006


5,724,701


$
23.74



5.29


$
42,504       Weighted-AverageGrant-DateFair ValueNonvested Options:

Shares


per ShareNonvested at December 31, 2005


2,660,324


$
7.54Granted


788,140



9.13Vested


(1,333,933
)


7.62Canceled, forfeited and expired


(56,693
)


8.19Nonvested at September 30,
    2006


2,057,838


$
8.08        73




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-AverageGrant-DateFair ValueRestricted Stock:

Shares


per ShareNonvested at June 30, 2006


799,861


$
38.05Granted


68,622



41.81Vested


(5,253
)


24.43Canceled and forfeited


(22,937
)


38.51Nonvested at September 30,
    2006


840,293


$
38.53   Weighted-AverageGrant-DateFair ValueRestricted Stock:

Shares


per ShareNonvested at December 31, 2005


582,401


$
32.59Granted


485,671



40.32Vested


(170,175
)


24.20Canceled and forfeited


(57,604
)


37.89Nonvested at September 30,
    2006


840,293


$
38.53   NOTE 6 
    DEFINED BENEFIT PENSION PLAN NET PERIODIC COST
      Three Months


Nine MonthsEnded September 30,


Ended September 30,2006


2005


2006


2005(Dollars in thousands)Service cost

$
1,575


$
1,486


$
4,725


$
4,458Interest cost


568



453



1,704



1,359Expected return on assets


(582
)


(440
)


(1,746
)


(1,320
)Recognized actuarial loss


81



85



243



255Amortization of prior service cost


14



14



42



42Net periodic expense

$
1,656


$
1,598


$
4,968


$
4,794  74




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three MonthsEnded September 30,2006


2005Assumed discount rate


6.00
%


6.00
%Rate of compensation increase


4.00
%


4.00
%Expected return on assets


7.50
%


7.50
%   10-K
  NOTE 7 
    LEGAL MATTERS
  Accounting for
    Contingencies
  NOTE 8 
    SUBSEQUENT EVENTS
   75




---



##### Table of Contents



ITEM 4.CONTROLS
    AND PROCEDURES  Rules 13a-15 15d-15 Form 10-Q
   PART II.  OTHER
    INFORMATION ITEM 1.  LEGAL
    PROCEEDINGS  Accounting for
    Contingencies
  ITEM 1A.
    RISK
    FACTORS  Form 10-Q
  ITEM 2.
    UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS    ITEM 5.
    OTHER
    INFORMATION   76




---



##### Table of Contents



ITEM 6.
    EXHIBITS  4.1

2000 Stock Incentive Plan, as
    amended.4.2

2002 Incentive Plan, as amended
    and restated, as amended.10.1

Board Compensation Policy and
    Stock Ownership Requirements.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.  77




---



##### Table of Contents



SIGNATURE
    Indymac Bancorp, Inc.
  By:
    /s/  Michael
    W. Perry   Chairman of the Board of Directors
 and Chief Executive Officer
  By:
    /s/  Scott
    Keys  Scott Keys
 Executive Vice President
 and Chief Financial Officer
 78