##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




---

Form 10-Q

|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|  
|   |  | For the quarterly period ended June 30,
    2004                                            
|  
|or
|  
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to                                             

Commission file number 1-8972

IndyMac Bancorp, Inc.

(Exact name of registrant as specified in its
charter)


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

Registrants telephone number, including
area code:

(800) 669-2300


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

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

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

Common stock outstanding as of July 26,
2004: 61,246,075 shares



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FORM 10-Q QUARTERLY REPORT

For the Period Ended June 30,
2004


TABLE OF CONTENTS

|                                   |  |                                                                                           |  |      |    | 
|---------------------------------- |  | ----------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                   |  |                                                                                           |  | Page
|                                   |  |                                                                                           |  |     
|PART I.  FINANCIAL
    INFORMATION
|                                   |  | Forward-Looking
    Statements                                                            |  |      | 2  | 
|Item 2.                            |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations |  |      | 2  | 
|                                   |  | Highlights for the Three and
    Six Months Ended June 30, 2004                           |  |      | 2  | 
|                                   |  | Overall Results                                                                           |  |      | 5  | 
|                                   |  | Business Acquisition                                                                      |  |      | 5  | 
|                                   |  | Our Business                                                                              |  |      | 5  | 
|                                   |  | Mortgage Banking
    Activities                                                           |  |      | 20 | 
|                                   |  | Loan
    Production                                                                       |  |      | 20 | 
|                                   |  | Mortgage
    Production by Division and Channel                                           |  |      | 21 | 
|                                   |  | Loan
    Sales                                                                            |  |      | 26 | 
|                                   |  | Investing and
    HELOC Activities                                                        |  |      | 31 | 
|                                   |  | Investing
    Activities                                                                  |  |      | 32 | 
|                                   |  | Construction
    Lending                                                                  |  |      | 41 | 
|                                   |  | HELOC
    Portfolio                                                                       |  |      | 43 | 
|                                   |  | Net Interest Income                                                                       |  |      | 44 | 
|                                   |  | Overall Interest Rate Risk
    Management                                                 |  |      | 46 | 
|                                   |  | Credit Risk and Reserves                                                                  |  |      | 48 | 
|                                   |  | General                                                                                   |  |      | 48 | 
|                                   |  | Secondary Market
    Reserve                                                              |  |      | 51 | 
|                                   |  | Operating Expenses                                                                        |  |      | 52 | 
|                                   |  | Dividend Policy                                                                           |  |      | 52 | 
|                                   |  | Future Outlook                                                                            |  |      | 53 | 
|                                   |  | Liquidity and Capital
    Resources                                                       |  |      | 53 | 
|                                   |  | Overview                                                                                  |  |      | 53 | 
|                                   |  | Principal
    Sources of Cash                                                             |  |      | 54 | 
|                                   |  | Principal Uses
    of Cash                                                                |  |      | 56 | 
|                                   |  | Accumulated
    Other Comprehensive Loss                                                  |  |      | 56 | 
|                                   |  | Regulatory
    Capital Requirements                                                       |  |      | 56 | 
|                                   |  | Issuance of Common Stock                                                                  |  |      | 57 | 
|                                   |  | Share Repurchases                                                                         |  |      | 57 | 
|                                   |  | Off-Balance Sheet
    Arrangements                                                        |  |      | 58 | 
|                                   |  | Aggregate Contractual
    Obligations                                                     |  |      | 59 | 
|                                   |  | Key Operating Risks                                                                       |  |      | 60 | 
|                                   |  | Interest Rate
    Risk                                                                    |  |      | 60 | 
|                                   |  | Valuation
    Risk                                                                        |  |      | 60 | 
|                                   |  | Credit Risk                                                                               |  |      | 60 | 
|                                   |  | Liquidity Risk/
    Access to Capital Markets                                             |  |      | 61 | 
|                                   |  | Government
    Regulation and Monetary Policy                                             |  |      | 61 | 
|                                   |  | Competition                                                                               |  |      | 61 | 
|                                   |  | Other Risks                                                                               |  |      | 62 | 
|                                   |  | Critical Accounting
    Policies                                                          |  |      | 62 | 
|Item 3.                            |  | Quantitative and Qualitative
    Disclosure About Market Risk                             |  |      | 62 | 
|Item 1.                            |  | Financial Statements
    (Unaudited)                                                      |  |      | 63 | 
|                                   |  | Consolidated Balance
    Sheets                                                           |  |      | 63 | 
|                                   |  | Consolidated Statements of
    Earnings                                                   |  |      | 64 | 
|                                   |  | Consolidated Statements of
    Stockholders Equity and Comprehensive Income              |  |      | 65 | 
|                                   |  | Consolidated Statements of
    Cash Flows                                                 |  |      | 66 | 
|                                   |  | Notes to Consolidated
    Financial Statements                                            |  |      | 67 | 
|Item 4.                            |  | Controls and Procedures                                                                   |  |      | 72 | 
|PART II.  OTHER
    INFORMATION   
|Item 1.                            |  | Legal Proceedings                                                                         |  |      | 72 | 
|Item 4.                            |  | Submission of Matters to a
    Vote of Security Holders                                   |  |      | 72 | 
|Item 6.                            |  | Exhibits and Reports on
    Form 8-K                                                      |  |      | 73 | 
|EXHIBIT 4.1                       
|EXHIBIT 10.1                      
|EXHIBIT 31.1                      
|EXHIBIT 31.2                      
|EXHIBIT 32.1                      
|EXHIBIT 32.2                      



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##### Table of Contents






FORWARD-LOOKING STATEMENTS

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

References to IndyMac Bancorp or
the Parent Company refer to the parent company alone
while references to IndyMac, the
Company, or we refer to IndyMac Bancorp,
Inc. and its consolidated subsidiaries. References to
IndyMac Bank or the Bank refer to
our subsidiary IndyMac Bank, F.S.B. and its
consolidated subsidiaries. The following discussion addresses
the Companys financial condition and results of operations
for the three and six months ended June 30, 2004.






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




HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2004

On March 9, 2004, the Securities and
Exchange Commission (SEC) issued Staff Accounting
Bulletin No. 105, Application of Accounting
Principles to Loan Commitments (SAB
No. 105). In SAB No. 105, the SEC determined
that an interest rate lock commitment should generally be valued
at zero at inception. Profits inherent in the rate lock will be
recognized at the time of the sale of the underlying loan. The
Company adopted this standard effective April 1, 2004,
which affected the second quarter 2004 gain on sale of loans
with a one-time negative impact of $52.2 million
before-tax, or $31.6 million after-tax.

In the table below, in addition to the financial
information presented in accordance with generally accepted
accounting principles (GAAP), we have presented
certain pro forma non-GAAP financial measures that are marked
with footnote (1). These pro forma non-GAAP financial
measures are calculated based on the GAAP gain on sale of loans
but adjusted to exclude the effect of the SAB No. 105
change in accounting principle related to rate lock commitments
described above. We believe these pro forma non-GAAP financial
measures provide useful information to investors in evaluating
and comparing our financial condition and results of operations
on a consistent basis from period to period, and it is on this
basis that our management internally assesses our performance.
Further, while the calculation of segment measures for internal
performance evaluation remains unchanged, the effect of the
change in rate lock accounting has been reflected in two
separate columns of the segment table in the Our
Business section at page 5.

2



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##### Table of Contents



Although we believe these pro forma non-GAAP
financial measures are useful to the investors, they should not
be considered a substitute for, or superior to, GAAP results.

|                                                                                                                          |                                                         |                                              |   |                  |        |           |   |          |        |          |   |        |        |  |   |        |        |  |   |        |        | 
|------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | -------------------------------------------- | - | ---------------- | ------ | --------- | - | -------- | ------ | -------- | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                                                                                                          |                                                         |                                              |   |                 
|                                                                                                                          |                                                         | Three Months Ended                           |   | Six Months Ended
|                                                                                                                          |                                                         |                                              |   |                 
|                                                                                                                          |                                                         | June 30,                                     |   | June 30,         |        | March 31, |   | June 30, |        | June 30,
|                                                                                                                          |                                                         | 2004                                         |   | 2003             |        | 2004      |   | 2004     |        | 2003    
|                                                                                                                          |                                                         |                                              |   |                  |        |           |   |          |        |         
|                                                                                                                          |                                                         |                                             
|                                                                                                                          |                                                         | (Dollars in millions, except per share data)
|Income Statement                                                                                                          |                                                         |                                              |   |                  |        |           |   |          |        |          |   |        |        |  |   |        |        |  |   |       
|                                                                                                                          | Net interest income after provision for loan
    losses |                                              | $ | 104              |        |           | $ | 61       |        |          | $ | 92     |        |  | $ | 196    |        |  | $ | 121    |       
|                                                                                                                          | Gain on sale of loans                                   |                                              |   | 66               |        |           |   | 102      |        |          |   | 84     |        |  |   | 150    |        |  |   | 186    |       
|                                                                                                                          | Other (loss) income                                     |                                              |   | (11              | )      |           |   | 11       |        |          |   | 9      |        |  |   | (2     | )      |  |   | 24     |       
|                                                                                                                          | Net revenues                                            |                                              |   | 159              |        |           |   | 173      |        |          |   | 185    |        |  |   | 344    |        |  |   | 330    |       
|                                                                                                                          | Operating expenses                                      |                                              |   | 121              |        |           |   | 105      |        |          |   | 115    |        |  |   | 236    |        |  |   | 200    |       
|                                                                                                                          | Net earnings                                            |                                              |   | 23               |        |           |   | 41       |        |          |   | 42     |        |  |   | 65     |        |  |   | 78     |       
|                                                                                                                          | Basic earnings per share                                |                                              |   | 0.39             |        |           |   | 0.75     |        |          |   | 0.74   |        |  |   | 1.13   |        |  |   | 1.43   |       
|                                                                                                                          | Diluted earnings per share                              |                                              | $ | 0.38             |        |           | $ | 0.73     |        |          | $ | 0.70   |        |  | $ | 1.08   |        |  | $ | 1.39   |       
|Pro Forma Income Statement Items Excluding the
    Effect of the Change in Accounting Principle in the Current
    Period |                                                         |                                              |   |                  |        |           |   |          |        |          |   |        |        |  |   |        |        |  |   |       
|                                                                                                                          | Gain on sale of loans(1)                                |                                              | $ | 118              |        |           | $ | 102      |        |          | $ | 84     |        |  | $ | 202    |        |  | $ | 186    |       
|                                                                                                                          | Net revenues(1)                                         |                                              |   | 211              |        |           |   | 173      |        |          |   | 185    |        |  |   | 396    |        |  |   | 330    |       
|                                                                                                                          | Net earnings(1)                                         |                                              |   | 55               |        |           |   | 41       |        |          |   | 42     |        |  |   | 96     |        |  |   | 78     |       
|                                                                                                                          | Basic earnings per share(1)                             |                                              |   | 0.94             |        |           |   | 0.75     |        |          |   | 0.74   |        |  |   | 1.68   |        |  |   | 1.43   |       
|                                                                                                                          | Diluted earnings per share(1)                           |                                              | $ | 0.90             |        |           | $ | 0.73     |        |          | $ | 0.70   |        |  | $ | 1.60   |        |  | $ | 1.39   |       
|Other Per Share Data                                                                                                      |                                                         |                                              |   |                  |        |           |   |          |        |          |   |        |        |  |   |        |        |  |   |       
|                                                                                                                          | Dividends paid per share                                |                                              |   | 0.30             |        |           |   | 0.10     |        |          |   | 0.25   |        |  |   | 0.55   |        |  |   | 0.20   |       
|                                                                                                                          | Book value per share at end of quarter                  |                                              |   | 19.35            |        |           |   | 16.48    |        |          |   | 18.26  |        |  |   | 19.35  |        |  |   | 16.48  |       
|                                                                                                                          | Closing price per share                                 |                                              | $ | 31.60            |        |           | $ | 25.42    |        |          | $ | 36.29  |        |  | $ | 31.60  |        |  | $ | 25.42  |       
|                                                                                                                          | Average Common Shares (in thousands)                    |                                              |   |                  |        |           |   |          |        |          |   |        |        |  |   |        |        |  |   |        |       
|                                                                                                                          |                                                         | Basic                                        |   |                  | 58,137 |           |   |          | 55,015 |          |   |        | 56,997 |  |   |        | 57,548 |  |   |        | 54,922 | 
|                                                                                                                          |                                                         | Diluted                                      |   |                  | 60,588 |           |   |          | 56,711 |          |   |        | 59,791 |  |   |        | 60,180 |  |   |        | 56,345 | 
|Performance Ratios                                                                                                        |                                                         |                                              |   |                  |        |           |   |          |        |          |   |        |        |  |   |        |        |  |   |       
|                                                                                                                          | Return on average equity (annualized)(1)                |                                              |   | 19.46            | %      |           |   | 18.34    | %      |          |   | 16.16  | %      |  |   | 17.88  | %      |  |   | 17.79  | %     
|                                                                                                                          | Return on average assets (annualized)(1)                |                                              |   | 1.29             | %      |           |   | 1.52     | %      |          |   | 1.16   | %      |  |   | 1.23   | %      |  |   | 1.51   | %     
|                                                                                                                          | Dividend payout ratio(1,2)                              |                                              |   | 33.33            | %      |           |   | 13.70    | %      |          |   | 35.71  | %      |  |   | 34.38  | %      |  |   | 14.39  | %     
|                                                                                                                          | Net interest income to pretax income(1)                 |                                              |   | 118.65           | %      |           |   | 98.74    | %      |          |   | 135.53 | %      |  |   | 125.99 | %      |  |   | 100.88 | %     
|                                                                                                                          | Average cost of funds                                   |                                              |   | 2.29             | %      |           |   | 2.94     | %      |          |   | 2.32   | %      |  |   | 2.30   | %      |  |   | 3.07   | %     
|                                                                                                                          | Net interest margin                                     |                                              |   | 2.75             | %      |           |   | 2.73     | %      |          |   | 2.83   | %      |  |   | 2.78   | %      |  |   | 2.76   | %     
|                                                                                                                          | Efficiency ratio(1,3)                                   |                                              |   | 56               | %      |           |   | 58       | %      |          |   | 62     | %      |  |   | 59     | %      |  |   | 59     | %     
|                                                                                                                          | Capital to net revenue ratio(1,4)                       |                                              |   | 131              | %      |           |   | 125      | %      |          |   | 140    | %      |  |   | 135    | %      |  |   | 130    | %     
|                                                                                                                          | Capital adjusted efficiency ratio(1,5)                  |                                              |   | 74               | %      |           |   | 73       | %      |          |   | 87     | %      |  |   | 80     | %      |  |   | 77     | %     
|                                                                                                                          | Operating expenses to loan production                   |                                              |   | 1.24             | %      |           |   | 1.28     | %      |          |   | 1.61   | %      |  |   | 1.40   | %      |  |   | 1.36   | %     

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##### Table of Contents



|                                           |                                                                          |                                              |   |                  |   |           |   |          |   |          |   |        |   |  |   |        |   |  |   |        |  
|------------------------------------------ | ------------------------------------------------------------------------ | -------------------------------------------- | - | ---------------- | - | --------- | - | -------- | - | -------- | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                           |                                                                          |                                              |   |                 
|                                           |                                                                          | Three Months Ended                           |   | Six Months Ended
|                                           |                                                                          |                                              |   |                 
|                                           |                                                                          | June 30,                                     |   | June 30,         |   | March 31, |   | June 30, |   | June 30,
|                                           |                                                                          | 2004                                         |   | 2003             |   | 2004      |   | 2004     |   | 2003    
|                                           |                                                                          |                                              |   |                  |   |           |   |          |   |         
|                                           |                                                                          |                                             
|                                           |                                                                          | (Dollars in millions, except per share data)
|Balance Sheet and Asset Quality
    Ratios |                                                                          |                                              |   |                  |   |           |   |          |   |          |   |        |   |  |   |        |   |  |   |       
|                                           | Average interest-earning assets                                          |                                              | $ | 15,669           |   |           | $ | 9,909    |   |          | $ | 13,370 |   |  | $ | 14,519 |   |  | $ | 9,525  |  
|                                           | Average equity                                                           |                                              | $ | 1,127            |   |           | $ | 905      |   |          | $ | 1,043  |   |  | $ | 1,085  |   |  | $ | 887    |  
|                                           | Debt to equity ratio(6)                                                  |                                              |   | 12.1:1           |   |           |   | 10.7:1   |   |          |   | 12.7:1 |   |  |   | 12.1:1 |   |  |   | 10.7:1 |  
|                                           | Core capital ratio(7)                                                    |                                              |   | 7.65             | % |           |   | 8.53     | % |          |   | 7.50   | % |  |   | 7.65   | % |  |   | 8.53   | %
|                                           | Risk-based capital ratio(7)                                              |                                              |   | 13.10            | % |           |   | 14.46    | % |          |   | 13.25  | % |  |   | 13.10  | % |  |   | 14.46  | %
|                                           | Non-performing assets to total assets                                    |                                              |   | 0.73             | % |           |   | 0.88     | % |          |   | 0.75   | % |  |   | 0.73   | % |  |   | 0.88   | %
|                                           | Allowance for loan losses to total loans held for
    investment         |                                              |   | 0.76             | % |           |   | 1.09     | % |          |   | 0.78   | % |  |   | 0.76   | % |  |   | 1.09   | %
|                                           | Allowance for loan losses and other reserves to
    non-performing loans |                                              |   | 78               | % |           |   | 97       | % |          |   | 80     | % |  |   | 78     | % |  |   | 97     | %
|                                           | Allowance for loan losses to annualized net
    charge-offs              |                                              |   | 522              | % |           |   | 176      | % |          |   | 645    | % |  |   | 580    | % |  |   | 233    | %
|                                           | Provision for loan losses to net charge-offs                             |                                              |   | 127              | % |           |   | 97       | % |          |   | 74     | % |  |   | 103    | % |  |   | 93     | %
|                                           | Provision to net charge-offs (core loan
    portfolio)(8)                |                                              |   | 117              | % |           |   | 120      | % |          |   | 40     | % |  |   | 86     | % |  |   | 119    | %
|Other Selected Items                       |                                                                          |                                              |   |                  |   |           |   |          |   |          |   |        |   |  |   |        |   |  |   |       
|                                           | Loans serviced for others(9)                                             |                                              | $ | 34,618           |   |           | $ | 29,858   |   |          | $ | 32,122 |   |  | $ | 34,618 |   |  | $ | 29,858 |  
|                                           | Loan production(10)                                                      |                                              |   | 9,727            |   |           |   | 8,193    |   |          |   | 7,146  |   |  |   | 16,873 |   |  |   | 14,778 |  
|                                           | Pipeline of mortgage loans in process                                    |                                              |   | 5,179            |   |           |   | 6,929    |   |          |   | 5,949  |   |  |   | 5,179  |   |  |   | 6,929  |  
|                                           | Loans sold                                                               |                                              | $ | 7,638            |   |           | $ | 6,336    |   |          | $ | 4,907  |   |  | $ | 12,524 |   |  | $ | 11,860 |  
|                                           | Net margin on sale of loans(1)                                           |                                              |   | 1.55             | % |           |   | 1.61     | % |          |   | 1.71   | % |  |   | 1.61   | % |  |   | 1.57   | %



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| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | For the three and six months ended June 30,
    2004, the data is presented on a pro forma basis excluding the
    effect of a one-time deferral of gain on sale of loans revenue
    of $52.2 million before-tax or $31.6 million after-tax
    pursuant to the change in accounting principle for rate lock
    commitments under SAB No. 105. A full reconciliation
    between the pro forma and GAAP amounts, with the relevant
    performance ratios, is included in the segment table on
    page 6.
|
| | (2) | Dividends declared per common share as a
    percentage of diluted earnings per share.                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (3) | Defined as operating expenses divided by net
    interest income and other income.                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (4) | Average equity divided by net interest income and
    other income.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (5) | Efficiency ratio multiplied by the capital to net
    revenue ratio.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (6) | Debt includes deposits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (7) | IndyMac Bank, F.S.B. (excludes unencumbered
    cash at the Parent Company available for investment in IndyMac
    Bank). Risk-based capital ratio is based on the regulatory
    standard risk weighting. With IndyMac Banks additional
    subprime risk weightings, the ratios are 12.47%, 13.22% and
    12.61% for the quarters ended June 30, 2004, June 30,
    2003 and March 31, 2004, respectively.                                                                                              
|
| | (8) | Represents the total loan portfolio excluding
    amounts of loans from discontinued product lines.                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (9) | Represents the unpaid principal balance on loans
    sold with servicing retained by IndyMac.                                                                                                                                                                                                                                                                                                                                                                                                               



|     |                                                                 
|---- | ----------------------------------------------------------------
|(10) | Includes newly originated commitments on
    construction loans.

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##### Table of Contents






OVERALL RESULTS

IndyMac continued to demonstrate strong execution
on its strategies focused on single-family residential mortgage
lending during the second quarter of 2004. The Company achieved
record mortgage production and pro forma earnings during the
quarter while the overall mortgage industry, according to the
July Mortgage Finance Forecast published by the Mortgage Bankers
Association (MBA) was 29% below its mid-year 2003
peak level. Based on the MBAs Mortgage Finance Forecast
dated July 14, 2004, IndyMacs mortgage market share
was up 66% over the second quarter of 2003. IndyMacs pro
forma earnings per share of $0.90 were up 23% over the second
quarter of 2003. Comparing second quarter 2004 to second quarter
2003, pro forma net revenues increased 22% and operating
expenses increased 16%, resulting in pro forma net earnings of
$54 million, up 32% over the prior year. In addition, the
Company continued to deploy capital to facilitate balance sheet
growth and achieved record total assets of $15.5 billion as
of June 30, 2004.

The second quarter 2004 pro forma revenues,
earnings, and earnings per share (EPS) referred to
above excludes the impact to earnings and EPS for the change in
accounting for rate locks pursuant to SAB No. 105. On a
GAAP basis, net earnings and EPS for the second quarter 2004
were $23 million and $0.38, respectively.

For the six months ended June 30, 2004,
IndyMac earned $96 million, or $1.60 per share on a
pro forma basis excluding the change in accounting for rate
locks in the second quarter, compared to $78 million, or
$1.39 per share during the six months ended June 30,
2003. On a GAAP basis, the Company earned $65 million, or
$1.08 per share, during the six months ended June 30,
2004.




BUSINESS ACQUISITION

On July 16, 2004, we completed the
acquisition of 93.75% of the outstanding shares of common stock
of Financial Freedom Holdings Inc. (Financial
Freedom), the leading provider of reverse mortgages in the
United States, and the related assets from Lehman Brothers Bank,
F.S.B. and its affiliates for an aggregate purchase price of
approximately $83 million. The remaining shares (6.25%) of
the common stock of Financial Freedom are held by its Chief
Executive Officer and will be accounted for as a minority
interest. The acquisition will result in approximately
$45 million in goodwill.




OUR BUSINESS

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

While our segments are structured to achieve
synergies with our varying customer base and marketing
strategies, our operating activities primarily consist of three
broad categories: mortgage banking activities, investing
activities and HELOC activities. All of these activities are
performed to varying degrees by each of our main segments as
shown in the tables that follow. Mortgage banking activities are
characterized by high asset turnover (the production and sale of
mortgage loans) and efficient utilization of capital but can be
cyclical in nature depending on interest rates. Revenues
generated by mortgage banking activities include gain on sale of
mortgage loans, fee income and net spread (interest) income
during the period loans are held

5



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##### Table of Contents



pending sale. Investing and HELOC activities tend
to provide a source of revenues which is generally
counter-cyclical to mortgage banking revenues, comprised
primarily of net interest income and servicing fees. IndyMac is
strategically focused on increasing the relative size of its
portfolios of mortgage loans and mortgage servicing and
investments in HELOC-related assets to achieve greater balance
between its mortgage banking activities and its core investing
activities. We believe that our investing activities will
increasingly act to stabilize IndyMacs core income. In
addition to its revenue contribution, the Investment Portfolio
Group performs the mortgage servicing function, which includes
payment processing, customer service, default management and
reporting to investors in our securitizations. The mortgage
servicing function creates added opportunities to retain
customers when the interest rate environment makes it attractive
for them to refinance, and to cross-market customers with other
Company products. Default management, which includes the
processes of collections, loss mitigation, foreclosures,
bankruptcies, and foreclosed assets management, enables IndyMac
to proactively manage credit risk for the Company and its
investors in its securities.


The following tables summarize the Companys
financial results for the three months ended June 30, 2004,
illustrating the revenues earned in its mortgage banking
activities, investing and HELOC activities by each of its
divisions. The profitability of each operating segment is
measured on a fully-leveraged basis after allocating capital
based on regulatory capital rules. Operating segments that
originate mortgage loans are credited with gain on sale at
funding based on the estimated fair value. Any difference
between the actual gain on sale realized and the estimate is
credited or charged to the operating segment in the period the
loan is sold or transferred to the held for investment
portfolio. Differences between the gain on sale credited to the
operating segments and the consolidated gain on sale due to
timing of loan sales or transfers to the held for investment
portfolio are eliminated in consolidation. The Company uses a
funds transfer pricing (FTP) system to allocate
interest income and expense to the operating segments. Each
operating segment is allocated funding with maturities and
interest rates matched with the expected lives and repricing
frequencies of the segments assets. The Retail Bank
division within the Consumer Banking Group receives a funding
credit for deposits using a similar methodology. The difference
between these allocations and the Companys actual net
interest income and capital levels resulting from centralized
management of funding costs is reported in the Treasury unit.
Corporate overhead costs related to managing the Company as a
whole are not allocated to the operating segments.

The following table summarizes the segment
financial highlights for the three months ended June 30,
2004:

|                                  |                        |                        |        |          |        |          |        |            |       |       |   |           |   |            |         |         |         |   |        |        |        |   |         |         |         |   |         |         |         |   |         |         |        | 
|--------------------------------- | ---------------------- | ---------------------- | ------ | -------- | ------ | -------- | ------ | ---------- | ----- | ----- | - | --------- | - | ---------- | ------- | ------- | ------- | - | ------ | ------ | ------ | - | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------ | 
|                                  |                        |                        |        |          |        | Home     |        | Investment |       |       |   | Total     |   | SAB        |         | Total  
|                                  |                        | Mortgage               |        | Consumer |        | Equity   |        | Portfolio  |       |       |   | Company   |   | No. 105    |         | Company
|                                  |                        | Bank                   |        | Bank     |        | Division |        | Group      |       | Other |   | Pro Forma |   | Adjustment |         | GAAP   
|                                  |                        |                        |        |          |        |          |        |            |       |       |   |           |   |            |         |        
|                                  |                        |                       
|                                  |                        | (Dollars in thousands)
|Operating Results                 |                        |                        |        |          |        |          |        |            |       |       |   |           |   |            |         |         |         |   |        |        |        |   |         |         |         |   |         |         |         |   |         |        
|Mortgage Banking Activities       |                        |                        |        |          |        |          |        |            |       |       |   |           |   |            |         |         |         |   |        |        |        |   |         |         |         |   |         |         |         |   |         |        
|Net interest income               |                        | $                      | 37,739 |          |        | $        | 5,040  |            |       | $     |  |           |   | $          | 8,030   |         |         | $ |       |        |        | $ | 50,809  |         |         | $ |        |         |         | $ | 50,809  |        
|Gain (loss) on sale of loans      |                        |                        | 89,678 |          |        |          | 17,341 |            |       |       |  |           |   |            | 20,632  |         |         |   | (9,344 | )      |        |   | 118,307 |         |         |   | (52,223 | )       |         |   | 66,084  |        
|Other income                      |                        |                        | 11,117 |          |        |          | 3,427  |            |       |       |  |           |   |            |        |         |         |   | 242    |        |        |   | 14,786  |         |         |   |        |         |         |   | 14,786  |        
|                                  |                        |                        |        |          |        |          |        |            |       |       |   |           |   |            |         |         |         |   |        |        |        |   |         |         |         |   |         |         |         |   |         |        
|                                  | Net revenues (expense) |                        |        | 138,534  |        |          |        | 25,808     |       |       |   |          |   |            |         | 28,662  |         |   |        | (9,102 | )      |   |         | 183,902 |         |   |         | (52,223 | )       |   |         | 131,679 |       
|                                  | Operating expenses     |                        |        | 47,302   |        |          |        | 20,392     |       |       |   |          |   |            |         | 1,155   |         |   |        |       |        |   |         | 68,849  |         |   |         |        |         |   |         | 68,849  |       
|                                  |                        |                        |        |          |        |          |        |            |       |       |   |           |   |            |         |         |         |   |        |        |        |   |         |         |         |   |         |         |         |   |         |        
|                                  |                        | Pretax income (loss)   |        |          | 91,232 |          |        |            | 5,416 |       |   |           |  |            |         |         | 27,507  |   |        |        | (9,102 | ) |         |         | 115,053 |   |         |         | (52,223 | ) |         |         | 62,830 | 
|                                  |                        |                        |        |          |        |          |        |            |       |       |   |           |   |            |         |         |         |   |        |        |        |   |         |         |         |   |         |         |         |   |         |        
|Investing Activities              |                        |                        |        |          |        |          |        |            |       |       |   |           |   |            |         |         |         |   |        |        |        |   |         |         |         |   |         |         |         |   |         |        
|Net interest income               |                        |                        | 18,227 |          |        |          |       |            |       |       |  |           |   |            | 34,040  |         |         |   | 2,720  |        |        |   | 54,987  |         |         |   |        |         |         |   | 54,987  |        
|Provision for loan losses         |                        |                        | (1,300 | )        |        |          |       |            |       |       |  |           |   |            | (1,800  | )       |         |   |       |        |        |   | (3,100  | )       |         |   |        |         |         |   | (3,100  | )      
|Service fee (expense) income      |                        |                        |       |          |        |          |       |            |       |       |  |           |   |            | (31,538 | )       |         |   | 3,371  |        |        |   | (28,167 | )       |         |   |        |         |         |   | (28,167 | )      
|(Loss) gain on sale of securities |                        |                        |       |          |        |          |       |            |       |       |  |           |   |            | (4,500  | )       |         |   | 1,086  |        |        |   | (3,414  | )       |         |   |        |         |         |   | (3,414  | )      
|Other income                      |                        |                        | 1,704  |          |        |          |       |            |       |       |  |           |   |            | 1,615   |         |         |   | 847    |        |        |   | 4,166   |         |         |   |         |         |         |   | 4,166   |        
|                                  |                        |                        |        |          |        |          |        |            |       |       |   |           |   |            |         |         |         |   |        |        |        |   |         |         |         |   |         |         |         |   |         |        
|                                  | Net revenues (expense) |                        |        | 18,631   |        |          |        |           |       |       |   |          |   |            |         | (2,183  | )       |   |        | 8,024  |        |   |         | 24,472  |         |   |         |         |         |   |         | 24,472  |       
|                                  | Operating expenses     |                        |        | 10,214   |        |          |        |           |       |       |   |          |   |            |         | 11,854  |         |   |        |       |        |   |         | 22,068  |         |   |         |        |         |   |         | 22,068  |       
|                                  |                        |                        |        |          |        |          |        |            |       |       |   |           |   |            |         |         |         |   |        |        |        |   |         |         |         |   |         |         |         |   |         |        
|                                  |                        | Pretax income (loss)   |        |          | 8,417  |          |        |            |      |       |   |           |  |            |         |         | (14,037 | ) |        |        | 8,024  |   |         |         | 2,404   |   |         |         |         |   |         |         | 2,404  | 
|                                  |                        |                        |        |          |        |          |        |            |       |       |   |           |   |            |         |         |         |   |        |        |        |   |         |         |         |   |         |         |         |   |         |        

6



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##### Table of Contents



|                                                        |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |        |         |        |        | 
|------------------------------------------------------- | ---------------------- | ---------------------- | -------------------------- | ----------------- | ----- | -------- | --------- | ---------- | ----- | ------ | ------- | --------- | --- | ---------- | --------- | ------- | - | ------ | ------- | ------- | ------- | ------- | ---------- | ------ | ------- | ------ | ------ | - | - | ------- | ---------- | ------ | ------- | ------ | ------ | 
|                                                        |                        |                        |                            |                   |       | Home     |           | Investment |       |        |         | Total     |     | SAB        |           | Total  
|                                                        |                        | Mortgage               |                            | Consumer          |       | Equity   |           | Portfolio  |       |        |         | Company   |     | No. 105    |           | Company
|                                                        |                        | Bank                   |                            | Bank              |       | Division |           | Group      |       | Other  |         | Pro Forma |     | Adjustment |           | GAAP   
|                                                        |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |        
|                                                        |                        |                       
|                                                        |                        | (Dollars in thousands)
|HELOC Activities                                        |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|Net interest income                                     |                        | $                      | 3,698                      |                   |       | $        | 1,482     |            |       | $      | 1,025   |           |     | $          |          |         |   | $      |        |         |         | $       | 6,205      |        |         | $      |       |   |   | $       | 6,205      |       
|Provision for loan losses                               |                        |                        | (24                        | )                 |       |          | (68       | )          |       |        | (8      | )         |     |            |          |         |   |        |        |         |         |         | (100       | )      |         |        |       |   |   |         | (100       | )     
|Service fee income                                      |                        |                        |                           |                   |       |          |          |            |       |        | 360     |           |     |            |          |         |   |        |        |         |         |         | 360        |        |         |        |       |   |   |         | 360        |       
|Other income                                            |                        |                        | 507                        |                   |       |          | 383       |            |       |        | 282     |           |     |            |          |         |   |        |        |         |         |         | 1,172      |        |         |        |       |   |   |         | 1,172      |       
|                                                        |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|                                                        | Net revenues           |                        |                            | 4,181             |       |          |           | 1,797      |       |        |         | 1,659     |     |            |           |        |   |        |         |        |         |         |            | 7,637  |         |        |        |  |   |         |            | 7,637  |        
|                                                        | Operating expenses     |                        |                            | 393               |       |          |           | 268        |       |        |         | 1,343     |     |            |           |        |   |        |         |        |         |         |            | 2,004  |         |        |        |  |   |         |            | 2,004  |        
|                                                        |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|                                                        |                        | Pretax income          |                            |                   | 3,788 |          |           |            | 1,529 |        |         |           | 316 |            |           |         |  |        |         |         |        |         |            |        | 5,633   |        |        |   |  |         |            |        | 5,633   |       
|                                                        |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|Financing and Other Activities                          |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|Net interest income (loss)                              |                        |                        |                           |                   |       |          | 7,672     |            |       |        |        |           |     |            |          |         |   |        | (12,695 | )       |         |         | (5,023     | )      |         |        |       |   |   |         | (5,023     | )     
|Other income                                            |                        |                        |                           |                   |       |          | 537       |            |       |        |        |           |     |            |          |         |   |        | 113     |         |         |         | 650        |        |         |        |       |   |   |         | 650        |       
|                                                        |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|                                                        | Net revenues (expense) |                        |                            |                  |       |          |           | 8,209      |       |        |         |          |     |            |           |        |   |        |         | (12,582 | )       |         |            | (4,373 | )       |        |        |  |   |         |            | (4,373 | )      
|                                                        | Operating expenses     |                        |                            |                  |       |          |           | 5,027      |       |        |         |          |     |            |           |        |   |        |         | 23,525  |         |         |            | 28,552 |         |        |        |  |   |         |            | 28,552 |        
|                                                        |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|                                                        |                        | Pretax income (loss)   |                            |                   |      |          |           |            | 3,182 |        |         |           |    |            |           |         |  |        |         |         | (36,107 | )       |            |        | (32,925 | )      |        |   |  |         |            |        | (32,925 | )     
|                                                        |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|                                                        |                        |                        | Total pretax income (loss) |                   |       | 103,437  |           |            |       | 10,127 |         |           |     | 316        |           |         |   | 13,470 |         |         |         | (37,185 | )          |        |         | 90,165 |        |   |   | (52,223 | )          |        |         | 37,942 |       
|                                                        |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|                                                        |                        |                        |                            | Net income (loss) |       | $        | 62,580    |            |       | $      | 6,127   |           |     | $          | 191       |         |   | $      | 8,149   |         |         | $       | (22,497    | )      |         | $      | 54,550 |   |   | $       | (31,595    | )      |         | $      | 22,955 | 
|                                                        |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|Ratios                                                  |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|Percentage of average total assets                      |                        |                        | 39                         | %                 |       |          | 5         | %          |       |        | 1       | %         |     |            | 50        | %       |   |        | 5       | %       |         |         | 100        | %      |         |        |        |   |   |         |            |       
|Percentage of total revenue                             |                        |                        | 76                         | %                 |       |          | 17        | %          |       |        | 1       | %         |     |            | 12        | %       |   |        | (6      | )%      |         |         | 100        | %      |         |        |        |   |   |         |            |       
|Percentage of pretax income                             |                        |                        | 115                        | %                 |       |          | 11        | %          |       |        | 0       | %         |     |            | 15        | %       |   |        | (41     | )%      |         |         | 100        | %      |         |        |        |   |   |         |            |       
|Balance Sheet Data                                      |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|Average interest-earning assets(1)                      |                        | $                      | 6,551,261                  |                   |       | $        | 821,759   |            |       | $      | 136,456 |           |     | $          | 7,851,383 |         |   | $      | 308,016 |         |         | $       | 15,668,875 |        |         |        |        |   |   | $       | 15,668,875 |       
|Average total assets                                    |                        | $                      | 6,647,762                  |                   |       | $        | 859,409   |            |       | $      | 148,333 |           |     | $          | 8,503,788 |         |   | $      | 827,190 |         |         | $       | 16,986,482 |        |         |        |        |   |   | $       | 16,986,482 |       
|Allocated capital                                       |                        | $                      | 432,191                    |                   |       | $        | 56,243    |            |       | $      | 9,997   |           |     | $          | 490,376   |         |   | $      | 138,481 |         |         | $       | 1,127,288  |        |         |        |        |   |   | $       | 1,127,288  |       
|Capital allocated to mortgage banking activities        |                        | $                      | 249,977                    |                   |       | $        | 35,396    |            |       | $      |        |           |     | $          | 31,607    |         |   | $      |        |         |         | $       | 316,980    |        |         |        |        |   |   | $       | 316,980    |       
|Capital allocated to investing activities               |                        | $                      | 152,544                    |                   |       | $        |          |            |       | $      |        |           |     | $          | 458,769   |         |   | $      |        |         |         | $       | 611,313    |        |         |        |        |   |   | $       | 611,313    |       
|Capital allocated to HELOC activities                   |                        | $                      | 29,670                     |                   |       | $        | 18,784    |            |       | $      | 9,997   |           |     | $          |          |         |   | $      |        |         |         | $       | 58,451     |        |         |        |        |   |   | $       | 58,451     |       
|Capital allocated to financing and other
    activities |                        | $                      |                           |                   |       | $        | 2,063     |            |       | $      |        |           |     | $          |          |         |   | $      | 138,481 |         |         | $       | 140,544    |        |         |        |        |   |   | $       | 140,544    |       
|Allocated capital/ average total assets                 |                        |                        | 6.50                       | %                 |       |          | 6.54      | %          |       |        | 6.74    | %         |     |            | 5.77      | %       |   |        | 16.74   | %       |         |         | 6.64       | %      |         |        |        |   |   |         | 6.64       | %     
|Loans Produced                                          |                        | $                      | 8,189,309                  |                   |       | $        | 1,076,157 |            |       | $      | 43,894  |           |     | $          | 417,669   |         |   | $      |        |         |         | $       | 9,727,029  |        |         |        |        |   |   | $       | 9,727,029  |       
|Purchase mortgages                                      |                        |                        | 47                         | %                 |       |          | 12        | %          |       |        | N/A     |           |     |            | 1         | %       |   |        |         |         |         |         | 41         | %      |         |        |        |   |   |         | 41         | %     
|Cash-out refinance mortgages                            |                        |                        | 34                         | %                 |       |          | 55        | %          |       |        | N/A     |           |     |            | 1         | %       |   |        |         |         |         |         | 35         | %      |         |        |        |   |   |         | 35         | %     
|Rate and term refinance mortgages                       |                        |                        | 19                         | %                 |       |          | 33        | %          |       |        | N/A     |           |     |            | 98        | %       |   |        |         |         |         |         | 24         | %      |         |        |        |   |   |         | 24         | %     
|Performance Ratios                                      |                        |                        |                            |                   |       |          |           |            |       |        |         |           |     |            |           |         |   |        |         |         |         |         |            |        |         |        |        |   |   |         |            |       
|Return on equity (ROE)                                  |                        |                        | 58                         | %                 |       |          | 44        | %          |       |        | 8       | %         |     |            | 7         | %       |   |        |         |         |         |         | 19         | %      |         |        |        |   |   |         | 8          | %     
|ROE  mortgage banking activities                       |                        |                        | 89                         | %                 |       |          | 37        | %          |       |        |        |           |     |            | 212       | %       |   |        |         |         |         |         | 88         | %      |         |        |        |   |   |         | 48         | %     
|ROE  investing activities                              |                        |                        | 13                         | %                 |       |          |          |            |       |        |        |           |     |            | (7        | )%      |   |        |         |         |         |         | 1          | %      |         |        |        |   |   |         | 1          | %     
|ROE  HELOC activities                                  |                        |                        | 31                         | %                 |       |          | 20        | %          |       |        | 8       | %         |     |            |          |         |   |        |         |         |         |         | 23         | %      |         |        |        |   |   |         | 23         | %     
|ROE  financing and other activities                    |                        |                        |                           |                   |       |          | 375       | %          |       |        |        |           |     |            |          |         |   |        |         |         |         |         | (57        | )%     |         |        |        |   |   |         | (57        | )%    
|Return on assets (ROA)                                  |                        |                        | 3.79                       | %                 |       |          | 2.87      | %          |       |        | 0.52    | %         |     |            | 0.39      | %       |   |        |         |         |         |         | 1.29       | %      |         |        |        |   |   |         | 0.54       | %     
|Net interest margin                                     |                        |                        | 3.66                       | %                 |       |          | 6.95      | %          |       |        | 3.02    | %         |     |            | 2.16      | %       |   |        |         |         |         |         | 2.75       | %      |         |        |        |   |   |         | 2.75       | %     
|Efficiency ratio                                        |                        |                        | 36                         | %                 |       |          | 72        | %          |       |        | 81      | %         |     |            | 46        | %       |   |        |         |         |         |         | 56         | %      |         |        |        |   |   |         | 75         | %     
|Capital adjusted efficiency ratio                       |                        |                        | 24                         | %                 |       |          | 28        | %          |       |        | 121     | %         |     |            | 199       | %       |   |        |         |         |         |         | 74         | %      |         |        |        |   |   |         | 129        | %     
|Average Full-Time Equivalent Employees
    (FTE)      |                        |                        | 2,090                      |                   |       |          | 876       |            |       |        | 16      |           |     |            | 445       |         |   |        | 634     |         |         |         | 4,061      |        |         |        |        |   |   |         | 4,061      |       



---



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

7



---



##### Table of Contents



The following table provides additional detail on
the segment results for the Mortgage Bank for the three months
ended June 30, 2004:

|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |         |        |         |        | 
|--------------------------------- | ------------------ | ----------------------------------------------- | -------------------------- | ----------------- | ------ | ------ | ------ | ----- | ---- | ----- | ------ | ------ | ------ | ------ | ------ | ----- | ----- | ----- | ------ | ------- | ------ | ------- | ------ | 
|                                  |                    |                                                
|                                  |                    | Relationship Businesses  IndyMac Mortgage Bank
|                                  |                    |                                                
|                                  |                    | B2B                                             |                            | B2R               |        | HCL    |        | HBD   |      | Total
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |      
|                                  |                    |                                                
|                                  |                    | (Dollars in thousands)                         
|Operating Results                 |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|Mortgage Banking Activities       |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|Net interest income               |                    | $                                               | 30,913                     |                   |        | $      | 626    |       |      | $     | 4,942  |        |        | $      | 1,258  |       |       | $     | 37,739 |        
|Gain on sale of loans             |                    |                                                 | 71,643                     |                   |        |        | 1,667  |       |      |       | 14,250 |        |        |        | 2,118  |       |       |       | 89,678 |        
|Other income                      |                    |                                                 | 8,054                      |                   |        |        | 323    |       |      |       | 2,390  |        |        |        | 350    |       |       |       | 11,117 |        
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|                                  | Net revenues       |                                                 |                            | 110,610           |        |        |        | 2,616 |      |       |        | 21,582 |        |        |        | 3,726 |       |       |        | 138,534 |       
|                                  | Operating expenses |                                                 |                            | 40,306            |        |        |        | 3,519 |      |       |        | 1,163  |        |        |        | 2,314 |       |       |        | 47,302  |       
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|                                  |                    | Pretax income (loss)                            |                            |                   | 70,304 |        |        |       | (903 | )     |        |        | 20,419 |        |        |       | 1,412 |       |        |         | 91,232 |        
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|Investing Activities              |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|Net interest income               |                    |                                                 |                           |                   |        |        |       |       |      |       | 10,862 |        |        |        | 7,365  |       |       |       | 18,227 |        
|Provision for loan losses         |                    |                                                 |                           |                   |        |        |       |       |      |       | (1,030 | )      |        |        | (270   | )     |       |       | (1,300 | )      
|Service fee income                |                    |                                                 |                           |                   |        |        |       |       |      |       |       |        |        |        |       |       |       |       |       |        
|Gain (loss) on sale of securities |                    |                                                 |                           |                   |        |        |       |       |      |       |       |        |        |        |       |       |       |       |       |        
|Other income                      |                    |                                                 |                           |                   |        |        |       |       |      |       | 1,640  |        |        |        | 64     |       |       |       | 1,704  |        
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|                                  | Net revenues       |                                                 |                            |                  |        |        |        |      |      |       |        | 11,472 |        |        |        | 7,159 |       |       |        | 18,631  |       
|                                  | Operating expenses |                                                 |                            |                  |        |        |        |      |      |       |        | 8,285  |        |        |        | 1,929 |       |       |        | 10,214  |       
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|                                  |                    | Pretax income                                   |                            |                   |       |        |        |       |     |       |        |        | 3,187  |        |        |       | 5,230 |       |        |         | 8,417  |        
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|HELOC Activities                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|Net interest income               |                    |                                                 | 3,392                      |                   |        |        | 152    |       |      |       | 38     |        |        |        | 116    |       |       |       | 3,698  |        
|Provision for loan losses         |                    |                                                 | (125                       | )                 |        |        | 109    |       |      |       | (6     | )      |        |        | (2     | )     |       |       | (24    | )      
|Service fee income                |                    |                                                 |                           |                   |        |        |       |       |      |       |       |        |        |        |       |       |       |       |       |        
|Other income                      |                    |                                                 | 455                        |                   |        |        | 33     |       |      |       | 10     |        |        |        | 9      |       |       |       | 507    |        
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|                                  | Net revenues       |                                                 |                            | 3,722             |        |        |        | 294   |      |       |        | 42     |        |        |        | 123   |       |       |        | 4,181   |       
|                                  | Operating expenses |                                                 |                            | 352               |        |        |        | 24    |      |       |        | 5      |        |        |        | 12    |       |       |        | 393     |       
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|                                  |                    | Pretax income                                   |                            |                   | 3,370  |        |        |       | 270  |       |        |        | 37     |        |        |       | 111   |       |        |         | 3,788  |        
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|Financing and Other Activities    |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|Net interest income               |                    |                                                 |                           |                   |        |        |       |       |      |       |       |        |        |        |       |       |       |       |       |        
|Other income                      |                    |                                                 |                           |                   |        |        |       |       |      |       |       |        |        |        |       |       |       |       |       |        
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|                                  | Net revenues       |                                                 |                            |                  |        |        |        |      |      |       |        |       |        |        |        |      |       |       |        |        |       
|                                  | Operating expenses |                                                 |                            |                  |        |        |        |      |      |       |        |       |        |        |        |      |       |       |        |        |       
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|                                  |                    | Pretax income                                   |                            |                   |       |        |        |       |     |       |        |        |       |        |        |       |      |       |        |         |       |        
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|                                  |                    |                                                 | Total pretax income (loss) |                   |        | 73,674 |        |       |      | (633  | )      |        |        | 23,643 |        |       |       | 6,753 |        |         |        | 103,437 |       
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|                                  |                    |                                                 |                            | Net income (loss) |        | $      | 44,573 |       |      | $     | (383   | )      |        | $      | 14,304 |       |       | $     | 4,086  |         |        | $       | 62,580 | 
|                                  |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|Ratios                            |                    |                                                 |                            |                   |        |        |        |       |      |       |        |        |        |        |        |       |       |       |        |        
|Percentage of assets              |                    |                                                 | 24                         | %                 |        |        | 1      | %     |      |       | 10     | %      |        |        | 4      | %     |       |       | 39     | %      
|Percentage of total revenue       |                    |                                                 | 54                         | %                 |        |        | 1      | %     |      |       | 16     | %      |        |        | 5      | %     |       |       | 76     | %      
|Percentage of pretax income       |                    |                                                 | 82                         | %                 |        |        | (1     | )%    |      |       | 26     | %      |        |        | 8      | %     |       |       | 115    | %      

8



---



##### Table of Contents



|                                                        |  |                                                 |           |     |  |     |         |     |  |       |           |   |  |   |         |   |  |   |           |  
|------------------------------------------------------- |  | ----------------------------------------------- | --------- | --- |  | --- | ------- | --- |  | ----- | --------- | - |  | - | ------- | - |  | - | --------- | -
|                                                        |  |                                                
|                                                        |  | Relationship Businesses  IndyMac Mortgage Bank
|                                                        |  |                                                
|                                                        |  | B2B                                             |           | B2R |  | HCL |         | HBD |  | Total
|                                                        |  |                                                 |           |     |  |     |         |     |  |      
|                                                        |  |                                                
|                                                        |  | (Dollars in thousands)                         
|Balance Sheet Data                                      |  |                                                 |           |     |  |     |         |     |  |       |           |   |  |   |         |   |  |   |           |  
|Average interest-earning assets                         |  | $                                               | 4,003,605 |     |  | $   | 93,562  |     |  | $     | 1,673,034 |   |  | $ | 781,060 |   |  | $ | 6,551,261 |  
|Average total assets                                    |  | $                                               | 4,089,252 |     |  | $   | 95,259  |     |  | $     | 1,678,708 |   |  | $ | 784,543 |   |  | $ | 6,647,762 |  
|Allocated capital                                       |  | $                                               | 255,474   |     |  | $   | 5,267   |     |  | $     | 93,911    |   |  | $ | 77,539  |   |  | $ | 432,191   |  
|Capital allocated to mortgage banking activities        |  | $                                               | 228,395   |     |  | $   | 3,767   |     |  | $     | 10,493    |   |  | $ | 7,322   |   |  | $ | 249,977   |  
|Capital allocated to investing activities               |  | $                                               |          |     |  | $   |        |     |  | $     | 83,170    |   |  | $ | 69,374  |   |  | $ | 152,544   |  
|Capital allocated to HELOC activities                   |  | $                                               | 27,079    |     |  | $   | 1,500   |     |  | $     | 248       |   |  | $ | 843     |   |  | $ | 29,670    |  
|Capital allocated to financing and other
    activities |  | $                                               |          |     |  | $   |        |     |  | $     |          |   |  | $ |        |   |  | $ |          |  
|Allocated capital/total average assets                  |  |                                                 | 6.25      | %   |  |     | 5.53    | %   |  |       | 5.59      | % |  |   | 9.88    | % |  |   | 6.50      | %
|Loans Produced                                          |  | $                                               | 6,380,571 |     |  | $   | 152,723 |     |  | $     | 1,070,114 |   |  | $ | 585,901 |   |  | $ | 8,189,309 |  
|Purchase mortgages                                      |  |                                                 | 38        | %   |  |     | 45      | %   |  |       | 98        | % |  |   | 85      | % |  |   | 47        | %
|Cash out refinance mortgages                            |  |                                                 | 40        | %   |  |     | 32      | %   |  |       | 0         | % |  |   | 10      | % |  |   | 34        | %
|Rate and term refinance mortgages                       |  |                                                 | 22        | %   |  |     | 23      | %   |  |       | 2         | % |  |   | 5       | % |  |   | 19        | %
|Performance Ratios                                      |  |                                                 |           |     |  |     |         |     |  |       |           |   |  |   |         |   |  |   |           |  
|Return on equity (ROE)                                  |  |                                                 | 70        | %   |  |     | (29     | )%  |  |       | 61        | % |  |   | 21      | % |  |   | 58        | %
|ROE  mortgage banking activities                       |  |                                                 | 75        | %   |  |     | (58     | )%  |  |       | 474       | % |  |   | 47      | % |  |   | 89        | %
|ROE  investing activities                              |  |                                                 |          |     |  |     |        |     |  |       | 9         | % |  |   | 18      | % |  |   | 13        | %
|ROE  HELOC activities                                  |  |                                                 | 30        | %   |  |     | 44      | %   |  |       | 36        | % |  |   | 32      | % |  |   | 31        | %
|ROE  financing and other activities                    |  |                                                 |          |     |  |     |        |     |  |       |          |   |  |   |        |   |  |   |          |  
|Return on assets (ROA)                                  |  |                                                 | 4.38      | %   |  |     | (1.62   | )%  |  |       | 3.43      | % |  |   | 2.09    | % |  |   | 3.79      | %
|Net interest margin                                     |  |                                                 | 3.45      | %   |  |     | 3.34    | %   |  |       | 3.81      | % |  |   | 4.50    | % |  |   | 3.66      | %
|Efficiency ratio                                        |  |                                                 | 36        | %   |  |     | 126     | %   |  |       | 28        | % |  |   | 38      | % |  |   | 36        | %
|Capital adjusted efficiency ratio                       |  |                                                 | 20        | %   |  |     | 59      | %   |  |       | 19        | % |  |   | 65      | % |  |   | 24        | %
|Average FTE                                             |  |                                                 | 1,502     |     |  |     | 125     |     |  |       | 285       |   |  |   | 178     |   |  |   | 2,090     |  

IndyMac Mortgage Bank Divisions






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

9



---



##### Table of Contents



The following table provides additional details
on the segment results for the Consumer Bank and the Home Equity
Division for the three months ended June 30, 2004:

|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |       |     |     |     | 
|--------------------------------- | ------------------ | ---------------------------- | ------------------- | ----------- | ----- | ----- | ----- | -------- | ----- | ----- | ------ | ------ | ----- | ------ | ----- | ----- | --- | --- | --- | 
|                                  |                    |                              |                     |            
|                                  |                    | Consumer Direct Businesses  |                     |            
|                                  |                    | IndyMac Consumer Bank        |                     |            
|                                  |                    |                              |                     | Home Equity
|                                  |                    | B2C                          |                     | Retail Bank |       | Total |       | Division
|                                  |                    |                              |                     |             |       |       |       |         
|                                  |                    |                             
|                                  |                    | (Dollars in thousands)      
|Operating Results                 |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|Mortgage Banking Activities       |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|Net interest income               |                    | $                            | 4,494               |             |       | $     | 546   |          |       | $     | 5,040  |        |       | $      |      |      
|Gain on sale of loans             |                    |                              | 16,165              |             |       |       | 1,176 |          |       |       | 17,341 |        |       |        |      |      
|Other income                      |                    |                              | 3,075               |             |       |       | 352   |          |       |       | 3,427  |        |       |        |      |      
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|                                  | Net revenues       |                              |                     | 23,734      |       |       |       | 2,074    |       |       |        | 25,808 |       |        |       |      |    
|                                  | Operating expenses |                              |                     | 17,789      |       |       |       | 2,603    |       |       |        | 20,392 |       |        |       |      |    
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|                                  |                    | Pretax income (loss)         |                     |             | 5,945 |       |       |          | (529  | )     |        |        | 5,416 |        |       |       |    |    
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|Investing Activities              |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|Net interest income               |                    |                              |                    |             |       |       |      |          |       |       |       |        |       |        |      |      
|Provision for loan losses         |                    |                              |                    |             |       |       |      |          |       |       |       |        |       |        |      |      
|Service fee income                |                    |                              |                    |             |       |       |      |          |       |       |       |        |       |        |      |      
|Gain (loss) on sale of securities |                    |                              |                    |             |       |       |      |          |       |       |       |        |       |        |      |      
|Other income                      |                    |                              |                    |             |       |       |      |          |       |       |       |        |       |        |      |      
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|                                  | Net revenues       |                              |                     |            |       |       |       |         |       |       |        |       |       |        |       |      |    
|                                  | Operating expenses |                              |                     |            |       |       |       |         |       |       |        |       |       |        |       |      |    
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|                                  |                    | Pretax income                |                     |             |      |       |       |          |      |       |        |        |      |        |       |       |    |    
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|HELOC Activities                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|Net interest income               |                    |                              | 1,289               |             |       |       | 193   |          |       |       | 1,482  |        |       |        | 1,025 |      
|Provision for loan losses         |                    |                              | (59                 | )           |       |       | (9    | )        |       |       | (68    | )      |       |        | (8    | )    
|Service fee income                |                    |                              |                    |             |       |       |      |          |       |       |       |        |       |        | 360   |      
|Other income                      |                    |                              | 352                 |             |       |       | 31    |          |       |       | 383    |        |       |        | 282   |      
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|                                  | Net revenues       |                              |                     | 1,582       |       |       |       | 215      |       |       |        | 1,797  |       |        |       | 1,659 |    
|                                  | Operating expenses |                              |                     | 227         |       |       |       | 41       |       |       |        | 268    |       |        |       | 1,343 |    
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|                                  |                    | Pretax income                |                     |             | 1,355 |       |       |          | 174   |       |        |        | 1,529 |        |       |       | 316 |    
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|Financing and Other Activities    |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|Net interest income               |                    |                              |                    |             |       |       | 7,672 |          |       |       | 7,672  |        |       |        |      |      
|Other income                      |                    |                              |                    |             |       |       | 537   |          |       |       | 537    |        |       |        |      |      
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|                                  | Net revenues       |                              |                     |            |       |       |       | 8,209    |       |       |        | 8,209  |       |        |       |      |    
|                                  | Operating expenses |                              |                     |            |       |       |       | 5,027    |       |       |        | 5,027  |       |        |       |      |    
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|                                  |                    | Pretax income                |                     |             |      |       |       |          | 3,182 |       |        |        | 3,182 |        |       |       |    |    
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|                                  |                    |                              | Total pretax income |             |       | 7,300 |       |          |       | 2,827 |        |        |       | 10,127 |       |       |     | 316 |    
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|                                  |                    |                              |                     | Net income  |       | $     | 4,417 |          |       | $     | 1,710  |        |       | $      | 6,127 |       |     | $   | 191 | 
|                                  |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|Ratios                            |                    |                              |                     |             |       |       |       |          |       |       |        |        |       |        |       |      
|Percentage of assets              |                    |                              | 4                   | %           |       |       | 1     | %        |       |       | 5      | %      |       |        | 1     | %    
|Percentage of total revenue       |                    |                              | 12                  | %           |       |       | 5     | %        |       |       | 17     | %      |       |        | 1     | %    
|Percentage of pretax income       |                    |                              | 8                   | %           |       |       | 3     | %        |       |       | 11     | %      |       |        | 0     | %    

10



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##### Table of Contents



|                                                        |  |                              |         |             |  |       |         |          |  |   |           |   |  |   |         |  
|------------------------------------------------------- |  | ---------------------------- | ------- | ----------- |  | ----- | ------- | -------- |  | - | --------- | - |  | - | ------- | -
|                                                        |  |                              |         |            
|                                                        |  | Consumer Direct Businesses  |         |            
|                                                        |  | IndyMac Consumer Bank        |         |            
|                                                        |  |                              |         | Home Equity
|                                                        |  | B2C                          |         | Retail Bank |  | Total |         | Division
|                                                        |  |                              |         |             |  |       |         |         
|                                                        |  |                             
|                                                        |  | (Dollars in thousands)      
|Balance Sheet Data                                      |  |                              |         |             |  |       |         |          |  |   |           |   |  |   |         |  
|Average interest-earning assets                         |  | $                            | 720,364 |             |  | $     | 101,395 |          |  | $ | 821,759   |   |  | $ | 136,456 |  
|Average total assets                                    |  | $                            | 737,274 |             |  | $     | 122,135 |          |  | $ | 859,409   |   |  | $ | 148,333 |  
|Allocated capital                                       |  | $                            | 48,469  |             |  | $     | 7,774   |          |  | $ | 56,243    |   |  | $ | 9,997   |  
|Capital allocated to mortgage banking activities        |  | $                            | 32,572  |             |  | $     | 2,824   |          |  | $ | 35,396    |   |  | $ |        |  
|Capital allocated to investing activities               |  | $                            |        |             |  | $     |        |          |  | $ |          |   |  | $ |        |  
|Capital allocated to HELOC activities                   |  | $                            | 15,897  |             |  | $     | 2,887   |          |  | $ | 18,784    |   |  | $ | 9,997   |  
|Capital allocated to financing and other
    activities |  | $                            |        |             |  | $     | 2,063   |          |  | $ | 2,063     |   |  | $ |        |  
|Allocated capital/total average assets                  |  |                              | 6.57    | %           |  |       | 6.37    | %        |  |   | 6.54      | % |  |   | 6.74    | %
|Loans Produced                                          |  | $                            | 936,471 |             |  | $     | 139,686 |          |  | $ | 1,076,157 |   |  | $ | 43,894  |  
|Purchase mortgages                                      |  |                              | 10      | %           |  |       | 24      | %        |  |   | 12        | % |  |   | N/A     |  
|Cash out refinance mortgages                            |  |                              | 56      | %           |  |       | 51      | %        |  |   | 55        | % |  |   | N/A     |  
|Rate and term refinance mortgages                       |  |                              | 34      | %           |  |       | 25      | %        |  |   | 33        | % |  |   | N/A     |  
|Performance Ratios                                      |  |                              |         |             |  |       |         |          |  |   |           |   |  |   |         |  
|Return on equity (ROE)                                  |  |                              | 37      | %           |  |       | 88      | %        |  |   | 44        | % |  |   | 8       | %
|ROE  mortgage banking activities                       |  |                              | 44      | %           |  |       | (46     | )%       |  |   | 37        | % |  |   |        |  
|ROE  investing activities                              |  |                              |        |             |  |       |        |          |  |   |          |   |  |   |        |  
|ROE  HELOC activities                                  |  |                              | 21      | %           |  |       | 15      | %        |  |   | 20        | % |  |   | 8       | %
|ROE  financing and other activities                    |  |                              |        |             |  |       | 375     | %        |  |   | 375       | % |  |   |        |  
|Return on assets (ROA)                                  |  |                              | 2.41    | %           |  |       | N/A     |          |  |   | 2.87      | % |  |   | 0.52    | %
|Net interest margin                                     |  |                              | 3.23    | %           |  |       | N/A     |          |  |   | 6.95      | % |  |   | 3.02    | %
|Efficiency ratio                                        |  |                              | 71      | %           |  |       | 73      | %        |  |   | 72        | % |  |   | 81      | %
|Capital adjusted efficiency ratio                       |  |                              | 34      | %           |  |       | 14      | %        |  |   | 28        | % |  |   | 121     | %
|Average FTE                                             |  |                              | 606     |             |  |       | 270     |          |  |   | 876       |   |  |   | 16      |  

IndyMac Consumer Bank and Home Equity
Divisions






|                     |  |                                                                                                                                                                                                                                               
|-------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|B2C                  |  | Business-to-Consumer division, offers SFR
    mortgage loans directly to consumers via the Internet and
    centralized call center                                                                                                           
|                    
|Retail Bank          |  | Retail Bank division, offers direct lending and
    deposit products to our depositors through our retail branch
    network, on-line contact center and institutional money desk                                                             
|                    
|Home Equity Division |  | The Home Equity Division is a product-focused
    division that supports the production of home equity lines of
    credit (HELOCs) and other home equity products through all of
    our relationship and consumer direct production channels

11



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##### Table of Contents



The following table provides additional details
on the segment results for the Investment Portfolio Group for
the three months ended June 30, 2004:

|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |        |         |        |       | 
|--------------------------------- | ---------------------- | -------------------------- | -------------------------- | ----------------- | ------- | ------- | --------- | ------------ | ------ | ------ | --------- | ----- | ----- | ----- | ------ | ---- | ------ | ------ | --------- | ------ | ------- | ------ | ----- | 
|                                  |                        |                           
|                                  |                        | Investment Portfolio Group
|                                  |                        |                           
|                                  |                        | Mortgage                   |                            |                  
|                                  |                        | Servicing-Related          |                            | SFR Mortgage      |         |         |           | Discontinued |        |       
|                                  |                        | Assets(1)                  |                            | Loans(2)          |         | MBS(3)  |           | Products(4)  |        | Total 
|                                  |                        |                            |                            |                   |         |         |           |              |        |       
|                                  |                        |                           
|                                  |                        | (Dollars in thousands)    
|Operating Results                 |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|Mortgage Banking Activities       |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|Net interest income               |                        | $                          | 8,030                      |                   |         | $       |          |              |        | $      |          |       |       | $     |       |      |        | $      | 8,030     |       
|Gain on sale of loans             |                        |                            | 9,169                      |                   |         |         | 11,463    |              |        |        |          |       |       |       |       |      |        |        | 20,632    |       
|Other income                      |                        |                            |                           |                   |         |         |          |              |        |        |          |       |       |       |       |      |        |        |          |       
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|                                  | Net revenues           |                            |                            | 17,199            |         |         |           | 11,463       |        |        |           |      |       |       |        |     |        |        |           | 28,662 |        
|                                  | Operating expenses     |                            |                            | 1,155             |         |         |           |             |        |        |           |      |       |       |        |     |        |        |           | 1,155  |        
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|                                  |                        | Pretax income              |                            |                   | 16,044  |         |           |              | 11,463 |        |           |       |      |       |        |      |       |        |           |        | 27,507  |       
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|Investing Activities              |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|Net interest income               |                        |                            | 8,882                      |                   |         |         | 15,446    |              |        |        | 8,609     |       |       |       | 1,103  |      |        |        | 34,040    |       
|Provision for loan losses         |                        |                            |                           |                   |         |         | (301      | )            |        |        |          |       |       |       | (1,499 | )    |        |        | (1,800    | )     
|Service fee expense               |                        |                            | (31,538                    | )                 |         |         |          |              |        |        |          |       |       |       |       |      |        |        | (31,538   | )     
|Gain (loss) on sale of securities |                        |                            | (5,000                     | )                 |         |         |          |              |        |        | 500       |       |       |       |       |      |        |        | (4,500    | )     
|Other income                      |                        |                            | 588                        |                   |         |         | 1,027     |              |        |        |          |       |       |       |       |      |        |        | 1,615     |       
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|                                  | Net (expense) revenues |                            |                            | (27,068           | )       |         |           | 16,172       |        |        |           | 9,109 |       |       |        | (396 | )      |        |           | (2,183 | )      
|                                  | Operating expenses     |                            |                            | 10,123            |         |         |           | 685          |        |        |           | 300   |       |       |        | 746  |        |        |           | 11,854 |        
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|                                  |                        | Pretax (loss) income       |                            |                   | (37,191 | )       |           |              | 15,487 |        |           |       | 8,809 |       |        |      | (1,142 | )      |           |        | (14,037 | )     
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|HELOC Activities                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|Net interest income               |                        |                            |                           |                   |         |         |          |              |        |        |          |       |       |       |       |      |        |        |          |       
|Provision for loan losses         |                        |                            |                           |                   |         |         |          |              |        |        |          |       |       |       |       |      |        |        |          |       
|Service fee income                |                        |                            |                           |                   |         |         |          |              |        |        |          |       |       |       |       |      |        |        |          |       
|Other income                      |                        |                            |                           |                   |         |         |          |              |        |        |          |       |       |       |       |      |        |        |          |       
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|                                  | Net revenues           |                            |                            |                  |         |         |           |             |        |        |           |      |       |       |        |     |        |        |           |       |        
|                                  | Operating expenses     |                            |                            |                  |         |         |           |             |        |        |           |      |       |       |        |     |        |        |           |       |        
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|                                  |                        | Pretax income              |                            |                   |        |         |           |              |       |        |           |       |      |       |        |      |       |        |           |        |        |       
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|Financing and Other Activities    |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|Net interest income               |                        |                            |                           |                   |         |         |          |              |        |        |          |       |       |       |       |      |        |        |          |       
|Other income                      |                        |                            |                           |                   |         |         |          |              |        |        |          |       |       |       |       |      |        |        |          |       
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|                                  | Net revenues           |                            |                            |                  |         |         |           |             |        |        |           |      |       |       |        |     |        |        |           |       |        
|                                  | Operating expenses     |                            |                            |                  |         |         |           |             |        |        |           |      |       |       |        |     |        |        |           |       |        
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|                                  |                        | Pretax income              |                            |                   |        |         |           |              |       |        |           |       |      |       |        |      |       |        |           |        |        |       
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|                                  |                        |                            | Total pretax (loss) income |                   |         | (21,147 | )         |              |        | 26,950 |           |       |       | 8,809 |        |      |        | (1,142 | )         |        |         | 13,470 |      
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|                                  |                        |                            |                            | Net (loss) income |         | $       | (12,794   | )            |        | $      | 16,305    |       |       | $     | 5,329  |      |        | $      | (691      | )      |         | $      | 8,149 | 
|                                  |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|Ratios                            |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|Percentage of assets              |                        |                            | 10                         | %                 |         |         | 28        | %            |        |        | 12        | %     |       |       | 0      | %    |        |        | 50        | %     
|Percentage of total revenue       |                        |                            | (5                         | )%                |         |         | 13        | %            |        |        | 4         | %     |       |       | 0      | %    |        |        | 12        | %     
|Percentage of pretax income       |                        |                            | (24                        | )%                |         |         | 30        | %            |        |        | 10        | %     |       |       | (1     | )%   |        |        | 15        | %     
|Balance Sheet Data                |                        |                            |                            |                   |         |         |           |              |        |        |           |       |       |       |        |      |        |        |           |       
|Average interest-earning assets   |                        | $                          | 1,016,929                  |                   |         | $       | 4,820,823 |              |        | $      | 1,950,173 |       |       | $     | 63,458 |      |        | $      | 7,851,383 |       
|Average total assets              |                        | $                          | 1,617,352                  |                   |         | $       | 4,835,011 |              |        | $      | 1,995,009 |       |       | $     | 56,416 |      |        | $      | 8,503,788 |       
|Allocated capital                 |                        | $                          | 205,192                    |                   |         | $       | 236,595   |              |        | $      | 43,036    |       |       | $     | 5,553  |      |        | $      | 490,376   |       

12



---



##### Table of Contents



|                                                        |  |                            |         |              |  |        |         |              |  |       |        |   |  |   |       |    |  |   |         |   
|------------------------------------------------------- |  | -------------------------- | ------- | ------------ |  | ------ | ------- | ------------ |  | ----- | ------ | - |  | - | ----- | -- |  | - | ------- | --
|                                                        |  |                           
|                                                        |  | Investment Portfolio Group
|                                                        |  |                           
|                                                        |  | Mortgage                   |         |             
|                                                        |  | Servicing-Related          |         | SFR Mortgage |  |        |         | Discontinued |  |      
|                                                        |  | Assets(1)                  |         | Loans(2)     |  | MBS(3) |         | Products(4)  |  | Total
|                                                        |  |                            |         |              |  |        |         |              |  |      
|                                                        |  |                           
|                                                        |  | (Dollars in thousands)    
|Capital allocated to mortgage banking activities        |  | $                          | 31,607  |              |  | $      |        |              |  | $     |       |   |  | $ |      |    |  | $ | 31,607  |   
|Capital allocated to investing activities               |  | $                          | 173,585 |              |  | $      | 236,595 |              |  | $     | 43,036 |   |  | $ | 5,553 |    |  | $ | 458,769 |   
|Capital allocated to HELOC activities                   |  | $                          |        |              |  | $      |        |              |  | $     |       |   |  | $ |      |    |  | $ |        |   
|Capital allocated to financing and other
    activities |  | $                          |        |              |  | $      |        |              |  | $     |       |   |  | $ |      |    |  | $ |        |   
|Allocated capital/ total average assets                 |  |                            | 12.69   | %            |  |        | 4.89    | %            |  |       | 2.16   | % |  |   | 9.84  | %  |  |   | 5.77    | % 
|Loans Produced                                          |  | $                          | 417,669 |              |  | $      |        |              |  | $     |       |   |  | $ |      |    |  | $ | 417,669 |   
|Performance Ratios                                      |  |                            |         |              |  |        |         |              |  |       |        |   |  |   |       |    |  |   |         |   
|Return on equity (ROE)                                  |  |                            | (25     | )%           |  |        | 28      | %            |  |       | 50     | % |  |   | (50   | )% |  |   | 7       | % 
|ROE  mortgage banking activities                       |  |                            | 124     | %            |  |        |        |              |  |       |       |   |  |   |      |    |  |   | 212     | % 
|ROE  investing activities                              |  |                            | (52     | )%           |  |        | 16      | %            |  |       | 50     | % |  |   | (50   | )% |  |   | (7      | )%
|ROE  HELOC activities                                  |  |                            |        |              |  |        |        |              |  |       |       |   |  |   |      |    |  |   |        |   
|ROE  financing and other activities                    |  |                            |        |              |  |        |        |              |  |       |       |   |  |   |      |    |  |   |        |   
|Return on assets (ROA)                                  |  |                            | (3.18   | )%           |  |        | 1.36    | %            |  |       | 1.07   | % |  |   | (4.93 | )% |  |   | 0.39    | % 
|Net interest margin                                     |  |                            | 6.69    | %            |  |        | 1.29    | %            |  |       | 1.78   | % |  |   | 6.99  | %  |  |   | 2.16    | % 
|Efficiency ratio                                        |  |                            | (114    | )%           |  |        | 2       | %            |  |       | 3      | % |  |   | 68    | %  |  |   | 46      | % 
|Capital adjusted efficiency ratio                       |  |                            | 594     | %            |  |        | 5       | %            |  |       | 4      | % |  |   | 85    | %  |  |   | 199     | % 
|Average FTE                                             |  |                            | 407     |              |  |        | 9       |              |  |       | 4      |   |  |   | 25    |    |  |   | 445     |   

The Investment Portfolio Group




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

13



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##### Table of Contents



The following table provides additional details
on the segment results for all others for the three months ended
June 30, 2004:

|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |         |         |        |        | 
|--------------------------------- | ---------------------- | ---------------------- | -------------------------- | ----------------- | ------- | --------- | ------- | ------------ | ------- | --------- | ------ | ----------- | ------- | ------- | ------- | ------ | ------ | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------ | ------ | 
|                                  |                        |                        |                            | Total             |         |           |         |              |         |           |        |             |         |        
|                                  |                        |                        |                            | Company           |         |           |         |              |         |           |        |             |         |        
|                                  |                        |                        |                            | Before Corp.      |         |           |         |              |         | Total     |        |             |         | Total  
|                                  |                        | Treasury               |                            | Overhead and      |         | Corporate |         |              |         | Company   |        | SAB No. 105 |         | Company
|                                  |                        | Group(1)               |                            | Eliminations      |         | Overhead  |         | Eliminations |         | Pro Forma |        | Adjustment  |         | GAAP   
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |        
|                                  |                        |                       
|                                  |                        | (Dollars in thousands)
|Operating Results                 |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|Mortgage Banking Activities       |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|Net interest income               |                        | $                      |                           |                   |         | $         | 50,809  |              |         | $         |       |             |         | $       |        |        |        | $      | 50,809  |         |         | $      |        |         |         | $       | 50,809  |        
|Gain (loss) on sale of loans(2)   |                        |                        |                           |                   |         |           | 127,651 |              |         |           |       |             |         |         | (9,344  | )      |        |        | 118,307 |         |         |        | (52,223 | )       |         |         | 66,084  |        
|Other income                      |                        |                        |                           |                   |         |           | 14,544  |              |         |           |       |             |         |         | 242     |        |        |        | 14,786  |         |         |        |        |         |         |         | 14,786  |        
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|                                  | Net revenues (expense) |                        |                            |                  |         |           |         | 193,004      |         |           |        |            |         |         |         | (9,102 | )      |        |         | 183,902 |         |        |         | (52,223 | )       |         |         | 131,679 |        
|                                  | Operating expenses     |                        |                            |                  |         |           |         | 68,849       |         |           |        |            |         |         |         |       |        |        |         | 68,849  |         |        |         |        |         |         |         | 68,849  |        
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|                                  |                        | Pretax income (loss)   |                            |                   |        |           |         |              | 124,155 |           |        |             |        |         |         |        | (9,102 | )      |         |         | 115,053 |        |         |         | (52,223 | )       |         |         | 62,830  |       
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|Investing Activities              |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|Net interest income               |                        |                        |                           |                   |         |           | 52,267  |              |         |           |       |             |         |         | 2,720   |        |        |        | 54,987  |         |         |        |        |         |         |         | 54,987  |        
|Provision for loan losses         |                        |                        |                           |                   |         |           | (3,100  | )            |         |           |       |             |         |         |        |        |        |        | (3,100  | )       |         |        |        |         |         |         | (3,100  | )      
|Service fee (expense) income      |                        |                        |                           |                   |         |           | (31,538 | )            |         |           |       |             |         |         | 3,371   |        |        |        | (28,167 | )       |         |        |        |         |         |         | (28,167 | )      
|Gain (loss) on sale of securities |                        |                        |                           |                   |         |           | (4,500  | )            |         |           |       |             |         |         | 1,086   |        |        |        | (3,414  | )       |         |        |        |         |         |         | (3,414  | )      
|Other income                      |                        |                        |                           |                   |         |           | 3,319   |              |         |           | 847    |             |         |         |        |        |        |        | 4,166   |         |         |        |        |         |         |         | 4,166   |        
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|                                  | Net revenues           |                        |                            |                  |         |           |         | 16,448       |         |           |        | 847         |         |         |         | 7,177  |        |        |         | 24,472  |         |        |         |        |         |         |         | 24,472  |        
|                                  | Operating expenses     |                        |                            |                  |         |           |         | 22,068       |         |           |        |            |         |         |         |       |        |        |         | 22,068  |         |        |         |        |         |         |         | 22,068  |        
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|                                  |                        | Pretax (loss) income   |                            |                   |        |           |         |              | (5,620  | )         |        |             | 847     |         |         |        | 7,177  |        |         |         | 2,404   |        |         |         |        |         |         |         | 2,404   |       
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|HELOC Activities                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|Net interest income               |                        |                        |                           |                   |         |           | 6,205   |              |         |           |       |             |         |         |        |        |        |        | 6,205   |         |         |        |        |         |         |         | 6,205   |        
|Provision for loan losses         |                        |                        |                           |                   |         |           | (100    | )            |         |           |       |             |         |         |        |        |        |        | (100    | )       |         |        |        |         |         |         | (100    | )      
|Service fee income                |                        |                        |                           |                   |         |           | 360     |              |         |           |       |             |         |         |        |        |        |        | 360     |         |         |        |        |         |         |         | 360     |        
|Other income                      |                        |                        |                           |                   |         |           | 1,172   |              |         |           |       |             |         |         |        |        |        |        | 1,172   |         |         |        |        |         |         |         | 1,172   |        
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|                                  | Net revenues           |                        |                            |                  |         |           |         | 7,637        |         |           |        |            |         |         |         |       |        |        |         | 7,637   |         |        |         |        |         |         |         | 7,637   |        
|                                  | Operating expenses     |                        |                            |                  |         |           |         | 2,004        |         |           |        |            |         |         |         |       |        |        |         | 2,004   |         |        |         |        |         |         |         | 2,004   |        
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|                                  |                        | Pretax income          |                            |                   |        |           |         |              | 5,633   |           |        |             |        |         |         |        |       |        |         |         | 5,633   |        |         |         |        |         |         |         | 5,633   |       
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|Financing and Other Activities    |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|Net interest loss                 |                        |                        | (11,250                    | )                 |         |           | (3,578  | )            |         |           | (1,445 | )           |         |         |        |        |        |        | (5,023  | )       |         |        |        |         |         |         | (5,023  | )      
|Other income                      |                        |                        | 113                        |                   |         |           | 650     |              |         |           |       |             |         |         |        |        |        |        | 650     |         |         |        |        |         |         |         | 650     |        
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|                                  | Net expense            |                        |                            | (11,137           | )       |           |         | (2,928       | )       |           |        | (1,445      | )       |         |         |       |        |        |         | (4,373  | )       |        |         |        |         |         |         | (4,373  | )      
|                                  | Operating expenses     |                        |                            | 744               |         |           |         | 5,771        |         |           |        | 22,781      |         |         |         |       |        |        |         | 28,552  |         |        |         |        |         |         |         | 28,552  |        
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|                                  |                        | Pretax loss            |                            |                   | (11,881 | )         |         |              | (8,699  | )         |        |             | (24,226 | )       |         |        |       |        |         |         | (32,925 | )      |         |         |        |         |         |         | (32,925 | )     
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|                                  |                        |                        | Total pretax (loss) income |                   |         | (11,881   | )       |              |         | 115,469   |        |             |         | (23,379 | )       |        |        | (1,925 | )       |         |         | 90,165 |         |         |         | (52,223 | )       |         |         | 37,942 |       
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|                                  |                        |                        |                            | Net (loss) income |         | $         | (7,188  | )            |         | $         | 69,859 |             |         | $       | (14,144 | )      |        | $      | (1,165  | )       |         | $      | 54,550  |         |         | $       | (31,595 | )       |         | $      | 22,955 | 
|                                  |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|Ratios                            |                        |                        |                            |                   |         |           |         |              |         |           |        |             |         |         |         |        |        |        |         |         |         |        |         |         |         |         |         |        
|Percentage of assets              |                        |                        | 3                          | %                 |         |           | 98      | %            |         |           | 2      | %           |         |         | 0       | %      |        |        | 100     | %       |         |        |         |         |         |         |         |        
|Percentage of total revenue       |                        |                        | (5                         | )%                |         |           | 101     | %            |         |           | 0      | %           |         |         | (1      | )%     |        |        | 100     | %       |         |        |         |         |         |         |         |        
|Percentage of pretax income       |                        |                        | (13                        | )%                |         |           | 128     | %            |         |           | (26    | )%          |         |         | (2      | )%     |        |        | 100     | %       |         |        |         |         |         |         |         |        

14



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##### Table of Contents



|                                                        |  |                        |         |              |  |           |            |              |  |             |         |             |  |         |   |  |  |   |            |    |  |  |  |  |  |   |            |   
|------------------------------------------------------- |  | ---------------------- | ------- | ------------ |  | --------- | ---------- | ------------ |  | ----------- | ------- | ----------- |  | ------- | - |  |  | - | ---------- | -- |  |  |  |  |  | - | ---------- | --
|                                                        |  |                        |         | Total        |  |           |            |              |  |             |         |             |  |        
|                                                        |  |                        |         | Company      |  |           |            |              |  |             |         |             |  |        
|                                                        |  |                        |         | Before Corp. |  |           |            |              |  | Total       |         |             |  | Total  
|                                                        |  | Treasury               |         | Overhead and |  | Corporate |            |              |  | Company Pro |         | SAB No. 105 |  | Company
|                                                        |  | Group(1)               |         | Eliminations |  | Overhead  |            | Eliminations |  | Forma       |         | Adjustment  |  | GAAP   
|                                                        |  |                        |         |              |  |           |            |              |  |             |         |             |  |        
|                                                        |  |                       
|                                                        |  | (Dollars in thousands)
|Balance Sheet Data                                      |  |                        |         |              |  |           |            |              |  |             |         |             |  |         |   |  |  |   |            |    |  |  |  |  |  |   |            |   
|Average interest-earning assets                         |  | $                      | 326,046 |              |  | $         | 15,686,905 |              |  | $           | (18,030 | )           |  | $       |  |  |  | $ | 15,668,875 |    |  |  |  |  |  | $ | 15,668,875 |   
|Average total assets                                    |  | $                      | 554,841 |              |  | $         | 16,714,133 |              |  | $           | 272,349 |             |  | $       |  |  |  | $ | 16,986,482 |    |  |  |  |  |  | $ | 16,986,482 |   
|Allocated capital                                       |  | $                      | 27,742  |              |  | $         | 1,016,549  |              |  | $           | 110,739 |             |  | $       |  |  |  | $ | 1,127,288  |    |  |  |  |  |  | $ | 1,127,288  |   
|Capital allocated to mortgage banking activities        |  | $                      |        |              |  | $         | 316,980    |              |  | $           |        |             |  | $       |  |  |  | $ | 316,980    |    |  |  |  |  |  | $ | 316,980    |   
|Capital allocated to investing activities               |  | $                      |        |              |  | $         | 611,313    |              |  | $           |        |             |  | $       |  |  |  | $ | 611,313    |    |  |  |  |  |  | $ | 611,313    |   
|Capital allocated to HELOC activities                   |  | $                      |        |              |  | $         | 58,451     |              |  | $           |        |             |  | $       |  |  |  | $ | 58,451     |    |  |  |  |  |  | $ | 58,451     |   
|Capital allocated to financing and other
    activities |  | $                      | 27,742  |              |  | $         | 29,805     |              |  | $           | 110,739 |             |  | $       |  |  |  | $ | 140,544    |    |  |  |  |  |  | $ | 140,544    |   
|Allocated capital/total average assets                  |  |                        | 5.00    | %            |  |           | 6.08       | %            |  |             | 40.66   | %           |  |         |  |  |  |   | 6.64       | %  |  |  |  |  |  |   | 6.64       | % 
|Loans Produced                                          |  | $                      |        |              |  | $         | 9,727,029  |              |  | $           |        |             |  | $       |  |  |  | $ | 9,727,029  |    |  |  |  |  |  | $ | 9,727,029  |   
|Purchase mortgages                                      |  |                        |         |              |  |           | N/A        |              |  |             |         |             |  |         |   |  |  |   | 41         | %  |  |  |  |  |  |   | 41         | % 
|Cash out refinance mortgages                            |  |                        |         |              |  |           | N/A        |              |  |             |         |             |  |         |   |  |  |   | 35         | %  |  |  |  |  |  |   | 35         | % 
|Rate and term refinance mortgages                       |  |                        |         |              |  |           | N/A        |              |  |             |         |             |  |         |   |  |  |   | 24         | %  |  |  |  |  |  |   | 24         | % 
|Performance Ratios                                      |  |                        |         |              |  |           |            |              |  |             |         |             |  |         |   |  |  |   |            |    |  |  |  |  |  |   |            |   
|Return on equity (ROE)                                  |  |                        |         |              |  |           | 28         | %            |  |             |         |             |  |         |   |  |  |   | 19         | %  |  |  |  |  |  |   | 8          | % 
|ROE  mortgage banking                                  |  |                        |         |              |  |           | 95         | %            |  |             |         |             |  |         |   |  |  |   | 88         | %  |  |  |  |  |  |   | 48         | % 
|ROE  investing activities                              |  |                        |         |              |  |           | (2         | )%           |  |             |         |             |  |         |   |  |  |   | 1          | %  |  |  |  |  |  |   | 1          | % 
|ROE  HELOC activities                                  |  |                        |         |              |  |           | 23         | %            |  |             |         |             |  |         |   |  |  |   | 23         | %  |  |  |  |  |  |   | 23         | % 
|ROE  financing and other activities                    |  |                        |         |              |  |           | (71        | )%           |  |             |         |             |  |         |   |  |  |   | (57        | )% |  |  |  |  |  |   | (57        | )%
|Return on assets (ROA)                                  |  |                        |         |              |  |           | 1.68       | %            |  |             |         |             |  |         |   |  |  |   | 1.29       | %  |  |  |  |  |  |   | 0.54       | % 
|Net interest margin                                     |  |                        |         |              |  |           | 2.71       | %            |  |             |         |             |  |         |   |  |  |   | 2.75       | %  |  |  |  |  |  |   | 2.75       | % 
|Efficiency ratio                                        |  |                        |         |              |  |           | 45         | %            |  |             |         |             |  |         |   |  |  |   | 56         | %  |  |  |  |  |  |   | 75         | % 
|Capital adjusted efficiency ratio                       |  |                        |         |              |  |           | 53         | %            |  |             |         |             |  |         |   |  |  |   | 74         | %  |  |  |  |  |  |   | 129        | % 
|Average FTE                                             |  |                        | 24      |              |  |           | 3,451      |              |  |             | 610     |             |  |         |   |  |  |   | 4,061      |    |  |  |  |  |  |   | 4,061      |   



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | During the three months ended June 30, 2004,
    the Treasury Group reported net interest expense of
    $11.3 million. This amount includes interest expense
    related to the trust preferred debentures issued by the Company
    in 2003 and 2001 which is not allocated to the business units.
    The Treasury Group also credits the Retail Bank and Investment
    Portfolio Group amounts in addition to their normal
    FTP credit to reward their raising of core deposits.
    Additionally, the net expense in Treasury reflects the cost of
    maintaining adequate corporate liquidity, as well as certain
    fixed rate deposits with longer maturities raised in prior
    years, the higher cost of which is not allocated to the business
    units.

15



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##### Table of Contents



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

|                                  |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|--------------------------------- |  | ----------------------------------------------- | ------ | --- |  | --- | ------ | --- |  | ----- | ------ | -- |  | - | ----- | -- |  | - | ------ | --
|                                  |  |                                                
|                                  |  | Relationship Businesses  IndyMac Mortgage Bank
|                                  |  |                                                
|                                  |  | B2B                                             |        | B2R |  | HCL |        | HBD |  | Total
|                                  |  |                                                 |        |     |  |     |        |     |  |      
|                                  |  |                                                
|                                  |  | (Dollars in thousands)                         
|Mortgage Banking Activities       |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q2 04  Pretax income (loss)      |  | $                                               | 70,304 |     |  | $   | (903   | )   |  | $     | 20,419 |    |  | $ | 1,412 |    |  | $ | 91,232 |   
|Q1 04  Pretax income (loss)      |  |                                                 | 45,561 |     |  |     | (1,122 | )   |  |       | 8,728  |    |  |   | 667   |    |  |   | 53,834 |   
|Annualized Percent Change         |  |                                                 | 217    | %   |  |     | 78     | %   |  |       | 536    | %  |  |   | 447   | %  |  |   | 278    | % 
|Q2 03  Pretax income             |  |                                                 | 59,741 |     |  |     | 1,000  |     |  |       | 8,003  |    |  |   | 1,227 |    |  |   | 69,971 |   
|Percent Change                    |  |                                                 | 18     | %   |  |     | (190   | )%  |  |       | 155    | %  |  |   | 15    | %  |  |   | 30     | % 
|Investing Activities              |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q2 04  Pretax income             |  |                                                 |       |     |  |     |       |     |  |       | 3,187  |    |  |   | 5,230 |    |  |   | 8,417  |   
|Q1 04  Pretax income             |  |                                                 |       |     |  |     |       |     |  |       | 3,470  |    |  |   | 4,803 |    |  |   | 8,273  |   
|Annualized Percent Change         |  |                                                 |       |     |  |     |       |     |  |       | (33    | )% |  |   | 36    | %  |  |   | 7      | % 
|Q2 03  Pretax income             |  |                                                 |       |     |  |     |       |     |  |       | 3,622  |    |  |   | 6,245 |    |  |   | 9,867  |   
|Percent Change                    |  |                                                 |       |     |  |     |       |     |  |       | (12    | )% |  |   | (16   | )% |  |   | (15    | )%
|HELOC Activities                  |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q2 04  Pretax income             |  |                                                 | 3,370  |     |  |     | 270    |     |  |       | 37     |    |  |   | 111   |    |  |   | 3,788  |   
|Q1 04  Pretax income             |  |                                                 | 2,546  |     |  |     | 114    |     |  |       | 41     |    |  |   | 70    |    |  |   | 2,771  |   
|Annualized Percent Change         |  |                                                 | 129    | %   |  |     | 547    | %   |  |       | (39    | )% |  |   | 234   | %  |  |   | 147    | % 
|Q2 03  Pretax income (loss)      |  |                                                 | 1,032  |     |  |     | 31     |     |  |       | (59    | )  |  |   | 27    |    |  |   | 1,031  |   
|Percent Change                    |  |                                                 | 227    | %   |  |     | 771    | %   |  |       | 163    | %  |  |   | 311   | %  |  |   | 267    | % 
|Financing and Other Activities    |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q2 04  Pretax income             |  |                                                 |       |     |  |     |       |     |  |       |       |    |  |   |      |    |  |   |       |   
|Q1 04  Pretax income             |  |                                                 |       |     |  |     |       |     |  |       |       |    |  |   |      |    |  |   |       |   
|Q2 03  Pretax income             |  |                                                 |       |     |  |     |       |     |  |       |       |    |  |   |      |    |  |   |       |   
|Net Income                        |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q2 04  Net income (loss)         |  |                                                 | 44,573 |     |  |     | (383   | )   |  |       | 14,304 |    |  |   | 4,086 |    |  |   | 62,580 |   
|Q1 04  Net income (loss)         |  |                                                 | 29,105 |     |  |     | (610   | )   |  |       | 7,405  |    |  |   | 3,351 |    |  |   | 39,251 |   
|Annualized Percent Change         |  |                                                 | 213    | %   |  |     | 149    | %   |  |       | 373    | %  |  |   | 88    | %  |  |   | 238    | % 
|Q2 03  Net income                |  |                                                 | 36,768 |     |  |     | 624    |     |  |       | 6,997  |    |  |   | 4,537 |    |  |   | 48,926 |   
|Percent Change                    |  |                                                 | 21     | %   |  |     | (161   | )%  |  |       | 104    | %  |  |   | (10   | )% |  |   | 28     | % 
|Performance Ratios                |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|Q2 04                             |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|ROE                               |  |                                                 | 70     | %   |  |     | (29    | )%  |  |       | 61     | %  |  |   | 21    | %  |  |   | 58     | % 
|ROA                               |  |                                                 | 4.38   | %   |  |     | (1.62  | )%  |  |       | 3.43   | %  |  |   | 2.09  | %  |  |   | 3.79   | % 
|NIM                               |  |                                                 | 3.45   | %   |  |     | 3.34   | %   |  |       | 3.81   | %  |  |   | 4.50  | %  |  |   | 3.66   | % 
|Efficiency ratio                  |  |                                                 | 36     | %   |  |     | 126    | %   |  |       | 28     | %  |  |   | 38    | %  |  |   | 36     | % 
|Capital adjusted efficiency ratio |  |                                                 | 20     | %   |  |     | 59     | %   |  |       | 19     | %  |  |   | 65    | %  |  |   | 24     | % 
|Average FTE                       |  |                                                 | 1,502  |     |  |     | 125    |     |  |       | 285    |    |  |   | 178   |    |  |   | 2,090  |   
|Q1 04                             |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|ROE                               |  |                                                 | 69     | %   |  |     | (48    | )%  |  |       | 37     | %  |  |   | 19    | %  |  |   | 49     | % 
|ROA                               |  |                                                 | 4.52   | %   |  |     | (3.13  | )%  |  |       | 1.95   | %  |  |   | 1.94  | %  |  |   | 3.23   | % 
|NIM                               |  |                                                 | 4.33   | %   |  |     | 3.52   | %   |  |       | 3.76   | %  |  |   | 4.53  | %  |  |   | 4.16   | % 
|Efficiency ratio                  |  |                                                 | 43     | %   |  |     | 139    | %   |  |       | 41     | %  |  |   | 42    | %  |  |   | 45     | % 
|Capital adjusted efficiency ratio |  |                                                 | 22     | %   |  |     | 68     | %   |  |       | 39     | %  |  |   | 76    | %  |  |   | 31     | % 
|Average FTE                       |  |                                                 | 1,378  |     |  |     | 134    |     |  |       | 278    |    |  |   | 157   |    |  |   | 1,947  |   
|Q2 03                             |  |                                                 |        |     |  |     |        |     |  |       |        |    |  |   |       |    |  |   |        |   
|ROE                               |  |                                                 | 88     | %   |  |     | 35     | %   |  |       | 44     | %  |  |   | 26    | %  |  |   | 64     | % 
|ROA                               |  |                                                 | 5.71   | %   |  |     | 2.17   | %   |  |       | 2.43   | %  |  |   | 2.71  | %  |  |   | 4.33   | % 
|NIM                               |  |                                                 | 4.31   | %   |  |     | 4.01   | %   |  |       | 4.29   | %  |  |   | 4.91  | %  |  |   | 4.39   | % 
|Efficiency ratio                  |  |                                                 | 35     | %   |  |     | 79     | %   |  |       | 37     | %  |  |   | 22    | %  |  |   | 36     | % 
|Capital adjusted efficiency ratio |  |                                                 | 15     | %   |  |     | 27     | %   |  |       | 31     | %  |  |   | 38    | %  |  |   | 22     | % 
|Average FTE                       |  |                                                 | 1,231  |     |  |     | 158    |     |  |       | 204    |    |  |   | 101   |    |  |   | 1,694  |   

The Mortgage Bank segments net income
increased by 59%, or $23.3 million compared to first
quarter 2004, and 28% or $13.7 million from the second
quarter of 2003. The increase was primarily due to an increase
in mortgage production and higher loan sales. Our operating
expenses continued to increase as we expanded our sales force to
support continued growth in mortgage production and our pursuit
of increased market share.

16



---



##### Table of Contents



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

|                                  |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|--------------------------------- |  | ---------------------------- | ------ | ----------- |  | ----- | ------ | -------- |  | - | ------ | -- |  | - | ----- | --
|                                  |  |                              |        |            
|                                  |  | Consumer Direct Businesses  |        |            
|                                  |  | IndyMac Consumer Bank        |        |            
|                                  |  |                              |        | Home Equity
|                                  |  | B2C                          |        | Retail Bank |  | Total |        | Division
|                                  |  |                              |        |             |  |       |        |         
|                                  |  |                             
|                                  |  | (Dollars in thousands)      
|Mortgage Banking Activities       |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q2 04  Pretax income (loss)      |  | $                            | 5,945  |             |  | $     | (529   | )        |  | $ | 5,416  |    |  | $ |      |   
|Q1 04  Pretax income             |  |                              | 7,647  |             |  |       | 664    |          |  |   | 8,311  |    |  |   |      |   
|Annualized Percent Change         |  |                              | (89    | )%          |  |       | (719   | )%       |  |   | (139   | )% |  |   |      |   
|Q2 03  Pretax income             |  |                              | 22,645 |             |  |       | 1,348  |          |  |   | 23,993 |    |  |   |      |   
|Percent Change                    |  |                              | (74    | )%          |  |       | (139   | )%       |  |   | (77    | )% |  |   |      |   
|Investing Activities              |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q2 04  Pretax income             |  |                              |       |             |  |       |       |          |  |   |       |    |  |   |      |   
|Q1 04  Pretax income             |  |                              |       |             |  |       |       |          |  |   |       |    |  |   |      |   
|Annualized Percent Change         |  |                              |       |             |  |       |       |          |  |   |        | %  |  |   |      |   
|Q2 03  Pretax income             |  |                              |       |             |  |       |       |          |  |   |       |    |  |   |      |   
|Percent Change                    |  |                              |       |             |  |       |       |          |  |   |        | %  |  |   |      |   
|HELOC Activities                  |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q2 04  Pretax income             |  |                              | 1,355  |             |  |       | 174    |          |  |   | 1,529  |    |  |   | 316   |   
|Q1 04  Pretax income             |  |                              | 1,115  |             |  |       | 118    |          |  |   | 1,233  |    |  |   | 177   |   
|Annualized Percent Change         |  |                              | 86     | %           |  |       | 190    | %        |  |   | 96     | %  |  |   | 314   | % 
|Q2 03  Pretax income (loss)      |  |                              | 650    |             |  |       | 31     |          |  |   | 681    |    |  |   | (403  | ) 
|Percent Change                    |  |                              | 108    | %           |  |       | 461    | %        |  |   | 125    | %  |  |   | 178   | % 
|Financing and Other Activities    |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q2 04  Pretax income             |  |                              |       |             |  |       | 3,182  |          |  |   | 3,182  |    |  |   |      |   
|Q1 04  Pretax income             |  |                              |       |             |  |       | 164    |          |  |   | 164    |    |  |   |      |   
|Q2 03  Pretax loss               |  |                              |       |             |  |       | (3,608 | )        |  |   | (3,608 | )  |  |   |      |   
|Net Income                        |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q2 04  Net income                |  |                              | 4,417  |             |  |       | 1,710  |          |  |   | 6,127  |    |  |   | 191   |   
|Q1 04  Net income                |  |                              | 5,301  |             |  |       | 572    |          |  |   | 5,873  |    |  |   | 107   |   
|Annualized Percent Change         |  |                              | (67    | )%          |  |       | 796    | %        |  |   | 17     | %  |  |   | 314   | % 
|Q2 03  Net income (loss)         |  |                              | 14,093 |             |  |       | (1,348 | )        |  |   | 12,745 |    |  |   | (244  | ) 
|Percent Change                    |  |                              | (69    | )%          |  |       | 227    | %        |  |   | (52    | )% |  |   | 178   | % 
|Performance Ratios                |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|Q2 04                             |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|ROE                               |  |                              | 37     | %           |  |       | 88     | %        |  |   | 44     | %  |  |   | 8     | % 
|ROA                               |  |                              | 2.41   | %           |  |       |       |          |  |   | 2.87   | %  |  |   | 0.52  | % 
|NIM                               |  |                              | 3.23   | %           |  |       |       |          |  |   | 6.95   | %  |  |   | 3.02  | % 
|Efficiency ratio                  |  |                              | 71     | %           |  |       | 73     | %        |  |   | 72     | %  |  |   | 81    | % 
|Capital adjusted efficiency ratio |  |                              | 34     | %           |  |       | 14     | %        |  |   | 28     | %  |  |   | 121   | % 
|Average FTE                       |  |                              | 606    |             |  |       | 270    |          |  |   | 876    |    |  |   | 16    |   
|Q1 04                             |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|ROE                               |  |                              | 47     | %           |  |       | 44     | %        |  |   | 47     | %  |  |   | 4     | % 
|ROA                               |  |                              | 3.40   | %           |  |       |       |          |  |   | 3.33   | %  |  |   | 0.38  | % 
|NIM                               |  |                              | 3.54   | %           |  |       |       |          |  |   | 6.32   | %  |  |   | 2.88  | % 
|Efficiency ratio                  |  |                              | 68     | %           |  |       | 87     | %        |  |   | 72     | %  |  |   | 83    | % 
|Capital adjusted efficiency ratio |  |                              | 28     | %           |  |       | 15     | %        |  |   | 26     | %  |  |   | 192   | % 
|Average FTE                       |  |                              | 599    |             |  |       | 258    |          |  |   | 857    |    |  |   | 15    |   
|Q2 03                             |  |                              |        |             |  |       |        |          |  |   |        |    |  |   |       |   
|ROE                               |  |                              | 114    | %           |  |       | (59    | )%       |  |   | 87     | %  |  |   | (30   | )%
|ROA                               |  |                              | 7.44   | %           |  |       | NM     |          |  |   | 6.02   | %  |  |   | (2.92 | )%
|NIM                               |  |                              | 3.77   | %           |  |       | NM     |          |  |   | 4.27   | %  |  |   | 1.07  | % 
|Efficiency ratio                  |  |                              | 43     | %           |  |       | 158    | %        |  |   | 53     | %  |  |   | (412  | )%
|Capital adjusted efficiency ratio |  |                              | 13     | %           |  |       | 95     | %        |  |   | 17     | %  |  |   | 4,530 | % 
|Average FTE                       |  |                              | 622    |             |  |       | 219    |          |  |   | 841    |    |  |   | 11    |   

The Consumer Bank segments net income is
comparable to first quarter 2004, and decreased by 52% or
$6.6 million compared to second quarter 2003. The decrease
from the second quarter 2003 was primarily due to a 36% decrease
in mortgage production, partially offset by the increase in the
FTP credit earned by the Retail Bank.

The Home Equity Division generated net income of
$191 thousand during the second quarter 2004 as compared to
a net income of $107 thousand in the first quarter of 2004,
and a net loss of $244 thousand in the second quarter 2003.
The increase in net income from both quarters was driven by the
increase in net interest income, resulting from an increase in
average interest-earning assets as the Home Equity Division
continues to grow.

17



---



##### Table of Contents



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

|                                  |  |                            |         |          |  |     |        |              |  |       |        |    |  |   |        |    |  |   |         |   
|--------------------------------- |  | -------------------------- | ------- | -------- |  | --- | ------ | ------------ |  | ----- | ------ | -- |  | - | ------ | -- |  | - | ------- | --
|                                  |  |                           
|                                  |  | Investment Portfolio Group
|                                  |  |                           
|                                  |  | Mortgage                   |         |         
|                                  |  | Servicing-                 |         | SFR      |  |    
|                                  |  | Related                    |         | Mortgage |  |     |        | Discontinued |  |      
|                                  |  | Assets                     |         | Loans    |  | MBS |        | Products     |  | Total
|                                  |  |                            |         |          |  |     |        |              |  |      
|                                  |  |                           
|                                  |  | (Dollars in thousands)    
|Mortgage Banking Activities       |  |                            |         |          |  |     |        |              |  |       |        |    |  |   |        |    |  |   |         |   
|Q2 04  Pretax income             |  | $                          | 16,044  |          |  | $   | 11,463 |              |  | $     |       |    |  | $ |       |    |  | $ | 27,507  |   
|Q1 04  Pretax income             |  |                            | 20,505  |          |  |     | 296    |              |  |       |       |    |  |   |       |    |  |   | 20,801  |   
|Annualized Percent Change         |  |                            | (87     | )%       |  |     | 15,091 | %            |  |       |       |    |  |   |       |    |  |   | 129     | % 
|Q2 03  Pretax income             |  |                            | 15,901  |          |  |     | 2,732  |              |  |       |       |    |  |   |       |    |  |   | 18,633  |   
|Percent Change                    |  |                            | 1       | %        |  |     | 320    | %            |  |       |       |    |  |   |       |    |  |   | 48      | % 
|Investing Activities              |  |                            |         |          |  |     |        |              |  |       |        |    |  |   |        |    |  |   |         |   
|Q2 04  Pretax (loss) income      |  |                            | (37,191 | )        |  |     | 15,487 |              |  |       | 8,809  |    |  |   | (1,142 | )  |  |   | (14,037 | ) 
|Q1 04  Pretax (loss) income      |  |                            | (13,740 | )        |  |     | 18,074 |              |  |       | 8,639  |    |  |   | (1,051 | )  |  |   | 11,922  |   
|Annualized Percent Change         |  |                            | (683    | )%       |  |     | (57    | )%           |  |       | 8      | %  |  |   | (35    | )% |  |   | (871    | )%
|Q2 03  Pretax (loss) income      |  |                            | (14,246 | )        |  |     | 2,328  |              |  |       | (1,427 | )  |  |   | (1,221 | )  |  |   | (14,566 | ) 
|Percent Change                    |  |                            | (161    | )%       |  |     | 565    | %            |  |       | 717    | %  |  |   | 6      | %  |  |   | 4       | % 
|HELOC Activities                  |  |                            |         |          |  |     |        |              |  |       |        |    |  |   |        |    |  |   |         |   
|Q2 04  Pretax income             |  |                            |        |          |  |     |       |              |  |       |       |    |  |   |       |    |  |   |        |   
|Q1 04  Pretax income             |  |                            |        |          |  |     |       |              |  |       |       |    |  |   |       |    |  |   |        |   
|Annualized Percent Change         |  |                            |        |          |  |     |       |              |  |       |       |    |  |   |       |    |  |   |        |   
|Q2 03  Pretax income             |  |                            |        |          |  |     |       |              |  |       |       |    |  |   |       |    |  |   |        |   
|Percent Change                    |  |                            |        |          |  |     |       |              |  |       |       |    |  |   |       |    |  |   |        |   
|Financing and Other Activities    |  |                            |         |          |  |     |        |              |  |       |        |    |  |   |        |    |  |   |         |   
|Q2 04  Pretax income             |  |                            |        |          |  |     |       |              |  |       |       |    |  |   |       |    |  |   |        |   
|Q1 04  Pretax income             |  |                            |        |          |  |     |       |              |  |       |       |    |  |   |       |    |  |   |        |   
|Q2 03  Pretax income             |  |                            |        |          |  |     |       |              |  |       |       |    |  |   |       |    |  |   |        |   
|Net Income                        |  |                            |         |          |  |     |        |              |  |       |        |    |  |   |        |    |  |   |         |   
|Q2 04  Net (loss) income         |  |                            | (12,794 | )        |  |     | 16,305 |              |  |       | 5,329  |    |  |   | (691   | )  |  |   | 8,149   |   
|Q1 04  Net income (loss)         |  |                            | 4,093   |          |  |     | 11,114 |              |  |       | 5,227  |    |  |   | (636   | )  |  |   | 19,798  |   
|Annualized Percent Change         |  |                            | (1,650  | )%       |  |     | 187    | %            |  |       | 8      | %  |  |   | (35    | )% |  |   | (235    | )%
|Q2 03  Net income (loss)         |  |                            | 1,001   |          |  |     | 3,061  |              |  |       | (863   | )  |  |   | (739   | )  |  |   | 2,460   |   
|Percent Change                    |  |                            | (1,378  | )%       |  |     | 433    | %            |  |       | 717    | %  |  |   | 6      | %  |  |   | 231     | % 
|Performance Ratios                |  |                            |         |          |  |     |        |              |  |       |        |    |  |   |        |    |  |   |         |   
|Q2 04                             |  |                            |         |          |  |     |        |              |  |       |        |    |  |   |        |    |  |   |         |   
|ROE                               |  |                            | (25     | )%       |  |     | 28     | %            |  |       | 50     | %  |  |   | (50    | )% |  |   | 7       | % 
|ROA                               |  |                            | (3.18   | )%       |  |     | 1.36   | %            |  |       | 1.07   | %  |  |   | (4.93  | )% |  |   | 0.39    | % 
|NIM                               |  |                            | 6.69    | %        |  |     | 1.29   | %            |  |       | 1.78   | %  |  |   | 6.99   | %  |  |   | 2.16    | % 
|Efficiency ratio                  |  |                            | (114    | )%       |  |     | 2      | %            |  |       | 3      | %  |  |   | 68     | %  |  |   | 46      | % 
|Capital adjusted efficiency ratio |  |                            | 594     | %        |  |     | 5      | %            |  |       | 4      | %  |  |   | 85     | %  |  |   | 199     | % 
|Average FTE                       |  |                            | 407     |          |  |     | 9      |              |  |       | 4      |    |  |   | 25     |    |  |   | 445     |   
|Q1 04                             |  |                            |         |          |  |     |        |              |  |       |        |    |  |   |        |    |  |   |         |   
|ROE                               |  |                            | 8       | %        |  |     | 19     | %            |  |       | 57     | %  |  |   | (43    | )% |  |   | 17      | % 
|ROA                               |  |                            | 1.02    | %        |  |     | 0.92   | %            |  |       | 1.30   | %  |  |   | (4.23  | )% |  |   | 0.98    | % 
|NIM                               |  |                            | 6.05    | %        |  |     | 1.52   | %            |  |       | 2.03   | %  |  |   | 6.56   | %  |  |   | 2.28    | % 
|Efficiency ratio                  |  |                            | 59      | %        |  |     | 5      | %            |  |       | 3      | %  |  |   | 96     | %  |  |   | 26      | % 
|Capital adjusted efficiency ratio |  |                            | 179     | %        |  |     | 14     | %            |  |       | 4      | %  |  |   | 128    | %  |  |   | 69      | % 
|Average FTE                       |  |                            | 437     |          |  |     | 11     |              |  |       | 4      |    |  |   | 29     |    |  |   | 481     |   
|Q2 03                             |  |                            |         |          |  |     |        |              |  |       |        |    |  |   |        |    |  |   |         |   
|ROE                               |  |                            | 2       | %        |  |     | 11     | %            |  |       | (9     | )% |  |   | (39    | )% |  |   | 3       | % 
|ROA                               |  |                            | 0.32    | %        |  |     | 0.50   | %            |  |       | (0.26  | )% |  |   | (3.75  | )% |  |   | 0.19    | % 
|NIM                               |  |                            | 7.13    | %        |  |     | 0.94   | %            |  |       | (1.01  | )% |  |   | 7.05   | %  |  |   | 1.57    | % 
|Efficiency ratio                  |  |                            | 85      | %        |  |     | 8      | %            |  |       | (15    | )% |  |   | 56     | %  |  |   | 55      | % 
|Capital adjusted efficiency ratio |  |                            | 382     | %        |  |     | 24     | %            |  |       | 121    | %  |  |   | 69     | %  |  |   | 243     | % 
|Average FTE                       |  |                            | 382     |          |  |     | 8      |              |  |       | 6      |    |  |   | 34     |    |  |   | 430     |   

The Investment Portfolio Group segments net
income decreased by 59%, or $11.6 million compared to first
quarter 2004, and increased by 231% or $5.7 million
compared to second quarter 2003. The decrease from the first
quarter 2004 was primarily due to larger losses in servicing due
to increased amortization as a result of accelerated prepayment
activity during the quarter and losses from hedge instruments
exceeding servicing income and positive valuation adjustments in
the second quarter 2004. The increase over the second quarter
2003 was primarily due to an increase in net interest income as
the average earning assets of the Investment Portfolio Group
grew by 77% or $3.4 billion.

18



---



##### Table of Contents



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

|                                  |  |                        |         |              |  |           |         |              |  |           |         |            |  |         |        |    |  |   |         |    |  |   |         |   |  |   |         |   
|--------------------------------- |  | ---------------------- | ------- | ------------ |  | --------- | ------- | ------------ |  | --------- | ------- | ---------- |  | ------- | ------ | -- |  | - | ------- | -- |  | - | ------- | - |  | - | ------- | --
|                                  |  |                        |         | Total        |  |           |         |              |  |           |         |            |  |        
|                                  |  |                        |         | Company      |  |           |         |              |  |           |         |            |  |        
|                                  |  |                        |         | before Corp. |  |           |         |              |  | Total     |         |            |  | Total  
|                                  |  | Treasury               |         | Overhead and |  | Corporate |         |              |  | Company   |         | SAB 105    |  | Company
|                                  |  | Group                  |         | Eliminations |  | Overhead  |         | Eliminations |  | Pro Forma |         | Adjustment |  | GAAP   
|                                  |  |                        |         |              |  |           |         |              |  |           |         |            |  |        
|                                  |  |                       
|                                  |  | (Dollars in thousands)
|Mortgage Banking Activities       |  |                        |         |              |  |           |         |              |  |           |         |            |  |         |        |    |  |   |         |    |  |   |         |   |  |   |         |   
|Q2 04  Pretax income (loss)      |  | $                      |        |              |  | $         | 124,155 |              |  | $         |        |            |  | $       | (9,102 | )  |  | $ | 115,053 |    |  | $ | (52,223 | ) |  | $ | 62,830  |   
|Q1 04  Pretax income (loss)      |  |                        |        |              |  |           | 82,946  |              |  |           |        |            |  |         | (8,125 | )  |  |   | 74,821  |    |  |   |        |   |  |   | 74,821  |   
|Annualized Percent Change         |  |                        |        |              |  |           | 199     | %            |  |           |        |            |  |         | (48    | )% |  |   | 215     | %  |  |   |        |   |  |   | (64     | )%
|Q2 03  Pretax income (loss)      |  |                        |        |              |  |           | 112,597 |              |  |           |        |            |  |         | (9,753 | )  |  |   | 102,844 |    |  |   |        |   |  |   | 102,844 |   
|Percent Change                    |  |                        |        |              |  |           | 10      | %            |  |           |        |            |  |         | 7      | %  |  |   | 12      | %  |  |   |        |   |  |   | (39     | )%
|Investing Activities              |  |                        |         |              |  |           |         |              |  |           |         |            |  |         |        |    |  |   |         |    |  |   |         |   |  |   |         |   
|Q2 04  Pretax (loss) income      |  |                        |        |              |  |           | (5,620  | )            |  |           | 847     |            |  |         | 7,177  |    |  |   | 2,404   |    |  |   |        |   |  |   | 2,404   |   
|Q1 04  Pretax income             |  |                        |        |              |  |           | 20,195  |              |  |           | 708     |            |  |         | 4,984  |    |  |   | 25,887  |    |  |   |        |   |  |   | 25,887  |   
|Annualized Percent Change         |  |                        |        |              |  |           | (511    | )%           |  |           | 79      | %          |  |         | 176    | %  |  |   | (363    | )% |  |   |        |   |  |   | (363    | )%
|Q2 03  Pretax (loss) income      |  |                        |        |              |  |           | (4,699  | )            |  |           | 105     |            |  |         | 2,653  |    |  |   | (1,941  | )  |  |   |        |   |  |   | (1,941  | ) 
|Percent Change                    |  |                        |        |              |  |           | (20     | )%           |  |           | 707     | %          |  |         | 171    | %  |  |   | 224     | %  |  |   |        |   |  |   | 224     | % 
|HELOC Activities                  |  |                        |         |              |  |           |         |              |  |           |         |            |  |         |        |    |  |   |         |    |  |   |         |   |  |   |         |   
|Q2 04  Pretax income             |  |                        |        |              |  |           | 5,633   |              |  |           |        |            |  |         |       |    |  |   | 5,633   |    |  |   |        |   |  |   | 5,633   |   
|Q1 04  Pretax income             |  |                        |        |              |  |           | 4,181   |              |  |           |        |            |  |         |       |    |  |   | 4,181   |    |  |   |        |   |  |   | 4,181   |   
|Annualized Percent Change         |  |                        |        |              |  |           | 139     | %            |  |           |        |            |  |         |       |    |  |   | 139     | %  |  |   |        |   |  |   | 139     | % 
|Q2 03  Pretax income             |  |                        |        |              |  |           | 1,309   |              |  |           |        |            |  |         |       |    |  |   | 1,309   |    |  |   |        |   |  |   | 1,309   |   
|Percent Change                    |  |                        |        |              |  |           | 330     | %            |  |           |        |            |  |         |       |    |  |   | 330     | %  |  |   |        |   |  |   | 330     | % 
|Financing and Other Activities    |  |                        |         |              |  |           |         |              |  |           |         |            |  |         |        |    |  |   |         |    |  |   |         |   |  |   |         |   
|Q2 04  Pretax loss               |  |                        | (11,881 | )            |  |           | (8,699  | )            |  |           | (24,226 | )          |  |         |       |    |  |   | (32,925 | )  |  |   |        |   |  |   | (32,925 | ) 
|Q1 04  Pretax (loss) income      |  |                        | (11,441 | )            |  |           | (11,277 | )            |  |           | (24,309 | )          |  |         | 3      |    |  |   | (35,583 | )  |  |   |        |   |  |   | (35,583 | ) 
|Q2 03  Pretax (loss) income      |  |                        | (8,776  | )            |  |           | (12,384 | )            |  |           | (21,457 | )          |  |         | 7      |    |  |   | (33,834 | )  |  |   |        |   |  |   | (33,834 | ) 
|Net Income                        |  |                        |         |              |  |           |         |              |  |           |         |            |  |         |        |    |  |   |         |    |  |   |         |   |  |   |         |   
|Q2 04  Net (loss) income         |  |                        | (7,188  | )            |  |           | 69,859  |              |  |           | (14,144 | )          |  |         | (1,165 | )  |  |   | 54,550  |    |  |   | (31,595 | ) |  |   | 22,955  |   
|Q1 04  Net (loss) income         |  |                        | (6,922  | )            |  |           | 58,107  |              |  |           | (14,279 | )          |  |         | (1,898 | )  |  |   | 41,930  |    |  |   |        |   |  |   | 41,930  |   
|Annualized Percent Change         |  |                        | (15     | )%           |  |           | 81      | %            |  |           | 4       | %          |  |         | 154    | %  |  |   | 120     | %  |  |   |        |   |  |   | (181    | )%
|Q2 03  Net (loss) income         |  |                        | (5,309  | )            |  |           | 58,578  |              |  |           | (12,918 | )          |  |         | (4,291 | )  |  |   | 41,369  |    |  |   |        |   |  |   | 41,369  |   
|Percent Change                    |  |                        | (35     | )%           |  |           | 19      | %            |  |           | (9      | )%         |  |         | 73     | %  |  |   | 32      | %  |  |   |        |   |  |   | (45     | )%
|Performance Ratios                |  |                        |         |              |  |           |         |              |  |           |         |            |  |         |        |    |  |   |         |    |  |   |         |   |  |   |         |   
|Q2 04                             |  |                        |         |              |  |           |         |              |  |           |         |            |  |         |        |    |  |   |         |    |  |   |         |   |  |   |         |   
|ROE                               |  |                        |        |              |  |           | 28      | %            |  |           |        |            |  |         |       |    |  |   | 19      | %  |  |   |         |   |  |   | 8       | % 
|ROA                               |  |                        |        |              |  |           | 1.68    | %            |  |           |        |            |  |         |       |    |  |   | 1.29    | %  |  |   |         |   |  |   | 0.54    | % 
|NIM                               |  |                        |        |              |  |           | 2.71    | %            |  |           |        |            |  |         |       |    |  |   | 2.75    | %  |  |   |         |   |  |   | 2.75    | % 
|Efficiency ratio                  |  |                        |        |              |  |           | 45      | %            |  |           |        |            |  |         |       |    |  |   | 56      | %  |  |   |         |   |  |   | 75      | % 
|Capital adjusted efficiency ratio |  |                        |        |              |  |           | 53      | %            |  |           |        |            |  |         |       |    |  |   | 74      | %  |  |   |         |   |  |   | 129     | % 
|Average FTE                       |  |                        | 24      |              |  |           | 3,451   |              |  |           | 610     |            |  |         |       |    |  |   | 4,061   |    |  |   |         |   |  |   | 4,061   |   
|Q1 04                             |  |                        |         |              |  |           |         |              |  |           |         |            |  |         |        |    |  |   |         |    |  |   |         |   |  |   |         |   
|ROE                               |  |                        |        |              |  |           | 26      | %            |  |           |        |            |  |         |       |    |  |   | 16      | %  |  |   |         |   |  |   | 16      | % 
|ROA                               |  |                        |        |              |  |           | 1.63    | %            |  |           |        |            |  |         |       |    |  |   | 1.16    | %  |  |   |         |   |  |   | 1.16    | % 
|NIM                               |  |                        |        |              |  |           | 2.79    | %            |  |           |        |            |  |         |       |    |  |   | 2.82    | %  |  |   |         |   |  |   | 2.82    | % 
|Efficiency ratio                  |  |                        |        |              |  |           | 48      | %            |  |           |        |            |  |         |       |    |  |   | 62      | %  |  |   |         |   |  |   | 62      | % 
|Capital adjusted efficiency ratio |  |                        |        |              |  |           | 57      | %            |  |           |        |            |  |         |       |    |  |   | 87      | %  |  |   |         |   |  |   | 87      | % 
|Average FTE                       |  |                        | 25      |              |  |           | 3,325   |              |  |           | 596     |            |  |         |       |    |  |   | 3,921   |    |  |   |         |   |  |   | 3,921   |   
|Q2 03                             |  |                        |         |              |  |           |         |              |  |           |         |            |  |         |        |    |  |   |         |    |  |   |         |   |  |   |         |   
|ROE                               |  |                        |        |              |  |           | 32      | %            |  |           |        |            |  |         |       |    |  |   | 18      | %  |  |   |         |   |  |   | 18      | % 
|ROA                               |  |                        |        |              |  |           | 2.18    | %            |  |           |        |            |  |         |       |    |  |   | 1.52    | %  |  |   |         |   |  |   | 1.52    | % 
|NIM                               |  |                        |        |              |  |           | 2.67    | %            |  |           |        |            |  |         |       |    |  |   | 2.73    | %  |  |   |         |   |  |   | 2.73    | % 
|Efficiency ratio                  |  |                        |        |              |  |           | 45      | %            |  |           |        |            |  |         |       |    |  |   | 58      | %  |  |   |         |   |  |   | 58      | % 
|Capital adjusted efficiency ratio |  |                        |        |              |  |           | 44      | %            |  |           |        |            |  |         |       |    |  |   | 73      | %  |  |   |         |   |  |   | 73      | % 
|Average FTE                       |  |                        | 23      |              |  |           | 2,999   |              |  |           | 506     |            |  |         |       |    |  |   | 3,505   |    |  |   |         |   |  |   | 3,505   |   

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##### Table of Contents






MORTGAGE BANKING ACTIVITIES




Loan Production

During the second quarter of 2004, the
Companys loan production was a record $9.7 billion, a
36% increase over the $7.1 billion of loans produced during
the first quarter of 2004 and a 19% increase over the
$8.2 billion loans produced in the second quarter of 2003.
Our focus on less cyclical products, such as Alt-A, subprime,
HELOCs and consumer construction, resulted in continued growth
in each of these products in the second quarter 2004 compared to
the first quarter of 2004 and second quarter 2003. This increase
more than offset the decrease in our agency conforming and jumbo
products which are more cyclical in nature, closely tracking
changes in the overall mortgage market. Additionally, we
continued to further penetrate the purchase market, increasing
our purchase transactions 61% year over year and successfully
adapted our production mix to the demand for adjustable rate
mortgages (ARMs) with 61% of our mortgage production now
consisting of ARMs compared with only 29% a year ago. Further,
our Investment Portfolio Groups customer retention program
continues to show strong production, originating
$418 million in loans, a 48% increase over the first
quarter 2004 volume.

Total production by loan type was as follows:

|                                     |                   |                              |       |          |       |         |       |           |       |         |     |     |    |   |       |       |       |  |     |     |    |  
|------------------------------------ | ----------------- | ---------------------------- | ----- | -------- | ----- | ------- | ----- | --------- | ----- | ------- | --- | --- | -- | - | ----- | ----- | ----- |  | --- | --- | -- | -
|                                     |                   |                             
|                                     |                   | Three Months Ended          
|                                     |                   |                             
|                                     |                   | June 30,                     |       | June 30, |       | Percent |       | March 31, |       | Percent
|                                     |                   | 2004                         |       | 2003     |       | Change  |       | 2004      |       | Change 
|                                     |                   |                              |       |          |       |         |       |           |       |        
|                                     |                   |                             
|                                     |                   | (Dollars in millions)       
|Volume by product                    |                   |                              |       |          |       |         |       |           |       |         |     |     |    |   |       |       |       |  |     |    
|Prime(1)                             |                   |                              |       |          |       |         |       |           |       |         |     |     |    |   |       |       |       |  |     |    
|                                     | Alt-A             |                              | $     | 6,447    |       |         | $     | 4,081     |       |         |     | 58  | %  |   | $     | 4,584 |       |  |     | 41  | % 
|                                     | Agency conforming |                              |       | 511      |       |         |       | 1,471     |       |         |     | (65 | )% |   |       | 608   |       |  |     | (16 | )%
|                                     | Jumbo             |                              |       | 730      |       |         |       | 1,192     |       |         |     | (39 | )% |   |       | 407   |       |  |     | 79  | % 
|Subprime(1)                          |                   |                              | 567   |          |       |         | 465   |           |       |         | 22  | %   |    |   | 458   |       |       |  | 24  | %  
|Home equity line of credit(2)        |                   |                              | 408   |          |       |         | 229   |           |       |         | 78  | %   |    |   | 244   |       |       |  | 67  | %  
|Consumer construction(2)             |                   |                              | 760   |          |       |         | 518   |           |       |         | 47  | %   |    |   | 603   |       |       |  | 26  | %  
|                                     |                   |                              |       |          |       |         |       |           |       |         |     |     |    |   |       |       |       |  |     |    
|                                     |                   | Subtotal mortgage production |       |          | 9,423 |         |       |           | 7,956 |         |     |     | 18 | % |       |       | 6,904 |  |     |     | 36 | %
|Subdivision construction commitments |                   |                              | 304   |          |       |         | 237   |           |       |         | 28  | %   |    |   | 242   |       |       |  | 26  | %  
|                                     |                   |                              |       |          |       |         |       |           |       |         |     |     |    |   |       |       |       |  |     |    
|                                     |                   | Total production volume      |       | $        | 9,727 |         |       | $         | 8,193 |         |     |     | 19 | % |       | $     | 7,146 |  |     |     | 36 | %
|                                     |                   |                              |       |          |       |         |       |           |       |         |     |     |    |   |       |       |       |  |     |    
|Mortgage  Web-based
    production  |                   | $                            | 5,973 |          |       | $       | 5,994 |           |       |         | 0   | %   |    | $ | 4,319 |       |       |  | 38  | %  
|Mortgage pipeline at period end(3)   |                   | $                            | 5,179 |          |       | $       | 6,929 |           |       |         | (25 | )%  |    | $ | 5,949 |       |       |  | (13 | )% 



---



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

The table below provides the mix of production
for the quarters ended June 30, 2004 and 2003, and
March 31, 2004, based on the interest rate characteristics
and amortization type of the loan:

|                     |  |                    |    |          |  |           |    |   |  |  |    |  
|-------------------- |  | ------------------ | -- | -------- |  | --------- | -- | - |  |  | -- | -
|                     |  |                   
|                     |  | Three Months Ended
|                     |  |                   
|                     |  | June 30,           |    | June 30, |  | March 31,
|                     |  | 2004               |    | 2003     |  | 2004     
|                     |  |                    |    |          |  |          
|Fixed Rate Mortgages |  |                    | 39 | %        |  |           | 71 | % |  |  | 44 | %
|Hybrid ARMs          |  |                    | 36 | %        |  |           | 16 | % |  |  | 44 | %
|ARMs                 |  |                    | 25 | %        |  |           | 13 | % |  |  | 12 | %

The following table details the mix of our
production and pipeline between purchase, cash-out refinance and
rate/term refinance transactions as of and for the quarters
ended June 30, 2004, June 30, 2003, and

20



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##### Table of Contents



March 31, 2004. As refinance volumes
industry-wide have declined, IndyMac has increased its
penetration of the market with respect to purchase transactions,
mitigating the decline in refinance related mortgage
transactions.


|                                 |  |                                               |       |          |  |         |       |           |  |         |     |    |  |   |       |   |  |  |     |   
|-------------------------------- |  | --------------------------------------------- | ----- | -------- |  | ------- | ----- | --------- |  | ------- | --- | -- |  | - | ----- | - |  |  | --- | --
|                                 |  |                                              
|                                 |  | As of and for the Quarters Ended Months Ended
|                                 |  |                                              
|                                 |  | June 30,                                      |       | June 30, |  | Percent |       | March 31, |  | Percent
|                                 |  | 2004                                          |       | 2003     |  | Change  |       | 2004      |  | Change 
|                                 |  |                                               |       |          |  |         |       |           |  |        
|                                 |  |                                              
|                                 |  | (Dollars in millions)                        
|Mortgage loan production:        |  |                                               |       |          |  |         |       |           |  |         |     |    |  |   |       |   |  |  |     |   
|Purchase transactions            |  | $                                             | 3,882 |          |  | $       | 2,408 |           |  |         | 61  | %  |  | $ | 2,669 |   |  |  | 45  | % 
|Cash-out refinance transactions  |  |                                               | 3,301 |          |  |         | 3,213 |           |  |         | 3   | %  |  |   | 2,562 |   |  |  | 29  | % 
|Rate/term refinance transactions |  |                                               | 2,240 |          |  |         | 2,335 |           |  |         | (4  | )% |  |   | 1,673 |   |  |  | 34  | % 
|                                 |  |                                               |       |          |  |         |       |           |  |         |     |    |  |   |       |   |  |  |     |   
|Total mortgage loan production   |  | $                                             | 9,423 |          |  | $       | 7,956 |           |  |         | 18  | %  |  | $ | 6,904 |   |  |  | 36  | % 
|                                 |  |                                               |       |          |  |         |       |           |  |         |     |    |  |   |       |   |  |  |     |   
|% purchase transactions          |  |                                               | 41    | %        |  |         | 30    | %         |  |         |     |    |  |   | 39    | % |  |  |     |   
|Mortgage pipeline:               |  |                                               |       |          |  |         |       |           |  |         |     |    |  |   |       |   |  |  |     |   
|Purchase transactions            |  | $                                             | 2,542 |          |  | $       | 1,714 |           |  |         | 48  | %  |  | $ | 2,249 |   |  |  | 13  | % 
|Cash-out refinance transactions  |  |                                               | 1,737 |          |  |         | 2,560 |           |  |         | (32 | )% |  |   | 1,900 |   |  |  | (9  | )%
|Rate/term refinance transactions |  |                                               | 900   |          |  |         | 2,655 |           |  |         | (66 | )% |  |   | 1,800 |   |  |  | (50 | )%
|                                 |  |                                               |       |          |  |         |       |           |  |         |     |    |  |   |       |   |  |  |     |   
|Mortgage pipeline at period end  |  | $                                             | 5,179 |          |  | $       | 6,929 |           |  |         | (25 | )% |  | $ | 5,949 |   |  |  | (13 | )%
|                                 |  |                                               |       |          |  |         |       |           |  |         |     |    |  |   |       |   |  |  |     |   
|% purchase transactions          |  |                                               | 49    | %        |  |         | 25    | %         |  |         |     |    |  |   | 38    | % |  |  |     |   

During the six months ended June 30, 2004,
the Company produced $16.9 billion of loans, which was a
14% increase over the $14.8 billion of loans produced
during the six months ended June 30, 2003. Total production
by loan type was as follows:

|                                     |                   |                              |        |          |        |         |        |       |        |  |    |     |    |  
|------------------------------------ | ----------------- | ---------------------------- | ------ | -------- | ------ | ------- | ------ | ----- | ------ |  | -- | --- | -- | -
|                                     |                   |                             
|                                     |                   | Six Months Ended            
|                                     |                   |                             
|                                     |                   | June 30,                     |        | June 30, |        | Percent
|                                     |                   | 2004                         |        | 2003     |        | Change 
|                                     |                   |                              |        |          |        |        
|                                     |                   |                             
|                                     |                   | (Dollars in millions)       
|Volume by product                    |                   |                              |        |          |        |         |        |       |        |  |    |    
|Prime(1)                             |                   |                              |        |          |        |         |        |       |        |  |    |    
|                                     | Alt-A             |                              | $      | 11,031   |        |         | $      | 7,098 |        |  |    | 55  | % 
|                                     | Agency conforming |                              |        | 1,119    |        |         |        | 2,892 |        |  |    | (61 | )%
|                                     | Jumbo             |                              |        | 1,137    |        |         |        | 2,205 |        |  |    | (48 | )%
|Subprime(1)                          |                   |                              | 1,025  |          |        |         | 849    |       |        |  | 21 | %  
|Home equity line of credit(2)        |                   |                              | 652    |          |        |         | 409    |       |        |  | 59 | %  
|Consumer construction(2)             |                   |                              | 1,363  |          |        |         | 958    |       |        |  | 42 | %  
|                                     |                   |                              |        |          |        |         |        |       |        |  |    |    
|                                     |                   | Subtotal mortgage production |        |          | 16,327 |         |        |       | 14,411 |  |    |     | 13 | %
|Subdivision construction commitments |                   |                              | 546    |          |        |         | 367    |       |        |  | 49 | %  
|                                     |                   |                              |        |          |        |         |        |       |        |  |    |    
|                                     |                   | Total production volume      |        | $        | 16,873 |         |        | $     | 14,778 |  |    |     | 14 | %
|                                     |                   |                              |        |          |        |         |        |       |        |  |    |    
|Mortgage  Web-based
    production  |                   | $                            | 10,292 |          |        | $       | 10,914 |       |        |  | (6 | )% 



---



|    |                 
|--- | ----------------
|(1) | Fundings.       
|   
|(2) | New commitments.




Mortgage Production by Division and
Channel

IndyMac generates its mortgage production through
multiple channels on a nationwide basis with a concentration in
those regions of the country in which we have regional offices
or in which there are higher home prices, including California,
Florida, New Jersey and New York. Our highest concentration of
mortgage

21



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##### Table of Contents



loans relates to properties in California.
Mortgages secured by California properties accounted for 41% of
the mortgage loans we produced in the second quarter of 2004
based on dollar value, and 33% based on number of loans. This is
a decrease from the level of concentration during the first
quarter of 2004, which totaled 45% and 37%, respectively. We
expect this trend to continue in the future as we execute on our
plan to double the number of regional offices outside of
California over the next five years.


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

The following table shows production and key
performance indicators of the various relationship businesses of
IndyMac Mortgage Bank during the three and six months ended
June 30, 2004.

|                                                                        |                                                  |                                                 |      |       |       |     |     |     |     |       |      |       |       |   |     |     |     |   |      |       |       |  
|----------------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------------- | ---- | ----- | ----- | --- | --- | --- | --- | ----- | ---- | ----- | ----- | - | --- | --- | --- | - | ---- | ----- | ----- | -
|                                                                        |                                                  |                                                
|                                                                        |                                                  | Relationship Businesses  IndyMac Mortgage Bank
|                                                                        |                                                  |                                                
|Three Months Ended June 30, 2004                                        |                                                  | B2B                                             |      | B2R   |       | HCL |     | HBD |     | Total
|                                                                        |                                                  |                                                 |      |       |       |     |     |     |     |      
|                                                                        |                                                  |                                                
|                                                                        |                                                  | (Dollars in millions)                          
|Volume by Channel and Customer
    Source                               |                                                  |                                                 |      |       |       |     |     |     |     |       |      |       |       |   |     |     |     |   |      |      
|                                                                        | Wholesale                                        |                                                 | $    | 3,669 |       |     | $   |    |     |       | $    | 560   |       |   | $   |    |     |   | $    | 4,229 |      
|                                                                        | Correspondent/ Mortgage bankers                  |                                                 |      | 864   |       |     |     |    |     |       |      | 310   |       |   |     |    |     |   |      | 1,174 |      
|                                                                        | Correspondent/ Financial institutions            |                                                 |      | 55    |       |     |     |    |     |       |      |      |       |   |     |    |     |   |      | 55    |      
|                                                                        | Conduit                                          |                                                 |      | 1,792 |       |     |     |    |     |       |      |      |       |   |     |    |     |   |      | 1,792 |      
|                                                                        | Realtors                                         |                                                 |      |      |       |     |     | 153 |     |       |      |      |       |   |     |    |     |   |      | 153   |      
|                                                                        | Builder/Builder affiliates                       |                                                 |      |      |       |     |     |    |     |       |      | 52    |       |   |     | 282 |     |   |      | 334   |      
|                                                                        | Consumer direct marketing by HCL                 |                                                 |      |      |       |     |     |    |     |       |      | 148   |       |   |     |    |     |   |      | 148   |      
|                                                                        |                                                  |                                                 |      |       |       |     |     |     |     |       |      |       |       |   |     |     |     |   |      |      
|                                                                        |                                                  | Subtotal mortgage production                    |      |       | 6,380 |     |     |     | 153 |       |      |       | 1,070 |   |     |     | 282 |   |      |       | 7,885 |  
|                                                                        | Builder and subdivision construction commitments |                                                 |      |      |       |     |     |    |     |       |      |      |       |   |     | 304 |     |   |      | 304   |      
|                                                                        |                                                  |                                                 |      |       |       |     |     |     |     |       |      |       |       |   |     |     |     |   |      |      
|                                                                        |                                                  | Total relationship businesses production volume |      | $     | 6,380 |     |     | $   | 153 |       |      | $     | 1,070 |   |     | $   | 586 |   |      | $     | 8,189 |  
|                                                                        |                                                  |                                                 |      |       |       |     |     |     |     |       |      |       |       |   |     |     |     |   |      |      
|Percentage of total production                                          |                                                  |                                                 | 65.6 | %     |       |     | 1.6 | %   |     |       | 11.0 | %     |       |   | 6.0 | %   |     |   | 84.2 | %    
|                                                                        |                                                  | Total production second quarter 2003            |      | $     | 5,072 |     |     | $   | 279 |       |      | $     | 748   |   |     | $   | 358 |   |      | $     | 6,457 |  
|                                                                        |                                                  | Total production first quarter 2004             |      | $     | 4,472 |     |     | $   | 109 |       |      | $     | 872   |   |     | $   | 409 |   |      | $     | 5,862 |  
|Composition of mortgage production                                      |                                                  |                                                 |      |       |       |     |     |     |     |       |      |       |       |   |     |     |     |   |      |      
|                                                                        |                                                  | Purchase transactions                           |      |       | 38    | %   |     |     | 45  | %     |      |       | 98    | % |     |     | 85  | % |      |       | 47    | %
|                                                                        |                                                  | Cash-out refinance transactions                 |      |       | 40    | %   |     |     | 32  | %     |      |       | 0     | % |     |     | 10  | % |      |       | 34    | %
|                                                                        |                                                  | Rate/term refinance transactions                |      |       | 22    | %   |     |     | 23  | %     |      |       | 2     | % |     |     | 5   | % |      |       | 19    | %
|Key Performance Indicators for the Three
    Months Ended June 30, 2004 |                                                  |                                                 |      |       |       |     |     |     |     |       |      |       |       |   |     |     |     |   |      |      
|Active Customers:(1)                                                    |                                                  |                                                 |      |       |       |     |     |     |     |       |      |       |       |   |     |     |     |   |      |      
|                                                                        | Average monthly active customers                 |                                                 |      | 2,527 |       |     |     | 138 |     |       |      | 453   |       |   |     | 57  |     |   |      | 3,175 |      
|                                                                        | Active customers during the quarter              |                                                 |      | 4,273 |       |     |     | 262 |     |       |      | 1,079 |       |   |     | 88  |     |   |      | 5,702 |      
|                                                                        | Net new customers during the quarter(2)          |                                                 |      | 874   |       |     |     | 162 |     |       |      | N/A   |       |   |     | 29  |     |   |      | 1,065 |      
|Sales personnel                                                         |                                                  |                                                 | 476  |       |       |     | 57  |     |     |       | 119  |       |       |   | 56  |     |     |   | 708  |      
|Cost per funded mortgage loan (bps)                                     |                                                  |                                                 | 62   |       |       |     | 269 |     |     |       | 82   |       |       |   | 120 |     |     |   | N/A  |      

22



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|                                                                                     |                                     |                                                 |     |     |   |     |    |     |    |       |    |    |   |  |     |    |   |  |     |    |  
|------------------------------------------------------------------------------------ | ----------------------------------- | ----------------------------------------------- | --- | --- | - | --- | -- | --- | -- | ----- | -- | -- | - |  | --- | -- | - |  | --- | -- | -
|                                                                                     |                                     |                                                
|                                                                                     |                                     | Relationship Businesses  IndyMac Mortgage Bank
|                                                                                     |                                     |                                                
|Three Months Ended June 30, 2004                                                     |                                     | B2B                                             |     | B2R |   | HCL |    | HBD |    | Total
|                                                                                     |                                     |                                                 |     |     |   |     |    |     |    |      
|                                                                                     |                                     |                                                
|                                                                                     |                                     | (Dollars in millions)                          
|Percentage Change for the Three Months
    Ended
    June 30, 2004 vs. June 30, 2003 |                                     |                                                 |     |     |   |     |    |     |    |       |    |    |   |  |     |    |   |  |     |   
|Active Customers:(1)                                                                 |                                     |                                                 |     |     |   |     |    |     |    |       |    |    |   |  |     |    |   |  |     |   
|                                                                                     | Average monthly active customers    |                                                 |     | 14  | % |     |    | (45 | )% |       |    | 80 | % |  |     | 90 | % |  |     | 16 | %
|                                                                                     | Active customers during the quarter |                                                 |     | 25  | % |     |    | (48 | )% |       |    | 77 | % |  |     | 80 | % |  |     | 25 | %
|Sales personnel                                                                      |                                     |                                                 | 47  | %   |   |     | (4 | )%  |    |       | 83 | %  |   |  | 157 | %  |   |  | 47  | % 
|Cost per funded mortgage loan (bps)                                                  |                                     |                                                 | (15 | )%  |   |     | 42 | %   |    |       | 2  | %  |   |  | 16  | %  |   |  | N/A |   



---



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

|                                                                      |                                                  |                                                 |                                                             |       |        |       |     |     |     |       |      |       |       |       |     |     |     |     |      |       |        |        | 
|--------------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------------- | ----------------------------------------------------------- | ----- | ------ | ----- | --- | --- | --- | ----- | ---- | ----- | ----- | ----- | --- | --- | --- | --- | ---- | ----- | ------ | ------ | 
|                                                                      |                                                  |                                                
|                                                                      |                                                  | Relationship Businesses  IndyMac Mortgage Bank
|                                                                      |                                                  |                                                
|Six Months Ended June 30, 2004                                        |                                                  | B2B                                             |                                                             | B2R   |        | HCL   |     | HBD |     | Total
|                                                                      |                                                  |                                                 |                                                             |       |        |       |     |     |     |      
|                                                                      |                                                  |                                                
|                                                                      |                                                  | (Dollars in millions)                          
|Volume by Channel and Customer
    Source                             |                                                  |                                                 |                                                             |       |        |       |     |     |     |       |      |       |       |       |     |     |     |     |      |      
|                                                                      | Wholesale                                        |                                                 | $                                                           | 6,320 |        |       | $   |    |     |       | $    | 993   |       |       | $   |    |     |     | $    | 7,313 |       
|                                                                      | Correspondent/ Mortgage bankers                  |                                                 |                                                             | 1,475 |        |       |     |    |     |       |      | 578   |       |       |     |    |     |     |      | 2,053 |       
|                                                                      | Correspondent/ Financial institutions            |                                                 |                                                             | 95    |        |       |     |    |     |       |      |      |       |       |     |    |     |     |      | 95    |       
|                                                                      | Conduit                                          |                                                 |                                                             | 2,962 |        |       |     |    |     |       |      |      |       |       |     |    |     |     |      | 2,962 |       
|                                                                      | Realtors                                         |                                                 |                                                             |      |        |       |     | 262 |     |       |      |      |       |       |     |    |     |     |      | 262   |       
|                                                                      | Builder/Builder affiliates                       |                                                 |                                                             |      |        |       |     |    |     |       |      | 90    |       |       |     | 449 |     |     |      | 539   |       
|                                                                      | Consumer direct marketing by HCL                 |                                                 |                                                             |      |        |       |     |    |     |       |      | 281   |       |       |     |    |     |     |      | 281   |       
|                                                                      |                                                  |                                                 |                                                             |       |        |       |     |     |     |       |      |       |       |       |     |     |     |     |      |      
|                                                                      |                                                  | Subtotal mortgage production                    |                                                             |       | 10,852 |       |     |     | 262 |       |      |       | 1,942 |       |     |     | 449 |     |      |       | 13,505 |       
|                                                                      | Builder and subdivision construction commitments |                                                 |                                                             |      |        |       |     |    |     |       |      |      |       |       |     | 546 |     |     |      | 546   |       
|                                                                      |                                                  |                                                 |                                                             |       |        |       |     |     |     |       |      |       |       |       |     |     |     |     |      |      
|                                                                      |                                                  | Total relationship businesses production volume |                                                             | $     | 10,852 |       |     | $   | 262 |       |      | $     | 1,942 |       |     | $   | 995 |     |      | $     | 14,051 |       
|                                                                      |                                                  |                                                 |                                                             |       |        |       |     |     |     |       |      |       |       |       |     |     |     |     |      |      
|Percentage of total production                                        |                                                  |                                                 | 64.3                                                        | %     |        |       | 1.6 | %   |     |       | 11.5 | %     |       |       | 5.9 | %   |     |     | 83.3 | %    
|                                                                      |                                                  |                                                 | Total production for the six months ended
    June 30, 2003 |       | $      | 9,075 |     |     | $   | 526   |      |       | $     | 1,428 |     |     | $   | 580 |      |       | $      | 11,609 | 
|Composition of mortgage production                                    |                                                  |                                                 |                                                             |       |        |       |     |     |     |       |      |       |       |       |     |     |     |     |      |      
|                                                                      |                                                  | Purchase transactions                           |                                                             |       | 36     | %     |     |     | 48  | %     |      |       | 98    | %     |     |     | 85  | %   |      |       | 47     | %     
|                                                                      |                                                  | Cash-out refinance transactions                 |                                                             |       | 41     | %     |     |     | 32  | %     |      |       | 0     | %     |     |     | 10  | %   |      |       | 34     | %     
|                                                                      |                                                  | Rate/term refinance transactions                |                                                             |       | 23     | %     |     |     | 20  | %     |      |       | 2     | %     |     |     | 5   | %   |      |       | 19     | %     
|Key Performance Indicators for the Six Months
    Ended June 30, 2004 |                                                  |                                                 |                                                             |       |        |       |     |     |     |       |      |       |       |       |     |     |     |     |      |      
|Active Customers:(1)                                                  |                                                  |                                                 |                                                             |       |        |       |     |     |     |       |      |       |       |       |     |     |     |     |      |      
|                                                                      | Average monthly active customers                 |                                                 |                                                             | 2,294 |        |       |     | 131 |     |       |      | 389   |       |       |     | 46  |     |     |      | 2,860 |       
|                                                                      | Active customers during the period               |                                                 |                                                             | 5,321 |        |       |     | 391 |     |       |      | 1,560 |       |       |     | 102 |     |     |      | 7,374 |       
|                                                                      | Net new customers during the period(2)           |                                                 |                                                             | 1,605 |        |       |     | 417 |     |       |      | N/A   |       |       |     | 61  |     |     |      | 2,083 |       
|Cost per funded mortgage loan (bps)                                   |                                                  |                                                 | 68                                                          |       |        |       | 311 |     |     |       | 89   |       |       |       | 136 |     |     |     | N/A  |      

23



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##### Table of Contents



|                                                                               |                                    |                                                 |    |     |   |     |     |     |    |       |    |    |   |  |    |    |   |  |     |    |  
|------------------------------------------------------------------------------ | ---------------------------------- | ----------------------------------------------- | -- | --- | - | --- | --- | --- | -- | ----- | -- | -- | - |  | -- | -- | - |  | --- | -- | -
|                                                                               |                                    |                                                
|                                                                               |                                    | Relationship Businesses  IndyMac Mortgage Bank
|                                                                               |                                    |                                                
|Six Months Ended June 30, 2004                                                 |                                    | B2B                                             |    | B2R |   | HCL |     | HBD |    | Total
|                                                                               |                                    |                                                 |    |     |   |     |     |     |    |      
|                                                                               |                                    |                                                
|                                                                               |                                    | (Dollars in millions)                          
|Percentage Change for the Six Months Ended
    June 30, 2004 vs. June 30, 2003 |                                    |                                                 |    |     |   |     |     |     |    |       |    |    |   |  |    |    |   |  |     |   
|Active Customers:(1)                                                           |                                    |                                                 |    |     |   |     |     |     |    |       |    |    |   |  |    |    |   |  |     |   
|                                                                               | Average monthly active customers   |                                                 |    | 9   | % |     |     | (45 | )% |       |    | 72 | % |  |    | 59 | % |  |     | 10 | %
|                                                                               | Active customers during the period |                                                 |    | 28  | % |     |     | (45 | )% |       |    | 73 | % |  |    | 55 | % |  |     | 27 | %
|Cost per funded mortgage loan (bps)                                            |                                    |                                                 | (9 | )%  |   |     | (57 | )%  |    |       | 13 | %  |   |  | 29 | %  |   |  | N/A |   



---



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

IndyMac Mortgage Banks production increased
40% from the three months ended March 31, 2004 to the three
months ended June 30, 2004, due to strong execution on
IndyMacs strategies to increase market share in the
mortgage industry. Active customers during the quarter in our
largest channel  B2B  grew 25% compared to
the second quarter of 2003. This growth is the direct result of
IndyMacs focus on increasing the size of its sales force
nationwide and the newer sales people demonstrating increasing
effectiveness as they gain experience with IndyMacs
products and technology. We have been successful in attracting
experienced, quality salespeople because of our less
interest-rate sensitive products combined with our technology
advantage. In addition, we have improved our production of
subprime mortgages and purchase mortgages through a specific
focus on sales people with experience in these areas to generate
relationships with purchase-oriented and subprime-oriented
originators.

Our construction lending divisions continued to
take advantage of the strong purchase market as new home
construction starts remained near seasonally adjusted record
levels. Our consumer construction division, Home Construction
Lending (HCL) produced new consumer construction loan
commitments of $760 million, 26% higher than the first quarter
of 2004. Similarly, our Home Builder Division (HBD)
produced new construction financing commitments of
$304 million, up 26% from the first quarter of 2004, and
permanent home mortgages of $282 million reflecting an
increase of 69% relative to the first quarter of this year.

Our Realtor channel  B2R 
continued its efforts to refocus on its core purpose, which is
to capture purchase volume and build long-term relationships
with Realtors. Steps taken during the first quarter of this year
to improve execution resulted in a 40% increase in loan volume
from our Realtor customers. We continue to expect this business
to show improvement with Realtors as the year progresses.

The following table shows production and other
key performance indicators of the various consumer direct
businesses of IndyMac Consumer Bank and Home Equity Division
during the three and six months ended June 30, 2004. In
addition, during the second quarter and six months ended
June 30, 2004, as shown

24



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##### Table of Contents



below, our Investment Portfolio Group generated
$418 million and $700 million of loans, respectively,
through its customer retention program in connection with its
servicing portfolio.


|                                                |                                   |                                         |     |        |       |            |     |             |     |           |      |     |       |  |     |     |    |  |     |    |     | 
|----------------------------------------------- | --------------------------------- | --------------------------------------- | --- | ------ | ----- | ---------- | --- | ----------- | --- | --------- | ---- | --- | ----- |  | --- | --- | -- |  | --- | -- | --- | 
|                                                |                                   |                                        
|                                                |                                   | Consumer Direct Businesses             
|                                                |                                   |                                        
|                                                |                                   |                                         |     |       
|                                                |                                   | IndyMac Consumer Bank                   |     |       
|                                                |                                   |                                         |     | Home   |       | Investment
|                                                |                                   |                                         |     | Retail |       |            |     | Equity      |     | Portfolio
|Three Months Ended June 30, 2004                |                                   | B2C                                     |     | Bank   |       | Total      |     | Division(1) |     | Group    
|                                                |                                   |                                         |     |        |       |            |     |             |     |          
|                                                |                                   |                                        
|                                                |                                   | (Dollars in millions)                  
|Volume by Channel and Source                    |                                   |                                         |     |        |       |            |     |             |     |           |      |     |       |  |     |     |    |  |     |   
|Web-based Production:                           |                                   |                                         |     |        |       |            |     |             |     |           |      |     |       |  |     |     |    |  |     |   
|                                                | Direct at www.indymacmortgage.com |                                         | $   | 125    |       |            | $   |            |     |           | $    | 125 |       |  | $   |    |    |  | $   |   |    
|                                                | Indirect Web-based leads          |                                         |     | 122    |       |            |     |            |     |           |      | 122 |       |  |     |    |    |  |     |   |    
|Cross-marketing and portfolio refinancing       |                                   |                                         | 517 |        |       |            | 55  |             |     |           | 572  |     |       |  |    |     |    |  | 418 |   
|Direct telemarketing and affinity relationships |                                   |                                         | 172 |        |       |            |    |             |     |           | 172  |     |       |  | 44  |     |    |  |    |   
|Retail banking branches                         |                                   |                                         |    |        |       |            | 85  |             |     |           | 85   |     |       |  |    |     |    |  |    |   
|                                                |                                   |                                         |     |        |       |            |     |             |     |           |      |     |       |  |     |     |    |  |     |   
|                                                |                                   | Total consumer direct production volume |     | $      | 936   |            |     | $           | 140 |           |      | $   | 1,076 |  |     | $   | 44 |  |     | $  | 418 | 
|                                                |                                   |                                         |     |        |       |            |     |             |     |           |      |     |       |  |     |     |    |  |     |   
|Percentage of total production                  |                                   |                                         | 9.6 | %      |       |            | 1.5 | %           |     |           | 11.1 | %   |       |  | 0.5 | %   |    |  | 4.2 | % 
|                                                |                                   | Total production second quarter 2003    |     | $      | 1,571 |            |     | $           | 119 |           |      | $   | 1,690 |  |     | $   | 46 |  |     |    | N/A | 
|                                                |                                   | Total production first quarter 2004     |     | $      | 878   |            |     | $           | 89  |           |      | $   | 967   |  |     | $   | 35 |  |     | $  | 282 | 
|Composition of mortgage production:             |                                   |                                         |     |        |       |            |     |             |     |           |      |     |       |  |     |     |    |  |     |   
|                                                | Purchase transactions             |                                         |     | 10     | %     |            |     | 24          | %   |           |      | 12  | %     |  |     | N/A |    |  |     | 1  | %  
|                                                | Cash-out refinance transactions   |                                         |     | 56     | %     |            |     | 51          | %   |           |      | 55  | %     |  |     | N/A |    |  |     | 1  | %  
|                                                | Rate/term refinance transactions  |                                         |     | 34     | %     |            |     | 25          | %   |           |      | 33  | %     |  |     | N/A |    |  |     | 98 | %  

|                                                |                                   |                                                             |      |        |       |            |     |             |     |           |       |     |       |  |     |     |    |  |     |    |     | 
|----------------------------------------------- | --------------------------------- | ----------------------------------------------------------- | ---- | ------ | ----- | ---------- | --- | ----------- | --- | --------- | ----- | --- | ----- |  | --- | --- | -- |  | --- | -- | --- | 
|                                                |                                   |                                                            
|                                                |                                   | Consumer Direct Businesses                                 
|                                                |                                   |                                                            
|                                                |                                   |                                                             |      |       
|                                                |                                   | IndyMac Consumer Bank                                       |      |       
|                                                |                                   |                                                             |      | Home   |       | Investment
|                                                |                                   |                                                             |      | Retail |       |            |     | Equity      |     | Portfolio
|Six Months Ended June 30, 2004                  |                                   | B2C                                                         |      | Bank   |       | Total      |     | Division(1) |     | Group    
|                                                |                                   |                                                             |      |        |       |            |     |             |     |          
|                                                |                                   |                                                            
|                                                |                                   | (Dollars in millions)                                      
|Volume by Channel and Source                    |                                   |                                                             |      |        |       |            |     |             |     |           |       |     |       |  |     |     |    |  |     |   
|Web-based Production:                           |                                   |                                                             |      |        |       |            |     |             |     |           |       |     |       |  |     |     |    |  |     |   
|                                                | Direct at www.indymacmortgage.com |                                                             | $    | 234    |       |            | $   |            |     |           | $     | 234 |       |  | $   |    |    |  | $   |   |    
|                                                | Indirect Web-based leads          |                                                             |      | 261    |       |            |     |            |     |           |       | 261 |       |  |     |    |    |  |     |   |    
|Cross-marketing and portfolio refinancing       |                                   |                                                             | 964  |        |       |            | 89  |             |     |           | 1,053 |     |       |  |    |     |    |  | 700 |   
|Direct telemarketing and affinity relationships |                                   |                                                             | 355  |        |       |            |    |             |     |           | 355   |     |       |  | 79  |     |    |  |    |   
|Retail banking branches                         |                                   |                                                             |     |        |       |            | 140 |             |     |           | 140   |     |       |  |    |     |    |  |    |   
|                                                |                                   |                                                             |      |        |       |            |     |             |     |           |       |     |       |  |     |     |    |  |     |   
|                                                |                                   | Total consumer direct production volume                     |      | $      | 1,814 |            |     | $           | 229 |           |       | $   | 2,043 |  |     | $   | 79 |  |     | $  | 700 | 
|                                                |                                   |                                                             |      |        |       |            |     |             |     |           |       |     |       |  |     |     |    |  |     |   
|Percentage of total production                  |                                   |                                                             | 10.8 | %      |       |            | 1.3 | %           |     |           | 12.1  | %   |       |  | 0.5 | %   |    |  | 4.1 | % 
|                                                |                                   | Total production for the six months ended
    June 30, 2003 |      | $      | 2,885 |            |     | $           | 197 |           |       | $   | 3,082 |  |     | $   | 87 |  |     |    | N/A | 
|Composition of mortgage production:             |                                   |                                                             |      |        |       |            |     |             |     |           |       |     |       |  |     |     |    |  |     |   
|                                                | Purchase transactions             |                                                             |      | 9      | %     |            |     | 25          | %   |           |       | 11  | %     |  |     | N/A |    |  |     | 0  | %  
|                                                | Cash-out refinance transactions   |                                                             |      | 57     | %     |            |     | 51          | %   |           |       | 56  | %     |  |     | N/A |    |  |     | 1  | %  
|                                                | Rate/term refinance transactions  |                                                             |      | 34     | %     |            |     | 24          | %   |           |       | 33  | %     |  |     | N/A |    |  |     | 99 | %  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The amount represents the loans produced only by
    the Home Equity Division. HELOC loans produced by other business
    divisions totaled $364 million and $573 million during
    the three and six months ended June 30, 2004, respectively.
    HELOC loans produced by business divisions other than the Home
    Equity Division are included in the production volume of the
    respective originating business division.

25



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##### Table of Contents



B2Cs production volume declined 40% for the
three months ended June 30, 2004, compared to the three
months ended June 30, 2003. The B2C division is currently
our most established consumer-direct business, generating 61% of
the total consumer-direct business. This business is generally
skewed to the refinance environment with its web-centralized
call center approach and as such, is expected to be more
cyclical in response to changes in interest rates. The Home
Equity Division was established during 2002 to facilitate
targeted marketing of our HELOC product directly to consumers in
addition to the production of HELOCs within our other production
channels. Through a streamlined application process and
competitive pricing, this division provides homeowners the
ability to easily access the excess equity in their homes for a
variety of uses. The HELOC product tends to be somewhat
counter-cyclical to the mortgage industry. As interest rates
rise, consumers who want to access the equity in their home are
more inclined to utilize a HELOC product rather than a cash-out
refinance of their existing low-rate mortgage loan. As a result,
we expect the Home Equity Divisions production to increase
as the market transitions to a higher interest rate environment.




Loan Sales

The Company sold $7.6 billion and
$6.3 billion of loans during the three months ended
June 30, 2004 and 2003, respectively, and
$12.5 billion and $11.9 billion for the six months
ended June 30, 2004 and 2003, respectively. The
Companys gain on sale of loans of $66.1 million in
the second quarter of 2004 reflected a one-time deferral of
$52.2 million of revenue on the adoption of
SAB No. 105. Had the accounting principle been applied
consistently with prior periods, the gain on sale of loans would
have been $118.3 million for the second quarter of 2004
compared to $102.1 million for the same quarter of 2003,
reflecting a 16% increase. The increase in gain on sale of
loans was primarily due to the 21% increase in the amount
of loans sold year over year.

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

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

26



---



##### Table of Contents



The following tables illustrate the impact of the
Companys pipeline hedging activities (second quarter 2004
is reflected on a pro forma basis(1)).

|                                     |  |                       |      |          |  |         |      |           |  |         |      |    |  |   |      |   |  |  |      |   
|------------------------------------ |  | --------------------- | ---- | -------- |  | ------- | ---- | --------- |  | ------- | ---- | -- |  | - | ---- | - |  |  | ---- | --
|                                     |  |                      
|                                     |  | Three Months Ended   
|                                     |  |                      
|                                     |  | June 30,              |      | June 30, |  | Percent |      | March 31, |  | Percent
|                                     |  | 2004                  |      | 2003     |  | Change  |      | 2004      |  | Change 
|                                     |  |                       |      |          |  |         |      |           |  |        
|                                     |  |                      
|                                     |  | (Dollars in millions)
|Gross gain on mortgage loan sales(1) |  | $                     | 54   |          |  | $       | 163  |           |  |         | (67  | )% |  | $ | 126  |   |  |  | (57  | )%
|Gross margin before hedging          |  |                       | 0.71 | %        |  |         | 2.57 | %         |  |         | (72  | )% |  |   | 2.58 | % |  |  | (72  | )%
|Hedging gains (losses)               |  | $                     | 64   |          |  | $       | (61  | )         |  |         | (205 | )% |  | $ | (42  | ) |  |  | (252 | )%
|Net gains on sale(1)                 |  | $                     | 118  |          |  | $       | 102  |           |  |         | 16   | %  |  | $ | 84   |   |  |  | 40   | % 
|Net margin after hedging(1)          |  |                       | 1.55 | %        |  |         | 1.61 | %         |  |         | (4   | )% |  |   | 1.71 | % |  |  | (9   | )%



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The gain on mortgage loan sales for the three
    months ended June 30, 2004 in the tables excludes the
    $52 million before-tax revenue deferral as a result of
    adoption of SAB No. 105 in the second quarter of 2004. The
    GAAP gain on mortgage loan sales reported was $66 million
    for the three months ended June 30, 2004. The GAAP net
    margin after hedging was 0.87% for the three months ended
    June 30, 2004.

|                                     |  |                       |      |          |  |         |      |   |  |  |      |   
|------------------------------------ |  | --------------------- | ---- | -------- |  | ------- | ---- | - |  |  | ---- | --
|                                     |  |                      
|                                     |  | Six Months Ended     
|                                     |  |                      
|                                     |  | June 30,              |      | June 30, |  | Percent
|                                     |  | 2004                  |      | 2003     |  | Change 
|                                     |  |                       |      |          |  |        
|                                     |  |                      
|                                     |  | (Dollars in millions)
|Gross gain on mortgage loan sales(1) |  | $                     | 181  |          |  | $       | 281  |   |  |  | (36  | )%
|Gross margin before hedging          |  |                       | 1.44 | %        |  |         | 2.37 | % |  |  | (39  | )%
|Hedging gains (losses)               |  | $                     | 21   |          |  | $       | (95  | ) |  |  | (122 | )%
|Net gains on sale(1)                 |  | $                     | 202  |          |  | $       | 186  |   |  |  | 9    | % 
|Net margin after hedging(1)          |  |                       | 1.61 | %        |  |         | 1.57 | % |  |  | 3    | % 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The gain on mortgage loan sales for the six
    months ended June 30, 2004 in the tables excludes the
    $52 million before-tax revenue deferral as a result of
    adoption of SAB No. 105 in the second quarter of 2004. The
    GAAP gain on mortgage loan sales reported was $150 million
    for the six months ended June 30, 2004. The GAAP net margin
    after hedging was 1.20% for the six months ended June 30,
    2004.

During the quarter ended June 30, 2004 the
Companys pipeline hedging activities resulted in hedging
gains of $64 million compared to hedging losses of
$61 million for the quarter ended June 30, 2003. The
hedging gains in the second quarter of 2004 were consistent with
the increasing interest rate environment. The yield on the
10-year Treasury increased by 76 basis points from
March 31, 2004 to June 30, 2004.

The gain on sale margin was 1.55% in the quarter
ended June 30, 2004 compared to 1.61% in the quarter ended
June 30, 2003 and 1.71% in the quarter ended March 31,
2004. The lower gain on sale margin during the second quarter of
2004 is primarily due to a higher percentage of loans originated
through the conduit and correspondent channels, which operate
with smaller profit margins.

In addition to mortgage loans held for sale, the
pipeline also includes rate lock commitments. Rate lock
commitments on mortgage loans that are intended to be sold are
considered to be derivatives pursuant to SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities, (SFAS 133) and,
therefore, were recorded at fair value prior to April 1,
2004. On April 1, 2004, the Company adopted SAB
No. 105, and in accordance with this standard, for rate
lock commitments entered into after April 1, 2004, only the
change in the fair value is recorded by the Company.

The Company hedges the risk of changes in fair
value of rate lock commitments by selling forward contracts on
securities of Fannie Mae or Freddie Mac, Euro Dollar futures and
other hedge instruments as the Company deems appropriate to
prudently manage this risk. These forward contracts are also
accounted for as derivatives and recorded at fair value. As of
June 30, 2004, the fair value of the rate lock commitments,
net of related hedges, was $1.3 million, significantly
decreased from $30.8 million at March 31, 2004 due to
the adoption of SAB No. 105.

27



---



##### Table of Contents



The following two tables present the gain on sale
margins by product type for the quarters ended June 30,
2004 and 2003, and March 31, 2004 and for the six months
ended June 30, 2004 and 2003:

|                                      |  |                       |       |               |  |                |       |        |  |         |      |        |  |        |       |         |  |        |       |  |  |  |      |   |  |   |       |  |  |   |      |  |  |  |      |  
|------------------------------------- |  | --------------------- | ----- | ------------- |  | -------------- | ----- | ------ |  | ------- | ---- | ------ |  | ------ | ----- | ------- |  | ------ | ----- |  |  |  | ---- | - |  | - | ----- |  |  | - | ---- |  |  |  | ---- | -
|                                      |  |                      
|                                      |  | Three Months Ended   
|                                      |  |                      
|                                      |  |                       |       |               |  |               
|                                      |  | June 30, 2004         |       | June 30, 2003 |  | March 31, 2004
|                                      |  |                       |       |               |  |               
|Gain on Sale Margins by               |  | Amount                |       | Gain on       |  |                |       | Amount |  | Gain on |      |        |  | Amount |       | Gain on |  |       
|Product Type(1)                       |  | Sold                  |       | Sale          |  | Margin         |       | Sold   |  | Sale    |      | Margin |  | Sold   |       | Sale    |  | Margin
|                                      |  |                       |       |               |  |                |       |        |  |         |      |        |  |        |       |         |  |       
|                                      |  |                      
|                                      |  | (Dollars in millions)
|Alt-A and Jumbo                       |  | $                     | 5,938 |               |  | $              | 88.0  |        |  |         | 1.48 | %      |  | $      | 4,326 |         |  | $      | 69.9  |  |  |  | 1.62 | % |  | $ | 3,463 |  |  | $ | 53.9 |  |  |  | 1.56 | %
|Agency conforming                     |  |                       | 924   |               |  |                | 6.4   |        |  |         | 0.69 | %      |  |        | 1,589 |         |  |        | 18.4  |  |  |  | 1.16 | % |  |   | 725   |  |  |   | 6.5  |  |  |  | 0.89 | %
|Subprime                              |  |                       | 476   |               |  |                | 13.2  |        |  |         | 2.77 | %      |  |        | 264   |         |  |        | 6.6   |  |  |  | 2.50 | % |  |   | 426   |  |  |   | 14.9 |  |  |  | 3.50 | %
|Consumer Lot Loans                    |  |                       | 192   |               |  |                | 8.2   |        |  |         | 4.27 | %      |  |        |      |         |  |        |      |  |  |  |     |   |  |   |      |  |  |   |     |  |  |  |     |  
|Loans acquired through clean-up calls |  |                       | 108   |               |  |                | 2.5   |        |  |         | 2.31 | %      |  |        | 157   |         |  |        | 7.2   |  |  |  | 4.59 | % |  |   | 293   |  |  |   | 8.4  |  |  |  | 2.86 | %
|                                      |  |                       |       |               |  |                |       |        |  |         |      |        |  |        |       |         |  |        |       |  |  |  |      |   |  |   |       |  |  |   |      |  |  |  |      |  
|Total gain on sale of loans(1)        |  | $                     | 7,638 |               |  | $              | 118.3 |        |  |         | 1.55 | %      |  | $      | 6,336 |         |  | $      | 102.1 |  |  |  | 1.61 | % |  | $ | 4,907 |  |  | $ | 83.7 |  |  |  | 1.71 | %
|                                      |  |                       |       |               |  |                |       |        |  |         |      |        |  |        |       |         |  |        |       |  |  |  |      |   |  |   |       |  |  |   |      |  |  |  |      |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The gain on mortgage loan sales for the three
    months ended June 30, 2004 has been adjusted to exclude the
    $52 million before-tax negative impact as a result of
    adoption of SAB No. 105 in the second quarter of 2004. The
    gain on mortgage loan sales reported on the statements of
    earnings was $66 million for the three months ended
    June 30, 2004.

|                                      |  |                           |        |                           |  |        |       |        |  |         |      |        |  |   |        |  |  |   |       |  |  |  |      |  
|------------------------------------- |  | ------------------------- | ------ | ------------------------- |  | ------ | ----- | ------ |  | ------- | ---- | ------ |  | - | ------ |  |  | - | ----- |  |  |  | ---- | -
|                                      |  |                           |        |                          
|                                      |  | Six Months Ended June 30, |        | Six Months Ended June 30,
|                                      |  | 2004                      |        | 2003                     
|                                      |  |                           |        |                          
|Gain on Sale Margins by               |  | Amount                    |        | Gain on                   |  |        |       | Amount |  | Gain on |      |       
|Product Type(1)                       |  | Sold                      |        | Sale                      |  | Margin |       | Sold   |  | Sale    |      | Margin
|                                      |  |                           |        |                           |  |        |       |        |  |         |      |       
|                                      |  |                          
|                                      |  | (Dollars in millions)    
|Alt-A and Jumbo                       |  | $                         | 9,401  |                           |  | $      | 141.9 |        |  |         | 1.51 | %      |  | $ | 8,128  |  |  | $ | 129.1 |  |  |  | 1.59 | %
|Agency conforming                     |  |                           | 1,649  |                           |  |        | 12.9  |        |  |         | 0.78 | %      |  |   | 3,131  |  |  |   | 35.3  |  |  |  | 1.13 | %
|Subprime                              |  |                           | 903    |                           |  |        | 28.1  |        |  |         | 3.11 | %      |  |   | 264    |  |  |   | 6.6   |  |  |  | 2.50 | %
|Consumer Lot Loans                    |  |                           | 192    |                           |  |        | 8.2   |        |  |         | 4.27 | %      |  |   |       |  |  |   |      |  |  |  |     |  
|Loans acquired through clean-up calls |  |                           | 400    |                           |  |        | 10.9  |        |  |         | 2.71 | %      |  |   | 337    |  |  |   | 14.9  |  |  |  | 4.43 | %
|                                      |  |                           |        |                           |  |        |       |        |  |         |      |        |  |   |        |  |  |   |       |  |  |  |      |  
|Total gain on sale of loans(1)        |  | $                         | 12,545 |                           |  | $      | 202.0 |        |  |         | 1.61 | %      |  | $ | 11,860 |  |  | $ | 185.9 |  |  |  | 1.57 | %
|                                      |  |                           |        |                           |  |        |       |        |  |         |      |        |  |   |        |  |  |   |       |  |  |  |      |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The gain on mortgage loan sales for the six
    months ended June 30, 2004 has been adjusted to exclude the
    $52 million before-tax negative impact as a result of
    adoption of SAB No. 105 in the second quarter of 2004. The
    gain on mortgage loan sales reported on the statements of
    earnings was $150 million for the six months ended
    June 30, 2004.

The gain on sale margins declined on the Alt-A
and agency conforming products during the second quarter 2004.
The decline in Alt-A and Jumbo margins was caused by origination
channel mix, including an increase in loans funded through the
conduit and correspondent channels, and a shift to adjustable
rate products. In the second quarter of 2004, 61% of loans
originated were adjustable rate compared to 56% in the first
quarter of 2004. In addition, 60% of the sales in the quarter
ended June 30, 2004 were ARM loans, compared to 45% in the
quarter ended March 31, 2004. The demand for the ARM market
is somewhat less than the demand for the fixed rate agency and
non-agency markets.

In addition to the gain on sale, IndyMac earns
spread and fee income on its mortgage loans held for sale. It is
important to look at the entire mortgage banking revenue stream
in evaluating performance, as these components may vary in
differing interest rate environments and sale strategies. The
following table depicts

28



---



##### Table of Contents



the total revenue margin on mortgage loans sold,
which is calculated by dividing the sum of gain on sale of
loans, net interest income, and fee income by the amount of
loans sold:


|                               |  |                        |           |            |  |          |      |            |  |           |           |            |  |  |      |   |  |   |           |  |  |  |      |  
|------------------------------ |  | ---------------------- | --------- | ---------- |  | -------- | ---- | ---------- |  | --------- | --------- | ---------- |  |  | ---- | - |  | - | --------- |  |  |  | ---- | -
|                               |  |                       
|                               |  | Three Months Ended    
|                               |  |                       
|                               |  | June 30,               |           | % of loans |  | June 30, |      | % of loans |  | March 31, |           | % of loans
|                               |  | 2004                   |           | sold       |  | 2003     |      | sold       |  | 2004      |           | sold      
|                               |  |                        |           |            |  |          |      |            |  |           |           |           
|                               |  |                       
|                               |  | (Dollars in thousands)
|Gain on sale of loans(1)       |  | $                      | 118,307   |            |  |          | 1.55 | %          |  | $         | 102,146   |            |  |  | 1.61 | % |  | $ | 83,668    |  |  |  | 1.70 | %
|Net interest income            |  |                        | 50,809    |            |  |          | 0.67 | %          |  |           | 40,592    |            |  |  | 0.64 | % |  |   | 41,800    |  |  |  | 0.85 | %
|Fee income                     |  |                        | 14,786    |            |  |          | 0.19 | %          |  |           | 18,007    |            |  |  | 0.29 | % |  |   | 12,107    |  |  |  | 0.25 | %
|                               |  |                        |           |            |  |          |      |            |  |           |           |            |  |  |      |   |  |   |           |  |  |  |      |  
|Total mortgage banking revenue |  | $                      | 183,902   |            |  |          | 2.41 | %          |  | $         | 160,745   |            |  |  | 2.54 | % |  | $ | 137,575   |  |  |  | 2.80 | %
|                               |  |                        |           |            |  |          |      |            |  |           |           |            |  |  |      |   |  |   |           |  |  |  |      |  
|Loans sold                     |  | $                      | 7,638,446 |            |  |          |      |            |  | $         | 6,335,907 |            |  |  |      |   |  | $ | 4,906,724 |  |  |  |      |  

|                               |  |                        |            |            |  |               |      |            |  |   |            |  |  |  |      |  
|------------------------------ |  | ---------------------- | ---------- | ---------- |  | ------------- | ---- | ---------- |  | - | ---------- |  |  |  | ---- | -
|                               |  |                       
|                               |  | Six Months Ended      
|                               |  |                       
|                               |  |                        |            | % of loans |  |               |      | % of loans
|                               |  | June 30, 2004          |            | sold       |  | June 30, 2003 |      | sold      
|                               |  |                        |            |            |  |               |      |           
|                               |  |                       
|                               |  | (Dollars in thousands)
|Gain on sale of loans(1)       |  | $                      | 201,975    |            |  |               | 1.61 | %          |  | $ | 185,929    |  |  |  | 1.57 | %
|Net interest income            |  |                        | 92,609     |            |  |               | 0.74 | %          |  |   | 77,033     |  |  |  | 0.65 | %
|Fee income                     |  |                        | 26,893     |            |  |               | 0.21 | %          |  |   | 32,798     |  |  |  | 0.28 | %
|                               |  |                        |            |            |  |               |      |            |  |   |            |  |  |  |      |  
|Total mortgage banking revenue |  | $                      | 321,477    |            |  |               | 2.56 | %          |  | $ | 295,760    |  |  |  | 2.50 | %
|                               |  |                        |            |            |  |               |      |            |  |   |            |  |  |  |      |  
|Loans sold                     |  | $                      | 12,545,170 |            |  |               |      |            |  | $ | 11,859,608 |  |  |  |      |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The gain on mortgage loan sales for the three and
    six months ended June 30, 2004 is the pro forma amount
    which has been adjusted to exclude the $52 million
    before-tax negative impact as a result of adoption of SAB
    No. 105 in the second quarter of 2004. The gain on mortgage
    loan sales reported on the statements of earnings was
    $66 million and $150 million for the three and six
    months ended June 30, 2004, respectively.

Total mortgage banking revenue for the six months
ended June 30, 2004 was $321.5 million compared to
$295.8 million for the six months ended June 30, 2003.
The increase in revenue was driven by the additional loan sales
of $685.6 million in the first half of 2004. Mortgage
banking revenue increased to $183.9 million in the quarter
ended June 30, 2004 compared to $160.7 million in the
quarter ended June 30, 2003. However, as a percentage of
loans sold, the total revenue declined to 2.41% from 2.54% due
to the higher percentage of conduit and correspondent loan
production in the second quarter of 2004.

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

|                                     |                         |                       |       |              |  |          |    |              |   |           |       |              |  |  |    |     |   |   |       |       |  |  |    |     |  
|------------------------------------ | ----------------------- | --------------------- | ----- | ------------ |  | -------- | -- | ------------ | - | --------- | ----- | ------------ |  |  | -- | --- | - | - | ----- | ----- |  |  | -- | --- | -
|                                     |                         |                      
|                                     |                         | Three Months Ended   
|                                     |                         |                      
|                                     |                         | June 30,              |       | Distribution |  | June 30, |    | Distribution |   | March 31, |       | Distribution
|                                     |                         | 2004                  |       | Percentages  |  | 2003     |    | Percentages  |   | 2004      |       | Percentages 
|                                     |                         |                       |       |              |  |          |    |              |   |           |       |             
|                                     |                         |                      
|                                     |                         | (Dollars in millions)
|Sales to the GSEs(1)                 |                         | $                     | 2,249 |              |  |          | 25 | %            |   | $         | 3,459 |              |  |  | 48 | %   |   | $ | 2,304 |       |  |  | 45 | %  
|Private-label securitizations        |                         |                       | 3,845 |              |  |          | 43 | %            |   |           | 1,617 |              |  |  | 23 | %   |   |   | 1,085 |       |  |  | 21 | %  
|Whole loan sales                     |                         |                       | 1,544 |              |  |          | 17 | %            |   |           | 1,260 |              |  |  | 18 | %   |   |   | 1,518 |       |  |  | 30 | %  
|                                     |                         |                       |       |              |  |          |    |              |   |           |       |              |  |  |    |     |   |   |       |       |  |  |    |    
|                                     | Subtotal sales          |                       |       | 7,638        |  |          |    | 86           | % |           |       | 6,336        |  |  |    | 89  | % |   |       | 4,907 |  |  |    | 96  | %
|Investment portfolio acquisitions(2) |                         |                       | 1,236 |              |  |          | 14 | %            |   |           | 798   |              |  |  | 11 | %   |   |   | 195   |       |  |  | 4  | %  
|                                     |                         |                       |       |              |  |          |    |              |   |           |       |              |  |  |    |     |   |   |       |       |  |  |    |    
|                                     | Total loan distribution |                       | $     | 8,874        |  |          |    | 100          | % |           | $     | 7,134        |  |  |    | 100 | % |   | $     | 5,102 |  |  |    | 100 | %
|                                     |                         |                       |       |              |  |          |    |              |   |           |       |              |  |  |    |     |   |   |       |       |  |  |    |    

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|                                     |                         |                       |       |              |  |          |    |              |   |   |       |        |  |  |    |     |  
|------------------------------------ | ----------------------- | --------------------- | ----- | ------------ |  | -------- | -- | ------------ | - | - | ----- | ------ |  |  | -- | --- | -
|                                     |                         |                      
|                                     |                         | Six Months Ended     
|                                     |                         |                      
|                                     |                         | June 30,              |       | Distribution |  | June 30, |    | Distribution
|                                     |                         | 2004                  |       | Percentages  |  | 2003     |    | Percentages 
|                                     |                         |                       |       |              |  |          |    |             
|                                     |                         |                      
|                                     |                         | (Dollars in millions)
|Sales to the GSEs(1)                 |                         | $                     | 4,553 |              |  |          | 33 | %            |   | $ | 6,923 |        |  |  | 53 | %  
|Private-label securitizations        |                         |                       | 4,930 |              |  |          | 35 | %            |   |   | 3,088 |        |  |  | 24 | %  
|Whole loan sales                     |                         |                       | 3,062 |              |  |          | 22 | %            |   |   | 1,849 |        |  |  | 14 | %  
|                                     |                         |                       |       |              |  |          |    |              |   |   |       |        |  |  |    |    
|                                     | Subtotal sales          |                       |       | 12,545       |  |          |    | 90           | % |   |       | 11,860 |  |  |    | 91  | %
|Investment portfolio acquisitions(2) |                         |                       | 1,431 |              |  |          | 10 | %            |   |   | 1,200 |        |  |  | 9  | %  
|                                     |                         |                       |       |              |  |          |    |              |   |   |       |        |  |  |    |    
|                                     | Total loan distribution |                       | $     | 13,976       |  |          |    | 100          | % |   | $     | 13,060 |  |  |    | 100 | %
|                                     |                         |                       |       |              |  |          |    |              |   |   |       |        |  |  |    |    



---



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

Loan sales to GSEs dropped to 25% of total
sales for the quarter ended June 30, 2004 compared to 48%
for the same period a year ago and 45% for the previous quarter
ended March 31, 2004. The increase in the amount of
adjustable rate mortgages sold resulted in a higher percentage
of loans being sold in private-label securitizations.

In conjunction with the sale of mortgage loans in
private-label securitizations and government-sponsored
enterprises (GSEs) transactions, the Company
generally retains certain assets. The primary assets retained
include MSRs and, to a lesser degree, AAA-rated and agency
interest-only strips, investment-grade securities,
non-investment grade securities and residual securities. The
allocated cost of the retained assets at the time of sale is
recorded as an asset with an offsetting increase to the gain on
sale of loans (or a reduction in the cost basis of the loans
sold). The calculation of the $118 million in gain on sale
of loans, excluding the $52 million SAB No. 105
adjustment, earned during the three months ended June 30,
2004, included the retention of $122 million of
servicing-related assets, $62 million of other
investment-grade and $21 million of non-investment grade
securities. During the three months ended June 30, 2004,
assets previously retained generated cash flows of
$90.6 million. More information on the valuation
assumptions related to IndyMacs retained assets can be
found under the heading, Valuation of Servicing-Related
Assets below.

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INVESTING AND HELOC ACTIVITIES

The following table details the assets associated
with our investing and HELOC activities as of June 30,
2004, and December 31, 2003:

|                                                                           |                                |                                                |                                          |                                                                                 |           |           |            |  |           |           |           | 
|-------------------------------------------------------------------------- | ------------------------------ | ---------------------------------------------- | ---------------------------------------- | ------------------------------------------------------------------------------- | --------- | --------- | ---------- |  | --------- | --------- | --------- | 
|                                                                           |                                |                                                |                                          | December 31,                                                                   
|                                                                           |                                | June 30, 2004                                  |                                          | 2003                                                                           
|                                                                           |                                |                                                |                                          |                                                                                
|                                                                           |                                |                                               
|                                                                           |                                | (Dollars in thousands)                        
|SFR mortgage loans held for
    investment                                 |                                | $                                              | 4,639,993                                |                                                                                 |           | $         | 4,945,439  | 
|Consumer construction                                                      |                                |                                                | 1,301,688                                |                                                                                 |           |           | 1,145,526  | 
|Builder construction                                                       |                                |                                                | 561,538                                  |                                                                                 |           |           | 484,397    | 
|HELOC                                                                      |                                |                                                | 217,368                                  |                                                                                 |           |           | 711,494    | 
|Income property                                                            |                                |                                                | 7,432                                    |                                                                                 |           |           | 36,285     | 
|Mortgage-backed securities, U.S. Treasury
    securities and agency notes: |                                |                                                |                                          |                                                                                 |           |           |            | 
|                                                                           | Trading securities:            |                                                |                                          |                                                                                 |           |           |            |  |          
|                                                                           |                                | AAA-rated and agency interest-only strips      |                                          |                                                                                 | 166,799   |           |            |  | 148,275   |          
|                                                                           |                                | AAA-rated principal-only securities            |                                          |                                                                                 | 83,964    |           |            |  | 8,518     |          
|                                                                           |                                | Other investment grade securities              |                                          |                                                                                 | 9,093     |           |            |  | 8,922     |          
|                                                                           |                                | Other non-investment grade securities          |                                          |                                                                                 | 478       |           |            |  | 1,760     |          
|                                                                           |                                | Non-investment grade residual securities       |                                          |                                                                                 | 49,535    |           |            |  | 56,157    |          
|                                                                           |                                |                                                |                                          |                                                                                 |           |           |            | 
|                                                                           |                                |                                                | Subtotal  trading securities            |                                                                                 |           | 309,869   |            |  |           | 223,632   |          
|                                                                           |                                |                                                |                                          |                                                                                 |           |           |            | 
|                                                                           | Available for sale securities: |                                                |                                          |                                                                                 |           |           |            |  |          
|                                                                           |                                | U.S. Treasury securities and agency notes      |                                          |                                                                                 | 47,703    |           |            |  | 143,689   |          
|                                                                           |                                | AAA-rated non-agency securities                |                                          |                                                                                 | 2,450,258 |           |            |  | 1,407,984 |          
|                                                                           |                                | AAA-rated agency securities                    |                                          |                                                                                 | 18,519    |           |            |  | 25,193    |          
|                                                                           |                                | AAA-rated principal-only securities            |                                          |                                                                                 | 20,102    |           |            |  |          |          
|                                                                           |                                | Other investment grade securities              |                                          |                                                                                 | 82,139    |           |            |  | 26,926    |          
|                                                                           |                                | Other non-investment grade securities          |                                          |                                                                                 | 29,304    |           |            |  | 10,182    |          
|                                                                           |                                | Non-investment grade HELOC residual securities |                                          |                                                                                 | 23,097    |           |            |  |          |          
|                                                                           |                                |                                                |                                          |                                                                                 |           |           |            | 
|                                                                           |                                |                                                | Subtotal  available for sale securities |                                                                                 |           | 2,671,122 |            |  |           | 1,613,974 |          
|                                                                           |                                |                                                |                                          |                                                                                 |           |           |            | 
|                                                                           |                                |                                                |                                          | Total mortgage-backed securities,
    U.S. Treasury securities and agency notes |           |           | 2,980,991  |  |           |           | 1,837,606 | 
|                                                                           |                                |                                                |                                          |                                                                                 |           |           |            | 
|Mortgage servicing rights                                                  |                                |                                                | 493,876                                  |                                                                                 |           |           | 443,688    | 
|Other assets                                                               |                                |                                                | 277,876                                  |                                                                                 |           |           | 280,467    | 
|                                                                           |                                |                                                |                                          |                                                                                 |           |           |            | 
|                                                                           |                                |                                                |                                          | Total                                                                           |           | $         | 10,480,762 |  |           | $         | 9,884,902 | 
|                                                                           |                                |                                                |                                          |                                                                                 |           |           |            | 
|Percentage of securities portfolio rated
    investment grade              |                                |                                                | 97%                                      |                                                                                 |           |           | 96%        | 
|Percentage of securities portfolio rated AAA                               |                                |                                                | 94%                                      |                                                                                 |           |           | 94%        | 

Our HELOC loans held for investment decreased by
$494 million from December 31, 2003, to June 30,
2004, primarily due to the recharacterization of
$500 million of HELOCs into mortgage-backed securities via
an on-balance sheet securitization in March 2004 and the
reclassification of $342 million of HELOCs from the held
for investment classification to the held for sale
classification in June 2004 to reflect the Companys intent
to securitize these loans. Similarly, our AAA-rated non-agency
securities increased from $1.4 billion at December 31,
2003, to $2.5 billion at June 30, 2004, resulting from
the recharacterization of the $500 million of HELOCs from
loans to securities as previously noted and the reclassification
of $516 million of SFR mortgage loans that were securitized
with retention of $353 million as mortgage-backed
securities available for

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sale during the first quarter 2004. Please refer
to the Investing Activities and the HELOC
Portfolio sections below for further discussions on SFR
mortgage and HELOC securitizations.


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

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

|                                                                                  |  |                        |            |          |  |           |           |   |  |   |           |  
|--------------------------------------------------------------------------------- |  | ---------------------- | ---------- | -------- |  | --------- | --------- | - |  | - | --------- | -
|                                                                                  |  |                       
|                                                                                  |  | Three Months Ended    
|                                                                                  |  |                       
|                                                                                  |  | June 30,               |            | June 30, |  | March 31,
|                                                                                  |  | 2004                   |            | 2003     |  | 2004     
|                                                                                  |  |                        |            |          |  |          
|                                                                                  |  |                       
|                                                                                  |  | (Dollars in thousands)
|Net interest income after provision for loan
    losses                           |  | $                      | 57,992     |          |  | $         | 26,743    |   |  | $ | 57,278    |  
|Service fee loss                                                                  |  |                        | (27,807    | )        |  |           | (1,401    | ) |  |   | (3,144    | )
|Loss on mortgage-backed securities, net                                           |  |                        | (3,414     | )        |  |           | (9,258    | ) |  |   | (4,987    | )
|Other income                                                                      |  |                        | 5,338      |          |  |           | 2,718     |   |  |   | 4,004     |  
|Average balance of interest-earning assets and
    MSRs                           |  | $                      | 10,493,236 |          |  | $         | 6,518,704 |   |  | $ | 9,792,163 |  
|Investing activities return on
    interest-earning assets and MSRs (annualized) |  |                        | 1.23       | %        |  |           | 1.16      | % |  |   | 2.18      | %
|                                                                                  |  |                        |            |          |  |           |           |   |  |   |           |  

|                                                                                  |  |                        |            |          |  |   |           |  
|--------------------------------------------------------------------------------- |  | ---------------------- | ---------- | -------- |  | - | --------- | -
|                                                                                  |  |                       
|                                                                                  |  | Six Months Ended      
|                                                                                  |  |                       
|                                                                                  |  | June 30,               |            | June 30,
|                                                                                  |  | 2004                   |            | 2003    
|                                                                                  |  |                        |            |         
|                                                                                  |  |                       
|                                                                                  |  | (Dollars in thousands)
|Net interest income after provision for loan
    losses                           |  | $                      | 115,270    |          |  | $ | 58,067    |  
|Service fee (loss) income                                                         |  |                        | (30,951    | )        |  |   | 982       |  
|Loss on mortgage-backed securities, net                                           |  |                        | (8,401     | )        |  |   | (16,168   | )
|Other income                                                                      |  |                        | 9,342      |          |  |   | 5,211     |  
|Average balance of interest-earning assets and
    MSRs                           |  | $                      | 10,142,700 |          |  | $ | 6,462,416 |  
|Investing activities return on
    interest-earning assets and MSRs (annualized) |  |                        | 1.69       | %        |  |   | 1.50      | %
|                                                                                  |  |                        |            |          |  |   |           |  




INVESTING ACTIVITIES

IndyMacs Investment Portfolio Group
complements the Companys mortgage banking activities and
serves to diversify the Companys revenue stream through
its investments in SFR mortgage loans, mortgage-backed
securities and servicing-related assets.

The Investment Portfolio Groups investment
in prime SFR loans, mortgage-backed securities and mortgage loan
servicing-related assets helps to provide stable earnings in
periods when mortgage banking revenues decline. Should loan
production decline due to factors such as increasing interest
rates, the value and fee income of the Investment Portfolio
Groups MSRs generally rises, as there is less incentive
for borrowers to refinance at a higher interest rate. Similarly,
when loan production increases, the value of the MSRs and the

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associated income streams generally decrease. We
believe this serves to stabilize the Companys revenue
stream through increased interest and servicing fee income when
production slows.


In addition to the Investment Portfolio
Groups investments, certain investing activities through
investments in construction loans also take place in the
Mortgage Bank and the Home Equity Division. These activities
include the investment in construction loans and HELOCs by these
business units.

SFR Mortgage Loans Held for
Investment

The Companys portfolio of mortgage loans
held for investment is comprised primarily of SFR mortgage
loans, with a concentration in adjustable-rate and hybrid
adjustable-rate mortgage loans to mitigate interest rate risk.
The Company plans on increasing its portfolio of mortgage loans
held for investment to achieve better balance in its investing
activities relative to its mortgage banking activities, which
tend to be more cyclical. The Company added $1.4 billion of
mortgage loans in accordance with this strategy during the six
months ended June 30, 2004; however, the portfolio actually
declined relative to December 31, 2003. The decline was the
result of the Companys decision to sell approximately
$600 million of loans in the second quarter and
recharacterized approximately $516 million of loans as
securities in line with overall balance sheet management
objectives. The Company plans to continue to securitize portions
of its SFR mortgage loans held for investment periodically, with
the intent to retain most of the securities, to optimize return
on equity, reduce hedging costs and enhance the liquidity of the
loan portfolio. The following table shows the composition of the
portfolio as of June 30, 2004, and December 31, 2003,
and relevant credit quality characteristics at June 30,
2004 and December 31, 2003.

|                                                  |  |                        |           |              |  |   |           |  
|------------------------------------------------- |  | ---------------------- | --------- | ------------ |  | - | --------- | -
|                                                  |  | June 30,               |           | December 31,
|                                                  |  | 2004                   |           | 2003        
|                                                  |  |                        |           |             
|                                                  |  |                       
|                                                  |  | (Dollars in thousands)
|SFR mortgage loans held for investment            |  | $                      | 4,639,993 |              |  | $ | 4,945,439 |  
|Average loan size                                 |  | $                      | 289       |              |  | $ | 286       |  
|Non-performing loans as a percentage of SFR loans |  |                        | 0.40      | %            |  |   | 0.38      | %
|Estimated average life in years(1)                |  |                        | 2.3       |              |  |   | 3.1       |  
|Estimated average duration in years(2)            |  |                        | 1.7       |              |  |   | 1.4       |  
|Yield                                             |  |                        | 4.21      | %            |  |   | 4.43      | %
|Fixed-rate mortgages                              |  |                        | 9         | %            |  |   | 6         | %
|Adjustable-rate mortgages                         |  |                        | 28        | %            |  |   | 39        | %
|Hybrid adjustable-rate mortgages                  |  |                        | 63        | %            |  |   | 55        | %

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|                                                                 |                                        |          |     |              |     |   |     |    |     |  
|---------------------------------------------------------------- | -------------------------------------- | -------- | --- | ------------ | --- | - | --- | -- | --- | -
|                                                                 |                                        | June 30, |     | December 31,
|                                                                 |                                        | 2004     |     | 2003        
|Additional Information as of June 30, 2004 and December 31, 2003 |                                        |          |     |             
|Average FICO score(3)                                            |                                        |          | 713 |              |     |   | 707 |   
|Average loan to value ratio                                      |                                        |          | 71  | %            |     |   | 73  | % 
|Geographic distribution:                                         |                                        |          |     |              |     |   |     |   
|                                                                 | Southern California                    |          |     | 35           | %   |   |     | 39 | %  
|                                                                 | Northern California                    |          |     | 21           | %   |   |     | 22 | %  
|                                                                 | Michigan                               |          |     | 5            | %   |   |     | 3  | %  
|                                                                 | New York                               |          |     | 4            | %   |   |     | 4  | %  
|                                                                 | Florida                                |          |     | 4            | %   |   |     | 3  | %  
|                                                                 | New Jersey                             |          |     | 2            | %   |   |     | 2  | %  
|                                                                 | Georgia                                |          |     | 2            | %   |   |     | 2  | %  
|                                                                 | Colorado                               |          |     | 2            | %   |   |     | 2  | %  
|                                                                 | Washington                             |          |     | 2            | %   |   |     | 2  | %  
|                                                                 | Other (each individually less than 2%) |          |     | 23           | %   |   |     | 21 | %  
|                                                                 |                                        |          |     |              |     |   |     |   
|                                                                 |                                        | Total    |     |              | 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 duration measures the expected change in
    the value of a financial instrument in response to changes in
    interest rates.                                                                                                                                                                                                                                                                                           
|   
|(3) | FICO scores are the result of a credit scoring
    system developed by Fair Isaacs and Co. and are generally used
    by lenders to evaluate a borrowers credit history. FICO
    scores of 700 or higher are generally considered in the mortgage
    industry to be very high quality borrowers with low risk of
    default, but in general, the secondary market will consider FICO
    scores of 620 or higher to be prime.

Mortgage-Backed Securities,
U.S. Treasury Securities and Agency Notes

The Companys portfolio of mortgage-backed
securities, U.S. Treasury securities and agency notes
totaled $3.0 billion and $1.8 billion at June 30,
2004, and December 31, 2003, respectively. These securities
are recorded at fair value. The Company invests in high quality
mortgage-backed securities to provide net interest income. At
June 30, 2004, 94% of the portfolio was rated AAA with an
expected weighted-average life of 3.3 years.
U.S. Treasury securities are purchased to hedge the
interest rate risk associated with servicing-related assets,
among other types of investments. AAA-rated principal-only
securities are retained from securitizations or purchased in the
secondary market to hedge servicing related assets.

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The fair value of other investment grade and
non-investment grade securities by credit rating as of
June 30, 2004, and December 31, 2003, follows:

|                                                     |      |                                                                 |   |                   |        |           |   |         |         |            |   |        |        |  |   |        |        |  |   |        |        | 
|---------------------------------------------------- | ---- | --------------------------------------------------------------- | - | ----------------- | ------ | --------- | - | ------- | ------- | ---------- | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                                     |      |                                                                 |   |                  
|                                                     |      | June 30, 2004                                                   |   | December 31, 2003
|                                                     |      |                                                                 |   |                  
|                                                     |      | Current                                                         |   | (Discount)        |        |           |   |        
|                                                     |      | Face                                                            |   | To Face           |        | Amortized |   | Fair    |         |           
|                                                     |      | Value                                                           |   | Value             |        | Cost      |   | Value   |         | Fair Value
|                                                     |      |                                                                 |   |                   |        |           |   |         |         |           
|                                                     |      |                                                                
|                                                     |      | (In thousands)                                                 
|Investment grade mortgage-backed
    securities:     |      |                                                                 |   |                   |        |           |   |         |         |            |   |        |        |  |   |        |        |  |   |       
|                                                     | AAA  |                                                                 | $ |                  |        |           | $ |        |         |            | $ |       |        |  | $ |       |        |  | $ | 8,001  |       
|                                                     | AA   |                                                                 |   | 31,255            |        |           |   | (43     | )       |            |   | 31,212 |        |  |   | 31,321 |        |  |   |       |       
|                                                     | A    |                                                                 |   | 301               |        |           |   | (21     | )       |            |   | 280    |        |  |   | 285    |        |  |   |       |       
|                                                     | BBB  |                                                                 |   | 44,577            |        |           |   | (2,545  | )       |            |   | 42,032 |        |  |   | 43,424 |        |  |   | 24,198 |       
|                                                     | BBB- |                                                                 |   | 17,050            |        |           |   | (1,430  | )       |            |   | 15,620 |        |  |   | 16,202 |        |  |   | 3,649  |       
|                                                     |      |                                                                 |   |                   |        |           |   |         |         |            |   |        |        |  |   |        |        |  |   |       
|                                                     |      | Total other investment grade mortgage-backed
    securities     |   | $                 | 93,183 |           |   | $       | (4,039  | )          |   | $      | 89,144 |  |   | $      | 91,232 |  |   | $      | 35,848 | 
|                                                     |      |                                                                 |   |                   |        |           |   |         |         |            |   |        |        |  |   |        |        |  |   |       
|Non-investment grade mortgage-backed
    securities: |      |                                                                 |   |                   |        |           |   |         |         |            |   |        |        |  |   |        |        |  |   |       
|                                                     | BB   |                                                                 | $ | 27,137            |        |           | $ | (4,461  | )       |            | $ | 22,676 |        |  | $ | 23,444 |        |  | $ | 7,896  |       
|                                                     | B    |                                                                 |   | 14,617            |        |           |   | (10,147 | )       |            |   | 4,470  |        |  |   | 4,599  |        |  |   | 186    |       
|                                                     | CCC  |                                                                 |   |                  |        |           |   |        |         |            |   |       |        |  |   |       |        |  |   | 1,165  |       
|                                                     | C    |                                                                 |   | 2,277             |        |           |   | (1,799  | )       |            |   | 478    |        |  |   | 478    |        |  |   | 1,934  |       
|                                                     | D    |                                                                 |   | 1,728             |        |           |   | (1,417  | )       |            |   | 311    |        |  |   | 311    |        |  |   | 676    |       
|                                                     | NR   |                                                                 |   | 10,364            |        |           |   | (9,514  | )       |            |   | 850    |        |  |   | 950    |        |  |   | 85     |       
|                                                     |      |                                                                 |   |                   |        |           |   |         |         |            |   |        |        |  |   |        |        |  |   |       
|                                                     |      | Total other non-investment grade mortgage-backed
    securities |   | $                 | 56,123 |           |   | $       | (27,338 | )          |   | $      | 28,785 |  |   | $      | 29,782 |  |   | $      | 11,942 | 
|                                                     |      |                                                                 |   |                   |        |           |   |         |         |            |   |        |        |  |   |        |        |  |   |       

At June 30, 2004, of the total other
investment grade and non-investment grade mortgage-backed
securities, $90.0 million was collateralized by prime
loans, $30.5 million by subprime loans and
$0.5 million by manufactured housing loans.

Mortgage Servicing and Mortgage Servicing
Rights

In addition to its own loans, IndyMac serviced
$34.6 billion of mortgage loans owned by others at
June 30, 2004, with a weighted average coupon of 6.15%. In
comparison, IndyMac serviced $30.8 billion of mortgage
loans owned by others at December 31, 2003, with a weighted
average coupon of 6.53%. The table below shows the activity in
the servicing portfolios during the quarter and six months ended
June 30, 2004.

|                                                |  |                       |        |               |  |   |        |  
|----------------------------------------------- |  | --------------------- | ------ | ------------- |  | - | ------ | -
|                                                |  |                      
|                                                |  | Servicing Portfolio  
|                                                |  |                      
|                                                |  | Three Months          |        | Six Months   
|                                                |  | Ended                 |        | Ended        
|                                                |  | June 30, 2004         |        | June 30, 2004
|                                                |  |                       |        |              
|                                                |  |                      
|                                                |  | (Dollars in millions)
|Unpaid principal balance at beginning of period |  | $                     | 32,122 |               |  | $ | 30,774 |  
|Additions                                       |  |                       | 7,086  |               |  |   | 11,762 |  
|Clean-up calls exercised                        |  |                       | (672   | )             |  |   | (991   | )
|Loan payments and prepayments                   |  |                       | (3,918 | )             |  |   | (6,927 | )
|                                                |  |                       |        |               |  |   |        |  
|Unpaid principal balance at June 30, 2004       |  | $                     | 34,618 |               |  | $ | 34,618 |  
|                                                |  |                       |        |               |  |   |        |  

35



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##### Table of Contents



The capitalized value of MSRs totaled
$493.9 million as of June 30, 2004, and
$443.7 million as of December 31, 2003, reflecting an
increase of $50.2 million. The table below shows the
activity in MSRs.

|                                                           |  |                        |         |                  |  |           |         |          |  |          |         |   |  |   |         |   |  |   |         |  
|---------------------------------------------------------- |  | ---------------------- | ------- | ---------------- |  | --------- | ------- | -------- |  | -------- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                           |  |                        |         |                 
|                                                           |  | Three Months Ended     |         | Six Months Ended
|                                                           |  |                        |         |                 
|                                                           |  | June 30,               |         | June 30,         |  | March 31, |         | June 30, |  | June 30,
|                                                           |  | 2004                   |         | 2003             |  | 2004      |         | 2004     |  | 2003    
|                                                           |  |                        |         |                  |  |           |         |          |  |         
|                                                           |  |                       
|                                                           |  | (Dollars in thousands)
|Balance at beginning of period                             |  | $                      | 414,358 |                  |  | $         | 343,544 |          |  | $        | 443,688 |   |  | $ | 443,688 |   |  | $ | 300,539 |  
|Additions                                                  |  |                        | 92,190  |                  |  |           | 73,732  |          |  |          | 50,753  |   |  |   | 142,943 |   |  |   | 141,474 |  
|Transfers to AAA-rated agency interest-only
    securities |  |                        | (14,293 | )                |  |           | (17,812 | )        |  |          |        |   |  |   | (14,293 | ) |  |   | (17,812 | )
|Clean-up calls exercised                                   |  |                        | (8,226  | )                |  |           | (1,481  | )        |  |          | (3,790  | ) |  |   | (12,016 | ) |  |   | (3,956  | )
|Scheduled amortization                                     |  |                        | (38,747 | )                |  |           | (21,832 | )        |  |          | (22,860 | ) |  |   | (61,607 | ) |  |   | (42,982 | )
|Valuation/impairment                                       |  |                        | 48,594  |                  |  |           | (40,424 | )        |  |          | (53,433 | ) |  |   | (4,839  | ) |  |   | (41,536 | )
|                                                           |  |                        |         |                  |  |           |         |          |  |          |         |   |  |   |         |   |  |   |         |  
|Balance at end of period                                   |  | $                      | 493,876 |                  |  | $         | 335,727 |          |  | $        | 414,358 |   |  | $ | 493,876 |   |  | $ | 335,727 |  
|                                                           |  |                        |         |                  |  |           |         |          |  |          |         |   |  |   |         |   |  |   |         |  

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

Each quarter, we evaluate the MSRs for impairment
in accordance with SFAS No. 140, Accounting
for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities.We first stratify our
MSRs based on predominant risk characteristics, underlying loan
type, interest rate type, and interest rate band. Then, for each
stratum, we determine the fair value of MSRs using our valuation
models, which are validated quarterly by third party opinions of
value. If the carrying value exceeds the fair value by
individual stratum, a valuation allowance is recorded as a
charge to service fee income in current earnings; however, if
such impairment is determined to be other-than-temporary and the
recoverability of the value is remote, we recognize a direct
write-down. Unlike a valuation allowance, a direct write-down
permanently reduces the carrying value of the MSR asset and the
related valuation allowance. During the quarter ended
June 30, 2004, we recorded a positive valuation adjustment
of $48.6 million due to reduced expected prepayments on our
servicing portfolio. As of June 30, 2004, the valuation
allowance on MSRs totaled $70.5 million.



| |                                                            
| | -----------------------------------------------------------
| | AAA-Rated and Agency Interest-Only Strips
    and Residuals

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

36



---



##### Table of Contents



A summary of the activity in the AAA-rated and
agency interest-only strips and residual securities portfolios
for the three and six months ended June 30, 2004 and 2003,
and for the three months ended March 31, 2004, follows:

|                                                  |                                           |                        |   |                  |         |           |   |          |         |          |   |         |         |  |   |         |         |  |   |         |         | 
|------------------------------------------------- | ----------------------------------------- | ---------------------- | - | ---------------- | ------- | --------- | - | -------- | ------- | -------- | - | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                                  |                                           |                        |   |                 
|                                                  |                                           | Three Months Ended     |   | Six Months Ended
|                                                  |                                           |                        |   |                 
|                                                  |                                           | June 30,               |   | June 30,         |         | March 31, |   | June 30, |         | June 30,
|                                                  |                                           | 2004                   |   | 2003             |         | 2004      |   | 2004     |         | 2003    
|                                                  |                                           |                        |   |                  |         |           |   |          |         |         
|                                                  |                                           |                       
|                                                  |                                           | (Dollars in thousands)
|AAA-rated and agency interest-only
    securities |                                           |                        |   |                  |         |           |   |          |         |          |   |         |         |  |   |         |         |  |   |        
|                                                  | Beginning balance                         |                        | $ | 153,460          |         |           | $ | 157,775  |         |          | $ | 148,275 |         |  | $ | 148,275 |         |  | $ | 188,043 |        
|                                                  | Retained investments from securitizations |                        |   | 13,180           |         |           |   | 12,327   |         |          |   | 35,777  |         |  |   | 48,957  |         |  |   | 26,347  |        
|                                                  | Transfer from MSRs                        |                        |   | 14,293           |         |           |   | 17,812   |         |          |   |        |         |  |   | 14,293  |         |  |   | 17,812  |        
|                                                  | Sales(1)                                  |                        |   | (15,171          | )       |           |   |         |         |          |   |        |         |  |   | (15,171 | )       |  |   |        |        
|                                                  | Clean-up calls exercised                  |                        |   | (1,655           | )       |           |   | (7,077   | )       |          |   | (1,151  | )       |  |   | (2,806  | )       |  |   | (19,125 | )      
|                                                  | Cash received, net of accretion           |                        |   | (12,240          | )       |           |   | (13,705  | )       |          |   | (12,200 | )       |  |   | (24,440 | )       |  |   | (27,834 | )      
|                                                  | Valuation gains (losses) before hedges    |                        |   | 14,932           |         |           |   | (29,932  | )       |          |   | (17,241 | )       |  |   | (2,309  | )       |  |   | (48,043 | )      
|                                                  |                                           |                        |   |                  |         |           |   |          |         |          |   |         |         |  |   |         |         |  |   |        
|                                                  |                                           | Ending balance         |   | $                | 166,799 |           |   | $        | 137,200 |          |   | $       | 153,460 |  |   | $       | 166,799 |  |   | $       | 137,200 | 
|                                                  |                                           |                        |   |                  |         |           |   |          |         |          |   |         |         |  |   |         |         |  |   |        
|Residual securities                               |                                           |                        |   |                  |         |           |   |          |         |          |   |         |         |  |   |         |         |  |   |        
|                                                  | Beginning balance                         |                        | $ | 61,324           |         |           | $ | 76,435   |         |          | $ | 56,157  |         |  | $ | 56,157  |         |  | $ | 77,757  |        
|                                                  | Retained investments from securitizations |                        |   | 11,827           |         |           |   | (198     | )       |          |   | 16,507  |         |  |   | 28,334  |         |  |   | 13,824  |        
|                                                  | Sales                                     |                        |   |                 |         |           |   |         |         |          |   |        |         |  |   |        |         |  |   | (10,525 | )      
|                                                  | Clean-up calls exercised                  |                        |   |                 |         |           |   |         |         |          |   | 159     |         |  |   | 159     |         |  |   |        |        
|                                                  | Cash received, net of accretion           |                        |   | (3,706           | )       |           |   | (6,113   | )       |          |   | (11,249 | )       |  |   | (14,955 | )       |  |   | (12,920 | )      
|                                                  | Valuation gains (losses) before hedges    |                        |   | 3,187            |         |           |   | (6,029   | )       |          |   | (250    | )       |  |   | 2,937   |         |  |   | (4,041  | )      
|                                                  |                                           |                        |   |                  |         |           |   |          |         |          |   |         |         |  |   |         |         |  |   |        
|                                                  |                                           | Ending balance         |   | $                | 72,632  |           |   | $        | 64,095  |          |   | $       | 61,324  |  |   | $       | 72,632  |  |   | $       | 64,095  | 
|                                                  |                                           |                        |   |                  |         |           |   |          |         |          |   |         |         |  |   |         |         |  |   |        



---



|    |                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the AAA-rated interest-only security
    that was created during the first quarter in connection with a
    private-label securitization transaction and subsequently sold
    in the second quarter.

Valuation of Servicing-Related
Assets

MSRs, AAA-rated and agency interest-only strips
and residual securities are recorded at fair market value. MSRs,
except for certain tranches for which we have applied hedge
accounting, are further subject to the lower of cost or market
limitations. Relevant information and assumptions used to value
the Companys

37



---



##### Table of Contents



servicing related assets and residual securities
at June 30, 2004, March 31, 2004, and
December 31, 2003 are shown below.


|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|---------------------------------------------- |  | ---------------------- | ------- | --------------------- |  | --------- | ---------- | ------------ |  | ---------- | ---- | -------- |  | ---------- | ---- | ---------- |  | --------- | ---- | ------------ |  |  | ---- |  |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | --- | -
|                                               |  |                        |         |                      
|                                               |  | Actual                 |         | Valuation Assumptions
|                                               |  |                        |         |                      
|                                               |  |                        |         | Gross Wtd.            |  | Servicing |            | 3-Month      |  | Weighted   |      | Lifetime |  | 3-Month    |      |            |  | Remaining
|                                               |  | Book                   |         | Collateral            |  | Average   |            | Fee/Interest |  | Prepayment |      | Average  |  | Prepayment |      | Prepayment |  | Discount  |      | Cumulative  
|                                               |  | Value                  |         | Balance               |  | Coupon    |            | Strip        |  | Speeds     |      | Multiple |  | Speeds     |      | Speeds     |  | Yield     |      | Loss Rate(1)
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |             
|                                               |  |                       
|                                               |  | (Dollars in thousands)
|June 30, 2004                                  |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|AAA-rated/agency interest- only strips         |  | $                      | 166,799 |                       |  | $         | 16,280,985 |              |  |            | 6.55 | %        |  |            | 0.38 | %          |  |           | 43.0 | %            |  |  | 2.70 |  |  |  | 16.7 | % |  |  | 23.3 | % |  |  | 10.8 | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Prime residual securities                      |  | $                      | 20,059  |                       |  | $         | 2,320,207  |              |  |            | 6.88 | %        |  |            | 2.31 | %          |  |           | 63.5 | %            |  |  | 0.37 |  |  |  | 32.2 | % |  |  | 37.3 | % |  |  | 16.9 | % |  |  | 0.5 | %
|Subprime and HELOC residual securities(2)      |  |                        | 52,574  |                       |  | $         | 1,843,879  |              |  |            | 7.43 | %        |  |            | 4.35 | %          |  |           | 40.6 | %            |  |  | 0.66 |  |  |  | 35.8 | % |  |  | 32.2 | % |  |  | 21.7 | % |  |  | 2.3 | %
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Total non-investment grade residual securities |  | $                      | 72,633  |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|MSRs                                           |  | $                      | 493,876 |                       |  | $         | 34,618,427 |              |  |            | 6.15 | %        |  |            | 0.32 | %          |  |           | 35.6 | %            |  |  | 4.46 |  |  |  | 16.2 | % |  |  | 15.9 | % |  |  | 11.4 | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|March 31, 2004                                 |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|AAA-rated/agency interest- only strips         |  | $                      | 153,146 |                       |  | $         | 15,253,063 |              |  |            | 6.68 | %        |  |            | 0.43 | %          |  |           | 33.7 | %            |  |  | 2.34 |  |  |  | 20.1 | % |  |  | 35.9 | % |  |  | 9.1  | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Prime residual securities                      |  | $                      | 18,875  |                       |  | $         | 2,210,176  |              |  |            | 6.94 | %        |  |            | 1.89 | %          |  |           | 55.6 | %            |  |  | 0.45 |  |  |  | 27.5 | % |  |  | 37.6 | % |  |  | 15.9 | % |  |  | 0.5 | %
|Subprime and HELOC residual securities(2)      |  |                        | 42,448  |                       |  | $         | 1,545,047  |              |  |            | 7.69 | %        |  |            | 4.21 | %          |  |           | 35.4 | %            |  |  | 0.65 |  |  |  | 38.2 | % |  |  | 38.7 | % |  |  | 21.5 | % |  |  | 2.3 | %
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Total non-investment grade residual securities |  | $                      | 61,323  |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|MSRs                                           |  | $                      | 414,358 |                       |  | $         | 32,121,562 |              |  |            | 6.36 | %        |  |            | 0.32 | %          |  |           | 29.2 | %            |  |  | 4.03 |  |  |  | 18.9 | % |  |  | 32.1 | % |  |  | 9.0  | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|December 31, 2003                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|AAA-rated/agency interest- only strips         |  | $                      | 148,275 |                       |  | $         | 14,740,915 |              |  |            | 6.90 | %        |  |            | 0.38 | %          |  |           | 34.0 | %            |  |  | 2.65 |  |  |  | 17.2 | % |  |  | 35.5 | % |  |  | 9.8  | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Prime residual securities                      |  | $                      | 23,518  |                       |  | $         | 2,406,030  |              |  |            | 7.00 | %        |  |            | 1.48 | %          |  |           | 60.0 | %            |  |  | 0.66 |  |  |  | 26.3 | % |  |  | 36.0 | % |  |  | 15.8 | % |  |  | 0.5 | %
|Subprime residual securities                   |  |                        | 32,639  |                       |  | $         | 1,286,694  |              |  |            | 8.65 | %        |  |            | 4.34 | %          |  |           | 38.4 | %            |  |  | 0.58 |  |  |  | 33.4 | % |  |  | 32.9 | % |  |  | 23.6 | % |  |  | 2.3 | %
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Total non-investment grade residual securities |  | $                      | 56,157  |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|MSRs                                           |  | $                      | 443,688 |                       |  | $         | 30,773,545 |              |  |            | 6.53 | %        |  |            | 0.32 | %          |  |           | 31.0 | %            |  |  | 4.51 |  |  |  | 16.8 | % |  |  | 31.5 | % |  |  | 10.0 | % |  |  | N/A |  
|                                               |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As a percentage of the original pool balance, the
    actual cumulative loss rate to date totaled 0.09% and 1.41% for
    prime and subprime residuals, respectively, at June 30,
    2004.                                                                                                                                                                    
|   
|(2) | As of June 30, 2004, subprime and HELOC
    residual securities include residuals from the securitization of
    home equity loans in the amount of $23 million. Although
    our HELOC loans are made to high credit quality, prime
    borrowers, the assumptions on HELOC-related residuals are
    similar to subprime as they are second trust deed loans.

The lifetime prepayment speeds represent the
annual constant prepayment rate (CPR) we estimate
for the remaining life of the collateral supporting the asset.
For MSRs and AAA-rated and agency interest-only strips, we
project prepayment rates using an industry standard prepayment
model. The model considers key factors such as refinance
incentive, housing turnover, seasonality and aging of the pool
of loans. Prepayment speeds incorporate expectations of future
rates implied by the market forward LIBOR/swap curve as well as
collateral specific current coupon information.

38



---



##### Table of Contents



The weighted average multiple for MSRs, AAA-rated
and agency interest-only strips and residual securities
represents the book value divided by the product of collateral
balance and servicing fee/interest strip. While the weighted
average life of such assets is a function of the undiscounted
cash flows, the multiple is a function of the discounted cash
flows. With regard to AAA-rated and agency interest-only strips,
the marketplace frequently uses calculated multiples to assess
the overall impact valuation assumptions have on value.
Collateral type, coupon, loan age and the size of the interest
strip must be considered when comparing these multiples. The mix
of collateral types supporting servicing-related assets is
primarily non-conforming/conventional, which may make
comparisons of the Companys MSR multiples misleading
relative to peer multiples whose product mix is substantially
different.

The lifetime prepayment speed assumptions
incorporate expectations of future rates implied by the market
forward LIBOR/swap curve. In contrast, the refinance incentive
reflected in short term prepayment speeds incorporates recent
actual mortgage current coupon information and generally will be
higher than lifetime speeds due to aging and burnout effects of
the portfolio; however, three-month projected prepayment speeds
for the MSRs dropped considerably compared to the first quarter
in response to an increase in 10-year swap rates of
approximately 80 basis points from the first quarter.
Substantial new MSR capitalization further contributed to the
overall decrease in expected short term speeds.

Similar to the decrease in three-month prepayment
speeds, the lifetime prepayment speed assumptions for subprime
and HELOC residual securities and MSRs have dropped compared to
March 31, 2004, due to an increase in 10-year swap rates
from the first quarter. However, the lifetime prepayment speed
assumptions for prime residual securities have increased from
that of the first quarter 2004 as they are predominantly
collateralized by ARM loans that tend to have higher prepayment
speeds. The discount rate assumptions increased reflecting the
increase in benchmark rates and the extension of the expected
life of the underlying loans.



| |                                                           
| | ----------------------------------------------------------
| | Hedging Interest Rate Risk on
    Servicing-Related Assets

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

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

We recorded a positive $48.6 million
valuation adjustment to increase our mortgage servicing asset
during the second quarter of 2004 as a result of increasing
long-term interest rates; however, this increase was more than
offset by losses of $67.5 million on our related hedging
instruments. Several factors contributed to the net valuation
loss in this quarter. Prepayment speeds experienced in the
portfolio during the second quarter were faster than projected
as the lower rates during the first quarter of this year
resulted in significantly higher levels of prepayments in the
second quarter than anticipated. In addition, our hedges were
negatively impacted by market volatility rates reaching
multi-year lows during the quarter, and a flattening of the
yield curve.

39



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##### Table of Contents



Our portfolio retention activities contributed to
the increased prepayments during the quarter. The positive
benefits of these activities are reflected in our segment
results and in the table on page 32, as these benefits are
realized in higher net interest income and gain on sale results.
In line with our expectations, we have observed a slowing of
prepayment speeds more recently, and as a result, we currently
expect improved performance in our servicing segment in the
second half of 2004.

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

|                                                 |                                                                                                                                              |                                                   |        |                  |         |           |        |          |        |          |        |         |        |   |        |         |         |   |        |         |         |  
|------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ------ | ---------------- | ------- | --------- | ------ | -------- | ------ | -------- | ------ | ------- | ------ | - | ------ | ------- | ------- | - | ------ | ------- | ------- | -
|                                                 |                                                                                                                                              |                                                   |        |                 
|                                                 |                                                                                                                                              | Three Months Ended                                |        | Six Months Ended
|                                                 |                                                                                                                                              |                                                   |        |                 
|                                                 |                                                                                                                                              | June 30,                                          |        | June 30,         |         | March 31, |        | June 30, |        | June 30,
|                                                 |                                                                                                                                              | 2004                                              |        | 2003             |         | 2004      |        | 2004     |        | 2003    
|                                                 |                                                                                                                                              |                                                   |        |                  |         |           |        |          |        |         
|                                                 |                                                                                                                                              |                                                  
|                                                 |                                                                                                                                              | (Dollars in thousands)                           
|Service fee (expense) income:                    |                                                                                                                                              |                                                   |        |                  |         |           |        |          |        |          |        |         |        |   |        |         |         |   |        |        
|                                                 | Gross service fee income                                                                                                                     |                                                   | $      | 29,879           |         |           | $      | 25,510   |        |          | $      | 28,080  |        |   | $      | 57,959  |         |   | $      | 49,567  |        
|                                                 | Amortization                                                                                                                                 |                                                   |        | (38,747          | )       |           |        | (21,832  | )      |          |        | (22,860 | )      |   |        | (61,607 | )       |   |        | (42,982 | )      
|                                                 |                                                                                                                                              |                                                   |        |                  |         |           |        |          |        |          |        |         |        |   |        |         |         |   |        |        
|                                                 | Service fee (expense) income, net of
    amortization                                                                                        |                                                   |        | (8,868           | )       |           |        | 3,678    |        |          |        | 5,220   |        |   |        | (3,648  | )       |   |        | 6,585   |        
|                                                 | Valuation adjustments on MSRs                                                                                                                |                                                   |        | 48,594           |         |           |        | (40,424  | )      |          |        | (53,433 | )      |   |        | (4,839  | )       |   |        | (41,536 | )      
|                                                 | Hedge (loss) gain on MSRs                                                                                                                    |                                                   |        | (67,533          | )       |           |        | 35,345   |        |          |        | 45,069  |        |   |        | (22,464 | )       |   |        | 35,933  |        
|                                                 |                                                                                                                                              |                                                   |        |                  |         |           |        |          |        |          |        |         |        |   |        |         |         |   |        |        
|                                                 |                                                                                                                                              | Total service fee
    (expense) income            |        | $                | (27,807 | )         |        | $        | (1,401 | )        |        | $       | (3,144 | ) |        | $       | (30,951 | ) |        | $       | 982     |  
|                                                 |                                                                                                                                              |                                                   |        |                  |         |           |        |          |        |          |        |         |        |   |        |         |         |   |        |        
|Net loss on securities:                          |                                                                                                                                              |                                                   |        |                  |         |           |        |          |        |          |        |         |        |   |        |         |         |   |        |        
|                                                 | Realized gain on available for sale securities                                                                                               |                                                   | $      | 631              |         |           | $      | 2,022    |        |          | $      | 900     |        |   | $      | 1,531   |         |   | $      | 2,022   |        
|                                                 | Impairment on available for sale securities                                                                                                  |                                                   |        | (565             | )       |           |        | (808     | )      |          |        | (101    | )      |   |        | (666    | )       |   |        | (1,388  | )      
|                                                 | Unrealized gain (loss) on AAA-rated and agency
    interest-only and residual securities                                                     |                                                   |        | 18,119           |         |           |        | (35,962  | )      |          |        | (17,492 | )      |   |        | 627     |         |   |        | (52,085 | )      
|                                                 | Net (loss) gain on trading securities and other
    instruments used to hedge AAA-rated and agency interest-only and
    residual securities |                                                   |        | (21,599          | )       |           |        | 25,490   |        |          |        | 11,706  |        |   |        | (9,893  | )       |   |        | 35,283  |        
|                                                 |                                                                                                                                              |                                                   |        |                  |         |           |        |          |        |          |        |         |        |   |        |         |         |   |        |        
|                                                 |                                                                                                                                              | Total loss on mortgage-backed securities,
    net |        | $                | (3,414  | )         |        | $        | (9,258 | )        |        | $       | (4,987 | ) |        | $       | (8,401  | ) |        | $       | (16,168 | )
|                                                 |                                                                                                                                              |                                                   |        |                  |         |           |        |          |        |          |        |         |        |   |        |         |         |   |        |        
|Total Clean-Up Call and Retention Program Income |                                                                                                                                              | $                                                 | 17,199 |                  |         | $         | 16,087 |          |        | $        | 21,192 |         |        | $ | 38,391 |         |         | $ | 26,987 |        

The income from the clean-up call and retention
programs is recognized as a component of gain on sale and net
interest income in the Investment Portfolio Groups
mortgage banking activities. As shown in our segment results on
page 12, the effect of the clean-up call and retention
program activities allowed the mortgage servicing business to
generate positive returns during the historical refinance boom
periods, with the exception of the current quarter.

The income from the clean-up call and retention
programs totaled $17.2 million during the second quarter of
2004, a decrease of $4.0 million compared to the quarter
ended March 31, 2004. The reduction is primarily due to the
decrease in net interest income as the remaining clean-up call
loans and loans acquired through retention programs had lower
weighted average coupon rates.

As master servicer for our various
securitizations, we maintain the right to call selected
transactions when the outstanding loan balances in the
securitization trust decline to a specified level, typically 10%
of the original collateral balance. During the quarter ended
June 30, 2004, we sold approximately $104.0 million of
called loans with a pretax gain of $2.5 million, and
$450.2 million of loans acquired through retention programs
for a pretax gain of $11.1 million. We expect to exercise
our option to call additional loans of approximately
$221 million during the remainder of 2004, the exact timing
and amount of which is dependent upon the future interest rate
environment and borrower prepayment behavior.

40



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Mortgage loan servicing provides a key advantage
to mortgage originators in a declining interest rate
environment, as there is an existing base of customers that
could potentially be in the market for a refinance mortgage. The
gains from providing a new mortgage to an existing customer,
serve to mitigate the decline in value of the mortgage servicing
asset for the early prepayment of the original loan. Prior to
the third quarter of 2003, servicing referrals and direct
marketing to IndyMacs servicing customers was performed by
the consumer direct (B2C) segment. IndyMac began to transition
this customer retention activity to the mortgage servicing
segment beginning in the third quarter of last year and
completed this transition in the second quarter of this year. In
order to evaluate the overall profitability of the servicing
segment, we believe it is important to view the profitability
including all of the retention activities performed at the
Company, both by the consumer direct segment and the mortgage
servicing segment.

When looked at as a whole, the retention
activities significantly enhance the servicing returns. The
second quarter of 2004 is the first quarter in which IndyMac has
suffered a loss in its servicing activities net of the retention
profits. The table below shows the total return on servicing and
retained assets including an estimate of the consumer direct
retention profits.

|                           |                                  |                          |         |          |         |         |        |           |         |         |      |      |     |    |        |         |         |  |      |      |     |   
|-------------------------- | -------------------------------- | ------------------------ | ------- | -------- | ------- | ------- | ------ | --------- | ------- | ------- | ---- | ---- | --- | -- | ------ | ------- | ------- |  | ---- | ---- | --- | --
|                           |                                  |                         
|                           |                                  | Three Months Ended      
|                           |                                  |                         
|                           |                                  | June 30,                 |         | June 30, |         | Percent |        | March 31, |         | Percent
|                           |                                  | 2004                     |         | 2003     |         | Change  |        | 2004      |         | Change 
|                           |                                  |                          |         |          |         |         |        |           |         |        
|                           |                                  |                         
|                           |                                  | (Dollars in thousands)  
|Net revenues:              |                                  |                          |         |          |         |         |        |           |         |         |      |      |     |    |        |         |         |  |      |     
|                           | Servicing-related assets segment |                          | $       | (9,869   | )       |         | $      | 10,835    |         |         |      | (191 | )%  |    | $      | 16,655  |         |  |      | (159 | )% 
|                           | B2C servicing retention revenue  |                          |         | 10,018   |         |         |        | 16,958    |         |         |      | (41  | )%  |    |        | 11,182  |         |  |      | (10  | )% 
|                           |                                  |                          |         |          |         |         |        |           |         |         |      |      |     |    |        |         |         |  |      |     
|                           |                                  | Total net revenues       |         |          | 149     |         |        |           | 27,793  |         |      |      | (99 | )% |        |         | 27,837  |  |      |      | (99 | )%
|Operating expenses:        |                                  |                          |         |          |         |         |        |           |         |         |      |      |     |    |        |         |         |  |      |     
|                           | Servicing-related assets segment |                          |         | 11,278   |         |         |        | 9,180     |         |         |      | 23   | %   |    |        | 9,890   |         |  |      | 14   | %  
|                           | B2C servicing retention revenue  |                          |         | 4,838    |         |         |        | 7,857     |         |         |      | (38  | )%  |    |        | 4,651   |         |  |      | 4    | %  
|                           |                                  |                          |         |          |         |         |        |           |         |         |      |      |     |    |        |         |         |  |      |     
|                           |                                  | Total operating expenses |         |          | 16,116  |         |        |           | 17,037  |         |      |      | (5  | )% |        |         | 14,541  |  |      |      | 11  | % 
|Earnings before tax        |                                  |                          | (15,967 | )        |         |         | 10,756 |           |         |         | (248 | )%   |     |    | 13,296 |         |         |  | (220 | )%  
|                           |                                  |                          |         |          |         |         |        |           |         |         |      |      |     |    |        |         |         |  |      |     
|Net earnings               |                                  | $                        | (9,660  | )        |         | $       | 6,507  |           |         |         | (248 | )%   |     | $  | 8,044  |         |         |  | (220 | )%  
|                           |                                  |                          |         |          |         |         |        |           |         |         |      |      |     |    |        |         |         |  |      |     
|Average capital allocated: |                                  |                          |         |          |         |         |        |           |         |         |      |      |     |    |        |         |         |  |      |     
|                           | Servicing-related assets segment |                          | $       | 205,192  |         |         | $      | 195,570   |         |         |      | 5    | %   |    | $      | 200,874 |         |  |      | 2    | %  
|                           | B2C servicing retention revenue  |                          |         | 6,719    |         |         |        | 10,912    |         |         |      | (38  | )%  |    |        | 6,460   |         |  |      | 4    | %  
|                           |                                  |                          |         |          |         |         |        |           |         |         |      |      |     |    |        |         |         |  |      |     
|                           |                                  | Total average capital    |         | $        | 211,911 |         |        | $         | 206,482 |         |      |      | 3   | %  |        | $       | 207,334 |  |      |      | 2   | % 
|                           |                                  |                          |         |          |         |         |        |           |         |         |      |      |     |    |        |         |         |  |      |     
|ROE                        |                                  |                          | (18     | )%       |         |         | 13     | %         |         |         | (238 | )%   |     |    | 16     | %       |         |  | (213 | )%  




Construction Lending

IndyMac provides construction financing for
individual consumers who are in the process of building their
own home (consumer construction) and for residential subdivision
developers (builder construction). With respect to consumer
construction, the primary product is a construction-to-permanent
residential mortgage loan. This product provides financing for
the 9 to 12 month term of construction and automatically
converts to a permanent mortgage loan at the end of
construction. As a result, this product represents a hybrid
activity between our portfolio lending activities and mortgage
banking activities. The Company earns net interest income during
the construction phase. These loans are typically fixed-rate
loans. When the loan converts to permanent status the loan is
transferred into the Companys pipeline of mortgage loans
held for sale. Consumer construction loan originations grew 26%
from the first quarter of 2004 and 47% over the same quarter of
2003, as we continue to take advantage of the strong new
home purchase market. Overall, HCL is ranked as the second
largest custom residential lender in the nation and the largest
in California. Consumer construction loans outstanding at
June 30, 2004, were $1.3 billion, up 14% compared to
the amount at December 31, 2003.

41



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##### Table of Contents



With respect to builder construction loans, our
activities have been increasingly focused on those homebuilders
that provide our mortgage loans to their customers when they
sell the completed residence. Builder construction loans are
typically based on prime rates. During the second quarter 2004,
we entered into new tract construction commitments of
$304 million, up 28%, or $67 million, from the second
quarter 2003. Builder loans outstanding at June 30, 2004,
including construction and land and other mortgage loans,
totaled $738.9 million, a $133.7 million, or 22%
increase compared to December 31, 2003. A substantial
portion of our builder construction loans is secured by
corporate or personal guarantees of the builders as well as the
underlying real estate.

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

|                                     |  |               |           |                        |  |              |           |              |  |   |           |   |  |   |           |  
|------------------------------------ |  | ------------- | --------- | ---------------------- |  | ------------ | --------- | ------------ |  | - | --------- | - |  | - | --------- | -
|                                     |  |              
|                                     |  | As of        
|                                     |  |              
|                                     |  |               |           |                       
|                                     |  | June 30, 2004 |           | December 31, 2003     
|                                     |  |               |           |                       
|                                     |  | Consumer      |           | Builder                |  | Consumer     |           | Builder     
|                                     |  | Construction  |           | Construction           |  | Construction |           | Construction
|                                     |  | Loans         |           | Loans                  |  | Loans        |           | Loans       
|                                     |  |               |           |                        |  |              |           |             
|                                     |  |               |           |                        |  |             
|                                     |  |               |           | (Dollars in thousands) |  |             
|Construction loans                   |  | $             | 1,301,688 |                        |  | $            | 561,538   |              |  | $ | 1,145,526 |   |  | $ | 484,397   |  
|Land and other mortgage loans        |  | $             | 73,063    |                        |  | $            | 177,337   |              |  | $ | 87,045    |   |  | $ | 120,751   |  
|Outstanding commitments              |  | $             | 2,335,273 |                        |  | $            | 1,329,717 |              |  | $ | 2,091,853 |   |  | $ | 1,120,893 |  
|Average construction loan commitment |  | $             | 389       |                        |  | $            | 2,467     |              |  | $ | 391       |   |  | $ | 3,046     |  
|Non-performing loans                 |  |               | 0.74      | %                      |  |              | 1.24      | %            |  |   | 0.78      | % |  |   | 1.60      | %
|Yield                                |  |               | 5.66      | %                      |  |              | 6.44      | %            |  |   | 5.81      | % |  |   | 6.63      | %
|Fixed-rate loans                     |  |               | 95        | %                      |  |              | 0         | %            |  |   | 94        | % |  |   | 1         | %
|Adjustable-rate loans                |  |               | 5         | %                      |  |              | 98        | %            |  |   | 6         | % |  |   | 97        | %
|Hybrid adjustable-rate loans         |  |               | 0         | %                      |  |              | 2         | %            |  |   | 0         | % |  |   | 2         | %

Additional Information as of June 30,
2004

|                               |                                            |              |     |     |   |              |                                              |  |     |     |  
|------------------------------ | ------------------------------------------ | ------------ | --- | --- | - | ------------ | -------------------------------------------- |  | --- | --- | -
|                               |                                            | Consumer     |     |     |   | Builder     
|                               |                                            | Construction |     |     |   | Construction
|                               |                                            | Loans        |     |     |   | Loans       
|                               |                                            |              |     |     |   |             
|Average loan-to-value ratio(1) |                                            |              | 74  | %   |   |              |                                              |  | 73  | %  
|Average FICO score(2)          |                                            |              | 706 |     |   |              |                                              |  | N/A |    
|Geographic distribution        |                                            |              |     |     |   |              |                                              |  |     |    
|                               | Southern California                        |              |     | 30  | % |              | Southern California                          |  |     | 45  | %
|                               | Northern California                        |              |     | 18  | % |              | Northern California                          |  |     | 22  | %
|                               | New York                                   |              |     | 5   | % |              | Illinois                                     |  |     | 12  | %
|                               | Hawaii                                     |              |     | 5   | % |              | Florida                                      |  |     | 7   | %
|                               | Florida                                    |              |     | 4   | % |              | Massachusetts                                |  |     | 4   | %
|                               | Colorado                                   |              |     | 3   | % |              |                                              |  |     |     |  
|                               | Connecticut                                |              |     | 3   | % |              |                                              |  |     |     |  
|                               | Washington                                 |              |     | 2   | % |              |                                              |  |     |     |  
|                               | New Jersey                                 |              |     | 2   | % |              |                                              |  |     |     |  
|                               | Nevada                                     |              |     | 2   | % |              |                                              |  |     |     |  
|                               | Other (each individually
    less than 2%) |              |     | 26  | % |              | Other (each
    individually   less than 2%) |  |     | 10  | %
|                               |                                            |              |     |     |   |              |                                              |  |     |    
|                               | Total Consumer Construction                |              |     | 100 | % |              | Total Builder Construction                   |  |     | 100 | %
|                               |                                            |              |     |     |   |              |                                              |  |     |    



---



|    |                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The average loan-to-value ratio is based on the
    estimated appraised value of the completed project compared to
    the commitment amount at June 30, 2004.
|   
|(2) | FICO scores are not calculated for corporate
    entities and, therefore, are not applicable to the builder
    construction portfolio.                       

For information related to the Companys
balance of non-performing assets and related credit reserves,
see discussion in the Credit Risk and Reserves
section at page 48.

42



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##### Table of Contents






HELOC Portfolio

Our managed HELOC portfolio reached the
$1 billion level during the second quarter 2004. The
portfolio grew 50% during the first half of the year from
$711.5 million at December 31, 2003, to
$1.1 billion at June 30, 2004, including the HELOC
securitized servicing portfolio. The majority of the HELOC
production was driven by our internal channels and produced
concurrently with a first mortgage.

During the first quarter 2004, the Company
financed $500 million in HELOC loans through a
securitization trust. The trust issued AAA-rated asset-backed
certificates that are guaranteed by a third party insurer. The
Company pledged the certificates to secure $500 million of
nonrecourse debt. As a result of this transaction, the Company
recharacterized the net book value of the HELOCs as securities
available for sale and servicing rights. The nonrecourse notes
are reflected in other borrowings. The Company recognized no
gain or loss on this secured financing transaction. The primary
objectives of these transactions were to (1) lower our cost
of funds, (2) improve our liquidity profile, and
(3) improve our risk profile through the use of mortgage
insurance.

On June 30, 2004, we reclassified
$342 million of HELOC loans, representing the planned
amount of loans to be securitized in the third quarter 2004,
from held for investment to held for sale on the consolidated
balance sheet. This reclassification did not result in any basis
adjustment to the loans and had no impact on second quarter
earnings.

The following table presents information on the
combined HELOCs held for sale and held for investment as of and
for the three months ended June 30, 2004, March 31,
2004, and December 31, 2003. All HELOC loans are
adjustable rate loans and indexed to the prime rate.

|                           |  |                        |           |           |  |              |         |   |  |   |           |  
|-------------------------- |  | ---------------------- | --------- | --------- |  | ------------ | ------- | - |  | - | --------- | -
|                           |  | June 30,               |           | March 31, |  | December 31,
|                           |  | 2004                   |           | 2004      |  | 2003        
|                           |  |                        |           |           |  |             
|                           |  |                       
|                           |  | (Dollars in thousands)
|Outstanding balance        |  | $                      | 559,406   |           |  | $            | 322,351 |   |  | $ | 711,494   |  
|Outstanding commitments(1) |  | $                      | 1,095,532 |           |  | $            | 638,210 |   |  | $ | 1,189,213 |  
|Average spread over prime  |  |                        | 1.99      | %         |  |              | 2.07    | % |  |   | 1.92      | %
|Average FICO score         |  |                        | 716       |           |  |              | 711     |   |  |   | 710       |  
|Average CLTV ratio(2)      |  |                        | 75        | %         |  |              | 76      | % |  |   | 77        | %

|                 |       |                        |         |              |  |                |    |         |  |             |      |      |   |  |     |     |  |  |      |      |  
|---------------- | ----- | ---------------------- | ------- | ------------ |  | -------------- | -- | ------- |  | ----------- | ---- | ---- | - |  | --- | --- |  |  | ---- | ---- | -
|                 |       |                        |         | Average Loan |  |                |    |         |  | 30+ Days   
|                 |       | Outstanding            |         | Commitment   |  | Average Spread |    | Average |  | Delinquency
|CLTV             |       | Balance                |         | Balance      |  | Over Prime     |    | FICO    |  | Percentage 
|                 |       |                        |         |              |  |                |    |         |  |            
|                 |       |                       
|                 |       | (Dollars in thousands)
|>= 96% &< = 100% |       | $                      | 25,492  |              |  | $              | 64 |         |  |             | 3.06 | %    |   |  | 722 |     |  |  | 1.47 | %   
|>= 91% &< = 95%  |       |                        | 65,322  |              |  |                | 61 |         |  |             | 3.08 | %    |   |  | 715 |     |  |  | 0.76 | %   
|>= 81% &< = 90%  |       |                        | 188,316 |              |  |                | 63 |         |  |             | 2.52 | %    |   |  | 699 |     |  |  | 1.40 | %   
|>= 71% &< = 80%  |       |                        | 154,098 |              |  |                | 98 |         |  |             | 1.31 | %    |   |  | 715 |     |  |  | 0.95 | %   
|<= 70%           |       |                        | 126,178 |              |  |                | 99 |         |  |             | 1.23 | %    |   |  | 733 |     |  |  | 0.53 | %   
|                 |       |                        |         |              |  |                |    |         |  |             |      |      |   |  |     |     |  |  |      |     
|                 | Total |                        | $       | 559,406      |  |                | $  | 80      |  |             |      | 1.99 | % |  |     | 716 |  |  |      | 1.00 | %
|                 |       |                        |         |              |  |                |    |         |  |             |      |      |   |  |     |     |  |  |      |     



---



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

43



---



##### Table of Contents






NET INTEREST INCOME

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

|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |      |  
|-------------------------------------------------------- | ------------------------------------------ | ---------------------- | --------- | ------------- |  | -------------- | ------- | ------- |  | -------- | ---- | ----- | - | ------- | --------- | ---------- |  | ----- | ------ | ------- |  |  | ---- | ---- | - | - | --------- | ---------- |  | - | ------ | ------- |  |  | ---- | ---- | -
|                                                         |                                            |                       
|                                                         |                                            | Three Months Ended    
|                                                         |                                            |                       
|                                                         |                                            |                        |           |               |  |               
|                                                         |                                            | June 30, 2004          |           | June 30, 2003 |  | March 31, 2004
|                                                         |                                            |                        |           |               |  |               
|                                                         |                                            | Average                |           |               |  | Yield          |         | Average |  |          |      | Yield |   | Average |           |            |  | Yield
|                                                         |                                            | Balance                |           | Interest      |  | Rate           |         | Balance |  | Interest |      | Rate  |   | Balance |           | Interest   |  | Rate 
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |      
|                                                         |                                            |                       
|                                                         |                                            | (Dollars in thousands)
|Securities                                               |                                            | $                      | 2,877,174 |               |  | $              | 34,365  |         |  |          | 4.80 | %     |   | $       | 1,553,656 |            |  | $     | 16,111 |         |  |  | 4.16 | %    |   | $ | 2,105,468 |            |  | $ | 26,855 |         |  |  | 5.13 | %   
|Loans held for sale                                      |                                            |                        | 5,282,806 |               |  |                | 69,395  |         |  |          | 5.28 | %     |   |         | 3,467,140 |            |  |       | 52,460 |         |  |  | 6.07 | %    |   |   | 3,688,650 |            |  |   | 54,746 |         |  |  | 5.97 | %   
|Mortgage loans held for investment                       |                                            |                        | 5,424,545 |               |  |                | 56,827  |         |  |          | 4.21 | %     |   |         | 3,173,541 |            |  |       | 37,201 |         |  |  | 4.70 | %    |   |   | 5,608,258 |            |  |   | 58,042 |         |  |  | 4.16 | %   
|Builder construction and income property                 |                                            |                        | 546,597   |               |  |                | 8,820   |         |  |          | 6.49 | %     |   |         | 570,944   |            |  |       | 9,768  |         |  |  | 6.86 | %    |   |   | 506,668   |            |  |   | 8,039  |         |  |  | 6.38 | %   
|Consumer construction                                    |                                            |                        | 1,208,522 |               |  |                | 17,003  |         |  |          | 5.66 | %     |   |         | 899,204   |            |  |       | 14,639 |         |  |  | 6.53 | %    |   |   | 1,140,371 |            |  |   | 15,995 |         |  |  | 5.64 | %   
|Investment in Federal Home Loan Bank stock
    and other |                                            |                        | 329,231   |               |  |                | 3,898   |         |  |          | 4.76 | %     |   |         | 244,552   |            |  |       | 2,298  |         |  |  | 3.77 | %    |   |   | 320,321   |            |  |   | 2,882  |         |  |  | 3.62 | %   
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total interest-earning assets              |                        |           | 15,668,875    |  |                |         | 190,308 |  |          |      | 4.88  | % |         |           | 9,909,037  |  |       |        | 132,477 |  |  |      | 5.36 | % |   |           | 13,369,736 |  |   |        | 166,559 |  |  |      | 5.01 | %
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Other                                                    |                                            |                        | 1,317,607 |               |  |                |         |         |  |          |      |       |   |         | 972,687   |            |  |       |        |         |  |  |      |      |   |   | 1,178,636 |            |  |   |        |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total assets                               |                        | $         | 16,986,482    |  |                |         |         |  |          |      |       |   |         | $         | 10,881,724 |  |       |        |         |  |  |      |      |   |   | $         | 14,548,372 |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Interest-bearing deposits                                |                                            | $                      | 4,076,509 |               |  |                | 23,697  |         |  |          | 2.34 | %     |   | $       | 2,996,427 |            |  |       | 21,950 |         |  |  | 2.94 | %    |   | $ | 3,838,511 |            |  |   | 22,482 |         |  |  | 2.36 | %   
|Advances from Federal Home Loan Bank                     |                                            |                        | 5,775,468 |               |  |                | 33,919  |         |  |          | 2.36 | %     |   |         | 3,588,032 |            |  |       | 28,308 |         |  |  | 3.16 | %    |   |   | 5,207,135 |            |  |   | 30,920 |         |  |  | 2.39 | %   
|Other borrowings                                         |                                            |                        | 4,800,920 |               |  |                | 25,714  |         |  |          | 2.15 | %     |   |         | 2,276,959 |            |  |       | 14,704 |         |  |  | 2.59 | %    |   |   | 3,532,004 |            |  |   | 19,224 |         |  |  | 2.19 | %   
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total interest-bearing liabilities         |                        |           | 14,652,897    |  |                |         | 83,330  |  |          |      | 2.29  | % |         |           | 8,861,418  |  |       |        | 64,962  |  |  |      | 2.94 | % |   |           | 12,577,650 |  |   |        | 72,626  |  |  |      | 2.32 | %
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Other                                                    |                                            |                        | 1,206,297 |               |  |                |         |         |  |          |      |       |   |         | 1,115,755 |            |  |       |        |         |  |  |      |      |   |   | 927,400   |            |  |   |        |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total liabilities                          |                        |           | 15,859,194    |  |                |         |         |  |          |      |       |   |         |           | 9,977,173  |  |       |        |         |  |  |      |      |   |   |           | 13,505,050 |  |   |        |         |  |  |      |      |  
|                                                         | Stockholders equity                       |                        |           | 1,127,288     |  |                |         |         |  |          |      |       |   |         |           | 904,551    |  |       |        |         |  |  |      |      |   |   |           | 1,043,322  |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total liabilities and stockholders equity |                        | $         | 16,986,482    |  |                |         |         |  |          |      |       |   |         | $         | 10,881,724 |  |       |        |         |  |  |      |      |   |   | $         | 14,548,372 |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Net interest income                                      |                                            |                        |           |               |  | $              | 106,978 |         |  |          |      |       |   |         |           |            |  | $     | 67,515 |         |  |  |      |      |   |   |           |            |  | $ | 93,933 |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Net interest spread                                      |                                            |                        |           |               |  |                |         |         |  |          | 2.59 | %     |   |         |           |            |  |       |        |         |  |  | 2.42 | %    |   |   |           |            |  |   |        |         |  |  | 2.69 | %   
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Net interest margin                                      |                                            |                        |           |               |  |                |         |         |  |          | 2.75 | %     |   |         |           |            |  |       |        |         |  |  | 2.73 | %    |   |   |           |            |  |   |        |         |  |  | 2.83 | %   
|                                                         |                                            |                        |           |               |  |                |         |         |  |          |      |       |   |         |           |            |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     

44



---



##### Table of Contents



|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |      |  
|-------------------------------------------------------- | ------------------------------------------ | ---------------------- | --------- | ------------- |  | ----- | ------- | ------- |  | -------- | ---- | ----- | - | - | --------- | ---------- |  | - | ------- | ------- |  |  | ---- | ---- | -
|                                                         |                                            |                       
|                                                         |                                            | Six Months Ended      
|                                                         |                                            |                       
|                                                         |                                            |                        |           |              
|                                                         |                                            | June 30, 2004          |           | June 30, 2003
|                                                         |                                            |                        |           |              
|                                                         |                                            | Average                |           |               |  | Yield |         | Average |  |          |      | Yield
|                                                         |                                            | Balance                |           | Interest      |  | Rate  |         | Balance |  | Interest |      | Rate 
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |      
|                                                         |                                            |                       
|                                                         |                                            | (Dollars in thousands)
|Securities                                               |                                            | $                      | 2,491,321 |               |  | $     | 61,220  |         |  |          | 4.94 | %     |   | $ | 1,737,151 |            |  | $ | 37,072  |         |  |  | 4.30 | %   
|Loans held for sale                                      |                                            |                        | 4,485,728 |               |  |       | 124,141 |         |  |          | 5.57 | %     |   |   | 3,167,344 |            |  |   | 97,661  |         |  |  | 6.22 | %   
|Mortgage loans held for investment                       |                                            |                        | 5,516,402 |               |  |       | 114,868 |         |  |          | 4.19 | %     |   |   | 2,966,721 |            |  |   | 73,164  |         |  |  | 4.97 | %   
|Builder construction and income property                 |                                            |                        | 526,633   |               |  |       | 16,860  |         |  |          | 6.44 | %     |   |   | 570,915   |            |  |   | 19,488  |         |  |  | 6.88 | %   
|Consumer construction                                    |                                            |                        | 1,174,446 |               |  |       | 32,998  |         |  |          | 5.65 | %     |   |   | 869,488   |            |  |   | 29,035  |         |  |  | 6.73 | %   
|Investment in Federal Home Loan Bank stock
    and other |                                            |                        | 324,776   |               |  |       | 6,780   |         |  |          | 4.20 | %     |   |   | 212,910   |            |  |   | 4,254   |         |  |  | 4.03 | %   
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     
|                                                         | Total interest-earning assets              |                        |           | 14,519,306    |  |       |         | 356,867 |  |          |      | 4.94  | % |   |           | 9,524,529  |  |   |         | 260,674 |  |  |      | 5.52 | %
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     
|Other                                                    |                                            |                        | 1,248,121 |               |  |       |         |         |  |          |      |       |   |   | 933,665   |            |  |   |         |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     
|                                                         | Total assets                               |                        | $         | 15,767,427    |  |       |         |         |  |          |      |       |   |   | $         | 10,458,194 |  |   |         |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     
|Interest-bearing deposits                                |                                            | $                      | 3,957,510 |               |  |       | 46,179  |         |  |          | 2.35 | %     |   | $ | 2,866,625 |            |  |   | 43,638  |         |  |  | 3.07 | %   
|Advances from Federal Home Loan Bank                     |                                            |                        | 5,491,302 |               |  |       | 64,839  |         |  |          | 2.37 | %     |   |   | 3,148,520 |            |  |   | 53,866  |         |  |  | 3.45 | %   
|Other borrowings                                         |                                            |                        | 4,166,462 |               |  |       | 44,938  |         |  |          | 2.17 | %     |   |   | 2,544,684 |            |  |   | 32,630  |         |  |  | 2.59 | %   
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     
|                                                         | Total interest-bearing liabilities         |                        |           | 13,615,274    |  |       |         | 155,956 |  |          |      | 2.30  | % |   |           | 8,559,829  |  |   |         | 130,134 |  |  |      | 3.07 | %
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     
|Other                                                    |                                            |                        | 1,066,848 |               |  |       |         |         |  |          |      |       |   |   | 1,010,978 |            |  |   |         |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     
|                                                         | Total liabilities                          |                        |           | 14,682,122    |  |       |         |         |  |          |      |       |   |   |           | 9,570,807  |  |   |         |         |  |  |      |      |  
|                                                         | Stockholders equity                       |                        |           | 1,085,305     |  |       |         |         |  |          |      |       |   |   |           | 887,387    |  |   |         |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     
|                                                         | Total liabilities and stockholders equity |                        | $         | 15,767,427    |  |       |         |         |  |          |      |       |   |   | $         | 10,458,194 |  |   |         |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     
|Net interest income                                      |                                            |                        |           |               |  | $     | 200,911 |         |  |          |      |       |   |   |           |            |  | $ | 130,540 |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     
|Net interest spread                                      |                                            |                        |           |               |  |       |         |         |  |          | 2.64 | %     |   |   |           |            |  |   |         |         |  |  | 2.45 | %   
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     
|Net interest margin                                      |                                            |                        |           |               |  |       |         |         |  |          | 2.78 | %     |   |   |           |            |  |   |         |         |  |  | 2.76 | %   
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |            |  |   |         |         |  |  |      |     

The net interest margin during the second quarter
2004 was 2.75%, a decline from 2.83% for the first quarter 2004.
The decrease is primarily due to a 13 basis point decline
in yield on interest-earning assets. The lower yield on
interest-earning assets was the result of an increase in the mix
of monthly adjustable 12-MAT loans held for sale that carry a
lower yield in the initial period, generally the first month.

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

45



---



##### Table of Contents



by the prior periods volume), and
(iii) changes in rate/volume (mix) (changes in
rates times the changes in volume).


|                 |                                                          |                                           |   |        |        |     |   |              |         |   |   |        |        |   |   |        |        | 
|---------------- | -------------------------------------------------------- | ----------------------------------------- | - | ------ | ------ | --- | - | ------------ | ------- | - | - | ------ | ------ | - | - | ------ | ------ | 
|                 |                                                          |                                          
|                 |                                                          | Three Months Ended June 30, 2004 vs. 2003
|                 |                                                          |                                          
|                 |                                                          |                                          
|                 |                                                          | Increase/(Decrease) Due to               
|                 |                                                          |                                          
|                 |                                                          | Volume                                    |   | Rate   |        | Mix |   | Total Change
|                 |                                                          |                                           |   |        |        |     |   |             
|                 |                                                          |                                          
|                 |                                                          | (Dollars in thousands)                   
|Interest income  |                                                          |                                           |   |        |        |     |   |              |         |   |   |        |        |   |   |       
|                 | Mortgage-backed securities                               |                                           | $ | 13,643 |        |     | $ | 2,497        |         |   | $ | 2,114  |        |   | $ | 18,254 |       
|                 | Loans held for sale                                      |                                           |   | 27,254 |        |     |   | (6,791       | )       |   |   | (3,528 | )      |   |   | 16,935 |       
|                 | Mortgage loans held for investment                       |                                           |   | 26,213 |        |     |   | (3,864       | )       |   |   | (2,723 | )      |   |   | 19,626 |       
|                 | Builder construction and income property                 |                                           |   | (442   | )      |     |   | (530         | )       |   |   | 24     |        |   |   | (948   | )     
|                 | Consumer construction                                    |                                           |   | 4,983  |        |     |   | (1,953       | )       |   |   | (665   | )      |   |   | 2,365  |       
|                 | Investment in Federal Home Loan Bank stock
    and other |                                           |   | 787    |        |     |   | 605          |         |   |   | 207    |        |   |   | 1,599  |       
|                 |                                                          |                                           |   |        |        |     |   |              |         |   |   |        |        |   |   |       
|                 |                                                          | Total interest income                     |   |        | 72,438 |     |   |              | (10,036 | ) |   |        | (4,571 | ) |   |        | 57,831 | 
|Interest expense |                                                          |                                           |   |        |        |     |   |              |         |   |   |        |        |   |   |       
|                 | Interest-bearing deposits                                |                                           |   | 7,831  |        |     |   | (4,484       | )       |   |   | (1,600 | )      |   |   | 1,747  |       
|                 | Advances from Federal Home Loan Bank                     |                                           |   | 17,133 |        |     |   | (7,178       | )       |   |   | (4,344 | )      |   |   | 5,611  |       
|                 | Other borrowings                                         |                                           |   | 16,214 |        |     |   | (2,475       | )       |   |   | (2,729 | )      |   |   | 11,010 |       
|                 |                                                          |                                           |   |        |        |     |   |              |         |   |   |        |        |   |   |       
|                 |                                                          | Total interest expense                    |   |        | 41,178 |     |   |              | (14,137 | ) |   |        | (8,673 | ) |   |        | 18,368 | 
|                 |                                                          |                                           |   |        |        |     |   |              |         |   |   |        |        |   |   |       
|                 |                                                          | Net interest income                       |   | $      | 31,260 |     |   | $            | 4,101   |   |   | $      | 4,102  |   |   | $      | 39,463 | 
|                 |                                                          |                                           |   |        |        |     |   |              |         |   |   |        |        |   |   |       

|                 |                                                          |                                         |   |        |         |     |   |              |         |   |   |         |         |   |   |        |        | 
|---------------- | -------------------------------------------------------- | --------------------------------------- | - | ------ | ------- | --- | - | ------------ | ------- | - | - | ------- | ------- | - | - | ------ | ------ | 
|                 |                                                          |                                        
|                 |                                                          | Six Months Ended June 30, 2004 vs. 2003
|                 |                                                          |                                        
|                 |                                                          |                                        
|                 |                                                          | Increase/(Decrease) Due to             
|                 |                                                          |                                        
|                 |                                                          | Volume                                  |   | Rate   |         | Mix |   | Total Change
|                 |                                                          |                                         |   |        |         |     |   |             
|                 |                                                          |                                        
|                 |                                                          | (Dollars in thousands)                 
|Interest income  |                                                          |                                         |   |        |         |     |   |              |         |   |   |         |         |   |   |       
|                 | Mortgage-backed securities                               |                                         | $ | 16,242 |         |     | $ | 5,497        |         |   | $ | 2,409   |         |   | $ | 24,148 |       
|                 | Loans held for sale                                      |                                         |   | 41,035 |         |     |   | (10,249      | )       |   |   | (4,306  | )       |   |   | 26,480 |       
|                 | Mortgage loans held for investment                       |                                         |   | 63,257 |         |     |   | (11,559      | )       |   |   | (9,993  | )       |   |   | 41,705 |       
|                 | Builder construction and income property                 |                                         |   | (1,462 | )       |     |   | (1,262       | )       |   |   | 95      |         |   |   | (2,629 | )     
|                 | Consumer construction                                    |                                         |   | 10,292 |         |     |   | (4,673       | )       |   |   | (1,656  | )       |   |   | 3,963  |       
|                 | Investment in Federal Home Loan Bank stock
    and other |                                         |   | 2,253  |         |     |   | 178          |         |   |   | 94      |         |   |   | 2,525  |       
|                 |                                                          |                                         |   |        |         |     |   |              |         |   |   |         |         |   |   |       
|                 |                                                          | Total interest income                   |   |        | 131,617 |     |   |              | (22,068 | ) |   |         | (13,357 | ) |   |        | 96,192 | 
|Interest expense |                                                          |                                         |   |        |         |     |   |              |         |   |   |         |         |   |   |       
|                 | Interest-bearing deposits                                |                                         |   | 16,774 |         |     |   | (10,281      | )       |   |   | (3,952  | )       |   |   | 2,541  |       
|                 | Advances from Federal Home Loan Bank                     |                                         |   | 40,342 |         |     |   | (16,793      | )       |   |   | (12,577 | )       |   |   | 10,972 |       
|                 | Other borrowings                                         |                                         |   | 20,944 |         |     |   | (5,260       | )       |   |   | (3,376  | )       |   |   | 12,308 |       
|                 |                                                          |                                         |   |        |         |     |   |              |         |   |   |         |         |   |   |       
|                 |                                                          | Total interest expense                  |   |        | 78,060  |     |   |              | (32,334 | ) |   |         | (19,905 | ) |   |        | 25,821 | 
|                 |                                                          |                                         |   |        |         |     |   |              |         |   |   |         |         |   |   |       
|                 |                                                          | Net interest income                     |   | $      | 53,557  |     |   | $            | 10,266  |   |   | $       | 6,548   |   |   | $      | 70,371 | 
|                 |                                                          |                                         |   |        |         |     |   |              |         |   |   |         |         |   |   |       




OVERALL INTEREST RATE RISK
MANAGEMENT

In addition to our hedging activities to mitigate
the interest rate risk in our pipeline of mortgage loans held
for sale and our investment in servicing-related assets, we
perform extensive overall interest rate risk analyses. The
primary measurement tool used to evaluate interest rate risk
over the comprehensive balance

46



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sheet is a net portfolio value (NPV)
analysis that simulates the effects changes in interest rates
have on the fair value of stockholders equity.


The following table sets forth the NPV and change
in NPV that we estimate might result from a 100 basis point
change in interest rates as of June 30, 2004, and
December 31, 2003. Our NPV model has been built to focus on
the Bank alone as the $256 million of assets at the holding
company have very little interest rate risk exposure.

|                                     |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |            |  |   |           |            |  |   |           |            | 
|------------------------------------ | ----------------- | ---------------------- | --------- | ------------------- |  | -------- | --------- | ------------------- |  | -------- | --------- | ---------- |  | - | --------- | ---------- |  | - | --------- | ---------- |  | - | --------- | ---------- | 
|                                     |                   |                        |           |                    
|                                     |                   | June 30, 2004          |           | December 31, 2003  
|                                     |                   |                        |           |                    
|                                     |                   |                        |           |                     |  |          |           |                    
|                                     |                   |                        |           | Effect of Change in |  |          |           | Effect of Change in
|                                     |                   |                        |           | Interest Rates      |  |          |           | Interest Rates     
|                                     |                   |                        |           |                     |  |          |           |                    
|                                     |                   |                        |           | Decrease            |  | Increase |           |                     |  | Decrease |           | Increase  
|                                     |                   | Fair Value             |           | 100 bps             |  | 100 bps  |           | Fair Value          |  | 100 bps  |           | 100 bps   
|                                     |                   |                        |           |                     |  |          |           |                     |  |          |           |           
|                                     |                   |                       
|                                     |                   | (Dollars in thousands)
|Cash and cash equivalents            |                   | $                      | 329,377   |                     |  | $        | 329,377   |                     |  | $        | 329,377   |            |  | $ | 111,203   |            |  | $ | 111,203   |            |  | $ | 111,203   |           
|Trading securities                   |                   |                        | 302,950   |                     |  |          | 286,052   |                     |  |          | 301,068   |            |  |   | 206,484   |            |  |   | 180,197   |            |  |   | 228,880   |           
|Available for sale securities        |                   |                        | 2,046,266 |                     |  |          | 2,094,812 |                     |  |          | 1,988,411 |            |  |   | 1,611,958 |            |  |   | 1,662,715 |            |  |   | 1,553,103 |           
|Loans held for sale                  |                   |                        | 3,985,286 |                     |  |          | 4,006,073 |                     |  |          | 3,909,136 |            |  |   | 2,573,248 |            |  |   | 2,606,028 |            |  |   | 2,519,059 |           
|Loans held for investment            |                   |                        | 6,978,583 |                     |  |          | 7,044,745 |                     |  |          | 6,877,960 |            |  |   | 7,396,475 |            |  |   | 7,448,389 |            |  |   | 7,304,464 |           
|MSRs                                 |                   |                        | 495,086   |                     |  |          | 393,432   |                     |  |          | 548,086   |            |  |   | 443,688   |            |  |   | 311,777   |            |  |   | 534,672   |           
|Other assets                         |                   |                        | 708,404   |                     |  |          | 695,147   |                     |  |          | 718,896   |            |  |   | 683,213   |            |  |   | 697,356   |            |  |   | 669,062   |           
|Derivatives                          |                   |                        | 92,317    |                     |  |          | (33,952   | )                   |  |          | 224,760   |            |  |   | 106,119   |            |  |   | 91,598    |            |  |   | 169,246   |           
|                                     |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |            |  |   |           |            |  |   |           |           
|                                     | Total assets      |                        | $         | 14,938,269          |  |          | $         | 14,815,686          |  |          | $         | 14,897,694 |  |   | $         | 13,132,388 |  |   | $         | 13,109,263 |  |   | $         | 13,089,689 | 
|                                     |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |            |  |   |           |            |  |   |           |           
|Deposits                             |                   | $                      | 4,745,202 |                     |  | $        | 4,789,176 |                     |  | $        | 4,704,339 |            |  | $ | 4,367,400 |            |  | $ | 4,404,900 |            |  | $ | 4,335,433 |           
|Advances from Federal Home Loan Bank |                   |                        | 5,567,651 |                     |  |          | 5,602,862 |                     |  |          | 5,533,274 |            |  |   | 4,949,477 |            |  |   | 4,979,962 |            |  |   | 4,919,147 |           
|Other borrowings                     |                   |                        | 2,885,675 |                     |  |          | 2,886,937 |                     |  |          | 2,884,415 |            |  |   | 2,438,695 |            |  |   | 2,440,538 |            |  |   | 2,436,665 |           
|Other liabilities                    |                   |                        | 371,885   |                     |  |          | 338,708   |                     |  |          | 400,730   |            |  |   | 156,711   |            |  |   | 156,800   |            |  |   | 156,599   |           
|                                     |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |            |  |   |           |            |  |   |           |           
|                                     | Total liabilities |                        |           | 13,570,413          |  |          |           | 13,617,683          |  |          |           | 13,522,758 |  |   |           | 11,912,283 |  |   |           | 11,982,200 |  |   |           | 11,847,844 | 
|                                     |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |            |  |   |           |            |  |   |           |           
|Stockholders equity (NPV)           |                   | $                      | 1,367,856 |                     |  | $        | 1,198,003 |                     |  | $        | 1,374,936 |            |  | $ | 1,220,105 |            |  | $ | 1,127,063 |            |  | $ | 1,241,845 |           
|                                     |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |            |  |   |           |            |  |   |           |           
|% Change from base case              |                   |                        |           |                     |  |          | (12.42    | )%                  |  |          | 0.52      | %          |  |   |           |            |  |   | (7.63     | )%         |  |   | 1.78%     |           
|                                     |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |            |  |   |           |            |  |   |           |           

The increase in the net present value of equity
from December 31, 2003, to June 30, 2004, is primarily
due to the net income of $70 million for the first six
months of 2004, and the $80 million capital contributed by
the holding company to the Bank from the equity offering in
June. See Issuance of Common Stock at page 57
for further information regarding the offering. The
June 30, 2004 results indicate that the Bank is better
positioned for rising rates in an up 100 basis point
scenario. It should be noted that this analysis does not reflect
changes in volumes and profits from our mortgage banking
operations that would be expected to result from the simulated
change in interest rate environment.

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

47



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The Companys Board of Directors-level and
management-level Asset Liability Committees (ALCOs)
monitor our hedging activities to determine whether the value of
our hedge positions, their correlation to the balance sheet item
being hedged, and the amounts being hedged, continue to provide
effective protection against interest rate risk. While there can
be no assurances that our interest rate management strategies
will be effective, we believe we have adequate internal controls
to monitor and manage our interest rate risk within reasonable
levels.




CREDIT RISK AND RESERVES



GENERAL

The following table summarizes the Companys
allowance for loan losses/credit discounts and non-performing
assets as of June 30, 2004.

|                                                                |                                      |                               |                                     |             |        |           |            |               |       |            |        |             |   |             |      |      |       |      |        |        |       |        |        |       |       |       |       |       |       |       |       | 
|--------------------------------------------------------------- | ------------------------------------ | ----------------------------- | ----------------------------------- | ----------- | ------ | --------- | ---------- | ------------- | ----- | ---------- | ------ | ----------- | - | ----------- | ---- | ---- | ----- | ---- | ------ | ------ | ----- | ------ | ------ | ----- | ----- | ----- | ----- | ----- | ----- | ----- | ----- | 
|                                                                |                                      |                               |                                     |             |        |           |            | Total         |       |            |        |             |   |            
|                                                                |                                      |                               |                                     |             |        |           |            | Reserves as a |       |            |        | QTD Net     |   | YTD Net    
|                                                                |                                      |                               |                                     | Allowance   |        | Credit    |            | Percentage    |       | Non-       |        | Charge      |   | Charge     
|                                                                |                                      |                               |                                     | For Loan    |        | Discounts |            | of Book       |       | Performing |        | Offs/Net    |   | Offs/Net   
|Type of Loan                                                    |                                      | Book Value                    |                                     | Losses      |        | (2)       |            | Value         |       | Assets     |        | REO (Gains) |   | REO (Gains)
|                                                                |                                      |                               |                                     |             |        |           |            |               |       |            |        |             |   |            
|                                                                |                                      |                              
|                                                                |                                      | (Dollars in thousands)       
|Held for investment portfolio                                   |                                      |                               |                                     |             |        |           |            |               |       |            |        |             |   |             |      |      |       |      |        |        |       |        |        |       |       |       |       |      
|SFR mortgage loans and HELOCs                                   |                                      | $                             | 4,796,027                           |             |        | $         | 18,596     |               |       | $          |       |             |   |             | 0.39 | %    |       | $    | 12,625 |        |       | $      | 1,120  |       |       | $     | 2,046 |      
|Land and other mortgage                                         |                                      |                               | 182,352                             |             |        |           | 3,170      |               |       |            |       |             |   |             | 1.74 | %    |       |      |       |        |       |        |       |       |       |       |      |      
|Builder construction and income property                        |                                      |                               | 568,970                             |             |        |           | 13,058     |               |       |            |       |             |   |             | 2.30 | %    |       |      | 9,162  |        |       |        | 10     |       |       |       | 10    |      
|Consumer construction                                           |                                      |                               | 1,301,688                           |             |        |           | 10,464     |               |       |            |       |             |   |             | 0.80 | %    |       |      | 10,203 |        |       |        | 329    |       |       |       | 404   |      
|                                                                |                                      |                               |                                     |             |        |           |            |               |       |            |        |             |   |             |      |      |       |      |        |        |       |        |        |       |       |       |       |      
|                                                                | Total core held for investment loans |                               |                                     | 6,849,037   |        |           |            | 45,288        |       |            |        |            |   |             |      | 0.66 | %     |      |        | 31,990 |       |        |        | 1,459 |       |       |       | 2,460 |      
|                                                                |                                      | Discontinued product lines(1) |                                     |             | 61,334 |           |            |               | 7,508 |            |        |             |  |             |      |      | 12.24 | %    |        |        | 6,024 |        |        |       | 1,071 |       |       |       | 2,089 |      
|                                                                |                                      |                               |                                     |             |        |           |            |               |       |            |        |             |   |             |      |      |       |      |        |        |       |        |        |       |       |       |       |      
|                                                                |                                      |                               | Total held for investment portfolio |             |        | 6,910,371 |            |               | $     | 52,796     |        |             |   |            |      |      |       | 0.76 | %      |        |       | 38,014 |        |       |       | 2,530 |       |       |       | 4,549 |      
|                                                                |                                      |                               |                                     |             |        |           |            |               |       |            |        |             |   |             |      |      |       |      |        |        |       |        |        |       |       |       |       |      
|Held for sale portfolio                                         |                                      |                               | 4,026,779                           |             |        |           |            |               |       | $          | 14,572 |             |   |             | 0.36 | %    |       |      | 47,823 |        |       |        |       |       |       |       |      |      
|                                                                |                                      |                               |                                     |             |        |           |            |               |       |            |        |             |   |             |      |      |       |      |        |        |       |        |        |       |       |       |       |      
|                                                                |                                      |                               |                                     | Total loans |        | $         | 10,937,150 |               |       |            |        |             |   |             |      |      |       |      |        |        |       |        | 85,837 |       |       | $     | 2,530 |       |       | $     | 4,549 | 
|                                                                |                                      |                               |                                     |             |        |           |            |               |       |            |        |             |   |             |      |      |       |      |        |        |       |        |        |       |       |       |       |      
|Foreclosed assets                                               |                                      |                               |                                     |             |        |           |            |               |       |            |        |             |   |             |      |      |       |      |        |        |       |        |        |       |       |       |       |      
|Core portfolios                                                 |                                      |                               | 26,533                              |             |        | $         | (139       | )             |       | $          | (599   | )          
|Discontinued product lines                                      |                                      |                               | 783                                 |             |        |           | (57        | )             |       |            | 160    |            
|                                                                |                                      |                               |                                     |             |        |           |            |               |       |            |        |            
|Total foreclosed assets                                         |                                      |                               | 27,316                              |             |        | $         | (196       | )             |       | $          | (439   | )          
|                                                                |                                      |                               |                                     |             |        |           |            |               |       |            |        |            
|Total non-performing assets                                     |                                      | $                             | 113,153                             |             |        |           |            |               |       |            |        |            
|                                                                |                                      |                               |                                     |             |        |           |            |               |       |            |        |            
|Total non-performing assets as a percentage of
    total assets |                                      |                               | 0.73                                | %           |        |           |            |               |       |            |        |            
|                                                                |                                      |                               |                                     |             |        |           |            |               |       |            |        |            



---



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

48



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

|                                                                          |                             |                               |                                      |          |        |              |        |        |        |        |        |         |        |        | 
|------------------------------------------------------------------------- | --------------------------- | ----------------------------- | ------------------------------------ | -------- | ------ | ------------ | ------ | ------ | ------ | ------ | ------ | ------- | ------ | ------ | 
|                                                                          |                             | June 30,                      |                                      | June 30, |        | December 31,
|                                                                          |                             | 2004                          |                                      | 2003     |        | 2003        
|                                                                          |                             |                               |                                      |          |        |             
|                                                                          |                             |                              
|                                                                          |                             | (Dollars in thousands)       
|Loans held for investment                                                 |                             |                               |                                      |          |        |              |        |        |        |        |        |        
|                                                                          | Portfolio loans             |                               |                                      |          |        |              |        |        |        |        |        |         |       
|                                                                          |                             | SFR mortgage loans            |                                      | $        | 12,625 |              |        | $      | 11,059 |        |        | $       | 12,414 |       
|                                                                          |                             | Land and other mortgage loans |                                      |          |       |              |        |        | 2,214  |        |        |         | 71     |       
|                                                                          |                             | Builder construction          |                                      |          | 9,162  |              |        |        | 1,605  |        |        |         | 9,704  |       
|                                                                          |                             | Consumer construction         |                                      |          | 10,203 |              |        |        | 10,654 |        |        |         | 8,954  |       
|                                                                          |                             |                               |                                      |          |        |              |        |        |        |        |        |        
|                                                                          |                             |                               | Total portfolio non-performing loans |          |        | 31,990       |        |        |        | 25,532 |        |         |        | 31,143 | 
|                                                                          | Discontinued product lines  |                               |                                      | 6,024    |        |              |        | 7,126  |        |        |        | 6,449   |       
|                                                                          |                             |                               |                                      |          |        |              |        |        |        |        |        |        
|Total non-performing loans held for investment                            |                             |                               | 38,014                               |          |        |              | 32,658 |        |        |        | 37,592 |        
|Non-performing loans held for sale                                        |                             |                               | 47,823                               |          |        |              | 30,054 |        |        |        | 38,855 |        
|                                                                          |                             |                               |                                      |          |        |              |        |        |        |        |        |        
|                                                                          | Total non-performing loans  |                               |                                      | 85,837   |        |              |        | 62,712 |        |        |        | 76,447  |       
|Foreclosed assets                                                         |                             |                               | 27,316                               |          |        |              | 31,028 |        |        |        | 23,677 |        
|                                                                          |                             |                               |                                      |          |        |              |        |        |        |        |        |        
|                                                                          | Total non-performing assets |                               | $                                    | 113,153  |        |              | $      | 93,740 |        |        | $      | 100,124 |       
|                                                                          |                             |                               |                                      |          |        |              |        |        |        |        |        |        
|Total non-performing assets to total assets                               |                             |                               | 0.73                                 | %        |        |              | 0.88   | %      |        |        | 0.76   | %      
|                                                                          |                             |                               |                                      |          |        |              |        |        |        |        |        |        
|Allowance for loan losses to non-performing loans
    held for investment |                             |                               | 139                                  | %        |        |              | 153    | %      |        |        | 140    | %      
|                                                                          |                             |                               |                                      |          |        |              |        |        |        |        |        |        

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

|                              |                               |                        |        |                  |        |          |        |          |        |   |        |        |        |   |        |        |        |  
|----------------------------- | ----------------------------- | ---------------------- | ------ | ---------------- | ------ | -------- | ------ | -------- | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------ | -
|                              |                               |                        |        |                 
|                              |                               | Three Months Ended     |        | Six Months Ended
|                              |                               |                        |        |                 
|                              |                               | June 30,               |        | June 30,         |        | June 30, |        | June 30,
|                              |                               | 2004                   |        | 2003             |        | 2004     |        | 2003    
|                              |                               |                        |        |                  |        |          |        |         
|                              |                               |                       
|                              |                               | (Dollars in thousands)
|Core portfolio loans          |                               |                        |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|Balance, beginning of period  |                               | $                      | 45,043 |                  |        | $        | 41,524 |          |        | $ | 45,644 |        |        | $ | 41,314 |       
|Provision for loan losses     |                               |                        | 1,701  |                  |        |          | 5,000  |          |        |   | 2,101  |        |        |   | 6,525  |       
|Charge-offs net of recoveries |                               |                        |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|                              |                               | SFR mortgage loans     |        |                  | (1,120 | )        |        |          | (691   | ) |        |        | (2,046 | ) |        |        | (1,857 | )
|                              |                               | Builder construction   |        |                  | (10    | )        |        |          | (3,066 | ) |        |        | (10    | ) |        |        | (3,066 | )
|                              |                               | Consumer construction  |        |                  | (329   | )        |        |          | (421   | ) |        |        | (404   | ) |        |        | (570   | )
|                              |                               |                        |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|                              | Charge-offs net of recoveries |                        |        | (1,459           | )      |          |        | (4,178   | )      |   |        | (2,460 | )      |   |        | (5,493 | )     
|Balance, end of period        |                               |                        | 45,285 |                  |        |          | 42,346 |          |        |   | 45,285 |        |        |   | 42,346 |       

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|                                               |                               |                                 |       |                  |        |          |       |          |        |  |       |        |        |  |       |        |        | 
|---------------------------------------------- | ----------------------------- | ------------------------------- | ----- | ---------------- | ------ | -------- | ----- | -------- | ------ |  | ----- | ------ | ------ |  | ----- | ------ | ------ | 
|                                               |                               |                                 |       |                 
|                                               |                               | Three Months Ended              |       | Six Months Ended
|                                               |                               |                                 |       |                 
|                                               |                               | June 30,                        |       | June 30,         |        | June 30, |       | June 30,
|                                               |                               | 2004                            |       | 2003             |        | 2004     |       | 2003    
|                                               |                               |                                 |       |                  |        |          |       |         
|                                               |                               |                                
|                                               |                               | (Dollars in thousands)         
|Discontinued product lines                     |                               |                                 |       |                  |        |          |       |          |        |  |       |        |        |  |       |       
|Balance, beginning of period                   |                               |                                 | 7,083 |                  |        |          | 8,722 |          |        |  | 7,001 |        |        |  | 9,447 |       
|Provision for loan losses                      |                               |                                 | 1,499 |                  |        |          | 1,900 |          |        |  | 2,599 |        |        |  | 3,475 |       
|                                               | Charge-offs net of recoveries |                                 |       | (1,071           | )      |          |       | (2,926   | )      |  |       | (2,089 | )      |  |       | (5,226 | )     
|                                               |                               |                                 |       |                  |        |          |       |          |        |  |       |        |        |  |       |       
|Balance, end of period                         |                               |                                 | 7,511 |                  |        |          | 7,696 |          |        |  | 7,511 |        |        |  | 7,696 |       
|                                               |                               |                                 |       |                  |        |          |       |          |        |  |       |        |        |  |       |       
|                                               |                               | Total allowance for loan losses |       | $                | 52,796 |          |       | $        | 50,042 |  |       | $      | 52,796 |  |       | $      | 50,042 | 
|                                               |                               |                                 |       |                  |        |          |       |          |        |  |       |        |        |  |       |       
|Annualized charge-offs to average loans        |                               |                                 | 0.14  | %                |        |          | 0.61  | %        |        |  | 0.13  | %      |        |  | 0.49  | %     
|Annualized charge-offs to quarterly production |                               |                                 | 0.10  | %                |        |          | 0.36  | %        |        |  | 0.05  | %      |        |  | 0.28  | %     
|Core portfolio loans only:                     |                               |                                 |       |                  |        |          |       |          |        |  |       |        |        |  |       |       
|Net charge-offs to average loans               |                               |                                 | 0.08  | %                |        |          | 0.37  | %        |        |  | 0.07  | %      |        |  | 0.24  | %     
|Net charge-offs to quarterly production        |                               |                                 | 0.06  | %                |        |          | 0.20  | %        |        |  | 0.03  | %      |        |  | 0.16  | %     

Total credit-related reserves, including the
allowance for loan losses and the market valuation reserves,
amounted to $67.4 million at June 30, 2004, compared
to $66.6 million at December 31, 2003. As of
June 30, 2004, the allowance for loan losses of
$52.8 million for loans held for investment, represented
0.76% of total loans held for investment. This compares to an
allowance for loan losses of $52.7 million, or 0.71% of
total loans held for investment, at December 31, 2003.
Charge-offs improved significantly during the second quarter
2004, both in our core portfolio loans and discontinued product
lines. Total second quarter net charge-offs of $2.5 million
decreased 64% relative to the second quarter 2003. In relation
to annualized charge-offs, our coverage improved year-over-year
with the allowance representing 5.2 times of the annualized
charge-offs for the second quarter 2004 compared with 1.8 times
of the annualized charge-offs for the second quarter 2003.

Loans are generally placed on non-accrual status
when they are 90 days past due. Non-performing assets
include non-performing loans and foreclosed assets. We recorded
the balance of our assets acquired in foreclosure or by deed in
lieu of foreclosure at estimated net realizable value. The ratio
of non-performing assets to total assets also improved from
0.76% at December 31, 2003 to 0.73% at June 30, 2004.
Total non-performing assets amounted to $113.2 million at
June 30, 2004 as compared to $100.1 million at
December 31, 2003. The increase in non-performing loans was
driven by a $9.0 million increase in mortgage loans held
for sale primarily due to the loans acquired through clean-up
calls exercised during the first half of 2004. The exercises of
the clean-up call options have also driven the increase in
foreclosed assets.

With respect to the portfolio of loans held for
investment in IndyMacs core businesses, the allowance for
loan losses at June 30, 2004 was $45.2 million, or
0.66% of the loan balance, compared to the 0.62% of total loan
balance at December 31, 2003.

With respect to IndyMacs non-core
liquidating portfolios, consisting primarily of manufactured
housing and home improvement loans, net charge-offs totaled
$1.1 million during the second quarter of 2004, down from
the $2.9 million of net charge-offs on these portfolios
during the second quarter of 2003. After provision for loan
losses of $1.5 million, the allocated allowance for loan
losses was $7.5 million, or 12.24% of the remaining
principal balance of such liquidating portfolios, compared to
the 10.07% reserve coverage at December 31, 2003.

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

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products is representative of our judgments and
assumptions at a specific point in time and may be reallocated
in the future based on changes in performance and other
circumstances.


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

With respect to mortgage loans held for sale,
IndyMac does not provide an allowance for loan losses, pursuant
to the applicable accounting rules. Instead, a component for
credit risk related to loans held for sale is embedded in the
market valuation for these loans. Market valuation adjustments
on loans held for sale totaled $14.6 million at
June 30, 2004.




SECONDARY MARKET RESERVE

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

|            |                       |                       |   |            |       |             |   |        |         |  |  |      |      |  
|----------- | --------------------- | --------------------- | - | ---------- | ----- | ----------- | - | ------ | ------- |  |  | ---- | ---- | -
|            |                       | Amount                |   |            |       | Percentage 
|            |                       | Repurchased           |   | Total Sold |       | Repurchased
|            |                       |                       |   |            |       |            
|            |                       |                      
|            |                       | (Dollars in millions)
|Loans Sold: |                       |                       |   |            |       |             |   |        |         |  |  |     
|            | GSEs and whole loans  |                       | $ | 127.1      |       |             | $ | 49,043 |         |  |  | 0.26 | %   
|            | Securitization trusts |                       |   | 9.3        |       |             |   | 61,525 |         |  |  | 0.02 | %   
|            |                       |                       |   |            |       |             |   |        |         |  |  |     
|            |                       | Total Loans Sold      |   | $          | 136.4 |             |   | $      | 110,568 |  |  |      | 0.12 | %
|            |                       |                       |   |            |       |             |   |        |         |  |  |     

The Company maintains secondary market reserves
for losses that arise in connection with loans that we are
required to repurchase from whole loan sales or securitization
transactions. These reserves, which totaled $37.3 million
at June 30, 2004, have two general components: reserves for
repurchases arising from representation and warranty claims, and
reserves for disputes with investors and vendors with respect to
contractual obligations pertaining to mortgage operations. The
table below shows the activity in the reserves during the three
and six months ended June 30, 2004.

|                                                                                    |  |                        |        |        |  |   |         |  
|----------------------------------------------------------------------------------- |  | ---------------------- | ------ | ------ |  | - | ------- | -
|                                                                                    |  | Three                  |        | Six   
|                                                                                    |  | Months                 |        | Months
|                                                                                    |  |                        |        |       
|                                                                                    |  |                       
|                                                                                    |  | (Dollars in thousands)
|Balance, beginning of period                                                        |  | $                      | 34,000 |        |  | $ | 34,000  |  
|Additions/provisions                                                                |  |                        | 7,493  |        |  |   | 15,979  |  
|Claims reimbursement and estimated discounts on
    loans held for sale/charge-offs |  |                        | (5,223 | )      |  |   | (14,319 | )
|Recoveries on previous claims                                                       |  |                        | 980    |        |  |   | 1,590   |  
|                                                                                    |  |                        |        |        |  |   |         |  
|Balance, June 30, 2004                                                              |  | $                      | 37,250 |        |  | $ | 37,250  |  
|                                                                                    |  |                        |        |        |  |   |         |  

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




OPERATING EXPENSES

A summary of operating expenses follows:

|                                         |  |                        |         |                  |  |           |         |          |  |          |         |  |  |   |         |  |  |   |         | 
|---------------------------------------- |  | ---------------------- | ------- | ---------------- |  | --------- | ------- | -------- |  | -------- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                         |  |                        |         |                 
|                                         |  | Three Months Ended     |         | Six Months Ended
|                                         |  |                        |         |                 
|                                         |  | June 30,               |         | June 30,         |  | March 31, |         | June 30, |  | June 30,
|                                         |  | 2004                   |         | 2003             |  | 2004      |         | 2004     |  | 2003    
|                                         |  |                        |         |                  |  |           |         |          |  |         
|                                         |  |                       
|                                         |  | (Dollars in thousands)
|Salaries and related                     |  | $                      | 64,231  |                  |  | $         | 57,030  |          |  | $        | 63,038  |  |  | $ | 127,269 |  |  | $ | 110,125 | 
|Premises and equipment                   |  |                        | 9,938   |                  |  |           | 8,138   |          |  |          | 9,593   |  |  |   | 19,531  |  |  |   | 16,444  | 
|Loan purchase costs                      |  |                        | 10,244  |                  |  |           | 7,810   |          |  |          | 7,307   |  |  |   | 17,551  |  |  |   | 14,868  | 
|Professional services                    |  |                        | 5,844   |                  |  |           | 5,086   |          |  |          | 5,073   |  |  |   | 10,917  |  |  |   | 9,696   | 
|Data processing                          |  |                        | 8,580   |                  |  |           | 8,131   |          |  |          | 8,591   |  |  |   | 17,171  |  |  |   | 14,895  | 
|Office                                   |  |                        | 5,758   |                  |  |           | 5,860   |          |  |          | 5,979   |  |  |   | 11,737  |  |  |   | 11,120  | 
|Advertising and promotion                |  |                        | 9,167   |                  |  |           | 6,580   |          |  |          | 8,856   |  |  |   | 18,023  |  |  |   | 12,644  | 
|Operations and sale of foreclosed assets |  |                        | 1,419   |                  |  |           | 794     |          |  |          | 2,135   |  |  |   | 3,554   |  |  |   | 1,750   | 
|Other                                    |  |                        | 6,113   |                  |  |           | 5,329   |          |  |          | 4,626   |  |  |   | 10,739  |  |  |   | 8,874   | 
|                                         |  |                        |         |                  |  |           |         |          |  |          |         |  |  |   |         |  |  |   |         | 
|                                         |  | $                      | 121,294 |                  |  | $         | 104,758 |          |  | $        | 115,198 |  |  | $ | 236,492 |  |  | $ | 200,416 | 
|                                         |  |                        |         |                  |  |           |         |          |  |          |         |  |  |   |         |  |  |   |         | 

General and administrative expenses, including
salaries, increased during the quarter ended June 30, 2004,
to $121.3 million, compared to $104.8 million during
the same period in 2003. The increase was largely driven by
increases in salaries, loan purchase costs, advertising and
promotion, and infrastructure and technology related expenses as
a result of the Companys increased mortgage loan
production and operational expansions. Total loan production
increased 19% year over year, from $8.2 billion for the
quarter ended June 30, 2003, to $9.7 billion for the
quarter ended June 30, 2004. In a continuing effort to
penetrate the market and gain market share, the Company also
incurred costs to expand its sales force infrastructure with
dedicated resources focused on new customer activation, customer
training and support, and improving its conversion of loan
submissions to fundings. As a result of the increased production
volume and investments made in sales and customer service, the
Companys average full-time equivalent employees increased
during the year by 16%, from 3,505 during the quarter ended
June 30, 2003, to 4,061 during the quarter ended
June 30, 2004. Additionally, the Company continues to
increase its investment in direct marketing costs to further
promote its new product offerings, subprime and HELOC products.
Furthermore, the Company made investments in data processing
costs to (1) enhance its quality controls and compliance
structure to ensure continued improvement in asset quality and
support the growth of higher margin products;
(2) strengthen its technology platform; and
(3) enhance its customer service response performance. In
spite of the increase in total operating expense for the second
quarter 2004, our efficiency ratio has improved from 58% for the
second quarter 2003 to 56% for the second quarter 2004.




DIVIDEND POLICY

IndyMacs Board of Directors declared a cash
dividend of $0.32 per share for the third quarter of 2004,
up 6.7% from the dividend declared and paid in the second
quarter of this year. The cash dividend is payable
September 9, 2004 to stockholders of record on
August 12, 2004. The current dividend represents an
annualized increase of 27% relative to the dividend declared on
April 28, 2004, and IndyMacs fifth consecutive
quarterly dividend increase. Over this period of time, IndyMac
has successfully increased its

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dividend payout ratio to be more in line with
other financial institution payout ratios, which range from 30%
to 50%. Looking forward, IndyMac expects to continue to increase
its dividend in accordance with its potential growth in earnings
per share. As a result, IndyMac expects to increase future
dividends within a targeted range between IndyMacs
long-term earnings per share growth goal of 15% and its historic
earnings per share growth rate of 27% since 1992 under current
management.





FUTURE OUTLOOK

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

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

However, given IndyMacs performance in the
first half of 2004, our acquisition of Financial Freedom, our
strong rate lock volume during the second quarter and continued
strong pipeline of mortgage loans in process, solid customer
growth, market share gains and balance sheet strength, we now
expect that earnings per share will range from $3.35 to $3.55 in
2004, an increase of 11% to 18% over 2003 and an improvement
from our prior range of $3.10 to $3.30 provided three months
earlier.

The 2004 earnings projection above represents a
pro forma number that excludes the $31.5 million, or
$0.52 per share, impact to earnings and EPS for the change
in industry accounting for rate locks pursuant to SAB 105
discussed earlier. Including the SAB 105 adjustment in the
second quarter of 2004 the range for the full year 2004 is $2.83
to $3.03 per share.

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

Our principal financing needs are to fund
acquisitions of mortgage loans and our investment in mortgage
loans, mortgage-backed securities and MSRs. Our primary sources
of funds used to meet these financing needs are loan sales and
securitizations, deposits, advances from the Federal Home
Loan Bank, borrowings and retained earnings. The sources
used vary depending on such factors as rates paid, collateral
requirements, maturities and the impact on our capital.
Additionally, we may occasionally securitize mortgage loans that
we intend to hold for investment to lower our costs of borrowing
against such assets and reduce the capital requirement
associated with such assets. During the quarter ended
June 30, 2004, we had average total liquidity of
$1,043 million, which is represented by unpledged liquid
assets on hand plus amounts that may be immediately raised
through the pledging of other available assets as collateral
pursuant to committed financing facilities. On June 8,
2004, we issued 3.2 million shares of common stock,
generating net cash proceeds of $96.52 million, a portion
of which was utilized to finance the acquisition of Financial
Freedom Holdings Inc. We anticipate using the remaining net
proceeds for general corporate purposes, including, but not
limited to,

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continued asset growth for IndyMac Bank. We
currently believe that our liquidity level is in excess of that
necessary to satisfy our operating requirements and meet our
obligations and commitments in a timely and cost effective
manner.





PRINCIPAL SOURCES OF CASH

Loan Sales and
Securitizations

Our business model relies heavily upon selling
the majority of our mortgage loans shortly after acquisition.
The proceeds of these sales are a critical component of the
liquidity necessary for our ongoing operations. During the three
months ended June 30, 2004, we sold 86% of our funded
mortgage loans through three channels: (1) GSEs;
(2) private label securitizations; and (3) whole loan
sales. The remainder we retained in our investment portfolio. If
any of our sales channels were disrupted, our liquidity could be
negatively impacted. Disruptions in our whole loan sales and
mortgage securitization transactions can occur as a result of
the performance of our existing securitizations, as well as
economic events or other factors beyond our control.

Deposits/ Retail Bank

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

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

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

|                              |                     |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |     |  
|----------------------------- | ------------------- | ---------------------- | --------- | ------------- |  | ----------------- | -- | -------- | - | ------ | --------- | --------- |  |  | -- | --- | - | - | --------- | --------- |  |  | -- | --- | -
|                              |                     |                        |           |               |  |                  
|                              |                     | June 30, 2004          |           | June 30, 2003 |  | December 31, 2003
|                              |                     |                        |           |               |  |                  
|                              |                     |                        |           | % of          |  |                   |    | % of     |   |        |           | % of     
|                              |                     |                        |           | Total         |  |                   |    | Total    |   |        |           | Total    
|                              |                     | Amount                 |           | Deposits      |  | Amount            |    | Deposits |   | Amount |           | Deposits 
|                              |                     |                        |           |               |  |                   |    |          |   |        |           |          
|                              |                     |                       
|                              |                     | (Dollars in thousands)
|Non-interest-bearing checking |                     | $                      | 49,299    |               |  |                   | 1  | %        |   | $      | 40,483    |           |  |  | 1  | %   |   | $ | 44,353    |           |  |  | 1  | %  
|Interest-bearing checking     |                     |                        | 42,030    |               |  |                   | 1  | %        |   |        | 37,256    |           |  |  | 1  | %   |   |   | 39,761    |           |  |  | 1  | %  
|Savings                       |                     |                        | 1,757,560 |               |  |                   | 37 | %        |   |        | 1,225,707 |           |  |  | 32 | %   |   |   | 1,515,771 |           |  |  | 35 | %  
|Custodial accounts            |                     |                        | 616,470   |               |  |                   | 13 | %        |   |        | 716,578   |           |  |  | 18 | %   |   |   | 528,724   |           |  |  | 12 | %  
|                              |                     |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    
|                              | Total core deposits |                        |           | 2,465,359     |  |                   |    | 52       | % |        |           | 2,020,024 |  |  |    | 52  | % |   |           | 2,128,609 |  |  |    | 49  | %
|Certificates of deposit       |                     |                        | 2,293,196 |               |  |                   | 48 | %        |   |        | 1,883,461 |           |  |  | 48 | %   |   |   | 2,222,164 |           |  |  | 51 | %  
|                              |                     |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    
|                              | Total deposits      |                        | $         | 4,758,555     |  |                   |    | 100      | % |        | $         | 3,903,485 |  |  |    | 100 | % |   | $         | 4,350,773 |  |  |    | 100 | %
|                              |                     |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    

The increase in our savings deposits from
$1,515.8 million at December 31, 2003 to
$1,757.6 million at June 30, 2004, is mainly due to
our competitive money market products.

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

|            |                |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |     |  
|----------- | -------------- | ---------------------- | --------- | ------------- |  | ----------------- | -- | -------- | - | ------ | --------- | --------- |  |  | -- | --- | - | - | --------- | --------- |  |  | -- | --- | -
|            |                |                        |           |               |  |                  
|            |                | June 30, 2004          |           | June 30, 2003 |  | December 31, 2003
|            |                |                        |           |               |  |                  
|            |                |                        |           | % of          |  |                   |    | % of     |   |        |           | % of     
|            |                |                        |           | Total         |  |                   |    | Total    |   |        |           | Total    
|            |                | Amount                 |           | Deposits      |  | Amount            |    | Deposits |   | Amount |           | Deposits 
|            |                |                        |           |               |  |                   |    |          |   |        |           |          
|            |                |                       
|            |                | (Dollars in thousands)
|Branch      |                | $                      | 1,903,211 |               |  |                   | 40 | %        |   | $      | 1,526,351 |           |  |  | 39 | %   |   | $ | 1,717,314 |           |  |  | 39 | %  
|Telebanking |                |                        | 520,536   |               |  |                   | 11 | %        |   |        | 488,575   |           |  |  | 13 | %   |   |   | 463,755   |           |  |  | 11 | %  
|Internet    |                |                        | 486,926   |               |  |                   | 10 | %        |   |        | 476,645   |           |  |  | 12 | %   |   |   | 555,029   |           |  |  | 13 | %  
|Money desk  |                |                        | 1,231,412 |               |  |                   | 26 | %        |   |        | 695,336   |           |  |  | 18 | %   |   |   | 1,085,951 |           |  |  | 25 | %  
|Custodial   |                |                        | 616,470   |               |  |                   | 13 | %        |   |        | 716,578   |           |  |  | 18 | %   |   |   | 528,724   |           |  |  | 12 | %  
|            |                |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    
|            | Total deposits |                        | $         | 4,758,555     |  |                   |    | 100      | % |        | $         | 3,903,485 |  |  |    | 100 | % |   | $         | 4,350,773 |  |  |    | 100 | %
|            |                |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    

Included in deposits at June 30, 2004, and
December 31, 2003, were non-interest-bearing custodial
accounts, primarily related to our GSE servicing portfolio,
totaling $616.5 million and $528.7 million,
respectively.

Advances from Federal Home
Loan Bank

The Federal Home Loan Bank
(FHLB) system functions as a borrowing source for
regulated financial depositories and similar institutions that
are engaged in residential housing finance. As a member of the
FHLB of San Francisco, we are required to own capital stock
of the FHLB and are authorized to apply for advances from the
FHLB, on a secured basis, in amounts determined by reference to
available collateral. SFR mortgage loans, agency and AAA-rated
mortgage-backed securities are the principal collateral that may
be used to secure these borrowings, although certain other types
of loans and other assets may also be accepted pursuant to FHLB
policies and statutory requirements. Currently, the Bank is
approved for collateralized advances of up to $6.9 billion,
of which $5.6 billion were outstanding at June 30,
2004. The FHLB offers several credit programs, each with its own
fixed or floating interest rate, and a range of maturities.

Trust Preferred Securities and
Warrants

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

Upon the adoption of FASB Interpretation
No. 46, Consolidation of Variable Interest
Entities, an Interpretation of Accounting Research Bulletin
(ARB) No. 51, on July 1, 2003,
the trusts have been deconsolidated from the financial
statements of the Company. Trust preferred debentures,
representing the liabilities due from IndyMac Bancorp to IndyMac
Capital Trusts, amounted to $184.0 million and
$183.6 million at June 30, 2004, and December 31,
2003, respectively. These debentures are included in Other
Borrowings on the consolidated balance sheets.

Other Borrowings, Excluding Trust Preferred
Debentures

Other borrowings, excluding trust preferred
debentures, consist of loans and securities sold under committed
financing facilities and uncommitted agreements to repurchase,
CMO collateral and notes payable. Total other borrowings
increased to $3,479.9 million at June 30, 2004, from
$2,438.5 million at December 31, 2003. The increase of
$1,041.4 million was primarily the result of additional
draws on our credit facilities to fund mortgage loan
originations, the issuance of $500 million non-recourse
AAA-rated HELOC-backed notes

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during the first quarter 2004, and reductions of
other borrowings that previously financed HELOC loans.
Additionally, we continued to use borrowed funds to fund our
asset growth during the first half of the year.


At June 30, 2004, we had $4.4 billion
in committed financing facilities, of which $2.2 billion
was utilized. For the second quarter 2004, we had an average of
$763.8 million in operating liquidity available for use,
based on eligible collateral. Decisions by our lenders and
investors to make additional funds available to us in the future
will depend upon a number of factors. These include our
compliance with the terms of existing credit arrangements, our
financial performance, eligible collateral, changes in our
credit rating, industry and market trends in our various
businesses, the general availability and interest rates
applicable to financing and investments, the lenders
and/or investors own resources and policies concerning
loans and investments and the relative attractiveness of
alternative investment or lending opportunities. As of
June 30, 2004, we were in compliance with all
representations, warranties and financial covenants under our
borrowing facilities.




PRINCIPAL USES OF CASH

In addition to the financing sources discussed
above, cash uses are funded by net cash flows from operations,
sales of mortgage-backed securities and principal and interest
payments on loans and securities. The amounts of net
acquisitions of loans held for sale and trading securities
included as components of net cash used in operating activities
totaled $3.1 billion during the six months ended
June 30, 2004 and $1.3 billion during the six months
ended June 30, 2003. Excluding the purchase and sale
activity for loans held for sale and trading securities, the net
cash provided by the Companys operating activities totaled
$211.3 million and $154.1 million for the six months
ended June 30, 2004 and 2003, respectively. During the
third quarter 2003, the Company started to purchase swaptions
and more caps and floors to hedge certain liabilities and
servicing-related assets. The net decrease in premiums for these
derivative instruments totaled $30.1 million and none for
the six months ended June 30, 2004 and 2003, respectively.
The net cash provided by the Companys operating activities
before the activities for trading securities, loans held for
sale and purchase of derivative instruments amounted to
$181.2 million and $154.1 million for the six months
ended June 30, 2004 and 2003, respectively.




ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss was
$(15.1) million at June 30, 2004, compared to
$(26.5) million at December 31, 2003. This change was
a result of the increase in the fair value of the swaps and
swaptions designated as cash flow hedges of floating rate
borrowings, partially offset by the decline in fair value of
securities classified as available for sale. It should be noted
that accumulated other comprehensive loss does not include the
increases in the fair value of loans held for investment that
are funded by borrowings that are hedged by a portion of these
interest rate swaps and swaptions. Accumulated other
comprehensive loss is not a component of the determination of
regulatory capital.




REGULATORY CAPITAL REQUIREMENTS

The Bank is subject to regulatory capital
regulations administered by the federal banking agencies. In
addition, as a condition to its approval of our acquisition of
SGV Bancorp, Inc. in July 2000, the OTS required that the Bank
hold Tier 1 (core) capital of at least 8% of adjusted
total assets for three years following the consummation of the
transaction and maintain a total risk-based capital position of
at least 10% of total risk-weighted assets. This particular
condition expired on July 1, 2003. As of June 30,
2004, the Bank met all of the requirements of a
well-capitalized institution under the general
regulatory capital regulations.

During 2001, the OTS issued guidance for subprime
lending programs, which requires a lender to quantify the
additional risks in its subprime lending activities and
determine the appropriate amounts of allowances for loan losses
and capital it needs to offset those risks. The Company
generally classifies all loans in a first lien position with a
FICO score less than 620 and all loans in a second lien position
with a FICO score less than 660 as subprime. Loans meeting this
definition are supported by capital two times that of similar
prime loans. We report our subprime loan calculation in an
addendum to the Thrift Financial Report that we

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file with the OTS. As of June 30, 2004,
subprime loans totaled $601.1 million as calculated for
regulatory reporting purposes, of which $433.8 million were
loans held for sale.


The following table presents the Banks
actual and required capital ratios and the minimum required
capital ratios to be categorized as well-capitalized
at June 30, 2004. The impact of the additional
risk-weighting criteria related to subprime loans had the effect
of reducing IndyMacs total risk-based capital by
63 basis points as noted in the table below.

|                |                   |                |  |                     |   |                  |  |       |   |  |  |       |  
|--------------- | ----------------- | -------------- |  | ------------------- | - | ---------------- |  | ----- | - |  |  | ----- | -
|                |                   | As Reported    |  | Adjusted for        |   |                 
|                |                   | Pre-Subprime   |  | Additional Subprime |   | Well-Capitalized
|                |                   | Risk-Weighting |  | Risk-Weighting      |   | Minimum         
|                |                   |                |  |                     |   |                 
|Capital Ratios: |                   |                |  |                     |   |                  |  |       |   |  |  |      
|                | Tangible          |                |  | 7.65                | % |                  |  | 7.65  | % |  |  | 2.00  | %
|                | Tier 1 core       |                |  | 7.65                | % |                  |  | 7.65  | % |  |  | 5.00  | %
|                | Tier 1 risk-based |                |  | 12.54               | % |                  |  | 11.94 | % |  |  | 6.00  | %
|                | Total risk-based  |                |  | 13.10               | % |                  |  | 12.47 | % |  |  | 10.00 | %

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




ISSUANCE OF COMMON STOCK

On June 8, 2004, we issued
3,200,000 shares of common stock at a market price of
$31.75 through a public offering. On July 12, 2004, we
issued an additional 130,000 shares of common stock at a
market price of $31.75 upon the exercise of the
underwriters over-allotment options. The cash proceeds
from the initial closing, net of expenses, of
$96.25 million were recorded as equity during the second
quarter of 2004. The cash proceeds from the exercise of the
over-allotment option will be similarly applied during the third
quarter of 2004. Certain of the proceeds were used to finance
the acquisition of Financial Freedom Holdings Inc. and the
remaining proceeds are expected to be used for general corporate
purposes, including, but not limited to, continued asset growth
for IndyMac Bank.




SHARE REPURCHASES

In June 1999, our Board of Directors approved a
$100 million share repurchase program, which has since been
amended to increase to $500 million and include a special
repurchase of 3,640,860 shares from Countrywide Credit
Industries, Inc. (Countrywide). From the share
repurchase programs inception through December 31,
2002, we repurchased 28 million shares in open market
transactions and from Countrywide at an average price of
approximately $18.02 per share, for an aggregate investment
of $504.4 million. At June 30, 2004, we had
$63.6 million of remaining capacity to repurchase under the
current authorization from the Board of Directors. No share
repurchases under this program were made since December 31,
2002.

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

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




OFF-BALANCE SHEET ARRANGEMENTS

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

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

In connection with our loan sales that are
securitization transactions, there are $23.7 billion in
loans owned by off-balance sheet trusts as of June 30,
2004. The trusts have issued bonds secured by these loans. We
have no obligation to provide funding support to either the
third party investors or the off-balance sheet trusts. The third
party investors or the trusts generally have no recourse to our
assets or us and have no ability to require us to repurchase
their loans other than for non-credit-related recourse that can
arise under standard representations and warranties. We maintain
secondary market reserves for losses that could arise in
connection with loans that we are required to repurchase from
whole loan sales or securitization transactions.

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

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

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AGGREGATE CONTRACTUAL OBLIGATIONS

The following table summarizes our material
contractual obligations as of June 30, 2004. The payment
amounts represent those amounts contractually due to the
recipient and do not include any unamortized premiums or
discounts, hedge basis adjustments, or other similar carrying
value adjustments. There have been no material changes outside
the ordinary course of our business in any specified contractual
obligations during the second quarter 2004.

|                                                |  |                |            |              |  |              |           |              |  |       |         |  |  |   |         |  |  |   |            | 
|----------------------------------------------- |  | -------------- | ---------- | ------------ |  | ------------ | --------- | ------------ |  | ----- | ------- |  |  | - | ------- |  |  | - | ---------- | 
|                                                |  |               
|                                                |  | Payment Due   
|                                                |  |               
|                                                |  | July 1, 2004   |            | January 1,   |  | January 1,   |           |             
|                                                |  | through        |            | 2005 through |  | 2008 through |           | After        |  |      
|                                                |  | December 31,   |            | December 31, |  | December 31, |           | December 31, |  |      
|                                                |  | 2004           |            | 2007         |  | 2009         |           | 2009         |  | Total
|                                                |  |                |            |              |  |              |           |              |  |      
|                                                |  |               
|                                                |  | (In thousands)
|Deposits without a stated maturity              |  | $              | 2,465,359  |              |  | $            |          |              |  | $     |        |  |  | $ |        |  |  | $ | 2,465,359  | 
|Custodial Accounts and Certificates of Deposits |  |                | 1,231,123  |              |  |              | 1,048,316 |              |  |       | 13,757  |  |  |   |        |  |  |   | 2,293,196  | 
|FHLB Advances                                   |  |                | 4,283,936  |              |  |              | 1,075,000 |              |  |       | 200,000 |  |  |   |        |  |  |   | 5,558,936  | 
|Repurchase Agreements                           |  |                | 2,981,598  |              |  |              |          |              |  |       |        |  |  |   |        |  |  |   | 2,981,598  | 
|HELOC Notes                                     |  |                |           |              |  |              |          |              |  |       |        |  |  |   | 498,137 |  |  |   | 498,137    | 
|CMOs                                            |  |                |           |              |  |              |          |              |  |       |        |  |  |   | 198     |  |  |   | 198        | 
|Trust Preferred                                 |  |                |           |              |  |              |          |              |  |       |        |  |  |   | 183,955 |  |  |   | 183,955    | 
|Accrued Interest Payable                        |  |                | 28,448     |              |  |              |          |              |  |       |        |  |  |   |        |  |  |   | 28,448     | 
|Deferred Compensation(1)                        |  |                |           |              |  |              |          |              |  |       |        |  |  |   | 18,448  |  |  |   | 18,448     | 
|Operating Leases(2)                             |  |                | 6,676      |              |  |              | 40,213    |              |  |       | 20,531  |  |  |   | 7,684   |  |  |   | 75,104     | 
|Employment Agreements(1)                        |  |                | 4,877      |              |  |              | 18,067    |              |  |       |        |  |  |   |        |  |  |   | 22,944     | 
|Purchase Obligations                            |  |                | 3,861      |              |  |              | 13,883    |              |  |       |        |  |  |   |        |  |  |   | 17,744     | 
|                                                |  |                |            |              |  |              |           |              |  |       |         |  |  |   |         |  |  |   |            | 
|Total                                           |  | $              | 11,005,878 |              |  | $            | 2,195,479 |              |  | $     | 234,288 |  |  | $ | 708,422 |  |  | $ | 14,144,067 | 
|                                                |  |                |            |              |  |              |           |              |  |       |         |  |  |   |         |  |  |   |            | 



---



|    |                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The amount excludes $6.5 million of deferred
    compensation that is included in obligations under employment
    agreements.                                                                   
|   
|(2) | The lease commitments had a net increase of
    $4.2 million from first quarter 2004, largely due to a new
    lease entered into in May 2004, which has a total commitment of
    $10.7 million.

A schedule of significant commitments at
June 30, 2004, follows:

|                                     |                                                          |                        |       |           | 
|------------------------------------ | -------------------------------------------------------- | ---------------------- | ----- | --------- | 
|                                     |                                                          | Payment Due           
|                                     |                                                          |                       
|                                     |                                                          | (Dollars in thousands)
|Investment portfolio commitments to: |                                                          |                        |       |          
|                                     | Purchase loans pursuant to exercising clean-up
    calls |                        | $     | 9,845     | 
|Undisbursed loan commitments:        |                                                          |                        |       |          
|                                     | Builder construction                                     |                        |       | 574,963   | 
|                                     | Consumer construction                                    |                        |       | 1,032,396 | 
|                                     | HELOCs                                                   |                        |       | 707,156   | 
|Letters of credit                    |                                                          |                        | 6,816 |          

Additionally, in connection with standard
representations and warranties on loan sales and
securitizations, we are occasionally required to repurchase
loans or make certain payments to settle breaches of these
representations and warranties. From inception of our active
mortgage banking operations on January 1, 1993, through
June 30, 2004, we sold $110.6 billion in loans, and
repurchased $136.4 million in loans, or 0.12% of total
loans sold. To provide for probable future losses related to
loans sold, we have established a reserve based on estimated
losses on actual pending claims and repurchase requests,
historical experience, loan sales volume

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and loan sale distribution channels, which is
included in other liabilities in the consolidated balance
sheets. The balance in this reserve totaled $37 million at
June 30, 2004. See the caption Secondary Market
Reserve above for further information.





KEY OPERATING RISKS

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




INTEREST RATE RISK

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




VALUATION RISK

In connection with the loan sale process, we
retain certain assets for which the market is limited and
illiquid. As a result, valuations are derived using complex
modeling and significant assumptions and judgments, in the
absence of active market quotations or sale information to value
such assets. The assets include AAA-rated and agency
interest-only securities, MSRs, non-investment grade securities
and residuals. In addition, from time to time, we may acquire
these types of securities from third party issuers. These assets
represented 5% of total assets and 65% of total equity at
June 30, 2004. The fair value of these assets could vary
significantly as market conditions change. We periodically
obtain appraisals from mortgage servicing brokers and consider
these appraisals in the estimation of fair value.




CREDIT RISK

A significant portion of our Investment Portfolio
consists of prime residential SFR loans held for investment, and
non-investment grade securities and residuals collateralized by
mortgage loans. We also provide construction lending to
consumers and developers to build residential properties. The
credit risk profile on consumer loans is very similar to that of
our permanent mortgage loans, while builder construction loans
tend to have higher credit risk profile than permanent mortgage
loans. While the majority of our loans are to prime quality
borrowers and secured by residential property, there is no
guarantee that, in the event of borrower default, we will be
able to recoup the full principal amount and interest due on a
loan. We have adopted underwriting and loan quality monitoring
systems, procedures and credit policies, including the
establishment and review of the allowance for loan losses, that
management believes are prudent and appropriate to minimize this
risk by tracking loan performance, assessing the likelihood of
nonperformance and diversifying our loan portfolio. Such
policies and procedures, however, may not prevent unexpected
losses that could adversely affect our results. In addition,
while we have discontinued our home improvement and manufactured
housing lending programs, we continue to liquidate portfolios of
these loans, which have greater credit risk than that of our
core mortgage loan portfolios. At June 30, 2004, the book
value of these non-core portfolios was $53.8 million, net
of reserves.

We also sell loans to GSEs, to outside investors,
and to securitization trusts. In these instances, we are subject
to repurchase risk in the event of breaches of representations
or warranties we make in connection with the loan sales. While
we have established what we believe to be adequate secondary
marketing reserves, there

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can be no guarantee that the amount reserved is
sufficient to cover all potential losses resulting from such
repurchases.





LIQUIDITY RISK/ACCESS TO CAPITAL
MARKETS

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

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




GOVERNMENT REGULATION AND MONETARY
POLICY

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

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




COMPETITION

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

The GSEs have made and we believe will continue
to make significant technological and economic advances to
broaden their customer bases. When the GSEs contract or expand,
there are both positive and negative impacts on our mortgage
banking lending operations. As GSEs expand, additional liquidity
is brought to the market, and loan products can be resold more
quickly. Conversely, expanding GSEs increase

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competition for loans, which may reduce profit
margins on loan sales. We seek to address these competitive
pressures by making a strong effort to maximize our use of
technology, by diversifying into other residential mortgage
products that are less affected by GSEs, and by operating in a
more cost-effective manner than our competitors.


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




OTHER RISKS

We are subject to various other risks, including
changes in the demand for mortgage loans, which historically
tends to decrease as interest rates increase. Also, a majority
of our loan acquisitions are geographically concentrated in
certain states, including California, New York, Florida and New
Jersey. Any adverse economic conditions in these markets could
cause the number of loans acquired to decrease and delinquencies
to increase, causing a corresponding decline in revenues.
Further, there are no guarantees as to our degree of success in
managing loan portfolio concentrations, anticipating and taking
advantage of technological advances, or executing upon our
growth plans for our mortgage banking operations. Lastly,
political conditions could impact the Companys earnings.
Acts or threats of war or terrorism, as well as actions taken by
the U.S. or other governments in response to such acts or
threats, could impact business and economic conditions in which
the Company operates.




CRITICAL ACCOUNTING POLICIES

Various elements of our accounting policies, by
their nature, are inherently subject to estimation techniques,
valuation assumptions and other subjective assessments. In
particular, we have identified six policies, that, due to the
judgments, estimates and assumptions inherent in those policies,
are critical to an understanding of our financial statements.
These policies relate to (a) the valuation of AAA-rated and
agency interest-only strips; (b) the valuation of MSRs;
(c) the valuation of non-investment grade securities and
residuals; (d) derivatives and other hedging instruments;
(e) the methodology for determining our allowance for loan
losses; and (f) the valuation of our secondary market
reserve. Management discusses these critical accounting policies
and related judgments with IndyMacs audit committee and
external auditors on a quarterly basis. We believe that the
judgments, estimates and assumptions used in the preparation of
our consolidated financial statements are appropriate given the
factual circumstances at the time; however, given the
sensitivity of our consolidated financial statements to these
critical accounting policies, the use of other judgments,
estimates and assumptions could result in material differences
in our results of operations or financial condition. For further
information on the Companys critical accounting policies
and the impact of SAB No. 105 on our accounting policy for
rate lock loan commitments, refer to IndyMacs annual
report on Form 10-K for the year ended December 31,
2003 and Note 2  Newly Adopted Accounting
Guidance, accompanying the consolidated financial statements on
page 67.






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

See Overall Interest Rate Risk
Management beginning on page 46 for quantitative and
qualitative disclosure about market risk.

62



---



##### Table of Contents








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

INDYMAC BANCORP, INC. AND
SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS


|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |           |            |           |            | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | --------- | ---------- | --------- | ---------- | --------- | ---------- | 
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | June 30,                                   |                                 | December 31,                                                                                                                                            
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | 2004                                       |                                 | 2003                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | (Unaudited)                                |                                 |                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                           
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | (Dollars in thousands)                    
|ASSETS                                                                                                                                                                                                                                                                                         
|Cash and cash equivalents                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                  | $                                          | 329,763                         |                                                                                                                                                          |            | $         | 115,485    |          
|Securities classified as trading
    ($143.4 million and $70.9 million pledged as
    collateral for borrowings at June 30, 2004 and
    December 31, 2003, respectively)                                                                                                                       |                                                                                                                                                                                                                                  |                                            | 309,869                         |                                                                                                                                                          |            |           | 223,632    |          
|Securities classified as available for sale,
    amortized cost of $2.7 billion and $1.6 billion at
    June 30, 2004 and December 31, 2003, respectively
    ($2.0 billion and $1.5 billion pledged as collateral
    for borrowings at June 30, 2004 and December 31, 2003,
    respectively) |                                                                                                                                                                                                                                  |                                            | 2,671,122                       |                                                                                                                                                          |            |           | 1,613,974  |          
|Loans receivable:                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|                                                                                                                                                                                                                                                                                                | Loans held for sale                                                                                                                                                                                                              |                                            |                                 |                                                                                                                                                          |            |           |            |           |           
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | Prime                                      |                                 |                                                                                                                                                          | 3,239,737  |           |            |           | 2,196,488  |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | Subprime                                   |                                 |                                                                                                                                                          | 361,250    |           |            |           | 295,008    |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | HELOC                                      |                                 |                                                                                                                                                          | 342,038    |           |            |           |           |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | Consumer lot loans                         |                                 |                                                                                                                                                          | 68,048     |           |            |           | 81,752     |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            | Total loans held for sale       |                                                                                                                                                          |            | 4,011,073 |            |           |            | 2,573,248 |           
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|                                                                                                                                                                                                                                                                                                | Loans held for investment                                                                                                                                                                                                        |                                            |                                 |                                                                                                                                                          |            |           |            |           |           
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | SFR mortgage                               |                                 |                                                                                                                                                          | 4,639,993  |           |            |           | 4,945,439  |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | Consumer construction                      |                                 |                                                                                                                                                          | 1,301,688  |           |            |           | 1,145,526  |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | Builder construction                       |                                 |                                                                                                                                                          | 561,538    |           |            |           | 484,397    |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | HELOC                                      |                                 |                                                                                                                                                          | 217,368    |           |            |           | 711,494    |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | Land and other mortgage                    |                                 |                                                                                                                                                          | 182,352    |           |            |           | 126,044    |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | Income property                            |                                 |                                                                                                                                                          | 7,432      |           |            |           | 36,285     |          
|                                                                                                                                                                                                                                                                                                | Allowance for loan losses                                                                                                                                                                                                        |                                            |                                 | (52,796                                                                                                                                                  | )          |           |            | (52,645   | )         
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            | Total loans held for investment |                                                                                                                                                          |            | 6,857,575 |            |           |            | 7,396,540 |           
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 | Total loans receivable ($8.5 billion and
    $7.6 billion pledged as collateral for borrowings at
    June 30, 2004 and December 31, 2003, respectively) |            |           | 10,868,648 |           |            |           | 9,969,788  | 
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|Mortgage servicing rights                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                  |                                            | 493,876                         |                                                                                                                                                          |            |           | 443,688    |          
|Investment in Federal Home Loan Bank stock,
    at cost                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                  |                                            | 345,781                         |                                                                                                                                                          |            |           | 313,284    |          
|Interest receivable                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                  |                                            | 58,477                          |                                                                                                                                                          |            |           | 51,758     |          
|Goodwill and other intangible assets                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                            | 33,330                          |                                                                                                                                                          |            |           | 33,697     |          
|Foreclosed assets                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                  |                                            | 27,316                          |                                                                                                                                                          |            |           | 23,677     |          
|Other assets                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                  |                                            | 400,334                         |                                                                                                                                                          |            |           | 451,408    |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 | Total assets                                                                                                                                             |            | $         | 15,538,516 |           |            | $         | 13,240,391 | 
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|                                                                                                                                                                                                                                                                                               
|LIABILITIES AND STOCKHOLDERS
    EQUITY                                                                                                                                                                                                                                                       
|Deposits                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                  | $                                          | 4,758,555                       |                                                                                                                                                          |            | $         | 4,350,773  |          
|Advances from Federal Home Loan Bank                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                            | 5,558,936                       |                                                                                                                                                          |            |           | 4,934,911  |          
|Other borrowings                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            | 3,663,887                       |                                                                                                                                                          |            |           | 2,622,094  |          
|Other liabilities                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                  |                                            | 374,834                         |                                                                                                                                                          |            |           | 315,182    |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | Total liabilities                          |                                 |                                                                                                                                                          | 14,356,212 |           |            |           | 12,222,960 |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|Stockholders Equity                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|                                                                                                                                                                                                                                                                                                | Preferred stock  authorized,
    10,000,000 shares of $0.01 par value; none issued                                                                                                                                              |                                            |                                 |                                                                                                                                                         |            |           |            |          |           
|                                                                                                                                                                                                                                                                                                | Common stock  authorized,
    200,000,000 shares of $0.01 par value; issued
    90,270,718 shares (61,099,027 outstanding) at June 30,
    2004, and issued 85,914,552 shares (56,760,313 outstanding)
    at December 31, 2003 |                                            |                                 | 903                                                                                                                                                      |            |           |            | 859       |           
|                                                                                                                                                                                                                                                                                                | Additional paid-in-capital                                                                                                                                                                                                       |                                            |                                 | 1,164,622                                                                                                                                                |            |           |            | 1,043,856 |           
|                                                                                                                                                                                                                                                                                                | Accumulated other comprehensive loss                                                                                                                                                                                             |                                            |                                 | (15,080                                                                                                                                                  | )          |           |            | (26,454   | )         
|                                                                                                                                                                                                                                                                                                | Retained earnings                                                                                                                                                                                                                |                                            |                                 | 551,630                                                                                                                                                  |            |           |            | 518,408   |           
|                                                                                                                                                                                                                                                                                                | Treasury stock, 29,171,691 shares and
    29,154,239 shares at June 30, 2004, and
    December 31, 2003, respectively                                                                                                            |                                            |                                 | (519,771                                                                                                                                                 | )          |           |            | (519,238  | )         
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | Total stockholders equity                 |                                 |                                                                                                                                                          | 1,182,304  |           |            |           | 1,017,431  |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  | Total liabilities and stockholders equity |                                 | $                                                                                                                                                        | 15,538,516 |           |            | $         | 13,240,391 |          
|                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                            |                                 |                                                                                                                                                          |            |           |            |          

The accompanying notes are an integral part of
these statements.

63



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES



CONSOLIDATED STATEMENTS OF EARNINGS


|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |         |         | 
|------------------------------------------ | ----------------------------------------- | ------------------------------------------------------- | ------ | ------------------ | ------- | ---- | ------ | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                           |                                           |                                                         |        |                   
|                                           |                                           | For the Three Months                                    |        | For the Six Months
|                                           |                                           | Ended June 30,                                          |        | Ended June 30,    
|                                           |                                           |                                                         |        |                   
|                                           |                                           | 2004                                                    |        | 2003               |         | 2004 |        | 2003   
|                                           |                                           |                                                         |        |                    |         |      |        |        
|                                           |                                           |                                                        
|                                           |                                           | (Unaudited)                                            
|                                           |                                           |                                                        
|                                           |                                           | (Dollars in thousands, except per share data)          
|Interest income                            |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|Mortgage-backed and other securities       |                                           | $                                                       | 34,365 |                    |         | $    | 16,111 |         |         | $ | 61,220  |         |         | $ | 37,072  |        
|Loans held for sale                        |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           | Prime                                     |                                                         |        | 58,842             |         |      |        | 43,344  |         |   |         | 103,173 |         |   |         | 80,768  |        
|                                           | Subprime                                  |                                                         |        | 7,681              |         |      |        | 7,142   |         |   |         | 16,189  |         |   |         | 13,386  |        
|                                           | Consumer lot loans                        |                                                         |        | 2,872              |         |      |        | 1,974   |         |   |         | 4,779   |         |   |         | 3,507   |        
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           |                                           | Total loans held for sale                               |        |                    | 69,395  |      |        |         | 52,460  |   |         |         | 124,141 |   |         |         | 97,661  | 
|Loans held for investment                  |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           | SFR mortgage                              |                                                         |        | 49,744             |         |      |        | 30,458  |         |   |         | 98,962  |         |   |         | 59,973  |        
|                                           | Consumer construction                     |                                                         |        | 17,003             |         |      |        | 14,639  |         |   |         | 32,998  |         |   |         | 29,035  |        
|                                           | Builder construction                      |                                                         |        | 8,621              |         |      |        | 8,682   |         |   |         | 16,147  |         |   |         | 17,283  |        
|                                           | HELOC                                     |                                                         |        | 4,325              |         |      |        | 4,951   |         |   |         | 10,684  |         |   |         | 9,098   |        
|                                           | Land and other mortgage                   |                                                         |        | 2,758              |         |      |        | 1,792   |         |   |         | 5,222   |         |   |         | 4,093   |        
|                                           | Income property                           |                                                         |        | 199                |         |      |        | 1,086   |         |   |         | 713     |         |   |         | 2,205   |        
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           |                                           | Total loans held for investment                         |        |                    | 82,650  |      |        |         | 61,608  |   |         |         | 164,726 |   |         |         | 121,687 | 
|Other                                      |                                           |                                                         | 3,898  |                    |         |      | 2,298  |         |         |   | 6,780   |         |         |   | 4,254   |        
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           |                                           | Total interest income                                   |        |                    | 190,308 |      |        |         | 132,477 |   |         |         | 356,867 |   |         |         | 260,674 | 
|Interest expense                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|Deposits                                   |                                           |                                                         | 23,697 |                    |         |      | 21,950 |         |         |   | 46,179  |         |         |   | 43,638  |        
|Advances from Federal Home Loan Bank       |                                           |                                                         | 33,919 |                    |         |      | 28,308 |         |         |   | 64,839  |         |         |   | 53,866  |        
|Trust preferred securities                 |                                           |                                                         | 3,823  |                    |         |      | 2,765  |         |         |   | 7,638   |         |         |   | 5,528   |        
|Other borrowings                           |                                           |                                                         | 21,891 |                    |         |      | 11,939 |         |         |   | 37,300  |         |         |   | 27,102  |        
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           |                                           | Total interest expense                                  |        |                    | 83,330  |      |        |         | 64,962  |   |         |         | 155,956 |   |         |         | 130,134 | 
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           |                                           | Net interest income                                     |        |                    | 106,978 |      |        |         | 67,515  |   |         |         | 200,911 |   |         |         | 130,540 | 
|Provision for loan losses                  |                                           |                                                         | 3,200  |                    |         |      | 6,900  |         |         |   | 4,700   |         |         |   | 10,000  |        
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           |                                           | Net interest income after provision for loan
    losses |        |                    | 103,778 |      |        |         | 60,615  |   |         |         | 196,211 |   |         |         | 120,540 | 
|Other income                               |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           | Gain on sale of loans                     |                                                         |        | 66,084             |         |      |        | 102,146 |         |   |         | 149,752 |         |   |         | 185,929 |        
|                                           | Service fee (loss) income                 |                                                         |        | (27,807            | )       |      |        | (1,401  | )       |   |         | (30,951 | )       |   |         | 982     |        
|                                           | Losses on mortgage-backed securities, net |                                                         |        | (3,414             | )       |      |        | (9,258  | )       |   |         | (8,401  | )       |   |         | (16,168 | )      
|                                           | Fee and other income                      |                                                         |        | 20,774             |         |      |        | 21,251  |         |   |         | 37,496  |         |   |         | 38,979  |        
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           |                                           | Total other income                                      |        |                    | 55,637  |      |        |         | 112,738 |   |         |         | 147,896 |   |         |         | 209,722 | 
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           |                                           | Net revenues                                            |        |                    | 159,415 |      |        |         | 173,353 |   |         |         | 344,107 |   |         |         | 330,262 | 
|Other expense                              |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           | Operating expenses                        |                                                         |        | 121,294            |         |      |        | 104,758 |         |   |         | 236,492 |         |   |         | 200,416 |        
|                                           | Amortization of other intangible assets   |                                                         |        | 179                |         |      |        | 217     |         |   |         | 367     |         |   |         | 448     |        
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           |                                           | Total other expense                                     |        |                    | 121,473 |      |        |         | 104,975 |   |         |         | 236,859 |   |         |         | 200,864 | 
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|Earnings before provision for income taxes |                                           |                                                         | 37,942 |                    |         |      | 68,378 |         |         |   | 107,248 |         |         |   | 129,398 |        
|                                           | Provision for income taxes                |                                                         |        | 14,987             |         |      |        | 27,009  |         |   |         | 42,363  |         |   |         | 51,112  |        
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           |                                           | Net earnings                                            |        | $                  | 22,955  |      |        | $       | 41,369  |   |         | $       | 64,885  |   |         | $       | 78,286  | 
|                                           |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|Earnings per share                         |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           | Basic                                     |                                                         | $      | 0.39               |         |      | $      | 0.75    |         |   | $       | 1.13    |         |   | $       | 1.43    |        
|                                           | Diluted                                   |                                                         | $      | 0.38               |         |      | $      | 0.73    |         |   | $       | 1.08    |         |   | $       | 1.39    |        
|Weighted average shares outstanding        |                                           |                                                         |        |                    |         |      |        |         |         |   |         |         |         |   |         |        
|                                           | Basic                                     |                                                         |        | 58,137             |         |      |        | 55,015  |         |   |         | 57,548  |         |   |         | 54,922  |        
|                                           | Diluted                                   |                                                         |        | 60,588             |         |      |        | 56,711  |         |   |         | 60,180  |         |   |         | 56,345  |        
|Dividends declared per share               |                                           | $                                                       | 0.32   |                    |         | $    | 0.10   |         |         | $ | 0.62    |         |         | $ | 0.20    |        

The accompanying notes are an integral part of
these statements.

64



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES



CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY AND COMPREHENSIVE INCOME


|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|--------------------------------------------------------------------------- |  | ---------------------- | ---------- | ------ |  | ---------- | --- | ------------- |  | -------- | --------- | ------------- |  | -------- | ------- | ------------- |  | - | ------- | - |  | - | ------- | - |  | - | -------- | - |  | - | --------- | -
|                                                                            |  |                        |            |        |  |            |     | Accumulated   |  |          |           |               |  |          |         |              
|                                                                            |  |                        |            |        |  |            |     | Other         |  |          |           |               |  |          |         |              
|                                                                            |  |                        |            |        |  | Additional |     | Comprehensive |  |          |           | Total         |  |          |         | Total        
|                                                                            |  | Shares                 |            | Common |  | Paid-In-   |     | Income        |  | Retained |           | Comprehensive |  | Treasury |         | Stockholders
|                                                                            |  | Outstanding            |            | Stock  |  | Capital    |     | (Loss)        |  | Earnings |           | Income        |  | Stock    |         | Equity       
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |              
|                                                                            |  |                       
|                                                                            |  | (Unaudited)           
|                                                                            |  |                       
|                                                                            |  | (Dollars in thousands)
|Balance at December 31, 2002                                                |  |                        | 54,829,486 |        |  | $          | 840 |               |  | $        | 1,007,936 |               |  | $        | (17,747 | )             |  | $ | 377,707 |   |  |   |         |   |  | $ | (518,771 | ) |  | $ | 849,965   |  
|Common stock options exercised                                              |  |                        | 385,624    |        |  |            | 5   |               |  |          | 6,132     |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   |         |   |  |   | 6,137     |  
|Directors and officers notes
    receivable                               |  |                        |           |        |  |            |    |               |  |          | 196       |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   |         |   |  |   | 196       |  
|Deferred compensation, restricted stock                                     |  |                        | 172,587    |        |  |            |    |               |  |          | 1,050     |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   |         |   |  |   | 1,050     |  
|Net loss on mortgage- backed securities available
    for sale, net of tax  |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | (7,014  | )             |  |   |        |   |  |   | (7,014  | ) |  |   |         |   |  |   | (7,014    | )
|Net unrealized loss on derivatives used in cash
    flow hedges, net of tax |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | (4,595  | )             |  |   |        |   |  |   | (4,595  | ) |  |   |         |   |  |   | (4,595    | )
|Purchases of common stock                                                   |  |                        | (23,426    | )      |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   | (448     | ) |  |   | (448      | )
|Cash dividends                                                              |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   | (11,018 | ) |  |   |        |   |  |   |         |   |  |   | (11,018   | )
|Net earnings                                                                |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   | 78,286  |   |  |   | 78,286  |   |  |   |         |   |  |   | 78,286    |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|Total comprehensive income                                                  |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |   |  | $ | 66,677  |   |  |   |         |   |  |   |          |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|Balance at June 30, 2003                                                    |  |                        | 55,364,271 |        |  | $          | 845 |               |  | $        | 1,015,314 |               |  | $        | (29,356 | )             |  | $ | 444,975 |   |  |   |         |   |  | $ | (519,219 | ) |  | $ | 912,559   |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|Balance at December 31, 2003                                                |  |                        | 56,760,313 |        |  | $          | 859 |               |  | $        | 1,043,856 |               |  | $        | (26,454 | )             |  | $ | 518,408 |   |  |   |         |   |  | $ | (519,238 | ) |  | $ | 1,017,431 |  
|Common stock issued                                                         |  |                        | 3,200,000  |        |  |            | 32  |               |  |          | 96,218    |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   |         |   |  |   | 96,250    |  
|Common stock options exercised                                              |  |                        | 1,049,051  |        |  |            | 10  |               |  |          | 23,290    |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   |         |   |  |   | 23,300    |  
|Directors and officers notes
    receivable                               |  |                        |           |        |  |            |    |               |  |          | 33        |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   |         |   |  |   | 33        |  
|Deferred compensation, restricted stock                                     |  |                        | 107,115    |        |  |            | 2   |               |  |          | 1,225     |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   |         |   |  |   | 1,227     |  
|Net loss on mortgage- backed securities available
    for sale, net of tax  |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | (15,515 | )             |  |   |        |   |  |   | (15,515 | ) |  |   |         |   |  |   | (15,515   | )
|Net unrealized gain on derivatives used in cash
    flow hedges, net of tax |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | 26,889  |               |  |   |        |   |  |   | 26,889  |   |  |   |         |   |  |   | 26,889    |  
|Purchases of common stock                                                   |  |                        | (17,452    | )      |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |   |  |   |        |   |  |   | (533     | ) |  |   | (533      | )
|Cash dividends                                                              |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   | (31,663 | ) |  |   |        |   |  |   |         |   |  |   | (31,663   | )
|Net earnings                                                                |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   | 64,885  |   |  |   | 64,885  |   |  |   |         |   |  |   | 64,885    |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|Total comprehensive income                                                  |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |   |  | $ | 76,259  |   |  |   |         |   |  |   |          |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  
|Balance at June 30, 2004                                                    |  |                        | 61,099,027 |        |  | $          | 903 |               |  | $        | 1,164,622 |               |  | $        | (15,080 | )             |  | $ | 551,630 |   |  |   |         |   |  | $ | (519,771 | ) |  | $ | 1,182,304 |  
|                                                                            |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |         |   |  |   |          |   |  |   |           |  

The accompanying notes are an integral part of
these statements.

65



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH
FLOWS


|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |          |            |            |  
|-------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ---------- | ---------- | ------- | -------- | ---------- | ---------- | -
|                                                                           |                                                                                            |                                                                    
|                                                                           |                                                                                            | For the Six Months Ended                                           
|                                                                           |                                                                                            | June 30,                                                           
|                                                                           |                                                                                            |                                                                    
|                                                                           |                                                                                            | 2004                                                                |                                                                                                                                                             | 2003     
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |          
|                                                                           |                                                                                            |                                                                    
|                                                                           |                                                                                            | (Unaudited)                                                        
|                                                                           |                                                                                            | (Dollars in thousands)                                             
|Cash flows from operating
    activities:                                  |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|                                                                           | Net earnings                                                                               |                                                                     | $                                                                                                                                                           | 64,885    |            |            | $       | 78,286   |           
|                                                                           | Adjustments to reconcile net earnings to net cash
    used in operating activities:        |                                                                     |                                                                                                                                                             |           |            |            |         |          |           
|                                                                           |                                                                                            | Total amortization and depreciation                                 |                                                                                                                                                             |           | 104,391    |            |         |          | 99,159     |           
|                                                                           |                                                                                            | Provision for valuation adjustment of mortgage
    servicing rights |                                                                                                                                                             |           | 4,839      |            |         |          | 41,536     |           
|                                                                           |                                                                                            | Gain on sale of loans                                               |                                                                                                                                                             |           | (149,752   | )          |         |          | (185,929   | )         
|                                                                           |                                                                                            | Loss on mortgage-backed securities, net                             |                                                                                                                                                             |           | 8,401      |            |         |          | 16,168     |           
|                                                                           |                                                                                            | Provision for loan losses                                           |                                                                                                                                                             |           | 4,700      |            |         |          | 10,000     |           
|                                                                           |                                                                                            | Net decrease in other assets and liabilities                        |                                                                                                                                                             |           | 143,706    |            |         |          | 94,860     |           
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|                                                                           |                                                                                            |                                                                     | Net cash provided by operating activities before
    activity for trading securities, premiums paid for derivative
    instruments, and loans held for sale |           |            | 181,170    |         |          |            | 154,080    |  
|                                                                           |                                                                                            | Net (purchases) sales of trading securities                         |                                                                                                                                                             |           | (31,501    | )          |         |          | 520,647    |           
|                                                                           |                                                                                            | Net decrease on premiums paid for derivative
    instruments        |                                                                                                                                                             |           | 30,102     |            |         |          |           |           
|                                                                           |                                                                                            | Net purchases of loans held for sale                                |                                                                                                                                                             |           | (3,053,980 | )          |         |          | (1,843,049 | )         
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|                                                                           |                                                                                            |                                                                     | Net cash used in operating activities                                                                                                                       |           |            | (2,874,209 | )       |          |            | (1,168,322 | )
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|Cash flows from investing
    activities:                                  |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|                                                                           | Net sales of and payments from loans held for
    investment                               |                                                                     |                                                                                                                                                             | 1,089,165 |            |            |         | 272,790  |           
|                                                                           | Net (purchases of) payments from securities
    available for sale                         |                                                                     |                                                                                                                                                             | (111,018  | )          |            |         | 400,890  |           
|                                                                           | Net increase in investment in Federal Home
    Loan Bank stock, at cost                    |                                                                     |                                                                                                                                                             | (32,497   | )          |            |         | (76,902  | )         
|                                                                           | Net purchases of property, plant and equipment                                             |                                                                     |                                                                                                                                                             | (17,790   | )          |            |         | (16,240  | )         
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|                                                                           |                                                                                            |                                                                     | Net cash provided by investing activities                                                                                                                   |           |            | 927,860    |         |          |            | 580,538    |  
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|Cash flows from financing
    activities:                                  |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|                                                                           | Net increase in deposits                                                                   |                                                                     |                                                                                                                                                             | 407,782   |            |            |         | 762,983  |           
|                                                                           | Net increase in advances from Federal Home
    Loan Bank                                   |                                                                     |                                                                                                                                                             | 624,001   |            |            |         | 730,914  |           
|                                                                           | Net increase (decrease) in borrowings                                                      |                                                                     |                                                                                                                                                             | 1,041,457 |            |            |         | (688,879 | )         
|                                                                           | Net proceeds from issuance of common stock                                                 |                                                                     |                                                                                                                                                             | 96,250    |            |            |         |         |           
|                                                                           | Net proceeds from stock options and notes
    receivable                                   |                                                                     |                                                                                                                                                             | 23,333    |            |            |         | 6,333    |           
|                                                                           | Cash dividends paid                                                                        |                                                                     |                                                                                                                                                             | (31,663   | )          |            |         | (11,018  | )         
|                                                                           | Purchases of common stock                                                                  |                                                                     |                                                                                                                                                             | (533      | )          |            |         | (448     | )         
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|                                                                           |                                                                                            |                                                                     | Net cash provided by financing activities                                                                                                                   |           |            | 2,160,627  |         |          |            | 799,885    |  
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|Net increase in cash and cash equivalents                                  |                                                                                            |                                                                     | 214,278                                                                                                                                                     |           |            |            | 212,101 |         
|Cash and cash equivalents at beginning of period                           |                                                                                            |                                                                     | 115,485                                                                                                                                                     |           |            |            | 196,720 |         
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|Cash and cash equivalents at end of period                                 |                                                                                            | $                                                                   | 329,763                                                                                                                                                     |           |            | $          | 408,821 |         
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|Supplemental cash flow information:                                        |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|                                                                           | Cash paid for interest                                                                     |                                                                     | $                                                                                                                                                           | 147,122   |            |            | $       | 132,804  |           
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|                                                                           | Cash paid for income taxes                                                                 |                                                                     | $                                                                                                                                                           | 31,330    |            |            | $       | 6,208    |           
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|Supplemental disclosure of noncash investing
    and financing activities: |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|                                                                           | Net transfer of loans held for sale to loans held
    for investment                       |                                                                     | $                                                                                                                                                           | 1,089,351 |            |            | $       | 925,550  |           
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         
|                                                                           | Transfer of loans held for investment to
    mortgage-backed securities available for sale |                                                                     | $                                                                                                                                                           | 500,012   |            |            | $       |         |           
|                                                                           |                                                                                            |                                                                     |                                                                                                                                                             |           |            |            |         |         

The accompanying notes are an integral part of
these statements.

66



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


June 30, 2004


(Unaudited)




|         |                      
|-------- | ---------------------
|Note 1  | Basis of Presentation

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

The consolidated financial statements include the
accounts of IndyMac Bancorp and its subsidiaries, including
IndyMac Bank®, F.S.B. (IndyMac Bank). All
significant intercompany balances and transactions with
IndyMacs consolidated subsidiaries have been eliminated in
consolidation. The consolidated financial statements of IndyMac
are prepared in conformity with accounting principles generally
accepted in the United States of America (US GAAP).
The foregoing financial statements are unaudited; however, in
the opinion of management, all adjustments, consisting only of
normal recurring adjustments necessary for a fair statement of
the results for the interim periods have been included.
Operating results for the three and six months ended
June 30, 2004, are not necessarily indicative of the
results that may be expected for the year ending
December 31, 2004. For further information, refer to the
consolidated financial statements and footnotes thereto included
in IndyMacs annual report on Form 10-K for the year
ended December 31, 2003.



|         |                                  
|-------- | ---------------------------------
|Note 2  | Newly Adopted Accounting Guidance

On March 9, 2004, the Securities and
Exchange Commission (SEC) issued Staff Accounting
Bulletin No. 105, Application of Accounting
Principles to Loan Commitments,which provides
guidance regarding loan commitments that are accounted for as
derivative instruments. In this Bulletin, the SEC determined
that an interest rate lock commitment should generally be valued
at zero at inception. The rate locks will continue to be
adjusted for changes in value resulting from changes in market
interest rates. The Company adopted this new standard
prospectively effective April 1, 2004. Under the new
accounting guidance, the Company no longer recognizes any
revenue at the inception of the rate lock. Profits inherent in
the rate lock are recognized at the time of the sale of the
underlying loans. The implementation of the standard had a
one-time negative impact on gain on sale totaling
$52.2 million before-tax, or $31.6 million after-tax.



|         |           
|-------- | ----------
|Note 3  | Securities

The following table details our securities
classified as trading and securities available for sale as of
June 30, 2004, and December 31, 2003:

|                                  |                                           |                                        |   |              |         |  |   |         |         | 
|--------------------------------- | ----------------------------------------- | -------------------------------------- | - | ------------ | ------- |  | - | ------- | ------- | 
|                                  |                                           | June 30,                               |   | December 31,
|                                  |                                           | 2004                                   |   | 2003        
|                                  |                                           |                                        |   |             
|                                  |                                           |                                       
|                                  |                                           | (Dollars in thousands)                
|Securities Classified as Trading: |                                           |                                        |   |              |         |  |   |        
|                                  | AAA-rated and agency interest-only strips |                                        | $ | 166,799      |         |  | $ | 148,275 |        
|                                  | AAA-rated principal-only securities       |                                        |   | 83,964       |         |  |   | 8,518   |        
|                                  | Other investment grade securities         |                                        |   | 9,093        |         |  |   | 8,922   |        
|                                  | Other non-investment grade securities     |                                        |   | 478          |         |  |   | 1,760   |        
|                                  | Non-investment grade residual securities  |                                        |   | 49,535       |         |  |   | 56,157  |        
|                                  |                                           |                                        |   |              |         |  |   |        
|                                  |                                           | Total securities classified as trading |   | $            | 309,869 |  |   | $       | 223,632 | 
|                                  |                                           |                                        |   |              |         |  |   |        

67



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INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                             |                                                           |                                                   |   |              |           |  |   |           |           | 
|-------------------------------------------- | --------------------------------------------------------- | ------------------------------------------------- | - | ------------ | --------- |  | - | --------- | --------- | 
|                                             |                                                           | June 30,                                          |   | December 31,
|                                             |                                                           | 2004                                              |   | 2003        
|                                             |                                                           |                                                   |   |             
|                                             |                                                           |                                                  
|                                             |                                                           | (Dollars in thousands)                           
|Securities Classified as Available for Sale: |                                                           |                                                   |   |              |           |  |   |          
|                                             | U.S. Treasury and agency notes                            |                                                   | $ | 47,703       |           |  | $ | 143,689   |          
|                                             | AAA-rated principal-only mortgage-backed
    securities   |                                                   |   | 20,102       |           |  |   |          |          
|                                             | AAA-rated agency mortgage-backed securities               |                                                   |   | 18,519       |           |  |   | 25,193    |          
|                                             | AAA-rated non-agency mortgage-backed securities           |                                                   |   | 2,450,258    |           |  |   | 1,407,984 |          
|                                             | Other investment grade mortgage-backed securities         |                                                   |   | 82,139       |           |  |   | 26,926    |          
|                                             | Other non-investment grade mortgage-backed
    securities |                                                   |   | 29,304       |           |  |   | 10,182    |          
|                                             | Non-investment grade HELOC residual securities            |                                                   |   | 23,097       |           |  |   |          |          
|                                             |                                                           |                                                   |   |              |           |  |   |          
|                                             |                                                           | Total securities classified as available for sale |   | $            | 2,671,122 |  |   | $         | 1,613,974 | 
|                                             |                                                           |                                                   |   |              |           |  |   |          

The significant increase in AAA-rated non-agency
mortgage-backed securities from $1.4 billion at
December 31, 2003, to $2.5 billion at June 30,
2004 was primarily due to the reclassification of approximately
$500 million HELOC loans to securities and the retention of
a $346 million senior note from our SFR mortgage loans held
for investment securitization during the first quarter 2004.



|         |                  
|-------- | -----------------
|Note 4  | Segment Reporting

IndyMac operates through its four main segments:
IndyMac Mortgage Bank, IndyMac Consumer Bank, Home Equity
Division, and Investment Portfolio Group. IndyMac Mortgage Bank
is centered on providing consumers with mortgage products
through relationships with the Companys business
customers  mortgage brokers, mortgage bankers,
financial institutions, real estate professionals and
homebuilders. The Home Equity Division is a product-focused
division that supports the production of home equity lines of
credit (HELOCs) and other home equity products through all of
IndyMacs relationship and consumer direct production
channels. IndyMac Consumer Bank provides the platform for the
mortgage and deposit services that IndyMac offers directly to
consumers. Loans produced by IndyMac Mortgage Bank, IndyMac
Consumer Bank and the Home Equity Division are then securitized
through the issuance of mortgage-backed securities, sold to
GSEs, resold in bulk whole loan sales to investors, or
transferred to and retained by our Investment Portfolio Group.
The Investment Portfolio Group serves as the main link to
customers whose mortgages we service. Through its investments in
single-family residential mortgages, mortgage-backed securities
and mortgage servicing rights, it serves a critical support
function for IndyMacs mortgage lending operations.

The profitability of each operating segment is
measured on a fully-leveraged basis after allocating capital
based on regulatory capital rules. Operating segments that
originate mortgage loans are credited with gain on sale at
funding based on the estimated fair value. Any difference
between the actual gain on sale realized and the estimate is
credited or charged to the operating segment in the period the
loan is sold or transferred to the held for investment
portfolio. Differences between the gain on sale credited to the
operating segments and the consolidated gain on sale due to
timing of loan sales or transfers to the held for investment
portfolio are eliminated in consolidation. The Company uses a
fund transfer pricing system to allocate net interest income to
the operating segments. Each operating segment is allocated
funding with maturities and interest rates matched with the
expected lives and repricing frequencies of the segments
assets. Deposits receive a funding credit using a similar
methodology. The difference between these allocations and the
Companys actual net interest income and capital levels
resulting from centralized management of funding costs is
reported in the line item titled Other. Also
included in the line item titled Other are
unallocated corporate costs such as corporate salaries and
related expenses, excess capital, and non-recurring corporate
items.

68



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Segment information for the three and six months
ended June 30, 2004 and 2003, was as follows:

|                                 |                               |                        |           |          |  |            |         |          |  |       |           |              |  |            |         |              |   |   |         |         |   |   |            |         |  |   |   |         |   |   |            |         | 
|-------------------------------- | ----------------------------- | ---------------------- | --------- | -------- |  | ---------- | ------- | -------- |  | ----- | --------- | ------------ |  | ---------- | ------- | ------------ | - | - | ------- | ------- | - | - | ---------- | ------- |  | - | - | ------- | - | - | ---------- | ------- | 
|                                 |                               | IndyMac                |           | IndyMac  |  | Investment |         | Home     |  |       |           |              |  | SAB        |         |             
|                                 |                               | Mortgage               |           | Consumer |  | Portfolio  |         | Equity   |  |       |           | Pro Forma    |  | No. 105    |         | GAAP        
|                                 |                               | Bank                   |           | Bank     |  | Group      |         | Division |  | Other |           | Consolidated |  | Adjustment |         | Consolidated
|                                 |                               |                        |           |          |  |            |         |          |  |       |           |              |  |            |         |             
|                                 |                               |                       
|                                 |                               | (Dollars in thousands)
|Three months ended June 30, 2004 |                               |                        |           |          |  |            |         |          |  |       |           |              |  |            |         |              |   |   |         |         |   |   |            |         |  |   |   |         |   |   |            |        
|                                 | Net interest income (expense) |                        | $         | 59,664   |  |            | $       | 14,194   |  |       | $         | 42,070       |  |            | $       | 1,025        |   |   | $       | (9,975  | ) |   | $          | 106,978 |  |   | $ |        |   |   | $          | 106,978 | 
|                                 | Net revenues (expense)        |                        |           | 161,346  |  |            |         | 35,814   |  |       |           | 26,479       |  |            |         | 1,659        |   |   |         | (13,660 | ) |   |            | 211,638 |  |   |   | (52,223 | ) |   |            | 159,415 | 
|                                 | Net earnings (loss)           |                        |           | 62,580   |  |            |         | 6,127    |  |       |           | 8,149        |  |            |         | 191          |   |   |         | (22,497 | ) |   |            | 54,550  |  |   |   | (31,595 | ) |   |            | 22,955  | 
|Assets as of June 30, 2004       |                               | $                      | 5,730,641 |          |  | $          | 636,776 |          |  | $     | 8,219,882 |              |  | $          | 245,156 |              |   | $ | 706,061 |         |   | $ | 15,538,516 |         |  | $ |  |         |   | $ | 15,538,516 |        
|Three months ended June 30, 2003 |                               |                        |           |          |  |            |         |          |  |       |           |              |  |            |         |              |   |   |         |         |   |   |            |         |  |   |   |         |   |   |            |        
|                                 | Net interest income (expense) |                        | $         | 48,288   |  |            | $       | 8,387    |  |       | $         | 17,362       |  |            | $       | 70           |   |   | $       | (6,592  | ) |   | $          | 67,515  |  |   | $ |        |   |   | $          | 67,515  | 
|                                 | Net revenues (expense)        |                        |           | 128,201  |  |            |         | 45,093   |  |       |           | 14,975       |  |            |         | (98          | ) |   |         | (14,818 | ) |   |            | 173,353 |  |   |   |        |   |   |            | 173,353 | 
|                                 | Net earnings (loss)           |                        |           | 48,926   |  |            |         | 12,745   |  |       |           | 2,460        |  |            |         | (244         | ) |   |         | (22,518 | ) |   |            | 41,369  |  |   |   |        |   |   |            | 41,369  | 
|Assets as of June 30, 2003       |                               | $                      | 4,265,091 |          |  | $          | 749,644 |          |  | $     | 4,880,072 |              |  | $          | 61,952  |              |   | $ | 704,636 |         |   | $ | 10,661,395 |         |  | $ |  |         |   | $ | 10,661,395 |        
|                                
|Six months ended June 30, 2004   |                               |                        |           |          |  |            |         |          |  |       |           |              |  |            |         |              |   |   |         |         |   |   |            |         |  |   |   |         |   |   |            |        
|                                 | Net interest income (expense) |                        | $         | 109,369  |  |            | $       | 24,675   |  |       | $         | 84,463       |  |            | $       | 1,771        |   |   | $       | (19,367 | ) |   | $          | 200,911 |  |   | $ |        |   |   | $          | 200,911 | 
|                                 | Net revenues (expense)        |                        |           | 278,858  |  |            |         | 70,684   |  |       |           | 71,367       |  |            |         | 2,747        |   |   |         | (27,326 | ) |   |            | 396,330 |  |   |   | (52,223 | ) |   |            | 344,107 | 
|                                 | Net earnings (loss)           |                        |           | 101,831  |  |            |         | 12,000   |  |       |           | 27,947       |  |            |         | 298          |   |   |         | (45,596 | ) |   |            | 96,480  |  |   |   | (31,595 | ) |   |            | 64,885  | 
|Assets as of June 30, 2004       |                               | $                      | 5,730,641 |          |  | $          | 636,776 |          |  | $     | 8,219,882 |              |  | $          | 245,156 |              |   | $ | 706,061 |         |   | $ | 15,538,516 |         |  | $ |  |         |   | $ | 15,538,516 |        
|Six months ended June 30, 2003   |                               |                        |           |          |  |            |         |          |  |       |           |              |  |            |         |              |   |   |         |         |   |   |            |         |  |   |   |         |   |   |            |        
|                                 | Net interest income (expense) |                        | $         | 94,081   |  |            | $       | 16,039   |  |       | $         | 35,705       |  |            | $       | (138         | ) |   | $       | (15,147 | ) |   | $          | 130,540 |  |   | $ |        |   |   | $          | 130,540 | 
|                                 | Net revenues (expense)        |                        |           | 246,282  |  |            |         | 79,939   |  |       |           | 34,525       |  |            |         | 252          |   |   |         | (30,736 | ) |   |            | 330,262 |  |   |   |        |   |   |            | 330,262 | 
|                                 | Net earnings (loss)           |                        |           | 94,087   |  |            |         | 21,293   |  |       |           | 8,420        |  |            |         | (583         | ) |   |         | (44,931 | ) |   |            | 78,286  |  |   |   |        |   |   |            | 78,286  | 
|Assets as of June 30, 2003       |                               | $                      | 4,265,091 |          |  | $          | 749,644 |          |  | $     | 4,880,072 |              |  | $          | 61,952  |              |   | $ | 704,636 |         |   | $ | 10,661,395 |         |  | $ |  |         |   | $ | 10,661,395 |        



|         |                         
|-------- | ------------------------
|Note 5  | Stock-Based Compensation

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

As permitted by SFAS 123,
Accounting for Stock-Based Compensation(SFAS 123), we continue to measure and
recognize compensation expense using the intrinsic value method
specified in Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees(APB 25). As required

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INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

under the provisions of SFAS 148,
Accounting for Stock-Based Compensation 
Transition and Disclosure,the following table
discloses the pro forma net income and pro forma basic and
diluted earnings per share had the fair value method been
applied to all stock awards for the three and six months ended
June 30, 2004 and 2003:

|                           |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |        |        |  
|-------------------------- | ----------- | -------------------------------- | - | ---------------------- | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | - | - | ------ | ------ | -
|                           |             |                                  |   |                       
|                           |             | Three Months Ended               |   | Six Months Ended      
|                           |             | June 30,                         |   | June 30,              
|                           |             |                                  |   |                       
|                           |             | 2004                             |   | 2003                   |        | 2004 |   | 2003  
|                           |             |                                  |   |                        |        |      |   |       
|                           |             |                                  |   |                       
|                           |             | (Dollars in thousands,           |   | (Dollars in thousands,
|                           |             | except per share data)           |   | except per share data)
|Net Earnings               |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |       
|                           | As reported |                                  | $ | 22,955                 |        |      | $ | 41,369 |        |   | $ | 64,885 |        |   | $ | 78,286 |       
|                           |             | Stock-based compensation expense |   |                        | (2,859 | )    |   |        | (4,575 | ) |   |        | (5,687 | ) |   |        | (9,110 | )
|                           |             | Tax effect                       |   |                        | 1,129  |      |   |        | 1,807  |   |   |        | 2,246  |   |   |        | 3,598  |  
|                           |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |       
|                           | Pro forma   |                                  | $ | 21,225                 |        |      | $ | 38,601 |        |   | $ | 61,444 |        |   | $ | 72,774 |       
|                           |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |       
|Basic Earnings Per Share   |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |       
|                           | As reported |                                  | $ | 0.39                   |        |      | $ | 0.75   |        |   | $ | 1.13   |        |   | $ | 1.43   |       
|                           | Pro forma   |                                  | $ | 0.37                   |        |      | $ | 0.70   |        |   | $ | 1.07   |        |   | $ | 1.33   |       
|Diluted Earnings Per Share |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |       
|                           | As reported |                                  | $ | 0.38                   |        |      | $ | 0.73   |        |   | $ | 1.08   |        |   | $ | 1.39   |       
|                           | Pro forma   |                                  | $ | 0.35                   |        |      | $ | 0.68   |        |   | $ | 1.02   |        |   | $ | 1.29   |       

In addition, during the three months ended
June 30, 2004 and 2003, we recognized compensation expense
of $721,000 ($436,000, net of taxes) and $561,000 ($339,000, net
of taxes), respectively, related to restricted stock awards.
These expenses were included in net earnings as reported.



|         |                                                   
|-------- | --------------------------------------------------
|Note 6  | Defined Benefit Pension Plan Net Periodic
    Cost

We provided a defined benefit pension plan (the
DBP Plan) to substantially all of our employees
hired prior to January 1, 2003. The net periodic benefit
cost of the DBP Plan, which is based on actuarial assumptions,
is presented in the following table for the three and six months
ended June 30, 2004 and 2003:

|                                   |  |                        |       |                |  |      |       |      |  |   |       |   |  |   |       |  
|---------------------------------- |  | ---------------------- | ----- | -------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                   |  |                        |       |               
|                                   |  | Three Months           |       | Six Months    
|                                   |  | Ended June 30,         |       | Ended June 30,
|                                   |  |                        |       |               
|                                   |  | 2004                   |       | 2003           |  | 2004 |       | 2003
|                                   |  |                        |       |                |  |      |       |     
|                                   |  |                       
|                                   |  | (Dollars in thousands)
|Service cost                       |  | $                      | 1,209 |                |  | $    | 932   |      |  | $ | 2,418 |   |  | $ | 1,864 |  
|Interest cost                      |  |                        | 323   |                |  |      | 222   |      |  |   | 646   |   |  |   | 444   |  
|Expected return on assets          |  |                        | (294  | )              |  |      | (165  | )    |  |   | (588  | ) |  |   | (330  | )
|Amortization of net loss           |  |                        | 73    |                |  |      | 47    |      |  |   | 146   |   |  |   | 94    |  
|Amortization of prior service cost |  |                        | 14    |                |  |      | 14    |      |  |   | 28    |   |  |   | 28    |  
|                                   |  |                        |       |                |  |      |       |      |  |   |       |   |  |   |       |  
|Net periodic benefit costs         |  | $                      | 1,325 |                |  | $    | 1,050 |      |  | $ | 2,650 |   |  | $ | 2,100 |  
|                                   |  |                        |       |                |  |      |       |      |  |   |       |   |  |   |       |  

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INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The actuarial assumptions used in accounting for
the net periodic cost at June 30, 2004 and 2003, were as
follows:

|                              |  |                |      |      |  |  |      |  
|----------------------------- |  | -------------- | ---- | ---- |  |  | ---- | -
|                              |  |               
|                              |  | Three Months  
|                              |  | Ended June 30,
|                              |  |               
|                              |  | 2004           |      | 2003
|                              |  |                |      |     
|Assumed discount rate         |  |                | 6.00 | %    |  |  | 6.75 | %
|Rate of compensation increase |  |                | 4.00 | %    |  |  | 4.00 | %
|Expected return on assets     |  |                | 7.50 | %    |  |  | 7.50 | %

The Company is expected to contribute
$6 million to the DBP Plan in 2004, which will be made as a
one lump sum payment later in the year. No contribution was made
during the quarter and six months ended June 30, 2004.

Note 7  Legal
Matters

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

We are involved in other litigation including
class actions lawsuits arising from normal operations.
Management has accrued for those that are both probable and
reasonably estimable. In the opinion of management in
consultation with counsel, none of these matters are likely to
have a material adverse effect on our financial condition.

Note 8  Subsequent
Event

On July 16, 2004, the Company completed the
acquisition of 93.75% of the outstanding shares of common stock
of Financial Freedom Holdings Inc. (Financial
Freedom), the leading provider of reverse mortgages in the
United States, and the related assets from Lehman Brothers Bank,
F.S.B. and its affiliates for an aggregate purchase price of
approximately $83 million. The remaining shares (6.25%) of
the common stock of Financial Freedom are held by its Chief
Executive Officer and will be accounted for as minority
interest. The acquisition will result in approximately
$45 million in goodwill.

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

As of June 30, 2004, an evaluation was
performed under the supervision and with the participation of
the Companys management, including the Chief Executive
Officer (CEO) and Chief Financial Officer
(CFO), of the effectiveness of the design and
operation of the Companys disclosure controls and
procedures. Based on that evaluation, the Companys
management, including the CEO and CFO, concluded that the
Companys disclosure controls and procedures were effective
as of June 30, 2004. There have been no significant changes
in the Companys internal controls or in other factors that
could significantly affect internal controls subsequent to
June 30, 2004.




PART II.     OTHER
INFORMATION






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

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

We are involved in other litigation including
class actions lawsuits arising from normal operations.
Management has accrued for those that are both probable and
reasonably estimable. In the opinion of management in
consultation with counsel, none of these matters are likely to
have a material adverse effect on our financial condition.






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

At the annual meeting of IndyMac Bancorps
stockholders held on April 28, 2004, the stockholders voted
to elect IndyMac Bancorps directors. The votes cast in
this regard were as follows:

|                        |  |            |            |                 |  |  |            | 
|----------------------- |  | ---------- | ---------- | --------------- |  |  | ---------- | 
|                        |  | Shares For |            | Shares Withheld
|                        |  |            |            |                
|Michael W. Perry        |  |            | 51,733,211 |                 |  |  | 2,148,222  | 
|Louis E. Caldera        |  |            | 51,713,490 |                 |  |  | 2,167,943  | 
|Lyle E. Gramley         |  |            | 51,696,044 |                 |  |  | 2,185,389  | 
|Hugh M. Grant           |  |            | 52,211,099 |                 |  |  | 1,670,334  | 
|Patrick C. Haden        |  |            | 31,460,969 |                 |  |  | 22,420,464 | 
|Terrance G. Hodel       |  |            | 53,131,746 |                 |  |  | 749,687    | 
|Robert L. Hunt II       |  |            | 51,350,590 |                 |  |  | 2,530,843  | 
|James R. Ukropina, Esq. |  |            | 51,354,772 |                 |  |  | 2,526,661  | 

In addition, the stockholders voted to approve
the IndyMac Bancorp, Inc. 2002 Incentive Plan, as Amended and
Restated. The votes cast in this regard were as follows:

|                                     |  |                      |            | 
|------------------------------------ |  | -------------------- | ---------- | 
|                                     |  | Number of Votes Cast
|                                     |  |                     
|For                                  |  |                      | 33,397,958 | 
|Against                              |  |                      | 10,374,149 | 
|Abstain (including broker non-votes) |  |                      | 270,385    | 

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##### Table of Contents



Finally, the stockholders voted to ratify the
appointment of Ernst & Young LLP as IndyMac
Bancorps independent public accountants for the year
ending December 31, 2004. The votes cast in this regard
were as follows:

|                                     |  |                      |            | 
|------------------------------------ |  | -------------------- | ---------- | 
|                                     |  | Number of Votes Cast
|                                     |  |                     
|For                                  |  |                      | 49,872,166 | 
|Against                              |  |                      | 3,927,068  | 
|Abstain (including broker non-votes) |  |                      | 82,199     | 






|        |                                     
|------- | ------------------------------------
|ITEM 6. | EXHIBITS AND REPORTS ON
    FORM 8-K

(a) Exhibits

| |      |  |  |                                                                                                                                                          
| | ---- |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.1  |  |  | IndyMac Bancorp, Inc. 2002 Incentive Plan, as
    Amended and Restated.                                                                                  
| | 10.1 |  |  | IndyMac Bancorp, Inc. Amended Director Emeritus
    Plan effective as of April 27, 2004.                                                                 
| | 31.1 |  |  | Chief Executive Officers Certification
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                   
| | 31.2 |  |  | Chief Financial Officers Certification
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                   
| | 32.1 |  |  | Chief Executive Officers Certification
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | 32.2 |  |  | Chief Financial Officers Certification
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

The Company furnished a report on Form 8-K
on April 28, 2004. Items included: Item 12. Disclosure
of Results of Operations and Financial Condition 
Press Release announcing results of operations and financial
condition for the quarter ended March 31, 2004 and related
webcast presentation.

The Company filed a report on Form 8-K on
May 5, 2004. Items included: Item 5. Other
Events  Press Release announcing the signing of a
definitive agreement by IndyMac Bank to acquire 93.75% of the
outstanding shares of common stock of Financial Freedom
Holdings, Inc.

The Company furnished a report on Form 8-K
on May 6, 2004. Items included: Item 9.
Regulation FD Disclosure  Webcast presentation
on Financial Freedom acquisition.

The Company filed a report on Form 8-K on
June 10, 2004. Items included: Item 5. Other
Events  Announcement of offering price for
3.2 million shares of common stock, and Item 7.
Financial Statements and Exhibits  Underwriting
Agreement for the offering of 3.2 million shares of common
stock.

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SIGNATURES

Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Pasadena, State of California, on
July 29, 2004.



| |                      
| | ---------------------
| | INDYMAC BANCORP, INC.
| | (Registrant)         



| |     |                     
| | --- | --------------------
| | By: | /s/ MICHAEL W. PERRY

| |                                   
| | ----------------------------------
| |                                   
| | Michael W. Perry                  
| | Chairman of the Board of Directors
| | and Chief Executive Officer       



| |     |               
| | --- | --------------
| | By: | /s/ SCOTT KEYS

| |                            
| | ---------------------------
| |                            
| | Scott Keys                 
| | Executive Vice President   
| | and Chief Financial Officer

74